Exhibit 4.12
______________________________________________
TERM CREDIT AGREEMENT
BETWEEN
SA HOLDINGS, INC.
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
______________________________________________
Closing Date: July 31, 1995
TERM CREDIT AGREEMENT
Dated as of July 31, 1995
SA Holdings, Inc., a Delaware corporation (the
"Borrower"), and Norwest Bank Minnesota, National Association, a
national banking association (the "Bank"), agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular; and
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP.
"Acquisition" means the acquisition by the Borrower of
all of the stock of the Target Company.
"Acquisition Documents" means the purchase agreement
between the Borrower, the Target Company and the
shareholders of the Target Company and any other documents
relating to the Acquisition, together with all deeds, bills
of sale, assignments, approvals and consents required to
consummate the Acquisition, and all UCC and lien searches,
certificates, opinions, documents and agreements related to
or delivered in connection therewith.
"Adjusted Operating Cash Flow" means, with respect to
any 12-month period, the Operating Cash Flow for such period
plus the Expense Reduction Amount, if any, attributable to
such period. Notwithstanding the foregoing, Adjusted
Operating Cash Flow as of any quarter-end occurring on or
before the Conversion Date (but after the Closing Date)
means the Adjusted Operating Cash Flow during the two-
quarter period ending on such date multiplied by two.
"Advance Date" means, with respect to a Term Advance
(other than the initial Term Advance), the date requested
for such Term Advance which must be at least five Bank
Business Days after delivery of a Borrowing Certificate to
the Bank.
"Affiliate" means (a) any director, officer or employee
of the Borrower, (b) any Person who, individually or with
his or her immediate family or any other Affiliate, directly
or indirectly beneficially owns or holds 5% or more of
the voting interest in the Borrower, or (c) any corporation,
partnership or other Person in which any Person described
above owns a 5% or greater equity interest. Without
limiting the generality of the foregoing, the Guarantor
shall at all times be deemed to be an Affiliate of the
Borrower.
"Agreement" means this Term Credit Agreement.
"Assignment of Deposit Accounts" means an Assignment of
Deposit Accounts duly executed by the Borrower in
substantially the form of Exhibit E, assigning to the Bank
each deposit account of any type now or hereafter held by
the Borrower.
"Bank Business Day" means a day other than a Saturday,
Sunday or day on which banks are not generally open for
business in the State of Minnesota.
"Base Rate" means the rate of interest publicly
announced from time to time by the Bank as its "prime" or
"base" rate of interest or, if the Bank ceases to announce a
rate so designated, any similar successor rate designated by
the Bank.
"Borrowing Certificate" means a certificate in
substantially the form of Exhibit G, or such other form as
the Borrower and the Bank may from time to time agree upon
in writing, setting forth relevant facts in reasonable
detail and the computation as to the Borrower's Adjusted
Operating Cash Flow as of the preceding quarter-end.
"Capital Expenditure" means any expenditure of money
for the purchase or construction of fixed assets or for the
purchase or construction of any other assets, or for
improvements or additions thereto, which are capitalized on
the Borrower's balance sheet.
"Closing Date" means the date of this Agreement.
"Compliance Certificate" means a certificate in
substantially the form of Exhibit H, or such other form as
the Borrower and the Bank may from time to time agree upon
in writing, setting forth relevant facts in reasonable
detail and the computations as to whether or not the
Borrower is in compliance with the requirements set forth in
Section 5.9, 5.10, 5.11, 5.12 and 6.11.
"Conversion Date" means November 15, 1996.
"Debt" of any Person means (i) all items of
indebtedness or liability which in accordance with GAAP
would be included in determining total liabilities as shown
on the liabilities side of a balance sheet of that Person as
at the date as of which Debt is to be determined, excluding,
however, accounts payable and accrued liabilities incurred
in the ordinary course of that Person's business that are
owed to sellers of goods or services to that Person and are
in an amount not greater than the cost of such goods or
services, and (ii) indebtedness secured by any mortgage,
pledge, lien or security interest existing on property owned
by such Person, whether or not the indebtedness secured
thereby shall have been assumed, and (iii) guaranties and
endorsements (other than for purposes of collection in the
ordinary course of business) by such Person and other
contingent obligations of such Person in respect of, or to
purchase or otherwise acquire, indebtedness of others. For
purposes of determining a Person's aggregate Debt at any
time, "Debt" shall also include the aggregate payments
required to be made by such Person at any time under any
lease that is considered a capitalized lease under GAAP.
For purposes of this Agreement "Debt" shall not include the
Preferred Stock or Cash Obligation of Borrower with respect
thereto.
"Default" means an event that, with the giving of
notice, the passage of time or both, would constitute an
Event of Default.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) that is, along with the Borrower, a
member of a controlled group of corporations or a controlled
group of trades or businesses, as described in sections
414(b) and 414(c), respectively, of the Internal Revenue
Code of 1986, as amended.
"Environmental Law" means the Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1802 et
seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Clean Water Act, 33 U.S.C.
Section 1252 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., and any other federal, state, county,
municipal, local or other statute, law, ordinance or
regulation which may relate to or deal with human health or
the environment, all as may be from time to time amended.
"Eurodollar Business Day" means a Bank Business Day on
which dealings in U.S. dollar deposits are carried on in the
London interbank market.
"Event of Default" has the meaning specified in Section
7.1.
"Excess Cash Flow" means, with respect to any fiscal
year, the Operating Cash Flow of the Borrower and its
Subsidiaries during that fiscal year, minus the sum of
(i) interest expense by the Borrower and its Subsidiaries
during that fiscal year, (ii) scheduled principal payments
made by the Borrower during that fiscal year on the Note and
other indebtedness to the extent such indebtedness and
payments are not prohibited by this Agreement, and
(iii) capital expenditures made by the Borrower and its
Subsidiaries during that fiscal year to the extent that such
capital expenditures do not exceed the amounts permitted
under Section 6.11, all determined in accordance with GAAP.
"Expense Reduction Amount" for any period means the
amount which has been recognized by the Borrower or its
Subsidiaries as an expense for purposes of determining
Operating Cash Flow for such period, which amount was
incurred by the Borrower, its Subsidiaries or the Target
Company prior to the Closing Date and which has been
identified by management of the Borrower and approved by the
Bank, in its sole discretion, as avoidable in future periods
based on the anticipated effect of positive and verifiable
actions taken or identified and to be taken by management of
the Borrower, and verified by the Bank or, at the Bank's
sole option, the Borrower's independent accountants, to
reduce for future periods the types of expenses which were
actually incurred prior to the Closing Date. With respect
to each month prior to the Closing Date, the Expense
Reduction Amount approved by the Bank is $163,000. With
respect to each month set forth below, the Expense Reduction
Amount approved by the Bank is set forth opposite such
month:
Month Expense Reduction Amount
----- ------------------------
August, 1995 $107,000
September, 1995 $ 49,000
October, 1995 $ 47,000
November, 1995 $ 2,000
Any Expense Reduction Amount related to an action which is
identified by management to be taken, but which is not
taken, shall be disallowed retroactively and prospectively
for all periods.
"Floating Rate" means an annual rate equal to the sum
of the Base Rate and the Floating Rate Spread, as determined
in accordance with Section 2.4, which rate shall change when
and as the Base Rate changes.
"Floating Rate Spread" means a percentage, determined
as set forth in Section 2.4.
"GAAP" means generally accepted accounting principles,
consistently applied.
"Guarantor" means Xxxx X. Xxxx, Xx.
"Guarantor's Pledge Agreement" means the Collateral
Pledge Agreement of even date herewith executed by the
Guarantor, granting the Bank a security interest in all of
the common stock and stock warrants of the Borrower owned by
the Guarantor to secure payment of all indebtedness arising
under the Guaranty.
"Guaranty" means the guaranty agreement of the
Guarantor in substantially the form of Exhibit B.
"Hazardous Substance" means any pollutant, contaminant,
hazardous substance or waste, solid waste, petroleum or any
fraction thereof, or any other chemical, substance or
material listed or identified in or regulated by any
Environmental Law.
"Interest Period" means a period of 30, 60, 90, 120,
150 or 180 days beginning on a Eurodollar Business Day as
elected by the Borrower.
"Interest Rate Spread" means a Floating Rate Spread or
a LIBO Rate Spread, as determined in accordance with Section
2.4, or such other interest rate spread as may be negotiated
in accordance with Section 2.3.
"LIBO Rate" means the annual rate equal to the sum of
(i) the annual rate obtained by dividing (a) the rate
(rounded up to the nearest 1/8 of 1%) determined by the Bank
to be the average rate at which U.S. dollar deposits are
offered to the Bank by major banks in the London interbank
market for funds to be made available on the first day of
any Interest Period in an amount approximately equal to the
amount for which a LIBO Rate quotation has been requested
and maturing at the end of such Interest Period, as
determined by the Bank prior to 12:00 noon (Minneapolis
time) on the second Eurodollar Business Day prior to the
beginning of such Interest Period, by (b) a percentage equal
to 100% minus the Federal Reserve System reserve requirement
(expressed as a
percentage) applicable to such deposits, and (ii) the LIBO
Rate Spread, as determined in accordance with Section 2.4.
"LIBO Rate Spread" means a percentage, determined as
set forth in Section 2.4.
"Licenses" means all material authorizations, licenses,
permits and franchises granted or assigned to the Borrower,
or any Subsidiary or the Target Company by any public or
governmental agency, domestic or international, including
but not limited to any licenses issued by a state public
utility commission or the Federal Communications Commission.
"Life Insurance Assignment" means an Assignment of Life
Insurance Policy as Collateral to be executed by the
Borrower, in form and substance satisfactory to the Bank,
granting the Bank a lien on 50% of the proceeds of the Life
Insurance Policy to secure payment of the Note.
"Life Insurance Policy" has the meaning set forth in
Section 5.12.
"Loan Documents" means this Agreement, the Assignment
of Deposit Accounts, the Life Insurance Assignment, the Note
and the Borrower's Security Agreement.
"Material Agreements" means all material agreements
relating to the Licenses, and all other access, termination,
long distance and local exchange carrier agreements, real
estate leases and other material agreements relating to the
operation of the Borrower's, Subsidiaries' and the Target
Company's businesses.
"Maximum Loan Amount" means $10,000,000.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
"Note" has the meaning specified in Section 2.1
"Operating Cash Flow" means, with respect to any
period, the sum of the following: (i) the consolidated net
after-tax income of the Borrower and its Subsidiaries during
that period, plus (ii) the sum of depreciation, amortization
and interest expenses recognized by the Borrower and its
Subsidiaries with respect to that period, management fees
accrued by the Borrower and its Subsidiaries during that
period, any extraordinary or non-cash losses or expenses
paid or incurred by the Borrower and its Subsidiaries during
that period, less (iii) the sum of any extraordinary,
non-operating or non-cash income claimed by the Borrower and
its Subsidiaries during that period, all as determined in
accordance with GAAP.
"Person" means any individual, corporation,
partnership, limited liability company, limited liability
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Plan" means an employee benefit plan or other plan
maintained for employees of the Borrower or any ERISA
Affiliate and covered by Title IV of ERISA.
"Preferred Stock" means the Preferred Stock of Borrower
described on Schedule 4.11.
"Reportable Event" means (i) a "reportable event"
described in Section 4043 of ERISA and the regulations
issued thereunder, (ii) a withdrawal from any Plan, as
described in Section 4063 of ERISA, (iii) an action to
terminate a Plan for which a notice is required to be filed
under Section 4041 of ERISA, (iv) any other event or
condition that might constitute grounds for termination of,
or the appointment of a trustee to administer, any Plan, or
(v) a complete or partial withdrawal from a Multiemployer
Plan as described in Sections 4203 and 4205 of ERISA.
"SATC" means Strategic Abstract & Title Corporation, a
Texas corporation.
"SEC" means the Securities and Exchange Commission.
"SLDN" means Southwest Long Distance Network, Inc., an
Arkansas corporation.
"Security Agreements" means the security agreements of
the Borrower and its Telecommunications Subsidiaries, each
in substantially the form of Exhibit C.
"Seller Subordination Agreement" means the
Subordination Agreement of even date herewith executed by
Xxxx X. Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxxxxx Xxxx for the
benefit of the Bank.
"Senior Debt Service Ratio" means, at any fiscal
quarter-end, the ratio of (i) the Adjusted Operating Cash
Flow of the Borrower, to (ii) the Senior Debt Service
Requirements of the Borrower as of that fiscal quarter-end.
"Senior Debt Service Requirements" means, at any fiscal
quarter-end, the sum of all payments of principal and
interest required to be paid by the Borrower on the Note
during the immediately succeeding four-quarter period in
accordance with the terms of the Note (specifically
excluding any mandatory prepayment required under Section
2.9). For purposes of determining Senior Debt Service
Requirements with respect to any portion of the Note bearing
interest at a floating rate, the floating rate shall be
assumed to be fixed for the period in question at the
floating rate in effect on the first day of such period.
"Senior Leverage Ratio" means, at any fiscal quarter-
end of the Borrower, the ratio of (A) the aggregate Debt of
the Borrower as at the end of that fiscal quarter, excluding
Subordinated Debt, to (B) the Adjusted Operating Cash Flow
of the Borrower and its Subsidiaries, all determined in
accordance with GAAP.
"Subordinated Debt" means Debt of the Borrower which is
subordinated in right of payment to all indebtedness of the
Borrower to the Bank, on terms that have been approved in
writing by the Bank and that have been noted by appropriate
legend on all instruments evidencing the Subordinated Debt,
which instruments shall have been delivered to and held by
the Bank.
"Subordinated Notes" has the meaning given it in the
Seller Subordination Agreement.
"Subsidiary" means any corporation of which more than
50% of the outstanding shares of capital stock having
general voting power under ordinary circumstances 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 shall have or might have voting power
by reason of the happening of any contingency, is at the
time directly or indirectly owned by the Borrower, by the
Borrower and one or more other Subsidiaries, or by one or
more other Subsidiaries.
"Subsidiary Guaranties" means, collectively, the
guaranty agreement of each of the Telecommunications
Subsidiaries, in substantially the form of Exhibit D.
"Target Company" means U.S. Communications, Inc., a
Texas corporation.
"Telecommunications Subsidiaries" means Long Distance
Network, Inc., North American Telecommunications
Corporation, the Target Company and SLDN.
"Term Advances" has the meaning specified in Section
2.1.
"Welfare Plan" means a "welfare plan" as defined in
Section 3(1) of ERISA.
ARTICLE 2
Amount and Terms of the Term Loan
Section 2.1 Term Loan. The Bank agrees, on the terms and
subject to the conditions hereinafter set forth, to make advances
(each a "Term Advance") to the Borrower from time to time during
the period from the Closing Date to and including the Conversion
Date in an aggregate outstanding amount not to exceed the lesser
of (i) 2.5 times Adjusted Operating Cash Flow on the quarter-end
preceding the Advance Date of each such Term Advance or (ii) the
Maximum Loan Amount. Based on the Borrowing Certificate
delivered to the Bank pursuant to Section 3.2(a) hereof, the Bank
agrees that the principal amount of the initial Term Advance on
the Closing Date shall be $7,000,000. The Term Advances shall be
evidenced by and repayable in accordance with the Borrower's
single promissory note of even date herewith in substantially the
form of Exhibit A hereto (the "Note"). Term Advances shall not
be revolving; the Borrower may not reborrow Term Advances that
have been prepaid.
Section 2.2 Making the Term Advances. Each Term Advance,
after the initial Term Advance, shall be made on at least five
Bank Business Days' prior written notice from the Borrower to the
Bank, which notice shall specify the Advance Date of the
requested Term Advance and the amount thereof. Each Term
Advance, after the initial Term Advance, shall be in the amount
of $100,000 or a multiple of $25,000 greater than $100,000. Upon
receipt of a request for a Term Advance hereunder, the Bank shall
verify to its satisfaction whether the Borrower has sufficient
Adjusted Operating Cash Flow for an additional Term Advance based
on the Borrowing Certificate submitted by the Borrower pursuant
to Section 3.2(a). In no event shall the Bank make a Term
Advance if the Bank has not received the monthly financial
statements for the preceding quarter required under
Section 5.1(b). Upon fulfillment of the applicable conditions
set forth in Article 3, including but not limited to the
conditions set forth in Section 3.2, the Bank shall disburse the
amount of the requested Term Advance by crediting the same to the
Borrower's demand deposit account maintained with the Bank or in
such other manner as the Bank and the Borrower may from time to
time agree. The Borrower shall promptly confirm each telephonic
request for a Term Advance by executing and delivering an
appropriate confirmation certificate to the Bank. The
Borrower shall be obligated to repay all Term Advances
notwithstanding the failure of the Bank to receive such
confirmation and notwithstanding the fact that the person
requesting same was not in fact authorized to do so. Any request
for a Term Advance shall be deemed to be a representation that
the statements set forth in Section 3.2 are correct.
Section 2.3 Interest. Except to the extent that the
Borrower elects a LIBO Rate pursuant to this Section for some
portion or all of the Term Advances, the principal balance of the
Term Advances from time to time outstanding shall bear interest
at the Floating Rate. At the election of the Borrower, which may
be exercised from time to time so long as no Default or Event of
Default has occurred and is then continuing, the Borrower may
request in writing or by telephone that the Bank quote the LIBO
Rate which would be applicable for the portion of the outstanding
principal balance of the Term Advances and for the Interest
Period indicated by the Borrower in its quotation request. The
portion of the outstanding balance of the Term Advances for which
a LIBO Rate quotation is requested (i) must be in the amount of
$500,000 or a higher amount which is an integral multiple of
$500,000, (ii) must not otherwise bear interest at a LIBO Rate at
any time during the designated Interest Period on account of any
other acceptance of a LIBO Rate hereunder, and (iii) must not be
subject to being repaid during the proposed Interest Period by
any regularly scheduled principal payment. No more than five
Interest Periods shall be outstanding at any one time. A request
for a LIBO Rate quotation must be received by the Bank before
10:00 a.m. (Minneapolis time) on the day three (3) Eurodollar
Business Days before the first day of the proposed Interest
Period. The Borrower shall immediately either accept or reject
the quotation by telephone. If the Borrower does not immediately
accept a LIBO Rate quotation, the quotation shall be deemed to
have been rejected. Upon acceptance of a LIBO Rate quotation,
the quoted LIBO Rate shall be the interest rate applicable for
the proposed Interest Period to the portion of the outstanding
principal balance of the Term Advances to which the quotation
related (and the remaining part of the principal balance of the
Term Advances, if any, shall continue to bear interest at the
rate or rates previously applicable to such amounts). At the
termination of such Interest Period, the interest rate applicable
to the portion of the principal balance of the Term Advances to
which the accepted LIBO Rate quotation was applicable shall
revert to the Floating Rate unless a new LIBO Rate quotation is
accepted by the Borrower. Notwithstanding anything contained in
this Section to the contrary, the Bank shall have no obligation
to quote a LIBO Rate for any Interest Period if the Bank, in
accordance with its standard commercial practices, determines
that deposits in amounts equal to the amount for which the
quotation has been requested and maturing at the end of the
proposed Interest Period are not readily available to the Bank
from major banks in the London interbank market. In such event,
the Bank shall offer the Borrower an alternative fixed rate
option with the Interest Rate Spread to be negotiated at such
time.
Section 2.4 Interest Rate Spreads.
(a) The Floating Rate Spread used in calculating the
Floating Rate at any time shall be the sum of the
then-applicable Floating Increment, the then-applicable
Default Increment, if any, and the then-applicable Equity
Increment, if any, all as determined in accordance with
subsections (c), (d) and (e) below.
(b) The LIBO Rate Spread used in calculating the LIBO
Rate at any time shall be the sum of the then-applicable
LIBO Increment, the then-applicable Default Increment, if
any, and the then-applicable Equity Increment, if any, all
as determined in accordance with subsections (c), (d) and
(e) below.
(c) The Floating Increment and the LIBO Increment
(collectively, the "Basic Rate Increments") shall be
determined as follows:
Through and including September 30, 1995, the Floating
Increment shall be 2.0% and the LIBO Increment shall be
4.0%. The Basic Rate Increments shall thereafter be
adjusted as of the first day of each fiscal quarter of the
Borrower on the basis of the Borrower's Senior Leverage
Ratio as of the end of the preceding fiscal quarter (e.g.
any adjustment to be made as of October 1, 1995 shall be
determined on the basis of the Senior Leverage Ratio as of
September 30, 1995) in accordance with the following table:
Then the And the
If the Senior Floating LIBO
Leverage Increment Increment
Ratio is: shall be shall be
------------- --------- ---------
2.0 to 1 or more 2.0% 4.0%
1.25 to 1 or more, but 1.5% 3.5%
less than 2.0 to 1
less than 1.25 to 1 1.0% 3.0%
Reductions and increases in the Basic Rate Increments will
be determined quarterly upon receipt of the Borrower's
financial statements and monthly Compliance Certificates
required under Section 5.1(b) (and, in any event, not later
than 45 days after each quarter-end). Such reductions and
increases will be applied retroactively to the beginning of
the quarter in which such determination is made; provided,
however, that if the Borrower fails to deliver any financial
statements or Compliance Certificates when required under
Section 5.1(b), the Bank may, by notice to the Borrower,
increase the Basic Rate Increments to the highest rates set
forth above until such time as the Bank has received all
such financial statements and Compliance Certificates.
Notwithstanding the foregoing, no reduction in the Basic
Rate Increments will be made if a Default or an Event of
Default has occurred (and written notice thereof has been
given by the Bank to the Borrower) and is continuing at the
time that such reduction would otherwise be made.
(d) Upon written notice of any Default or Event of
Default by the Bank to the Borrower, and so long as such
Default or Event of Default continues without written waiver
thereof by the Bank, a Default Increment shall be added to
the applicable Interest Rate Spread. Such Default Increment
shall be equal to two percent (2.0%). Inclusion of the
Default Increment in calculating the Interest Rate Spreads
shall not be deemed a waiver or excuse of any such Default
or Event of Default.
(e) If the Borrower fails to prepay at least
$1,250,000 in principal of Subordinated Debt after the date
hereof and on or before October 31, 1995 from the proceeds
of one or more Qualified Equity Offerings, as defined in the
Seller Subordination Agreement, the Equity Increment shall
be 100 basis points (1.00%) at all times from and after
November 1, 1995. At all other times, the Equity Increment
shall be 0%.
Section 2.5 Collateral; Guaranty. Payment of the Note and
all other amounts now or hereafter owing by the Borrower to the
Bank (i) shall be secured by a security interest in property
generally described as all of the Borrower's and
Telecommunications Subsidiaries' inventory, accounts, equipment
and general intangibles (including customer lists), as more fully
described in the Security Agreements, (ii) shall be further
secured by the Life Insurance Assignment, (iii) shall be
guaranteed by the Guarantor pursuant to the Guaranty, which
Guaranty shall be secured by a security interest in a portion of
the issued and outstanding capital stock of the Borrower, as set
forth in the Guarantor's Pledge Agreement, (iv) shall be further
guaranteed by the Telecommunications Subsidiaries pursuant to the
Subsidiaries Guaranties, (v) shall be further secured by the
Assignment of Deposit Accounts, and (vi) may also now or
hereafter be secured by one or more other security agreements,
mortgages, deeds of trust, assignments or other instruments or
agreements. Each of the liens and security interests described
above shall be prior to all other liens and security interests of
any kind whatsoever, subject only to such exceptions as the Bank
may expressly approve in writing.
The Bank hereby agrees that upon receipt of Compliance
Certificates and financial statements of the Borrower which
indicate that the Borrower has maintained its Senior Leverage
Ratio at less than 1.5 to 1 for two consecutive fiscal quarters
after the Conversion Date, as verified by the Bank and provided
that no Default or Event of Default shall have occurred and be
continuing, the Bank will release the Guarantor from his
obligations under the Guaranty and the Pledge Agreement and the
Guaranty and the Pledge Agreement shall forthwith be terminated
and all collateral thereunder returned to the Guarantor.
Section 2.6 Payment of Interest and Principal. Interest
accruing on the principal balance of the Note (including interest
at a LIBO Rate) shall be payable quarterly in arrears on the last
day of each calendar quarter, commencing on September 30, 1995.
The principal balance of the Note shall be due and payable in
fifteen quarterly installments due and payable on the last day of
each calendar quarter, commencing December 31, 1996. The amount
of each quarterly installment due during each period set forth
below shall be equal in amount, and the aggregate amount of the
installments due during each such period shall be equal to the
principal balance of the Note as of the Conversion Date times the
percentage set forth opposite such period:
Percent of
Loan Year Principal Balance
--------- -----------------
July 1, 1996-June 30, 1997 15%
July 1, 1997-June 30, 1998 25%
July 1, 1998-June 30, 1999 25%
July 1, 1999-June 30, 2000 35%
Any remaining principal of the Term Note, together with all
accrued but unpaid interest on the Term Note, shall be finally
due and payable in full on June 30, 2000.
Section 2.7 Voluntary Prepayments. The Borrower may prepay
the Note in whole or in part at any time and from time to time;
provided that (i) prepayment of the full amount of the Note shall
include accrued interest thereon, (ii) prepayment shall be
accompanied by the payment of a prepayment premium if required
under Section 2.8, (iii) each partial prepayment of the Note
shall be in the principal amount of $150,000 or a multiple of
$50,000 greater than $150,000, (iv) any prepayment shall be made
only upon five Bank Business Days' notice to the Bank, and
(v) any partial prepayment of the Note shall be applied to the
principal installments of the Note in inverse order of their
maturities.
Section 2.8 Prepayment Premium. Upon prepayment of the
Note (other than mandatory prepayments under Section 2.9) from
the proceeds of any loan made to the
Borrower by a financial or other lending institution other than
the Bank, or upon acceleration of the maturity of the Note, there
shall be due and payable a sum equal to the Applicable Percentage
of the principal balance of the Note so prepaid or due upon
acceleration, as the case may be. For purposes of this Section,
a prepayment shall be deemed to have been made from the proceeds
of a loan by a financial or other lending institution other than
the Bank if the Borrower obtains any such loan concurrent with
such prepayment or within six (6) months thereafter. If such
loan is obtained after the prepayment of the Note, the prepayment
premium required hereunder shall be due and payable at the time
that such replacement loan is funded.
As used herein, "Applicable Percentage" means, with respect
to any Loan Year, a percentage equal to the amount set forth
below opposite that Loan Year:
Loan Year Applicable Percentage
--------- ---------------------
1 3.0%
2 2.0%
3 1.0%
As used herein, "Loan Year" means a twelve-month period, with the
first such Loan Year commencing on the date hereof and ending on
the first anniversary hereof and with each subsequent Loan Year
commencing on the corresponding subsequent anniversary of the
date hereof. No prepayment premium shall be due with respect to
any prepayment or acceleration occurring during the fourth or any
subsequent Loan Year.
Section 2.9 Mandatory Prepayments.
(a) Within 120 days after the end of each fiscal year
of the Borrower beginning with the fiscal year ending
December 31, 1996, the Borrower shall pay to the Bank an
amount equal to 33.33% of its Excess Cash Flow with respect
to that fiscal year; provided, however, that for the fiscal
year ending December 31, 1996, the Excess Cash Flow
calculation will be based upon the period from the Closing
Date through December 31, 1996.
(b) If at any time the outstanding Term Advances
exceed an amount equal to 2.5 times the Adjusted Operating
Cash Flow, as determined by the Bank, the Borrower shall
immediately upon notice from the Bank repay such Term
Advances to the extent necessary to eliminate such excess.
(c) All sums paid under this Section 2.9 shall be
applied to the principal installments of the Note in inverse
order of their maturities in accordance with Section 2.7.
Section 2.10 Computation of Interest and Fees. Interest
under the Note and the fees hereunder shall be computed on the
basis of actual number of days elapsed in a year of 360 days.
Section 2.11 Payment. All payments of principal and
interest under the Note and of the fees hereunder shall be made
to the Bank in immediately available funds. The Borrower agrees
that the amount shown on the books and records of the Bank as
being the principal balance of the Note shall be prima facie
evidence of such principal amount. The Borrower hereby
authorizes the Bank to charge against the Borrower's account with
the Bank an amount equal to the accrued interest and fees from
time to time due and payable to the Bank under the Note or
hereunder.
Section 2.12 Payment on Nonbusiness Days. Whenever any
payment to be made hereunder or under the Note shall be stated to
be due on a day other than a Bank Business Day, such payment may
be made on the next succeeding Bank Business Day, and such
extension of time shall in each case be included in the
computation of payment of interest on the Note or the fees
hereunder, as the case may be.
Section 2.13 Fees. The Borrower agrees to pay to the Bank
each of the following fees, in addition to all other fees
required to be paid under Section 3.1 and otherwise by this
Agreement:
(a) A commitment fee at the rate of three-eighths of
one percent (.375%) per annum on the average daily unused
amount of the Maximum Loan Amount from the Closing Date to
and including the Conversion Date, payable quarterly in
arrears on the last day of each December, March, June and
September, through the Conversion Date, commencing September
30, 1995; provided that any commitment fee remaining unpaid
shall be due and payable on the Conversion Date.
(b) A supplemental facility fee equal to $100,000,
payable on the earliest of (i) the date of prepayment of the
Term Advances in full, (ii) 30 days after the Borrower's
Senior Leverage Ratio is less than 1.0 to 1.0 for two or
more consecutive fiscal quarters, (iii) the date the
Borrower is sold, or (iv) June 30, 2000.
Section 2.14 Use of Proceeds. The proceeds of the initial
Term Advance hereunder shall be used by the Borrower to pay a
portion of the purchase price of the Acquisition. The proceeds
of subsequent Term Advances hereunder shall be used by the
Borrower to repay principal on the Subordinated Debt portion of
the Acquisition costs in whole or in part. The Bank acknowledges
that the subsequent Term Advances will be made prior to the
maturity of the Subordinated Debt and agrees that the Borrower
may request and receive such Advances (subject to the other terms
and conditions herein) so long as such Term Advances are used for
the immediate prepayment of such Subordinated Debt. Any Term
Advances made after such
Subordinated Debt has been paid in full shall be used for the
Borrower's general corporate purposes.
Section 2.15 Fees on Fixed Rate Amounts and Indemnity. In
addition to any interest payable on the Note and any fees or
other amounts payable hereunder, the Borrower agrees:
(a) If at any time any applicable law, rule or
regulation or the interpretation or administration thereof
by any governmental authority (including, without
limitation, Regulation D of the Federal Reserve Board)
shall:
(i) subject the Bank to any tax, duty or other charges
(including but not limited to any tax designed to
discourage the purchase or acquisition of foreign
securities or debt instruments by United States
nationals) with respect to this Agreement, or shall
materially change the basis of taxation of payments to
the Bank of the principal of or interest on any portion
of the Note bearing interest at a LIBO Rate (except for
changes in the rate of tax on the overall net income of
the Bank); or
(ii) impose or deem applicable any reserve, special
deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended
by the Bank because of any portion of the principal
balance of the Note bearing interest at a LIBO Rate;
(iii) impose on the Bank any other condition affecting
its making, maintaining or funding of any portion of
the Note at a LIBO Rate;
and the result of any of the foregoing is to increase the
cost to the Bank of making or maintaining any portion of the
Note at a LIBO Rate, or to reduce the amount of any sum
received or receivable by the Bank with respect to such
portion, then within 30 days after demand by the Bank (which
demand shall be accompanied by a statement setting forth the
basis of such demand), the Borrower shall pay directly to
the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or such
reduction.
(b) In addition to any premium required to be paid to
the Bank under Section 2.8 hereof, upon demand by the Bank
(which demand shall be accompanied by a statement setting
forth the basis for the calculations of the among being
claimed) the Borrower will indemnify the Bank against any
loss or expense which the Bank may have sustained or
incurred (including, without limitation, any net loss or
expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Bank
to fund or
maintain any portion of principal of the Note which bears
interest at a LIBO Rate), as reasonably determined by the
Bank, due to any prepayment of any portion of the Note
bearing interest at a LIBO Rate on a date which is not the
expiration date of the relevant Interest Period, or which
causes any portion of the Note bearing interest at a LIBO
Rate to be subject to being repaid during the relevant
Interest Period by any regularly scheduled principal
payment, as a consequence of a voluntary prepayment pursuant
to Section 2.7, mandatory prepayment under Section 2.9 or of
any Event of Default under this Agreement. For this
purpose, all acceptances of LIBO Rate quotations pursuant to
this Agreement shall be deemed to be irrevocable. Any
certificate as to any such loss or expense shall, in the
absence of manifest error, be final and conclusive as to the
amount thereof.
ARTICLE 3
Conditions of Lending
Section 3.1 Initial Conditions Precedent. The obligation
of the Bank to make the initial Term Advance is subject to the
condition precedent that the Bank shall have received on or
before the day of that Term Advance all of the following, each
dated (unless otherwise indicated) as of the Closing Date, in
form and substance satisfactory to the Bank:
(a) The Note, properly executed on behalf of the
Borrower.
(b) The Security Agreements, properly executed on
behalf of the Borrower and the Telecommunications
Subsidiaries.
(c) The Subsidiary Guaranties properly executed on
behalf of the Telecommunications Subsidiaries.
(d) All original certificates evidencing the stock of
the Telecommunications Subsidiaries, together with blank
assignments of that stock duly executed by the Borrower or
(in the case of SLDN's stock) the Target Company.
(e) The Guaranty, properly executed by the Guarantor.
(f) The Guarantor's Pledge Agreement, properly
executed by the Guarantor, together with the original
certificates evidencing the stock covered by the Pledge
Agreement and blank assignments of that stock duly executed
by the Guarantor.
(g) Financing statements sufficient when filed to
perfect the security interests granted under the Security
Agreements and the Pledge Agreements to the extent such
security interests are capable of being perfected by filing.
(h) Current searches of appropriate filing offices
showing that (i) no state or federal tax liens have been
filed and remain in effect against the Borrower, the Target
Company, the Subsidiaries or the Guarantor, (ii) no
financing statements have been filed and remain in effect
against the Borrower, the Target Company or such
Subsidiaries except financing statements perfecting only
security interests permitted under Section 6.1, and (iii) no
financing statements have been filed and remain in effect
against the Guarantor that cover the collateral described in
the Pledge Agreement.
(i) Copies of all real property leases to which the
Borrower or any Subsidiary is a party, together with consent
agreements signed by the landlord under each such lease
designated by the Bank, confirming such matters as the Bank
may request.
(j) The Life Insurance Assignment, duly executed by
the beneficiary and owner thereof, and the original Life
Insurance Policy, each in form and substance satisfactory to
the Bank, together with such evidence as the Bank may
request that the Life Insurance Policy is subject to no
assignments or encumbrances other than the Life Insurance
Assignment.
(k) The Assignment of Deposit Accounts, duly executed
by the Borrower, and, within 30 days after the Closing Date,
one or more acknowledgments in the form attached thereto,
duly executed by the financial institutions at which the
Borrower maintains any deposit account, as may be required
by the Bank.
(l) Copies of the Borrower's Articles of Incorporation
and Bylaws, certified by the Secretary or Assistant
Secretary of the Borrower as being true and correct copies
thereof.
(m) Copies of the Articles of Incorporation and Bylaws
of each Telecommunications Subsidiary certified by the
Secretary or Assistant Secretary of such Subsidiary as being
true and correct copies thereof.
(n) A certified copy of the resolutions of the
Borrower's Board of Directors evidencing approval of the
matters contemplated hereby, including but not limited to
the Acquisition and the Loan Documents.
(o) A signed copy of a certificate of the Secretary or
an Assistant Secretary of the Borrower which shall certify
the names of the officers of that Borrower authorized to
sign this Agreement, the Note, the Security Agreement and
the Borrower's Pledge Agreement and the other documents or
certificates to be delivered pursuant to this Agreement by
the Borrower or any of its officers, including requests for
Term Advances, together with the true signatures of such
officers. The Bank may conclusively rely on such
certificate until it shall receive a further certificate of
the Secretary or Assistant Secretary of the Borrower
canceling or amending the prior certificate and submitting
the signatures of the officers named in such further
certificate.
(p) A certified copy of the resolutions of the Board
of Directors of each Telecommunications Subsidiary
evidencing approval of the Security Agreement and Guaranty
of such Subsidiary.
(q) Certificates of Good Standing of the Borrower,
issued by the States of Delaware and Texas; Certificates of
Good Standing of Long Distance Network, Inc. and North
American Communications Corporation issued by the State of
Texas; and Certificates of Good Standing of the Target
Company issued by the State of Texas, Oklahoma, Arkansas,
New Mexico and Arizona and Colorado; with each such
certificate dated not more than ten days before the Closing
Date.
(r) A signed copy of an opinion of counsel for the
Borrower and the Guarantor, addressed to the Bank in
substantially the form of Exhibit D hereto.
(s) A copy of such executed Acquisition Documents as
the Bank shall reasonably require to evidence conveyance of
all stock and assets of the Target Company, free and clear
of any liens, claims or encumbrances, except as may be
permitted by the Bank.
(t) Evidence satisfactory to the Bank with respect to
the amount, source and form of equity contributions to the
Borrower, together with such waivers of conversion or
redemption rights of preferred stockholders as may be
required by the Bank.
(u) Such subordination agreements as the Bank may
require to evidence that all of the Borrower's Debt other
than its indebtedness arising hereunder has been
subordinated to payment of the Borrower's indebtedness
arising hereunder on terms satisfactory to the Bank,
together with copies of all promissory notes or other
documents evidencing such Subordinated Debt, showing that
such notes or
other documents have been legended with notification of the
subordination thereof.
(v) A pro forma balance sheet of the Borrower after
consummation of the Acquisition, certified by the president
or the chief financial officer of the Borrower.
(w) Copies of all Licenses, together with all
necessary consents of the governmental agencies issuing such
Licenses to the Acquisition.
(x) Copies of all Material Agreements and all
necessary consents of the other parties thereto to the
Acquisition.
(y) A Certificate of the insurance required under the
Security Agreement, naming the Bank as loss payee.
(z) A collateral audit of the Borrower performed by
the Bank.
(aa) A facility fee in the amount of $100,000. The
facility fee shall be deemed fully earned by the Bank's
entering into this Agreement, whether or not any Term
Advance is in fact made.
Section 3.2 Additional Conditions Precedent to Term
Advances. The Bank's obligation to make any Term Advance
(including the initial Term Advance) shall be subject to the
further conditions precedent that on the date of that Term
Advance:
(a) The Borrower shall have delivered to the Bank a
Borrowing Certificate as of the quarter-end preceding the
Term Advance or, with respect to the initial Term Advance,
as of April 30, 1995, certified by the president or chief
financial officer of the Borrower;
(b) The Borrower shall have delivered to the Bank such
evidence as the Bank may reasonably require that the
Borrower has entered into one or more interest rate
protection arrangements acceptable to the Bank, as necessary
to cover at least 50% of the principal amount of such
requested Term Advance, for a period ending at least two
years from the Closing Date, the economic effect of which
arrangements shall be to limit the upward fluctuation in the
Base Rate during the term of such arrangements to not more
than 200 basis points (2.00%), all for purposes of
determining the Borrower's obligation to pay interest on the
requested Term Advance at the Floating Rate;
(c) The representations and warranties contained in
Article 4 are correct on and as of the date of the Term
Advance as though made on and as of such date, except to the
extent that such representations and warranties relate
solely to an earlier date; and
(c) No event has occurred and is continuing, or would
result from the Term Advance, which constitutes a Default or
an Event of Default.
ARTICLE 4
Representations and Warranties
The Borrower represents and warrants to the Bank as
follows:
Section 4.1 Corporate Existence and Power. The Borrower is
a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware, and is duly licensed or
qualified to transact business in Texas. Long Distance Network,
Inc. and North American Telecommunications Corporation are each
corporations duly incorporated, validly existing and in good
standing under the laws of Texas. The Borrower and its
Subsidiaries are each duly licensed or qualified to do business
in all other jurisdictions where the character of the property
owned or leased or the nature of the business transacted by it
makes such licensing or qualification necessary to enable it to
enforce all of its material contracts and other material rights
and to avoid any material penalty or forfeiture. The Borrower
and each Subsidiary has all requisite power and authority,
corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its
obligations under, the Loan Documents and such Subsidiary's
Guaranty and Security Agreement, as the case may be.
Section 4.2 Authorization of Borrowing; No Conflict as to
Law or Agreements. The execution, delivery and performance by
the Borrower of the Loan Documents and the borrowings from time
to time hereunder have been duly authorized by all necessary
corporate action of the Borrower and do not and will not
(i) require any consent or approval of the shareholders of the
Borrower, or any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision
of any law, rule or regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve
System) or of any order, writ, injunction or decree presently in
effect having applicability to the Borrower or of its Articles of
Incorporation or Bylaws, (iii) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be
bound or affected, except for defaults under equipment and office
leases to which the Target Company is a party, the effect of
which
defaults shall not be materially adverse to the Borrower and its
Subsidiaries, or (iv) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature (other than
liens and security interests in favor of the Bank) upon or with
respect to any of the properties now owned or hereafter acquired
by the Borrower.
Section 4.3 Legal Agreements. The Loan Documents
constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their respective terms.
Section 4.4 Subsidiaries. Schedule 4.4 hereto is a
complete and correct list of all present Subsidiaries and of the
percentage of ownership of the Borrower or any Subsidiary in each
as of the Closing Date. Except as otherwise indicated in that
Schedule, all shares of each Subsidiary owned by the Borrower or
by any such other Subsidiary are validly issued and fully paid
and nonassessable. The Borrower hereby represents, warrants and
agrees with the Bank that within 30 days of obtaining the SEC's
declaration that the registration statement with respect thereto
is effective, the Borrower will distribute approximately 57% of
the common stock of SATC to the Borrower's shareholders, as set
forth in the Form 10-SB filed with the SEC and previously
delivered to the Bank. If such declaration has not been obtained
by the Borrower on or before September 30, 1995, the Borrower
shall, on or before that date, deliver to the Bank (i) a security
agreement, duly executed by SATC, in the form of the Security
Agreements, (ii) such UCC-1 Financing Statements and other
documents as the Bank may require to perfect the security
interest granted thereunder, and (iii) a guaranty duly executed
by SATC, in the form of Exhibit D; provided, however, that such
security agreement and guaranty, and the security interest in
SATC's stock granted pursuant to the Borrower's Security
Agreement, shall be released by the Bank concurrent with any
distribution of at least 80% of the stock of SATC to the
Borrower's shareholders.
Section 4.5 Financial Condition. The Borrower has
heretofore furnished to the Bank its audited financial statements
as of and for the year ended December 31, 1994, and its unaudited
interim financial statements as of and for the year-to-date
period ended April 30, 1995. The Borrower has also furnished to
the Bank the audited financial statements of the Target Company
as of and for the year ended December 31, 1994, and the Target
Company's unaudited interim financial statements as of and for
the year-to-date period ended April 30, 1995. Those financial
statements fairly present the financial condition of the Borrower
and the Target Company on the dates thereof and the results of
its operations and cash flows for the periods then ended, and
were prepared in accordance with GAAP. The Borrower has also
furnished to the Bank a pro forma balance sheet of the Borrower
and the Target Company after consummation
of the Acquisition which fairly presents the projected financial
condition of the Borrower and its Subsidiaries after the
Acquisition.
Section 4.6 Adverse Change. There has been no material
adverse change in the business, properties or condition
(financial or otherwise) of the Borrower or its Subsidiaries
since the date of the latest financial statement referred to in
Section 4.5.
Section 4.7 Litigation. Except as set forth in
Schedule 4.7, there are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary or the properties of the
Borrower or any Subsidiary before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the
Borrower or any Subsidiary, would have a material adverse effect
on the financial condition, properties, or operations of the
Borrower or any Subsidiary.
Section 4.8. Hazardous Substances. To the best of the
Borrower's knowledge after reasonable inquiry, neither the
Borrower, any Subsidiary nor any other Person has ever caused or
permitted any Hazardous Substance to be disposed of in any manner
which might result in any material liability to the Borrower or
any Subsidiary on, under or at any real property which is or was
operated by the Borrower or any Subsidiary or in which the
Borrower or any Subsidiary has any interest; and no such real
property has ever been used (either by the Borrower or by any
other Person) as a dump site or permanent or temporary storage
site for any Hazardous Substance.
Section 4.9 Regulation U. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of
the proceeds of the Term Advances will be used to purchase or
carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
Section 4.10 Taxes. The Borrower and each Subsidiary has
paid or caused to be paid to the proper authorities when due all
federal, state and local taxes required to be withheld by it.
The Borrower and each Subsidiary has filed all federal, state and
local tax returns which to the knowledge of the officers of the
Borrower are required to be filed, and the Borrower and each
Subsidiary has paid or caused to be paid to the respective taxing
authorities all taxes as shown on said returns or on any
assessment received by it to the extent such taxes have become
due, except any tax or assessment whose amount, applicability or
validity is being contested in good faith by appropriate
proceedings.
Section 4.11 Capitalization. Schedule 4.11 constitutes a
correct and complete list of all authorized stock of the
Borrower, including the amount thereof that is issued and
outstanding and the class thereof.
Section 4.12 Real Estate. Schedule 4.12 constitutes a
correct and complete list of all interests (including but not
limited to all fee simple and leasehold interests) of the
Borrower, the Target Company and its Subsidiaries in any real
property or fixtures, wherever located, including complete legal
descriptions of all such real property. The Borrower has
delivered to the Bank correct and complete copies of all leases
or other documents giving rise to any leasehold or similar
interest of the Borrower, the Target Company and the Subsidiaries
in any real property.
Section 4.13 Titles and Liens. The Borrower or one of its
Subsidiaries has good title to each of the properties and assets
reflected in the latest balance sheet referred to in Section 4.5
(other than any sold, as permitted by Section 6.6), free and
clear of all mortgages, security interests, liens and
encumbrances, except for mortgages, security interests and liens
permitted by Section 6.1 and covenants, restrictions, rights,
easements and minor irregularities in title which do not
materially interfere with the business or operations of the
Borrower or such Subsidiary as presently conducted. No financing
statement naming the Borrower or any Subsidiary as debtor is on
file in any office except to perfect only security interests
permitted by Section 6.1.
Section 4.14 Licenses. Schedule 4.14 constitutes a correct
and complete list of all Licenses and the expiration dates
thereof. The Borrower has heretofore furnished the Bank with
correct and complete copies of all Licenses listed in Schedule
4.14. Each License is in full force and effect.
Section 4.15 Material Agreements. Schedule 4.15
constitutes a correct and complete list of all Material
Agreements and the expiration dates thereof. The Borrower has
heretofore furnished the Bank with correct and complete copies of
all Material Agreements listed in Schedule 4.15. Each Material
Agreement is in full force and effect.
Section 4.16. ERISA. No Plan established or maintained by
the Borrower or any ERISA Affiliate or any ERISA Affiliate that
is subject to Part 3 of Subtitle B of Title I of ERISA had an
accumulated funding deficiency (as such term is defined in
Section 302 of ERISA) in excess of $1,000,000 as of the last day
of the most recent fiscal year of such Plan ended prior to the
date hereof, and no liability to the Pension Benefit Guaranty
Corporation or the Internal Revenue Service in excess of such
amount has been, or is expected by the Borrower or any ERISA
Affiliate to be, incurred with respect to any Plan of the
Borrower or any ERISA Affiliate. The Borrower has no
contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
Section 4.17. Representations with respect to Target
Company. Notwithstanding anything to the contrary in this
Article 4, all representations and warranties made in this
Article 4 regarding the Target Company are made to the best of
the Borrower's knowledge in reliance upon representations and
warranties made in connection with the Borrower's purchase of the
Target Company. Nonetheless, to the extent that any
representation or warranty made in this Article 4 regarding the
Target Company proves to have been incorrect or misleading in any
material respect when made, an Event of Default shall be deemed
to have occurred under Section 7.1(d) whether or not the Borrower
had or should have had knowledge of the incorrect or misleading
nature of such warranty or representation.
ARTICLE 5
Affirmative Covenants of the Borrower
So long as the Note shall remain unpaid, the Borrower
will comply with the following requirements, unless the Bank
shall otherwise consent in writing:
Section 5.1 Financial Statements. The Borrower will
deliver to the Bank:
(a) As soon as available, and in any event within 90
days after the end of each fiscal year of the Borrower, a
copy of the annual audit report of the Borrower prepared on
a consolidated basis with the unqualified opinion of
independent certified public accountants selected by the
Borrower and acceptable to the Bank, which annual report
shall include the consolidated and consolidating balance
sheet of the Borrower as at the end of such fiscal year and
the related consolidated and consolidating statements of
income, shareholders' equity and cash flows of the Borrower
and its Subsidiaries for the fiscal year then ended, all in
reasonable detail and all prepared in accordance with GAAP
applied
on a basis consistent with the accounting practices applied
in the annual financial statements referred to in Section
4.5, together with (A) a report signed by such accountants
stating that in making the investigations necessary for said
opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default hereunder and all
relevant facts in reasonable detail to evidence, and the
computations as to, whether or not the Borrower is in
compliance with the requirements set forth in Sections 5.9,
5.10, 5.11 and 6.11; (B) a copy of such accountants'
management letter issued to the Borrower for such year; and
(C) a certificate of the president or chief financial
officer of the Borrower stating that such financial
statements have been prepared in accordance with GAAP
applied on a basis consistent with the accounting practices
reflected in the annual financial statements referred to in
Section 4.5 and whether or not he has knowledge of the
occurrence of any Default or Event of Default hereunder and,
if so, stating in reasonable detail the facts with respect
thereto.
(b) As soon as available and in any event within 45
days after the end of each month, the consolidated and
consolidating balance sheet of the Borrower as at the end of
such month and related consolidated and consolidating
statements of income, shareholders' equity and cash flows of
the Borrower and its Subsidiaries for such month and for the
year to date, in reasonable detail and stating in
comparative form the figures for the corresponding date and
period in the previous year, all prepared in accordance with
GAAP applied on a basis consistent with the accounting
practices reflected in the annual financial statements
referred to in Section 4.5, and subject to year-end audit
adjustments; and accompanied by a certificate of the
president or chief financial officer of the Borrower stating
(i) that such financial statements have been prepared in
accordance with GAAP applied on a basis consistent with the
accounting practices reflected in the annual financial
statements referred to in Section 4.5, and (ii) whether or
not he has knowledge of the occurrence of any Default or
Event of Default hereunder not theretofore reported and
remedied and, if so, stating in reasonable detail the facts
with respect thereto, and with respect to the financial
statements delivered for any month that is the last month of
a fiscal quarter of the Borrower, accompanied by a
Compliance Certificate and a Borrowing Certificate each
signed by the president or the chief financial officer of
the Borrower.
(c) Not less than 45 days prior to the end of each
fiscal year of the Borrower, projections for the Borrower's
and its Subsidiaries' financial performance during the
following fiscal year, including projections of income, cash
flows and balance sheets, all presented on a quarter-by-
quarter basis in such detail as the Bank may request and
certified by the president or chief financial officer of the
Borrower as being identical to the projections used by the
Borrower for internal planning purposes.
(d) Within 45 days after the end of each fiscal
quarter of the Borrower, a cost-of-sales analysis and
accounts payable aging showing the top 20 account vendors
with respect to that quarter, including both a consolidated
analysis and separate figures for each material business
segment or product line, as the case may be, for each
location in which the Borrower and its Subsidiaries
operates.
(e) Within 120 days after the end of each calendar
year, so long as the Guaranty is in effect, the personal
financial statements of the Guarantor as at the end of such
year, in such detail as the Bank may reasonably request.
(f) Within 30 days after filing thereof, so long as
the Guaranty is in effect, copies of all state and federal
personal income tax returns filed by the Guarantor,
including all schedules and attachments thereto.
(g) Promptly upon their distribution, copies of all
financial statements, reports and proxy statements which the
Borrower shall have sent to its shareholders.
(h) Promptly after the sending or filing thereof,
copies of all regular and periodic financial reports which
the Borrower shall file with the SEC or any national
securities exchange.
(i) Promptly upon becoming available, copies of any
reports or applications filed by the Borrower or any
Subsidiary with the FCC or any other federal, state or local
governmental body, and copies of any material notices and
other communications from any such governmental body that
specifically relate to the Borrower or any License.
(j) Immediately after the commencement thereof, notice
in writing of all litigation and of all proceedings before
any governmental or regulatory agency affecting the Borrower
or any Subsidiary of the type described in Section 4.7 or
which seek a monetary recovery against the Borrower or any
Subsidiary in excess of $250,000.
(k) As promptly as practicable (but in any event not
later than five business days) after an officer of the
Borrower obtains knowledge of the occurrence of any Default
or Event of Default, notice of such occurrence, together
with a detailed statement by a responsible officer of the
Borrower of the steps being taken by the Borrower to cure
the effect of such event.
(l) Promptly upon becoming aware of any Reportable
Event or any prohibited transaction (as defined in Section
4975 of the Internal Revenue Code or Section 406 of ERISA)
in connection with any Plan or any trust created thereunder,
a written notice specifying the nature thereof, what action
the Borrower has taken, is taking or proposes to take with
respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the Department of Labor with
respect thereto.
(m) Promptly upon their receipt, copies of (a) all
notices received by the Borrower or any ERISA Affiliate of
the Pension Benefit Guaranty Corporation's intent to
terminate any Plan or to have a trustee appointed to
administer any Plan, (b) the annual report (Form 5500
Series), including any supporting schedules, filed by the
Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to any Plan, and (c) all notices
received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA.
(n) Such other information respecting the financial
condition and results of operations of the Borrower and its
Subsidiaries as the Bank may from time to time reasonably
request.
Section 5.2 Books and Records; Inspection and Examination.
The Borrower will keep, and will cause each Subsidiary to keep,
accurate books of record and account for itself in which true and
complete entries will be made in accordance with GAAP and, upon
request of the Bank, will give any representative of the Bank
access to, and permit such representative to examine, copy or
make extracts from, any and all books, records and documents in
its possession, to inspect any of its properties and to discuss
its affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as
often as the Bank may reasonably request.
Section 5.3 Compliance with Laws. The Borrower will, and
will cause each Subsidiary to, comply with the requirements of
applicable laws and regulations, the noncompliance with which
would materially and adversely affect its business or the
financial condition of the Borrower and its Subsidiaries.
Section 5.4 Payment of Taxes and Other Claims. The
Borrower will pay or discharge, and will cause each Subsidiary to
pay or discharge, when due, (a) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income
or profits, or upon any properties belonging to it, prior to the
date on which penalties attach thereto, (b) all federal, state
and local taxes required to be withheld by it, and (c) all lawful
claims for labor, materials and supplies which, if unpaid, might
by law become a lien or charge upon any properties of the
Borrower or any Subsidiary; provided, that the Borrower or such
Subsidiary shall not be required to pay any such tax, assessment,
charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
Section 5.5 Maintenance of Properties. The Borrower will
keep and maintain, and will cause each Subsidiary to keep and
maintain, all of its properties necessary or useful in its
business in good condition, repair and working order, ordinary
wear and tear excepted; provided, however, that nothing in this
Section shall prevent the
Borrower or such Subsidiary from discontinuing the operation and
maintenance of any of its properties if such discontinuance is,
in the judgment of the Borrower or such Subsidiary, desirable in
the conduct of its business and not disadvantageous in any
material respect to the Bank as holder of the Note.
Section 5.6 Insurance. The Borrower will, and will cause
each Subsidiary to, obtain and maintain insurance with insurers
believed by the Borrower to be responsible and reputable, in such
amounts and against such risks as is usually carried by companies
engaged in similar business and owning similar properties in the
same general areas in which the Borrower or such Subsidiary
operates.
Section 5.7 Preservation of Existence. The Borrower will,
and will cause each Subsidiary to, preserve and maintain its
existence and all of its Licenses, rights, privileges and
franchises; provided, however, that neither the Borrower nor any
Subsidiary shall be required to preserve any of its Licenses,
rights, privileges and franchises if its Board of Directors shall
determine that the preservation thereof is no longer desirable in
the conduct of the business of the Borrower or such Subsidiary
and that the loss thereof is not disadvantageous in any material
respect to the Bank as a holder of the Note.
Section 5.8 Deposit Accounts. The Borrower [and its
Subsidiaries] shall maintain all of its deposit accounts of any
type (whether for working capital or other purposes, and whether
held jointly or individually), excluding the Borrower's and
Subsidiaries' payroll accounts, with the Bank or another
depository institution acceptable to the Bank.
Section 5.9 Senior Leverage Ratio. The Borrower will at
all times maintain its Senior Leverage Ratio, determined as at
the end of each fiscal quarter of the Borrower designated below,
at not more than the amount set forth below opposite such
quarter-end:
Quarters Ending Ratio
--------------- -----
On or before September 30, 1996 2.50 to 1
October 1, 1996 through June 30, 1997 2.25 to 1
July 1, 1997 through June 30, 1998 1.75 to 1
July 1, 1998 through June 30, 1999 1.25 to 1
July 1, 1999 and thereafter 0.75 to 1
Section 5.10 Senior Debt Service Ratio. The Borrower will
at all times maintain its Senior Debt Service Ratio, determined
at the end of each fiscal quarter of the Borrower, at not less
than 2.0 to 1 through June 30, 1996 and at not less than 1.75 to
1 thereafter.
Section 5.11 Operating Cash Flow. The Borrower shall
maintain its Operating Cash Flow for each period of four fiscal
quarters, determined as of the end of each fiscal quarter, in an
amount not less than the greater of (i) $2,818,141 or (ii) 85% of
its Operating Cash Flow during the period of four fiscal quarters
ending one year prior to the date of determination.
Section 5.12 Key Person Life Insurance. The Borrower shall
maintain insurance upon the life of the Guarantor with the death
benefit thereunder in an amount not less than $2,000,000 (the
"Life Insurance Policy"). The right to receive 50% of the
proceeds of the Life Insurance Policy shall be assigned to the
Bank by the Life Insurance Assignment. The Borrower shall retain
at all times the right to receive the remaining 50% of the
proceeds.
Section 5.13 Material Agreements. Within 120 days of
the Closing Date, the Borrower or its Subsidiaries shall enter
into an agreement with NTS Communications, Inc. ("NTS"), or with
another similar long distance wholesaler, to provide switched
terminating services on terms at least as favorable as the
existing Telecommunications Agreement between Long Distance
Network, Inc. and NTS, or into such other arrangements acceptable
to the Bank in its reasonable discretion.
ARTICLE 6
Negative Covenants
So long as the Note shall remain unpaid, the Borrower
agrees that, without the prior written consent of the Bank:
Section 6.1 Liens. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to
exist any mortgage, deed of trust, pledge, lien, security
interest, or other charge or encumbrance of any nature on any of
its assets, now owned or hereafter acquired, or assign or
otherwise convey any right to receive income or give its consent
to the subordination of any right or claim of the Borrower or any
Subsidiary to any right or claim of any other Person; excluding,
however, from the operation of the foregoing:
(a) Liens for taxes or assessments or other
governmental charges to the extent not required to be paid
by Section 5.4.
(b) Materialmen's, merchants', carriers' worker's,
repairer's, or other like liens arising in the ordinary
course of business to the extent not required to be paid by
Section 5.4.
(c) Pledges or deposits to secure obligations under
worker's compensation laws, unemployment insurance and
social security laws, or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed
money) or leases or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance
or other similar bonds in the ordinary course of business.
(d) Zoning restrictions, easements, licenses,
restrictions on the use of real property or minor
irregularities in title thereto, which do not materially
impair the use of such property in the operation of the
business of the Borrower or any Subsidiary or the value of
such property for the purpose of such business.
(e) Purchase money mortgages, liens, or security
interests (which term for purposes of this subsection shall
include conditional sale agreements or other title retention
agreements and leases in the nature of title retention
agreements) upon or in property acquired after the date
hereof, or mortgages, liens or security interests existing
in such property at the time of acquisition thereof,
provided that:
(i) no such mortgage, lien or security interest
extends or shall extend to or cover any property
of the Borrower or any Subsidiary other than the
property then being acquired and fixed
improvements then or thereafter erected thereon;
(ii) the aggregate principal amount of all Debt of the
Borrower and its Subsidiaries secured by all
mortgages, liens or security interests described
in this subsection shall not exceed $750,000 at
any one time outstanding (but not including Debt
in connection with the purchase of switch hardware
or software permitted under Section 6.11); and
(iii) the aggregate principal amount of Debt secured by
mortgages, liens and security interests described
in this subsection 6.1(e) at the time of
acquisition of the property subject thereto shall
not exceed 100% of the cost of such property or of
the then fair market value of such property as
determined by the Board of Directors of the
Borrower, whichever shall be less, and the
aggregate amount of payments made thereunder in
any period of 12 consecutive months will not
result in a violation of the restriction contained
in Section 6.11.
(f) Mortgages, liens, pledges and security interests
on any property of the Borrower and its Subsidiaries (other
than those described in subsection 6.1(e)) securing any
indebtedness for borrowed money in existence on the date
hereof and listed in Schedule 6.1 hereto.
(g) The security interests granted to the Bank under
the Security Agreements.
(h) Liens arising out of a judgment against the
Borrower or any Subsidiary for the payment of money not
exceeding $100,000 with respect to which an appeal is being
prosecuted and a stay of execution pending such appeal has
been secured.
(i) Liens securing the Subordinated Notes, so long as
such liens are junior in priority to the security interests
granted to the Bank.
Section 6.2 Indebtedness. The Borrower will not, and will
not permit any Subsidiary to, incur, create, assume or permit to
exist any indebtedness or liability on account of deposits or
advances or any indebtedness for borrowed money, or any other
indebtedness or liability evidenced by notes, bonds, debentures
or similar obligations, except:
(a) Indebtedness to the Bank.
(b) Indebtedness of the Borrower or any Subsidiary in
existence on the date hereof and listed in Schedule 6.2
hereto, but not including any extensions or renewals
thereof, except for extensions or renewals of existing
indebtedness owed to officers, shareholders or directors in
an aggregate amount of $301,438, so long as no such
extension or renewal has the effect of making the final
maturity of the indebtedness so renewed or extended later
than December 31, 1995.
(c) Subordinated Debt, or renewals thereof.
(d) Indebtedness of a Subsidiary to the Borrower or
any Subsidiary or of the Borrower to a Subsidiary on account
of borrowings.
(e) Purchase money indebtedness of the Borrower or any
Subsidiary secured by liens permitted by subsection 6.1(e).
(f) Indebtedness incurred in connection with a
purchase of switch hardware or software approved by the Bank
pursuant to Section 6.11 hereof.
(g) The Preferred Stock.
Section 6.3 Guaranties. The Borrower will not, and will
not permit any Subsidiary to, assume, guarantee, endorse or
otherwise become directly or contingently liable in connection
with any obligations of any other Person, except:
(a) The endorsement of negotiable instruments by the
Borrower or any Subsidiary for deposit or collection or
similar transactions in the ordinary course of business.
(b) Guaranties, endorsements and other direct or
contingent liabilities in connection with the obligations of
other Persons in existence on the date hereof and listed in
Schedule 6.3 hereto.
(c) Guaranties of permitted indebtedness of the
Borrower or any Subsidiary.
Section 6.4 Investments. The Borrower will not, and will
not permit any Subsidiary to, purchase or hold beneficially any
stock or other securities or evidence of indebtedness of, make or
permit to exist any loans or advances to, or make any investment
or acquire any interest whatsoever in, any other Person, except:
(a) investments in direct obligations of the United
States of America or any agency or instrumentality thereof
whose obligations constitute full faith and credit
obligations of the United States of America having a
maturity of one year or less, commercial paper issued by
U.S. corporations rated "A-1" or "A-2" by Standard & Poors
Corporation or "P-1" or "P-2" by Xxxxx'x Investors Service
or certificates of deposit or bankers' acceptances having a
maturity of one year or less issued by members of the
Federal Reserve System having deposits in excess of
$100,000,000;
(b) loans to officers and employees of the Borrower
not exceeding at any one time an aggregate of $25,000;
(c) indebtedness of employees and officers of the
Borrower (excluding indebtedness described in
paragraph 6.4(b)) arising from the exercise by such
employees and officers of options to purchase stock of the
Borrower directly from the Borrower, provided that neither
the Borrower nor any Subsidiary shall have made any cash
advance in connection with such indebtedness (except to the
extent that such advance is immediately returned to the
Borrower in payment for the exercise of such options);
(d) travel advances to officers and employees of the
Borrower in the ordinary course of business;
(e) advances in the form of progress payments,
advances against commissions, prepaid rent or security
deposits; and
(f) investment in the stock of the Target Company or
any existing investment by the Borrower or any other
Subsidiary in the stock of any Subsidiary.
Section 6.5 Distributions. The Borrower will not declare
or pay any dividend on any class of its capital stock, or make
any payment on account of the purchase, redemption or other
retirement of any shares of such stock, or make any distribution
in respect thereof, either directly or indirectly; other than (i)
the distribution of stock of SATC as described in Section 4.4
hereof, on terms approved by the Bank; and (ii) distribution of
stock to preferred stockholders pursuant to the agreements
governing the Preferred Stock or otherwise on terms satisfactory
to the Bank.
Section 6.6 Sale of Assets. The Borrower will not, and
will not permit any Subsidiary to, sell, lease, assign, transfer
or otherwise dispose of all or a substantial part of its assets
(whether in one transaction or in a series of transactions) to
any other Person other than in the ordinary course of business
(but not including the sale of SATC stock or assets).
Section 6.7 Consolidation and Merger. The Borrower will
not, and will not permit any Subsidiary to, consolidate with or
merge into any Person, or permit any other Person to merge into
it, or acquire (in a transaction analogous in purpose or effect
to a consolidation or merger) all or substantially all of the
assets of any other Person; provided, however, that the
restrictions contained in this Section shall not apply to or
prevent the consolidation or merger of a Subsidiary with, or a
conveyance or transfer of its assets to, the Borrower (if the
Borrower shall be the continuing or surviving corporation) or any
other then existing wholly owned Subsidiary of the Borrower.
Section 6.8 Transactions with Affiliates.
(a) The Borrower may not pay management, consulting,
overhead, home office or any other fees or expenses of any
kind to any Affiliate (but not including ordinary
compensation, travel advances and other benefits paid to the
Senior Officers and directors of the Borrower in the
ordinary course), unless the right to receive such fees or
expenses is approved in advance by the Bank and is fully
subordinated to payment of the Note on the terms acceptable
to the Bank.
(b) The Borrower shall not make any loan or capital
contribution to, or any other investment in, any Affiliate,
or make any distribution or other cash transfer of any kind
to, any Affiliate, but not including loans to officers
permitted under Section 6.4. The Borrower shall not engage
in any other transaction (including but not limited to sales
of goods and services) with any Affiliate, except as
permitted by this Section 6.8.
(c) Nothing in this Section 6.8 shall limit the
Borrower's right to grant options for the purchase of its
stock to its officers, directors and employees.
Section 6.9 Sale and Leaseback. The Borrower will not, and
will not permit any Subsidiary to, enter into any arrangement,
directly or indirectly, with any other Person whereby the
Borrower shall sell or transfer any real or personal property,
whether now owned or hereafter acquired, and then or thereafter
rent or lease as lessee such property or any part thereof or any
other property which the Borrower intends to use for
substantially the same purpose or purposes as the property being
sold or transferred.
Section 6.10 Subordinated Debt. The Borrower, and will not
permit any Subsidiary to, (i) make any payment of, or acquire,
any Subordinated Debt except as expressly permitted by the Seller
Subordination Agreement; (ii) give security for all or any part
of such Subordinated Debt except as permitted by Section 6.1(i);
(iii) amend or cancel the subordination provisions of such
Subordinated Debt; (iv) take or omit to take any action whereby
the subordination of such Subordinated Debt or any part thereof
to the Note might be terminated, impaired or adversely affected;
or (v) omit to give the Bank prompt written notice of any default
under any agreement or instrument relating to such Subordinated
Debt by reason whereof such Subordinated Debt might become or be
declared to be immediately due and payable.
Section 6.11 Capital Expenditures. The Borrower will not,
and will not permit any Subsidiary to, make any Capital
Expenditure (including payments under capitalized leases) if,
after giving effect to such expenditure, the aggregate amount of
Capital Expenditures made by the Borrower and the Subsidiaries
combined will exceed
$275,000 in any period of 12 consecutive months; provided,
however, that the restriction contained in this Section is
subject to the further limitations imposed by Section 6.1(e) if
any asset is acquired under a purchase money mortgage, lien or
security interest referred to in that Section; and, provided
further that such restriction shall not apply to any purchase or
lease of switch hardware or software on terms and conditions and
in an amount approved in advance by the Bank. Such approval
shall not be unreasonably withheld, but the Bank may impose such
terms and conditions on its approval (including but not limited
to the imposition of fees and amendments to the terms of this
Agreement) as the Bank may in its sole discretion require.
Section 6.12 Rental Payments. The Borrower will not, and
will not permit any Subsidiary to, become or be a party as lessee
to any lease (excluding capitalized leases) with respect to real
or personal property if, after giving effect to such lease, the
aggregate amount of rent for any period of 12 consecutive months
payable by the Borrower and the Subsidiaries combined with
respect to all such leases (after deducting the aggregate amount
of rent receivable by the Borrower under any sublease of any such
lease to any Person) will exceed $500,000. For purposes of this
Section, "rent", with respect to any lease or sublease and for
any period, means the aggregate minimum amount payable by the
lessee or sublessee to the lessor or sublessor for such period.
Section 6.13 Hazardous Substances. The Borrower will not,
and will permit any Subsidiary to, cause or permit any Hazardous
Substance to be disposed of, in any manner which might result in
any material liability to the Borrower, on, under or at any real
property which is operated by the Borrower or in which the
Borrower has any interest.
Section 6.14 Restrictions on Nature of Business; Change in
Management. The Borrower will not, and will not permit any
Subsidiary to engage in any line of business materially different
from that presently engaged in by the Borrower or such
subsidiary. The Borrower will not make any material change in
its management.
ARTICLE 7
Events of Default, Rights and Remedies
Section 7.1 Events of Default. "Event of Default",
wherever used herein, means any one of the following events:
(a) Default in the payment of any principal of or
interest on the Note when it becomes due and payable,
including without limitation any mandatory prepayments under
Section 2.9 hereof.
(b) Default in the performance, or breach, of any
covenant or agreement on the part of the Borrower contained
in Section 5.9, 5.10, 5.11, or 6.11 hereof.
(c) Default in the performance, or breach, of any
covenant or agreement of the Borrower in this Agreement
(other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section
specifically dealt with), or of the Borrower or any
Subsidiary under any Security Agreement, the Pledge
Agreement, the Subsidiaries Guaranties or any other security
agreement, mortgage, deed of trust, assignment or other
instrument or agreement directly or indirectly securing any
obligations of the Borrower hereunder or under any Note or
any guaranty of such obligations, and the continuance of
such default or breach for a period of 30 days after the
Bank has given notice to the Borrower specifying such
default or breach and requiring it to be remedied.
(d) Any representation or warranty made by the
Borrower in this Agreement or by the Borrower, any
Subsidiary or the Guarantor (or any of the officers of the
Borrower or any Subsidiary) in any agreement, certificate,
instrument, or statement contemplated by or made or
delivered pursuant to or in connection with this Agreement,
shall prove to have been incorrect or misleading in any
material respect when made.
(e) A default under any bond, debenture, note or other
evidence of indebtedness with respect to any indebtedness of
the Borrower (other than to the Bank) or under any indenture
or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed and
the expiration of the applicable period of grace, if any,
specified in such evidence of indebtedness, indenture or
other instrument; provided, however, that if such default
shall be cured by the Borrower, or waived by the holders of
such indebtedness, in each case as may be permitted by such
evidence of indebtedness, indenture or other instrument,
then the Event of Default hereunder by reason of such
default shall be deemed likewise to have been thereupon
cured or waived.
(f) The Guarantor or any Subsidiary shall repudiate,
purport to revoke or fail to perform any of his obligations
under his or its Guaranty.
(g) The Life Insurance Policy shall be terminated, by
the Borrower or otherwise; or the Life Insurance Policy
shall be scheduled to terminate within 30 days and the
Borrower shall not have delivered a satisfactory renewal
thereof to the Bank; or the Borrower shall fail to pay any
premium on the Life Insurance
Policy when due; or the Borrower shall take any other action
that impairs the value of the Life Insurance Policy.
(h) Default in the payment of any amount owed by the
Borrower to the Bank other than hereunder or under the Note,
after notice of such default by the Bank the Borrower and
failure to cure such default within five days of such
notice.
(i) The Borrower or any Subsidiary shall be
adjudicated a bankrupt or insolvent, or admit in writing its
or his inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or the Borrower or
any Subsidiary shall apply for or consent to the appointment
of any receiver, trustee, or similar officer for it or for
all or any substantial part of its or his property; or such
receiver, trustee or similar officer shall be appointed
without the application or consent of the Borrower or any
Subsidiary and such appointment shall continue undischarged
for a period of 30 days; or the Borrower or any Subsidiary
shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation
or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by
petition, application or otherwise) against the Borrower or
any Subsidiary; or any judgment, writ, warrant of attachment
or execution or similar process shall be issued or levied
against a substantial part of the property of the Borrower
or any Subsidiary and such judgment, writ, or similar
process shall not be released, vacated or fully bonded
within 30 days after its issue or levy.
(j) A petition shall be filed by or against the
Borrower or any Subsidiary under the United States
Bankruptcy Code naming the Borrower or any Subsidiary as
debtor; provided, however, in the case of an involuntary
petition, no Event of Default shall occur hereunder unless
and until the earlier of (i) 30 days following the filing of
such petition without the petition having been dismissed, so
long as the Person against whom the petition shall have been
filed shall in good faith contest such petition and shall
diligently proceed to obtain dismissal thereof or (ii) entry
of an order by the bankruptcy court granting relief in the
case or consent by such Person to entry of such an order.
(k) Any law, regulation or order of any federal, state
or local governmental body or agency or any court shall be
modified, issued, vacated or rescinded, and the Bank shall
determine in good faith that such modification, issuance,
vacation or rescission will have a material adverse effect
on the Borrower and its Subsidiaries or the position of the
Borrower and its Subsidiaries in its marketplace.
(l) Any License or Material Agreement shall terminate
(without renewal or replacement by a comparable agreement)
or be suspended or revoked, and the Bank shall determine in
good faith that such termination, suspension or revocation
shall (either alone or in conjunction with one or more other
such terminations, suspensions and revocations of Licenses
or Material Agreements) have a material adverse impact upon
the Borrower or any Subsidiary.
(m) The Borrower shall make any payment prohibited by
any subordination agreement in favor of the Bank.
(n) The rendering against the Borrower or any
subsidiary of a final judgment, decree or order for the
payment of money in excess of $100,000 and the continuance
of such judgment, decree or order unsatisfied and in effect
for any period of 30 consecutive days without a stay of
execution.
(o) A writ of attachment, garnishment, levy or similar
process shall be issued against or served upon the Bank with
respect to (i) any property of the Borrower or any
Subsidiary or the Guarantor in the possession of the Bank,
or (ii) any indebtedness of the Bank to the Borrower or any
Subsidiary.
(p) Any Plan shall have been terminated (other than
termination of the Target Company's 401(k) Plan), or a
trustee shall have been appointed by an appropriate United
States District Court to administer any Plan, or the Pension
Benefit Guaranty Corporation shall have instituted
proceedings to terminate any Plan or to appoint a trustee to
administer any Plan, or withdrawal liability shall have been
asserted against the Borrower or any ERISA Affiliate by a
Multiemployer Plan; or the Borrower or any ERISA Affiliate
shall have incurred liability to the Pension Benefit
Guaranty Corporation, the Internal Revenue Service, the
Department of Labor or Plan participants in excess of
$1,000,000 with respect to any Plan; or any Reportable Event
that the Bank may determine in good faith might constitute
grounds for the termination of any Plan, for the appointment
by the appropriate United States District Court of a trustee
to administer any Plan or for the imposition of withdrawal
liability with respect to a Multiemployer Plan, shall have
occurred and be continuing 30 days after written notice to
such effect shall have been given to the Borrower by the
Bank.
(q) The Borrower shall fail to have sold or otherwise
disposed of at least 80% of the stock of SATC on or before
December 31, 1995.
Section 7.2 Rights and Remedies. Upon the occurrence and
during the continuation of an Event of Default or at any time
thereafter, the Bank may exercise any or all of the following
rights and remedies:
(a) The Bank may, by notice to the Borrower, declare
the entire unpaid principal amount of the Note, all interest
accrued and unpaid thereon, and all other amounts payable
under this Agreement to be forthwith due and payable,
whereupon the Note, all such accrued interest and all such
amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by the
Borrower.
(b) The Bank may, by notice to the Borrower, declare
its commitment to make additional Term Advances to be
terminated, whereupon the same shall forthwith terminate.
(c) The Bank may, without notice to the Borrower and
without further action, apply any and all money owing by the
Bank to the Borrower to the payment of the Note, including
interest accrued thereon, and of all other sums then owing
by the Borrower hereunder.
(d) The Bank may exercise and enforce its rights and
remedies under the other Loan Documents, the Guaranty and
the Pledge Agreement.
(e) The Bank may exercise any other rights and
remedies available to it by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of
Default described in Section 7.1(j) or 7.1(o) hereof, the entire
unpaid principal amount of the Note, all interest accrued and
unpaid thereon, and all other amounts payable under this
Agreement shall be immediately due and payable without
presentment, demand, protest or notice of any kind.
ARTICLE 8
Miscellaneous
Section 8.1 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Bank in exercising any right, power or
remedy under the Loan Documents shall operate as a waiver
thereof; nor shall the Bank's acceptance of payments while any
Default or Event of Default is outstanding operate as a waiver of
such Default or Event of Default, or any right, power or remedy
under the Loan Documents; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy under the Loan Documents. The remedies provided
in the Loan Documents are cumulative and not exclusive of any
remedies provided by law.
Section 8.2 Amendments, Etc. No amendment, modification,
termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom shall be
effective unless the same shall be in writing and signed by the
Bank and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in
similar or other circumstances (unless otherwise required).
Section 8.3 Notice. Except as otherwise expressly provided
herein, all notices and other communications hereunder shall be
in writing and shall be (i) personally delivered, (ii) sent by
registered mail, postage prepaid, or (iii) transmitted by
telecopy, in each case addressed to the party to whom notice is
being given at its address as set forth below and, if telecopied,
transmitted to that party at its telecopier number set forth
below:
If to the Borrower:
SA Holdings, Inc.
0000 Xxxxxx X
Xxxxx 000
Xxxxx, Xxxxx 00000-0000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
If to the Bank:
Norwest Bank Minnesota, National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Communications Division
Telecopier (000) 000-0000
or, as to each party, at such other address or telecopier number
as may hereafter be designated in a notice by that party to the
other party complying with the terms of this Section. All such
notices or other communications shall be deemed to have been
given on (i) the date received if delivered personally, (ii) the
date of posting if delivered by mail, or (iii) the date of
transmission if delivered by telecopy, except that notices or
requests to the Bank pursuant to any of the provisions of Article
2 shall not be effective until received by the Bank.
Section 8.4. Participations. The Bank may grant
participations in or assign any portion or all of the Note to any
institutional investor without the consent of the
Borrower, provided, however, that the Bank shall give notice to
the Borrower of any such participation or assignment. The
Borrower shall assist the Bank in granting any such
participations and making any such assignments.
Section 8.5. Disclosure of Information. The Borrower
authorizes the Bank to disclose to any participant or assignee
(each, a "Transferee") and any prospective Transferee any and all
financial and other information in the Bank's possession
concerning the Borrower which has been delivered to the Bank by
the Borrower pursuant to this Agreement or which has been
delivered to the Bank by the Borrower in connection with the
Bank's credit evaluation of the Borrower before entering into
this Agreement.
Section 8.6 Costs and Expenses. The Borrower agrees to pay
on demand all costs and expenses incurred by the Bank in
connection with the negotiation, preparation, execution,
administration, amendment, performance or enforcement of the Loan
Documents and the other instruments and documents to be delivered
hereunder and thereunder, including the reasonable fees and
out-of-pocket expenses of counsel for the Bank with respect
thereto, whether paid to outside counsel or allocated to the Bank
by in-house counsel. The Borrower also agrees to pay and
reimburse the Bank for all of its out-of-pocket and allocated
costs incurred in connection with (i) each audit or examination
conducted by the Bank, its employees or agents, including but not
limited to the pre-closing collateral audit referenced in
Section 3.1(z) and (ii) annual monitoring visits by Bank
personnel, which audits, examinations and monitoring visits shall
be for the sole benefit of the Bank; provided, however, that so
long as no Default or Event of Default has occurred and is
continuing, the Borrower shall pay for no more than four audits
during any calendar year.
Section 8.7. Indemnification by Borrower. The Borrower
hereby agrees to indemnify the Bank and each officer, director,
employee and agent thereof (herein individually each called an
"Indemnitee" and collectively called the "Indemnitees") from and
against any and all losses, claims, damages, reasonable expenses
(including, without limitation, reasonable attorneys' fees) and
liabilities (all of the foregoing being herein called the
"Indemnified Liabilities") incurred by an Indemnitee in
connection with any litigation in which it is alleged that any
Environmental Law has been breached with respect to any activity
or property of the Borrower, except for any portion of such
losses, claims, damages, expenses or liabilities incurred solely
as a result of the gross negligence or willful misconduct of the
applicable Indemnitee. If and to the extent that the foregoing
indemnity may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for
in this Section shall survive any termination of this Agreement.
Section 8.8 Execution in Counterparts. This Agreement and
the Security Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which counterparts of this
Agreement or the Security Agreement, as the case may be, taken
together, shall constitute but one and the same instrument.
Section 8.9 Binding Effect, Assignment. The Loan Documents
shall be binding upon and inure to the benefit of the Borrower
and the Bank and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights
thereunder or any interest therein without the prior written
consent of the Bank.
Section 8.10 Governing Law; Jurisdiction; Venue. The Loan
Documents shall be governed by, and construed in accordance with,
the substantive laws (other than conflicts laws) of the State of
Minnesota. Each party consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in
connection with any controversy related to this Agreement or any
other Loan Document, waives any argument that venue in any such
forum is not convenient, and agrees that any litigation initiated
by any of them in connection with this Agreement or any other
Loan Document shall be venued in either the District Court of
Hennepin County, Minnesota, or the United States District Court,
District of Minnesota, Fourth Division.
Section 8.11. WAIVER OF JURY TRIAL. THE BORROWER AND THE
BANK HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
Section 8.12 Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof.
Section 8.13 Prior Agreements. This Agreement and the
other Loan Documents and related documents described herein
restate and supersede in their entirety any and all prior
agreements and understandings, oral or written, between the Bank
and the Borrower.
Section 8.14 Headings. Article and Section headings in
this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any
other purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the date first above written.
SA HOLDINGS, INC. NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:__________________________ By:___________________________
Xxxx X. Xxxx, Xx. Xxxxxxx X. Xxxxxxxx
Its Chief Executive Officer Its Vice President
EXHIBITS AND SCHEDULES
Exhibit A Note
Exhibit B Guaranty
Exhibit C Security Agreement
Exhibit D Subsidiary Guaranty
Exhibit E Form of Assignment of Deposit
Account
Exhibit F Opinion of Counsel to Borrower and
Guarantor
Exhibit G Borrowing Certificate
Exhibit H Compliance Certificate
__________________________________
Schedule 4.4 Subsidiaries
Schedule 4.7 Litigation
Schedule 4.11 Capitalization
Schedule 4.12 Real Property
Schedule 4.14 Licenses
Schedule 4.15 Material Agreements
Schedule 6.1 Permitted Liens
Schedule 6.2 Permitted Indebtedness
Schedule 6.3 Permitted Guaranties
EXHIBIT A TO
TERM CREDIT AGREEMENT
TERM NOTE
$10,000,000 Minneapolis, Minnesota
July 31, 1995
For value received, SA Holdings, Inc., a Delaware
corporation (the "Borrower"), promises to pay to the order of
Norwest Bank Minnesota, National Association, a national banking
association (the "Bank"), at its main office in Minneapolis,
Minnesota, or at such other place as the holder hereof may
hereafter from time to time designate in writing, in lawful money
of the United States of America and in immediately available
funds, the principal sum of Ten Million Dollars ($10,000,000) or,
if less, the aggregate principal amount of Term Advances which
may be made by the Bank to the Borrower under the Term Credit
Agreement of even date herewith between the Borrower and the Bank
(the "Credit Agreement"), and to pay interest on the principal
balance of this Note outstanding from time to time at the rate or
rates and otherwise as determined pursuant to the Credit
Agreement; provided, however, that if collection of interest at
such rate or rates would be contrary to applicable law, interest
shall be paid at the maximum rate of interest which, under
applicable law, may then be changed on this Note.
All interest accruing on the principal balance of this Note
shall be due and payable on the last day of each calendar
quarter, commencing on September 30, 1995, and at maturity or
earlier prepayment in full.
The principal balance of this Note shall be due and payable
in quarterly installments due and payable on the last day of each
March, June, September and December commencing December 31, 1996.
The amount of each quarterly installment shall be the amount as
set forth in the Credit Agreement. All outstanding principal and
accrued interest will be due and payable in full on June 30,
2000.
This Note is issued pursuant to, and is subject to, the
Credit Agreement, which provides (among other things) for the
acceleration of the maturity hereof upon the occurrence of an
Event of Default (as defined therein) and for the voluntary and
mandatory prepayment hereof.
The Borrower shall pay all costs of collection, including
reasonable attorneys' fees and legal expenses, if this Note is
not paid when due, whether or not legal proceedings are
commenced.
This Note shall be governed by the internal laws (other than
conflict laws) of the State of Minnesota. It is expressly
stipulated and agreed to be the intent of the
holder hereof to at all times comply with the usury and other
applicable laws now or hereafter governing the interest payable
on the indebtedness evidenced by this Note. If the applicable
law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents (as defined int he Credit
Agreement), or contracted for, charged, taken, reserved or
received with respect to the indebtedness evidenced by this Note,
or if Bank's exercise of the option to accelerate the maturity of
this Note, or if any prepayment by Borrower results in Borrower
having paid any interest in excess of that permitted by law, then
it is the express intent of Borrower and Bank that all excess
amounts theretofore collected by Bank be credited on the
principal balance of this Note (or, if this Note and all other
indebtedness arising under or pursuant to the other Loan
Documents have been paid in full, refunded to Borrower), and the
provisions of this 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 law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder or thereunder.
Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.
SA HOLDINGS, INC.
By ___________________________________
Xxxx X. Xxxx, Xx.
Its Chief Executive Officer
EXHIBIT B TO
TERM CREDIT AGREEMENT
GUARANTY
This Guaranty is made as of the 31st day of July, 1995,
by XXXX X. XXXX, XX. (the "Guarantor"), for the benefit of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association (the "Bank").
Recitals
A. Pursuant to a Term Credit Agreement (as may
hereafter be amended, restated or supplemented from time to time,
the "Credit Agreement") of even date herewith by and between SA
Holdings, Inc., a Delaware corporation (the "Borrower"), and the
Bank, the Bank has agreed to make certain loans to the Borrower
upon the fulfillment of the conditions set forth therein.
B. The loans to be made under the Credit Agreement
will be evidenced by the term note of the Borrower of even date
herewith, payable to the order of the Bank in the original
principal amount of $10,000,000 (as the same may hereafter be
renewed, extended, amended, restated or modified from time to
time, or any note or notes issued in substitution therefor, the
"Note").
C. As a condition to making loans to the Borrower
under the Credit Agreement, the Bank has required the execution
and delivery by the Guarantor of the Collateral Pledge Agreement
of even date herewith, granting the Bank a security interest in
all of the issued and outstanding stock of the Borrower owned by
the Guarantor (as the same may hereafter be amended and restated
from time to time, the "Pledge Agreement").
D. As a further condition to making loans to the
Borrower under the Credit Agreement, the Bank has required the
execution and delivery of this Guaranty.
E. The Guarantor is a shareholder of the Borrower and
accordingly expects to derive substantial economic benefit from
the Credit Agreement and the loans and other financial
accommodations to be made thereunder.
ACCORDINGLY, the Guarantor, in consideration of the
premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, hereby agrees
as follows:
1. All terms defined in the Credit Agreement that are
not otherwise defined herein shall have the meanings given them
in the Credit Agreement.
2. Subject to the limitations set forth in paragraph
5, the Guarantor hereby absolutely and unconditionally guarantees
to the Bank the full and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of
(i) the Note, including all interest thereon, and any extensions
or renewals thereof and substitutions therefor; and (ii) each and
every other sum now or hereafter owing to the Bank under the
Credit Agreement (all of said sums being hereinafter called the
"Indebtedness").
3. The Guarantor will pay all costs, expenses and
attorneys' fees paid or incurred by the Bank in endeavoring to
enforce this Guaranty.
4. No act or thing need occur to establish the
liability of the Guarantor hereunder, and with the exception of
full payment, no act or thing (including, but not limited to, a
discharge in bankruptcy of the Indebtedness, and/or the running
of the statute of limitations) relating to the Indebtedness which
but for this provision could act as a release of the liabilities
of the Guarantor hereunder, shall in any way exonerate the
Guarantor, or affect, impair, reduce or release this Guaranty and
the liability of the Guarantor hereunder; and this shall be a
continuing, absolute and unconditional guaranty and shall be in
force and be binding upon the Guarantor until the Indebtedness is
fully paid, except as provided in Section 2.5 of the Credit
Agreement.
5. Notwithstanding the aggregate amount of the
Indebtedness which may from time to time be outstanding, the
liability of the Guarantor hereunder shall be limited to a
principal amount of $500,000, plus accrued interest thereon and
all attorneys' fees, collection costs and enforcement expenses
paid or incurred by the Bank in connection with this Guaranty.
Indebtedness may be created and continued in any amount, whether
or not in excess of such principal amount, without affecting or
impairing the liability of the Guarantor hereunder, and the Bank
may pay (or allow for the payment of) the excess out of any sums
received by or available to the Bank on account of the
Indebtedness from the Borrower or any other person (except the
Guarantor), from its property, out of any collateral security or
from any other source, and such payment (or allowance) shall not
reduce, affect or impair the liability of the Guarantor
hereunder. Any payment made by the Guarantor under this Guaranty
shall be effective to reduce or discharge the Guarantor's
liability only if accompanied by a written transmittal document,
received by the Bank, advising the Bank that such payment is made
under this Guaranty for such purpose.
6. The liability of the Guarantor hereunder shall not
be affected or impaired in any way by any of the following acts
or things (which the Bank is hereby expressly authorized to do,
omit or suffer from time to time without notice to or consent of
anyone): (i) any acceptance of collateral security, guarantors,
accommodation parties or sureties for any or all Indebtedness;
(ii) any extension or renewal of any Indebtedness (whether or not
for longer than the original period) or any modification of the
interest rate, maturity or other terms of any Indebtedness;
(iii) any waiver or indulgence granted to the Borrower, any delay
or lack of diligence in the enforcement of the Note or any other
Indebtedness; (iv) any full or partial release of, compromise or
settlement with, or agreement not to xxx, the Borrower or any
other guarantor or other person liable on any Indebtedness;
(v) any release, surrender, cancellation or other discharge of
any Indebtedness or the acceptance of any instrument in renewal
or substitution for any instrument evidencing Indebtedness;
(vi) any failure to obtain collateral security (including rights
of setoff) for any Indebtedness, or to see to the proper or
sufficient creation and perfection thereof, or to
establish the priority thereof, or to preserve, protect, insure,
care for, exercise or enforce any collateral security for any of
the Indebtedness; (vii) any modification, alteration,
substitution, exchange, surrender, cancellation, termination,
release or other change, impairment, limitation, loss or
discharge of any collateral security for any of the Indebtedness;
(viii) any assignment, sale, pledge or other transfer of any of
the Indebtedness; or (ix) any manner, order or method of
application of any payments or credits on any Indebtedness. The
Guarantor waives any and all defenses and discharges available to
a surety, guarantor, or accommodation co-obligor, dependent on
its character as such.
7. The Guarantor waives any and all defenses, claims,
setoffs and discharges of the Borrower, or any other obligor,
pertaining to the Indebtedness, except the defense of discharge
by payment in full. Without limiting the generality of the
foregoing, the Guarantor will not assert against the Bank any
defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency
statute, fraud, ultra xxxxx acts, usury, illegality or
unenforceability which may be available to the Borrower in
respect of the Indebtedness, or any setoff available against the
Bank to the Borrower, whether or not on account of a related
transaction, and the Guarantor expressly agrees that it shall be
and remain liable for any deficiency remaining after foreclosure
of any lien or security interest securing any Indebtedness,
notwithstanding provisions of applicable law that may prevent the
Bank from enforcing such deficiency against the Borrower (subject
to the limitation set forth in paragraph 5). The liability of
the Guarantor shall not be affected or impaired by any voluntary
or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshalling
of assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar
event or proceeding affecting, the Borrower or any of its assets.
The Guarantor will not assert against the Bank any claim, defense
or setoff available to the Guarantor against the Borrower.
8. The Guarantor also hereby waives:
(i) presentment, demand for payment, notice of dishonor or
nonpayment, and protest of the Indebtedness; (ii) notice of the
acceptance hereof by the Bank and of the creation and existence
of all Indebtedness; and (iii) notice of any amendment to or
modification of any of the terms and provisions of the Note, the
Credit Agreement or any other agreement evidencing or securing
any Indebtedness. The Bank shall not be required first to resort
for payment of the Indebtedness to the Borrower or other persons
or corporations, their properties or estates, or to any
collateral, property, liens or other rights or remedies
whatsoever.
9. Notwithstanding any other provision of this
Guaranty, the Bank hereby acknowledges and agrees that the
indebtedness, liabilities and obligations of the Guarantor under
this
Guaranty are indebtedness, liabilities and obligations of the
Guarantor only and not a community debt of the Guarantor and his
wife, Xxxxx Xxxxxx Xxxx ("NLM"). The Bank hereby further agrees
that the Bank, in pursuing its remedies against the Guarantor
under this Guaranty shall have no recourse against any right,
title or interest of the Guarantor or NLM in NLM's computer
software business (currently operated as Dynamic Energy Systems,
Inc.), any successor to such computer software business, or any
other commercial activities of NLM alone.
10. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or
required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of the
Borrower or any other obligor), the Indebtedness to which such
payment was applied shall for the purposes of this Guaranty be
deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such
Indebtedness as fully as if such application had never been made.
11. The Guarantor hereby will not recover any sums
paid under this Guaranty from, or otherwise be entitled to
payment by, the Borrower or its property, until all of the
Indebtedness (including interest) and all costs, expenses and
attorneys' fees paid or incurred by the Bank have been fully
paid.
12. The Guarantor represents and warrants to the Bank
that (i) the Guarantor is a shareholder of the Borrower, and the
Guarantor accordingly expects to derive substantial economic
benefit from the Credit Agreement and the loans to the Borrower
and any other financial accommodations under the Credit Agreement
or otherwise to the Borrower; (ii) the execution, delivery and
performance of this Guaranty do not and will not violate the
provisions of or constitute a default under any presently
applicable law or any other agreement presently binding upon the
Guarantor; (iii) this Guaranty has been duly executed and
delivered by the Guarantor and constitutes his lawful, binding
and legally enforceable obligation; and (iv) the Guarantor (A) is
not insolvent as of the date hereof, and shall not become
insolvent as a result of the execution and delivery of this
Guaranty, (B) is not engaged in business or a transaction, or
about to engage in business or a transaction, for which his
property is an unreasonably small capital, and (C) does not
intend to incur, or believe that he will incur, debts that would
be beyond his ability to pay as such debts mature.
13. Subject to the provisions of Section 2.5 of the
Credit Agreement relating to the termination of this Guaranty,
this Guaranty shall constitute a continuing and irrevocable
guaranty, and the Bank may continue, without notice to or consent
by the Guarantor, to make loans and extend other credit or
financial accommodation to or for the account of the Borrower in
reliance upon this Guaranty until written notice of revocation of
this Guaranty shall have been received by the Bank from the
Guarantor. Any such notice of revocation shall not affect this
Guaranty in relation to any Indebtedness then existing or created
thereafter pursuant to any previous commitment of the Bank to the
Borrower, or any extensions or renewals of any such Indebtedness,
and as to all such Indebtedness and extensions or renewals
thereof, this Guaranty shall, subject to such provisions of
Section 2.5
of the Credit Agreement, continue effective until the same have
been fully paid with interest.
14. This Guaranty shall be binding upon the heirs,
representatives, successors and assigns of the Guarantor, and
shall inure to the benefit of the successors and assigns of the
Bank.
15. This Guaranty is secured by the Guarantor's stock
of the Borrower, pursuant to the Pledge Agreement of the
Guarantor.
IN WITNESS WHEREOF, the Guarantor has executed this
Guaranty as of the day and year first above written.
______________________________
Xxxx X. Xxxx, Xx.
EXHIBIT C TO
TERM CREDIT AGREEMENT
SECURITY AGREEMENT
This Agreement is made as of the ____ day of ________,
1995, by and between __________________, a _________________
corporation (the "Debtor"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Secured
Party").
[The Debtor] [SA Holdings, Inc. (the "Borrower")] and
the Secured Party have entered into a Term Credit Agreement of
even date herewith (as may hereafter be amended, supplemented or
restated from time to time, the "Credit Agreement"), setting
forth the terms on which the Secured Party may now or hereafter
make certain loans to or other financial accommodations for the
[Debtor] [Borrower].
As a condition to making loans under the Credit
Agreement, the Secured Party has required the execution and
delivery of this Agreement by the Debtor.
ACCORDINGLY, in consideration of the mutual covenants
contained in the Credit Agreement and herein, the parties hereby
agree as follows:
1. Definitions. All terms defined in the Credit
Agreement that are not otherwise defined herein shall have the
meanings given them in the Credit Agreement. In addition, the
following terms have the meanings set forth below:
"Accounts" means each and every account and other right
of the Debtor to the payment of money, whether such right to
payment now exists or hereafter arises, whether such right
to payment arises out of a sale, lease or other disposition
of goods or other property by the Debtor, out of a rendering
of services by the Debtor, out of a loan by the Debtor, out
of the overpayment of taxes or other liabilities of the
Debtor, or otherwise arises under any contract or agreement,
whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be
evidenced, together with all other rights and interests
(including all liens and security interests) which the
Debtor may at any time have by law or agreement against any
account debtor or other obligor obligated to make any such
payment or against any of the property of such account
debtor or other obligor, all including but not limited to
all present and future debt instruments, chattel papers,
accounts, loans and obligations receivable and tax refunds.
"Collateral" means the Accounts, Inventory, Equipment
and General Intangibles, together with all substitutions and
replacements for, products and proceeds of, any of the
foregoing property, all accessions, all accessories,
attachments, parts, equipment and repairs now or hereafter
attached or affixed to or
used in connection with any of the foregoing, and all
warehouse receipts, bills of lading and other documents of
title now or hereafter covering any of the foregoing.
"Equipment" means all equipment of the Debtor, whether
now owned or hereafter acquired and wherever located,
including but not limited to all present and future
machinery, vehicles, receiving and transmitting equipment,
furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, office and recordkeeping
equipment, parts and tools.
"Event of Default" has the meaning specified in Section
7.
"Franchise" means (i) to the extent a security interest
can be granted therein under applicable law, any
authorization, license, permit or franchise presently held
by or hereafter granted or assigned to the Debtor by any
public or governmental body, any agreement relating thereto,
and (ii) any microwave service agreement, tower lease
agreement, real property lease agreement or other agreement
to which the Debtor is now or hereafter becomes a party,
including but not limited to those Licenses and Material
Agreements specifically identified in Schedules 4.14 and
4.15 to the Credit Agreement.
"General Intangibles" means all general intangibles of
the Debtor, whether now owned or hereafter acquired,
including but not limited to all Franchises, other
franchises, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, trade names, customer
lists, permits, and the right to use the Debtor's names.
"Inventory" means all inventory of the Debtor, whether
now owned or hereafter acquired and wherever located.
"Obligations" means (i) the Note, including interest
thereon and any extensions, renewals or replacements
thereof, [(ii) the Guaranty] and (ii) each and every other
debt, liability and obligation of every type and description
which the Debtor may now or at any time hereafter owe to the
Secured Party, whether such debt, liability or obligation
now exists or is hereafter created or incurred and whether
it is or may be direct or indirect, due or to become due, or
absolute or contingent, including without limitation all
debt, liability and obligation of the Debtor under the
Credit Agreement and extensions, renewals, amendments or
replacements thereof.
"Permitted Lien" means any of the liens, security
interests or other encumbrances permitted under Section 6.1
of the Credit Agreement.
"Security Interest" has the meaning specified in
Section 2.
2. Security Interest. The Debtor hereby grants the
Secured Party a security interest (the "Security Interest") in
the Collateral to secure payment of the Obligations.
3. Representations, Warranties and Agreements. The
Debtor hereby represents, warrants and agrees as follows:
(a) Title. The Debtor (i) has absolute title to each
item of Collateral in existence on the date hereof, free and
clear of all security interests, liens and encumbrances,
except the Security Interest and other Permitted Liens,
(ii) will have, at the time the Debtor acquires any rights
in Collateral hereafter arising, absolute title to each such
item of Collateral free and clear of all security interests,
liens and encumbrances, except the Security Interest and
other Permitted Liens, (iii) will keep all Collateral free
and clear of all security interests, liens and encumbrances,
except the Security Interest and Permitted Liens, and
(iv) will defend the Collateral against all claims or
demands (other than claims and demands based on Permitted
Liens) of all persons other than the Secured Party. The
Debtor will not, other than in the ordinary course of its
business, sell or otherwise dispose of the Collateral or any
interest therein without the prior written consent of the
Secured Party.
(b) Corporate Existence and Power. The Debtor is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of
____________________, and is duly licensed or qualified to
transact business in _____________________. The Debtor is
duly licensed or qualified to do business in all the
jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes
its licensing or qualification necessary. The Debtor has
all requisite power and authority, corporate or otherwise,
to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations
under this Security Agreement, [the Guaranty] and all other
documents executed in connection therewith.
(c) Authorization; No Conflict as to Law or
Agreements. The execution, delivery and performance by the
Debtor of this Security Agreement have been duly authorized
by all necessary corporate action of the Debtor and do not
and will not (i) require any consent or approval of the
shareholders of the Debtor, or any authorization, consent or
approval by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii)
violate any provision of any law, rule or regulation or of
any order, writ, injunction or decree presently in effect
having applicability to the Debtor or of its articles of
incorporation or bylaws, (iii) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to
which the Debtor is a party or by which it or its properties
may be bound or affected. This Security Agreement
constitutes the legal, valid and binding obligations of the
Debtor enforceable against the Debtor in accordance with its
terms.
(d) Litigation; Adverse Change. Except as previously
disclosed to the Secured Party, there are no actions, suits
or proceedings pending or, to the knowledge of the Debtor,
threatened against or affecting the Debtor or the property
of the Debtor before any court or governmental department,
commission, board, bureau, agency or instrumentality, which,
if determined adversely to the Debtor, would have a material
adverse effect on the financial condition, properties, or
operations of the Debtor. There has been no material
adverse change in the business, properties or condition
(financial or otherwise) of the Debtor since April 30, 1995.
(e) Chief Executive Office; Identification Number.
The Debtor's chief executive office is located at the
address set forth under its signature below. The Debtor's
federal employer identification number is correctly set
forth under its signature below.
(f) Location of Collateral. As of the date hereof,
the tangible Collateral is located only in the states of
Texas and ___________________________. The Debtor will not
permit any tangible Collateral to be located in any state
(and, if county filing is required, in any county) in which
a financing statement covering such Collateral is required
to be, but has not in fact been, filed in order to perfect
the Security Interest.
(g) Changes in Name or Location. The Debtor will not
change its name or the location of its place of business
without prior written notice to the Secured Party.
(h) Fixtures. The Debtor will not permit any tangible
Collateral to become part of or to be affixed to any real
property without first assuring to the reasonable
satisfaction of the Secured Party that the Security Interest
will be prior and senior to any interest or lien then held
or thereafter acquired by any mortgagee of such real
property or the owner or purchaser of any interest therein.
If any part or all of the tangible Collateral is now or will
become so related to particular real estate as to be a
fixture, the real estate concerned and the name of the
record owner are accurately set forth in Exhibit A hereto.
(i) Rights to Payment. Each right to payment and each
instrument, document, chattel paper and other agreement
constituting or evidencing Collateral is (or will be when
arising or issued) the valid, genuine and legally
enforceable obligation, subject to no defense, setoff or
counterclaim (other than those arising in the ordinary
course of business), of the account debtor or other obligor
named therein or in the Debtor's records pertaining thereto
as being obligated to pay such obligation. The Debtor will
not, other than in the ordinary course of business, agree to
any material modification or amendment, or to any
forbearance, release or cancellation, of any such obligation
without the Secured Party's prior written consent, and the
Debtor will not subordinate any such right to payment to
claims of other creditors of such account debtor or other
obligor.
(j) Miscellaneous Covenants. The Debtor will:
(i) keep all tangible Collateral in good repair,
working order and condition, normal depreciation
excepted, and will, from time to time, replace any
worn, broken or defective parts thereof;
(ii) promptly pay all taxes and other governmental
charges levied or assessed upon or against any
Collateral or upon or against the creation,
perfection or continuance of the Security
Interest, except any tax or assessment whose
amount, applicability or validity is being
contested in good faith by appropriate
proceedings;
(iii) at all reasonable times, permit the Secured Party
or its representatives to examine or inspect any
Collateral, wherever located, and to examine,
inspect and copy the Debtor's books and records
pertaining to the Collateral and its business and
financial condition and to send and discuss with
account debtors and other obligors requests for
verifications of amounts owed to the Debtor;
(iv) keep accurate and complete records pertaining to
the Collateral and pertaining to the Debtor's
business and financial condition and submit to the
Secured Party such periodic reports concerning the
Collateral and the Debtor's business and financial
condition as the Secured Party may from time to
time reasonably request;
(v) promptly notify the Secured Party of any loss of
or material damage to any Collateral or of any
adverse change, known to the Debtor, in the
prospect of payment of any sums due on or under
any instrument, chattel paper, or account
constituting Collateral;
(vi) if the Secured Party at any time so requests
(whether the request is made before or after the
occurrence of an Event of Default), promptly
deliver to the Secured Party any instrument,
document or chattel paper constituting Collateral,
duly endorsed or assigned by the Debtor;
(vii) at all times keep all tangible Collateral insured
against risks of fire (including so-called
extended coverage), theft, collision (in case of
Collateral consisting of motor vehicles) and such
other risks and in such amounts as the Secured
Party may reasonably request, with any loss
payable to the Secured Party to the extent of its
interest;
(viii) from time to time execute such financing
statements as the Secured Party may reasonably
require in order to perfect the Security Interest
and, if any Collateral consists of a motor
vehicle, execute such
documents as may be required to have the Security
Interest properly noted on a certificate of title;
(ix) pay when due or reimburse the Secured Party on
demand for all costs of collection of any of the
Obligations and all other out-of-pocket expenses
(including in each case all reasonable attorneys'
fees) incurred by the Secured Party in connection
with the creation, perfection, satisfaction,
protection, defense or enforcement of the Security
Interest or the creation, continuance, protection,
defense or enforcement of this Agreement or any or
all of the Obligations, including expenses
incurred in any litigation or bankruptcy or
insolvency proceedings;
(x) execute, deliver or endorse any and all
instruments, documents, assignments, security
agreements and other agreements and writings which
the Secured Party may at any time reasonably
request in order to secure, protect, perfect or
enforce the Security Interest and the Secured
Party's rights under this Agreement; and
(xi) not use or keep any Collateral, or permit it to be
used or kept, for any unlawful purpose or in
violation of any federal, state or local law,
statute or ordinance.
(k) Secured Party's Right to Take Action. If the
Debtor at any time fails to perform or observe any agreement
contained in Section 3(j), immediately upon the occurrence
of such failure, without notice or lapse of time the Secured
Party may (but need not) perform or observe such agreement
on behalf and in the name, place and stead of the Debtor
(or, at the Secured Party's option, in the Secured Party's
own name) and may (but need not) take any and all other
actions which the Secured Party may reasonably deem
necessary to cure or correct such failure (including,
without limitation the payment of taxes, the satisfaction of
security interests, liens, or encumbrances, the performance
of obligations under contracts or agreements with account
debtors or other obligors, the procurement and maintenance
of insurance, the execution of financing statements, the
endorsement of instruments, and the procurement of repairs,
transportation or insurance); and, except to the extent that
the effect of such payment would be to render any loan or
forbearance of money usurious or otherwise illegal under any
applicable law, the Debtor shall thereupon pay the Secured
Party on demand the amount of all moneys expended and all
costs and expenses (including reasonable attorneys' fees)
incurred by the Secured Party in connection with or as a
result of the Secured Party's performing or observing such
agreements or taking such actions, together with interest
thereon from the date expended or incurred by the Secured
Party at the highest rate then applicable to any of the
Obligations. To facilitate the performance or observance by
the Secured Party of such agreements of the Debtor, the
Debtor hereby irrevocably appoints (which appointment is
coupled with an interest) the Secured Party, or its
delegate, as the
attorney-in-fact of the Debtor with the right (but not the
duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file, in the name and on behalf
of the Debtor, any and all instruments, documents, financing
statements, applications for insurance and other agreements
and writings required to be obtained, executed, delivered or
endorsed by the Debtor under this Section 3 and Section 4.
4. Rights of Secured Party. At any time and from
time to time, whether before or after an Event of Default, the
Secured Party may take any or all of the following actions:
(a) Account Verification. The Secured Party may
verify any accounts in the name of the Debtor or in its own
name; and the Debtor, whenever requested, shall furnish the
Secured Party with duplicate statements of the accounts,
which statements may be mailed or delivered by the Secured
Party for that purpose.
(b) Collateral Account. The Secured Party may
establish a collateral account for the deposit of checks,
drafts and cash payments made by the Debtor's account
debtors. If a collateral account is so established, the
Debtor shall promptly deliver to the Secured Party, for
deposit into said collateral account, all payments on
accounts and chattel paper received by it. All such
payments shall be delivered to the Secured Party in the form
received (except for the Debtor's endorsements where
necessary). Until so deposited, all payments on accounts
and chattel paper received by the Debtor shall be held in
trust by that Debtor for and as the property of the Secured
Party and shall not be commingled with any funds or property
of the Debtor. All deposits in said collateral account
shall constitute proceeds of Collateral and shall not
constitute payment of any Obligation. At its option, the
Secured Party may, at any time, apply finally collected
funds on deposit in said collateral account to the payment
of the Obligations in such order of application as the
Secured Party may determine, or permit the Debtor to
withdraw all or any part of the balance on deposit in said
collateral account.
(c) Lock Box. The Secured Party may, by notice to the
Debtor, require the Debtor to direct each of its account
debtors to make payments due under the relevant account or
chattel paper directly to a special lock box to be under the
control of the Secured Party. The Debtor hereby authorizes
and directs the Secured Party to deposit all checks, drafts
and cash payments received in said lock box into the
collateral account established as set forth above.
(d) Direct Collection. The Secured Party may notify
any account debtor, or any other person obligated to pay any
amount due, that such chattel paper, account, or other right
to payment has been assigned or transferred to the Secured
Party for security and shall be paid directly to the Secured
Party. If the Secured Party so requests at any time, the
Debtor will so notify such account debtors and other
obligors in writing and will indicate on all invoices to
such account debtors or
other obligors that the amount due is payable directly to
the Secured Party. At any time after the Secured Party or
the Debtor gives such notice to an account debtor or other
obligor, the Secured Party may (but need not), in its own
name or in the Debtor's name, demand, xxx for, collect or
receive any money or property at any time payable or
receivable on account of, or securing, any such chattel
paper, account, or other right to payment, or grant any
extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the
obligations (including collateral obligations) of any such
account debtor or other obligor.
5. Assignment of Franchises. The security interest
granted hereunder shall constitute an assignment of all of the
Debtor's right, title and interest in and to each and every
Franchise now held or hereafter acquired by the Debtor, to the
extent such assignment is permitted under applicable law. The
Secured Party does not assume any of the obligations or duties of
the Debtor under or with respect to any Franchise unless and
until the Secured Party shall have given the parties thereto
written notice that it has affirmatively exercised its right to
take over the Debtor's position thereunder. The Secured Party
shall have no liability whatsoever for the performance of any of
such obligations and duties to the extent that the Franchises are
sold to a third party by foreclosure pursuant to the Uniform
Commercial Code. This assignment shall constitute a perfected,
absolute and present collateral assignment.
6. Assignment of Insurance. The Debtor hereby
assigns to the Secured Party, as additional security for the
payment of the Obligations, any and all moneys (including but not
limited to proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of the
Debtor under or with respect to, any and all policies of
insurance covering the Collateral, and the Debtor hereby directs
the issuer of any such policy to pay any such moneys directly to
the Secured Party. Both before and after the occurrence of an
Event of Default, the Secured Party may (but need not), in its
own name or in the name of the Debtor, execute and deliver proofs
of claim, receive all such moneys, endorse checks and other
instruments representing payment of such moneys, and adjust,
litigate, compromise or release any claim against the issuer of
any such policy.
7. Events of Default. Each of the following
occurrences shall constitute an event of default under this
Agreement (herein called "Event of Default"): (i) an Event of
Default shall occur under the Credit Agreement, or (ii) [the
Borrower or] the Debtor shall fail to pay any or all of the
Obligations when due or (if payable on demand) on demand;
(iii) the Debtor shall fail to observe or perform any covenant or
agreement herein binding on it and the continuance of such
default or breach for a period of 30 days after the Secured Party
has given notice to the Debtor specifying such default or breach
and requiring it to be remedied; or (iv) any representation or
warranty of the Debtor in this Agreement shall prove to have been
false or misleading when made.
8. Remedies upon Event of Default. Upon the
occurrence of an Event of Default under Section 7 and at any time
thereafter, the Secured Party may exercise any one or more of the
following rights and remedies: (a) declare all unmatured
Obligations to be immediately due and payable, and the same shall
thereupon be immediately due and payable, without presentment or
other notice or demand; (b) exercise and enforce any or all
rights and remedies available upon default to a secured party
under the Uniform Commercial Code, including but not limited to
the right to take possession of any Collateral, proceeding
without judicial process or by judicial process (without a prior
hearing or notice thereof, which the Debtor hereby expressly
waives), and the right to sell, lease or otherwise dispose of any
or all of the Collateral, and in connection therewith, the
Secured Party may require the Debtor to make the Collateral
available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties, and
if notice to the Debtor of any intended disposition of Collateral
or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if
given (in the manner specified in Section 10) at least 10
calendar days prior to the date of intended disposition or other
action; (c) exercise or enforce any or all other rights or
remedies available to the Secured Party by law or agreement
against the Collateral, against the Debtor or against any other
person or property. The Secured Party is hereby granted a
nonexclusive, worldwide and royalty-free license to use or
otherwise exploit all trademarks, trade secrets, franchises,
copyrights and patents of the Debtor that the Secured Party deems
necessary or appropriate to the disposition of any Collateral.
9. Other Personal Property. Unless at the time the
Secured Party takes possession of any tangible Collateral, or
within seven days thereafter, the Debtor gives written notice to
the Secured Party of the existence of any goods, papers or other
property of the Debtor, not affixed to or constituting a part of
such Collateral, but which are located or found upon or within
such Collateral, describing such property, the Secured Party
shall not be responsible or liable to the Debtor for any action
taken or omitted by or on behalf of the Secured Party with
respect to such property without actual knowledge of the
existence of any such property or without actual knowledge that
it was located or to be found upon or within such Collateral.
10. Notice. All notices and other communications
hereunder shall be in writing and shall be delivered, and deemed
delivered, in accordance with the Credit Agreement.
11. Miscellaneous. This Agreement has been duly and
validly authorized by all necessary action, corporate or
otherwise. This Agreement does not contemplate a sale of
accounts or of chattel paper. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security
Interest can be released, only explicitly in a writing signed by
the Secured Party. A waiver signed by the Secured Party shall be
effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude
the exercise or enforcement of any of the Secured Party's rights
or remedies. All rights and remedies of the Secured Party shall
be cumulative and may be
exercised singularly or concurrently, at the Secured Party's
option, and the exercise or enforcement of any one such right or
remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. The Secured Party's duty of care with
respect to Collateral in its possession (as imposed by law) shall
be deemed fulfilled if the Secured Party exercises reasonable
care in physically safekeeping such Collateral or, in the case of
Collateral in the custody or possession of a bailee or other
third person, exercises reasonable care in the selection of the
bailee or other third person, and the Secured Party need not
otherwise preserve, protect, insure or care for any Collateral.
The Secured Party shall not be obligated to preserve any rights
the Debtor may have against prior parties, to realize on the
Collateral at all or in any particular manner or order, or to
apply any cash proceeds of Collateral in any particular order of
application. This Agreement shall be binding upon and inure to
the benefit of the Debtor and the Secured Party and their
respective successors and assigns and shall take effect when
signed by the Debtor and delivered to the Secured Party, and the
Debtor waives notice of the Secured Party's acceptance hereof.
The Secured Party may execute this Agreement if appropriate for
the purpose of filing, but the failure of the Secured Party to
execute this Agreement shall not affect or impair the validity or
effectiveness of this Agreement. A carbon, photographic or other
reproduction of this Agreement or of any financing statement
signed by the Debtor shall have the same force and effect as the
original for all purposes of a financing statement. This
Agreement shall be governed by the internal law of Minnesota. If
any provision or application of this Agreement is held unlawful
or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or
applications which can be given effect and this Agreement shall
be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby.
All representations and warranties contained in this Agreement
shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Obligations.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.
Address:
__________________________________
0000 Xxxxxx X, Xxxxx 000
Xxxxx, Xxxxx 00000-0000 By:
__________________________
Federal Employer Its:
______________________
I.D. No: __-_______
Address: NORWEST BANK MINNESOTA,
Sixth & Marquette Avenue NATIONAL ASSOCIATION
Xxxxxxxxxxx, XX 00000-0000
Attn: Communications Division By:
Federal Employer Its: Vice President
I.D. No: 00-0000000
EXHIBIT A TO SECURITY AGREEMENT
Legal Descriptions and Record Owners
[To be prepared by the Borrower]
EXHIBIT C-1 TO
TERM CREDIT AGREEMENT
SECURITY AGREEMENT
[Borrower, Target Company]
This Agreement is made as of the 31st day of July,
1995, by and between ___________________________________, a
_________________ corporation (the "Debtor"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association
(the "Secured Party").
[The Debtor] [SA Holdings, Inc. (the "Borrower")] and
the Secured Party have entered into a Term Credit Agreement of
even date herewith (as may hereafter be amended, supplemented or
restated from time to time, the "Credit Agreement"), setting
forth the terms on which the Secured Party may now or hereafter
make certain loans to or other financial accommodations for the
[Debtor] [Borrower].
As a condition to making loans under the Credit
Agreement, the Secured Party has required the execution and
delivery of this Agreement by the Debtor.
ACCORDINGLY, in consideration of the mutual covenants
contained in the Credit Agreement and herein, the parties hereby
agree as follows:
1. Definitions. All terms defined in the Credit
Agreement that are not otherwise defined herein shall have the
meanings given them in the Credit Agreement. In addition, the
following terms have the meanings set forth below:
"Accounts" means each and every account and other right
of the Debtor to the payment of money, whether such right to
payment now exists or hereafter arises, whether such right
to payment arises out of a sale, lease or other disposition
of goods or other property by the Debtor, out of a rendering
of services by the Debtor, out of a loan by the Debtor, out
of the overpayment of taxes or other liabilities of the
Debtor, or otherwise arises under any contract or agreement,
whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be
evidenced, together with all other rights and interests
(including all liens and security interests) which the
Debtor may at any time have by law or agreement against any
account debtor or other obligor obligated to make any such
payment or against any of the property of such account
debtor or other obligor, all including but not limited to
all present and future debt instruments, chattel papers,
accounts, loans and obligations receivable and tax refunds.
"Collateral" means the Accounts, Inventory, Equipment,
General Intangibles and Stock, together with all
substitutions and replacements for, products and proceeds
of, any of the foregoing property, all accessions, all
accessories, attachments, parts, equipment and repairs now
or hereafter attached or affixed to or used in connection
with any of the foregoing, and all warehouse receipts, bills
of lading and other documents of title now or hereafter
covering any of the foregoing.
"Equipment" means all equipment of the Debtor, whether
now owned or hereafter acquired and wherever located,
including but not limited to all present and future
machinery, vehicles, receiving and transmitting equipment,
furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, office and recordkeeping
equipment, parts and tools.
"Event of Default" has the meaning specified in Section
7.
"Franchise" means (i) to the extent a security interest
can be granted therein under applicable law, any
authorization, license, permit or franchise presently held
by or hereafter granted or assigned to the Debtor by any
public or governmental body, any agreement relating thereto,
and (ii) any microwave service agreement, tower lease
agreement, real property lease agreement or other agreement
to which the Debtor is now or hereafter becomes a party,
including but not limited to those Licenses and Material
Agreements specifically identified in Schedules 4.14 and
4.15 to the Credit Agreement.
"General Intangibles" means all general intangibles of
the Debtor, whether now owned or hereafter acquired,
including but not limited to all Franchises, other
franchises, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, trade names, customer
lists, permits, and the right to use the Debtor's names.
"Inventory" means all inventory of the Debtor, whether
now owned or hereafter acquired and wherever located.
"Obligations" means (i) the Note, including interest
thereon and any extensions, renewals or replacements
thereof, [(ii) the Guaranty] and (ii) each and every other
debt, liability and obligation of every type and description
which the Debtor may now or at any time hereafter owe to the
Secured Party, whether such debt, liability or obligation
now exists or is hereafter created or incurred and whether
it is or may be direct or indirect, due or to become due, or
absolute or contingent, including without limitation all
debt, liability and obligation of the Debtor under the
Credit Agreement and extensions, renewals, amendments or
replacements thereof.
"Permitted Lien" means any of the liens, security
interests or other encumbrances permitted under Section 6.1
of the Credit Agreement.
"Security Interest" has the meaning specified in
Section 2.
"Specified Shares" means the shares of stock identified
in Exhibit B hereto, said shares being presently evidenced
by the certificates listed therein.
"Stock" means any share of the capital stock of any
corporation now or hereafter owned by the Debtor, including
but not limited to the Specified Shares.
2. Security Interest. The Debtor hereby grants the
Secured Party a security interest (the "Security Interest") in
the Collateral to secure payment of the Obligations.
3. Representations, Warranties and Agreements. The
Debtor hereby represents, warrants and agrees as follows:
(a) Title. The Debtor (i) has absolute title to each
item of Collateral in existence on the date hereof,
including but not limited to the Specified Shares described
in Exhibit B hereto, free and clear of all security
interests, liens and encumbrances, except the Security
Interest and other Permitted Liens, (ii) will have, at the
time the Debtor acquires any rights in Collateral hereafter
arising, absolute title to each such item of Collateral free
and clear of all security interests, liens and encumbrances,
except the Security Interest and other Permitted Liens, and,
in the case of Stock, any restrictive legend appearing on
the face of the certificates evidencing such Stock,
(iii) will keep all Collateral free and clear of all
security interests, liens and encumbrances, except the
Security Interest and Permitted Liens, and (iv) will defend
the Collateral against all claims or demands (other than
claims and demands based on Permitted Liens) of all persons
other than the Secured Party. The Debtor will not, other
than in the ordinary course of its business, sell or
otherwise dispose of the Collateral or any interest therein
without the prior written consent of the Secured Party.
(b) Corporate Existence and Power. The Debtor is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of
____________________, and is duly licensed or qualified to
transact business in _____________________. The Debtor is
duly licensed or qualified to do business in all the
jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes
its licensing or qualification necessary. The Debtor has
all requisite power and authority, corporate or otherwise,
to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations
under this Security Agreement, [the Guaranty] and all other
documents executed in connection therewith.
(c) Authorization; No Conflict as to Law or
Agreements. The execution, delivery and performance by the
Debtor of this Security Agreement have been duly authorized
by all necessary corporate action of the Debtor and do not
and will not (i) require any consent or approval of the
shareholders of the Debtor, or any authorization, consent or
approval by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii)
violate any provision of any law, rule or regulation or of
any order, writ, injunction or decree presently in effect
having applicability to the Debtor or of its articles of
incorporation or bylaws, (iii) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to
which the Debtor is a party or by which it or its properties
may be bound or affected. This Security Agreement
constitutes the legal, valid and binding obligations of the
Debtor enforceable against the Debtor in accordance with its
terms.
(d) Litigation; Adverse Change. Except as previously
disclosed to the Secured Party, there are no actions, suits
or proceedings pending or, to the knowledge of the Debtor,
threatened against or affecting the Debtor or the property
of the Debtor before any court or governmental department,
commission, board, bureau, agency or instrumentality, which,
if determined adversely to the Debtor, would have a material
adverse effect on the financial condition, properties, or
operations of the Debtor. There has been no material
adverse change in the business, properties or condition
(financial or otherwise) of the Debtor since April 30, 1995.
(e) Chief Executive Office; Identification Number.
The Debtor's chief executive office is located at the
address set forth under its signature below. The Debtor's
federal employer identification number is correctly set
forth under its signature below.
(f) Location of Collateral. As of the date hereof,
the tangible Collateral is located only in the states of
[Texas][Arkansas]. The Debtor will not permit any tangible
Collateral to be located in any state (and, if county filing
is required, in any county) in which a financing statement
covering such Collateral is required to be, but has not in
fact been, filed in order to perfect the Security Interest.
(g) Changes in Name or Location. The Debtor will not
change its name or the location of its place of business
without prior written notice to the Secured Party.
(h) Fixtures. The Debtor will not permit any tangible
Collateral to become part of or to be affixed to any real
property without first assuring to the reasonable
satisfaction of the Secured Party that the Security Interest
will be prior and senior to any interest or lien then held
or thereafter acquired by any mortgagee of such real
property or the owner or purchaser of any interest therein.
If any part or all of the tangible Collateral is now or will
become so related to particular real estate as to be a
fixture, the real estate concerned and the name of the
record owner are accurately set forth in Exhibit A hereto.
(i) Rights to Payment. Each right to payment and each
instrument, document, chattel paper and other agreement
constituting or evidencing Collateral is (or will be when
arising or issued) the valid, genuine and legally
enforceable obligation, subject to no defense, setoff or
counterclaim (other than those arising in the ordinary
course of business), of the account debtor or other obligor
named therein or in the Debtor's records pertaining thereto
as being obligated to pay such obligation. The Debtor will
not, other than in the ordinary course of business, agree to
any material modification or amendment, or to any
forbearance, release or cancellation, of any such obligation
without the Secured Party's prior written consent, and the
Debtor will not subordinate any such right to payment to
claims of other creditors of such account debtor or other
obligor.
(j) Miscellaneous Covenants. The Debtor will:
(i) keep all tangible Collateral in good repair,
working order and condition, normal depreciation
excepted, and will, from time to time, replace any
worn, broken or defective parts thereof;
(ii) promptly pay all taxes and other governmental charges
levied or assessed upon or against any Collateral or
upon or against the creation, perfection or continuance
of the Security Interest, except any tax or assessment
whose amount, applicability or validity is being
contested in good faith by appropriate proceedings;
(iii) at all reasonable times, permit the Secured Party
or its representatives to examine or inspect any
Collateral, wherever located, and to examine,
inspect and copy the Debtor's books and records
pertaining to the Collateral and its business and
financial condition and to send and discuss with
account debtors and other obligors requests for
verifications of amounts owed to the Debtor;
(iv) keep accurate and complete records pertaining to the
Collateral and pertaining to the Debtor's business and
financial condition and submit to the Secured Party
such periodic reports concerning the Collateral and the
Debtor's business and financial condition as the
Secured Party may from time to time reasonably request;
(v) promptly notify the Secured Party of any loss of or
material damage to any Collateral or of any adverse
change, known to the Debtor, in the prospect of payment
of any sums due on or under any instrument, chattel
paper, or account constituting Collateral;
(vi) if the Secured Party at any time so requests (whether
the request is made before or after the occurrence of
an Event of Default), promptly deliver to the Secured
Party any instrument, document or chattel paper
constituting Collateral, duly endorsed or assigned by
the Debtor;
(vii) at all times keep all tangible Collateral insured
against risks of fire (including so-called
extended coverage), theft, collision (in case of
Collateral consisting of motor vehicles) and such
other risks and in such amounts as the Secured
Party may reasonably request, with any loss
payable to the Secured Party to the extent of its
interest;
(viii) from time to time execute such financing
statements as the Secured Party may reasonably
require in order to perfect the Security Interest
and, if any Collateral consists of a motor
vehicle, execute such documents as may be required
to have the Security Interest properly noted on a
certificate of title;
(ix) pay when due or reimburse the Secured Party on demand
for all costs of collection of any of the Obligations
and all other out-of-pocket expenses (including in each
case all reasonable attorneys' fees) incurred by the
Secured Party in connection with the creation,
perfection, satisfaction, protection, defense or
enforcement of the Security Interest or the creation,
continuance, protection, defense or enforcement of this
Agreement or any or all of the Obligations, including
expenses incurred in any litigation or bankruptcy or
insolvency proceedings;
(x) execute, deliver or endorse any and all instruments,
documents, assignments, security agreements and other
agreements and writings which the Secured Party may at
any time reasonably request in order to secure,
protect, perfect or enforce the Security Interest and
the Secured Party's rights under this Agreement; and
(xi) not use or keep any Collateral, or permit it to be used
or kept, for any unlawful purpose or in violation of
any federal, state or local law, statute or ordinance.
(k) Secured Party's Right to Take Action. If the
Debtor at any time fails to perform or observe any agreement
contained in Section 3(j), immediately upon the occurrence
of such failure, without notice or lapse of time the Secured
Party may (but need not) perform or observe such agreement
on behalf and in the name, place and stead of the Debtor
(or, at the Secured Party's option, in the Secured Party's
own name) and may (but need not) take any and all other
actions which the Secured Party may reasonably deem
necessary to cure or correct such failure (including,
without limitation the payment of taxes, the satisfaction of
security interests, liens, or
encumbrances, the performance of obligations under contracts
or agreements with account debtors or other obligors, the
procurement and maintenance of insurance, the execution of
financing statements, the endorsement of instruments, and
the procurement of repairs, transportation or insurance);
and, except to the extent that the effect of such payment
would be to render any loan or forbearance of money usurious
or otherwise illegal under any applicable law, the Debtor
shall thereupon pay the Secured Party on demand the amount
of all moneys expended and all costs and expenses (including
reasonable attorneys' fees) incurred by the Secured Party in
connection with or as a result of the Secured Party's
performing or observing such agreements or taking such
actions, together with interest thereon from the date
expended or incurred by the Secured Party at the highest
rate then applicable to any of the Obligations. To
facilitate the performance or observance by the Secured
Party of such agreements of the Debtor, the Debtor hereby
irrevocably appoints (which appointment is coupled with an
interest) the Secured Party, or its delegate, as the
attorney-in-fact of the Debtor with the right (but not the
duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file, in the name and on behalf
of the Debtor, any and all instruments, documents, financing
statements, applications for insurance and other agreements
and writings required to be obtained, executed, delivered or
endorsed by the Debtor under this Section 3 and Section 4.
(l) Stock. Exhibit C is a correct and complete list
of the number of authorized and issued shares of each class
of capital stock of each corporation whose shares are
included in the Specified Shares. The Specified Shares are
fully paid for and nonassessable. The Debtor will upon
receipt deliver to the Secured Party in pledge as additional
Collateral all securities distributed on account of the
Stock or any other Collateral, including stock dividends and
securities resulting from stock splits, reorganizations and
recapitalizations, and all other shares of any class of
stock of any corporation now owned or hereafter acquired by
the Debtor for any reason whatsoever [(excluding, however,
any shares of SATC, Baltic States and CIS Ventures, Inc. and
CIS Intelligence Information Services, Inc.)], together in
each case with blank stock powers executed by the Debtor.
4. Rights of Secured Party. At any time and from
time to time, whether before or after an Event of Default, the
Secured Party may take any or all of the following actions:
(a) Account Verification. The Secured Party may
verify any accounts in the name of the Debtor or in its own
name; and the Debtor, whenever requested, shall furnish the
Secured Party with duplicate statements of the accounts,
which statements may be mailed or delivered by the Secured
Party for that purpose.
(b) Collateral Account. The Secured Party may
establish a collateral account for the deposit of checks,
drafts and cash payments made by the Debtor's account
debtors. If a collateral account is so established, the
Debtor shall promptly
deliver to the Secured Party, for deposit into said
collateral account, all payments on accounts and chattel
paper received by it. All such payments shall be delivered
to the Secured Party in the form received (except for the
Debtor's endorsements where necessary). Until so deposited,
all payments on accounts and chattel paper received by the
Debtor shall be held in trust by that Debtor for and as the
property of the Secured Party and shall not be commingled
with any funds or property of the Debtor. All deposits in
said collateral account shall constitute proceeds of
Collateral and shall not constitute payment of any
Obligation. At its option, the Secured Party may, at any
time, apply finally collected funds on deposit in said
collateral account to the payment of the Obligations in such
order of application as the Secured Party may determine, or
permit the Debtor to withdraw all or any part of the balance
on deposit in said collateral account.
(c) Lock Box. The Secured Party may, by notice to the
Debtor, require the Debtor to direct each of its account
debtors to make payments due under the relevant account or
chattel paper directly to a special lock box to be under the
control of the Secured Party. The Debtor hereby authorizes
and directs the Secured Party to deposit all checks, drafts
and cash payments received in said lock box into the
collateral account established as set forth above.
(d) Direct Collection. The Secured Party may notify
any account debtor, or any other person obligated to pay any
amount due, that such chattel paper, account, or other right
to payment has been assigned or transferred to the Secured
Party for security and shall be paid directly to the Secured
Party. If the Secured Party so requests at any time, the
Debtor will so notify such account debtors and other
obligors in writing and will indicate on all invoices to
such account debtors or other obligors that the amount due
is payable directly to the Secured Party. At any time after
the Secured Party or the Debtor gives such notice to an
account debtor or other obligor, the Secured Party may (but
need not), in its own name or in the Debtor's name, demand,
xxx for, collect or receive any money or property at any
time payable or receivable on account of, or securing, any
such chattel paper, account, or other right to payment, or
grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change
the obligations (including collateral obligations) of any
such account debtor or other obligor.
(e) Additional Rights Regarding Stock. The Secured
Party may notify the issuer of any stock to make all
distributions of additional stock of such corporation
directly to the Secured Party. Such additional stock shall
be deemed Stock hereunder. In addition, following the
occurrence of an Event of Default, the Secured Party may (i)
notify the issuer of any Stock to make payments and other
distributions thereon directly to the Secured Party, (ii)
receive all proceeds of the Stock, and (iii) hold any
increase or profits received from the Stock as additional
security for the Indebtedness, except that any money
received from the Collateral may, at the Secured Party's
option, be applied in reduction of the Indebtedness in such
order of application as the Secured Party may determine or
be remitted to the Debtor. The Debtor hereby irrevocably
authorizes and directs each corporation whose stock is
included in the Stock pledged hereunder to remit any and all
money, distributions and other property described in this
paragraph directly to the Secured Party in the Secured
Party's name alone. Such remittances shall continue to be
made to the Secured Party until the Secured Party otherwise
notifies the applicable corporation in writing. To the
extent that such remittances are made directly to the
Secured Party, the remitting entity shall have no further
liability to the Debtor for the same.
5. Assignment of Franchises. The security interest
granted hereunder shall constitute an assignment of all of the
Debtor's right, title and interest in and to each and every
Franchise now held or hereafter acquired by the Debtor, to the
extent such assignment is permitted under applicable law. The
Secured Party does not assume any of the obligations or duties of
the Debtor under or with respect to any Franchise unless and
until the Secured Party shall have given the parties thereto
written notice that it has affirmatively exercised its right to
take over the Debtor's position thereunder. The Secured Party
shall have no liability whatsoever for the performance of any of
such obligations and duties to the extent that the Franchises are
sold to a third party by foreclosure pursuant to the Uniform
Commercial Code. This assignment shall constitute a perfected,
absolute and present collateral assignment.
6. Assignment of Insurance. The Debtor hereby
assigns to the Secured Party, as additional security for the
payment of the Obligations, any and all moneys (including but not
limited to proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of the
Debtor under or with respect to, any and all policies of
insurance covering the Collateral, and the Debtor hereby directs
the issuer of any such policy to pay any such moneys directly to
the Secured Party. Both before and after the occurrence of an
Event of Default, the Secured Party may (but need not), in its
own name or in the name of the Debtor, execute and deliver proofs
of claim, receive all such moneys, endorse checks and other
instruments representing payment of such moneys, and adjust,
litigate, compromise or release any claim against the issuer of
any such policy.
7. Events of Default. Each of the following
occurrences shall constitute an event of default under this
Agreement (herein called "Event of Default"): (i) an Event of
Default shall occur under the Credit Agreement, or (ii) [the
Borrower or] the Debtor shall fail to pay any or all of the
Obligations when due or (if payable on demand) on demand;
(iii) the Debtor shall fail to observe or perform any covenant or
agreement herein binding on it and the continuance of such
default or breach for a period of 30 days after the Secured Party
has given notice to the Debtor specifying such default or breach
and requiring it to be remedied; or (iv) any representation or
warranty of the Debtor in this Agreement shall prove to have been
false or misleading when made.
8. Remedies upon Event of Default. Upon the
occurrence of an Event of Default under Section 7 and at any time
thereafter, the Secured Party may exercise any one or more of the
following rights and remedies: (a) declare all unmatured
Obligations to be immediately due and payable, and the same shall
thereupon be immediately due and payable, without presentment or
other notice or demand; (b) exercise all voting and other rights
as a holder of the Stock; (c) exercise and enforce any or all
rights and remedies available upon default to a secured party
under the Uniform Commercial Code, including but not limited to
the right to take possession of any Collateral, proceeding
without judicial process or by judicial process (without a prior
hearing or notice thereof, which the Debtor hereby expressly
waives), and the right to sell, lease or otherwise dispose of any
or all of the Collateral, and in connection therewith, the
Secured Party may require the Debtor to make the Collateral
available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties, and
if notice to the Debtor of any intended disposition of Collateral
or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if
given (in the manner specified in Section 10) at least 10
calendar days prior to the date of intended disposition or other
action; and (d) exercise or enforce any or all other rights or
remedies available to the Secured Party by law or agreement
against the Collateral, against the Debtor or against any other
person or property. The rights granted under this Section shall
include the right to offer and sell any Stock or similar
Collateral privately to purchasers who will agree to take the
Collateral for investment and not with a view to distribution and
who will agree to the imposition of restrictive legends on the
certificates representing the Collateral, and the right to
arrange for a sale which would otherwise qualify as exempt from
registration under the Securities Act of 1933. The Secured Party
is hereby granted a nonexclusive, worldwide and royalty-free
license to use or otherwise exploit all trademarks, trade
secrets, franchises, copyrights and patents of the Debtor that
the Secured Party deems necessary or appropriate to the
disposition of any Collateral.
9. Other Personal Property. Unless at the time the
Secured Party takes possession of any tangible Collateral, or
within seven days thereafter, the Debtor gives written notice to
the Secured Party of the existence of any goods, papers or other
property of the Debtor, not affixed to or constituting a part of
such Collateral, but which are located or found upon or within
such Collateral, describing such property, the Secured Party
shall not be responsible or liable to the Debtor for any action
taken or omitted by or on behalf of the Secured Party with
respect to such property without actual knowledge of the
existence of any such property or without actual knowledge that
it was located or to be found upon or within such Collateral.
10. Notice. All notices and other communications
hereunder shall be in writing and shall be delivered, and deemed
delivered, in accordance with the Credit Agreement.
11. Miscellaneous. This Agreement has been duly and
validly authorized by all necessary action, corporate or
otherwise. This Agreement does not contemplate a sale
of accounts or of chattel paper. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security
Interest can be released, only explicitly in a writing signed by
the Secured Party. A waiver signed by the Secured Party shall be
effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude
the exercise or enforcement of any of the Secured Party's rights
or remedies. All rights and remedies of the Secured Party shall
be cumulative and may be exercised singularly or concurrently, at
the Secured Party's option, and the exercise or enforcement of
any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. The Secured
Party's duty of care with respect to Collateral in its possession
(as imposed by law) shall be deemed fulfilled if the Secured
Party exercises reasonable care in physically safekeeping such
Collateral or, in the case of Collateral in the custody or
possession of a bailee or other third person, exercises
reasonable care in the selection of the bailee or other third
person, and the Secured Party need not otherwise preserve,
protect, insure or care for any Collateral. The Secured Party
shall not be obligated to preserve any rights the Debtor may have
against prior parties, to exercise at all or in any particular
manner any voting rights which may be available with respect to
the Collateral, to realize on the Collateral at all or in any
particular manner or order, or to apply any cash proceeds of
Collateral in any particular order of application. This
Agreement shall be binding upon and inure to the benefit of the
Debtor and the Secured Party and their respective successors and
assigns and shall take effect when signed by the Debtor and
delivered to the Secured Party, and the Debtor waives notice of
the Secured Party's acceptance hereof. The Secured Party may
execute this Agreement if appropriate for the purpose of filing,
but the failure of the Secured Party to execute this Agreement
shall not affect or impair the validity or effectiveness of this
Agreement. A carbon, photographic or other reproduction of this
Agreement or of any financing statement signed by the Debtor
shall have the same force and effect as the original for all
purposes of a financing statement. This Agreement shall be
governed by the internal law of Minnesota. If any provision or
application of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability shall not
affect other provisions or applications which can be given effect
and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained
herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery
and performance of this Agreement and the creation and payment of
the Obligations.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.
Address:
__________________________________
0000 Xxxxxx X, Xxxxx 000
Xxxxx, Xxxxx 00000-0000 By
_______________________
Federal Employer Its
___________________
I.D. No: __-_______
Address: NORWEST BANK MINNESOTA,
Sixth & Marquette Avenue NATIONAL ASSOCIATION
Xxxxxxxxxxx, XX 00000-0000
Attn: Communications Division By:
Federal Employer Xxxxxxx X. Xxxxxxxx
I.D. No: 00-0000000 Its Vice President
EXHIBIT A TO SECURITY AGREEMENT
Legal Descriptions and Record Owners
[To be prepared by the Borrower]
EXHIBIT C-2 TO
TERM CREDIT AGREEMENT
SECURITY AGREEMENT
[Other Subsidiaries]
This Agreement is made as of the 31st day of July,
1995, by and between ___________________________________________,
a _________________ corporation (the "Debtor"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association
(the "Secured Party").
SA Holdings, Inc. (the "Borrower") and the Secured
Party have entered into a Term Credit Agreement of even date
herewith (as may hereafter be amended, supplemented or restated
from time to time, the "Credit Agreement"), setting forth the
terms on which the Secured Party may now or hereafter make
certain loans to or other financial accommodations for the
Borrower.
As a condition to making loans under the Credit
Agreement, the Secured Party has required the execution and
delivery of this Agreement by the Debtor.
ACCORDINGLY, in consideration of the mutual covenants
contained in the Credit Agreement and herein, the parties hereby
agree as follows:
1. Definitions. All terms defined in the Credit
Agreement that are not otherwise defined herein shall have the
meanings given them in the Credit Agreement. In addition, the
following terms have the meanings set forth below:
"Accounts" means each and every account and other right
of the Debtor to the payment of money, whether such right to
payment now exists or hereafter arises, whether such right
to payment arises out of a sale, lease or other disposition
of goods or other property by the Debtor, out of a rendering
of services by the Debtor, out of a loan by the Debtor, out
of the overpayment of taxes or other liabilities of the
Debtor, or otherwise arises under any contract or agreement,
whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be
evidenced, together with all other rights and interests
(including all liens and security interests) which the
Debtor may at any time have by law or agreement against any
account debtor or other obligor obligated to make any such
payment or against any of the property of such account
debtor or other obligor, all including but not limited to
all present and future debt instruments, chattel papers,
accounts, loans and obligations receivable and tax refunds.
"Collateral" means the Accounts, Inventory, Equipment
and General Intangibles, together with all substitutions and
replacements for, products and proceeds of, any of the
foregoing property, all accessions, all accessories,
attachments, parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any of the
foregoing, and all warehouse receipts, bills of lading and
other documents of title now or hereafter covering any of
the foregoing.
"Equipment" means all equipment of the Debtor, whether
now owned or hereafter acquired and wherever located,
including but not limited to all present and future
machinery, vehicles, receiving and transmitting equipment,
furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, office and recordkeeping
equipment, parts and tools.
"Event of Default" has the meaning specified in Section
7.
"Franchise" means (i) to the extent a security interest
can be granted therein under applicable law, any
authorization, license, permit or franchise presently held
by or hereafter granted or assigned to the Debtor by any
public or governmental body, any agreement relating thereto,
and (ii) any microwave service agreement, tower lease
agreement, real property lease agreement or other agreement
to which the Debtor is now or hereafter becomes a party,
including but not limited to those Licenses and Material
Agreements specifically identified in Schedules 4.14 and
4.15 to the Credit Agreement.
"General Intangibles" means all general intangibles of
the Debtor, whether now owned or hereafter acquired,
including but not limited to all Franchises, other
franchises, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, trade names, customer
lists, permits, and the right to use the Debtor's names.
"Inventory" means all inventory of the Debtor, whether
now owned or hereafter acquired and wherever located.
"Obligations" means (i) the Note, including interest
thereon and any extensions, renewals or replacements
thereof, [(ii) the Guaranty] and (ii) each and every other
debt, liability and obligation of every type and description
which the Debtor may now or at any time hereafter owe to the
Secured Party, whether such debt, liability or obligation
now exists or is hereafter created or incurred and whether
it is or may be direct or indirect, due or to become due, or
absolute or contingent, including without limitation all
debt, liability and obligation of the Debtor under the
Credit Agreement and extensions, renewals, amendments or
replacements thereof.
"Permitted Lien" means any of the liens, security
interests or other encumbrances permitted under Section 6.1
of the Credit Agreement.
"Security Interest" has the meaning specified in
Section 2.
2. Security Interest. The Debtor hereby grants the
Secured Party a security interest (the "Security Interest") in
the Collateral to secure payment of the Obligations.
3. Representations, Warranties and Agreements. The
Debtor hereby represents, warrants and agrees as follows:
(a) Title. The Debtor (i) has absolute title to each
item of Collateral in existence on the date hereof, free and
clear of all security interests, liens and encumbrances,
except the Security Interest and other Permitted Liens,
(ii) will have, at the time the Debtor acquires any rights
in Collateral hereafter arising, absolute title to each such
item of Collateral free and clear of all security interests,
liens and encumbrances, except the Security Interest and
other Permitted Liens, (iii) will keep all Collateral free
and clear of all security interests, liens and encumbrances,
except the Security Interest and Permitted Liens, and
(iv) will defend the Collateral against all claims or
demands (other than claims and demands based on Permitted
Liens) of all persons other than the Secured Party. The
Debtor will not, other than in the ordinary course of its
business, sell or otherwise dispose of the Collateral or any
interest therein without the prior written consent of the
Secured Party.
(b) Corporate Existence and Power. The Debtor is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of
____________________, and is duly licensed or qualified to
transact business in _____________________. The Debtor is
duly licensed or qualified to do business in all the
jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes
its licensing or qualification necessary. The Debtor has
all requisite power and authority, corporate or otherwise,
to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations
under this Security Agreement, the Guaranty and all other
documents executed in connection therewith.
(c) Authorization; No Conflict as to Law or
Agreements. The execution, delivery and performance by the
Debtor of this Security Agreement have been duly authorized
by all necessary corporate action of the Debtor and do not
and will not (i) require any consent or approval of the
shareholders of the Debtor, or any authorization, consent or
approval by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii)
violate any provision of any law, rule or regulation or of
any order, writ, injunction or decree presently in effect
having applicability to the Debtor or of its articles of
incorporation or bylaws, (iii) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to
which the Debtor is a party or by which it or its properties
may be bound or affected. This Security Agreement
constitutes the legal, valid and binding obligations of the
Debtor enforceable against the Debtor in accordance with its
terms.
(d) Litigation; Adverse Change. Except as previously
disclosed to the Secured Party, there are no actions, suits
or proceedings pending or, to the knowledge of the Debtor,
threatened against or affecting the Debtor or the property
of the Debtor before any court or governmental department,
commission, board, bureau, agency or instrumentality, which,
if determined adversely to the Debtor, would have a material
adverse effect on the financial condition, properties, or
operations of the Debtor. There has been no material
adverse change in the business, properties or condition
(financial or otherwise) of the Debtor since April 30, 1995.
(e) Chief Executive Office; Identification Number.
The Debtor's chief executive office is located at the
address set forth under its signature below. The Debtor's
federal employer identification number is correctly set
forth under its signature below.
(f) Location of Collateral. As of the date hereof,
the tangible Collateral is located only in the states of
Texas and ___________________________. The Debtor will not
permit any tangible Collateral to be located in any state
(and, if county filing is required, in any county) in which
a financing statement covering such Collateral is required
to be, but has not in fact been, filed in order to perfect
the Security Interest.
(g) Changes in Name or Location. The Debtor will not
change its name or the location of its place of business
without prior written notice to the Secured Party.
(h) Fixtures. The Debtor will not permit any tangible
Collateral to become part of or to be affixed to any real
property without first assuring to the reasonable
satisfaction of the Secured Party that the Security Interest
will be prior and senior to any interest or lien then held
or thereafter acquired by any mortgagee of such real
property or the owner or purchaser of any interest therein.
If any part or all of the tangible Collateral is now or will
become so related to particular real estate as to be a
fixture, the real estate concerned and the name of the
record owner are accurately set forth in Exhibit A hereto.
(i) Rights to Payment. Each right to payment and each
instrument, document, chattel paper and other agreement
constituting or evidencing Collateral is (or will be when
arising or issued) the valid, genuine and legally
enforceable obligation, subject to no defense, setoff or
counterclaim (other than those arising in the ordinary
course of business), of the account debtor or other obligor
named therein or in the Debtor's records pertaining thereto
as being obligated to pay such obligation. The Debtor will
not, other than in the ordinary course of business, agree to
any material modification or amendment, or to any
forbearance, release or cancellation, of any such obligation
without the Secured Party's prior written consent, and the
Debtor will not subordinate any such right to payment to
claims of other creditors of such account debtor or other
obligor.
(j) Miscellaneous Covenants. The Debtor will:
(i) keep all tangible Collateral in good repair,
working order and condition, normal depreciation
excepted, and will, from time to time, replace any
worn, broken or defective parts thereof;
(ii) promptly pay all taxes and other governmental charges
levied or assessed upon or against any Collateral or
upon or against the creation, perfection or continuance
of the Security Interest, except any tax or assessment
whose amount, applicability or validity is being
contested in good faith by appropriate proceedings;
(iii) at all reasonable times, permit the Secured Party
or its representatives to examine or inspect any
Collateral, wherever located, and to examine,
inspect and copy the Debtor's books and records
pertaining to the Collateral and its business and
financial condition and to send and discuss with
account debtors and other obligors requests for
verifications of amounts owed to the Debtor;
(iv) keep accurate and complete records pertaining to the
Collateral and pertaining to the Debtor's business and
financial condition and submit to the Secured Party
such periodic reports concerning the Collateral and the
Debtor's business and financial condition as the
Secured Party may from time to time reasonably request;
(v) promptly notify the Secured Party of any loss of or
material damage to any Collateral or of any adverse
change, known to the Debtor, in the prospect of payment
of any sums due on or under any instrument, chattel
paper, or account constituting Collateral;
(vi) if the Secured Party at any time so requests (whether
the request is made before or after the occurrence of
an Event of Default), promptly deliver to the Secured
Party any instrument, document or chattel paper
constituting Collateral, duly endorsed or assigned by
the Debtor;
(vii) at all times keep all tangible Collateral insured
against risks of fire (including so-called
extended coverage), theft, collision (in case of
Collateral consisting of motor vehicles) and such
other risks and in such amounts as the Secured
Party may reasonably request, with any loss
payable to the Secured Party to the extent of its
interest;
(viii) from time to time execute such financing
statements as the Secured Party may reasonably
require in order to perfect the Security Interest
and, if any Collateral consists of a motor
vehicle, execute such
documents as may be required to have the Security
Interest properly noted on a certificate of title;
(ix) pay when due or reimburse the Secured Party on demand
for all costs of collection of any of the Obligations
and all other out-of-pocket expenses (including in each
case all reasonable attorneys' fees) incurred by the
Secured Party in connection with the creation,
perfection, satisfaction, protection, defense or
enforcement of the Security Interest or the creation,
continuance, protection, defense or enforcement of this
Agreement or any or all of the Obligations, including
expenses incurred in any litigation or bankruptcy or
insolvency proceedings;
(x) execute, deliver or endorse any and all instruments,
documents, assignments, security agreements and other
agreements and writings which the Secured Party may at
any time reasonably request in order to secure,
protect, perfect or enforce the Security Interest and
the Secured Party's rights under this Agreement; and
(xi) not use or keep any Collateral, or permit it to be used
or kept, for any unlawful purpose or in violation of
any federal, state or local law, statute or ordinance.
(k) Secured Party's Right to Take Action. If the
Debtor at any time fails to perform or observe any agreement
contained in Section 3(j), immediately upon the occurrence
of such failure, without notice or lapse of time the Secured
Party may (but need not) perform or observe such agreement
on behalf and in the name, place and stead of the Debtor
(or, at the Secured Party's option, in the Secured Party's
own name) and may (but need not) take any and all other
actions which the Secured Party may reasonably deem
necessary to cure or correct such failure (including,
without limitation the payment of taxes, the satisfaction of
security interests, liens, or encumbrances, the performance
of obligations under contracts or agreements with account
debtors or other obligors, the procurement and maintenance
of insurance, the execution of financing statements, the
endorsement of instruments, and the procurement of repairs,
transportation or insurance); and, except to the extent that
the effect of such payment would be to render any loan or
forbearance of money usurious or otherwise illegal under any
applicable law, the Debtor shall thereupon pay the Secured
Party on demand the amount of all moneys expended and all
costs and expenses (including reasonable attorneys' fees)
incurred by the Secured Party in connection with or as a
result of the Secured Party's performing or observing such
agreements or taking such actions, together with interest
thereon from the date expended or incurred by the Secured
Party at the highest rate then applicable to any of the
Obligations. To facilitate the performance or observance by
the Secured Party of such agreements of the Debtor, the
Debtor hereby irrevocably appoints (which appointment is
coupled with an interest) the Secured Party, or its
delegate, as the
attorney-in-fact of the Debtor with the right (but not the
duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file, in the name and on behalf
of the Debtor, any and all instruments, documents, financing
statements, applications for insurance and other agreements
and writings required to be obtained, executed, delivered or
endorsed by the Debtor under this Section 3 and Section 4.
4. Rights of Secured Party. At any time and from
time to time, whether before or after an Event of Default, the
Secured Party may take any or all of the following actions:
(a) Account Verification. The Secured Party may
verify any accounts in the name of the Debtor or in its own
name; and the Debtor, whenever requested, shall furnish the
Secured Party with duplicate statements of the accounts,
which statements may be mailed or delivered by the Secured
Party for that purpose.
(b) Collateral Account. The Secured Party may
establish a collateral account for the deposit of checks,
drafts and cash payments made by the Debtor's account
debtors. If a collateral account is so established, the
Debtor shall promptly deliver to the Secured Party, for
deposit into said collateral account, all payments on
accounts and chattel paper received by it. All such
payments shall be delivered to the Secured Party in the form
received (except for the Debtor's endorsements where
necessary). Until so deposited, all payments on accounts
and chattel paper received by the Debtor shall be held in
trust by that Debtor for and as the property of the Secured
Party and shall not be commingled with any funds or property
of the Debtor. All deposits in said collateral account
shall constitute proceeds of Collateral and shall not
constitute payment of any Obligation. At its option, the
Secured Party may, at any time, apply finally collected
funds on deposit in said collateral account to the payment
of the Obligations in such order of application as the
Secured Party may determine, or permit the Debtor to
withdraw all or any part of the balance on deposit in said
collateral account.
(c) Lock Box. The Secured Party may, by notice to the
Debtor, require the Debtor to direct each of its account
debtors to make payments due under the relevant account or
chattel paper directly to a special lock box to be under the
control of the Secured Party. The Debtor hereby authorizes
and directs the Secured Party to deposit all checks, drafts
and cash payments received in said lock box into the
collateral account established as set forth above.
(d) Direct Collection. The Secured Party may notify
any account debtor, or any other person obligated to pay any
amount due, that such chattel paper, account, or other right
to payment has been assigned or transferred to the Secured
Party for security and shall be paid directly to the Secured
Party. If the Secured Party so requests at any time, the
Debtor will so notify such account debtors and other
obligors in writing and will indicate on all invoices to
such account debtors or
other obligors that the amount due is payable directly to
the Secured Party. At any time after the Secured Party or
the Debtor gives such notice to an account debtor or other
obligor, the Secured Party may (but need not), in its own
name or in the Debtor's name, demand, xxx for, collect or
receive any money or property at any time payable or
receivable on account of, or securing, any such chattel
paper, account, or other right to payment, or grant any
extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the
obligations (including collateral obligations) of any such
account debtor or other obligor.
5. Assignment of Franchises. The security interest
granted hereunder shall constitute an assignment of all of the
Debtor's right, title and interest in and to each and every
Franchise now held or hereafter acquired by the Debtor, to the
extent such assignment is permitted under applicable law. The
Secured Party does not assume any of the obligations or duties of
the Debtor under or with respect to any Franchise unless and
until the Secured Party shall have given the parties thereto
written notice that it has affirmatively exercised its right to
take over the Debtor's position thereunder. The Secured Party
shall have no liability whatsoever for the performance of any of
such obligations and duties to the extent that the Franchises are
sold to a third party by foreclosure pursuant to the Uniform
Commercial Code. This assignment shall constitute a perfected,
absolute and present collateral assignment.
6. Assignment of Insurance. The Debtor hereby
assigns to the Secured Party, as additional security for the
payment of the Obligations, any and all moneys (including but not
limited to proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of the
Debtor under or with respect to, any and all policies of
insurance covering the Collateral, and the Debtor hereby directs
the issuer of any such policy to pay any such moneys directly to
the Secured Party. Both before and after the occurrence of an
Event of Default, the Secured Party may (but need not), in its
own name or in the name of the Debtor, execute and deliver proofs
of claim, receive all such moneys, endorse checks and other
instruments representing payment of such moneys, and adjust,
litigate, compromise or release any claim against the issuer of
any such policy.
7. Events of Default. Each of the following
occurrences shall constitute an event of default under this
Agreement (herein called "Event of Default"): (i) an Event of
Default shall occur under the Credit Agreement; (ii) the Borrower
or the Debtor shall fail to pay any or all of the Obligations
when due or (if payable on demand) on demand; (iii) the Debtor
shall fail to observe or perform any covenant or agreement herein
binding on it and the continuance of such default or breach for a
period of 30 days after the Secured Party has given notice to the
Debtor specifying such default or breach and requiring it to be
remedied; or (iv) any representation or warranty of the Debtor in
this Agreement shall prove to have been false or misleading when
made.
8. Remedies upon Event of Default. Upon the
occurrence of an Event of Default under Section 7 and at any time
thereafter, the Secured Party may exercise any one or more of the
following rights and remedies: (a) declare all unmatured
Obligations to be immediately due and payable, and the same shall
thereupon be immediately due and payable, without presentment or
other notice or demand; (b) exercise and enforce any or all
rights and remedies available upon default to a secured party
under the Uniform Commercial Code, including but not limited to
the right to take possession of any Collateral, proceeding
without judicial process or by judicial process (without a prior
hearing or notice thereof, which the Debtor hereby expressly
waives), and the right to sell, lease or otherwise dispose of any
or all of the Collateral, and in connection therewith, the
Secured Party may require the Debtor to make the Collateral
available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties, and
if notice to the Debtor of any intended disposition of Collateral
or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if
given (in the manner specified in Section 10) at least 10
calendar days prior to the date of intended disposition or other
action; (c) exercise or enforce any or all other rights or
remedies available to the Secured Party by law or agreement
against the Collateral, against the Debtor or against any other
person or property. The Secured Party is hereby granted a
nonexclusive, worldwide and royalty-free license to use or
otherwise exploit all trademarks, trade secrets, franchises,
copyrights and patents of the Debtor that the Secured Party deems
necessary or appropriate to the disposition of any Collateral.
9. Other Personal Property. Unless at the time the
Secured Party takes possession of any tangible Collateral, or
within seven days thereafter, the Debtor gives written notice to
the Secured Party of the existence of any goods, papers or other
property of the Debtor, not affixed to or constituting a part of
such Collateral, but which are located or found upon or within
such Collateral, describing such property, the Secured Party
shall not be responsible or liable to the Debtor for any action
taken or omitted by or on behalf of the Secured Party with
respect to such property without actual knowledge of the
existence of any such property or without actual knowledge that
it was located or to be found upon or within such Collateral.
10. Notice. All notices and other communications
hereunder shall be in writing and shall be delivered, and deemed
delivered, in accordance with the Credit Agreement.
11. Miscellaneous. This Agreement has been duly and
validly authorized by all necessary action, corporate or
otherwise. This Agreement does not contemplate a sale of
accounts or of chattel paper. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security
Interest can be released, only explicitly in a writing signed by
the Secured Party. A waiver signed by the Secured Party shall be
effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude
the exercise or enforcement of any of the Secured Party's rights
or remedies. All rights and remedies of the Secured Party shall
be cumulative and may be
exercised singularly or concurrently, at the Secured Party's
option, and the exercise or enforcement of any one such right or
remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. The Secured Party's duty of care with
respect to Collateral in its possession (as imposed by law) shall
be deemed fulfilled if the Secured Party exercises reasonable
care in physically safekeeping such Collateral or, in the case of
Collateral in the custody or possession of a bailee or other
third person, exercises reasonable care in the selection of the
bailee or other third person, and the Secured Party need not
otherwise preserve, protect, insure or care for any Collateral.
The Secured Party shall not be obligated to preserve any rights
the Debtor may have against prior parties, to realize on the
Collateral at all or in any particular manner or order, or to
apply any cash proceeds of Collateral in any particular order of
application. This Agreement shall be binding upon and inure to
the benefit of the Debtor and the Secured Party and their
respective successors and assigns and shall take effect when
signed by the Debtor and delivered to the Secured Party, and the
Debtor waives notice of the Secured Party's acceptance hereof.
The Secured Party may execute this Agreement if appropriate for
the purpose of filing, but the failure of the Secured Party to
execute this Agreement shall not affect or impair the validity or
effectiveness of this Agreement. A carbon, photographic or other
reproduction of this Agreement or of any financing statement
signed by the Debtor shall have the same force and effect as the
original for all purposes of a financing statement. This
Agreement shall be governed by the internal law of Minnesota. If
any provision or application of this Agreement is held unlawful
or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or
applications which can be given effect and this Agreement shall
be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby.
All representations and warranties contained in this Agreement
shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Obligations.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.
Address:
__________________________________
0000 Xxxxxx X, Xxxxx 000
Xxxxx, Xxxxx 00000-0000 By:
__________________________
Federal Employer Its:
______________________
I.D. No: __-_______
Address: NORWEST BANK MINNESOTA,
Sixth & Marquette Avenue NATIONAL ASSOCIATION
Xxxxxxxxxxx, XX 00000-0000
Attn: Communications Division By:
Federal Employer Xxxxxxx X. Xxxxxxxx
I.D. No: 00-0000000 Its Vice President
EXHIBIT A TO SECURITY AGREEMENT
Legal Descriptions and Record Owners
[To be prepared by the Borrower]
EXHIBIT D TO
TERM CREDIT AGREEMENT
GUARANTY BY CORPORATION
This Guaranty is made as of the ____ day of July, 1995,
by _________________________________________, a Texas corporation
(the "Guarantor"), for the benefit of NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association (the
"Bank").
Recitals
A. Pursuant to a Term Credit Agreement (as may
hereafter be amended, restated or supplemented from time to time,
the "Credit Agreement") of even date herewith by and between SA
Holdings, Inc., a Delaware corporation (the "Borrower"), and the
Bank, the Bank has agreed to make certain loans to the Borrower
upon the fulfillment of the conditions set forth therein.
B. The loans to be made under the Credit Agreement
will be evidenced by the term note of the Borrower of even date
herewith, payable to the order of the Bank in the original
principal amount of $10,000,000 (as the same may hereafter be
renewed, extended, amended, restated or modified from time to
time, or any note or notes issued in substitution therefor, the
"Note").
C. As a condition to making loans to the Borrower
under the Credit Agreement, the Bank has required the execution
and delivery by the Guarantor of a Security Agreement of even
date herewith, granting the Bank a security interest in all of
the personal property of the Guarantor (as the same may hereafter
be amended and restated from time to time, the "Security
Agreement").
D. As a further condition to making loans to the
Borrower under the Credit Agreement, the Bank has required the
execution and delivery of this Guaranty.
E. The Guarantor is a subsidiary of the Borrower.
Accordingly, the Guarantor expects to derive substantial economic
benefit from the Credit Agreement and the loans and other
financial accommodations to be made thereunder.
ACCORDINGLY, the Guarantor, in consideration of the
premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, hereby agrees
as follows:
1. All terms defined in the Credit Agreement that are
not otherwise defined herein shall have the meanings given them
in the Credit Agreement.
2. The Guarantor hereby absolutely and
unconditionally guarantees to the Bank the full and prompt
payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of (i) the Note, including all
interest thereon, and any extensions or renewals thereof and
substitutions therefor; (ii) each and every other sum now or
hereafter owing to the Bank under the Credit Agreement or under
any other promissory note or agreement hereafter entered into by
the Borrower; and (iii) each and every sum secured by the
Security Agreement (all of said sums being hereinafter called the
"Indebtedness").
3. The Guarantor will pay all costs, expenses and
attorneys' fees paid or incurred by the Bank in endeavoring to
collect the Indebtedness and in enforcing this Guaranty.
4. No act or thing need occur to establish the
liability of the Guarantor hereunder, and with the exception of
full payment, no act or thing (including, but not limited to, a
discharge in bankruptcy of the Indebtedness, and/or the running
of the statute of limitations) relating to the Indebtedness which
but for this provision could act as a release of the liabilities
of the Guarantor hereunder, shall in any way exonerate the
Guarantor, or affect, impair, reduce or release this Guaranty and
the liability of the Guarantor hereunder; and this shall be a
continuing, absolute and unconditional guaranty and shall be in
force and be binding upon the Guarantor until the Indebtedness is
fully paid.
5. Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount,
without affecting or impairing the liability of the Guarantor
hereunder, and the Bank may pay (or allow for the payment of) the
excess out of any sums received by or available to the Bank on
account of the Indebtedness from the Borrower or any other person
(except the Guarantor), from its property, out of any collateral
security or from any other source, and such payment (or
allowance) shall not reduce, affect or impair the liability of
the Guarantor hereunder. Any payment made by the Guarantor under
this Guaranty shall be effective to reduce or discharge the
Guarantor's liability only if accompanied by a written
transmittal document, received by the Bank, advising the Bank
that such payment is made under this Guaranty for such purpose.
6. The liability of the Guarantor hereunder shall not
be affected or impaired in any way by any of the following acts
or things (which the Bank is hereby expressly authorized to do,
omit or suffer from time to time without notice to or consent of
anyone): (i) any acceptance of collateral security, guarantors,
accommodation parties or sureties for any or all Indebtedness;
(ii) any extension or renewal of any Indebtedness (whether or not
for longer than the original period) or any modification of the
interest rate, maturity or other terms of any Indebtedness;
(iii) any waiver or indulgence granted to the Borrower, any delay
or lack of diligence in the enforcement of the Note or any other
Indebtedness; (iv) any full or partial release of, compromise or
settlement with, or agreement not to xxx, the Borrower or any
other guarantor or other person liable on any Indebtedness;
(v) any release, surrender, cancellation or other discharge of
any Indebtedness or the acceptance of any instrument in renewal
or substitution for any instrument evidencing Indebtedness;
(vi) any failure to obtain collateral security (including rights
of setoff) for any Indebtedness, or to see to the proper or
sufficient creation and perfection thereof, or to
establish the priority thereof, or to preserve, protect, insure,
care for, exercise or enforce any collateral security for any of
the Indebtedness; (vii) any modification, alteration,
substitution, exchange, surrender, cancellation, termination,
release or other change, impairment, limitation, loss or
discharge of any collateral security for any of the Indebtedness;
(viii) any assignment, sale, pledge or other transfer of any of
the Indebtedness; or (ix) any manner, order or method of
application of any payments or credits on any Indebtedness. The
Guarantor waives any and all defenses and discharges available to
a surety, guarantor, or accommodation co-obligor, dependent on
its character as such.
7. The Guarantor waives any and all defenses, claims,
setoffs and discharges of the Borrower, or any other obligor,
pertaining to the Indebtedness, except the defense of discharge
by payment in full. Without limiting the generality of the
foregoing, the Guarantor will not assert against the Bank any
defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency
statute, fraud, ultra xxxxx acts, usury, illegality or
unenforceability which may be available to the Borrower in
respect of the Indebtedness, or any setoff available against the
Bank to the Borrower, whether or not on account of a related
transaction, and the Guarantor expressly agrees that it shall be
and remain liable for any deficiency remaining after foreclosure
of any lien or security interest securing any Indebtedness,
notwithstanding provisions of applicable law that may prevent the
Bank from enforcing such deficiency against the Borrower. The
liability of the Guarantor shall not be affected or impaired by
any voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets,
marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or
other similar event or proceeding affecting, the Borrower or any
of its assets. The Guarantor will not assert against the Bank
any claim, defense or setoff available to the Guarantor against
the Borrower.
8. The Guarantor also hereby waives:
(i) presentment, demand for payment, notice of dishonor or
nonpayment, and protest of the Indebtedness; (ii) notice of the
acceptance hereof by the Bank and of the creation and existence
of all Indebtedness; and (iii) notice of any amendment to or
modification of any of the terms and provisions of the Note, the
Credit Agreement or any other agreement evidencing or securing
any Indebtedness. The Bank shall not be required first to resort
for payment of the Indebtedness to the Borrower or other persons
or corporations, their properties or estates, or to any
collateral, property, liens or other rights or remedies
whatsoever.
9. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or
required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of the
Borrower or any other obligor), the Indebtedness to which such
payment was applied shall for the purposes of this Guaranty be
deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such
Indebtedness as fully as if such application had never been made.
10. No payment by the Guarantor pursuant to any
provision hereof shall entitle the Guarantor, by subrogation to
the rights of the Bank or otherwise, to any payment by the
Borrower or out of the property of the Borrower until all of the
Indebtedness (including interest) and all costs, expenses and
attorneys' fees paid or incurred by the Bank in endeavoring to
collect the Indebtedness and enforcing this Guaranty have been
fully paid. The Guarantor will not exercise or enforce any right
of contribution, reimbursement, recourse or subrogation available
to the Guarantor as to any Indebtedness, or against any person
liable therefor, or as to any collateral security therefor,
unless and until all such Indebtedness shall have been fully paid
and discharged.
11. The Guarantor represents and warrants to the Bank
that (i) the Guarantor accordingly expects to derive substantial
economic benefit from the Credit Agreement and the loans to the
Borrower and any other financial accommodations under the Credit
Agreement or otherwise to the Borrower; (ii) the Guarantor is a
corporation duly organized and existing in good standing and has
full power and authority to make and deliver this Guaranty;
(iii) the execution, delivery and performance of this Guaranty
has been duly authorized by all necessary action of its directors
and do not and will not violate the provisions of or constitute a
default under any presently applicable law or its articles of
incorporation or bylaws or any other agreement presently binding
upon the Guarantor; (iii) this Guaranty has been duly executed
and delivered by the Guarantor and constitutes its lawful,
binding and legally enforceable obligation; and (iv) the
Guarantor (A) is not insolvent as of the date hereof, and shall
not become insolvent as a result of the execution and delivery of
this Guaranty, (B) is not engaged in business or a transaction,
or about to engage in business or a transaction, for which its
property is an unreasonably small capital, and (C) does not
intend to incur, or believe that it will incur, debts that would
be beyond its ability to pay as such debts mature.
12. This Guaranty shall constitute a continuing and
irrevocable guaranty, and the Bank may continue, without notice
to or consent by the Guarantor, to make loans and extend other
credit or financial accommodation to or for the account of the
Borrower in reliance upon this Guaranty until written notice of
revocation of this Guaranty shall have been received by the Bank
from the Guarantor. Any such notice of revocation shall not
affect this Guaranty in relation to any Indebtedness then
existing or created thereafter pursuant to any previous
commitment of the Bank to the Borrower, or any extensions or
renewals of any such Indebtedness, and as to all such
Indebtedness and extensions or renewals thereof, this Guaranty
shall continue effective until the same have been fully paid with
interest.
13. This Guaranty shall be binding upon the successors
and assigns of the Guarantor, and shall inure to the benefit of
the successors and assigns of the Bank.
14. This Guaranty is secured pursuant to the Security
Agreement be secured pursuant to one or more other security
agreements, pledge agreements, assignments, mortgages, deeds of
trust or other documents or instruments.
IN WITNESS WHEREOF, the Guarantor has executed this
Guaranty as of the day and year first above written.
By: ______________________________
Its: _____________________________
EXHIBIT E TO
TERM CREDIT AGREEMENT
ASSIGNMENT OF DEPOSIT ACCOUNTS
This Assignment is entered into as of the 31st day of
July, 1995, by and between SA HOLDINGS, INC., a Delaware
corporation (the "Borrower"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association (the
"Bank").
The Borrower and the Bank have entered into a Term
Credit Agreement of even date herewith (the "Credit Agreement"),
setting forth the terms on which the Bank has agreed to make
certain term loans to the Borrower.
As a condition to making the loans contemplated by the
Credit Agreement, the Bank has required that the Borrower execute
and deliver this Assignment.
ACCORDINGLY, in consideration of the advances to be
made under the Credit Agreement, the Borrower hereby agrees as
follows:
1. Assignment and Security Interest. To secure
payment of each and every debt, liability and obligation of every
type and description which the Borrower may now or at any time
hereafter owe to the Bank (whether such debt, liability or
obligation now exists or is hereafter created or incurred and
whether it is or may be direct or indirect, due or to become due,
absolute or contingent, or several or joint and several, all such
debts, liabilities and obligations being herein collectively
referred to as the "Obligations"), including but not limited to
the Note (as defined in the Credit Agreement) and all other
indebtedness arising under the Credit Agreement, the Borrower
hereby assigns, sets over and transfers to the Bank, and grants
the Bank a security interest in, all rights, title and interests
of the Borrower in and to the deposit accounts described in
Exhibit A, and in and to all other deposit and investment
accounts of any type, including but not limited to all checking
and savings accounts, NOW accounts, money market accounts,
collateral accounts, escrow accounts, margin accounts,
certificates of deposit and savings certificates now or hereafter
maintained by the Borrower with the Bank or any other bank,
savings bank, savings and loan association, broker, brokerage
house or other financial institution (each a "Financial
Institution"), and all rights to payment in connection therewith
and all sums or property now or at any time hereafter on deposit
therein, together with all earnings of every kind and description
which may now or hereafter accrue thereon (all of the foregoing
being herein referred to as the "Accounts"). If any Account is
evidenced by a certificate of deposit or is otherwise subject to
Article 9 of the Uniform Commercial Code, the foregoing
assignment shall be construed as a grant of a security interest
subject, to the extent applicable, to the Uniform Commercial Code
as enacted in the State of Minnesota.
2. Title. The Borrower represents, warrants and
covenants that the Borrower is and will remain the sole owner of
the Accounts described in Exhibit A hereto, free and clear of all
liens, encumbrances, security interests and restrictions, except
the security interest created hereby.
3. Acknowledgments. Concurrent with the opening or
establishment of any Account not listed in Exhibit A hereto, the
Borrower shall deliver to the Bank an acknowledgment, duly
executed by the Borrower and the Financial Institution at which
such Account is maintained, in substantially the form of Exhibit
B hereto.
4. Bank's Rights with Respect to Accounts. Following
the occurrence of an Event of Default, as defined in the Credit
Agreement, the Bank may, in its sole discretion, and the Borrower
hereby irrevocably authorizes and empowers the Bank to, in the
Bank's own name or in the name of the Borrower demand, apply for
withdrawal, receipt and give acquittance for any and all sums or
property which are or will become due and payable under any or
all of the Accounts, to exercise any and all rights and
privileges and receive all benefits accorded to the Accounts, and
to execute any and all instruments required therefor, all without
notice to the Borrower. The Bank shall apply any moneys or
property received thereby toward payment of the Obligations in
such order of application as the Bank may determine. In
addition, the Bank may, in its sole discretion, following the
occurrence of an Event of Default, notify any Financial
Institution that the Borrower shall not be entitled to any
further withdrawal from any Accounts maintained with that
Financial Institution, whereupon the Borrower shall not have any
further right to make such withdrawals. Each Financial
Institution is hereby specifically authorized and directed, on
request by the Bank and without notice to or consent from the
Borrower, to (i) pay the Accounts in the amount specified in the
applicable request from the Bank (including, if requested, the
entire amount of such Accounts), and (ii) transfer any or all of
the Accounts into the Bank's name on that Financial Institution's
books. Following transfer of any Account into Bank's name as
provided above, the Borrower shall not have any right to make any
withdrawals from any of the Accounts with that Financial
Institution, or to the issuance of any new certificates
evidencing any of such Accounts. The Financial Institutions
shall rely solely on the instructions of the Bank in acting under
this paragraph. Without limiting the generality of the
foregoing, the Financial Institutions shall have no duty to
ascertain or inquire as to whether the conditions permitting the
Bank to make any such request under this Agreement have been
satisfied or any other matter whatsoever.
5. Notices. All notices to be given to the Bank or
the Borrower hereunder shall be given in accordance with the
Credit Agreement.
6. Miscellaneous. This Assignment can be waived,
modified, amended, terminated or discharged, and the security
interest granted herein can be released, only explicitly in a
writing signed by the Bank. A waiver signed by the Bank shall be
effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude
the exercise or enforcement of any of the Bank's rights or
remedies. All
rights and remedies of the Bank shall be cumulative and may be
exercised singularly or concurrently, at the Bank's option, and
the exercise or enforcement of any one such right or remedy shall
neither be a condition to nor bar the exercise or enforcement of
any other. Any rights granted to the Bank hereunder are in
addition to any setoff or other rights that the Bank may
otherwise have. The Bank shall not be obligated to preserve any
rights the Borrower may have against prior parties, to exercise
at all or in any particular manner any voting rights which may be
available with respect to any Collateral, to realize on the
Collateral at all or in any particular manner or order, or to
apply any cash proceeds of Collateral in any particular order of
application. The Borrower agrees to reimburse the Bank for all
expenses (including reasonable attorneys' fees and legal
expenses) incurred by the Bank in the protection, defense or
enforcement of the assignment and security interest granted
herein, including expenses incurred in any litigation or
bankruptcy or insolvency proceedings. This Assignment shall be
binding upon and inure to the benefit of the Borrower and the
Bank and their respective successors and assigns and shall take
effect when signed by the Borrower and delivered to the Bank, and
the Borrower waives notice of the Bank's acceptance hereof. If
any provision or application of this Assignment is held unlawful
or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or
applications which can be given effect, and this Assignment shall
be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby.
The paragraph headings herein are for convenience of reference
only and shall not constitute a part of this Assignment for any
other purpose.
IN WITNESS WHEREOF, the Borrower has executed this
Assignment as of the day and year first above-written.
SA HOLDINGS, INC.
By: _________________________
Its: _____________________
Exhibit A
Depositor Depository Institution Account Number Description
Exhibit B
___________________, 1995
____________________________
[Depository Financial Institution]
_____________________________
_____________________________
Ladies and Gentlemen:
SA Holdings, Inc., a Delaware corporation, doing
business as SA Telecommunications, Inc. (the "Assignor"), has
granted Norwest Bank Minnesota, National Association, a national
banking association (together with any successor Bank under the
Credit Agreement described and defined herein, the "Bank"), a
security interest in and lien on, and have assigned to the Bank,
all of the Assignor's interest in the account or accounts
maintained with you and described on Attachment I hereto, and in
each and every other deposit or investment account of the
Assignor, now or hereafter maintained with you, together with all
rights to payment in connection therewith and all sums or
property now or at any time hereafter on deposit therein,
together with all earnings of every kind and description which
may now or hereafter accrue thereon. Pursuant to the Assignment,
all such moneys and property are payable directly to the Bank
upon its request.
A true copy of the Assignment is attached as
Attachment II.
The Bank hereby appoints you as its agent to perfect
the security interest, lien and assignment described above.
As a condition to making any advance under the Credit
Agreement described in the Assignment, the Bank has required that
you accept that appointment and agree to certain matters in
connection therewith. We therefore request that you sign the
acknowledgment attached hereto.
NORWEST BANK MINNESOTA, SA HOLDINGS, INC.
NATIONAL ASSOCIATION
By __________________________ By __________________________
Its Vice President Its ______________________
Acknowledgment of Depository Institution
The undersigned, ___________________________________, a
________________________________, hereby accepts the agency
described above, and agrees in connection therewith to the
following matters:
1. The undersigned hereby waives any and all rights
it may now or hereafter have against SA Holdings, Inc. a Delaware
corporation (the "Assignor"), with respect to any funds, earnings
or other property on deposit in any account maintained by the
Assignor with the undersigned (each an "Account"), including any
right of offset in connection therewith; provided, however, that
the undersigned retains the right to offset any funds, earnings
or other property in any Account against any indebtedness
resulting from inadvertent overdrafts in Accounts, whether such
overdrafts result from internal items or other causes.
2. The undersigned represents and warrants to the
Bank that the undersigned has no knowledge of any other security
interest in, lien on, or assignment of any of the Accounts.
3. The undersigned agrees that, at any time and from
time to time upon receipt of a request for withdrawal from the
Bank in writing or in such other form as the undersigned and the
Bank may agree, the undersigned will remit to the Bank all funds,
earnings, and other property on deposit with the undersigned to
the extent specified in such request. The undersigned further
agrees that, upon receipt of a written notice that an Event of
Default has occurred, the undersigned shall, to the extent
requested in such notice, (i) no longer permit the Assignor or
anyone else, except the Bank, to withdraw funds from or
countermand withdrawals from any of the Accounts, (ii) pay over
to the Bank directly all funds, earnings, and other property of
the Assignor on deposit with the undersigned, and (iii) transfer
each such Account into the Bank's name on the undersigned's
books.
________________________________
[Depository Financial Institution]
By _____________________________
Its _________________________
Attachment I
Depositor Account Number Description
Attachment II
[Copy of Assignment]
EXHIBIT F TO
TERM CREDIT AGREEMENT
[On Xxxxx & Xxxxxx
Washington, D.C. Firm
Letterhead]
(000) 000-0000
July 28, 0000
Xxxxxxx Xxxx xx Xxxxxxxxx
National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: Loan Agreement dated July __, 1995 between SA Holdings,
Inc. and Norwest Bank Minnesota, National Association
Ladies and Gentlemen:
In connection with the above-referenced loan, I have
reviewed certain regulatory filings by North American
Telecommunications Corporation ("NATC"), Long Distance Network,
Inc. ("LDN"), U.S. Communications, Inc. ("USC"), and Southwest
Long Distance Network, Inc. ("SLDN") (collectively "the
Corporations"). My conclusions regarding the status of these
regulatory filings is subject to a number of qualifications and
limitations. I have relied on the factual representations made
by the Corporations and the documents that the Corporations have
provided to me. I have not conducted any search of any indexes,
dockets, or other records of any federal, state, or local court,
governmental agency or tribunal or of any arbitrator. I have not
contacted or otherwise communicated with the Federal
Communications Commission ("FCC") or any state regulatory agency
concerning the status of the filings described below. I do not
represent any of the Corporations on a regular basis and as a
consequence my knowledge of their affairs is based upon
information supplied by them. I have assumed that the business
of the Corporations consists of acting as common carriers
offering long distance telephone service. I have no reason to
believe such assumption is incorrect.
I have ten years of experience in providing state and
federal telecommunications regulatory counsel to long distance
companies. The foregoing provides a summary of the status of the
Corporations' filings with the FCC and state regulatory
authorities with oversight responsibilities similar to the FCC.
However, nothing herein provides an opinion concerning any state
law as I am licensed to practice law in only the State of
Virginia and the District of Columbia.
U.S. COMMUNICATIONS INC.
A. Federal
USC has filed with the FCC all tariffs required by the
Communications Act of 1934 and the FCC's rules and decisions.
The FCC has granted USC all authorizations required by the
Communications Act of 1934 to provide long distance
telecommunications services.
B. States
1. Arizona
USC has applied for the requisite Certificate of Public
Convenience and Necessity and filed a tariff with the Arizona
Corporation Commission, but no approval has been obtained due to
the back-log at the Arizona Corporation Commission.
2. Arkansas
The Arkansas Public Service Commission has granted USC a
permanent Certificate of Public Convenience and Necessity to
provide competitive telecommunications services to business and
residential customers within the State of Arkansas and has
approved USC's tariff offering same.
3. Colorado
The Colorado Public Utilities Commission has granted USC a
Certificate of Public Convenience and Necessity to provide
intrastate non-optional operator services throughout the State of
Colorado. USC has filed a tariff offering intrastate non-
optional operator services within the State of Colorado as
required by the Colorado Public Utilities Commission.
4. Kansas
The Kansas Corporation Commission has granted USC a
certificate of convenience and authority to operate as an
interexchange/private line/operator services provider within the
State of Kansas. The Kansas Corporation Commission has approved
USC's tariff for the provision of intrastate resale common
carrier communications services within the State of Kansas.
5. Louisiana
USC has filed an application with the Louisiana Public
Service Commission for authority to provide intrastate long
distance service, operator service, and private line service in
Louisiana. To my knowledge, the Louisiana Public Service
Commission has not yet acted on this application.
6. New Mexico
The New Mexico State Corporation Commission has granted USC
a certificate of public convenience and necessity to provide
operator services and non-facilities based resale of long
distance telecommunications service on an intrastate basis within
the State of New Mexico and approved USC's tariff offering same.
USC also has filed an application for registration as a payphone
provider in New Mexico but I have no knowledge of whether the New
Mexico State Corporation Commission has approved such
registration.
7. Oklahoma
USC has registered with the Oklahoma Corporation Commission
as a non-dominant operator service provider and long distance
telecommunications interexchange carrier. However, new rules
recently adopted by the Oklahoma Corporation Commission require a
certificate of public convenience and necessity and tariffs to be
approved by the Oklahoma Corporation Commission in order to
provide intrastate interexchange telecommunications services or
operator services in Oklahoma. I have no knowledge of whether
USC has filed such an application for a certificate of public
convenience and necessity or tariffs with the Oklahoma
Corporation Commission.
8. Texas
USC has filed the informational tariff required by the Texas
Public Utility Commission.
LONG DISTANCE NETWORK, INC.
A. Federal
LDN has filed with the FCC all tariffs required by the
Communications Act of 1934 and the FCC's rules and decisions to
provide domestic interstate telecommunications services. LDN has
filed an application with the FCC requesting authorization
pursuant to Section 214 of the Communications Act of 1934 to
provide international resale. When this international resale
authority is granted, LDN will need to revise its international
resale tariff.
B. States
1. LDN has filed the informational tariff required by the
Texas Public Utility Commission.
NORTH AMERICAN TELECOMMUNICATIONS CORPORATION
A. Federal
To my knowledge, NATC does not offer domestic service,
therefore, NATC is not required to file domestic tariffs with the
FCC or intrastate tariffs with state regulators.
NATC has filed an application with the FCC requesting
authorization pursuant to Section 214 of the Communications Act
of 1934 to provide international resale. When this international
resale authority is granted, NATC will be required to file an
international resale tariff with the FCC.
SOUTHWEST LONG DISTANCE NETWORK, INC.
A. Federal
SLDN has filed with the FCC all tariffs required by the
Communications Act of 1934 and the FCC's rules and decisions to
provide domestic interstate telecommunications services.
To my knowledge, SLDN is a wholly-owned subsidiary of USC.
While USC has been granted authorization pursuant to Section 214
of the Communications Act of 1934 and has filed an international
resale tariff with the FCC, SLDN has not separately applied for
such international authorization or filed an international resale
tariff.
B. States
1. Arkansas
The Arkansas Public Service Commission has granted SLDN a
permanent Certificate of Public Convenience and Necessity to
provide intrastate telecommunications services within the State
of Arkansas and has approved SLDN's tariff offering same.
This status letter may be relied upon by you only in
connection with the above-referenced loan and nay not be relied
upon by, filed with or furnished to, quoted in any manner to, or
referred to in any financial statement, report or related
document, or delivered to, any person or entity without, in each
instance, Xxxxx & Xxxxxx'x prior written consent.
Sincerely,
Xxxxx X. Xxxxx
cc: Xxxx X. Xxxxxxx
EXHIBIT G
BORROWING CERTIFICATE
The undersigned Chief Financial Officer of SA Holdings, Inc. (the "Borrower") hereby certifies to the Bank
pursuant to Section [3.2(a][5.1(b)] of the Credit Agreement that the Adjusted Operating Cash Flow of the Borrower for
the quarter ending _______________, 199_ was as follows:
Quarter Ending: 06/30/95 9/30/95 12/31/95 03/31/96
(Months) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
--------------- ----------------------- --------------------- ------------------- ---------------
Operating Cash
Flow (EBITDA) 68,055 68,055 68,055
Expense Reduction
Amount 163,000 163,000 163,000 107,000 49,000 47,000 2,000 0 ____ 0 0 0
Monthly Adjusted
Operating Cash Flow
Two Quarters Ending
__/__/__ __/__/__ ________ _______ ____ ____
Multiple to Annualize 2.0 x 2.0 x 2.0 x 2.0 x
Annualized Adjusted
Operating Cash Flow:
Current Principal Balance:
Borrowing Availability:
__________________________________________
(Chief Financial Officer)
Schedule 4.4
Subsidiaries
1. Long Distance Network, Inc., a Texas corporation
2. North American Telecommunications Corporation, a Texas
corporation
3. Strategic Abstract and Title Corporation, a Texas
corporation
4. Baltic States and CIS Ventures, Inc., a Texas corporation
5. CIS Intelligence Information Services, Inc., a Texas
corporation
6. U.S. Communications, Inc., a Texas corporation (after
completion of the Acquisition)
7. Southwest Long Distance Network, Inc., an Arkansas
corporation
All of the above subsidiaries are owned 100% by Borrower,
except for Southwest Long Distance Network, Inc., which is
100% owned by U.S. Communications, Inc.
Schedule 4.7
Litigation
- SA Holdings, Inc. and its wholly owned subsidiary, North
American Telecommunications Corporation are Defendants in an
Original Petition with Jury Demand by Plaintiff Xxxxxx Xxxxx.
The Action was filed in the District court of Dallas County,
Texas July 20, 1995, Xxxxxx Xxxxx vs. SA Holdings, Inc., et al.
(Cause No. 95-07136-E). Mr. Avyam was previously engaged by the
Company under a Consulting Agreement which was terminated by the
Company in May, 1995 under the provisions of that Agreement.
Mr. Avyam claims unspecified monies owed him by the Company for
wages and commissions; as well as Common Law Fraud; Breach of
Fiduciary Obligation and Breach of Contract. In his Petition,
Mr. Avyam seeks among other things, 170,000 shares of SA Holdings
stock, exemplary damages and attorney's fees.
- U.S. Communications, Inc. is in the process of settling a
personal injury action brought by a UPS driver who was injured in
a malfunctioning elevator on July 15, 1992 (Cause No. 94-06-
15,823; Xxxxxxx Xxxxxxxx et ux. v. U.S. Communications Inc. d/b/a
NTS Communications/Western division, et al., filed in the 286th
Judicial District Court of Hockley County, Texas). The
Plaintiff's attorney has demanded a total settlement offer of
$350,894. U.S. Communications maintains personal injury
liability insurance with up to $500,000 insurance coverage per
occurrence up to an aggregate of $1,000,000 and has made demand
for this settlement payment by the insurance carrier.
Schedule 4.11
Capitalization
-SA Holdings, Inc.:
Preferred Stock: $0.00001 par value per share
12,500,000 shares authorized
166,667 shares Series A Preferred Stock
issued and outstanding at August 1, 1995
125,000 shares Series B Preferred Stock
issued and outstanding at August 1, 1995
Common Stock: $0.0001 par value share
50,000,000 share authorized
11,533,590 shares issued and outstanding
at 6/30/95
Treasury Stock: 217,572 shares of Common Stock at
6/30/95
0 shares of Preferred Stock
Schedule 4.12
Real Property
-SA Holdings, Inc.: NONE, except for the real property owned by
SA Holdings in Midland, Texas that will be sold to SATC in
December with the distribution of SATC stock described in Section
4.4 of the Agreement. The property is described as:
All of LOT FOUR (4), and the North One-Half (N/2) of LOT
FIVE (5) in BLOCK TWENTY-TWO (22) of XXXXXX ADDITION, an Addition
to the City of Midland, Midland County, Texas, according to the
map thereof recorded in Volume 36, Page 447 of the Deed of
Records of Midland County, Texas.
Schedule 4.14
Licenses
Except for the filings and authorizations described in the letter
dated July 28, 1995 from Xxxxx X. Xxxxx of Xxxxx & Xxxxxx
addressed to Bank, none.
SCHEDULE 4.15
MATERIAL AGREEMENTS
A. SA HOLDINGS, INC.
1. Lease Agreement relating to 0000 Xxxxxx X, Xxxxx 000,
Xxxxx, Xxxxx.
Expired: November 1993, currently on a month-to-
month basis.
2. Sale and Purchase Agreement between the Company, Long
Distance Network, Inc. and the shareholders of Long
Distance Network, Inc., dated April 12, 1994.
Expires: N/A
3. Stock Purchase Agreement between the Company, U.S.
Communications, Inc. and the shareholders of U.S.
Communications, Inc., dated June 30, 1995 (the
"Purchase Agreement").
Expires: July 31, 1995
4. Side Letter Agreement between NTS Communications, Inc.,
the Company, U.S. Communications, Inc. and the
shareholders thereof relating to the Purchase Agreement
(the "Side Letter Agreement").
Expires: N/A
5. Employment Agreement dated March 24, 1995 by and
between the Company and Xxxx X. Xxxx, Xx.
Expires: March 24, 2000
6. 1994 Stock Option Plan for Non-Employee Directors of
the Company ("Non-Employee Director Plan").
Expires: As set forth in the Non-Employee
Director Plan but in no event later than
5 years from the Date of Grant of the
Option.
7. Form of Stock Option Agreement used in connection with
Non-Employee Director Plan.
Expires: No later than five years from the
commencement date.
8. 1994 Employee Stock Option Plan ("Employee Plan").
Expires: As set forth in the Employee Plan but in
no event later than 10 years from the
Date of Grant of the Option.
9. Form of Incentive Stock Option Agreement used in
connection with the Employee Plan.
Expires: As set forth in the Agreement but in no
event later than 10 years from the date
of the Agreement.
10. Form of Non-Qualified Stock Option Agreement used in
connection with the Employee Plan.
Expires: As set forth in the Agreement but in no
event later than 10 years from the date
of the Agreement.
11. Employment Agreement dated August 8, 1993 and effective
on October 1, 1993 by and between Company and J. Xxxxx
Xxxxxxx.
Expires: October 1, 1998
12. Real Estate Lien Note dated May 12, 1994 in the
principal amount of $120,000 payable by Company to H.
Xxx Xxxxxxxxx and Xxxxxx X. Xxxxxxxx, Trustees, secured
by the Deed of Trust of same date by Company to Xxxxxxx
X. Xxxxxx, Trustee.
Matures: May 12, 2004
13. Certificate of Designation of Series A Preferred Stock
of SA Holdings, Inc. filed with the Secretary of State
of the State of Delaware on August 1, 1995.
14. Certificate of Designation of Series B Preferred Stock
of SA Holdings, Inc. filed with the Secretary of State
of the State of Delaware on August 1, 1995.
15. Subordinated Note dated July 31, 1995 payable to Xxxxxx
Xxxxxxx in the amount of $1,100,000.
16. Subordinated Note dated July 31, 1995 payable to Xxxx
X. Xxxxxxx in the amount of $1,100,000.
17. Subordinated Note dated July 31, 1995 payable to
Xxxxxxxx Xxxx in the amount of $550,000.
18. Subordinated Note dated July 31, 1995 payable to Xxxxxx
Xxxxxxx in the amount of $600,000.
19. Subordinated Note dated July 31, 1995 payable to Xxxx
X. Xxxxxxx in the amount of $600,000.
20. Subordinated Note dated July 31, 1995 payable to
Xxxxxxxx Xxxx in the amount of $300,000.
21. Note and Warrant Purchase Agreement dated July 31, 1995
between the Company and the Purchasers thereunder.
22. Term Credit Agreement dated July 31, 1995 between
Company and Norwest Bank Minnesota, National
Association ("Norwest") and the other Loan Documents
(as such term is defined therein).
B. LONG DISTANCE NETWORK, INC.
1. Lease Agreement relating to 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxx.
Expires: August 1996
2. Carrier Termination Services Agreement between LDN and
U.S. Long Distance, Inc. dated February 3, 1995.
Expires: February 20, 1996 (extendable for
additional one year period)
3. Telecommunications Agreement between LDN and NTS
Communications, Inc., dated August 1, 1993.
Expires: Two years after the first day of the
next billing period following the date
NTS receives the signed Agreement.
4. Carrier Termination Service Agreement between LDN and
Long Distance International, Inc. dated May 4, 1995.
Expires: June 5, 1996 (extendable for additional
one year period)
5. Employment Agreement dated April 1, 1994 by and between
LDN and Xxxx X. Xxxxxx.
Expires: April 1, 1999
6. Employment Agreement dated April 1, 1994 by and between
LDN and Xxxxx X. Xxxxxxx.
Expires: April 1, 1999
7. Lease Agreement relating to the Lafayette Building at
000 Xxxxx Xxxxxxxxx, Xxxxx XX000, Xxxxxx Xxxx,
Xxxxxxxx.
Expires: September 30, 1996
8. Lease Agreement relating to the Xxxxxxxxx Xxxxxx
Xxxxxx, 0000 Xxxx Xxxxxx, Xxxxx X-0, Xxxxxxxxxx,
Xxxxxxxx.
Expires: October 31, 1995
9. Lease Agreement relating to 000 Xxxxx 00xx, Xxxxxx 100,
102 and 000, Xxxx Xxxxx, Xxxxxxxx.
Expires: October 31, 1998
10. Security Agreement and Guaranty by Corporation, each
dated July 31, 1995, given for the benefit of Norwest.
11. Records Processing and Financing Agreement by and
between Teltrust Communications Services, Inc. (TCS)
and LDN dated May 18, 1993 and effective July 1, 1993.
Expires: July 1, 1994 (extendable for additional
one year period)
12. Operator Services Agreement by and between Teletrust,
Inc. and LDN dated May 12, 1994.
Expires: May 12, 1997
C. NORTH AMERICAN TELECOMMUNICATIONS CORPORATION ("NATC")
1. Reseller Services Agreement between NATC and Prairie
Systems, Inc. dated November 12, 1993.
Expires: November 12, 1996 with automatic twelve
month renewal periods.
2. Security Agreement and Guaranty by Corporation, each
dated July 31, 1995, given for the benefit of Norwest.
D. U.S. COMMUNICATIONS, INC. ("USC")
1. Stock Purchase Agreement by and between SA Holdings,
Inc., USC, and Xxxx X. Xxxxxxx, Xxxxxx Xxxxxxx,
Xxxxxxxx Xxxx, and NTS Communications, Inc., dated
October 6, 1994.
Expires: N/A
2. Side Letter Agreement by and between the Company, NTS
Communications, Inc., and USC dated June 30, 1995.
3. Telecommunications Agreement by and between NTS
Communications, Inc. and USC dated July 18, 1995 to
become effective June 11, 1995 and continue until
November 30, 1995, with successive 30 day renewable
terms.
4. Promissory Note dated July 1, 1991 payable to General
Electric Capital Corporation in the original principal
amount of $320,189.00 and amended on September 11, 1991
to principal amount of $246,689.00.
Matures: July 1, 1995
5. Promissory Note dated June 1, 1993 payable to American
State Bank in the original principal amount of
$25,681.65.
Matures: December 1, 1996
6. Promissory Note dated March 5, 1993 payable to American
State Bank in the original principal amount of
$13,000.00.
Matures: March 1, 1996
7. Promissory Note dated December 15, 1992 payable to
American State Bank in the original principal amount of
$12,946.11.
Matures: December 15, 1995
8. Promissory Note dated October 16, 1992 payable to
American State Bank in the original principal amount of
$11,656.34.
Matures: October 16, 1995
9. Promissory Note dated September 1, 1994 payable to
Xxxxxxxx Xxxx in the original principal amount of
$14,068.40.
Matures: September 1, 1996
10. Lease Agreement relating to 0000 Xxxx Xxxx Xxxx., XX,
Xxxxx 0, Xxxxxxxxxxx, Xxx Xxxxxx.
Expires: April 30, 1997
11. Lease Contract relating to 000 Xxxxxxx Xxxxxx, Xxx
Xxxxxx, Xxxxx.
Expires: September 1, 1996
12. Lease Agreement relating to 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xx Xxxx, Xxxxx.
Expires: July 31, 1998
13. Lease Agreement relating to 0000 Xxxxx Xxxxxxx 000,
Xxxxx 000, Xxxxx Xxxxxxx, Xxxxx.
Expires: July 31, 1997
14. Lease Agreement relating to 000 Xxxx Xxxxxx Xxxxxxxxx,
Xxxxx, Xxxxx.
Expires: August 1, 1997
15. Lease Agreement relating to 0000 Xxxxx Xxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxx, Xxx Xxxxxx.
Expires: December 31, 1995
16. Lease Agreement relating to 0000 Xxxxxxxxxx, Xxxxxx,
Xxxxx.
Expires: April 30, 1997
17. Lease Agreement relating to 0000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx.
Expires: October 31, 1996
18. Lease Agreement relating to 000 Xxxx Xxxxxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx.
Expires: November 30, 1997
19. Lease Agreement relating to 0000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxx.
Expires: December 31, 1995
20. Lease Agreement relating to 0000 X. Xxxx Xxxx, #000,
Xxxxxx, Xxxxxxx.
Expires: February 29, 1996
21. Lease Agreement relating to 000 Xxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx.
Expires: April 6, 1996
22. Security Agreement and Guaranty by Corporation, each
dated July 31, 1995, given for the benefit of Norwest.
SCHEDULE 6.1
Uniform Commercial Code Financing Statement Filings
Secured Party Filing Office Reference
------------- ------------- ---------
A. SA Holdings, Inc. Xxxxx Financial Corp. Texas S/S 93-054269
B. Long Distance Network Inc. Xxxxx Rents, Inc. Texas S/S 92-149136
SA Holdings, Inc. Texas S/S 95-040932
SA Holdings, Inc. ______ County 1256
Telecommunications Finance Group Texas S/S
Telecommunications Finance Group Texas S/S 94-003217
C. North American
Telecommunications Corporation
D. U.S. Communications, Inc. General Electric Capital Corp. Texas S/S 91-132174
NCNB Texas National Bank Texas S/S 91-140467
American Xxxxx Xxxx Xxxxx X/X 00-000000
Xxxxxxxx Xxxxx Bank Texas S/S 93-110316
Advanta Leasing Company Texas S/S 94-054167
First Security Bank of New Mexico Texas S/S 94-079296
Pitney Xxxxx Credit Corp. Texas S/S 94-089485
Tilden Financial Corp. Texas S/S 94-179495
Turn-Key Leasing, Ltd. Texas S/S 95-089423
E. Southwest Long Distance
Network, Inc. C&L Communications, Inc. Arkansas S/S 775601
Copystar Processing Center Texas S/S 94-173296
Real Estate Filings
Lien created by the Deed of Trust dated May 12, 1994 by SA
Holdings, Inc. to Xxxxxxx X. Xxxxxx, Trustee to secure
the Real Estate Lien Note dated May 12, 1994 in the stated
principal amount of $120,000 payable by SA Holdings, Inc. to
H. Xxx Xxxxxxxxx and Xxxxxx X. Xxxxxxxx, Trustees.
Schedule 6.2
Permitted Indebtedness
(Balance as of 6/30/95)
SA Telecommunications, Inc.:
Notes Payable to Officers & Directors
Payee Due Date Principal Interest Total
----- -------- --------- -------- -----
Xxxx Xxxx 6/30/95 25,610 4,217 $ 29,827
(25,000 note converted to options) 1,085 1,085
($100,000 note converted to options) 1,356 1,356
Xxxxx Xxxxxxx 6/17/95 25,000 1,069 26,069
8/31/95 75,000 173 75,173
Xxxx Xxxxxx 6/17/95 20,000 869 20,869
Xxxxx Xxxxxxxx 6/30/95 15,000 311 15,311
Xxxx Xxxxxx 6/17/95 25,000 1,069 26,069
Xxxx Xxxxx 6/17/95 25,000 1,069 26,069
TOTAL $221,828
Mortgage note payable to BMB-BCH Trust/AHB-BCB Trust (SATC
property)
BALANCE $111,992
1. Subordinated Note dated July 31, 1995 in the stated
principal amount of $1,100,000 payable to the order of Xxxx
X. Xxxxxxx.
2. Subordinated Note dated July 31, 1995 in the stated
principal amount of $1,100,000 payable to the order of
Xxxxxx Xxxxxxx.
3. Subordinated Note dated July 31, 1995 in the stated
principal amount of $550,000 payable to the order of
Xxxxxxxx Xxxx.
4. Subordinated Note dated July 31, 1995 in the stated
principal amount of $600,000 payable to the order of Xxxx X.
Xxxxxxx.
5. Subordinated Note dated July 31, 1995 in the stated
principal amount of $600,000 payable to the order of Xxxxxx
Xxxxxxx.
6. Subordinated Note dated July 31, 1995 in the stated
principal amount of $300,000 payable to the order of
Xxxxxxxx Xxxx.
TOTAL $4,250,000
Long Distance Network, Inc.:
(a) Capitalized Switching Equipment Lease Obligation
Summary of Terms: Lease Agreement dated November 20, 1993,
between Telecommunications Finance Group (Siemens/Xxxxxxxxx-
Xxxxxxx third-party vendor) and Total National
Telecommunications, Inc., effective May 1, 1994. The Lease
Agreement covers (1) an in place Siemens Xxxxxxxxx-Xxxxxxx
Digital Central Office Carrier Switch equipped for 576 digital
ports and wired for 1152 digital ports with Basic Release 11.1
and AMA (DCO-482027, Issue 01, dated 11/15/93), and the addition
of 576 equipped digital ports, installed at 0000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000. The original value of the
equipment was $220,000, to be paid in sixty monthly lease
installments (based on a rate factor per $1,000 of $21.867) of
$4,620.44. By Attachment A dated July 7, 1994 (and Addendum to
Lease Agreement dated July 15, 1994) and effective August 1, 1994
(when 57 monthly lease payments were outstanding), upgrades
(primarily of software) costing $220,173.65 were carried out,
bringing the total value of equipment under lease to $440,173.65
and increasing monthly lease payments by $4,814.54 to $9,434.98.
The upgrade included a one-sector upgrade to Basic Release 12.1
per DCO-482096, Issue 1, Dated 02/01/94, including SS7 with 800
Portability, SS7 spares, three additional pairs of "A" links,
Auto Truck Testing, CMF II Spares, and the addition of 300 "800"
Database Tables (S.O. #063782)
Balance $362,574
(b) Note Payable to Commercial Financial Services, Inc.
Summary of Terms: CFS is the holder of a promissory note in
connection with Loan Number 7633910, also referred to as loan
number 01941601, in the original principal amount of $100,000,
originally give by Long Distance Network to Continental Bank,
Dallas, Texas, and dated December 19, 1989 (Exhibit A). Under
the terms of the Compromise, Release, and Settlement Agreement
between Commercial Financial/SPC Acquisitions, Inc. and Long
Distance Network, Inc., LDN agreed to pay CFS, the sum of $37,500
("Amount Financed") plus interest of 7.5% p.a. in sixty monthly
installments of $752.40, commencing on May 1, 1995. There is no
prepayment penalty.
Balance $36,225
(c) Notes Payable to Former LDN Shareholders
Xxxxx Xxxxxxx $23,725
Xxxx Xxxxxx 3,640
Xxxxx Xxxxx 7,847
Xxx Xxxxxx 730
Xxxxx Xxxxxx 365
Xxx Xxxxxxxxx 183
TOTAL $36,500
U.S. Communications, Inc.:
Notes Payable, June 30, 1995
Original Maturity Payment
Lender Date Proceeds Date Rate Term Amount Balance
------ ---- -------- -------- ---- ---- -------
GE Capital Corp 7/1/91 $246,689.00 7/1/95 12.5% 48 mo $6,557.00 $12,533.78
(MAX,BOSS,SAGE)
American State Bank 1/13/94 58,306.39 7/1/95 11.5% 43 mo 2,170.55 25,726.45
(Computer Equipment)
American State Bank 6/1/93 25,681.65 12/1/96 11.0% 42 mo 706.16 11,650.83
('92 Cadillac Eld.)
American State Bank 3/5/93 13,000.00 3/1/96 10.5% 38 mo 405.52 3,284.34
('93 Ford Ranger)
American State Bank 12/15/92 12,946.11 12/15/95 9.0% 36 mo 395.31 2,431.57
('92 Chevy S10 PU)
American State Bank 10/16/92 11,656.34 10/16/95 9.0% 36 mo 355.93 1,491.28
('92 Chevy PU)
Xxxxxx Xxxxxxx 10/7/91 24,431.23 9/7/96 8.5% 60 mo 590.82 12,351.20
(Capital)
Xxxxxxxx Xxxx 9/1/94 14,068.40 9/1/96 8.0% 24 mo 636.27 8,473.55
(Note - Ins)
Xxx Xxxx 10/7/91 25,104.17 9/7/96 8.5% 60 mo 620.72 12,069.22
(Capital)
Xxxx Xxxxxxx 10/7/91 25,104.17 9/7/96 8.5% 60 mo 471.54 10,217.32
TOTAL $100,229.54
Schedule 6.3
Permitted Guaranties
-NONE-
