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EXHIBIT 10.9
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), dated as of March 30, 2000, is
by and between SERVICE ASSET INVESTMENTS, INC., a Texas corporation
("Borrower"), and GUARANTY FEDERAL BANK, F.S.B., a federal savings bank
("Bank").
RECITALS:
Borrower has requested Bank to extend credit to Borrower in the form
of (a) a term loan in the principal amount of $15,000,000 ("Term Loan A") and,
(b) a term loan in the principal amount of $10,000,000 ("Term Loan B"). Bank is
willing to make the extensions of credit described in clauses (a) and (b)
available to Borrower upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. As used in this Agreement, in addition to any
other terms defined herein, the following terms have the following meanings
indicated below:
"Acquisition Agreement" means the agreement and other
documents related to the Borrower's acquisition of Worldwide.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, such Person; (b)
that directly or indirectly beneficially owns or holds five percent or
more of any class of voting stock of such Person; or (c) five percent
or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Person in question. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or
otherwise; provided, however, in no event shall Bank be deemed an
Affiliate of Borrower or any of its Subsidiaries.
"Bank One" means Bank One, Texas, N.A.
"Borrower" has the meaning assigned to it in the introductory
paragraph hereof.
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"Business Day" means (a) any day on which commercial banks are
not authorized or required to close in Dallas, Texas.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or personal
property, which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP.
For purposes of this Agreement, the amount of such Capital Lease
Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commercial Base Rate" means, at any time, the base rate
announced or published from time to time by Bank, which rate may not be
the lowest rate charged by Bank; it being understood and agreed that
the Commercial Base Rate shall increase or decrease, as the case may
be, from time to time as of the effective date of each change in such
base rate, and may not correspond with future increases or decreases in
interest rates charged by other lenders or market rates in general.
"Debit Balances" means the outstanding balances attributable
to a Person's margin lending activities.
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable of such Person arising in the ordinary
course of business, (d) all Capital Lease Obligations of such Person,
(e) all Debt or other obligations of others Guaranteed by such Person,
(f) all obligations secured by a Lien existing on property owned by
such Person, whether or not the obligations secured thereby have been
assumed by such Person or are non-recourse to the credit of such
Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, and (h) all
liabilities of such Person in respect of unfunded vested benefits under
any Plan.
"Debt Service" means the sum of scheduled principal payments
on all (a) Debt owed to Bank and (b) the Service Lloyds Debt for the
next succeeding twelve months.
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"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of (a) the Maximum Rate, or
(b) the sum of the Commercial Base Rate in effect from day to day plus
five percent (5%).
"Dollars" and "$" mean lawful money of the United States of
America.
"EBITDA" means, for each period of determination, the sum of
(a) consolidated net income of a Person and its Subsidiaries for such
period, as determined in accordance with GAAP, plus (b) to the extent
deducted in arriving at consolidated net income for the period,
depreciation, amortization, non-cash charges, taxes, and interest
expense of such Person and its Subsidiaries for such period.
"Effective Date" means the date upon which all parties execute
this Agreement.
"Environmental Laws" means any and all federal, state, and
local laws, regulations, and requirements pertaining to health, safety,
or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Section 6901 et seq., the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., as such laws, regulations, and requirements may be amended or
supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses, (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand, by
any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Tribunal or
other Person, arising from environmental, health or safety conditions
or the Release or threatened Release of a Hazardous Material into the
environment, resulting from the past, present, or future operations of
such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the
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Code) as Borrower or is under common control (within the meaning of
Section 414(c) of the Code) with Borrower.
"Event of Default" has the meaning specified in Section 12.1.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards
Board and/or their respective successors and which are applicable in
the circumstances as of the date in question. Accounting principles are
applied on a "consistent basis" when the accounting principles applied
in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Law" means all statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any Tribunal.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Pledge
Agreement, and all other instruments, documents, and agreements
executed and delivered pursuant to or in
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connection with this Agreement, as such instruments, documents, and
agreements may be amended, restated, modified, renewed, extended, or
supplemented from time to time.
"Material Adverse Effect" means (a) the occurrence of any
event or condition that could reasonably be expected to have a material
adverse effect on (i) the business, condition (financial or otherwise),
operations, prospects, or properties of Borrower and Subsidiaries taken
as a whole, (ii) the ability of Borrower and Subsidiaries, taken as a
whole, to carry out their business, or (iii) the ability of Borrower
and Subsidiaries, taken as a whole, to perform the obligations under
the Notes, this Agreement and the other Loan Documents in accordance
with their respective obligations; or (b) an Event of Default
hereunder.
"Maximum Rate" means, at any time, the maximum non-usurious
rate of interest under applicable law that Bank may charge Borrower.
The Maximum Rate shall be calculated in a manner that takes into
account any and all fees, payments, and other charges in respect of the
Loan Documents that constitute interest under applicable law. Each
change in any interest rate provided for herein based upon the Maximum
Rate resulting from a change in the Maximum Rate shall take effect
without notice to Borrower at the time of such change in the Maximum
Rate. For purposes of determining the Maximum Rate under Texas law, the
applicable rate ceiling shall be the applicable weekly ceiling
described in, and computed in accordance with, Chapter 303 of the Texas
Finance Code, as the same may be amended.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by
Borrower or any ERISA Affiliate and which is covered by Title IV of
ERISA.
"Notes" means, collectively, all promissory notes executed at
any time by Borrower and payable to the order of Bank, as the same may
be renewed, extended, modified and/or increased from time to time.
"Obligated Party" means any Person who is or becomes party to
any agreement that guarantees or secures payment and performance of the
Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of Borrower to Bank, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligations, indebtedness, and
liabilities of Borrower under this Agreement, the Notes and the other
Loan Documents and all interest accruing thereon and all attorneys'
fees and other expenses incurred in the enforcement or collection
thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
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"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Tribunal, or other
entity.
"Plan" means any employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and which is covered by
Title IV of ERISA.
"Pledge Agreement" means the Pledge Agreement of Borrower in
favor of Bank, in substantially the form of Exhibit D hereto, as the
same may be amended, supplemented or modified from time to time.
"Pledged Stock" means all shares of capital stock of each of
Borrower's Subsidiaries, now owned or hereafter acquired by Borrower,
which Pledged Stock shall constitute 100% of the issued and outstanding
capital stock of such Subsidiaries.
"Principal Office" means the principal office of Bank,
presently located at 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Quarterly Payment Date" means the first day of each calendar
quarter, commencing July 1, 2000.
"Regulatory Capital" means net capital as defined in, and
determined in accordance with, Rule 15c3-l of the Securities and
Exchange Commission.
"Release" means as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, disbursement,
leaching, or migration of Hazardous Materials into the indoor or
outdoor environment or into or out of property owned by such Person,
including, without limitation, the movement of Hazardous Materials
through or in the air, soil, surface water, ground water, or property.
"Remedial Action" means, all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release or
minimize the further Release of Hazardous Materials so that they do not
migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment, or (c) perform pre-remedial studies
and investigations and post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"SAMCO" means Service Asset Management Co.
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"Service Lloyd's Debt" means all Debt owed by Borrower or any
Affiliate to Service Lloyd's Insurance, including, without limitation,
existing or future Debt owed by Service Asset Holdings, Inc. to Service
Lloyd's Insurance.
"Subsidiary" means (a) any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by Borrower or one or
more of the Subsidiaries or by Borrower and one or more of the
Subsidiaries, and (b) any other entity (i) of which at least a majority
of the ownership, equity or voting interest is at the time directly or
indirectly owned or controlled by one or more of Borrower and the
Subsidiaries and (ii) which is treated as a subsidiary in accordance
with GAAP.
"Tangible Net Worth" means, at any particular time, for any
Person, the sum of (i) all amounts which, in conformity with GAAP,
would be included as stockholders' equity on a balance sheet of such
Person; provided, however, there shall be excluded therefrom: (a) any
amount at which shares of capital stock of such Person appear as an
asset on such Person's balance sheet, (b) goodwill, including any
amounts, however designated, that represent the excess of the purchase
price paid for assets on stock over the value assigned thereto, (c)
patents, trademarks, trade names, and copyrights, (d) deferred
expenses, (e) loans and any advances to any stockholder, director,
officer, or employee of such Person or any Affiliate of such Person,
and (f) all other assets which are properly classified as intangible
assets.
"Taxes" means all taxes, levies, assessments, fees,
withholdings or other charges at any time imposed by any Laws or
Tribunal.
"Term Loan A" has the meaning specified in the recitals
hereof.
"Term Loan B" has the meaning specified in the recitals
hereof.
"Term Loan A Commitment" means the obligation of Bank to make
Term Loan A pursuant to Section 2.1 in an aggregate principal amount up
to but not exceeding $15,000,000.
"Term Loan A Maturity Date" means March 30, 2005.
"Term Loan B Commitment" means the obligation of Bank to make
Term Loan B pursuant to Section 3.1 in an aggregate principal amount up
to but not exceeding $10,000,000.
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"Term Loan B Maturity Date" means March 30, 2001.
"Term Loans" means Term Loan A and Term Loan B, collectively.
"Term Note A" means the promissory note to be executed by
Borrower and payable to the order of Bank, in substantially the form of
Exhibit "A" hereto, and all extensions, renewals, and modifications
thereof.
"Term Note B" means the promissory note to be executed by
Borrower and payable to the order of Bank, in substantially the form of
Exhibit "B" hereto, and all extensions, renewals, and modifications
thereof.
"Tribunal" means any municipal, state, commonwealth, federal,
foreign, territorial or other court, government body, subdivision,
agent, department, commission, board or bureau or institution.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
"Unencumbered Cash and Cash Equivalents" means with respect to
any Person, cash, certificates of deposit, U.S. treasury securities,
U.S. governmental agency securities, municipal and corporate bonds
rated A+ or better by Standard & Poors or equivalent rating by another
recognized rating company, unrestricted common and preferred stock of a
company which has a majority of its issued and outstanding shares
publicly traded and which is listed on the New York Stock Exchange or
American Stock Exchange or which are NASDAQ National Market Issues as
listed in the Wall Street Journal, each share of which has a market
value of $5.00 or more, and mutual funds and/or unit investment trusts
that invest solely in any of the forgoing, all of which are free of any
Liens, security interests and other encumbrances.
"Worldwide" means Worldwide Settlements, Ltd.
Section 1.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
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ARTICLE II
Term Loan A
2.1 Term Loan A. Subject to the terms and conditions of this Agreement,
Bank agrees to make a term loan to Borrower in the principal amount up to but
not exceeding the amount of the Term Loan A Commitment in a single advance on or
about the date hereof.
2.2 Term Note A. The obligation of Borrower to repay Term Loan A shall
be evidenced by Term Note A executed by Borrower, payable to the order of Bank,
in the principal amount of the Term Loan A Commitment, and dated the date
hereof.
2.3 Repayment of Term Loan A. Borrower shall repay the unpaid principal
amount of Term Loan A in quarterly installments of $750,000, commencing on
October 1, 2000, and continuing on each Quarterly Payment Date, with a final
installment in the amount of all outstanding principal of Term Loan A payable on
the Term Loan A Maturity Date.
2.4 Interest. The unpaid principal amount of Term Loan A shall bear
interest at the rates, and be payable on the dates, as provided in Term Note A.
2.5 Use of Proceeds. The proceeds of Term Loan A shall be used to
refinance existing Debt owed to Bank One.
2.6 Underwriting Fee. Borrower agrees to pay to Bank an underwriting
fee with respect to Term Loan A equal to $25,000, payable on the Effective Date,
which fee shall be deemed fully earned and nonrefundable on the date hereof.
ARTICLE III
Term Loan B
Section 3.1. Term Loan B Commitment. Subject to the terms and
conditions of this Agreement, Bank agrees to make a term loan to Borrower in a
principal amount up to but not exceeding the amount of the Term Loan B
Commitment in a single advance on or about the date hereof. If Borrower pays or
prepays any portion of Term Loan B under this Agreement, that portion may not be
reborrowed. However, portions of the outstanding Obligations under Term Loan B
may be designated as different types of borrowings from time to time subject to
the provisions set forth in Term Note B.
Section 3.2. Term Note B. The obligation of Borrower to repay Term Loan
B shall be evidenced by Term Note B executed by Borrower, payable to the order
of Bank, in the principal amount of the Term Loan B Commitment, and dated the
date hereof.
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Section 3.3. Repayment of Advance. Borrower shall repay the unpaid
principal amount of Term Loan B on the Term Loan B Maturity Date.
Section 3.4. Interest. The unpaid principal amount of borrowings under
Term Loan B shall bear interest at the rates, and be payable on the dates, as
provided in Term Note B.
Section 3.5. Use of Proceeds. The proceeds of Term Loan B shall be used
(a) for the acquisition of Worldwide, in an amount up to $3,000,000, and (b) to
provide equity capital to SAMCO.
Section 3.6. Underwriting Fee. Borrower agrees to pay to Bank an
underwriting fee with respect to Term Loan B equal to $25,000, payable on the
Effective Date, which fee shall be deemed fully earned and nonrefundable on the
date thereof.
ARTICLE IV
Payments
Section 4.1. Method of Payment. All payments of principal, interest,
and other amounts to be made by Borrower under this Agreement, the Notes and the
other Loan Documents shall be made to Bank at the Principal Office in Dollars in
lawful money of the United States, without setoff, deduction, or counterclaim,
not later than 12:00 noon, Dallas, Texas time on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Borrower shall,
at the time of making each such payment, specify to Bank the sums payable by
Borrower under this Agreement, the Notes, and the other Loan Documents to which
such payment is to be applied (and in the event Borrower fails to so specify, or
if an Event of Default has occurred and is continuing, Bank may apply such
payment to the Obligations in such order and manner as it may elect in its sole
discretion). Whenever any payment under this Agreement, the Notes or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest and commitment fee, as the case may be.
Section 4.2. Taxes.
(a) Any and all payments by Borrower hereunder or under the
Notes shall be made, in accordance with Section 4.1, free and clear of
and without deduction for any and all present or future Taxes,
excluding, in the case of Bank, taxes imposed on its income, and
franchise taxes imposed on Bank, by the jurisdiction under the laws of
which Bank is organized or is or should be qualified to do business or
any political subdivision thereof and Taxes imposed on its income by
the jurisdiction of Bank's lending office or any political subdivision
thereof. If Borrower shall be required by law to deduct any Taxes
(i.e., Taxes
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for which Borrower is responsible under the preceding sentence) from or
in respect of any sum payable hereunder or under the Notes to Bank, (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 4.2) Bank receives an amount
equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions and (iii) Borrower shall
pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, Borrower agrees 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 hereunder
or under the Loan Documents 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) Borrower will indemnify Bank 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 4.2)
for which Borrower is liable pursuant to this Section 4.2 paid by
Bank (as the case may be) or any liability (including penalties and
interest) arising therefrom or with respect thereto. Upon written
notice from Bank of a statement setting forth the amounts to be owed
hereunder, this indemnification shall be made 30 days from the date
Bank makes written demand therefor. This indemnity shall survive the
termination of this Agreement.
(d) Within 30 days after the date of any payment of Taxes,
Borrower will furnish to Bank, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower
contained in this Section 4.2 shall survive the payment in full of the
Obligations.
(f) Bank agrees to use good faith efforts to carry out its
obligations under this Agreement in such a way as to reduce the amount
of Taxes attributable to the Term Loans, including the use of a
different lending office, as long as in the good faith opinion of Bank
such actions would not have a material adverse effect upon it.
Section 4.3. Mandatory Prepayment. In the event of any public offering
of securities of SAMCO, Borrower shall prepay the Obligations in full within
three Business Days after the completion of such offering.
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ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
Security
Section 6.1. Collateral. To secure full and complete payment and
performance of the Obligations, Borrower shall execute and deliver or cause to
be executed and delivered the documents described below covering the property
and collateral described in this Section 6.1 (which, together with any other
property and collateral which may now or hereafter secure the Obligations or any
part thereof, is sometimes herein called the "Collateral"):
(a) Borrower shall grant to Bank a first priority security
interest in the Pledged Stock pursuant to the Pledge Agreement and
shall deliver the original stock certificates representing the Pledged
Stock and stock transfer powers duly executed in blank.
(b) Borrower shall execute and cause to be executed such
further documents and instruments, including without limitation,
Uniform Commercial Code financing statements; as Bank, in its sole
discretion, deems necessary or desirable to create, preserve, evidence,
and perfect its liens and security interests in the Collateral.
Section 6.2. Setoff. If an Event of Default shall have occurred and be
continuing, Bank shall have the right to set off and apply against the
Obligations in such manner as Bank may determine, at any time and without notice
to Borrower, any and all deposits (general or special, time or demand,
provisional or final) or other sums at any time credited by or owing from Bank
to Borrower whether or not the Obligations are then due. As further security for
the Obligations, Borrower hereby grants to Bank a security interest in all
money, instruments, and other property of Borrower now or hereafter held by
Bank, including, without limitation, property held in safekeeping. In addition
to Bank's right of setoff and as further security for the Obligations, Borrower
hereby grants to Bank a security interest in all deposits (general or special,
time or demand, provisional or final) and other accounts of Borrower now or
hereafter on deposit with or held by Bank and all other sums at any time
credited by or owing from Bank to Borrower. The rights and remedies of Bank
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which Bank may have.
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ARTICLE VII
Conditions Precedent
Section 7.1. Term Loans. The obligation of Bank to make the Term Loans
is subject to the condition precedent that Bank shall have received on or before
the date of making any advances hereunder all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance satisfactory
to Bank:
(a) Resolutions. Resolutions of the Board of Directors of
Borrower, certified by the Secretary or an Assistant Secretary of
Borrower which authorize the execution, delivery, and performance by
Borrower of this Agreement and the other Loan Documents to which
Borrower is or is to be a party;
(b) Incumbency Certificate. Certificates of incumbency
certified by the Secretary or an Assistant Secretary of Borrower
certifying the names of the officers of Borrower authorized to sign
this Agreement, the Notes and each of the other Loan Documents to which
Borrower is or is to be a party (including the certificates
contemplated herein) together with specimen signatures of such
officers;
(c) Articles of Incorporation. The articles or certificate of
incorporation of Borrower and each Subsidiary of Borrower certified by
the Secretary of State of the state of incorporation of such entity and
dated within 20 days prior to the date hereof;
(d) Bylaws. The bylaws of Borrower and each Subsidiary
of Borrower certified by its President, Secretary or an Assistant
Secretary;
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of Borrower and each
Subsidiary of Borrower as to the existence and good standing of each
such entity and certificates of the appropriate governmental officials
of each state where each such entity owns properties, conducts business
or employs any Persons as to the qualification and good standing of
such entity in such jurisdictions, each dated within 20 days prior to
the date hereof;
(f) Term Note A. Term Note A executed by Borrower;
(g) Term Note B. Term Note B executed by Borrower;
(h) Pledge Agreement. Pledge Agreement executed by Borrower;
(i) Stock Certificates and Stock Powers. Stock certificates
evidencing all of the Pledged Stock, together with stock powers
relating thereto duly endorsed in blank;
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(j) Opinion of Counsel. Favorable opinions of legal counsel to
Borrower acceptable to Bank, as to such matters as Bank may reasonably
request;
(k) Repayment of Existing Debt. Evidence that all of
Borrower's outstanding Debt owing to Bank One will be repaid
simultaneously with the funding of Term Loan A. In addition, Bank shall
have received a payoff letter, in form and substance satisfactory to
Bank from Bank One pursuant to which Bank One agrees to release any and
all Liens upon receipt of payment of all Debt currently owing by
Borrower to Bank One;
(l) No Default. No Default shall have occurred and be
continuing, or would result from the Term Loans.
(m) Representations and Warranties. All of the representations
and warranties contained in Article VIII and in the other Loan
Documents shall be true and correct in all material respects on and as
of the date of the Term Loans with the same force and effect as if such
representations and warranties had been made on and as of such date;
(n) Underwriting Fees. Payment of the underwriting fees
required pursuant to Section 2.6 and Section 3.6 hereof;
(o) Fees and Expenses. Evidence that the costs and expenses
(including attorneys' fees) referred to in Section 13.1, to the extent
incurred, shall have been paid in full by Borrower;
(p) No Material Adverse Effect. No Material Adverse Effect
shall have occurred or be continuing prior to the date hereof;
(q) UCC Search. The results of a Uniform Commercial Code
search showing all financing statements and other documents or
instruments on file against Borrower and its Subsidiaries in the office
of the Secretary of State of Texas, such search to be as of a date no
more than twenty (20) days prior to the date of the Effective Date;
(r) UCC Financing Statements. UCC-1 Financing Statements
executed by Borrower in form and substance acceptable to Bank;
(s) Acquisition Documents. A certified copy of the Acquisition
Agreement; and
(t) Additional Documentation. Such additional approvals,
opinions, or documents as Bank or its legal counsel, Xxxxxxxx Xxxxxxxx
& Xxxxxx P.C., may reasonably request.
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ARTICLE VIII
Representations and Warranties
To induce Bank to enter into this Agreement, Borrower represents and
warrants to Bank that:
Section 8.1. Corporate Existence. Each of Borrower and its Subsidiaries
(a) is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation, (b) has all requisite
power and authority to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
Borrower has the corporate power and authority to execute, deliver, and perform
its obligations under this Agreement, the Notes, the Pledge Agreement and the
other Loan Documents to which Borrower is a party.
Section 8.2. Financial Statements. Borrower has delivered to Bank
unaudited financial statements as at and for the fiscal year ended December 31,
1999 and internally prepared financial statements for the month ending January
31, 2000. SAMCO has delivered to Bank audited financial statements as at and for
the fiscal year ended December 31, 1999 and internally prepared financial
statements for the month ending January 31, 2000. Such financial statements have
been prepared in accordance with GAAP, are true and correct in all material
respects, and fairly and accurately present the consolidated financial condition
of Borrower or SAMCO, as the case may be, as of the respective dates indicated
therein and the results of operations for the respective periods indicated
therein. Neither Borrower nor SAMCO has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, or unrealized
or anticipated losses from any unfavorable commitments except as referred to or
reflected in such financial statements. There has been no material adverse
change in the business, condition (financial or otherwise), operations,
prospects, or properties of Borrower or any of its Subsidiaries since the
effective date of the most recent financial statements referred to in this
Section.
Section 8.3. Corporate Action; No Breach. The execution, delivery, and
performance by Borrower of this Agreement and the other Loan Documents to which
Borrower is or may become a party, and compliance with the terms and provisions
hereof and thereof, have been duly authorized by all requisite corporate action
on the part of Borrower and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the articles of
incorporation or bylaws of Borrower or any of Subsidiaries, (ii) any applicable
law, rule, or regulation or any order, writ, injunction, or decree of any
Tribunal or arbitrator, or (iii) any material agreement or instrument to which
Borrower or any of Subsidiaries is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a material default under
any such agreement or instrument, or result in the creation or imposition of any
Lien (except for Liens as provided in Article VI) upon any of the revenues or
assets of Borrower or any Subsidiary.
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Section 8.4. Operation of Business. Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and Borrower and each of its Subsidiaries are not in material
violation of any valid rights of others with respect to any of the foregoing.
Section 8.5. Litigation and Judgments. Except as disclosed on Schedule
8.5 hereto, there is no action, suit, investigation, or proceeding before or by
any Tribunal or arbitrator pending, or to the knowledge of Borrower, threatened
against or affecting Borrower or any Subsidiary, that would, if adversely
determined, have a Material Adverse Effect. There are no outstanding judgments
against Borrower or any of its Subsidiaries.
Section 8.6. Rights in Properties; Liens. Borrower and each of its
Subsidiaries have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in Section 8.2, and none of the properties, assets, or
leasehold interests of Borrower or any Subsidiary is subject to any Lien.
Section 8.7. Enforceability. This Agreement constitutes, and the other
Loan Documents to which Borrower is a party, when delivered, shall constitute
legal, valid, and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as limited by general
principles of equity and bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights.
Section 8.8. Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Tribunal or other Person is or will be
necessary for the execution, delivery, or performance by Borrower of this
Agreement and the other Loan Documents to which Borrower is a party or the
validity or enforceability thereof.
Section 8.9. Debt. Borrower and Subsidiaries have no Debt, except as
disclosed on Schedule 8.9 hereto or permitted by Section 10.1 hereof.
Section 8.10. Taxes. Borrower and each Subsidiary have filed all tax
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, property, and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable except for any such liabilities which are
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP. As of the date hereof, Borrower has no
knowledge of any pending investigation of Borrower or any Subsidiary except as
disclosed on Schedule 8.10 attached herein by any taxing authority or of any
pending but unassessed tax liability of Borrower or any Subsidiary.
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Section 8.11. Margin Stock. The Term Loans are not secured, and will
not be, directly or indirectly, by margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System).
Section 8.12. ERISA. Borrower and each of its Subsidiaries are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. No notice of intent to terminate a Plan has
been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither Borrower nor any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan. Borrower and each ERISA Affiliate
have met their minimum funding requirements under ERISA with respect to all of
their Plans, and the present value of all vested benefits under each Plan do not
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
ERISA. Neither Borrower nor any ERISA Affiliate has incurred any liability to
the PBGC under ERISA.
Section 8.13. Disclosure. No statement, information, report,
representation, or warranty made by Borrower in this Agreement, or in any other
Loan Document or furnished to Bank in connection with this Agreement or any of
the transactions contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading. As of the date hereof, there is no fact known to
Borrower which has a material adverse effect, or which might in the future have
a Material Adverse Effect that has not been disclosed in writing to Bank.
Section 8.14. Subsidiaries. Borrower has no Subsidiaries other than
those listed on Schedule 8.14 hereto. All of the outstanding capital stock of
each Subsidiary has been validly issued, is fully paid, and is nonassessable.
Borrower shall, from time to time as necessary, deliver to Bank an updated
Schedule 8.14 to this Agreement, together with a certificate of an authorized
officer of Borrower certifying that the information set forth in such schedule
is true, correct, and complete as of such date.
Section 8.15. Agreements. Neither Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could reasonably be expected to have a Material Adverse Effect. Neither
Borrower nor any Subsidiary is in default in any material respect in the
performance, observance, or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party.
Section 8.16. Compliance With Laws. Neither Borrower nor any Subsidiary
is in violation in any material respect of any law, rule, regulation, order, or
decree of any Tribunal or arbitrator, except to the extent that the failure to
comply therewith will not have a Material Adverse Effect.
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Section 8.17. Investment Company Act. Neither Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.18. Public Utility Holding Company Act. Neither Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 8.19. Environmental Matters. Except as disclosed on Schedule
8.19 hereto:
(a) Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all
Environmental Laws. Borrower is not aware of, nor has Borrower received
notice of, any past, present, or future conditions, events, activities,
practices, or incidents which may interfere with or prevent the
compliance or continued compliance of Borrower and Subsidiaries with
all Environmental Laws;
(b) Borrower and each Subsidiary have obtained all permits,
licenses, and authorizations that are required under applicable
Environmental Laws, and all such permits are in good standing and
Borrower and Subsidiaries are in compliance with all of the terms and
conditions of such permits;
(c) No Hazardous Materials exist on, about, or within or have
been used, generated, stored, transported, disposed of on, or Released
from any of the properties or assets of either Borrower or any
Subsidiary in violation of any Environmental Laws in effect on the date
hereof. The use which Borrower and Subsidiaries make and intend to make
of their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or Release
of any Hazardous Material on, in, or from any of their properties or
assets in violation of any Environmental Laws in effect on the date
hereof;
(d) Neither Borrower nor any of its Subsidiaries nor any of
their respective currently or previously owned or leased properties or
operations is subject to any outstanding or threatened order from or
agreement with any Tribunal or subject to any judicial or docketed
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations of
Borrower or any Subsidiaries that could reasonably be expected to give
rise to any Environmental Liabilities;
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(f) Neither Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
regulations thereunder or any comparable provision of state law.
Borrower and its Subsidiaries are in compliance with all applicable
financial responsibility requirements of all Environmental Laws;
(g) Neither Borrower nor any of its Subsidiaries has filed or
failed to file any notice required under applicable Environmental Law
reporting a Release; and
(h) No Lien arising under any Environmental Law has attached
to any property or revenues of Borrower or any Subsidiaries.
ARTICLE IX
Positive Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Bank has any Term Loan A Commitment or Term Loan
B Commitment hereunder, Borrower will perform and observe the following positive
covenants, unless Bank shall otherwise consent in writing:
Section 9.1. Reporting Requirements. Borrower will furnish to Bank:
(a) Annual Financial Statements. As soon as available, and in
any event within 120 days after the end of each fiscal year of
Borrower, beginning with the fiscal year ending December 31, 1999, (i)
a copy of the annual unaudited consolidated financial report of
Borrower, certified by the chief financial officer of Borrower, and
(ii) a copy of the annual audited consolidated financial report of
SAMCO, each for such fiscal year containing balance sheets and
statements of income, stockholders' equity, and cash flows as of the
end of such fiscal year and for the 12-month period then ended, in each
case setting forth in comparative form the figures for the preceding
fiscal year, all in reasonable detail and, with respect to SAMCO,
audited by independent certified public accountants of recognized
standing reasonably acceptable to Bank;
(b) Monthly Financial Statements. As soon as available, and in
any event within 20 days after the end of each calendar month, a copy
of an unaudited consolidated financial report of SAMCO as of the end of
such month and for the portion of the fiscal year then ended,
containing balance sheets and statements of income, retained earnings
and cash flow, all in reasonable detail certified by the chief
financial officer of SAMCO to have been prepared in accordance with
GAAP and to fairly and accurately present the financial condition and
results of operations of SAMCO at the date and for the periods
indicated therein.
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(c) Compliance Certificate. Concurrently with the delivery of
each of the financial statements referred to in subsection 9.1(b), a
certificate of the chief financial officer of Borrower, in the form of
Exhibit "D" hereto (i) stating that no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a statement
as to the nature thereof and the action which is proposed to be taken
with respect thereto, and (ii) showing in reasonable detail the
calculations demonstrating compliance with Article XI;
(d) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Tribunal or arbitrator affecting Borrower or any Subsidiary which, if
determined adversely to Borrower or such Subsidiary, could reasonably
be expected to have a Material Adverse Effect;
(e) Notice of Default. As soon as possible and in any event
within five (5) Business Days after the occurrence of each Default, a
written notice setting forth the details of such Default and the action
that Borrower has taken and proposes to take with respect thereto;
(f) ERISA Reports. As soon as possible and in any event within
five (5) days after Borrower or any Subsidiary knows or has reason to
know that any Reportable Event or Prohibited Transaction has occurred
with respect to any Plan or that the PBGC or Borrower or any Subsidiary
has instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, a certificate of the chief financial officer of
Borrower setting forth the details as to such Reportable Event or
Prohibited Transaction or Plan termination and the action that Borrower
proposes to take with respect thereto;
(g) Notice of Material Adverse Change. As soon as possible and
in any event within five (5) days after the occurrence thereof, written
notice of any matter that could reasonably be expected to have a
Material Adverse Effect;
(h) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by
Borrower or any Subsidiary to its stockholders generally and one copy
of each regular, periodic or special report, registration statement, or
prospectus filed by Borrower or any Subsidiary with any securities
exchange or the Securities and Exchange Commission or any successor
agency; and
(i) General Information. Promptly, such other information
concerning Borrower or any Subsidiary as Bank may from time to time
reasonably request.
Section 9.2. Maintenance of Existence; Conduct of Business. Borrower
will preserve and maintain, and will cause each Subsidiary to preserve and
maintain, its corporate or partnership existence, as the case may be, and all of
its leases, privileges, licenses, permits, franchises, qualifications, and
rights that are necessary or desirable in the ordinary conduct of its business.
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Borrower will conduct, and will cause each Subsidiary to conduct, its business
in an orderly and efficient manner in accordance with good business practices.
Section 9.3. Maintenance of Properties. Borrower will maintain, keep,
and preserve, and cause each Subsidiary to maintain, keep, and preserve, all of
its properties (tangible and intangible) necessary or useful in the proper
conduct of its business in good working order and condition.
Section 9.4. Taxes and Claims. Borrower will pay or discharge, and will
cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its property, and (b) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither Borrower nor
any Subsidiary shall be required to pay or discharge any tax, levy, assessment,
or governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves have been
established.
Section 9.5. Insurance. Borrower will maintain, and will cause each of
the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which Borrower and the Subsidiaries
operate. Without in any way limiting the foregoing, Borrower will maintain and
cause each Subsidiary to maintain workers' compensation insurance (except as
expressly provided in this Section), property insurance, comprehensive general
liability insurance, and products liability insurance reasonably satisfactory to
Bank.
Section 9.6. Inspection Rights. With reasonable notification and from
time to time, Borrower will permit, and will cause each Subsidiary to permit,
representatives of Bank to examine, copy, and make extracts from its books and
records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants.
Section 9.7. Keeping Books and Records. Borrower will maintain, and
will cause each Subsidiary to maintain, proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 9.8. Compliance with Laws and Agreements. Borrower will comply,
and will cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, orders, and decrees of any Tribunal or
arbitrator and all agreements, contracts, and instruments binding on it or
affecting its properties or business.
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Section 9.9. Further Assurances. Borrower will, and will cause each
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may be requested by Bank to carry out the provisions
and purposes of this Agreement and the other Loan Documents and to create,
preserve, and perfect the Liens of Bank in the Collateral.
Section 9.10. ERISA. Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
Section 9.11. Worldwide Acquisition. Promptly after Borrower acquires
Worldwide, Borrower will, and will cause Worldwide to, execute all documents
required by Bank in order to grant to Bank a first priority security interest in
all equity interests in Worldwide.
ARTICLE X
Negative Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Bank has any Term Loan A Commitment or Term Loan
B Commitment hereunder, Borrower will perform and observe the following negative
covenants, unless Bank shall otherwise consent in writing:
Section 10.1. Debt. Borrower will not incur, create, assume, or permit
to exist, and will not permit any Subsidiary to incur, create, assume, or permit
to exist, any Debt, except:
(a) Debt to Bank;
(b) Existing Debt described on Schedule 8.9 hereto; and
(c) Debt incurred in the ordinary course of business with
respect to purchasing or carrying securities.
Section 10.2. Limitation on Liens. Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur, create,
assume, or permit to exist, any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on Schedule 10.2 hereto;
(b) Liens in favor of Bank pursuant to the Loan Documents;
(c) Liens consisting of easements, rights-of-way, zoning
restrictions or other restrictions on the real property that (i) do not
(individually or in the aggregate) materially
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affect the value of assets encumbered thereby or materially impair the
ability of Borrower or its Subsidiaries to use such property in their
respective businesses and none of which is violated in any material
respect by existing or proposed structures of land use;
(d) Liens for taxes, assessments or other governmental charges
that are not delinquent or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject to such
Liens, and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords or other similar statutory Liens securing obligations that
are not yet due and are incurred in the ordinary course of business or
which are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale
of the property subject to such Liens, and for which adequate reserves
have been established;
(f) Liens resulting from good faith deposits to secure payment
of workmen's compensation or other social security programs or to
secure the performance or tenders, statutory obligations, surety and
appeal bonds, bids, contracts (other than for payment of Debt) or
leases, all in the ordinary course of business; and
(g) Liens securing Debt permitted by Section 10.1(c) hereof.
Section 10.3. Mergers, Etc. Borrower will not, and will not permit any
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any part of the assets of any Person or any shares or
other evidence of beneficial ownership of any Person, or wind-up, dissolve or
liquidate; provided that Borrower may acquire Worldwide pursuant to the terms of
the Worldwide Acquisition Agreement.
Section 10.4. Loans and Investments. Borrower will not make any
advance, loan, extension of credit, or capital contribution to or investment in,
or purchase, any stock, bonds, notes, debentures, or other securities of, any
Person, other than an existing Subsidiary or Worldwide.
Section 10.5. Transactions With Affiliates. Borrower will not enter
into, and will not permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of Borrower, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to Borrower or such Subsidiary than is customary in the business in which
Borrower is engaged.
Section 10.6. Disposition of Assets. Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets, except dispositions of assets in the
ordinary course of business.
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Section 10.7. Sale and Leaseback. Borrower will not enter into, and
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 10.8. Prepayment of Debt. Borrower will not prepay, and will
not permit any Subsidiary to prepay, any Debt, except the Obligations.
Notwithstanding the foregoing, the Service Lloyd's Debt may be repaid in amounts
consistent with the repayment schedule existing as of the Effective Date as set
forth on Schedule 10.8 hereto.
Section 10.9. Nature of Business. Borrower will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged as of the date hereof.
Section 10.10. Environmental Protection. Except as shall be in
compliance with Environmental Laws, Borrower will not, and will not permit any
Subsidiaries to, (a) use (or permit any tenant to use) any of their respective
properties or assets for the handling, processing, storage, transportation, or
disposal of any Hazardous Material, (b) generate any Hazardous Material, or (c)
conduct any activity that is likely to cause a Release or threatened Release of
any Hazardous Material, in each case where the same could reasonably be expected
to cause a Material Adverse Effect. Borrower will not, and will not permit any
Subsidiaries to, conduct any activity or use any of their respective properties
or assets in any manner in violation of any Environmental Law or so as to create
any Environmental Liabilities for which Borrower or any Subsidiaries would be
responsible.
Section 10.11. Limitation on New Subsidiaries. Borrower will not form
any new Subsidiary.
Section 10.12. Accounting. Borrower will not, and will not permit any
Subsidiary to, (a) change its fiscal year, unless Borrower shall have given Bank
prior notice of such change, or (b) make any material change (i) in accounting
treatment or reporting practices, except as required by GAAP and disclosed to
Bank, or (ii) in tax reporting treatment, except as required by law and
disclosed to Bank.
Section 10.13. Limitation on Issuance of Capital Stock. Borrower will
not, and will not permit any Subsidiaries to, at any time issue, sell, assign,
or otherwise dispose of (a) any of its capital stock, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock, or (c) any option, warrant, or other right to acquire any of
its capital stock.
Section 10.14. Restricted Payments. If any Default exists and is
continuing, Borrower will not declare or pay any dividends or make any other
payment or distribution (in cash, property, or obligations) on account of its
capital stock, redeem, purchase, retire, or otherwise acquire any of its capital
stock, or permit any of its Subsidiaries to purchase or otherwise acquire any
capital stock of
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Borrower or another Subsidiary, or set apart any money for a sinking or other
analogous fund for any dividend or other distribution on its capital stock or
for any redemption, purchase, retirement, or other acquisition of any of its
capital stock, or grant or issue any capital stock or any warrant, right, or
option pertaining to its capital stock, or issue any security convertible into
capital stock.
Section 10.15. Change in Management. Borrower will not make, and will
not permit any Subsidiary to make, changes to the executive management of
Borrower or the Subsidiaries.
Section 10.16. No Negative Pledges. Borrower shall not, and shall not
permit any of its Subsidiaries to enter into or permit to exist any arrangement
or agreement, other than pursuant to this Agreement or any Loan Document, which
directly or indirectly prohibits the Borrower or any of its Subsidiaries from
creating or incurring a Lien on any of its assets.
Section 10.17. No Restrictive Agreements. Borrower will not permit any
of its Subsidiaries to enter into any indenture, agreement, instrument or other
arrangement which, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the declaration or payment of dividends, the making of loans, advances or
investments or the sale, assignment, transfer or other disposition of property.
ARTICLE XI
Financial Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Bank has any Term Loan A Commitment or Term Loan
B Commitment hereunder, Borrower will observe and perform or cause SAMCO to
observe and perform, as the case may be, the following financial covenants,
unless Bank shall otherwise consent in writing:
Section 11.1. Liquidity Maintenance. Borrower shall cause SAMCO to
maintain Unencumbered Cash and Cash Equivalents having an aggregate market value
of not less than $10,000,000 as of the end of each fiscal month.
Section 11.2. Minimum Tangible Net Worth. Borrower shall cause SAMCO to
maintain, as of the end of each fiscal month, Tangible Net Worth in an amount
not less than the sum of (a) 90% of existing Tangible Net Worth as of the
Effective Date plus (b) $10,000,000 plus (c) 75% of the positive cumulative net
income of SAMCO for each fiscal quarter ending on and after June 30, 2000.
Section 11.3. Minimum EBITDA Requirement. Borrower shall cause SAMCO to
generate EBITDA of at least $7,500,000 during each fiscal quarter.
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Section 11.4. Minimum Capital Requirements. Borrower shall cause SAMCO
to maintain, as of the end of each fiscal month, Regulatory Capital which
exceeds the sum of (a) 5% of Debit Balances plus (b) Debt Service.
ARTICLE XII
Default
Section 12.1. Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Borrower shall fail to pay when due the Obligations or any
part thereof and such failure shall continue unremedied for three
Business Days.
(b) Any representation or warranty made or deemed made by
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) Borrower, SAMCO or any Obligated Party shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in Article IX of this Agreement and such failure shall
continue unremedied for 20 days after Borrower receives notice of such
failure or obtains knowledge thereof.
(d) Borrower, SAMCO or any Obligated Party shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in this Agreement or any other Loan Document (except those
described in (a) or (c) of this Section 12.1).
(e) Borrower, any Subsidiary, or any Obligated Party shall
commence a voluntary proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or a substantial part of its property or shall
consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as
they become due or shall take any corporate action to authorize any of
the foregoing.
(f) An involuntary proceeding shall be commenced against
Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under
any bankruptcy, insolvency, or other similar law now or
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hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official for it or a
substantial part of its property, and such involuntary proceeding shall
remain undismissed and unstayed for a period of thirty (30) days.
(g) Any attachment or sequestration, or any similar proceeding
or proceedings to seize or impose a Lien upon any assets or properties
of Borrower, any Subsidiary, or any Obligated Party involving an
aggregate amount in excess of $100,000 shall have been commenced
against any assets or properties of Borrower, any Subsidiary, or any
Obligated Party and shall not have been discharged within a period of
thirty (30) days after the commencement thereof.
(h) A final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate shall be rendered by a court or
courts against Borrower, any Subsidiary, or any Obligated Party and the
same shall not be discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry thereof and
Borrower, the relevant Subsidiary, or the relevant Obligated Party
shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal.
(i) Borrower, any Subsidiary, or any Obligated Party shall
fail to pay when due any principal of or interest on any Debt (other
than the Obligations), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof, or any event shall have occurred
(and shall not be waived or otherwise cured) that permits (or, with the
giving of notice or lapse of time or both, would permit) any holder or
holders of such Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such
prepayment, including, without limitation, a default under the Service
Lloyd's Debt.
(j) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
Borrower, any Subsidiary, any Obligated Party or any of their
respective shareholders, or Borrower or any Obligated party shall deny
that it has any further liability or obligation under any of the Loan
Documents, or any Lien or security interest created by the Loan
Documents shall for any reason cease to be a valid, first priority
perfected security interest in and Lien upon any of the Collateral
purported to be covered thereby.
(k) Any of the following events shall occur or exist with
respect to Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance
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entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such
proceedings; or (v) complete or partial withdrawal under Section 4201
or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; and in each case
above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion
of Bank subject Borrower to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed or could reasonably be expected
to exceed $100,000.
(l) Borrower, any Subsidiary, or any Obligated Party or any of
their properties, revenues, or assets, shall become subject to an order
of forfeiture, seizure, or divestiture and the same shall not have
been discharged within thirty (30) days from the date of entry thereof.
(m) The Service Lloyd's Debt is repaid in amounts greater than
the repayment schedule for the Service Lloyd's Debt existing as of the
Effective Date.
Section 12.2. Remedies Upon Default. If any Event of Default shall
occur and be continuing, Bank may without notice declare the Obligations or any
part thereof to be immediately due and payable, and the same shall thereupon
become immediately due and payable, without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, protest, or other formalities of any kind, all of which are
hereby expressly waived by Borrower; provided, however, that upon the occurrence
of an Event of Default under Section 12.1(e) or Section 12.1(f), the Obligations
shall be immediately due and payable without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, protest, or other formalities of any kind, all which are
hereby expressly waived by Borrower. If any Event of Default shall occur and be
continuing, Bank may exercise all rights and remedies available to it in law or
in equity, under the Loan Documents, or otherwise.
Section 12.3. Setoff. If an Event of Default shall have occurred and be
continuing, Bank shall have the right to set off and apply against the
Obligations in such manner as Bank may reasonably determine, at any time and
without notice to Borrower, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Bank to Borrower whether or not the Obligations are then due. The rights
and remedies of Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which Bank may have.
Bank agrees to notify Borrower after any such set-off and application.
Section 12.4. Performance by Bank. If Borrower shall fail to perform
any covenant or agreement contained in any of the Loan Documents, Bank may
perform or attempt to perform such covenant or agreement on behalf of Borrower.
In such event, Borrower shall, at the request of Bank, promptly pay any
reasonable amount expended by Bank in connection with such performance or
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attempted performance to Bank, together with interest thereon at the Default
Rate from and including the date of such expenditure to but excluding the date
such expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that Bank shall not have any liability or responsibility (except for its
gross negligence or willful misconduct) for the performance of any obligation of
Borrower under this Agreement or any other Loan Document.
ARTICLE XIII
Miscellaneous
Section 13.1. Expenses. Borrower hereby agrees to pay on demand: (a)
all costs and expenses of Bank in connection with the preparation, negotiation,
execution, and delivery of this Agreement and the other Loan Documents and any
and all amendments, modifications, renewals, extensions, and supplements thereof
and thereto, including, without limitation, the fees and expenses of legal
counsel for Bank, (b) all costs and expenses of Bank in connection with any
Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, the reasonable fees and expenses of legal counsel
for Bank, (c) all costs, expenses, assessments, and other charges incurred in
connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by this Agreement or any other Loan
Documents, and (d) all other costs and expenses incurred by Bank in connection
with this Agreement or any other Loan Document.
SECTION 13.2. INDEMNIFICATION. BORROWER HEREBY AGREES TO INDEMNIFY
BANK, ITS AFFILIATES AND ITS RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES, ATTORNEYS, AGENTS, AND PARTICIPANTS FROM, AND HOLD EACH OF THEM
HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, INTEREST, EXPENSES (INCLUDING ATTORNEYS' FEES)
AND AMOUNTS PAID IN SETTLEMENT TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (a) THE NEGOTIATION, EXECUTION,
DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS, (b) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (c)
ANY BREACH BY BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT OR OTHER
AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (d) THE USE OR PROPOSED USE OF
ANY BORROWING, OR (e) ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING,
INCLUDING WITHOUT LIMITATION ANY THREATENED INVESTIGATION, LITIGATION OR OTHER
PROCEEDING, RELATING TO ANY OF THE FOREGOING; PROVIDED, HOWEVER, THAT NO PERSON
TO BE INDEMNIFIED HEREUNDER SHALL HAVE THE RIGHT TO BE INDEMNIFIED FOR ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING ANY PROVISION OF THIS
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
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INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND
EXPENSES (INCLUDING ATTORNEYS' FEES).
Section 13.3. Limitation of Liability. Neither Bank nor any Affiliate,
officer, director, employee, attorney, or agent of Bank shall have any liability
with respect to, and Borrower hereby waives, releases, and agrees not to xxx any
of them upon, any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by Borrower in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents. Borrower hereby waives, releases, and agrees not to xxx Bank or any
of Bank's Affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents.
Section 13.4. No Fiduciary Relationship. The relationship between
Borrower and Bank with respect to the Loan Documents and the transactions
governed thereby is solely that of debtor and creditor, and Bank has no
fiduciary or other special relationship with Borrower with respect to the Loan
Documents and the transactions governed thereby, and no term or condition of any
of the Loan Documents shall be construed so as to deem the relationship between
Borrower and Bank with respect to the Loan Documents and the transactions
governed thereby to be other than that of debtor and creditor.
Section 13.5. No Waiver; Cumulative Remedies. No failure on the part of
Bank to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
Section 13.6. Successors and Assigns. This Agreement is binding upon
and shall inure to the benefit of Bank and Borrower and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of Bank.
Section 13.7. Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by Bank or any closing shall affect the representations and
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warranties or the right of Bank to rely upon them. Without prejudice to the
survival of any other obligation of Borrower hereunder, the obligations of
Borrower under Sections 13.1, and 13.2 shall survive repayment of the Notes and
termination of the Term Loan Commitment.
Section 13.8. Amendment. The provisions of this Agreement and the other
Loan Documents to which Borrower is a party may be amended or waived only by an
instrument in writing signed by the parties hereto.
Section 13.9. Maximum Interest Rate. No provision of this Agreement or
any other Loan Document shall require the payment or the collection of interest
in excess of the maximum amount permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
Borrower nor the sureties, guarantors, successors, or assigns of Borrower shall
be obligated to pay the excess amount of such interest or any other excess sum
paid for the use, forbearance, or detention of sums loaned pursuant hereto. In
the event Bank ever receives, collects, or applies as interest any such sum,
such amount which would be in excess of the maximum amount permitted by
applicable law shall be applied as a payment and reduction of the principal of
the indebtedness evidenced by the Notes, at Bank's option; and, if the principal
of the Notes have been paid in full, any remaining excess shall forthwith be
paid to Borrower. In determining whether or not the interest paid or payable
exceeds the Maximum Rate, Borrower and Bank shall, to the extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee,
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the entire contemplated
term of the indebtedness evidenced by the Notes, as applicable, so that interest
for the entire term does not exceed the Maximum Rate; provided that, if the
unpaid principal balance 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 the Maximum Rate, Bank shall refund to
Borrower the amount of such excess and, in such event, Bank shall not be subject
to any penalties provided by any laws for contracting for, charging, receiving,
taking, collecting, reserving or applying interest in excess of the Maximum
Rate.
Section 13.10. Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which Borrower is a party
shall be given or made by telecopy, or in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, five (5) business days after being duly deposited in the
mails, in each case given or addressed as aforesaid.
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Section 13.11. GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT
HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR
ALL PURPOSES IN DALLAS COUNTY, TEXAS. ANY ACTION OR PROCEEDING AGAINST BORROWER
UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS. BORROWER HEREBY IRREVOCABLY (a)
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (b) WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT
FORUM. BORROWER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 13.10. NOTHING HEREIN
OR IN ANY OF THE OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF BANK TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF BANK TO
BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR WITH RESPECT TO ANY OF ITS
PROPERTY IN COURTS IN OTHER JURISDICTIONS.
Section 13.12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.13. Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.14. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.15. Non-Application of Chapter 346 of Texas Finance Code.
The provisions of Chapter 346 of the Texas Finance Code (Vernon's Texas Finance
Code Xxx.) are specifically declared by the parties hereto not to be applicable
to this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby.
Section 13.16. Participations. Bank shall have the right at any time
and from time to time to grant participations in the Notes and any other Loan
Documents. Each actual or proposed participant shall be entitled to receive all
information received by Bank regarding Borrower and Subsidiaries, including,
without limitation, information required to be disclosed to a participant
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pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by the
Comptroller of the Currency (whether the actual or proposed participant is
subject to the circular or not).
Section 13.17. Construction. Borrower and Bank acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by Borrower and Bank.
Section 13.18. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF BANK IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 13.19. NO ORAL AGREEMENTS THIS WRITTEN AGREEMENT, THE NOTES,
THE OTHER LOAN DOCUMENTS, AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
SERVICE ASSET INVESTMENTS, INC.
By: /s/ XXXXX X. EUGEMOEN, JR.
------------------------------
Name: Xxxxx X. Eugemoen, Jr.
Title: President
Address for Notices for Borrower:
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention:
Fax No.: 000-000-0000
-------------------------
Telephone No.: 000-000-0000
-------------------
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BANK:
GUARANTY FEDERAL BANK, F.S.B.
By: /s/ XXXX XXXXXXXX
--------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
Fax No.: (000) 000-0000
---------------------
Telephone No.: (000) 000-0000
---------------
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INDEX TO EXHIBITS
Exhibit Description of Exhibit Section
------- ---------------------- -------
"A" Term Note A 2.2
"B" Term Note B 3.2
"C" Pledge Agreement 6.1(a)
"D" Compliance Certificate 8.1(c)
INDEX TO SCHEDULES
Schedule Description of Schedule Section
-------- ---------------------- -------
8.5 Existing Litigation 8.5
8.9 Existing Debt 8.9
8.10 Tax Investigations 8.10
8.14 List of Subsidiaries 8.14
8.19 Environmental Matters 8.19
10.2 Existing Liens 10.2
10.8 Service Lloyd's Debt Repayment Schedule 10.8
37
EXHIBIT A
TERM NOTE A
$15,000,000.00 March 30, 2000
FOR VALUE RECEIVED, the undersigned (sometimes referred to herein as
"Maker"), jointly and severally if more than one, promise to pay to the order of
GUARANTY FEDERAL BANK, F.S.B. ("Payee"), a federal savings bank organized and
existing under the laws of the United States, at its principal offices at 0000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or at such other place as the holder hereof
may from time to time designate, the principal sum of FIFTEEN MILLION AND NO/100
($15,000,000.00), or so much thereof as may be advanced, with interest on the
principal balance from time to time remaining unpaid prior to default or
maturity at the rate hereinafter provided, interest only being due and payable
on the first day of each calendar quarter, commencing October 1, 2000, and
continuing until and including the Maturity Date (hereinafter defined) when the
unpaid principal balance of this Note, together with all accrued and unpaid
interest, shall be due and payable. The principal of this Note shall otherwise
be payable in accordance with the Loan Agreement (hereinafter defined). All
payments due under this Note shall be delivered to the holder hereof not later
than twelve o'clock noon, Dallas, Texas time, on the date such payment becomes
due and payable (or the date any voluntary prepayment of this Note is made), in
immediately available funds. Any payment received by the holder hereof after
such time will be deemed to have been made on the next following business day.
Interest on the principal balance hereof from time to time remaining
unpaid prior to default or maturity shall be payable at the Commercial Base Rate
(as hereinafter defined) plus one-half of one percent (0.50%) per annum (the
"Applicable Rate"), the Applicable Rate to be adjusted as of the effective date
of any change in the Commercial Base Rate; provided, further, that the interest
payable at each interest payment date shall not exceed the maximum amount that
may be lawfully charged. Interest payable at each payment date shall be
calculated by first determining the amount of interest on the unpaid principal
balance hereof from time to time outstanding at the Applicable Rate in effect
from time to time from the date hereof through the end of the quarter next
preceding such payment date (or, if the Note has matured, to maturity), then
deducting any interest previously paid hereon to determine the amount of
interest then payable; provided, however, that the total interest accrued
through the end of such quarter and at maturity shall not exceed the maximum
amount of interest the holder hereof may lawfully charge hereon from the date
hereof to such payment date.
In addition to terms defined elsewhere within this Note, as used in
this Note, the following terms shall have the meanings specified herein:
"Commercial Base Rate" means, at any time, the base rate announced
or published from time to time by Payee, which rate may not be the lowest rate
charged by Payee; it being understood and agreed that the Commercial Base Rate
shall increase or decrease, as the case may be, from time to time as of the
effective date of each change in such base rate, and may not correspond with
future increases or decreases in interest rates charged by other lenders or
market rates in general. If, after the date of this Note, the Commercial Base
Rate announced or published by Payee shall change, the Applicable Rate shall be
increased or decreased, as the case may be, from time to time, as of the
effective date of each change in the Commercial Base Rate charged by Payee,
provided that in no
38
event shall such interest rate exceed the Maximum Rate (hereafter defined).
Notwithstanding the foregoing, if at any time the Applicable Rate exceeds the
Maximum Rate, the rate of interest payable under this Note shall be limited to
the Maximum Rate, as provided above, but any subsequent reductions in the
Commercial Base Rate shall not reduce the Applicable Rate below the Maximum Rate
until the total amount of interest accrued on this Note equals the total amount
of interest which would have accrued at the Applicable Rate if the Applicable
Rate had at all times been in effect. Interest on this Note shall be calculated
at a daily rate equal to 1/360 of the annual percentage rate stated above,
subject to the provisions hereof specifying the maximum amount of interest
which may be charged or collected hereunder.
"Event of Default" shall have the meaning set forth within the Loan
Agreement.
"Loan Agreement" shall mean the Loan Agreement of even date herewith
between Maker and Payee, as amended, restated, modified, restructured, or
supplemented from time to time.
"Maturity Date" shall mean March 30, 2005, being the date this Note
becomes due and payable in its entirety, unless extended pursuant to the terms
of the Loan Agreement.
"Maximum Rate" shall mean, at any time, the maximum non-usurious rate
of interest under applicable law that Payee may charge Maker. The Maximum Rate
shall be calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of the Loan. Documents (as defined in the
Loan Agreement) that constitute interest under applicable law. Each change in
any interest rate provided for herein based upon the Maximum Rate resulting from
a change in the Maximum Rate shall take effect without notice to Maker at the
time of such change in the Maximum Rate. For purposes of determining the Maximum
Rate under Texas law, the applicable rate ceiling shall be the applicable weekly
ceiling described in, and computed in accordance with, Chapter 303 of the Texas
Finance Code, as the same may be amended.
At the option of the holder hereof, the entire principal balance and
accrued interest owing hereon shall at once become due and payable without
notice or demand upon the occurrence at any time of any Event of Default.
The failure to exercise the option to accelerate the maturity of this
Note upon the happening of any one or more of the Events of Default shall not
constitute a waiver of the right of the holder hereof to exercise the same or
any other option at that time or at any subsequent time with respect to such
Event of Default. The remedies of the holder hereof, as provided in this Note
and in any other of the Loan Documents, shall be cumulative and concurrent and
may be pursued separately, successively or together, as often as occasion
therefor shall arise, at the sole discretion of the holder hereof. The
acceptance by the holder hereof of any payment under this Note which is less
than payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of or impair, reduce, release or extinguish any of
the rights or remedies of the holder to exercise the foregoing option or any
other option granted to the holder in this Note and in any other of the Loan
Documents, at that time or at any subsequent time, or nullify any prior exercise
of any such option.
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The unpaid principal of and, to the extent permitted by applicable law,
unpaid interest on this Note from time to time outstanding shall bear interest
from and after maturity at the rate (hereinafter called the "Default Rate") of
five percent (5%) per annum above the Applicable Rate (as such rate may change
from time to time as provided above), provided that in no event shall such
interest rate be more than the Maximum Rate. Notwithstanding anything to the
contrary contained in this Note, at the option of the holder hereof, and upon
notice to the undersigned at any time after the occurrence of an Event of
Default, from and after such notice and during the continuance of such Event of
Default, the unpaid principal of this Note from time to time outstanding and all
past due installments of interest shall, to the extent permitted by applicable
law, bear interest at the Default Rate (as such rate may change from time to
time with each change in the Applicable Rate), provided that in no event shall
such interest rate be more than the Maximum Rate.
During the existence of any Event of Default, the holder hereof may
apply any payments received hereunder or under any other of the Loan Documents
in such amount, order and manner as provided in the Loan Agreement.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, guarantor, surety or otherwise, severally
waive demand, presentment, notice of dishonor, notice of intention to accelerate
the indebtedness evidenced hereby, diligence in collecting, grace, notice and
protest, and consent to all extensions which from time to time may be granted by
the holder hereof and to all partial payments hereon, whether before or after
maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after maturity, the undersigned agrees to pay all costs
of collection, including but not limited to reasonable attorneys' fees and
expenses, incurred by the holder hereof.
This Note is executed pursuant to the Loan Agreement, which Loan
Agreement contains provisions for acceleration of the maturity hereof upon the
happening of certain events, and all advances made hereunder shall be made
pursuant to such Loan Agreement. This Note is secured by the Pledged Stock (as
defined in the Loan Agreement). The proceeds of this Note are to be used for
business, commercial, investment or other similar purposes and no portion
thereof will be used for personal, family or household use.
All agreements between the undersigned and the holder of this Note,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of acceleration of
the maturity hereof or otherwise, shall the interest contracted for, charged,
received, paid or agreed to be paid to the holder hereof exceed the Maximum
Rate. If, from any circumstance whatsoever, interest would otherwise be payable
to the holder hereof in excess of the maximum lawful amount, the interest
payable to the holder hereof shall be reduced to the maximum amount permitted
under applicable law; and if from any circumstance the holder hereof shall ever
receive anything of value deemed interest by applicable law in excess of the
Maximum Rate, an amount equal to any excessive interest shall be applied to the
reduction of the principal hereof and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal hereof, such excess
shall be refunded to the undersigned. All interest paid or agreed to
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be paid to the holder hereof shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread throughout the full period until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the Maximum Amount. This paragraph shall control all
agreements between the undersigned and the holder hereof.
The undersigned acknowledges and agrees that the holder of this Note
may, from time to time, sell or offer to sell interests in the loan evidenced by
this Note to one or more participants. The undersigned authorizes the holder of
this Note to disseminate any information it has pertaining to the loan evidenced
by this Note, including, without limitation, complete and current credit
information on the undersigned, any of its principals and any guarantor of this
Note, to any such participant or prospective participant.
This Note may be prepaid in whole or in part, at any time, without
premium or penalty.
EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND PREEMPTS STATE USURY LAWS),
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
[The balance of this page is intentionally left blank.]
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SERVICE ASSET INVESTMENTS, INC, a Texas
corporation
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
-5-
42
EXHIBIT B
TERM NOTE B
$10,000,000 March 30, 2000
FOR VALUE RECEIVED, the undersigned (sometimes referred to herein as
"Maker"), jointly and severally if more than one, promise to pay to the order of
GUARANTY FEDERAL BANK, F.S.B., a federal savings bank organized and existing
under the laws of the United States (sometimes referred to herein as "Payee"),
at its principal offices at 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or at such
other place as the holder hereof may from time to time designate, the principal
sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000), or so much thereof as may
be advanced, with interest on the principal balance from time to time remaining
unpaid prior to default or maturity at the rate hereinafter provided, interest
only being payable on the first day of each calendar quarter commencing July 1,
2000, and continuing until and including the Maturity Date (hereafter defined),
when the unpaid principal balance of this Note, together with all accrued and
unpaid interest, shall be due and payable. The principal of this Note shall
otherwise be payable in accordance with the Loan Agreement. All payments due
under this Note shall be delivered to the holder hereof not later than twelve
o'clock, noon, Dallas, Texas time, on the date such payment becomes due and
payable (or the date any voluntary prepayment of this Note is made), in
immediately available funds. Any payment received by the holder hereof after
such time will be deemed to have been made on the next following business day.
As herein provided, the unpaid Principal Amount (hereafter defined) of
this Note (or portions thereof) from time to time outstanding shall bear
interest prior to maturity at a varying rate per annum equal to, at Maker's
option, (i) the Commercial Base Rate (hereafter defined), or (ii) the applicable
LIBOR Base Rate (hereafter defined) (as elected in the manner specified in this
Note), provided that in no event shall the Applicable Rate (hereafter defined)
exceed the Maximum Rate (hereafter defined). Notwithstanding the foregoing, if
at any time the Applicable Rate exceeds the Maximum Rate, the rate of interest
payable under this Note shall be limited to the Maximum Rate, but any subsequent
reductions in the Commercial Base Rate or the LIBOR Base Rate, as the case may
be, shall not reduce the Applicable Rate below the Maximum Rate until the total
amount of interest accrued on this Note equals the total amount of interest
which would have accrued at the Applicable Rate if the Applicable Rate had at
all times been in effect. Interest on this Note shall be calculated at a daily
rate equal to 1/360 of the annual percentage rate stated above, subject to the
provisions hereof specifying the maximum amount of interest which may be charged
or collected hereunder.
As used in this Note, the following terms shall have the meanings
indicated opposite them:
"Additional Costs" -- Any costs, losses or expenses incurred by Payee
which it determines are attributable to its making or maintaining the Loan
(hereafter defined), or its obligation to make any Loan advances, or any
reduction in any amount receivable by Payee under the Loan or this Note.
43
"Applicable Rate" -- The Commercial Base Rate (as to that portion of
Principal Amount bearing interest at the Commercial Base Rate) and the LIBOR
Base Rate (as to each Euro-Dollar Amount) as elected in the manner specified in
this Note.
"Assessments" -- Any impositions and assessments imposed on Payee with
respect to any Euro-Dollar Amount for insurance or other fees, assessments and
surcharges.
"Commercial Base Rate" -- The base rate announced or published from
time to time by Payee, which rate may not be the lowest rate charged by Payee;
it being understood and agreed that the Commercial Base Rate shall increase or
decrease, as the case may be, from time to time as of the effective date of each
change in such base rate, and may not correspond with future increases or
decreases in interest rates charged by other lenders or market rates in general.
"Euro-Dollar Amount" -- Each portion of the Principal Amount bearing
interest at the applicable LIBOR Base Rate pursuant to a Euro-Dollar Rate
Request. There shall be no more than three (3) portions of the Principal Amount
bearing interest at an applicable LIBOR Base Rate outstanding at any time and
each such portion shall be in an amount not less than $1,000,000.
"Euro-Dollar Business Day" -- Any day on which commercial banks are
open for domestic and international business (including dealings in U.S. Dollar
deposits) in New York City and Dallas, Texas.
"Euro-Dollar Rate Request" -- Maker's telephonic notice (to be promptly
confirmed in a written notice which must be received by Payee before such
Euro-Dollar Rate Request will be put into effect by Payee), to be received by
Payee by twelve o'clock noon (Dallas, Texas time) three (3) Euro-Dollar Business
Days prior to the Euro-Dollar Business Day specified in the Euro-Dollar Rate
Request for the commencement of the Interest Period, of (a) its intention to
have (1) all or any portion of the Principal Amount which is not then the
subject of an Interest Period (other than an Interest Period which is
terminating on such Euro-Dollar Business Day), and/or (2) all or any portion of
any advance of Loan proceeds which is to be made on such Euro-Dollar Business
Day, bear interest at the LIBOR Base Rate, and (b) the Interest Period desired
by Maker in respect of the amount specified. There shall be no more than three
(3) such requests for an election outstanding at any time.
"Euro-Dollar Rate Request Amount" -- The amount, to be specified by
Maker in each Euro-Dollar Rate Request and stated in increments of
$1,000,000.00, which Maker desires to bear interest at the LIBOR Base Rate;
provided, however, in no event shall any such amount be less than $1,000,000.00
in each instance.
"Euro-Dollar Reference Source" -- The display for Euro-Dollar rates
provided on The Bloomberg (a data service), viewed by accessing Page One (1) of
the global deposits segment of money-market rates (or such other page as may
replace Page One [1] for the purposes of displaying Euro-Dollar rates); or, at
the option of Payee the display for Euro-Dollar rates on such other service
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selected from time to time by Payee and determined by Payee to be comparable to
The Bloomberg, which other service may include Reuters Monitor Money Rates
Service.
"Event of Default" -- As defined in the Loan Agreement.
"Interest Period" -- The period during which interest at the LIBOR Base
Rate, determined as provided in this Note, shall be applicable to the applicable
Euro-Dollar Rate Request Amount; provided, however, that each such period shall
be either thirty (30), sixty (60) or ninety (90) days, which shall be measured
from the date specified by Maker in each Euro-Dollar Rate Request for the
commencement of the computation of interest at the LIBOR Base Rate, to the
numerically corresponding day in the calendar month in which such period
terminates (or, if there be no numerical correspondent in such month, or if the
date selected by Maker for such commencement is the last Euro-Dollar Business
Day of a calendar month, then the last Euro-Dollar Business Day of the calendar
month in which such period terminates, or, if the numerically corresponding day
is not a Euro-Dollar Business Day, then the next succeeding Euro-Dollar Business
Day, unless such next succeeding Euro-Dollar Business Day enters a new calendar
month, in which case such period shall end on the next preceding Euro-Dollar
Business Day); and in no event shall any such period be elected which extends
beyond the Maturity Date.
"LIBOR Base Rate" -- With respect to any Euro-Dollar Amount, the rate
per annum (expressed as a percentage) determined by Payee to be equal to the sum
of (a) the quotient of the LIBOR Rate for the applicable Euro-Dollar Amount and
the applicable Interest Period, divided by (1 minus the applicable Reserve
Requirement), rounded up to the nearest 1/100 of 1%, plus (b) the applicable
Assessments, plus (c) two and twenty-five one-hundredths percent (2.25%).
"LIBOR Rate" -- The rate determined by Payee (rounded upward, if
necessary, to the nearest 1/16 of 1%) equal to the offered rate (and not the bid
rate) for deposits in U.S. Dollars of amounts comparable to the Euro-Dollar Rate
Request Amount for the same period of time as the Interest Period selected by
Maker in the Euro-Dollar Rate Request, as set forth on the Euro-Dollar Reference
Source at approximately 10:00 a.m. (Dallas, Texas time) on the first day of the
applicable Interest Period.
"Loan" -- The $10,000,000 term loan evidenced hereby.
"Loan Agreement" -- The Loan Agreement of even date herewith between
Maker and Payee, as amended, restated, modified, restructured or supplemented
from time to time.
"Maturity Date" -- March 30, 2001, being the date this Note becomes due
and payable in its entirety, unless extended pursuant to the terms of the Loan
Agreement.
"Maximum Rate" -- At any time, the maximum non-usurious rate of
interest under applicable law that Payee may charge Maker. The Maximum Rate
shall be calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of the Loan Documents
-3-
45
(hereafter defined) that constitute interest under applicable law. Each change
in any interest rate provided for herein based upon the Maximum Rate resulting
from a change in the Maximum Rate shall take effect without notice to Maker at
the time of such change in the Maximum Rate. For purposes of determining the
Maximum Rate under Texas law, the applicable rate ceiling shall be the
applicable weekly ceiling described in, and computed in accordance with, Chapter
303 of the Texas Finance Code, as the same may be amended.
"Principal Amount" -- That portion of the Loan evidenced hereby as is
from time to time outstanding.
"Regulation D" -- Regulation D of the Board of Governors of the Federal
Reserve System, as from time to time amended or supplemented.
"Regulation" -- With respect to the charging and collecting of interest
at the LIBOR Base Rate, any United States federal, state or foreign laws,
treaties, rules or regulations whether now in effect or hereinafter enacted or
promulgated (including Regulation D) or any interpretations, directives or
requests applying to a class of depository institutions including Payee under
any United States federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof, excluding any change
the effect of which is determined by Payee to be reflected in a change in the
LIBOR Base Rate.
"Reserve Requirement" -- The average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained under Regulation D by member banks of the Federal Reserve System in
New York City with deposits exceeding one billion U.S. Dollars against
"Eurocurrency Liabilities," as such quoted term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
regulatory change against (a) any category of liabilities which includes
deposits by reference to which the LIBOR Rate is to be determined as provided
in this Note, or (b) any category of extensions of credit or other assets which
includes loans the interest rate on which is determined on the basis of rates
referred to in the definition of "LIBOR Rate" set forth above.
If Maker desires the application of the LIBOR Base Rate, it shall
submit a Euro-Dollar Rate Request to Payee. Such Euro-Dollar Rate Request shall
specify the Interest Period and the Euro-Dollar Amount and shall be irrevocable,
subject to Payee's right to convert the rate of interest payable hereunder with
respect to any Euro-Dollar Amount from the LIBOR Base Rate to the Commercial
Base Rate as hereinafter provided. In the event that Maker fails to submit a
Euro-Dollar Rate Request with respect to an existing Euro-Dollar Amount not
later than twelve o'clock noon (Dallas time) three (3) Euro-Dollar Business Days
prior to the last day of the relevant Interest Period, then the applicable
Euro-Dollar Amount shall bear interest, commencing at the end of such Interest
Period, at the Commercial Base Rate.
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46
In no event shall Maker have more than three (3) Interest Periods
involving Euro-Dollar Amounts in effect at any one time, whether or not any
portion of the Principal Amount is then bearing interest at the Commercial Base
Rate.
Any portion of the Principal Amount to which the LIBOR Base Rate is
not (or pursuant to the terms hereof cannot be) applicable shall bear interest
at the Commercial Base Rate.
Maker shall pay to Payee, promptly upon demand, such amounts as are
necessary to compensate Payee for Additional Costs resulting from any Regulation
which (i) subjects Payee to any tax, duty or other charge with respect to the
Loan or this Note, or changes the basis of taxation of any amounts payable to
Payee under the Loan or this Note (other than taxes imposed on the overall net
income of Payee or of its applicable lending office by the jurisdiction in which
Payee's principal office or such applicable lending office is located), (ii)
imposes, modifies or deems applicable any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, Payee, or (iii) imposes on Payee or on
the interbank Euro-Dollar market any other condition affecting the Loan or this
Note, or any of such extensions of credit or liabilities. Payee will notify
Maker of any event which would entitle Payee to compensation pursuant to this
paragraph as promptly as practicable after Payee obtains knowledge thereof and
determines to request such compensation.
Without limiting the effect of the immediately preceding paragraph, in
the event that, by reason of any Regulation, (i) Payee incurs Additional Costs
based on or measured by the amount of (1) a category of deposits or other
liabilities of Payee which includes deposits by reference to which the LIBOR
Rate is determined as provided in this Note and/or (2) a category of extensions
of credit or other assets of Payee which includes loans the interest on which is
determined on the basis of rates referred to in the definition of "LIBOR Rate"
set forth above, (ii) Payee becomes subject to restrictions on the amount of
such a category of liabilities or assets which it may hold, or (iii) it shall be
unlawful or impractical for Payee to make or maintain the Loan (or any portion
thereof) at the LIBOR Base Rate, then Payee's obligation to make or maintain the
Loan (or portions thereof) at the LIBOR Base Rate (and Maker's right to request
the same) shall be suspended and Payee shall give notice thereof to Maker and,
upon the giving of such notice, interest payable hereunder at the LIBOR Base
Rate shall be converted to the Commercial Base Rate, unless Payee may lawfully
continue to maintain the Loan (or any portion thereof) then bearing interest at
the LIBOR Base Rate to the end of the current Interest Period(s), at which time
the interest rate shall convert to the Commercial Base Rate. If subsequently
Payee determines that such Regulation has ceased to be in effect, Payee will so
advise Maker and Maker may convert the rate of interest payable hereunder with
respect to those portions of the Principal Amount bearing interest at the
Commercial Base Rate to the LIBOR Base Rate by submitting a Euro-Dollar Rate
Request in respect thereof and otherwise complying with the provisions of this
Note with respect thereto.
Determinations by Payee of the existence or effect of any Regulation on
its costs of making or maintaining the Loan, or portions thereof, at the LIBOR
Base Rate, or on amounts receivable by it in respect thereof, and of the
additional amounts required to compensate Payee with respect to
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47
Additional Costs and/or Assessments, shall be conclusive; provided, however,
that such determinations are made without manifest error.
Anything herein to the contrary notwithstanding, if, at the time of or
prior to the determination of the LIBOR Base Rate in respect of any Euro-Dollar
Rate Request Amount as herein provided, Payee determines (which determination
shall be conclusive absent manifest error) that (i) by reason of circumstances
affecting the interbank Euro-Dollar market generally, adequate and fair means do
not or will not exist for determining the LIBOR Base Rate applicable to an
Interest Period, or (ii) the LIBOR Rate, as determined by Payee, will not
accurately reflect the cost to Payee of making or maintaining the Loan (or any
portion thereof) at the LIBOR Base Rate, then Payee shall give Maker prompt
notice thereof, and the applicable Euro-Dollar Rate Request Amount shall bear
interest, or continue to bear interest, as the case may be, at the Commercial
Base Rate. If at any time subsequent to the giving of such notice, Payee
determines that because of a change in circumstances the LIBOR Base Rate is
again available to Maker hereunder, Payee shall so advise Maker and Maker may
convert the rate of interest payable hereunder from the Commercial Base Rate to
the LIBOR Base Rate by submitting a Euro-Dollar Rate Request to Payee and
otherwise complying with the provisions of this Note with respect thereto.
Maker shall pay to Payee, immediately upon request and notwithstanding
contrary provisions contained in the Loan Agreement or other Loan Documents,
such amounts as shall, in the conclusive judgment of Payee reasonably exercised,
compensate Payee for any loss, cost or expense incurred by it as a result of (i)
any payment or prepayment, under any circumstances whatsoever, of any portion of
the Principal Amount bearing interest at the LIBOR Base Rate on a date other
than the last day of an applicable Interest Period, (ii) the conversion, for any
reason whatsoever, of the rate of interest payable hereunder from the LIBOR Base
Rate to the Commercial Base Rate with respect to any portion of the Principal
Amount then bearing interest at the LIBOR Base Rate on a date other than the
last day of an applicable Interest Period, (iii) the failure of all or a portion
of an advance, which was to have borne interest at the LIBOR Base Rate pursuant
to a Euro-Dollar Rate Request, to be made under the Loan Agreement, or (iv) the
failure of Maker to borrow in accordance with a Euro-Dollar Rate Request
submitted by it to Payee, which amounts shall include, without limitation, lost
profits.
Maker shall have the right to prepay, in whole or in part, the
Principal Amount of this Note accruing interest at the Commercial Base Rate,
without premium or penalty upon the payment of all accrued interest on the
amount prepaid (and any interest which has accrued at the Default Rate
(hereafter defined) and other sums that may be payable hereunder); provided,
however, that any Euro-Dollar Amount may be prepaid only on the last day of the
applicable Interest Period.
All payments of principal shall be credited first against principal
amounts bearing interest at the Commercial Base Rate and then toward the payment
of Euro-Dollar Amounts. Payments of Euro-Dollar Amounts shall be applied in such
manner as Maker shall select; provided, however, that Maker shall select
Euro-Dollar Amounts to be repaid in a manner designed to minimize any losses
incurred by virtue of such payment. If Maker shall fail to select the
Euro-Dollar Amounts to which
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48
such payments are to be applied, or if an event of default has occurred and is
continuing at the time of payment, then Payee shall be entitled to apply the
payment to such Euro-Dollar Amounts in the manner it deems appropriate. Maker
shall compensate Payee for any losses incurred by virtue of any payment of those
portions of the Loan accruing interest at the LIBOR Base Rate prior to the last
day of the relevant Interest Period, which compensation shall be determined in
accordance with the provisions set forth in this Note, and any payment received
pursuant to this paragraph shall be applied first to losses incurred by Payee by
reason of such payment.
If an Event of Default shall occur under the Loan Agreement, interest
on the Principal Amount shall, at the option of Payee, immediately and without
notice to Maker, be converted to the Commercial Base Rate. The foregoing
provisions shall not be construed as a waiver by Payee of its right to pursue
any other remedies available to it under the Loan Agreement or any other
instrument evidencing, governing, guaranteeing or securing the Loan
(collectively, the "Loan Documents"), nor shall it be construed to limit in any
way the application of the Default Rate.
Maker hereby agrees that it shall be bound by any agreement extending
the time or modifying the above terms of payment, made by Payee, whether with or
without notice to Maker, and Maker shall continue liable to pay the amount due
hereunder, but with interest at a rate no greater than the LIBOR Base Rate or
the Commercial Base Rate, as the case may be, according to the terms of any such
agreement of extension or modification.
At the option of the holder hereof, the entire principal balance and
accrued interest owing hereon shall, subject to applicable laws, at once become
due and payable without notice or demand upon the occurrence at any time of any
Event of Default.
The failure to exercise the option to accelerate the maturity of this
Note upon the happening of any one or more of the Events of Default shall not
constitute a waiver of the right of the holder hereof to exercise the same or
any other option at that time or at any subsequent time with respect to such
uncured default or any other Event of Default. The remedies of the holder
hereof, as provided in this Note and in any other of the Loan Documents, shall
be cumulative and concurrent and may be pursued separately, successively or
together, as often as occasion therefor shall arise, at the sole discretion of
the holder hereof. The acceptance by the holder hereof of any payment under this
Note which is less than payment in full of all amounts due and payable at the
time of such payment shall not constitute a waiver of or impair, reduce, release
or extinguish any of the rights or remedies of the holder hereof to exercise the
foregoing option or any other option granted to the holder hereof or in any
other of the Loan Documents, at that time or at any subsequent time, or nullify
any prior exercise of any such option.
The unpaid principal of and, to the extent permitted by applicable law,
unpaid interest on this Note from time to time outstanding shall bear interest
from and after maturity at the rate (hereafter called the "Default Rate") of
five percent (5%) per annum above the Commercial Base Rate (as such rate may
change from time to time as provided above), provided that in no event shall
such interest rate be more than the Maximum Rate. Notwithstanding anything to
the contrary contained in this
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49
Note, at the option of the holder hereof and upon notice to the undersigned at
any time after the occurrence of an Event of Default, from and after such notice
and during the continuance of such Event of Default, the unpaid principal of
this Note from time to time outstanding and all past due installments of
interest shall, to the extent permitted by applicable law, bear interest at the
Default Rate (as such rate may change from time to time with each change in the
Commercial Base Rate), provided that in no event shall such interest rate be
more than the Maximum Rate.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, guarantor, surety or otherwise, severally
waive demand, presentment, notice of dishonor, notice of intention to accelerate
the indebtedness evidenced hereby, notice of the acceleration of the maturity
hereof, diligence in collecting, grace, notice and protest, and consent to all
extensions which from time to time may be granted by the holder hereof and to
all partial payments hereon, whether before or after maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after maturity, the undersigned agrees to pay all costs
of collection, including but not limited to reasonable attorneys' fees and
expenses, incurred by the holder hereof.
This Note is executed pursuant to the Loan Agreement, which Loan
Agreement contains provisions for acceleration of the maturity hereof upon the
happening of certain events, and all advances made hereunder shall be made
pursuant to the Loan Agreement. This Note is secured by the Pledged Stock (as
defined in the Loan Agreement). The proceeds of this Note are to be used for
business, commercial, investment or other similar purposes and no portion
thereof will be used for personal, family or household use.
All agreements between the undersigned and the holder hereof, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged,
received, paid or agreed to be paid to the holder hereof exceed the Maximum
Rate. If from any circumstance the holder hereof shall ever receive anything of
value deemed interest by applicable law in excess of the Maximum Rate, an amount
equal to any excessive interest shall be applied to the reduction of the
principal hereof and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal hereof, such excess shall be
refunded to the undersigned. All interest paid or agreed to be paid to the
holder hereof shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full period until payment in full
of the principal so that the interest hereon for such full period shall not
exceed the Maximum Rate. This paragraph shall control all agreements between the
undersigned and the holder hereof.
The undersigned acknowledges and agrees that the holder hereof may,
from time to time, sell or offer to sell interests in the Loan to one or more
participants. The undersigned authorizes the holder hereof to disseminate any
information it has pertaining to the Loan, including, without
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50
limitation, complete and current credit information on the undersigned, any of
its principals and any guarantor of this Note, to any such participant or
prospective participant.
EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND WHICH PREEMPTS STATE USURY
LAWS), THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
STATE.
SERVICE ASSET INVESTMENTS, INC.,
a Texas corporation
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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51
EXHIBIT C
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT ("Pledge Agreement"), dated as of March
30,2000, is made by and between Service Asset Investments, Inc., a Texas
corporation ("Pledgor"), and Guaranty Federal Bank, F.S.B., a federal savings
bank ("Pledgee").
WITNESSETH:
WHEREAS, Pledgor and Pledgee have entered into a Loan Agreement of even
date herewith (such agreement, together with all amendments, restatements,
modifications and supplements thereto, being hereinafter referred to as the
"Loan Agreement"); and
WHEREAS, pursuant to the terms of the Loan Agreement, Pledgor has
executed and delivered Notes; and
WHEREAS, to induce Pledgee to make the term loans to Pledgor evidenced
by Notes, Pledgor has agreed to grant a security interest in and pledge the
Collateral (as hereinafter defined) to Pledgee as security for the payment of
the Notes and the Obligations; and
WHEREAS, capitalized terms used herein shall have the meanings assigned
to them in the Loan Agreement.
NOW, THEREFORE, to induce Pledgee to enter into the Loan Agreement and
for good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows, intending to be
legally bound:
1. Grant of Security Interest and Pledge.
(a) As security for the payment and performance of the Notes
and the Obligations, including, without limitation, the due and
punctual payment of the principal of, and accrued and unpaid interest
on, the Notes, whether at maturity, by acceleration or otherwise, and
all renewals, extensions, rearrangements, amendments, modifications and
increases thereof, Pledgor hereby pledges and grants to Pledgee a first
priority security interest in and to, and assigns and transfers to
Pledgee, (i) all of the capital stock of (w) Service Asset Management
Co., a North Carolina corporation; (x) Xxx, Xxxxxxx, Xxxxxxxxx & Xxxxx,
an Arizona corporation; (y) IBI, Inc., a Texas corporation; and (z)
Worldwide Settlements, Ltd., a United Kingdom Company. As evidenced on
the date hereof by the certificates described on Schedule 1 attached
hereto; (ii) all proceeds and products of the stock described in item
(i) above; and (iii) all income, stock dividends and other
distributions from items (i) and (ii) above (such shares, proceeds,
products, income, stock dividends and distributions being referred to
collectively as the "Collateral"). The Collateral shall be held by
Pledgee, but shall continue to be registered in the name of the Pledgor
unless and until the occurrence of an Event of Default.
52
(b) Pledgor hereby designates and appoints Pledgee as its
attorney-in-fact and proxy, with full power of substitution, which
designation and appointment is irrevocable and coupled with an
interest, exercisable upon the occurrence of an Event of Default for
the purpose of voting the Collateral and performing any and all acts,
in the name, place and stead of Pledgor, that are authorized by the
provisions of this Pledge Agreement. Accordingly, Pledgor irrevocably
constitutes and appoints Pledgee as Pledgor's proxy and
attorney-in-fact, effective only after notice to Pledgor after an Event
of Default has occurred and so long as it is continuing, but with full
power of substitution, to vote, and to act with respect to, the
Collateral, standing in the name of Pledgor or with respect to which
Pledgor is entitled to vote and act.
(c) Concurrently with, or within two Business Days after, the
execution and delivery of this Pledge Agreement, Pledgor shall deliver
to Pledgee all certificates identified in Schedule 1 accompanied by
undated stock powers duly executed in blank.
2. Voting.
During the term of this Pledge Agreement and for so long as no Event of
Default shall have occurred, Pledgor shall have the sole and absolute right to
vote the Collateral. After an Event of Default has occurred and so long as it is
continuing, the right to vote the Collateral is vested exclusively in Pledgee.
Such proxy is coupled with an interest, is irrevocable, and continues until the
Obligations are fully paid and performed.
3. Cash Dividends and Distributions.
During the term of this Pledge Agreement and for so long as no Event of
Default shall have occurred, cash dividends and cash distribution payments may
be paid to Pledgor. All non-cash dividends and other non-cash distributions
shall be immediately delivered to Pledgee (together with appropriate stock
powers signed by Pledgor).
4. Transfer, Dividends, Etc. After Default.
If an Event of Default shall have occurred, then upon written notice to
Pledgor, Pledgee may take any of the following actions:
(a) Pledgee may, in its absolute discretion, cause all or any
of the Collateral then held by it under this Pledge Agreement to be
transferred into the name of Pledgee, or the name or names of the
nominee or nominees of Pledgee;
(b) Pledgee may receive, and Pledgor upon request shall assign
to the order of Pledgee, all dividends, interest or principal and
payments or other distributions in respect of the Collateral, all of
which shall thereafter be held by Pledgee as part of the Collateral or
shall be applied to the Notes and the Obligations in such manner and
order as Pledgee determines in its absolute discretion;
-2-
53
(c) Pledgee, as Pledgor's attorney-in-fact and proxy, shall
have and may exercise on behalf of Pledgor all rights of an owner in
respect of any of the Collateral hereunder or may, in any respect not
contrary to the provisions of this Pledge Agreement, permit such rights
to be exercised by Pledgor; and, without limiting the generality of the
foregoing, in its discretion:
(i) Pledgee may join in and become a party to any
plan of reorganization and readjustment, whether voluntary or
involuntary, may deposit any of the Collateral under such plan
or make any exchange or surrender or permit any substitution
of or cancellation of the Collateral as required by such plan
and may take all such action as may be required by such plan;
provided, however, that all securities issued or created under
such plan and exchanged for the Collateral or any portion
thereof, and all securities, monies or property received
pursuant to such plan shall thereafter be subject to the terms
of this Pledge Agreement and become part of the Collateral or
shall be applied to the Notes and Obligations in such manner
and order as Pledgee determines in its absolute discretion;
and
(ii) Pledgee may receive, endorse and collect all
checks, whether or not made payable to the order of Pledgor,
representing any dividend, interest or principal payments or
other distributions at any time paid or made on or with
respect to the Collateral all of which shall be held by
Pledgee pursuant to the terms of this Pledge Agreement as part
of the Collateral or shall be applied to the Notes and
Obligations in such manner and order as Pledgee determines in
its absolute discretion.
5. Representations and Warranties of Pledgor. Pledgor represents and
warrants to Pledgee as follows:
(a) Financing Statements. Except for financing statements in
favor of Pledgee, no financing statement covering the Collateral or any
portion thereof, or any proceeds thereof, is on file in any public
office.
(b) Ownership Free of Encumbrances. All shares of capital
stock that are Collateral are duly issued, fully paid and
non-assessable, and except for the security interest granted hereby to
Pledgee, Pledgor now owns the Collateral free from any lien, security
interest, claim or encumbrance.
(c) Benefit. Pledgor will benefit, directly or indirectly,
from the loans to Pledgor evidenced by the Notes.
(d) All Outstanding Stock; No Warrants; Etc. The 1,000 shares
of common stock of Service Asset Management Company pledged hereunder
represent all of the outstanding capital stock of Service Asset
Management Co. The 100 shares of common stock of Xxx, Xxxxxxx,
Xxxxxxxxx & Xxxxx pledged hereunder represent all of the outstanding
capital stock of Xxx, Xxxxxxx, Xxxxxxxxx & Xxxxx. The _____ shares of
common stock of IBI, Inc. pledged hereunder represent all of the
outstanding capital stock of IBI, Inc. The ____ shares of stock of
Worldwide Settlements, Ltd. pledged hereunder represent all of the
outstanding
-3-
54
capital stock of Worldwide Settlements, Ltd. There are no warrants,
options or other rights to acquire capital stock of Service Asset
Management Co., Xxx Xxxxxxx, Xxxxxxxxx & Xxxxx, IBI, Inc. and Worldwide
Settlements, Ltd. outstanding.
(e) Organization and Authority. Pledgor is a corporation duly
organized, validly existing, and in good standing under the laws of its
state of incorporation. Pledgor has the corporate power and authority
to execute, deliver, and perform this Agreement, and the execution,
delivery, and performance of this Agreement by Pledgor have been duly
authorized by all necessary corporate action on the part of Pledgor and
do not and will not violate or conflict with the articles of
incorporation or bylaws of Pledgor or any law, rule, or regulation or
any order, writ, injunction, or decree of any court, governmental
authority, or arbitrator and do not and will not conflict with, result
in a breach of, or constitute a default under the provisions of any
indenture, mortgage, deed of trust, security agreement, or other
instrument or agreement binding on Pledgor or any of its property.
6. Covenants.
(a) Encumbrances. Pledgor shall not create, permit, or suffer
to exist, and shall defend the Collateral against, any Lien, security
interest, or other encumbrance on the Collateral except the pledge and
security interest of Pledgee hereunder, and shall defend Pledgor's
rights in the Collateral and Pledgee's security interest in the
Collateral against the claims of all Persons.
(b) Sale of Collateral. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the
prior written consent of Pledgee.
(c) Distributions. If Pledgor shall become entitled to receive
or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase, or reduction of capital
or issued in connection with any reorganization), option or rights,
whether as an addition to, in substitution of, or in exchange for any
Collateral or otherwise, Pledgor agrees to accept the same as Pledgee's
agent and to hold the same in trust for Pledgee, and to deliver the
same forthwith to Pledgee in the exact form received, with the
appropriate endorsement of Pledgor when necessary and/or appropriate
undated stock powers duly executed in blank, to be held by Pledgee as
additional Collateral for the Obligations, subject to the terms hereof.
Any sums paid upon or in respect of the Collateral upon the liquidation
or dissolution of the issuer thereof shall be paid over to Pledgee to
be held by it as additional Collateral for the Obligations subject to
the terms hereof; and in case any distribution of capital shall be made
on or in respect of the Collateral or any property shall be distributed
upon or with respect to the Collateral pursuant to any recapitalization
or reclassification of the capital of the issuer thereof or pursuant to
any reorganization of the issuer thereof, the property so distributed
shall be delivered to the Pledgee to be held by it, as additional
Collateral for the Obligations, subject to the terms hereof. All sums
of money and property so paid or distributed in respect of the
Collateral that are received by Pledgor shall, until paid or delivered
to Pledgee, be held by Pledgor in trust as additional security for the
Obligations.
-4-
55
(d) Further Assurances. At any time and from time to time,
upon the request of Pledgee, and at the sole expense of Pledgor,
Pledgor shall promptly execute and deliver all such further instruments
and documents and take such further action as Pledgee may deem
necessary or desirable to preserve and perfect its security interest in
the Collateral and carry out the provisions and purposes of this
Agreement, including, without limitation, the execution and filing of
such financing statements as Pledgee may require. A carbon,
photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall
be sufficient as a financing statement and may be filed as a financing
statement. Subject to the right of Pledgor to receive cash dividends
under Section 3 hereof, in the event any Collateral is ever received by
Pledgor, Pledgor shall promptly transfer and deliver to Pledgee such
Collateral so received by Pledgor (together with any necessary
endorsements in blank or undated stock powers duly executed in blank),
which Collateral shall thereafter be held by Pledgee pursuant to the
terms of this Agreement. Pledgee shall at all times have the right to
exchange any certificates representing Collateral for certificates of
smaller or larger denominations for any purpose consistent with this
Agreement.
(e) Inspection Rights. Pledgor shall permit Pledgee and its
representatives to examine, inspect, and copy Pledgor's books and
records at any reasonable time and as often as Pledgee may reasonably
desire.
(f) Taxes. Pledgor agrees to pay or discharge prior to
delinquency all taxes, assessments, levies, and other governmental
charges imposed on it or its property, except Pledgor shall not be
required to pay or discharge any tax, assessment, levy, or other
governmental charge if (i) the amount or validity thereof is being
contested by Pledgor in good faith by appropriate proceedings
diligently pursued, (ii) such proceedings do not involve any risk of
sale, forfeiture, or loss of the Collateral or any interest therein,
and (iii) adequate reserves therefor have been established in
conformity with GAAP.
(g) Notification. Pledgor shall promptly notify Pledgee of (i)
any Lien, security interest, encumbrance, or claim made or threatened
against the Collateral, (ii) any material change in the Collateral,
including, without limitation, any material decrease in the value of
the Collateral, and (iii) the occurrence or existence of any Event of
Default or the occurrence or existence of any condition or event that,
with the giving of notice or lapse of time or both, would be an Event
of Default.
(h) Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital
stock of any issuer of Collateral, or any securities convertible into,
or exchangeable for, any such shares or any warrants, options, rights,
or other commitments entitling any Person to purchase or otherwise
acquire any such shares.
-5-
56
7. Rights of Pledgee Upon Event of Default.
Upon the occurrence of an Event of Default, Pledgee may, at its option,
but subject to the provisions of this Section 7, have and exercise all rights of
a secured party under the Texas Business and Commerce Code, including, without
limitation, the following specific rights:
(a) to take and assume immediate possession of the Collateral
without further notice to Pledgor or prior resort to legal process;
(b) to sell or otherwise dispose of all or any portion of the
Collateral judicially or at public or private sale or any combination
thereof, and to bid and become a purchaser at any public (including
judicial) sale;
(c) written notice shall be given to Pledgor as provided for
in Section 13 hereof 10 days prior to the date of any public sale of
all or any portion of the Collateral, or 10 days prior to the date
after which a private sale of all or any portion of Collateral will be
made, and Pledgor agrees that such notice shall constitute reasonable
commercial notice of such public or private sale;
(d) to apply the proceeds of disposition of the Collateral in
satisfaction of the Notes and the Obligations; and
(e) to apply any cash or other proceeds received by Pledgee
pursuant to Section 4(c)(ii) hereof in full or partial satisfaction of
the Notes and the Obligations.
Pledgee, pursuant to paragraph (b) of Section 1 of this Pledge
Agreement, may make and execute all conveyances, assignments and transfers of
the Collateral sold pursuant to this Section 7 that Pledgee shall reasonably
deem advisable, and the Pledgor hereby ratifies and confirms all that Pledgee,
as Pledgor's attorney-in-fact, shall reasonably do by virtue thereof.
Nevertheless, Pledgor shall, if so requested by Pledgee, ratify and confirm any
sale or sales by executing and delivering or causing to be executed and
delivered to Pledgee or to such purchaser or purchasers all such instruments as
may, in the sole judgment of Pledgee, be advisable for the purpose.
The receipt of Pledgee for the purchase money paid at any such sale
made by it shall be sufficient discharge therefor to any purchaser of any of the
Collateral, or any portion thereof, sold as aforesaid; and no such purchaser (or
his, her or its representatives or assigns), after paying such purchase money
and receiving such receipt, shall be bound to see to the application of such
purchase money or any part thereof or in any manner whatsoever be answerable for
any loss, misapplication or non-application of any such purchase money, or any
part thereof, or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
8. No Waiver.
No failure on the part of the Pledgee to exercise, and no delay on the
part of Pledgee in exercising, any right, power or remedy hereunder shall
operate as a waiver hereof, nor shall any single or partial exercise by Pledgee
of any right, power or remedy hereunder serve to in any way limit Pledgee in the
further exercise of all or any portion of its rights, powers and remedies
-6-
57
hereunder. The remedies herein provided are cumulative and are not exclusive of
any remedies provided by law.
9. Termination of Pledge.
When the Notes and Obligations (and all renewals, extensions,
modifications and increases thereof) have been fully and indefeasibly paid and
performed and all commitments to lend under the Loan Agreement have terminated,
this Pledge Agreement shall terminate and be of no further force or effect. Upon
termination of this Pledge Agreement, Pledgee hereby covenants and agrees to
forthwith assign, transfer and deliver the Collateral, or to cause such
Collateral to be assigned, transferred and delivered, to Pledgor or its
designees.
10. Governing Law, Severability.
This Pledge Agreement shall in all respects be construed and
interpreted in accordance with and governed by the laws of the State of Texas.
Any provisions of this Pledge Agreement which are found to be invalid shall be
severable and shall not invalidate the remainder of this Pledge Agreement.
11. Successors and Assigns.
This Pledge Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of Pledgor and Pledgee and each subsequent
holder of the Notes and the Obligations; provided, however, Pledgor may not
assign any of its rights or obligations under this Pledge Agreement.
12. Additional Instruments and Assurances.
Pledgor hereby agrees, at its own expense, to execute and deliver or
cause to be executed and delivered, from time to time, any and all other
instruments and to perform such other acts as Pledgee may reasonably request to
effect the purpose of this Pledge Agreement. Pledgor agrees to pay all transfer
taxes, if any, that may be payable or determined to be payable in connection
with any transfer of all or any portion of the Collateral pursuant to the terms
hereof.
13. Notices.
All notices, demands and other communications required or permitted to
be given shall be in writing and must be personally delivered or mailed by
prepaid certified or registered mail to the party to whom such notice or
communication is directed at the address of such party shown on the signature
page hereof. Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is personally delivered
as aforesaid or, if mailed, on the second business day it is mailed as
aforesaid.
-7-
58
14. Amendment.
Neither this Pledge Agreement nor any term or provision hereof may be
amended, except by an instrument in writing executed by Pledgor and Pledgee.
15. Compliance and Securities Laws.
The securities initially pledged to Pledgee hereunder have not been
registered under the Securities Act of 1933 or any other securities statute.
Pledgor agrees that, because of the Securities Act of 1933, as amended, or any
other laws or regulations, and for other reasons, there may be legal and/or
practical restrictions or limitations affecting Pledgee in any attempts to
dispose of certain portions of the Collateral and to enforce its rights,
privileges and remedies granted pursuant to this Pledge Agreement. For these
reasons, Pledgee is hereby authorized by Pledgor, but not obligated, in the
event of the occurrence of an Event of Default, to sell all or any part of the
Collateral at private sale, subject to investment letter or in any other manner
that will not require the Collateral, or any part thereof, to be registered in
accordance with the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, or any other similar law or regulation, at
the best price reasonably obtainable by Pledgee at any such private sale or
other disposition in the manner mentioned above. Pledgee is also hereby
authorized by Pledgor, but not obligated, to take such actions, give such
notices, obtain such consents, and do such other things as Pledgee reasonably
may deem to be required or appropriate in the event of sale or disposition of
any of the Collateral. Pledgor understands that Pledgee may in its discretion
approach a restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral, or any part or parts
thereof, than would otherwise be obtainable if same were either offered to a
large number of potential purchasers, or registered and sold in the open market.
Pledgor agrees (a) that in the event Pledgee shall, upon the occurrence of an
Event of Default, sell the Collateral, or any portion thereof, at such private
sale or sales, Pledgee shall have the right, but not the obligation, to obtain
or rely upon the advice and opinion of any member or firm of a national
securities exchange as to the best price reasonably obtainable upon such a
private sale thereof, and (b) that such reliance shall be conclusive evidence
that Pledgee handled such matter in a commercially reasonable manner under the
applicable provisions of the Texas Business and Commerce Code.
16. Final Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-8-
59
Executed to be effective as of the date first written above.
PLEDGOR:
SERVICE ASSET INVESTMENTS, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address: 0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
PLEDGEE:
GUARANTY FEDERAL BANK, F.S.B.
BY:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address: 0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
STOCK PLEDGE AGREEMENT
SIGNATURE PAGE
60
SCHEDULE 1
ENTITY NUMBER OF SHARES CERTIFICATE NUMBER(S)
------ ---------------- ---------------------
Service Asset Management Co. 1,000 4
Xxx, Xxxxxxx, Xxxxxxxxx & Xxxxx 100 4
IBI, Inc. -- --
Worldwide Settlements, Ltd. -- --
61
EXHIBIT D
COMPLIANCE CERTIFICATE
FOR MONTH ENDED ________, 2000 (the "Subject Period")
BANK: GUARANTY FEDERAL BANK, F.S.B. DATE: ________, 2000
BORROWER: SERVICE ASSET INVESTMENTS, INC.
--------------------------------------------------------------------------------
This certificate is delivered pursuant to Section 9.1(c) of the Loan
Agreement (as renewed, extended, or amended, the "Loan Agreement") dated as of
March 30, 2000, among Borrower and Bank. All defined terms used in this
certificate shall have the meanings ascribed to them in the Loan Agreement.
I certify to Bank that, as of the date of this certificate, (a) I am an
officer of the Borrower and that, as such, am authorized to execute this
certificate on behalf of Borrower; (b) the financial statements of Borrower
attached to this certificate were prepared in accordance with GAAP, and present
fairly the financial condition and results of operations of the Borrower as of,
and for the (month or fiscal year) ended as on, the last day of the Subject
Period; (c) a review of the activities of the Borrower during the Subject Period
has been made under my supervision with a view to determining whether, during
the Subject Period, the Borrower performed, and complied with all of its
obligations under the Loan Documents, and during the Subject Period, to my
knowledge (i) the Borrower performed, and complied with all of its obligations
under the Loan Documents (except for the deviations, if any, set forth on the
schedule annexed to this certificate) in all material respects, and (ii) no
Event of Default (nor any default) has occurred which has not been cured or
waived (except Events of Default and defaults, if any, described on the schedule
annexed to this certificate or otherwise waived in writing by Bank); and (d) to
my knowledge, the status of compliance by Borrower with the financial covenants
specified in the Loan Agreement at the end of the Subject Period (month or
fiscal quarter), is as set forth on the schedule annexed to this certificate.
SERVICE ASSET INVESTMENTS, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
62
11.3 Minimum EBITDA Requirement
(a) SAMCO EBITDA for the Subject Period $
---------
(b) Minimum EBITDA required for the Subject Period $7,500,000
(c) Borrower is in compliance with this covenant Yes No
-- --
11.4 Minimum Capital Requirements
(a) Regulatory Capital $
---------
(b) 5% of Debit Balances $
---------
(c) Debt Service $
---------
(d) Line (b) plus Line (c) $
---------
(e) Is Line (a) greater than Line (d) for the Subject Period? Yes No
-- --
(f) Borrower is in compliance with this covenant Yes No
-- --
SCHEDULE TO COMPLIANCE CERTIFICATE - Page 2
63
SCHEDULE 8.5
EXISTING LITIGATION
NONE.
64
SCHEDULE 8.9
EXISTING DEBT
FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) PAYABLE TO BANK ONE.
65
SCHEDULE 8.10
TAX INVESTIGATIONS
NONE
66
SCHEDULE 8.14
SUBSIDIARIES
OF
SERVICE ASSET INVESTMENTS, INC. (TEXAS)
(1) Service Asset Management Co. (Texas)
(2) Xxx, Xxxxxxx, Xxxxxxxxx & Xxxxx (Arizona)
(3) IBI, Inc.
(4) Worldwide Settlements, Ltd.
67
SCHEDULE 8.19
ENVIRONMENTAL MATTERS
NONE.
68
SCHEDULE 10.2
EXISTING LIENS
NO OUTSTANDING LIENS OTHER THAN THE FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000.00) BANK ONE NOTE PREVIOUSLY IDENTIFIED IN SCHEDULE 8.9 -
EXISTING DEBT.
69
SCHEDULE 10.8
Service Lloyd's Debt Repayment Schedule
70
SCHEDULE 10.8
TO COME POST-CLOSING
71
Closing Index
FIRST AMENDMENT TO
LOAN AGREEMENT
by and between
SERVICE ASSET INVESTMENTS, INC.
as borrower
and
GUARANTY FEDERAL BANK, F.S.B.
as lender
dated as of July 31, 2000
Key:
BC = Borrower's Counsel
GFB = Guaranty Federal Bank, F.S.B., lender
PWI = Xxxxxx Worldwide, Inc., Subsidiary of SAI
PWS = Xxxxxx Worldwide Settlements, Ltd., Subsidiary of PWI
SAI = Service Asset Investments, Inc., borrower
WSM = Xxxxxxxx Xxxxxxxx & Xxxxxx, counsel to GFB
Document
1. First Amendment to Loan Agreement - GFB, SAI
Exhibits:
D - Compliance Certificate
E - Term Note C
Schedules:
8.14 - Subsidiaries
2. $10,000,000 Term Note C - SAI
3. Limited Guarantees
a. Xxxxx X. Xxxxxxxx, Xx.
b. J. Xxxxx Xxxx
c. Xxxxxxx X. Xxxxx
d. Xxxxxx X. Xxxxxxxxxxx
e. Xxxxxx X. Son
4. Amended and Restated Stock Pledge Agreement - SAI, GFB
5. Xxxxxx Pledge Agreement - PWI, GFB
72
6. Stock Powers and Stock Certificates for PWI and PWS
7. UCC-3 Financing Statement: SAI
Jurisdiction:
Texas Secretary of State
8. UCC-l Financing Statement: PWI
Jurisdiction:
Delaware Secretary of State
9. Officer's Certificate of SAI
Exhibits:
A - Resolutions
10. Officer's Certificate of PWI
A - Resolutions
B - Articles of Incorporation
C - Bylaws
D - Certificates of Existence and Good Standing
73
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (this "Amendment") is dated as
of July 31, 2000 by and between SERVICE ASSET INVESTMENTS, INC., a Texas
corporation ("Borrower"), and GUARANTY FEDERAL BANK, F.S.B. ("BANK").
RECITALS:
A. Borrower and Bank have entered into that certain Loan Agreement
dated March 30, 2000 (as the same has been or may be amended, modified or
supplemented, the "Agreement"), pursuant to which Bank agreed to extend credit
to Borrower in the form of two term loans under the terms and provisions stated
therein.
B. Borrower has requested Bank to amend certain provisions of the
Agreement and to provide a new term loan in the principal amount of $10,000,000
("Term Loan C"), which Bank is willing to do pursuant to the terms and
conditions hereinafter provided.
C. Borrower and Bank now desire to amend the Agreement as herein set
forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meaning as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS TO AGREEMENT
Section 2.1 Amendments to Section 1.1.
A. Addition of Defined Terms. Effective as of the date hereof,
the following defined terms are hereby added to the Agreement:
1. "CyberCorp Distribution" means, following the sale
of CyberCorp stock owned by Borrower, the
distribution to Borrower's owners of the after-tax
net
74
proceeds from such sale, which net proceeds are
anticipated to be approximately $1,500,000.
2. "Xxxxxx" means Xxxxxx Worldwide, Inc.
3. "Xxxxxx Pledge Agreement" means the pledge
agreement to be executed by Xxxxxx, pledging the
Xxxxxx Pledged Stock, in form and substance
acceptable to Bank, and all extensions, renewals and
modifications thereof.
4. "Xxxxxx Pledged Stock" means all shares of capital
stock of Worldwide, now owned or hereafter acquired
by Xxxxxx, which shall constitute 100% of the issued
and outstanding capital stock of Worldwide.
5. "SAMCO Capital Markets" means the division of
Borrower that offers fixed income sales; trading and
underwriting, public finance and investment banking
services.
6. "Term Loan C" means the term loan from Bank to
Borrower in the principal amount of $10,000,000.
7. "Term Loan C Commitment" means the obligation of
Bank to make Term Loan C pursuant to Section 3A.1 in
an aggregate principal amount up to but not exceeding
$10,000,000.
8. "Term Loan C Maturity Date" means January 1, 2001.
9. "Term Note C" means the promissory note to be
executed by Borrower and payable to the order of
Bank, in substantially the form of Exhibit "E"
hereto, and all extensions, renewals, and
modifications thereof.
B. Modification to Definition of Pledged Stock. Effective as
of the date hereof, the definition of "Pledged Stock" is hereby amended
to read as follows:
"Pledged Stock" means all shares of capital stock of
Service Asset Management, Inc. and Xxxxxx Worldwide, Inc., now
owned or
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hereafter acquired by Borrower, which Pledged Stock shall
constitute 100% of the issued and outstanding capital stock of
such entities.
C. Modification to Definition of Term Loans. Effective as of
the date hereof, the definition of "Term Loans" is hereby amended to
read as follows:
"Term Loans" means Term Loan A, Term Loan B and Term
Loan C, collectively.
D. Modification to Definition of Worldwide. Effective as of
the date hereof, the definition of "Worldwide" is hereby amended to
read as follows:
"Worldwide" means Xxxxxx Worldwide Settlements, Ltd.
Section 2.2 Addition of Article IIIA. Effective as of the date hereof,
Article IIIA is hereby added to the Agreement as follows:
"ARTICLE IIIA
Term Loan C
Section 3A.1 Term Loan C Commitment. Subject to the terms and
conditions of this Agreement, Bank agrees to make a term loan to
Borrower in a principal amount up to but not exceeding the amount of
the Term Loan C Commitment in a single advance on or about July 31,
2000.
Section 3A.2 Term Note C. The obligation of Borrower to repay
Term Loan C shall be evidenced by Term Note C executed by Borrower,
payable to the order of Bank, in the principal amount of the Term Loan
C Commitment, and dated as of July 31, 2000.
Section 3A.3 Repayment of Advance. Borrower shall repay the
unpaid principal amount of Term Loan C on the Term Loan C Maturity
Date.
Section 3A.4 Interest. The unpaid principal amount of
borrowings under Term Loan C shall bear interest at the rates, and be
payable on the dates, as provided in Term Note C.
Section 3A.5 Use of Proceeds. The proceeds of Term Loan C
shall be used to finance the working capital requirements of SAMCO
Capital Markets.
Section 3A.6 Underwriting Fee. Borrower agrees to pay to Bank
an underwriting fee with respect to Term Loan C equal to $25,000,
payable on the
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Effective Date, which fee shall be deemed fully earned and
nonrefundable on July 31, 2000."
Section 2.3 Amendment to Section 4.3. Effective as of the date hereof,
Section 4.3 of the Agreement is hereby amended in its entirety to read as
follows:
"Section 4.3 Mandatory Prepayment. In the event of any public
offering of securities of Borrower or any of the Subsidiaries, Borrower shall
prepay the Obligations in full within three Business Days after the completion
of such offering."
Section 2.4 Addition of Section 6.1(c). Effective as of the date
hereof, Section 6.1(c) is hereby added to the Agreement as follows:
"(c) Xxxxxx shall grant to Bank a first priority security
interest in the Xxxxxx Pledged Stock pursuant to the Xxxxxx Pledge
Agreement and shall deliver the original stock certificates
representing the Xxxxxx Pledged Stock and stock transfer powers duly
executed in blank."
Section 2.5 Amendment to Article XI. Effective as of the date hereof,
Article XI is hereby deleted in its entirety and is replaced by the following:
"ARTICLE XI
Financial Covenants
Borrower covenants and agrees that, as long as the Obligations
or any part thereof are outstanding, Borrower will observe and perform
or cause SAMCO to observe and perform, as the case may be, the
following financial covenants, unless Bank shall otherwise consent in
writing:
Section 11.1 Monthly Liquidity Maintenance. Borrower shall
cause SAMCO to maintain Unencumbered Cash and Cash Equivalents having
an aggregate market value of not less than $12,000,000 as of the end of
each fiscal month.
Section 11.2 Quarterly Minimum Tangible Net Worth. Borrower
shall cause SAMCO to maintain as of the end of each fiscal month,
Tangible Net Worth in an amount not less than the sum of (a) 90% of
existing Tangible Net Worth as of the Effective Date plus (b)
$10,000,000 plus (c) 75% of the combined positive cumulative net income
of SAMCO for each fiscal quarter ending on and after June 30, 2000.
Section 11.3 Quarterly Minimum EBITDA Requirement. Borrower
shall cause SAMCO to generate EBITDA of at least $9,000,000 during each
fiscal quarter.
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Section 11.4 Monthly Minimum Capital Requirements. Borrower
shall cause SAMCO to maintain as of the end of each fiscal month,
Regulatory Capital which exceeds the sum of (a) 5% of Debit Balances
plus (b) Debt Service."
Section 2.6 Substitution of Exhibit "D". Effective as of the date
hereof, the Compliance Certificate attached as Exhibit "D" to the Agreement is
hereby deleted in its entirety and is replaced with Exhibit "D" attached hereto.
Section 2.7 Substitution of Schedule 8.14. Effective as of the date
hereof, Schedule 8.14 to the Agreement is hereby deleted in its entirety and is
replaced with Schedule 8.14 attached hereto.
ARTICLE III
CONSENTS
Section 3.1 Consent to Distribution. Notwithstanding any limitations
contained in Article X of the Agreement, Bank consents to the CyberCorp
Distribution.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions. The effectiveness of this Amendment and the
making of Term Loan C are subject to the satisfaction of the following
conditions precedent:
(a) Bank shall have received all of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to Bank:
(1) Amendment. This Amendment, duly executed by
Borrower;
(2) Term Note C. Term Note C, duly executed by
Borrower;
(3) Amended and Restated Pledge Agreement. An amended
and restated pledge agreement, in form and substance
satisfactory to Bank, duly executed by Borrower;
(4) Xxxxxx Pledge Agreement. The Xxxxxx Pledge
Agreement, in form and substance satisfactory to Bank, duly
executed by Xxxxxx;
(5) Stock Certificates and Stock Powers. Stock
certificates evidencing all of the Pledged Stock and the
Xxxxxx Pledged Stock (including without limitation the stock
of Xxxxxx and Worldwide), together with stock powers relating
thereto duly endorsed in blank;
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(6) UCC Financing Statements. UCC-l and/or UCC-3
Financing Statements executed by Borrower and Xxxxxx in form
and substance acceptable to Bank;
(7) Guarantees. The limited guarantees of Xxxxx X.
Xxxxxxxx, Xx., J. Xxxxx Xxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxxxxxxx, and Xxxxxx X. Son, guaranteeing the obligations
under Term Loan C, in form and substance acceptable to Bank;
(8) Resolutions. Resolutions of the Board of
Directors of Borrower, certified by the Secretary or an
Assistant Secretary of Borrower which authorize the execution,
delivery, and performance by Borrower of this Amendment and
the other Loan Documents to which Borrower is or is to be a
party;
(9) Incumbency Certificate. Certificates of
incumbency certified by the Secretary or an Assistant
Secretary of Borrower certifying the names of the officers of
Borrower authorized to sign this Amendment, Term Note C, and
each of the other Loan Documents to which Borrower is or is to
be a party (including the certificates contemplated herein)
together with specimen signatures of such officers;
(10) Resolutions of Xxxxxx. Resolutions of the Board
of Directors of Xxxxxx, certified by the Secretary or an
Assistant Secretary of Xxxxxx which authorize the execution,
delivery, and performance by Xxxxxx of the Xxxxxx Pledge
Agreement and all documents related thereto;
(11) Incumbency Certificate of Xxxxxx. Certificates
of incumbency certified by the Secretary or an Assistant
Secretary of Xxxxxx certifying the names of the officers of
Xxxxxx authorized to sign the Xxxxxx Pledge Agreement and all
documents related thereto to which Xxxxxx is or is to be a
party (including the certificates contemplated herein)
together with specimen signatures of such officers;
(12) Articles of Incorporation. The articles or
certificate of incorporation of Xxxxxx certified by the
Secretary of State of the state of incorporation of such
entity and dated within 20 days prior to the date hereof;
(13) Bylaws. The bylaws of Xxxxxx certified by its
President, Secretary or an Assistant Secretary;
(14) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation
of Xxxxxx as to its existence and good standing and
certificates of the appropriate governmental officials of each
state where Xxxxxx owns properties, conducts business or
employs any Persons as to the qualification and good standing
of such entity in such jurisdictions, each dated within 20
days prior to the date hereof;
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(15) June 30, 2000 Financial Report. A copy of the
unaudited consolidated financial report of SAMCO as of June
30, 2000, together with a Compliance Certificate with respect
thereto demonstrating compliance with Article 11 as in effect
as of June 30, 2000;
(16) Underwriting Fees. Payment of the underwriting
fee required pursuant to Section 3A.6 of the Agreement; and
(17) Additional Information. Such additional
documents, instruments and information as Bank or its legal
counsel, Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., may reasonably
request.
(b) The representations and warranties contained herein and in
all other Loan Documents, as amended hereby, shall be true and correct
as of the date hereof as if made on the date hereof.
(c) No Event of Default shall have occurred and be continuing
and no event or condition shall have occurred that with the giving of
notice or lapse of time or both would be an Event of Default.
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be
satisfactory to Bank and its legal counsel, Xxxxxxxx Xxxxxxxx & Xxxxxx
P.C.
ARTICLE V
MISCELLANEOUS
Section 5.1 Representations and Warranties. Borrower hereby represents
and warrants to Bank that (i) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the articles of incorporation or
bylaws of Borrower, (ii) the representations and warranties contained in the
Agreement, as amended hereby, and any other Loan Document are true and correct
on and as of the date hereof as though made on and as of the date hereof, (iii)
no Event of Default has occurred and is continuing and no event or condition has
occurred that with the giving of notice or lapse of time or both would be an
Event of Default, and (iv) Borrower is in full compliance with all covenants and
agreements contained in the Agreement as amended hereby.
Section 5.2 Ratifications. Except as expressly modified and superseded
by this Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. The representations and warranties contained herein and in all other
Loan Documents, as amended hereby, shall be true and correct as of, and as if
made on,
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the date hereof. Borrower and Bank agree that the Agreement as amended hereby
shall continue to be legal, valid, binding and enforceable in accordance with
its respective terms.
Section 5.3 Reference to the Agreement. Each of the Loan Documents,
including the Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Agreement as amended hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement as amended hereby.
Section 5.4 Expenses of Bank. As provided for in the Agreement,
Borrower agrees to pay on demand all reasonable costs and expenses incurred by
Bank in connection with the preparation, negotiation, execution of this
Amendment, and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications and supplements thereto including, without limitation,
the reasonable costs and fees of Bank's legal counsel, and all reasonable costs
and expenses incurred by Bank in connection with the enforcement or preservation
of any rights under the Agreement, as amended hereby, or any other Loan
Documents.
Section 5.5 Severability. Any provisions of this Amendment held by
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provisions so held to be invalid or unenforceable.
Section 5.6 Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Texas.
Section 5.7 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Bank and Borrower and their respective successors
and assigns.
Section 5.8 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument.
Section 5.9 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.10 NO ORAL AGREEMENTS. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED as of the day and year first above written.
BORROWER:
SERVICE ASSET INVESTMENTS, INC.
By: /s/ XXXXX X. XXXXXXXX, XX.
----------------------------------------
Name: Xxxxx X. Xxxxxxxx, Xx.
Title: President
BANK:
GUARANTY FEDERAL BANK, F.S.B.
By: /s/ XXXX XXXXXXXX
-----------------------------------------
Xxxx Xxxxxxxx
Vice President
82
EXHIBIT D
83
COMPLIANCE CERTIFICATE
FOR MONTH ENDED _________, 2000 (the "Subject Period")
BANK: GUARANTY FEDERAL BANK, F.S.B. DATE: ________, 2000
BORROWER: SERVICE ASSET INVESTMENTS, INC.
--------------------------------------------------------------------------------
This certificate is delivered pursuant to Section 9.1(c) of the Loan
Agreement (as renewed, extended, or amended, the "Loan Agreement") dated as of
March 30, 2000, and as amended as of July 31, 2000, among Borrower and Bank. All
defined terms used in this certificate shall have the meanings ascribed to them
in the Loan Agreement.
I certify to Bank that, as of the date of this certificate, (a) I am an
officer of the Borrower and that, as such, am authorized to execute this
certificate on behalf of Borrower; (b) the financial statements of Borrower
attached to this certificate were prepared in accordance with GAAP, and present
fairly the financial condition and results of operations of the Borrower as of,
and for the (month or fiscal year) ended as on, the last day of the Subject
Period; (c) a review of the activities of the Borrower during the Subject Period
has been made under my supervision with a view to determining whether, during
the Subject Period, the Borrower performed, and complied with all of its
obligations under the Loan Documents, and during the Subject Period, to my
knowledge (i) the Borrower performed, and complied with all of its obligations
under the Loan Documents (except for the deviations, if any, set forth on the
schedule annexed to this certificate) in all material respects, and (ii) no
Event of Default (nor any default) has occurred which has not been cured or
waived (except Events of Default and defaults, if any, described on the schedule
annexed to this certificate or otherwise waived in writing by Bank); and (d) to
my knowledge, the status of compliance by Borrower with the financial covenants
specified in the Loan Agreement at the end of the Subject Period (month or
fiscal quarter), is as set forth on the schedule annexed to this certificate.
SERVICE ASSET INVESTMENTS, INC.
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
84
SCHEDULE TO COMPLIANCE CERTIFICATE
(For month ended _____________, 2000)
A. Describe deviations from performance or compliance with covenants,
if any, pursuant to clause (c)(i) of attached certificate. If none, so state.
B. Describe Events of Default or defaults, if any, pursuant to clause
(c)(ii) of the attached certificate. If none, so state.
C. Reflect compliance with the financial covenants specified in the
Loan Agreement at end of Subject Period (on a consolidated basis, if applicable)
pursuant to clause (d) of the attached certificate:
11.1 Monthly Liquidity Maintenance
(a) Unencumbered Cash and Cash Equivalents of SAMCO for Subject $
Period ----------
(b) Minimum Liquidity Maintenance required for Subject Period $12,000,000
(c) Borrower is in compliance with this covenant Yes No
-- --
11.2 Quarterly Minimum Tangible Net Worth
(a) 90% of the Tangible Net Worth of SAMCO on the Effective Date $
----------
(b) $10,000,000 $
----------
(c) Line (a) plus Line (b) $
----------
(d) 75% of positive cumulative net income of SAMCO $
----------
(e) For Subject Periods on and after June 30, 2000
(i) Line (c) plus Line (d) $
----------
(ii) Is Tangible Net Worth greater than Line e(i)? Yes No
-- --
(iii) Borrower is in compliance with the covenant Yes No
-- --
SCHEDULE TO COMPLIANCE CERTIFICATE - Page 1
85
11.3 Quarterly Minimum EBITDA Requirement
(a) SAMCO EBITDA for the Subject Period $
----------
(b) Minimum EBITDA required for the Subject Period $ 9,000,000
----------
(c) Borrower is in compliance with this covenant Yes No
-- --
11.4 Monthly Minimum Capital Requirements
(a) Regulatory Capital $
----------
(b) 5% of Debt Balances $
----------
(c) Debt Service $
----------
(d) Line (b) plus Line (c) $
----------
(e) Is Line (a) greater than Line (d) for the Subject Period? Yes No
-- --
(f) Borrower is in compliance with this covenant Yes No
-- --
SCHEDULE TO COMPLIANCE CERTIFICATE - Page 2
86
EXHIBIT E
87
TERM NOTE C
$10,000,000.00 July 31, 2000
FOR VALUE RECEIVED, the undersigned (sometimes referred to herein as
"Maker"), jointly and severally if more than one, promise to pay to the order of
GUARANTY FEDERAL BANK, F.S.B. ("Payee"), a federal savings bank organized and
existing under the laws of the United States, at its principal offices at 0000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or at such other place as the holder hereof
may from time to time designate, the principal sum of TEN MILLION AND NO/100
($10,000,000.00), or so much thereof as may be advanced, with interest on the
principal balance from time to time remaining unpaid prior to default or
maturity at the rate hereinafter provided, interest only being due and payable
on the first day of each calendar month, commencing September 1, 2000, and
continuing until and including the Maturity Date (hereinafter defined) when the
unpaid principal balance of this Note, together with all accrued and unpaid
interest, shall be due and payable. The principal of this Note shall otherwise
be payable in accordance with the Loan Agreement (hereinafter defined). All
payments due under this Note shall be delivered to the holder hereof not later
than twelve o'clock noon, Dallas, Texas time, on the date such payment becomes
due and payable (or the date any voluntary prepayment of this Note is made), in
immediately available funds. Any payment received by the holder hereof after
such time will be deemed to have been made on the next following business day.
Interest on the principal balance hereof from time to time remaining
unpaid prior to default or maturity shall be payable at the Commercial Base Rate
(as hereinafter defined) plus one percent (1.00%) per annum (the "Applicable
Rate"), the Applicable Rate to be adjusted as of the effective date of any
change in the Commercial Base Rate; provided, further, that the interest payable
at each interest payment date shall not exceed the maximum amount that may be
lawfully charged. Interest payable at each payment date shall be calculated by
first determining the amount of interest on the unpaid principal balance hereof
from time to time outstanding at the Applicable Rate in effect from time to time
from the date hereof through the end of the quarter next preceding such payment
date (or, if the Note has matured, to maturity), then deducting any interest
previously paid hereon to determine the amount of interest then payable;
provided, however, that the total interest accrued through the end of such
quarter and at maturity shall not exceed the maximum amount of interest the
holder hereof may lawfully charge hereon from the date hereof to such payment
date.
In addition to terms defined elsewhere within this Note, as used in
this Note, the following terms shall have the meanings specified herein:
"Commercial Base Rate" means, at any time, the base rate announced or
published from time to time by Payee, which rate may not be the lowest rate
charged by Payee; it being understood and agreed that the Commercial Base Rate
shall increase or decrease, as the case may be, from time to time as of the
effective date of each change in such base rate, and may not correspond with
future increases or decreases in interest rates charged by other lenders or
market rates in general. If, after the date of this Note, the Commercial Base
Rate announced or published by Payee shall change, the Applicable Rate shall be
increased or decreased, as the case may be, from time to time, as of the
88
effective date of each change in the Commercial Base Rate charged by Payee,
provided that in no event shall such interest rate exceed the Maximum Rate
(hereafter defined). Notwithstanding the foregoing, if at any time the
Applicable Rate exceeds the Maximum Rate, the rate of interest payable under
this Note shall be limited to the Maximum Rate, as provided above, but any
subsequent reductions in the Commercial Base Rate shall not reduce the
Applicable Rate below the Maximum Rate until the total amount of interest
accrued on this Note equals the total amount of interest which would have
accrued at the Applicable Rate if the Applicable Rate had at all times been in
effect. Interest on this Note shall be calculated at a daily rate equal to 1/360
of the annual percentage rate stated above, subject to the provisions hereof
specifying the maximum amount of interest which may be charged or collected
hereunder.
"Event of Default" shall have the meaning set forth within the Loan
Agreement.
"Loan Agreement" shall mean the Loan Agreement dated March 30, 2000, as
amended of even date herewith, between Maker and Payee, as amended, restated,
modified, restructured, or supplemented from time to time.
"Maturity Date" shall mean January 1, 2001, being the date this Note
becomes due and payable in its entirety, unless extended pursuant to the terms
of the Loan Agreement.
"Maximum Rate" shall mean, at any time, the maximum non-usurious rate of
interest under applicable law that Payee may charge Maker. The Maximum Rate
shall be calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of the Loan Documents (as defined in the
Loan Agreement) that constitute interest under applicable law. Each change in
any interest rate provided for herein based upon the Maximum Rate resulting from
a change in the Maximum Rate shall take effect without notice to Maker at the
time of such change in the Maximum Rate. For purposes of determining the Maximum
Rate under Texas law, the applicable rate ceiling shall be the applicable weekly
ceiling described in, and computed in accordance with, Chapter 303 of the Texas
Finance Code, as the same may be amended.
At the option of the holder hereof, the entire principal balance and
accrued interest owing hereon shall at once become due and payable without
notice or demand upon the occurrence at any time of any Event of Default.
The failure to exercise the option to accelerate the maturity of this
Note upon the happening of any one or more of the Events of Default shall not
constitute a waiver of the right of the holder hereof to exercise the same or
any other option at that time or at any subsequent time with respect to such
Event of Default. The remedies of the holder hereof, as provided in this Note
and in any other of the Loan Documents, shall be cumulative and concurrent and
may be pursued separately, successively or together, as often as occasion
therefor shall arise, at the sole discretion of the holder hereof. The
acceptance by the holder hereof of any payment under this Note which is less
than payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of or impair, reduce, release or extinguish any of
the rights or remedies of the holder to exercise the foregoing option or any
other option granted to the holder in this Note and in any other
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89
of the Loan Documents, at that time or at any subsequent time, or nullify any
prior exercise of any such option.
The unpaid principal of and, to the extent permitted by applicable law,
unpaid interest on this Note from time to time outstanding shall bear interest
from and after maturity at the rate (hereinafter called the "Default Rate") of
five percent (5%) per annum above the Applicable Rate (as such rate may change
from time to time as provided above), provided that in no event shall such
interest rate be more than the Maximum Rate. Notwithstanding anything to the
contrary contained in this Note, at the option of the holder hereof, and upon
notice to the undersigned at any time after the occurrence of an Event of
Default, from and after such notice and during the continuance of such Event of
Default, the unpaid principal of this Note from time to time outstanding and all
past due installments of interest shall, to the extent permitted by applicable
law, bear interest at the Default Rate (as such rate may change from time to
time with each change in the Applicable Rate), provided that in no event shall
such interest rate be more than the Maximum Rate.
During the existence of any Event of Default, the holder hereof may
apply any payments received hereunder or under any other of the Loan Documents
in such amount, order and manner as provided in the Loan Agreement.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, guarantor, surety or otherwise, severally
waive demand, presentment, notice of dishonor, notice of intention to accelerate
the indebtedness evidenced hereby, diligence in collecting, grace, notice and
protest, and consent to all extensions which from time to time may be granted by
the holder hereof and to all partial payments hereon, whether before or after
maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after maturity, the undersigned agrees to pay all
costs of collection, including but not limited to reasonable attorneys' fees and
expenses, incurred by the holder hereof.
This Note is executed pursuant to the Loan Agreement, which Loan
Agreement contains provisions for acceleration of the maturity hereof upon the
happening of certain events, and all advances made hereunder shall be made
pursuant to such Loan Agreement. This Note is secured by the Pledged Stock (as
defined in the Loan Agreement). The proceeds of this Note are to be used for
business, commercial, investment or other similar purposes and no portion
thereof will be used for personal, family or household use.
All agreements between the undersigned and the holder of this Note,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of acceleration of
the maturity hereof or otherwise, shall the interest contracted for, charged,
received, paid or agreed to be paid to the holder hereof exceed the Maximum
Rate. If, from any circumstance whatsoever, interest would otherwise be payable
to the holder hereof in excess of the maximum lawful amount, the interest
payable to the holder hereof shall be reduced to the maximum amount permitted
under applicable law; and if from any circumstance the holder hereof shall ever
receive anything of value deemed interest by applicable law in excess of the
Maximum
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90
Rate, an amount equal to any excessive interest shall be applied to the
reduction of the principal hereof and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal hereof, such excess
shall be refunded to the undersigned. All interest paid or agreed to be paid to
the holder hereof shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full period until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the Maximum Amount. This paragraph shall control all
agreements between the undersigned and the holder hereof.
The undersigned acknowledges and agrees that the holder of this Note
may, from time to time, sell or offer to sell interests in the loan evidenced by
this Note to one or more participants. The undersigned authorizes the holder of
this Note to disseminate any information it has pertaining to the loan evidenced
by this Note, including, without limitation, complete and current credit
information on the undersigned, any of its principals and any guarantor of this
Note, to any such participant or prospective participant.
This Note may be prepaid in whole or in part, at any time, without
premium or penalty.
EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND PREEMPTS STATE USURY LAWS),
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
[The balance of this page is intentionally left blank.]
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SERVICE ASSET INVESTMENTS, INC.,
a Texas corporation
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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92
SCHEDULE 8.14
SUBSIDIARIES
OF
SERVICE ASSET INVESTMENTS, INC. (TEXAS)
(1) Service Asset Management Co. (North Carolina)
(2) Xxx, Xxxxxxx, Xxxxxxxxx & Xxxxx (Arizona)
(3) SAMCO Financial Advisors, Inc. (Texas)
(4) Xxxxxx Worldwide, Inc. (Delaware)
(5) Xxxxxx Worldwide Settlements, Ltd. (UK) (Subsidiary of Xxxxxx
Worldwide, Inc.)
(6) IBI, Inc. (Texas)
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FIRST AMENDMENT TO AMENDED AND RESTATED
STOCK PLEDGE AGREEMENT
This First Amendment to Amended and Restated Stock Pledge Agreement
(this "Amendment") is dated as of September 12, 2000 by and between SERVICE
ASSET INVESTMENTS, INC., a Texas corporation ("Borrower"), and GUARANTY FEDERAL
BANK, F.S.B. ("Bank").
RECITALS:
A. Borrower and Bank have entered into that certain Loan Agreement
dated March 30, 2000 (as the same has been or may be amended, modified or
supplemented, the "Agreement"), pursuant to which Bank agreed to extend credit
to Borrower in the form of two term loans under the terms and provisions stated
therein.
B. The Agreement was amended by that certain First Amendment to Loan
Agreement dated as of July 31, 2000 in order to, among other things, provide a
new term loan in the principal amount of $10,000,000.
C. In connection with the Agreement, as amended, Borrower executed that
certain Amended and Restated Stock Pledge Agreement dated as of July 31,2000
(the "Pledge Agreement"), pursuant to which Borrower pledged and granted to Bank
a security interest in all of the capital stock of Service Asset Management
Company and Xxxxxx Worldwide, Inc., and all proceeds and products thereof.
D. Borrower and Bank now desire to amend the Pledge Agreement as herein
set forth in order to clarify the assets pledged to Bank.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meaning as in the
Agreement, as amended hereby.
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ARTICLE II
AMENDMENTS TO PLEDGE AGREEMENT
Section 2.1 Amendments to Section 1.
A. Addition of Defined Terms. Effective as of the date
hereof, the following sentence is hereby added to the end of Section
1(a) of the Pledge Agreement:
The security interest granted hereby specifically excludes
any security interest in the assets of Service Asset
Management Company described on Schedule 2 attached hereto.
B. Modification to Name of Xxxxxx Worldwide, Inc. Effective as
of the date hereof, all references within the Pledge Agreement to
Xxxxxx Worldwide, Inc. are hereby amended to Xxxxxx Holdings, Inc.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions. The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent:
(a) Bank shall have received all of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to Bank:
(1) Amendment. This Amendment, duly executed by Borrower;
(2) Additional Information. Such additional documents,
instruments and information as Bank or its legal counsel,
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., may reasonably request.
(b) The representations and warranties contained herein and in
all other Loan Documents, as amended hereby, shall be true and correct
as of the date hereof as if made on the date hereof.
(c) No Event of Default shall have occurred and be continuing
and no event or condition shall have occurred that with the giving of
notice or lapse of time or both would be an Event of Default.
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments, and other legal matters
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incident thereto shall be satisfactory to Bank and its legal counsel,
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Delivery of Stock Certificate. Borrower hereby agrees that
within 30 days of the date hereof, Borrower will issue a replacement stock
certificate and all other necessary documentation evidencing the change of the
name of Xxxxxx Worldwide, Inc. to Xxxxxx Holdings, Inc. and will deliver such
stock certificate, along with all other documentation required by Bank,
including, without limitation, executed stock powers, to Bank.
Section 4.2 Representations and Warranties. Borrower hereby represents
and warrants to Bank that (i) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the articles of incorporation or
bylaws of Borrower, (ii) the representations and warranties contained in the
Agreement and the Pledge Agreement, as amended hereby, and any other Loan
Document are true and correct on and as of the date hereof as though made on and
as of the date hereof, (iii) no Event of Default has occurred and is continuing
and no event or condition has occurred that with the giving of notice or lapse
of time or both would be an Event of Default, and (iv) Borrower is in full
compliance with all covenants and agreements contained in the Agreement and the
Pledge Agreement as amended hereby.
Section 4.3 Ratifications. Except as expressly modified and superseded
by this Amendment, the terms and provisions of the Agreement, the Pledge
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. The representations and warranties contained
herein and in all other Loan Documents, as amended hereby, shall be true and
correct as of, and as if made on, the date hereof. Borrower and Bank agree that
the Agreement and the Pledge Agreement as amended hereby shall continue to be
legal, valid, binding and enforceable in accordance with their respective terms.
Section 4.4 Reference to the Agreement. Each of the Loan Documents,
including the Agreement and the Pledge Agreement and any and all other
agreements, documents or instruments now or hereafter executed and delivered
pursuant to the terms hereof or pursuant to the terms of the Agreement or the
Pledge Agreement as amended hereby, are hereby amended so that any reference in
such Loan Documents to the Pledge Agreement shall mean a reference to the Pledge
Agreement as amended hereby.
Section 4.5 Expenses of Bank. As provided for in the Agreement,
Borrower agrees to pay on demand all reasonable costs and expenses incurred by
Bank in connection with the preparation, negotiation, execution of this
Amendment, and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications and supplements thereto including, without limitation,
the reasonable costs and fees of Bank's legal counsel, and all reasonable costs
and expenses incurred
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by Bank in connection with the enforcement or preservation of any rights under
the Agreement, as amended hereby, or any other Loan Documents.
Section 4.6 Severability. Any provisions of this Amendment held by
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provisions so held to be invalid or unenforceable.
Section 4.7 Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Texas.
Section 4.8 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Bank and Borrower and their respective successors
and assigns.
Section 4.9 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument.
Section 4.10 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 4.11 NO ORAL AGREEMENTS. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED as of the day and year first above written.
BORROWER:
SERVICE ASSET INVESTMENTS, INC.
By: /s/ XXXXX X. XXXXXXXX XX.
-----------------------------
Name: Xxxxx X. Xxxxxxxx Xx.
------------------------
Title: President
-----------------------
BANK:
GUARANTY FEDERAL BANK. F.S.B.
By: /s/ XXXX XXXXXXXX
-----------------------------
Xxxx Xxxxxxxx
Vice President
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SCHEDULE 2
Cash $ 835,102.00
Furniture and Equipment see attached
Securities Inventory see attached
