LOAN AGREEMENT
between
NORWEST BANK TEXAS, N.A.
("Bank")
and
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
("Borrower")
$16,000,000.00 TERM LOAN
September 30, 1998
TABLE OF CONTENTS
ARTICLE ONE
DEFINITION OF TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE TWO
COMMITMENT TO LEND, TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1. Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2. Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.5. Order of Application. . . . . . . . . . . . . . . . . . . . 5
ARTICLE THREE
COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1. Security Interests. . . . . . . . . . . . . . . . . . . . . 5
ARTICLE FOUR
CONDITIONS PRECEDENT TO LENDING. . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.1. Delivery of Items . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.1. Corporate Existence . . . . . . . . . . . . . . . . . . . . 6
Section 5.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.3. Collateral. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.4. Compliance with Laws and Documents. . . . . . . . . . . . . 6
Section 5.5. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.6. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.8. Financial Statements. . . . . . . . . . . . . . . . . . . . 7
Section 5.9. Margin Stock. . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE SIX
CERTAIN AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1. Material Adverse Effect . . . . . . . . . . . . . . . . . . 7
Section 6.2. Expenses of Bank. . . . . . . . . . . . . . . . . . . . . . 7
Section 6.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.4. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.8. Annual Financial Statements . . . . . . . . . . . . . . . . 8
Section 6.9. Stock Value Certificate . . . . . . . . . . . . . . . . . . 8
Section 6.10. Compliance with Applicable Laws. . . . . . . . . . . . . . 8
Section 6.11. Notice of Event of Default and Suits . . . . . . . . . . . 8
Section 6.12. Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . 8
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ARTICLE SEVEN
CERTAIN NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7.1. Merger or Sale of Assets. . . . . . . . . . . . . . . . . . 9
Section 7.2. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7.3. Continuation of Business. . . . . . . . . . . . . . . . . . 9
Section 7.4. Stock Value; Required Percentage. . . . . . . . . . . . . . 9
ARTICLE EIGHT
DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8.1. Payment of Obligation . . . . . . . . . . . . . . . . . . . 9
Section 8.2. Certain Negative Covenants. . . . . . . . . . . . . . . . .10
Section 8.3. Other Covenants . . . . . . . . . . . . . . . . . . . . . .10
Section 8.4. Voluntary Debtor Relief . . . . . . . . . . . . . . . . . .10
Section 8.5. Involuntary Proceedings . . . . . . . . . . . . . . . . . .10
Section 8.6. Other Obligations . . . . . . . . . . . . . . . . . . . . .10
Section 8.7. Dissolution of Borrower . . . . . . . . . . . . . . . . . .10
Section 8.8. Misrepresentation . . . . . . . . . . . . . . . . . . . . .10
ARTICLE NINE
CERTAIN RIGHTS OF BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 9.1. Rights Upon Default . . . . . . . . . . . . . . . . . . . .11
Section 9.2. Performance by Bank . . . . . . . . . . . . . . . . . . . .11
Section 9.3. Diminution in Collateral Value. . . . . . . . . . . . . . .11
Section 9.4. Bank Not in Control . . . . . . . . . . . . . . . . . . . .11
Section 9.5. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 9.6. Cumulative Rights . . . . . . . . . . . . . . . . . . . . .12
Section 9.7. Indemnification of Bank . . . . . . . . . . . . . . . . . .12
Section 9.8. Application of Proceeds . . . . . . . . . . . . . . . . . .12
Section 9.9. Expenditures by Bank. . . . . . . . . . . . . . . . . . . .12
ARTICLE TEN
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 10.1. Headings . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 10.2. Articles, Sections, and Exhibits . . . . . . . . . . . . .12
Section 10.3. Number and Gender of Words . . . . . . . . . . . . . . . .12
Section 10.4. Accounting Terms . . . . . . . . . . . . . . . . . . . . .12
Section 10.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .13
Section 10.6. Form and Number of Documents . . . . . . . . . . . . . . .13
Section 10.7. Survival . . . . . . . . . . . . . . . . . . . . . . . . .13
Section 10.8. Governing Law; Place of Performance. . . . . . . . . . . .13
Section 10.9. Maximum Rate . . . . . . . . . . . . . . . . . . . . . . .13
Section 10.10. Invalid Provisions. . . . . . . . . . . . . . . . . . . .14
Section 10.11. Entirety and Amendments . . . . . . . . . . . . . . . . .14
Section 10.12. Multiple Counterparts . . . . . . . . . . . . . . . . . .14
Section 10.13. Parties Bound . . . . . . . . . . . . . . . . . . . . . .14
Section 10.14. Arbitration . . . . . . . . . . . . . . . . . . . . . . .14
Section 10.15. STATUTE OF FRAUDS NOTICE. . . . . . . . . . . . . . . . .15
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LIST OF EXHIBITS
Exhibit "A" - Existing Litigation
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LOAN AGREEMENT
This Loan Agreement (this "AGREEMENT") is made and entered into as of
September 30, 1998, by and among NORWEST BANK TEXAS, N.A. ("BANK") and
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC. ("BORROWER").
RECITALS:
Subject to the terms and conditions of this Agreement, Bank has agreed to
lend to Borrower the amounts herein described.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby covenant and agree as follows:
ARTICLE ONE
DEFINITION OF TERMS
SECTION 1.01. DEFINITIONS. For the purposes of this Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings assigned to them in this ARTICLE ONE or in the Section or recital
referred to below:
"ADVANCE" means any disbursement of an amount or amounts to be loaned by
Bank to Borrower hereunder.
"AFFILIATE" means any Person who (a) controls, is controlled by, or is
under common control with Borrower or (b) owns any legal or beneficial interest
in Borrower, is a director or officer of Borrower, or is a relative of any of
the Persons described in this clause (b).
"APPROVED PURPOSES" means with respect to the Loan to finance the purchase
of approximately 570,000 shares of Borrower's Class "B" non-voting stock.
"ARTICLE" and "ARTICLES" have the meanings set forth in SECTION 10.2.
"BANK" means Norwest Bank Texas, N.A., a national banking association.
"BORROWER" means Independent Research Agency for Life Insurance, Inc. and
its successors and assigns.
"BUSINESS DAY" means every day which is not a Nonbusiness Day.
"CALCULATION DATE" means the Closing Date and the last Business Day of each
succeeding calendar month until the Termination Date, and each date that
Borrower requests Bank to release its Lien on any portion of the Stock.
"CLOSING DATE" means September 30, 1998.
"CODE" means the Texas Business and Commerce Code.
"COLLATERAL" means all property (and any and all interest therein) of
Borrower which secures, either directly or indirectly, the Loan and the
Obligations, including, but not limited to, the Stock.
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"COMMITTED SUM" means $16,000,000.00.
"CURRENT FINANCIAL STATEMENTS" means the most recent financial statements
delivered to Bank for Borrower prior to the Closing Date.
"DEBT" means (a) indebtedness or liability for borrowed money; (b)
obligations evidenced by bonds, debentures, notes, or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations as lessee under capital leases;
(e) obligations under letters of credit; (f) obligations under acceptance
facilities; (g) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or entity, or otherwise to assure a creditor against loss; and (h) obligations
secured by any Liens, whether or not the obligations have been assumed.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States and all
other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization, or similar debtor relief laws
affecting the rights of creditors generally from time to time in effect.
"DEFAULT" has the meaning set forth in ARTICLE EIGHT.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, 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 which are applicable in the
circumstances as of the date in question; and the requisite that such principles
be applied on a consistent basis means that the accounting principles observed
in a current period are comparable in all material respects to those applied in
a preceding period.
"LAWS" means all statutes, laws, ordinances, regulations, orders, writs,
injunctions, or decrees of the United States, any city or municipality, state,
commonwealth, nation, country, territory, possession, or any Tribunal.
"LIEN" means any lien, security interest, tax lien, mechanic's lien,
materialman's lien, or other encumbrance, whether arising by contract or under
law.
"LITIGATION" means any proceeding, claim, lawsuit, and/or investigation
conducted or threatened by or before any Tribunal, including, but not limited
to, proceedings, claims, lawsuits, and/or investigations under or pursuant to
any environmental, occupational safety and health, antitrust, unfair
competition, securities, Tax, or other Law, or under or pursuant to any
agreement, document, or instrument.
"LOAN DOCUMENTS" means this Agreement, the Note, the Pledge Agreements, and
any and all other agreements, documents, and instruments executed and delivered
pursuant to the terms of this Agreement, and any future amendments hereto, or
restatements hereof, or pursuant to the terms of any of the other Loan
Documents, together with any and all renewals, extensions, and restatements of,
and amendments and modifications to, any such agreements, documents, and
instruments.
"LOAN" has the meaning assigned to such term in Section 2.1.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or events which
(a) could reasonably be expected to have any adverse effect whatsoever upon the
validity, performance, or enforceability of any Loan Document, (b) is or could
reasonably be expected to become material and adverse to the financial
condition, properties, or business operations of the Person in question, (c)
could reasonably be expected to impair the ability of the Person in question to
fulfill its obligations under the terms and conditions of the Loan Documents, or
(d) could reasonably be expected to cause a Default.
2
"MAXIMUM RATE" means the maximum non-usurious rate of interest (or, if the
context so requires, an amount calculated at such rate) which Bank is allowed to
contract for, charge, take, reserve, or receive in this transaction under
applicable federal or state (whichever is higher) law from time to time in
effect after taking into account, to the extent required by applicable federal
or state (whichever is higher) law from time to time in effect, any and all
relevant payments or charges under the Loan Documents.
"NONBUSINESS DAY" means each day upon which national banks in the State of
Texas are authorized by law to remain closed.
"NOTE" means the Promissory Note dated the Closing Date, in the original
principal amount of $16,000,000.00, executed by Borrower and payable to the
order of Bank, in a form acceptable to Bank, which evidences the Loan, and all
renewals, extensions, increases, amendments and replacements to such Promissory
Note.
"OBLIGATIONS" mean all present and future indebtedness, obligations, and
liabilities, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Bank by Borrower under and pursuant to the Loan Documents,
and all interest accruing thereon and costs, expenses, and attorneys' fees
incurred in the enforcement or collection thereof, regardless of whether such
indebtedness, obligations, and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, but not limited to, the indebtedness, obligations, and liabilities
evidenced, secured, or arising pursuant to any of the Loan Documents, and all
renewals and extensions thereof, or any part thereof, and all present and future
amendments thereto.
"PERSON" means any natural person, firm, corporation, association,
partnership, joint venture, trust, other entity, or a Tribunal.
"PLEDGE AGREEMENTS" means the two Pledge Agreements, dated the Closing
Date, executed by Borrower and by USPA, covering the Stock, in a form acceptable
to Bank, and all amendments to, and replacements for, such Pledge Agreements,
and "PLEDGE AGREEMENT" means either of such Pledge Agreements.
"PRINCIPAL DEBT" means the unpaid principal balance of the Note at the time
in question.
"REQUIRED PERCENTAGE" means 120% of the Principal Balance as of the
applicable Calculation Date.
"RIGHTS" mean any remedies, powers, and privileges exercisable by Bank
under the Loan Documents, at law, equity, or otherwise.
"SECTION" and "SECTIONS" have the meanings set forth in SECTION 10.2.
"STOCK" means the securities which are described in the Pledge Agreements
as such may change from time to time.
"STOCK VALUE" means the aggregate value of the Stock calculated on the
basis of the closing price per share as reported in the Southwest Edition of the
WALL STREET JOURNAL on the Business Day immediately preceding the Calculation
Date.
"STOCK VALUE CERTIFICATE" means that certain certificate to be prepared and
executed by Borrower and delivered to Bank each month during the term of this
Agreement in accordance with SECTION 6.11 whereby Borrower calculates and
certifies to Bank the Stock Value as of the end of the preceding month.
"STOCK VALUE PERCENTAGE" means the percentage derived by dividing the Stock
Value by the Principal Balance on the date in question.
3
"SUBSECTION" and "SUBSECTIONS" has the meanings set forth in SECTION
10.2.
"SUBSIDIARY(IES)" means any corporation more than fifty percent (50%) of
whose capital stock now or hereafter is owned directly or indirectly by Borrower
or may be voted by Borrower. As of the Closing Date, USPA , Independent
Research Agency for Life Insurance, Inc., a Wyoming corporation, Independent
Research Agency for Life Insurance, Inc., a Montana corporation, Independent
Research Agency (New York), Inc., a New York corporation, Independent Research
Agency for Life Insurance, Inc., a Nevada corporation, Independent Research
Agency for Life Insurance, Inc., an Alabama corporation, and First Command Bank,
a federal savings bank, are the only Subsidiaries.
"TAXES" means all taxes, assessments, fees, levies, imposts, duties,
deductions, withholdings, or other charges of any nature whatsoever from time to
time or at any time imposed by any laws or by any Tribunal.
"TERMINATION DATE" means September 30, 2008.
"TRIBUNAL" means any state, commonwealth, federal, foreign, territorial, or
other court or governmental department, commission, board, bureau, agency, or
instrumentality.
"USPA" means United Services Planning Association and its successors and
assigns.
SECTION 1.2. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with those
applied in the preparation of the financial statements referred to in SECTION
6.8, and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with such principles.
ARTICLE TWO
COMMITMENT TO LEND, TERMS OF PAYMENT
SECTION 2.1. LOAN. Subject to and upon the terms, covenants, and
conditions of this Agreement, Bank agrees to lend to Borrower, and Borrower
agrees to borrow from Bank, on the date designated by Borrower which is not more
than ninety (90) days after the Closing Date, up to and including, in the
aggregate, the amount of $16,000,000.00 (the "Loan"). The Loan shall be
evidenced by the Note. The proceeds of the Loan must be used by Borrower to
finance the purchase of approximately 570,000 shares of Borrower's Class "B"
non-voting stock.
SECTION 2.2. NOTE. The Loan shall be evidenced by, and repayable in
accordance with, the Note. The Note shall be dated and shall be executed and
delivered by Borrower to Bank on the Closing Date.
SECTION 2.3. PAYMENTS. All payments of principal of and interest on the
Loan and all other amounts payable by Borrower to Bank under this Agreement or
under the Note shall be paid to Bank when due at the principal office of Bank in
Fort Worth, Texas or at such other place or places as Bank may from time to time
designate and shall be made in lawful money of the United States of America in
immediately available funds. If any payment of principal of or interest on the
Note shall become due on a Saturday, Sunday or a public holiday under the laws
of the State of Texas, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in each such case be included in
computing interest in connection with such payment. Amounts paid on the Loan
may not be reborrowed.
SECTION 2.4. INTEREST RATE. The unpaid principal balance of the Note
shall accrue interest at the Loan Rate as set forth in the Note.
4
SECTION 2.5. ORDER OF APPLICATION. Except as otherwise provided in the
Loan Documents or otherwise agreed by Bank, all payments and prepayments of the
Obligations, including proceeds from the exercise of any Rights under the Loan
Documents or proceeds of any of the Collateral, shall be applied to the
Obligations in the following order, any instructions from Borrower to the
contrary notwithstanding: (a) to expenses for which Bank shall not have been
reimbursed under the Loan Documents, and then to all indemnified amounts due
under the Loan Documents; (b) to fees then owed Bank hereunder; (c) to accrued
interest on the portion of the Obligations being paid or prepaid; (d) to the
portion of the principal being paid or prepaid; (e) to the remaining accrued
interest on the Obligations; (f) to the remaining principal; and (g) to the
remaining Obligations.
ARTICLE THREE
COLLATERAL
SECTION 3.1. SECURITY INTERESTS. In order to secure payment of the
Obligations, Borrower and USPA shall grant to Bank a security interest in the
Stock by executing and delivering to Bank the Pledge Agreements. Borrower
further agrees to execute and deliver to Bank from time to time such other
documents covering the Collateral or any part thereof and such Financing
Statements as Bank may reasonably require. Unless a Default has occurred and is
continuing at the time of Borrower's request, Bank shall release its Lien on
that portion of the Stock which exceeds the Required Percentage as of a
Calculation Date. The immediately preceding sentence shall control over any
inconsistent provision, express or implied, contained in any Loan Document.
ARTICLE FOUR
CONDITIONS PRECEDENT TO LENDING
SECTION 4.1. DELIVERY OF ITEMS. Bank shall not be obligated to make the
Loan unless and until Borrower has delivered to Bank, or Bank otherwise receives
on or prior to the Closing Date, each of the following:
(a) For Borrower and USPA, each of the following documents and
certificates:
(i) A certificate of incumbency of all officers of Borrower
and USPA who will be authorized to execute or attest any of the Loan Documents
on behalf of Borrower and USPA, dated the Closing Date, executed by the
Secretaries of Borrower and USPA;
(ii) A copy of resolutions approving the Loan Documents and
authorizing the transactions contemplated in this Agreement, duly adopted by the
Boards of Directors of Borrower and USPA, accompanied by certificates of the
Secretaries of Borrower and USPA, dated the Closing Date, that such copies are
true and correct copies of resolutions duly adopted at a meeting of the Boards
of Directors of Borrower and USPA, and that such resolutions have not been
amended, modified, or revoked in any respect and are in full force and effect as
of the Closing Date;
(iii) A copy of the Articles of Incorporation, and all
amendments thereto, of Borrower and USPA;
(iv) A copy of the Bylaws, and all amendments thereto, of
Borrower and USPA; and
(v) Certificates of the appropriate governmental officials of
the State of Texas, each dated a current date, to the effect that Borrower and
USPA are in good standing with respect to payment of franchise and similar Taxes
and are still authorized to do business in the State of Texas.
5
(b) The Agreement, dated the Closing Date, duly executed by Borrower
and USPA.
(c) The Note, dated the Closing Date, duly executed by Borrower.
(d) The Pledge Agreements, dated the Closing Date, duly executed by
Borrower and USPA.
(e) Financing Statements executed by Borrower and USPA as debtor
perfecting the security interest created by the Pledge Agreements.
(f) Evidence satisfactory to Bank that the Liens created by the Loan
Documents are, collectively, first and prior to all of the Collateral.
(g) A Stock Value Certificate computed as of the Business Day
immediately preceding the Closing Date.
(h) All other evidences, certificates, opinions, agreements,
documents, and instruments as Bank may reasonably request.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Bank as follows:
SECTION 5.1. CORPORATE EXISTENCE. Borrower is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas.
SECTION 5.2. AUTHORIZATION. Borrower possesses all requisite authority,
power, licenses, permits, and franchises to conduct its businesses and execute,
deliver, and comply with the terms of the Loan Documents. The execution and
delivery of this Agreement, the consummation of the transactions herein
contemplated and compliance with the terms and provisions hereof, the making of
the Loan, and the execution, issuance, and delivery of the Loan Documents have
been duly authorized and approved by all necessary corporate action on the part
of Borrower. No consent or approval of any Tribunal is required in order for
Borrower to legally execute, deliver, and comply with the terms of the Loan
Documents.
SECTION 5.3. COLLATERAL. Borrower and USPA each has good and marketable
title to the Collateral subject to no Liens.
SECTION 5.4. COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower is not, nor
will the execution, delivery, and performance of and compliance with the terms
of the Loan Documents cause Borrower to be, in violation of any Laws or in
default (nor has any event occurred which, with notice or lapse of time or both,
could reasonably be expected to constitute such a default) under any material
agreement in any respect which could have a Material Adverse Effect.
SECTION 5.5. INDEBTEDNESS. Except as previously disclosed to Bank,
Borrower is not directly, indirectly, or contingently obligated with respect to
any material Debt as of the date of this Agreement.
SECTION 5.6. LITIGATION. Except for Litigation in which Borrower is
exclusively a plaintiff without a counterclaim, crossclaim, or similar action
asserted against Borrower and except as set forth on EXHIBIT "A" attached hereto
(the "Existing Litigation"), Borrower is not involved in, nor is Borrower aware
of the threat of, any Litigation which could have a Material Adverse Effect.
6
SECTION 5.7. TAXES. All federal, state, foreign, and other Tax returns of
Borrower required to be filed have been filed, all federal, state, foreign, and
other Taxes imposed upon Borrower which are due and payable have been paid, and
no material amounts of Taxes not reflected on such returns are payable by
Borrower, other than Taxes being contested in good faith by appropriate legal
proceedings which have been brought to Bank's attention by written notice.
SECTION 5.8. FINANCIAL STATEMENTS. All financial statements of Borrower
heretofore and hereafter to be delivered to Bank have been and shall continue to
be prepared in accordance with GAAP, and do and shall accurately represent the
financial condition of Borrower as of the date of each such financial statement.
SECTION 5.9. MARGIN STOCK. The proceeds of the Loan are not and will not
be used directly or indirectly for the purpose of purchasing or carrying, or for
the purpose of extending credit to other for the purpose of purchasing or
carrying, any "margin stock" as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System.
ARTICLE SIX
CERTAIN AFFIRMATIVE COVENANTS
Until payment and performance in full of the Obligations, unless Borrower
receives from Bank a prior written statement that Bank does not object to a
deviation, Borrower covenants and agrees that:
SECTION 6.1. MATERIAL ADVERSE EFFECT. Borrower will promptly give written
notice to Bank of any matter (including Litigation) which has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect, and advise
Bank from time to time of the status thereof.
SECTION 6.2. EXPENSES OF BANK. Borrower will reimburse Bank for all
reasonable out-of-pocket costs, fees, and expenses, including, without
limitation, the reasonable fees and disbursements of counsel for Bank, (a) in
connection with or in anticipation of a Default, (b) in connection with any
amendment or waiver to any of the Loan Documents, or (c) in connection with any
request or action initiated by Borrower, all of which shall be and become a part
of the Obligations.
SECTION 6.3. INSURANCE. Borrower will maintain or cause to be maintained,
with financially sound and reputable insurers acceptable to Bank, insurance with
respect to its properties and businesses against such casualties and
contingencies and of such types and in such amounts as is reasonably
satisfactory to Bank.
SECTION 6.4. TAXES. Borrower will promptly pay or cause to be paid when
due (for the account of Bank, where appropriate) any and all Taxes due by
Borrower, respectively, including, without limitation, all taxes, duties, fees,
levies and other charges of whatsoever nature which have been or may be imposed
by any government or by any department, agency, state, other political
subdivision or taxing authority thereof or therein, including, without
limitation, those due on or in connection with the execution, issuance, delivery
or registration of this Agreement or the Note; provided that Borrower shall not
be required to pay and discharge any such Taxes or charges so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
Borrower shall set aside on its books adequate reserves with respect thereto and
shall pay any such Taxes or charge before the property subject thereto shall be
sold to satisfy any lien which has attached as security therefor.
SECTION 6.8. ANNUAL FINANCIAL STATEMENTS. Borrower shall cause to be
delivered to Bank, as soon as practicable after the end of each fiscal year, and
in any event within ninety (90) days thereafter, an unqualified audited
consolidated balance sheet of Borrower and USPA as of the end of such fiscal
year and related statements of income, contingent liabilities, and retained
earnings, in reasonable detail, prepared in accordance with GAAP and certified
by an independent certified public accounting firm
7
reasonably acceptable to Bank as fairly presenting the consolidated financial
condition and results of operations for Borrower and USPA. Such financial
statements shall be accompanied by a copy of the report to management delivered
to Borrower by such accountants and also by a statement signed by Borrower's
Chief Executive Officer or Chief Financial Officer representing to Bank that
such financial statements are true and complete and fairly represent the
consolidated financial condition and results of operation for Borrower and USPA,
and that no Default is in existence as of the date of delivery of such
statements.
SECTION 6.9. STOCK VALUE CERTIFICATE. Borrower will deliver to Bank as
soon as available and in any event within ten (10) days after the last day of
each month a Stock Value Certificate calculated as of the last Business Day of
such month.
SECTION 6.10. COMPLIANCE WITH APPLICABLE LAWS. Borrower will comply with
the requirements of all applicable Laws, rules, regulations and orders of any
governmental authority, except where contested in good faith and by proper
proceedings.
SECTION 6.11. NOTICE OF EVENT OF DEFAULT AND SUITS. Upon discovery,
Borrower will promptly notify Bank of any breach of any of the covenants
contained in Article Six or Article Seven and of the occurrence of any Default
hereunder, or of the filing of any claim, action, suit or proceeding before any
Tribunal agency against Borrower in which an adverse decision could reasonably
be expected to have a Material Adverse Effect upon Borrower and advise Bank from
time to time of the status thereof.
SECTION 6.12. YEAR 2000. Borrower acknowledges its awareness of the
issues and problems facing Borrower in connection with the effect of the year
2000 on computer hardware, software and other automated systems, and makes the
following representations, warranties and covenants:
(a) Each hardware and software product presently in use by Borrower, or
contemplated to be used by Borrower in the future is presently, or
shall be before the occurrence of the year 2000, able to accurately
process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into, and between the 20th and 21st
centuries, and the years 1999 and 2000 and leap year calculations.
(b) Borrower has established a budget for the year 2000 compliance effort
and such budget shall be sufficient to manage all financial needs in
connection with the year 2000 issues.
(c) Borrower has contingency plans in place for (i) the occurrence of a
failure or partial failure of a critical system, or (ii) the inability
of Borrower to complete a year 2000 testing and compliance program.
ARTICLE SEVEN
CERTAIN NEGATIVE COVENANTS
So long as Bank is committed to make Advances hereunder, and thereafter
until payment and performance in full of the Obligations, Borrower covenants and
agrees that, without the prior written consent of Bank:
SECTION 7.1. MERGER OR SALE OF ASSETS. Borrower will not merge or
consolidate with or into any other Person other than First Command Financial
Corporation or any Subsidiary or Affiliate of Borrower (unless Borrower is the
surviving entity) or sell all, or substantially all, of its property, assets or
business to any other Person.
8
SECTION 7.2. LIENS. Borrower will not mortgage, assign, encumber,
hypothecate or grant a security interest in any of the Collateral to any Person
other than Bank.
SECTION 7.3. CONTINUATION OF BUSINESS. Borrower will not discontinue the
business in which it is presently engaged, or cause to permit to be terminated
or surrendered any license, franchise or other agreement necessary to the
conduct to such businesses, which, in the reasonable judgment of Bank, may have
a Material Adverse Effect on the financial condition of Borrower.
SECTION 7.4. STOCK VALUE; REQUIRED PERCENTAGE. On the Closing Date, the
Stock Value Percentage shall not be less than 140%. Thereafter, as of each
Calculation Date, Borrower shall maintain the Stock Value Percentage at not less
than the Required Percentage. If the Stock Value Percentage is less than 120%
but equal to or greater than 110% then, within thirty (30) calendar days after
Bank provides written notification to Borrower of such, Borrower must provide
additional acceptable collateral to Bank, or reduce the Principal Balance, or
both, so that the Stock Value Percentage is not less than the Required
Percentage. If the Stock Value Percentage is less than 110% but equal to or
greater than 100% then, within fifteen (15) calendar days after Bank provides
written notice to Borrower of such, Borrower must provide additional acceptable
collateral to Bank, or reduce the Principal Balance, or both, so that the Stock
Value Percentage is not less than the Required Percentage. If the Stock Value
Percentage is less than 100% then, within five (5) calendar days after Bank
provides written notification to Borrower of such, Borrower must provide
additional acceptable collateral to Bank, or reduce the Principal Balance, or
both, so that the Stock Value Percentage is not less than the Required
Percentage. Borrower's failure to maintain the Stock Value Percentage at or in
excess of the Required Percentage as set forth in this SECTION 7.4 shall
constitute a Default under this Agreement.
ARTICLE EIGHT
DEFAULT
The term "Default" as used herein shall mean the occurrence of any one or
more of the following events (including the passage of time, if any, specified
therefor):
SECTION 8.1. PAYMENT OF OBLIGATIONS. The failure or refusal of Borrower
to punctually pay the principal of, or the interest on, the Obligations, or any
part thereof, as the same become due in accordance with the terms of the Loan
Documents and such failure continues for more than ten (10) days after written
notice thereof shall have been given by Bank to Borrower; provided, however,
Bank is not obligated to provide more than three (3) such notices during any
twelve (12) month period.
SECTION 8.2. CERTAIN NEGATIVE COVENANTS. The failure or refusal of
Borrower to punctually and properly perform, observe, and comply with any
covenant, agreement, or condition contained in Article Seven of this Agreement
in accordance with its terms.
SECTION 8.3. OTHER COVENANTS. The failure or refusal of Borrower to
properly perform, observe, and comply with any covenant or agreement contained
in any of the Loan Documents (other than covenants to pay the Obligations and
covenants contained in Article Seven of this Agreement), and such failure or
refusal continues for a period of thirty (30) days after written notice thereof
shall have been given by Bank to Borrower; provided, however, Bank may extend
said thirty (30) day period if Borrower, in Bank's sole discretion, has been
diligently pursuing its attempt to cure said breach; and provided, further, that
Bank is not obligated to provide more than three (3) such notices during any
twelve (12) month period.
SECTION 8.4. VOLUNTARY DEBTOR RELIEF. Borrower or USPA shall (a) execute
an assignment for the benefit of creditors, or (b) become or be adjudicated as
bankrupt or insolvent, or (c) admit in writing its inability to pay its debts
generally as they become due, or (d) apply for or consent to the appointment of
9
a conservator, receiver, trustee, or liquidator of it or all or a substantial
part of its assets, or (e) file a voluntary petition seeking reorganization or
an arrangement with creditors or to take advantage or seek any other relief
under any Debtor Relief law now or hereafter existing, or (f) file an answer
admitting the material allegations of or consenting to, or default in, a
petition filed against it in any liquidation, conservatorship, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceedings,
or (g) institute or voluntarily be or become a party to any other judicial
proceedings intended to effect a discharge of its debts, in whole or in part, or
a postponement of the maturity or the collection thereof, or a suspension of any
of the Rights or powers of Bank granted in any of the Loan Documents, or (h)
take any corporate action to effectuate any of the foregoing.
SECTION 8.5. INVOLUNTARY PROCEEDINGS. Borrower or USPA shall
involuntarily (a) have an order, judgment, or decree entered against it by any
Tribunal pursuant to any Debtor Relief Law that could suspend or otherwise
affect any of the Rights granted to Bank in any of the Loan Documents, and such
order, judgment, or decree is not permanently stayed, vacated, or reversed
within ninety (90) days after the entry thereof, or (b) have a petition filed
against it or any of its property seeking the benefit or benefits provided for
by any Debtor Relief Law that would suspend or otherwise affect any of the
Rights granted to Bank in any of the Loan Documents, and such petition is not
discharged within ninety (90) days after the filing thereof.
SECTION 8.6. OTHER OBLIGATIONS. Borrower or USPA shall default in the due
performance or observance of any covenant or condition of any other agreement
with Bank (including any Promissory Note) and such default shall have continued
beyond any period of grace or cure provided with respect thereto.
SECTION 8.7. DISSOLUTION OF BORROWER. The dissolution of Borrower or USPA
for any reason whatsoever other than as a result of the merger of Borrower or
USPA with and into First Command Financial Corporation or any Subsidiary or
Affiliate of Borrower or USPA.
SECTION 8.8. MISREPRESENTATION. Any statement, representation, or
warranty heretofore or hereafter made in the Loan Documents or in any writing or
in any other communication ever delivered to Bank pursuant to the Loan
Documents, or any statement or representation made in any certificate, report,
or opinion delivered to Bank pursuant to the Loan Documents, is false,
calculated to mislead, misleading, or erroneous in any material respect at the
time made.
ARTICLE NINE
CERTAIN RIGHTS OF BANK
SECTION 9.1. RIGHTS UPON DEFAULT. If a Default shall occur, at any time
thereafter, and in each such case, unless such Default shall have been remedied
to the satisfaction of Bank or waived in writing by Bank, Bank may, at its
election, do any one or more of the following:
(a) ACCELERATION. Declare the entire unpaid balance of the
Obligations, or any part thereof, immediately due and payable, whereupon they
shall be due and payable without notice of nonpayment, demand for payment,
presentment for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest, notice of protest, or any other notice or
demand of any kind, all of which are hereby waived by Borrower.
(b) POSSESSION AND PERFORMANCE. Without advance notice to Borrower,
which is hereby waived, take possession of the Collateral.
(c) JUDGMENT. Reduce any claim to judgment.
10
(d) FORECLOSURE. Foreclose or otherwise enforce any and all Liens
granted to Bank to secure payment and performance of the Obligations, and, at
Bank's option, buy all or any part of the Collateral at any public sale, it
being understood that Bank may, at its option, foreclose or enforce all such
Liens simultaneously or individually on the same or difference dates or
foreclose or enforce one or more of such Liens without foreclosing or enforcing
any other such Liens.
(e) RIGHTS. Exercise any and all rights afforded by the laws of the
State of Texas or any other jurisdiction, or by the Loan Documents or any and
all other instruments, documents, and agreements made to secure or assure
payment and performance of the Obligations or any other indebtedness of Borrower
or executed in connection therewith, or by law or equity, or otherwise.
SECTION 9.2. PERFORMANCE BY BANK. Should any covenant, duty, or agreement
of Borrower, fail to be performed in accordance with the terms of the Loan
Documents, Bank may, at its option, perform or attempt to perform, such
covenant, duty, or agreement on behalf of Borrower. In such event, Borrower
shall, at the request of Bank, promptly pay to Bank any amount expended by Bank
in such performance or attempted performance, together with interest thereon at
the rate of twelve percent (12%) per annum from the date of such expenditure by
Bank until paid. Notwithstanding the foregoing, it is expressly understood that
Bank does not assume any liability or responsibility for the performance of any
duties of Borrower hereunder or in connection with all or any part of the
Collateral.
SECTION 9.3. DIMINUTION IN COLLATERAL VALUE. Bank does not assume, and
shall never have, any liability or responsibility for any loss or diminution in
the value of all or any part of the Collateral.
SECTION 9.4. BANK NOT IN CONTROL. None of the covenants or other
provisions contained in this Agreement shall, or shall be deemed to, give Bank
the Right to exercise control over the affairs and/or management of Borrower,
the power of Bank being limited to the Right to exercise the remedies provided
in the other Sections of this Article.
SECTION 9.5. WAIVERS. The acceptance of Bank at any time and from time to
time of part payment on the Obligations shall not be deemed to be a waiver of
any Default then existing. No waiver by Bank of any Default shall be deemed to
be a waiver of any other then existing or subsequent Default. No delay or
omission by Bank in exercising any Right under the Loan Documents shall impair
such Right or be construed as a waiver thereof or any acquiescence therein, nor
shall any single or partial exercise of any such Right preclude other or further
exercise thereof, or the exercise of any other Right under the Loan Documents or
otherwise.
SECTION 9.6. CUMULATIVE RIGHTS. All Rights available to Bank under the
Loan Documents shall be cumulative of and in addition to all other Rights
granted to Bank at law or in equity, whether or not the Obligations be due and
payable and whether or not Bank shall have instituted any suit for collection,
foreclosure, or other action under or in connection with the Loan Documents.
SECTION 9.7. INDEMNIFICATION OF BANK. Borrower shall indemnify and hold
harmless Bank against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses, and disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against Bank, in any way relating to, or arising out of, the Loan
Documents or any of the transactions contemplated therein, to the extent that
any such indemnified liabilities result, directly or indirectly, from any claims
made or actions, suits, or proceedings commenced by or on behalf of any Person
other than Bank; provided that Bank shall not have the Right to be indemnified
hereunder for its own negligence or willful misconduct.
SECTION 9.8. APPLICATION OF PROCEEDS. Bank shall be entitled to apply the
proceeds of any sale of all or any part of the Collateral toward payment of the
Obligations in such order and manner as Bank, in its discretion, may deem
advisable. Borrower shall remain liable as to any deficiency, if any, and Bank
shall account to Borrower for any surplus remaining after payment in full of the
Obligations.
11
SECTION 9.9. EXPENDITURES BY BANK. Any sums spent by Bank pursuant to the
exercise of any Right provided herein shall become part of the Obligations and
shall bear interest at the rate of twelve percent (12%) per annum from the date
spent until the date repaid by Borrower.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.1. HEADINGS. The headings, captions, and arrangements used in
any of the Loan Documents are, unless specified otherwise, for convenience only
and shall not be deemed to limit, amplify, or modify the terms of the Loan
Documents, nor affect the meaning thereof.
SECTION 10.2. ARTICLES, SECTIONS, AND EXHIBITS. All references to
"Article," "Articles," "Section," "Sections," "Subsection," or "Subsections"
contained herein are, unless specifically indicated otherwise, references to
articles, sections, and subsections of this Agreement. All references to
"Exhibits" contained herein are references to exhibits attached hereto, all of
which are made a part hereof for all purposes, the same as if set forth herein
verbatim, it being understood that if any exhibit attached hereto, which is to
be executed and delivered, contains blanks, the same shall be completed
correctly and in accordance with the terms and provisions contained and as
contemplated herein prior to or at the time of the execution and delivery
thereof.
SECTION 10.3. NUMBER AND GENDER OF WORDS. Whenever herein the singular
number is used, the same shall include the plural where appropriate, and vice
versa; and words of any gender shall include each other gender where
appropriate.
SECTION 10.4. ACCOUNTING TERMS. All accounting and financial terms used
herein, and the compliance with each covenant contained herein which relates to
financial matters, shall be determined in accordance with GAAP, consistently
applied, as set forth in the opinions of Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in the Statements of
the Financial Accounting Standards Board which are applicable under the
circumstances as of the date in question, and the requisite that such principles
be applied on a' consistent basis means that the accounting principles being
observed in a current period are comparable in all material respects to those
applied in a preceding period, except to the extent that a deviation therefrom
is expressly stated herein.
SECTION 10.5. NOTICES. All notices and other communications provided for
under this Agreement and under the other Loan Documents to which Borrower is a
party shall be in writing (including telegraphic, telex and facsimile
transmissions) and mailed or transmitted or delivered as set forth on the
execution page of this Agreement or, as to each party, to such other name or at
such other address as shall be designated by such party in a written notice to
the other party complying as to delivery with the terms of this SECTION 10.05.
Except as otherwise provided in this Agreement, all such notices and
communications shall be effective when deposited in the mails or delivered to
the telegraph company, or sent, answer back received, respectively, addressed as
aforesaid. Each of the parties hereto shall be entitled to specify a different
address by giving written notice to the other party hereto in accordance with
this Section.
SECTION 10.6. FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished to Bank under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be satisfactory to Bank and its counsel.
SECTION 10.7. SURVIVAL. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents shall survive
all closings under the Loan Documents and shall continue in full force and
effect so long as any part of the Obligations remain and, except as otherwise
indicated, shall not be affected by any investigation made by any party.
12
SECTION 10.8. GOVERNING LAW; PLACE OF PERFORMANCE. THE LOAN DOCUMENTS ARE
BEING EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED, IN THE STATE OF
TEXAS, AND THE LAWS OF SUCH STATE AND OF THE UNITED STATES SHALL GOVERN THE
RIGHTS AND DUTIES OF THE PARTIES HERETO AND THE VALIDITY, CONSTRUCTION,
ENFORCEMENT, AND INTERPRETATION OF THE LOAN DOCUMENTS, EXCEPT TO THE EXTENT
OTHERWISE SPECIFIED IN ANY OF THE LOAN DOCUMENTS. THIS AGREEMENT, ALL OF THE
OTHER LOAN DOCUMENTS, AND ALL OF THE OBLIGATIONS OF BORROWER AND GUARANTORS
UNDER ANY OF THE LOAN DOCUMENTS ARE PERFORMABLE IN TARRANT COUNTY, TEXAS AND
VENUE OF ANY LITIGATION INVOLVING THE LOAN DOCUMENTS SHALL BE MAINTAINED
EXCLUSIVELY IN TARRANT COUNTY.
SECTION 10.9. MAXIMUM RATE. This Agreement and all of the other Loan
Documents are intended to be performed in accordance with, and only to the
extent permitted by, all applicable usury laws. If any provision hereof or of
any of the other Loan Documents or the application thereof to any person or
circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the application of such provision to any other person or
circumstance nor the remainder of the instrument in which such provision is
contained shall be affected thereby and shall be enforced to the greatest extent
permitted by applicable laws. It is expressly stipulated and agreed to be the
intent of Borrowers and Bank to at all times comply with the usury and other
applicable laws now or hereafter governing the interest payable on the
Obligations. If the applicable law is ever revised, repealed or judicially
interpreted so as to render usurious any amount called for under this Agreement
or under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Obligations, or if Bank's exercise of
the option to accelerate the maturity of the Note, or if any prepayment of the
Note results in the payment of any interest in excess of that permitted by law,
then it is the express intent of Borrowers and Bank that all excess amounts
theretofore collected by Bank be credited on the principal balance of the Note
(or, if the Note and all of the Obligations have been paid in full, refunded),
and the provisions of the Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectable hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable laws, but so as to permit the recovery of the
fullest amount otherwise called for hereunder or thereunder. All sums paid, or
agreed to be paid, for the use, forbearance , detention, taking, charging,
receiving or reserving on the Obligations shall, to the extent permitted by
applicable laws, be amortized, prorated, allocated and spread throughout the
full term of such Obligations until payment in full so that the rate or amount
of interest on account of such Obligations does not exceed the usury ceiling
from time to time in effect and applicable thereto for so long as debt is
outstanding under the Note. To the extent that Bank is relying on Chapter 303
of the Texas Finance Code to determine the maximum rate ("MAXIMUM RATE") payable
on the Note, Bank will utilize the weekly ceiling from time to time in effect as
provided in such Chapter 303. To the extent federal law permits Bank to
contract for, charge or receive a greater amount of interest, Bank will rely on
federal law instead of such article, as amended, for the purpose of determining
the Maximum Rate. Additionally, to the extent permitted by applicable law now
in effect, Bank may, at its option and from time to time, implement any other
method of computing the Maximum Rate under such article, as amended, or under
other applicable law by giving notice, if required, to Borrowers as provided by
applicable law now or hereafter in effect. In no event shall the provisions of
Chapter 346 of the Texas Finance Code (which regulates certain revolving credit
loan accounts and revolving triparty accounts) apply to the Obligations.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Bank to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.
SECTION 10.10. INVALID PROVISIONS. If any provision of any of the Loan
Documents is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term thereof, such provision shall be fully
severable, the appropriate Loan Paper shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part thereof;
and the remaining provisions thereof shall remain in full force and effect and
shall not be effected by the illegal, invalid, or unenforceable provision or by
its severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of such
Loan Paper a provision as
13
similar in terms to such illegal, invalid, or unenforceable provision as may be
possible and be legal, valid, and enforceable.
SECTION 10.11. ENTIRETY AND AMENDMENTS. This instrument embodies the
entire agreement between the parties relating to the subject matter hereof
(except documents, agreements and instruments delivered or to be delivered in
accordance with the express terms hereof), supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof, and may be
amended only by an instrument in writing executed jointly by Borrower and Bank
and supplemented only by documents delivered or to be delivered in accordance
with the express terms hereof.
SECTION 10.12. MULTIPLE COUNTERPARTS. This Agreement has been executed in
a number of identical counterparts, each of which constitutes an original and
all of which constitute, collectively, one agreement; but in making proof of
this Agreement, it shall not be necessary to produce or account for more than
one such counterpart.
SECTION 10.13. PARTIES BOUND. This Agreement shall be binding upon and
inure to the benefit of Borrower and Bank and their respective successors and
assigns; provided that Borrower may not, without the prior written consent of
Bank, assign any of its Rights, duties, or Obligations hereunder. No term or
provision of this Agreement shall inure to the benefit of any Person other than
Borrower and Bank and their respective successors and assigns; consequently, no
Person other than Borrower and Bank and their respective successors and assigns,
shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of Borrower or Bank to perform, observe, or comply with
any such term or provision.
SECTION 10.14. ARBITRATION. Except for "Core Proceedings" under the
United States Bankruptcy Code, Bank, Borrower and USPA agree to submit to
binding arbitration all claims, disputes and controversies between or among
them, whether in tort, contract or otherwise (and their respective employees,
officers, directors, attorneys, and other agents) arising out of or relating to
in any way (i) the loan and related loan and security documents which are the
subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit. Any arbitration proceeding will (i) proceed in Fort Worth, Texas; (ii)
be governed by the Federal Arbitration Act (Title 9 of the United States Code);
and (iii) be conducted in accordance with the Commercial Arbitration rules of
the American Arbitration Association ("AAA"). The arbitration requirement does
not limit the right of either party to (i) foreclose against real or personal
property collateral; (ii) exercise self-help remedies relating to collateral or
proceeds of collateral such as setoff or repossession; or (iii) obtain
provisional ancillary remedies such as replevin, injunctive relief, attachment
or the appointment of a receiver, before during or after the pendency of any
arbitration proceeding. This exclusion does not constitute a waiver of the
right or obligation of either party to submit any dispute to arbitration,
including those arising from the exercise of the actions detailed in sections
(i), (ii) and (iii) of this paragraph. Any arbitration proceeding will be
before a single arbitrator selected according to the Commercial Arbitration
Rules of the AAA. The arbitrator will be a neutral attorney who has practiced
in the area of commercial law for a minimum of ten years. The arbitrator will
determine whether or not an issue is arbitratable and will give effect to the
statutes of limitation in determining any claim. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. In
any arbitration proceeding the arbitrator will decide (by documents only or with
a hearing at the arbitrator's discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. In any arbitration proceeding discovery will be permitted
and will be governed by the Texas Rules of Civil Procedure. All discovery must
be completed no later than 20 days before the hearing date and within 180 days
of the commencement of arbitration proceedings. Any requests for an extension
of the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available. The arbitrator shall award costs and
expenses of the arbitration proceeding in accordance with the provisions of this
Agreement and/or other Loan Documents.
14
SECTION 10.15. STATUTE OF FRAUDS NOTICE. THIS WRITTEN LOAN AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
Effective the 30th day of September, 1998.
BANK: NORWEST BANK TEXAS, N.A.
By: /s/ Xxx Xxxxxxx
----------------------------------------
Name: Xxx Xxxxxxx
--------------------------------------
Title: Senior Vice President
-------------------------------------
Address for mail delivery and notices:
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Xxx Xxxxxxx
--------------------------------
Telephone No: (000) 000-0000
------------------------------
Telecopy No: (000) 000-0000
------------------------------
BORROWER: INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
Address for mail delivery and notices:
0000 Xxxxx Xxxxx
X.X. Xxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Chief Financial Officer
--------------------------------
Telephone No: (000) 000-0000, Ext. 2255
------------------------------
Telecopy No: (000) 000-0000, Ext. 2176
------------------------------
USPA: Reviewed and Agreed as to the Provisions Applicable to
USPA:
UNITED SERVICES PLANNING ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
15
EXHIBIT "A"
EXISTING LITIGATION
None
16
