EXHIBIT 10.3(a)
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is made as of April 8, 1998,
by and between SURREY, INC. ("Borrower"), a Texas corporation, and CHASE BANK OF
TEXAS, NATIONAL ASSOCIATION ("Lender"), a national banking association. Borrower
has requested that Lender make loans to Borrower in the following manner and
subject to the following terms and conditions:
1. Certain Definitions. Unless a particular word or phrase is
otherwise defined or the context otherwise requires, capitalized words and
phrases used in this Agreement shall have the following meanings (all
definitions that are defined in this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
Accounts, Chattel Paper, Equipment, General Intangibles,
Instruments and Inventory shall have the respective meanings assigned to them in
the Texas Business and Commerce Code in force on the date hereof.
Adjusted LIBOR Interbank Rate shall mean, with respect to each
LIBOR Interest Period, a rate per annum equal to the quotient (converted to a
percentage) of (a) the LIBOR Interbank Rate with respect to such LIBOR Interest
Period divided by (b) one (1) minus the LIBOR Reserve Requirement in effect on
the first day of such LIBOR Interest Period.
Advance/Term Loans shall mean the Loans described in Paragraph
3 hereof. Advance/Term Loan shall mean any such Loan.
Advance/Term Note shall mean the promissory note of Borrower
described in Paragraph 3 hereof, and any and all renewals, extensions,
modifications, rearrangements and replacements thereof and any and all
substitutions therefor.
Affiliate shall mean any Person controlling, controlled by or
under common control with any other Person. For purposes of this definition,
"control" (including "controlled by" and "under common control with") shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of any indicia of equity rights (whether issued and outstanding
capital stock, partnership interests or otherwise) or by any other means.
Agreement shall mean this Loan Agreement, as it may from time
to time be amended, modified, restated or supplemented.
Annual Financial Statements shall mean the annual financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such fiscal year and an income
statement, retained earnings statement, and a statement of cash flows for such
fiscal year, all setting forth in comparative form the corresponding figures
from the previous fiscal year, all prepared in conformity with GAAP and
accompanied by a report and unqualified opinion of independent certified public
accountants of recognized standing satisfactory to Lender, which shall state
that such financial statements, in the unqualified opinion of such accountants,
present
fairly, in all material respects, the financial position of such Person as of
the date thereof and the results of its operations for the period covered
thereby in conformity with GAAP. The Annual Financial Statements for Borrower
shall be prepared on a consolidated basis. In connection with each set of Annual
Financial Statements, if Borrower ever acquires any Subsidiary or Subsidiaries
in accordance with the other provisions of this Agreement, annual consolidating
statements shall also be prepared by Borrower for delivery to Lender, and such
consolidating statements shall be prepared in accordance with GAAP only to the
extent normal and customary.
Applicable Margin shall mean the applicable per annum
percentage for LIBOR Rate Borrowings set forth below which corresponds to the
applicable Debt to Tangible Net Worth Ratio:
Debt to Per Annum Percentage for
Tangible Net Worth Ratio LIBOR Rate Borrowings
------------------------ ---------------------
Less than or equal to .75x 1.75%
More than .75x but less than 1x 2.00%
1x or greater 2.25%
The Applicable Margin shall initially be 1.75%. The Applicable Margin will be
adjusted (if necessary) quarterly based on the Debt to Tangible Net Worth Ratio
as of the end of each quarter, as reflected in the Quarterly Financial
Statements and Compliance Certificates required to be provided Lender under
Paragraphs 10(b)(2) and (3), with any change in the Applicable Margin becoming
effective ten (10) calendar days after receipt by Lender of such Quarterly
Financial Statements and Compliance Certificates.
Bankruptcy Code shall mean the United States Bankruptcy Code,
as amended, and any successor statute.
Base Rate shall mean for any day a rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the lesser of (a) the Prime Rate
(computed on the basis of the actual number of days elapsed over a year of 360
days) in effect on such day or (b) the Ceiling Rate. For purposes of this
Agreement any change in the Base Rate due to a change in the Prime Rate shall be
effective on the effective date of such change in the Prime Rate.
Base Rate Borrowing shall mean that portion of the principal
balance of the Loans at any time bearing interest at the Base Rate.
Borrowing Authorization shall mean a certificate, in Proper
Form, of the Secretary or an Assistant Secretary of a corporation as to the
resolutions of the Board of Directors of such corporation authorizing the
execution, delivery and performance of the documents to be executed by such
corporation; the incumbency and signature of the officer of such corporation
executing such documents on behalf of such corporation, and the Organizational
Documents of such corporation.
Borrowing Base shall mean, as at any date, the amount of the
Borrowing Base shown on the Borrowing Base Certificate then most recently
delivered pursuant to Paragraph 10(b) hereof, determined by the following
calculation:
80% of the Eligible Accounts of Borrower at said date which
are owed by account debtors.
Notwithstanding anything to the contrary set forth in the immediately preceding
sentence, Lender reserves the right to adjust downward to a level acceptable to
Lender in its sole discretion the eighty percent (80%) advance rate set forth
above if Borrower's average dilution percentage for all Accounts exceeds five
percent (5%). In the absence of a current Borrowing Base Certificate, Lender
shall determine the Borrowing Base from time to time in its discretion, taking
into account all information available to it, and the Borrowing Base from time
to time so determined shall be the Borrowing Base for all purposes of this
Agreement until a current Borrowing Base Certificate, in Proper Form, is
furnished to and accepted by Lender.
Borrowing Base Certificate shall mean a certificate, duly
executed by an appropriate officer or other responsible party acceptable to
Lender on behalf of Borrower, appropriately completed and in substantially the
form of Exhibit A hereto. Each Borrowing Base Certificate shall be effective
only as accepted by Lender (and with such revisions, if any, as Lender may
require as a condition to such acceptance).
Business Day shall mean any day on which Lender is open for
business.
Capital Expenditures shall mean, as to any Person,
expenditures in respect of fixed or capital assets by such Person, including the
capital portion of lease payments made in respect of capital lease obligations,
but excluding expenditures for the restoration, repair or replacement of any
fixed or capital asset which was destroyed or damaged, in whole or in part, to
the extent financed by the proceeds of an insurance policy maintained by such
Person. Expenditures in respect of replacements and maintenance consistent with
the business practices of a Person in respect of plant facilities, machinery,
fixtures and other like capital assets utilized in the ordinary course of
business are not Capital Expenditures to the extent such expenditures are not
capitalized in preparing a balance sheet of such Person in accordance with GAAP.
Capital Lease Obligations shall mean the obligations of
Borrower on a consolidated basis to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal Property
which obligations are required to be classified and accounted for as a capital
lease on a consolidated balance sheet of Borrower under GAAP (including
Statement of Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board, as amended) and, for purposes of this Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP (including such Statement No. 13).
Cash Capital Expenditures shall mean for any period for which
Cash Capital Expenditures is calculated, all Capital Expenditures of Borrower on
a consolidated basis for such period, determined in accordance with GAAP,
consistently applied, less the amount of such Capital
Expenditures which have been financed with or by outside sources of funds,
including without limitation, funds advanced under this Agreement.
Ceiling Rate shall mean, on any day, the maximum nonusurious
rate of interest permitted for that day by whichever of applicable federal or
Texas laws permits the higher interest rate, stated as a rate per annum. On each
day, if any, that applicable Texas law establishes the Ceiling Rate, the Ceiling
Rate shall be the "weekly ceiling" (as defined in Chapter 1D of Title 79, Texas
Revised Civil Statues - "Chapter 1D" - and ss.303 of the Texas Finance Code -
"Texas Finance Code" - as amended) for that day. Lender may from time to time,
as to current and future balances, implement any other ceiling under Chapter 1D
or the Texas Finance Code by notice to Borrower, if and to the extent permitted
by Chapter 1D or the Texas Finance Code. Without notice to Borrower or any other
person or entity, the Ceiling Rate shall automatically fluctuate upward and
downward as and in the amount by which such maximum nonusurious rate of interest
permitted by applicable law fluctuates.
Code shall mean the Internal Revenue Code of 1986, as amended,
as now or hereafter in effect, together with all regulations thereof or
thereunder by the Internal Revenue Service.
Collateral shall mean all Property, tangible or intangible,
real, personal or mixed, now or hereafter subject to the Security Documents.
Compliance Certificate shall have the meaning given to it in
Paragraph 10(b) hereof.
Consequential Loss shall mean, with respect to (a) Borrower's
payment of principal of a LIBOR Rate Borrowing on a day other than the last day
of the applicable LIBOR Interest Period, (b) Borrower's failure to borrow a
LIBOR Rate Borrowing on the date specified by Borrower for any reason, (c)
Borrower's failure to make any prepayment of the Loans (other than Base Rate
Borrowings) on the date specified by Borrower, or (d) any cessation of the LIBOR
Rate to apply to the Loans or any part thereof pursuant to Paragraph 5 hereof,
in each case whether voluntary or involuntary, any loss, expense, penalty,
premium or liability incurred by Lender, including any interest paid by Lender
to lenders of funds borrowed by it to make or carry the Loans. And
"Consequential Loss" shall mean, with respect to the termination or cancellation
of any LIBOR Rate Borrowing pursuant to Paragraph 5 hereof, in each case whether
voluntary or involuntary, any loss, expense, penalty, premium or liability
incurred by Lender on account of any reduction resulting from such premature
termination or cancellation of such borrowing in Lender's margins or spreads
between its cost of funds and the interest earned on the principal of the
borrowing so terminated or canceled, including an amount equal to the excess (if
any) of (x) interest that would have accrued on any such borrowing during the
remainder of the applicable LIBOR Interest Period had such borrowing not been
terminated or canceled early, over (y) the interest actually accrued on the
principal amount of that terminated or canceled borrowing for such remainder of
such LIBOR Interest Period.
Construction Loan Agreement shall mean the Construction Loan
Agreement dated concurrently herewith between Borrower and Lender as the same
may be amended, supplemented or restated.
Controlled Group shall mean all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the applicable Person, are treated as a
single employer under Section 414 of the Code.
Credit Documents shall mean any and all papers now or
hereafter governing, evidencing, guaranteeing or securing or otherwise relating
to all or any part of the indebtedness evidenced by the Notes, including the
Notes, this Agreement, the Construction Loan Agreement, Borrowing Authorizations
with respect to all such Persons as Lender may require, the Security Documents,
all instruments, certificates and agreements now or hereafter executed or
delivered to Lender pursuant to any of the foregoing or in connection with the
Loans or any commitment regarding the Loans and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing.
Current Accounts Receivable shall mean all Accounts, that as
of the date of any determination of Current Accounts Receivable: (a) are
evidenced by invoice and are due and payable not more than 30 days from the date
of the invoice or agreement evidencing same, provided that, subject to Lender's
written approval, Current Accounts Receivable may include Accounts that are due
and payable up to 60 days from the date of invoice; (b) have been billed within
30 days after the shipment of the goods or the providing of services giving rise
to the Account; (c) are not unpaid more than 90 days past date of invoice; (d)
arise from the performance of services by the obligee of the Account which have
been fully and satisfactorily performed or from the sale of goods in which the
obligee had the sole and complete ownership which have been sold to the account
debtor on an absolute sale basis on open account and not on consignment, on
approval or on a "forced buyback" or "sale or return" basis or subject to any
other repurchase or return agreement, and the goods have been shipped and
delivered to the account debtor (evidenced by such obligee's possession of
shipping and delivery receipts); (e) are valid obligations of the account
debtors thereunder and are not subject to set-off, counterclaim, defense,
allowance or adjustment (other than discounts for prompt payment shown on the
invoice) or to litigation, dispute, objection or complaint by the account debtor
concerning its liability on the Account, and the goods, the sale of which gave
rise to the Account, have not been returned, rejected, lost or damaged on
shipment; (f) arose in the ordinary course of business of the obligee thereon,
are stated to be payable in lawful money of the United States and are not
evidenced by Chattel Paper, a promissory note or any other Instrument of any
kind; and (g) no notice of bankruptcy, insolvency or financial embarrassment of
the account debtor has been received by the obligee of such Account.
Current Assets shall mean all assets, including without
limitation, the applicable Accounts, which would be included in "current assets"
in accordance with GAAP. Current Assets shall be determined on a consolidated
basis.
Current Liabilities shall mean all liabilities and other items
which in accordance with GAAP would be included as "current liabilities."
Current Liabilities shall be determined on a consolidated basis.
Current Ratio shall mean, as of any day, the ratio of Current
Assets to Current Liabilities.
Debt to Tangible Net Worth Ratio shall mean, as of any day,
the ratio of (a) Indebtedness to (b) Tangible Net Worth.
Deed of Trust shall mean the Deed of Trust, Absolute
Assignment of Rents, Security Agreement and Financing Statement dated on or
about the date hereof executed by Borrower, in favor of Xxxxx X. Xxxxxx, Trustee
for the benefit of Lender, as the same may be amended, restated or supplemented
from time to time.
Default shall mean an Event of Default or an event which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
EBITDA shall mean for any period for which EBITDA is
calculated, Net Income of Borrower on a consolidated basis for such period plus
(a) taxes of Borrower on a consolidated basis for such period, (b) depreciation,
depletion, obsolescence and amortization of Property of Borrower on a
consolidated basis for such period, and (c) interest expense of Borrower on a
consolidated basis for such period. All components of EBITDA shall be determined
in accordance with GAAP, consistently applied.
Eligible Accounts shall mean, as at any date of determination
thereof, Current Accounts Receivable created by Borrower (but only to the extent
that such Current Accounts Receivable are Collateral hereunder and are subject
to a first priority perfected Lien in favor of Lender) in the ordinary course of
business arising out of the sale of goods or rendering of services by Borrower,
which are and at all times shall continue to be acceptable to Lender in all
respects. Standards of eligibility for Eligible Accounts may be fixed and
revised from time to time solely by Lender in Lender's exclusive judgment. In
general, without limiting the foregoing, an Eligible Account must comply with
the following requirements: (a) the applicable account debtor is not a foreign
country or any subdivision or agency or department thereof or located outside of
the fifty (50) states of the United States or Puerto Rico, unless the applicable
Current Account Receivable is insured or backed by credit insurance or a letter
of credit in form and substance reasonably acceptable to Lender in all respects;
(b) the applicable account debtor is not the United States of America or any of
its agencies, departments, commissions, boards or bureaus or is not otherwise
subject to the Federal Assignment of Claims Act; (c) the Account is subject to
no Lien whatsoever, except for the Liens created pursuant to the Security
Documents; (d) the Account has not arisen out of transactions with a Subsidiary,
employee, officer, agent, director, stockholder, partner, trustee or other owner
or holder of any indicia of equity rights (whether issued and outstanding
capital stock, partnership interests or otherwise) of Borrower or any Affiliate
of any such Person, (e) each of the representations and warranties set forth in
the Security Documents with respect to such Account is true and correct in all
material respects; (f) to the extent the total of the Eligible Accounts as
reflected in Borrower's aging of Accounts is different from the total reflected
in Borrower's general ledger, the lesser balance will be used as the total of
Eligible Accounts, and (g) Lender has not deemed such Account ineligible because
of Lender's reasonable belief in the uncertainty about the creditworthiness of
the account debtor or because Lender otherwise reasonably considers the
collateral value thereof to be impaired or its ability to realize such value to
be insecure; provided, however, (a) if more than twenty percent (20%) of any
account debtor's total Accounts with Borrower remain unpaid for more than 90
days after the date of invoice, the total Accounts owed to Borrower by such
account debtor shall be excluded from Eligible Accounts; (b) in the event that
the
aggregate Accounts owed to Borrower by any account debtor (other than Wal-Mart
Stores, Inc. and any of its Affiliates) exceeds ten percent (10%) of the total
Accounts owed to Borrower by all account debtors, the Accounts owed by such
account debtor to Borrower in excess of such ten percent (10%) amount shall be
excluded from Eligible Accounts; and (c) in the event that the aggregate
Accounts owed to Borrower by Wal-Mart Stores, Inc. and any of its Affiliates
exceeds twenty-five percent (25%) of the total Accounts owed to Borrower by all
account debtors, the Accounts owed by Wal-Mart Stores, Inc. and its Affiliates
in excess of such twenty-five percent (25%) amount shall be excluded from
Eligible Accounts. In the event of any dispute under the foregoing criteria
about whether an Account is or has ceased to be an Eligible Account, the
decision of Lender shall be conclusive and binding. Nothing in this definition
of "Eligible Accounts" shall be construed to limit or release any right of
Lender to any Collateral.
Environmental Claim shall mean any third party (including
Governmental Authorities and employees) action, lawsuit, claim or proceeding
(including claims or proceedings at common law or under the Occupational Safety
and Health Act or similar laws relating to safety of employees) which seeks to
impose liability for (i) noise; (ii) pollution or contamination of the air,
surface water, ground water or land or the clean-up of such pollution or
contamination; (iii) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation; (iv) exposure to Hazardous
Substances; (v) the safety or health of employees; or (vi) the manufacture,
processing, distribution in commerce or use of any Hazardous Substances. An
"Environmental Claim" includes a common law action, as well as a proceeding to
issue, modify or terminate an Environmental Permit, or to adopt or amend a
regulation to the extent that such a proceeding attempts to redress violations
of an applicable permit, license, or regulation as alleged by any Governmental
Authority.
Environmental Liabilities includes all liabilities arising
from any Environmental Claim, Environmental Permit or Requirement of
Environmental Law under any theory of recovery, at law or in equity, and whether
based on negligence, strict liability or otherwise, including remedial, removal,
response, abatement, restoration (including natural resources), investigative,
monitoring, personal injury and damage to property or natural resources or
injuries to persons, and any other related costs, expenses, losses, damages,
penalties, fines, liabilities and obligations, and all costs and expenses
necessary to cause the issuance, reissuance or renewal of any Environmental
Permit, including reasonable attorneys' fees and court costs.
Environmental Permit shall mean any permit, license, approval
or other authorization under any applicable Legal Requirement relating to
pollution or protection of health or the environ ment, including laws,
regulations or other requirements relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous substances or toxic
materials or wastes into ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants or
Hazardous Substances.
Environmental Matters shall mean matters relating to pollution
or protection of the environment, including emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment (including
ambient air, surface water or ground water, or land
surface or subsurface), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and all rules and regulations adopted by
the Internal Revenue Service or the U.S. Department of Labor thereunder.
Event of Default shall have the meaning assigned to it in
Paragraph 12 hereof.
Financing Statements shall mean all such Uniform Commercial
Code financing statements as Lender shall require, in Proper Form, duly executed
by Borrower or others to give notice of and to perfect or continue perfection of
Lender's Liens in all Collateral.
Fixed Charge Coverage Ratio shall mean as of any day that the
Fixed Charge Coverage Ratio is being calculated, the ratio of EBITDA less cash
taxes to the sum of (a) scheduled principal payments of Funded Indebtedness, (b)
interest expense, (c) Cash Capital Expenditures and (d) dividends paid. All
components of the Fixed Charge Coverage Ratio shall be computed for the Rolling
Four Quarters as of such day and determined on a consolidated basis in
accordance with GAAP, consistently applied.
Funded Indebtedness shall mean (a) all Indebtedness of
Borrower on a consolidated basis which by its terms matures more than one year
after the applicable date of calculation of Funded Indebtedness, and any
Indebtedness of Borrower on a consolidated basis maturing within one year from
such date which is renewable or extendable at the option of the obligor to a
date beyond one year from such date and (b) without duplication, Capital Lease
Obligations of Borrower on a consolidated basis. All components of Funded
Indebtedness shall be determined in accordance with GAAP, consistently applied.
GAAP shall mean, as to a particular Person, such accounting
practice as, in the opinion of the independent certified public accountants of
recognized national standing retained by such Person and acceptable to Lender,
conforms at the time to generally accepted accounting principles, consistently
applied. GAAP shall mean those principles and practices (a) which are recognized
as such by the Financial Accounting Standards Board, (b) which are applied for
all periods after the date hereof in a manner consistent with the manner in
which such principles and practices were applied to the most recent audited
financial statements of the relevant Person furnished to Lender, and (c) which
are consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in
financial position, of such Person. If any change in any accounting principle or
practice is required by the Financial Accounting Standards Board in order for
such principle or practice to continue as a GAAP or practice, all reports and
financial statements required hereunder may be prepared in accordance with such
change only after written notice of such change is given to Lender.
Governmental Authority shall mean any foreign governmental
authority, the United States of America, any State of the United States and any
political subdivision of any of the fore going, and any central bank, agency,
department, commission, board, bureau, court or other tribunal having
jurisdiction over Lender, Borrower or their respective Property.
Hazardous Substance shall mean petroleum products and any
hazardous or toxic waste or substance defined or regulated as a hazardous
substance from time to time by any law, rule, regulation or order described in
the definition of "Requirements of Environmental Law".
Indebtedness shall mean and includes (a) all items which in
accordance with GAAP would be included on the liability side of a balance sheet
on the date as of which Indebtedness is to be determined (excluding capital
stock, surplus and surplus reserves) and (b) all guaranties, letter of credit
contingent reimbursement obligations, endorsements and other contingent
obligations in respect of, or any obligations to purchase or otherwise acquire,
Indebtedness of others; provided, that such term shall not mean or include any
Indebtedness in respect of which monies sufficient to pay and discharge the same
in full (either on the expressed date of maturity thereof or on such earlier
date as such Indebtedness may be duly called for redemption and payment) shall
be deposited with a depository, agency or trustee acceptable to Lender in trust
for the payment thereof.
Interest Option shall have the meaning ascribed to such term
in Paragraph 4(a) hereof.
Interest Payment Dates shall mean (a) for Base Rate
Borrowings, the first (1st) day of each calendar month and, if any Base Rate
Borrowing is converted to a LIBOR Rate Borrowing, the first day of the Interest
Period applicable to such borrowing, and (b) for LIBOR Rate Borrowings, the
first (1st) day of each calendar month, and at the end of each Interest Period
in the event that any LIBOR Rate Borrowings are not rolled over to a successive
Interest Period as a LIBOR Rate Borrowing.
Legal Requirement shall mean any law, statute, ordinance,
decree, requirement, order, judgment, rule, or regulation (or interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, whether presently existing or arising in the future. The
term "Legal Requirement" shall include Requirements of Environmental Law.
LIBOR Business Day shall mean a Business Day on which
transactions in United States Dollar deposits between banks may be carried on in
the London interbank dollar market.
LIBOR Interbank Rate shall mean, for each LIBOR Interest
Period, the rate of interest per annum, rounded, if necessary, to the next
highest whole multiple of one-sixteenth percent (1/16%), determined by Lender
based upon rates quoted at approximately 11:00 a.m. in the London interbank
market, on the date two (2) LIBOR Business Days prior to the first day of such
LIBOR Interest Period, for the offering to the Reference Bank by leading dealers
in the London interbank market selected by Lender in its sole discretion, acting
in good faith, at the time of determination and in accordance with the then
existing practice in the London interbank market, of deposits in United States
dollars for delivery on the first day of such LIBOR Interest Period and having a
maturity equal to the length of such LIBOR Interest Period and in an amount
equal (or as nearly equal as may be) to the LIBOR Rate Borrowing to which such
LIBOR Interest Period relates. Each determination by Lender of the LIBOR
Interbank Rate shall be conclusive and binding, absent manifest error, and may
be computed using any reasonable averaging and attribution method.
LIBOR Interest Period shall mean, for each LIBOR Rate
Borrowing, a period commencing:
(a) on the date of such LIBOR Rate Borrowing, or
(b) on the last day of the immediately preceding LIBOR
Interest Period in the case of a roll-over to a
successive LIBOR Interest Period,
and ending on the numerically corresponding day one, two, three or six months
thereafter, as Borrower shall elect in accordance herewith; provided, (w) any
LIBOR Interest Period which would otherwise end on a day which is not a LIBOR
Business Day shall be extended to the next succeeding LIBOR Business Day, unless
such LIBOR Business Day falls in another calendar month, in which case such
LIBOR Interest Period shall end on the next preceding LIBOR Business Day; (x)
any LIBOR Interest Period which begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such LIBOR Interest Period) shall end on the
last LIBOR Business Day of the appropriate calendar month; (y) no LIBOR Interest
Period shall ever extend beyond the maturity date of the applicable Loan; and
(z) LIBOR Interest Periods shall be selected by Borrower in such a manner that
the LIBOR Interest Period with respect to any portion of the Loans which shall
become due shall not extend beyond such due date.
LIBOR Rate shall mean, for the entire term of each LIBOR
Interest Period, a rate per annum equal to the lesser of (a) the sum of (1) the
Adjusted LIBOR Interbank Rate in effect on the first day of such LIBOR Interest
Period plus (2) the Applicable Margin from time to time in effect during such
term, and (b) the Ceiling Rate.
LIBOR Rate Borrowing shall mean each portion of the principal
balance of the Loans at any time bearing interest at the LIBOR Rate.
LIBOR Reserve Requirement shall mean, on any day, for any
LIBOR Interest Period, the stated maximum rate (expressed as a decimal) for all
reserves (including basic, supplemental, marginal and emergency reserves)
required to be maintained during such LIBOR Interest Period under Regulation D
by any member bank of the Federal Reserve System against "Eurocurrency
liabilities," as currently defined in Regulation D, all as specified by any
Governmental Authority. Without limiting the effect of the foregoing, the LIBOR
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks by reason of any Regulatory Change against (a) any category
of liabilities which includes deposits by reference to which the Adjusted LIBOR
Interbank Rate is to be determined as provided in the definition of "LIBOR
Interbank Rate" or (b) any category of extensions of credit or other assets
which include LIBOR Rate Borrowings. Each determination of the LIBOR Reserve
Requirement by Lender shall be conclusive and binding, absent manifest error,
and may be computed using any reasonable averaging and attribution method.
Lien shall mean any mortgage, pledge, charge, encumbrance,
security interest, collateral assignment or other lien or restriction of any
kind, whether based on common law, constitutional provision, statute or
contract, and shall include reservations, exceptions, encroach ments, easements,
rights of way, covenants, conditions, restrictions, leases and other title
exceptions.
Loans shall mean the loans described in and provided for by
Paragraph 2 and Paragraph 3 hereof.
Maturity Date shall mean the maturity of the Revolving Note,
which is currently April 8, 2000, as the same may hereafter be accelerated
pursuant to the provisions of any of the Credit Documents.
Net Income shall mean gross revenues and other proper income
credits, less all proper income charges (including taxes on income), all
determined in accordance with GAAP; provided, that there shall not be included
in such revenues (a) any earnings of any Subsidiary for any period prior to the
date such Subsidiary was acquired or any undistributed earnings of any
Subsidiary; (b) any gains resulting from the write-up of assets; or (c) any gain
which is classified as "extraordinary" in accordance with GAAP; and provided
further, that capital gains may be included in revenues only to the extent of
capital losses. Net Income shall be determined on a consolidated basis.
Notes shall mean the Revolving Note and the Advance/Term Note,
together with any and all renewals, extensions, modifications, rearrangements
and/or replacements of any thereof.
Organizational Documents shall mean, with respect to a
corporation, the certificate of incorporation, articles of incorporation and
bylaws of such corporation, including any and all modifications thereof as of
the date of the Credit Document referring to such Organizational Document and
any and all future modifications thereof which are consented to by Lender.
Parties shall mean all Persons other than Lender executing any
Credit Document.
Past Due Rate shall mean, on any day, a rate per annum equal
to the Ceiling Rate for that day, or only if applicable law imposes no maximum
nonusurious rate of interest for that day, then eighteen percent (18%) per
annum.
PBGC shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
Person shall mean any individual, corporation, partnership,
joint venture, joint stock association, business or other trust, unincorporated
organization, Governmental Authority or any other form of entity.
Plan shall mean an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (a) maintained by Borrower or any member
of a Controlled Group for employees of Borrower or (b) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which Borrower or any member of a
Controlled Group for employees of Borrower is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.
Prime Rate means, on any day, the rate determined by Lender as
being its prime rate for that day. Without notice to Borrower or any other
Person, the Prime Rate shall automatically
fluctuate upward and downward as and in the amount by which said prime rate
fluctuates, with each change to be effective as of the date of each change in
said prime rate. THE PRIME RATE IS A REFERENCE RATE AND DOES NOT NECESSARILY
REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED TO ANY CUSTOMER, AND LENDER
DISCLAIMS ANY STATEMENT, REPRESENTATION OR WARRANTY TO THE CONTRARY. LENDER MAY
MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF INTEREST AT, ABOVE OR BELOW THE
PRIME RATE.
Proper Form shall mean in form and substance satisfactory to
Lender.
Property shall mean any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
Quarterly Financial Statements shall mean the quarterly
financial statements of a Person, including a balance sheet as of the end of
such calendar quarter and an income statement for the fiscal year to date,
subject to normal year-end adjustments, prepared in accordance with GAAP and
certified as true and correct to the best knowledge of an appropriate officer or
other party acceptable to Lender on behalf of such Person. The Quarterly
Financial Statements for Borrower shall be prepared on a consolidated basis. In
connection with each set of Quarterly Financial Statements, if Borrower ever
acquires any Subsidiary or Subsidiaries in accordance with the other provisions
of this Agreement, quarterly consolidating statements shall also be prepared by
Borrower for delivery to Lender, and such consolidating statements will be
prepared in accordance with GAAP only to the extent normal and customary.
Rate Selection Date shall mean that Business Day which is (a)
in the case of Base Rate Borrowings, the date of such borrowing or (b) in the
case of LIBOR Rate Borrowings, the date three (3) LIBOR Business Days preceding
the first day of any proposed LIBOR Interest Period.
Rate Selection Notice shall have the meaning ascribed to it in
Paragraph 4(b)(1) hereof.
Reference Bank shall mean Lender or such other financial
institution as Lender may from time to time designate.
Regulation D shall mean Regulation D of the Board of Governors
of the Federal Reserve System from time to time in effect and shall include any
successor or other regulation relat ing to reserve requirements applicable to
member banks of the Federal Reserve System.
Regulatory Change shall mean, with respect to Lender, any
change on or after the date of this Agreement in any Legal Requirement
(including Regulation D) or the adoption or making on or after such date of any
interpretation, directive or request applying to a class of banks including
Lender under any Legal Requirement (whether or not having the force of law) by
any Governmental Authority charged with the interpretation or administration
thereof.
Request for Advance means a request for credit duly executed
by an appropriate officer or other responsible party acceptable to Lender on
behalf of Borrower, appropriately completed and substantially in the form of
Exhibit A attached hereto.
Requirements of Environmental Law shall mean all requirements
imposed by any law (including The Resource Conservation and Recovery Act and The
Comprehensive Environmental Response, Compensation, and Liability Act), rule,
regulation or order of any Governmental Authority in effect at the applicable
time which relate to (i) noise; (ii) pollution, protection or clean-up of the
air, surface water, ground water or land; (iii) solid, gaseous or liquid waste
generation, recycling, reclamation, treatment, storage, disposal or
transportation; (iv) exposure to Hazardous Substances; (v) the safety or health
of employees or (vi) regulation of the manufacture, processing, distribution in
commerce, use, discharge, release, threatened release, emission or storage of
Hazardous Substances.
Revolving Commitment shall mean the obligation of Lender under
this Agreement to make Revolving Loans in an aggregate principal amount at any
one time outstanding up to (but not exceeding) $1,000,000.00.
Revolving Loans shall mean the Loans described in Paragraph 2
hereof. Revolving Loan shall mean any such Loan.
Revolving Note shall mean the promissory note of Borrower
described in Paragraph 2 hereof, and any and all renewals, extensions,
modifications, rearrangements and replacements thereof and any and all
substitutions therefor.
Rolling Four Quarters shall mean, (a) as of any day prior to
the date that financial statements are initially required to be given to Lender
for Borrower's 1998 fiscal year end pursuant to this Agreement, the most
recently ended four (4) consecutive fiscal quarters of Borrower for which, as of
such day, (i) financial statements have actually been given to Lender (with
respect to any quarter occurring prior to the effective date of this Agreement)
or (ii) financial statements are required to have been given to Lender pursuant
to this Agreement (with respect to all quarters occurring after the effective
date of this Agreement) and (b) as of any day after the date that financial
statements are initially required to have been given to Lender for Borrower's
1998 fiscal year end pursuant to this Agreement, the then most recently ended
four (4) consecutive quarters of Borrower for which, as of such day, financial
statements are required to have been given to Lender pursuant to this Agreement.
Security Agreements shall mean, collectively, the Security
Agreement dated concurrently herewith, executed by Borrower in favor of Lender
as security for the Loans, covering all Accounts, Equipment, Inventory and
General Intangibles now or hereafter owned by Borrower, and any and all security
agreements hereafter executed in favor of Lender in connection with, or as
security for the payment or performance of, any Credit Document, as any of them
may from time to time be amended, modified, restated or supplemented.
Security Documents shall mean, collectively, this Agreement,
the Security Agreements, the Deed of Trust, all Financing Statements and any and
all other agreements, deeds
of trust, mortgages, chattel mortgages, security agreements, pledges,
guaranties, assignments of production or proceeds of production, assignments of
income, assignments of contract rights, assignments of partnership interests,
assignments of royalty interests, assignments of performance, completion or
surety bonds, standby agreements, subordination agreements, undertakings and
other instruments and Financing Statements now or hereafter executed and
delivered in connection with, or as security for the payment or performance of,
any Credit Document, as any of them may from time to time be amended, modified,
restated or supplemented.
Subordinated Indebtedness means all Indebtedness of a Person
which has been subordinated on terms and conditions satisfactory to Lender, in
its sole discretion, to all Indebtedness of such Person to Lender, whether now
existing or hereafter incurred. Indebtedness shall not be considered as
"Subordinated Indebtedness" unless and until Lender shall have received copies
of the documentation evidencing or relating to such Indebtedness together with a
subordination agreement, in Proper Form, duly executed by the holder or holders
of such Indebtedness and evidencing the terms and conditions of subordination
required by Lender.
Subsidiary shall mean, as to a particular parent Person, any
other Person of which more than 10% of the indicia of equity rights (whether
outstanding capital stock, partnership interests or otherwise) is at the time
directly or indirectly owned or held by such parent Person, or by one or more of
its Affiliates.
Tangible Net Worth means the sum of (x) Subordinated
Indebtedness plus (y) total assets (valued at cost less normal depreciation),
less (a) all intangibles and (b) all liabilities including contingent and
indirect liabilities), all determined in accordance with GAAP. The term
"intangibles" shall include, without limitation, (1) deferred charges; (2) the
amount of any write-up in the book value of any assets contained in any balance
sheet resulting from revaluation thereof or any write-up in excess of the cost
of such assets acquired, and (3) the aggregate of all amounts appearing on the
assets side of any such balance sheet for franchises, licenses, permits,
patents, patent applications, copyrights, trademarks, trade names, goodwill,
treasury stock, experimental or organizational expenses and other like
intangibles. The term "liabilities" shall include, without limitation, (1)
Indebtedness secured by Liens on Property of the Person with respect to which
Tangible Net Worth is being computed, whether or not such Person is liable for
the payment thereof; (2) deferred liabilities, and (3) Capital Lease
Obligations. Tangible Net Worth shall be determined on a consolidated basis.
Texas Credit Code shall mean Title 79, Texas Revised Civil
Statutes, 1925, as amended.
Unfunded Liabilities shall mean, with respect to any Plan, at
any time, the amount (if any) by which (a) the present value of all benefits
under such Plan exceeds (b) the fair market value of all Plan assets allocable
to such benefits, all determined as of the then most recent actuarial valuation
report for such Plan, but only to the extent that such excess represents a
potential liability of any member of the applicable Controlled Group to the PBGC
or a Plan under Title IV of ERISA.
The words "hereof," "herein," and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement.
2. Revolving Loans.
(a) Lender agrees, subject to all of the terms and conditions
of this Agreement (including Paragraph 8 hereof), to make Revolving Loans under
this Paragraph to Borrower prior to the Maturity Date in an aggregate principal
amount at any one time outstanding up to, but not exceeding, the lesser of (i)
the Revolving Commitment or (ii) the Borrowing Base then in effect. All funds
advanced under any Revolving Loan shall be utilized by Borrower for working
capital purposes. Subject to the conditions set forth in this Agreement, any
such Revolving Loan repaid prior to the Maturity Date may be reborrowed pursuant
to the terms of this Agreement; provided, that any and all such Revolving Loans
shall be due and payable in full on the Maturity Date. Borrower and Lender agree
that Chapter 346 of the Texas Finance Code shall not apply to this Agreement,
the Revolving Note or any Loan obligation. The Revolving Loans shall be
evidenced by the Revolving Note dated concurrently herewith executed by
Borrower, payable to the order of Lender in the original principal amount of
$1,000,000.00. Lender shall in no event be obligated to fund more than one (1)
Revolving Loan per each Business Day. Each Loan shall be in a principal amount
equal to or greater than $10,000.00 or the amount by which the Revolving
Commitment exceeds the unpaid principal balance of the Revolving Note, whichever
is less. The Revolving Loan proceeds shall be made available to Borrower by
depositing them in an account designated by Borrower and maintained with Lender.
(b) If the aggregate outstanding amount of the Revolving Loans
ever exceeds either the Borrowing Base or the Revolving Commitment then in
effect, Borrower shall within two (2) Business Days after demand by Lender
prepay the Revolving Loans in such amounts as shall be necessary to cause the
aggregate outstanding amount of the Revolving Loans to be equal to or less than
the lesser of the Borrowing Base or the Revolving Commitment then in effect.
(c) Borrower shall also cause the outstanding principal
balance of the Revolving Note to be prepaid in full and reduced to a zero
balance for thirty (30) consecutive days at any time during each of the
following periods: (i) from the date of this Agreement until and including April
8, 1999; and (ii) from April 9, 1999 until and including the Maturity Date.
3. Advance/Term Loans. Lender agrees, subject to all of the terms
and conditions of this Agreement (including Paragraph 8 hereof), to make
Advance/Term Loans to Borrower at any time prior to the date eight (8) months
from the date of this Agreement, in an aggregate principal amount of no more
than $2,300,000.00 for the purposes, upon the terms and conditions and subject
to the limitations set forth in the Construction Loan Agreement. Both parties
hereto agree that, except to the extent overridden by the Construction Loan
Agreement, the terms and conditions of this Agreement shall govern the
Advance/Term Loans until payment in full of the amounts outstanding thereunder.
4. Interest Options for Loans.
(a) Options Available. Subject to Paragraph 14 hereof, the
Notes shall bear interest on their respective outstanding principal balances at
the Base Rate; provided, that (1) all past due principal and interest under each
Note shall bear interest at the Past Due Rate which shall be payable on demand,
and (2) subject to the provisions hereof, Borrower shall have the option of
having all or any portion of the principal balance from time to time outstanding
under the Notes bear interest until their respective maturities at a rate per
annum equal to the LIBOR Rate (together with the Base Rate, individually herein
called an "Interest Option" and collectively called "Interest Options"). The
records of Lender with respect to Interest Options, LIBOR Interest Periods and
the amounts of Loans to which they are applicable shall be binding and
conclusive, absent manifest error. Interest on the Loans shall be calculated at
the Base Rate except where it is expressly provided pursuant to this Agreement
that the LIBOR Rate is to apply.
(b) Designation and Conversion of Interest Options. Borrower
shall have the right to designate or convert its Interest Options in accordance
with the provisions hereof. Provided no Default or Event of Default has occurred
and is continuing and subject to the provisions of the last sentence of
Paragraph 4(a) hereinabove and of Paragraph 5 hereof, Borrower may elect to have
the LIBOR Rate apply or continue to apply to all or any portion of the principal
balance of the Notes. Each change in Interest Options shall be a conversion of
the rate of interest applicable to the specified portion of the Loans, but such
conversion alone shall not change the outstanding principal balance of the
Notes. The Interest Options shall be designated or converted in the manner
provided below:
(1) Borrower shall give Lender notice by telephone,
promptly confirmed by written notice (the "Rate Selection Notice")
substantially in the form of Exhibit D attached hereto. Each such
telephone and written notice shall specify the amount and type of
borrowings which are the subject of the designation, if any; the
amount and type of borrowings into which such borrowings are to be
converted or for which an Interest Option is designated; the
proposed date for the designation or conversion (which, in the case
of conversion of LIBOR Rate Borrowings, shall be the last day of the
LIBOR Interest Period applicable thereto) and the LIBOR Interest
Period or Periods, if any, selected by Borrower. Such notice by
telephone shall be irrevocable and shall be given to Lender no later
than the applicable Rate Selection Date.
(2) No more than five (5) LIBOR Interest Periods shall
be in effect at any one time for all of the Loans. Each LIBOR Rate
Borrowing shall be in the amount of at least $400,000.
(3) Principal included in any borrowing shall not be
included in any other borrowing which exists at the same time.
(4) Each designation or conversion shall occur on a
Business Day (and, for LIBOR Rate Borrowings, on a LIBOR Business
Day).
(5) Except as provided in Paragraph 5 hereof, no LIBOR
Rate Borrowing shall be converted on any day other than the last day
of the applicable LIBOR Interest Period.
(c) Accrual Computations. All interest and fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable, unless the effect of so computing shall be to cause the rate of
interest to exceed the Ceiling Rate, in which event, to the extent necessary to
avoid exceeding the Ceiling Rate, interest and fees shall be computed on the
basis of the actual days elapsed in the applicable calendar year in which they
accrued.
5. Special Provisions Applicable to LIBOR Rate Borrowings.
(a) Options Unlawful. If, after the date of this Agreement,
the adoption of any applicable Legal Requirement or any change in any applicable
Legal Requirement or in the interpretation or administration thereof by any
Governmental Authority or compliance by Lender with any request or directive
(whether or not having the force of law) of any Governmental Authority shall at
any time make it unlawful or impossible for Lender to permit the establishment
of or to maintain any LIBOR Rate Borrowing, the commitment of Lender to
establish or maintain the LIBOR Rate affected by such adoption or change shall
forthwith be canceled and Borrower shall forthwith, upon demand by Lender to
Borrower, (1) convert the LIBOR Rate with respect to which such demand was made
to the Base Rate; (2) pay all accrued and unpaid interest to date on the amount
so converted; and (3) pay any amounts required to compensate Lender for any
additional cost or expense which Lender may incur as a result of such adoption
of or change in such Legal Requirement or in the interpretation or
administration thereof and any Consequential Loss which Lender may incur as a
result of such conversion to the Base Rate. If, when Lender so notifies
Borrower, Borrower has given a Rate Selection Notice specifying one or more
borrowings of the type with respect to which such demand was made but the
selected LIBOR Interest Period or LIBOR Interest Periods has not yet begun, such
Rate Selection Notice shall be deemed to be of no force and effect, as if never
made, and the balance of the Loans specified in such Rate Selection Notice shall
bear interest at the Base Rate until a different available Interest Option shall
be designated in accordance herewith.
(b) Increased Cost of Borrowings. If the adoption of any
applicable Legal Requirement or any change in any applicable Legal Requirement
or in the interpretation or administration thereof by any Governmental Authority
or compliance by Lender with any request or directive (whether or not having the
force of law) from any Governmental Authority shall at any time as a result of
any portion of the principal balance of the Notes being maintained on the basis
of the LIBOR Rate:
(1) subject Lender (or make it apparent that Lender is
subject) to any tax (including any United States interest
equalization tax), levy, impost, duty, charge, fee (collectively,
"Taxes"), or any deduction or withholding for any Taxes on or from
the payment due under any LIBOR Rate Borrowing or other amounts due
hereunder, other than income and franchise taxes of the United
States and its political subdivisions; or
(2) change the basis of taxation of payments due from
Borrower to Lender under any LIBOR Rate Borrowing (otherwise than by
a change in the rate of taxation of the overall net income of
Lender); or
(3) impose, modify, increase or deem applicable any
reserve requirement (excluding that portion of any reserve
requirement included in the calculation of the LIBOR Reserve
Requirement), special deposit requirement or similar requirement
(including state law requirements and Regulation D) imposed,
modified, increased or deemed applicable by any Governmental
Authority against assets held by Lender, or against deposits or
accounts in or for the account of Lender, or against loans made by
Lender, or against any other funds, obligations or other Property
owned or held by Lender; or
(4) impose on Lender any other condition regarding any
LIBOR Rate Borrowing;
and the result of any of the foregoing is to increase the cost to
Lender of agreeing to make or of making, renewing or maintaining
such borrowing on the basis of the LIBOR Rate, or reduce the amount
of principal or interest received by Lender, then, upon demand by
Lender, Borrower shall pay to Lender, from time to time as specified
by Lender, additional amounts which shall compensate Lender for such
increased cost or reduced amount. Lender will promptly notify
Borrower in writing of any event, upon becoming actually aware of
it, which will entitle Lender to additional amounts pursuant to this
paragraph. Lender's determination of the amount of any such
increased cost, increased reserve requirement or reduced amount
shall be conclusive and binding, absent manifest error, provided
that the calculation thereof is set forth in reasonable detail in
such notice.
Borrower shall have the right, if it receives from Lender any notice referred to
in the preceding paragraph, upon three (3) Business Days' notice to Lender,
either (i) to repay in full (but not in part) any borrowing with respect to
which such notice was given, together with any accrued interest thereon, or (ii)
to convert the LIBOR Rate in effect with respect to such borrowing to the Base
Rate; provided, that any such repayment or conversion shall be accompanied by
payment of (x) the amount required to compensate Lender for the increased cost
or reduced amount referred to in the preceding paragraph; (y) all accrued and
unpaid interest to date on the amount so repaid or converted, and (z) any
Consequential Loss which may be incurred as a result of such repayment or
conversion.
(c) Inadequacy of Pricing and Rate Determination. If for any
reason with respect to any LIBOR Interest Period Lender shall have determined
(which determination shall be conclusive and binding upon Borrower) that: (1)
Lender is unable through its customary general practices to determine a rate at
which the Reference Bank is offered deposits in United States dollars by prime
banks in the London interbank market in the appropriate amount for the
appropriate period, or by reason of circumstances affecting the London interbank
market generally, the Reference Bank is not being offered deposits in United
States dollars in the London interbank market, for the applicable LIBOR Interest
Period and in an amount equal to the amount of the LIBOR Rate Borrowing
requested by Borrower, or (2) the LIBOR Rate will not adequately and fairly
reflect the cost to Lender of making and maintaining any LIBOR Rate Borrowing
hereunder for any proposed LIBOR Interest Period, then Lender shall give
Borrower notice thereof and thereupon, (A) any Rate Selection Notice previously
given by Borrower designating a LIBOR Rate which has not commenced as of the
date of such notice from Lender shall be deemed for all purposes hereof to be
of no force and effect, as if never given, and (B) until Lender shall notify
Borrower that the circumstances giving rise to such notice from Lender no longer
exist, each Rate Selection Notice requesting a LIBOR Rate shall be deemed a
request for a Base Rate Borrowing, and each outstanding LIBOR Rate Borrowing
then in effect shall be converted, without any notice to or from Borrower, upon
the termination of the LIBOR Interest Period then in effect, to a Base Rate
Borrowing.
(d) INDEMNIFICATION. BORROWER SHALL INDEMNIFY LENDER AGAINST
AND HOLD LENDER HARMLESS FROM ANY LOSS OR EXPENSE WHICH LENDER MAY INCUR OR
SUSTAIN AS A CONSEQUENCE OF ANY UNTIMELY PAYMENT (MANDATORY OR OPTIONAL) OR
DEFAULT BY BORROWER IN THE PAYMENT OF ANY PRINCIPAL AMOUNT OF OR INTEREST ON
EACH NOTE, OR ANY FAILURE BY BORROWER TO CONVERT OR TO BORROW ANY LIBOR RATE
BORROWING ON THE DATE SPECIFIED BY BORROWER, IN EACH CASE INCLUDING ANY INTEREST
PAYABLE BY LENDER TO THE LENDERS OF THE FUNDS OBTAINED BY IT IN ORDER TO MAKE OR
MAINTAIN ANY LIBOR RATE BORROWING (OR ANY PORTION THEREOF), AND, TO THE EXTENT
NOT COVERED ABOVE, ANY CONSEQUENTIAL LOSS. THIS AGREEMENT SHALL SURVIVE THE
PAYMENT OF EACH NOTE. A CERTIFICATE AS TO ANY ADDITIONAL AMOUNTS PAYABLE
PURSUANT TO THIS PARAGRAPH SUBMITTED BY LENDER TO BORROWER SHALL BE CONCLUSIVE
AND BINDING UPON BORROWER, ABSENT MANIFEST ERROR, PROVIDED THE CALCULATION
THEREOF IS SET FORTH IN REASONABLE DETAIL IN SUCH NOTICE.
(e) Rate Quotes and Lists of Business Days. If Borrower
requests quotes of the LIBOR Rate for different LIBOR Interest Periods being
considered for election by Borrower, Lender will use reasonable efforts to
provide such quotes to Borrower promptly. However, all such quotes provided
shall be representative only and shall not be binding on Lender, nor shall they
be determinative, directly or indirectly, of any LIBOR Rate or any component of
any such rate, nor will Borrower's failure to receive or Lender's failure to
provide any requested quote or quotes either (1) excuse or extend the time for
performance of any obligation of Borrower or for exercise of any right, option
or election of Borrower or (2) impose any duty or liability on Lender. If
Borrower requests a list of the Business Days or LIBOR Business Days in any
calendar month, Lender will use reasonable efforts to provide such list
promptly. However, any such list provided shall be understood to identify only
those days which Lender believes in good faith at the time such list is prepared
will be the Business Days or LIBOR Business Days for such month. Lender shall
have no liability for any failure to provide, delay in providing, error or
mistake in or omission from, any such quote or list.
(f) Payment Dates. Whenever any payment to be made hereunder
or under any Note shall be stated to be due on a day which is neither a Business
Day nor a LIBOR Business Day, such payment may be made on the next succeeding
Business Day, or, subject to the definition of LIBOR Interest Period in the case
of any payment of the Notes to which the LIBOR Rate applies, on the next
succeeding LIBOR Business Day, and such extension of time shall in each such
case be included in computing interest and commitment fees in connection with
such payment.
(g) LIBOR Funding Mechanism. Notwithstanding any provision of
this Agreement to the contrary, Lender shall be entitled to fund and maintain
its funding of all or any part of the Loans hereunder in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if Lender had actually funded and
maintained each LIBOR Rate Borrowing during each LIBOR Interest Period through
the purchase
of deposits having a maturity corresponding to such LIBOR Interest Period and
bearing an interest rate equal to the LIBOR Interbank Rate for such LIBOR
Interest Period.
(h) Obligations Survive Termination. Borrower's obligation to
pay increased costs and Consequential Loss with regard to each LIBOR Rate
Borrowing as specified in this Paragraph 5 shall survive termination of this
Agreement.
6. Prepayments of Loans.
(a) Borrower shall have the right at any time and from
time to time to prepay all or any part of the Loans without premium
or penalty, in whole or in part, except as provided in this
Paragraph 6. Each partial prepayment of a Loan shall be applied
first to any prepayment charge (if applicable), second to accrued
interest, and third, to installments of principal thereof in inverse
order of their maturities. Amounts prepaid on the Advance/Term Note
may not be reborrowed. Prepayments shall be subject to the following
additional conditions:
(i) In giving notice of prepayment as
hereinafter provided, Borrower shall specify, for the
purpose of subsections (ii) and (iii) immediately
following, the manner of application of such prepayment
as between any outstanding Base Rate Borrowings and
LIBOR Rate Borrowings; provided, that any prepayment of
any LIBOR Rate Borrowing shall be in the amount of at
least $100,000.00 and in subsequent $100,000.00
increments and in no event shall any LIBOR Rate
Borrowing be less than $100,000.00 after giving effect
to any partial payment of any LIBOR Rate Borrowing.
(ii) Prepayments applied to any LIBOR Rate
Borrowing may be made on any LIBOR Business Day,
provided, that the Borrower shall have given Lender at
least five (5) LIBOR Business Days' prior irrevocable
written or telephonic notice of such prepayment,
specifying the principal amount to be prepaid, and the
particular LIBOR Rate Borrowing to which such prepayment
is to be applied and the prepayment date; provided, that
if such prepayment is made on any day other than the
last day of the Interest Period corresponding to the
LIBOR Rate Borrowing to be prepaid, Borrower shall pay
directly to Lender, on the last day of such Interest
Period, the Consequential Loss of Lender as a result of
such prepayment.
(iii) Prepayments applied to any Base Rate
Borrowing may be made in any amount and on any Business
Day, provided that the Borrower shall have given the
Lender irrevocable written or telephonic notice of such
prepayment no later than 12:00 noon, Austin, Texas time,
on the Business Day of such prepayment, specifying the
principal amount to be prepaid and the prepayment date.
(b) Notice of any prepayment having been given with
regard to a LIBOR Rate Borrowing, the principal amount specified in
such notice, together with interest thereon to the date of
prepayment, shall be due and payable on such prepayment date.
7. Collateral for Loans. All Loans shall at all times be secured by
the Security Agreement, the Deed of Trust and all other Security Documents.
8. Conditions Precedent.
(a) The obligation of Lender to make any Loan is subject to
the accuracy of all representations and warranties of Borrower in this Agreement
or any other Credit Document on the date thereof (and Lender's receipt of
evidence of such accuracy), to the performance by Borrower of its obligations
under the Credit Documents (and Lender's receipt of evidence of such
performance) and to the satisfaction of the following conditions: (i) with
respect to a Revolving Loan, Lender shall have received, no later than 10:00
a.m. Austin, Texas time on the date of a requested Revolving Loan, a duly
completed, executed and proper Request for Advance; (ii) with respect to an
Advance/Term Loan, all conditions to advance contained in the Construction Loan
Agreement shall have been satisfied; (iii) prior to the date of the Loan, there
shall have occurred, in the reasonable opinion of Lender, no material adverse
change in the assets, liabilities, financial condition, business or affairs of
Borrower; (iv) no Default or Event of Default shall have occurred and be
continuing; (v) the making of the Loan shall not be prohibited by, or subject
Lender to any penalty or onerous condition under, any applicable Legal
Requirement; (vi) all of the Credit Documents have been executed and delivered,
and shall be valid, enforceable and in full force and effect; (vii) all fees and
expenses owed to Lender under any of the Credit Documents as of the date thereof
shall have been paid in full; and (viii) Lender shall have received such other
documents as it may reasonably require. Delivery of any Request for Advance or
any Construction Request for Advance (as defined in the Construction Loan
Agreement) to Lender shall constitute a representation by Borrower that the
representations and warranties made by Borrower under this Agreement and the
other Credit Documents are true and correct as of the date of delivery of such
Request for Advance, and Lender shall not be obligated to make any advance if
such representations and warranties are not true and correct as of such date.
(b) In addition to the conditions described in Paragraph 8(a)
hereof, the obligation of Lender to make the initial Advance/Term Loan and the
initial Revolving Loan is subject to the receipt by Lender of each of the
following, in Proper Form: (1) the Notes and the other Credit Documents; (2) a
duly executed Borrowing Authorization with respect to Borrower; (3) a
certificate from the Secretary of State or other appropriate official of the
State of Texas as to the continued existence and good standing of Borrower; (4)
a certificate from the appropriate public official of each jurisdiction other
than the State of Texas as to the due qualification to do business and good
standing of Borrower where such qualification is necessary to conduct Borrower's
business in such jurisdiction; (5) original certificates of insurance addressed
to Lender reflecting the insurance required by the Credit Documents (with copies
of all such insurance policies if requested by Lender); and (6) evidence
reasonably satisfactory to Lender as to the perfection and priority of the Liens
created by the Security Documents, and to the further condition that, at the
time thereof, all legal matters incident to the transactions herein contemplated
shall be satisfactory to Lender's legal counsel other than the filing of this
Agreement after the date of Agreement with the Securities and Exchange
Commission and other than the filing of the Financing Statements, neither of
which, however, affect the enforceability of this Agreement or the other Credit
Documents.
9. Representations and Warranties. Borrower represents and warrants
that:
(a) (i) Borrower is duly organized, validly existing and in
good standing under the laws of the state of its organization and has full legal
right, power and authority to carry on its business as presently conducted and
to execute, deliver and perform its obligations under the Credit Documents
executed by it, (ii) Borrower is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business it conducts
makes such qualification necessary or desirable and (iii) Borrower's execution,
delivery and performance of the Credit Documents executed by it have been duly
authorized by all necessary action under Borrower's Organizational Documents and
otherwise.
(b) Borrower's execution, delivery and performance of the
Credit Documents do not and will not require (i) any consent of any other Person
or (ii) any consent, license, permit, authorization or other approval (including
foreign exchange approvals) of any court, arbitrator, administrative agency or
other Governmental Authority, or any notice to, exemption by, any registration,
declaration or filing with or the taking of any other action in respect of, any
such court, arbitrator, administrative agency or other Governmental Authority
other than the filing of this Agreement after the effective date hereof under
the Securities Exchange Act of 1934 and other than the filing of Financing
Statements, neither of which, however, affect the enforceability of this
Agreement or the other Credit Documents.
(c) Neither execution or delivery of any Credit Document, nor
the fulfillment of or compliance with its terms and provisions will (i) violate
any Legal Requirement or the Organizational Documents of Borrower or (ii)
conflict with or result in a breach of the terms, conditions or provisions of,
or cause a default under, any agreement, instrument, franchise, license or
concession to which Borrower is a party or bound.
(d) Each Credit Document has been duly and validly executed,
issued and delivered by Borrower. They are in proper legal form for prompt
enforcement and they are the Borrower's valid and legally binding obligations,
enforceable in accordance with their terms. Borrower's obligations under them
rank and will rank at least equal in priority of payment with Borrower's other
debt (except only for debt preferred by operation of law or debt disclosed in
writing to Lender before execution and delivery of this Agreement).
(e) All information supplied to Lender, and all statements
made to Lender by or on behalf of Borrower before, concurrently with or after
execution of this Agreement are and will be true, correct, complete, valid and
genuine in all material respects when supplied or made. Borrower's financial
statements furnished to Lender fairly present the financial condition of
Borrower as of its date and for the period then ended. No material adverse
change has occurred in the financial conditions reflected in any such statements
since their dates, and all assets listed on such statements are subject to
Borrower's management, control and disposition and, except as shown therein, are
available to satisfy any claims rightfully made pursuant to the Credit
Documents.
(f) Borrower has filed all tax returns required to be filed
and paid all taxes shown thereon to be due, including interest and penalties,
except for taxes which are being diligently con tested in good faith and for
payment of which adequate reserves have been set aside.
(g) There is no condemnation or other action, suit or
proceeding pending, or, to the best of Borrower's knowledge, threatened, against
or affecting Borrower or the Collateral, at law or in equity, or before or by
any Governmental Authority, which might result in any material adverse change in
Borrower's business or financial condition or in the Collateral or in other
Property of Borrower or any interest in it.
(h) Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or other Governmental Authority,
in the payment of any Indebtedness for borrowed money or under any agreement or
other papers evidencing or securing any such debt.
(i) Borrower is not a party to any contract or agreement which
materially and adversely affects any of its businesses, properties, assets or
financial conditions.
(j) Borrower is now solvent, and no bankruptcy or insolvency
proceedings are pending or contemplated by or, to Borrower's knowledge, against
Borrower. Borrower's liabilities and obligations under the Credit Documents to
which it is a party do not and will not render Borrower insolvent, cause
Borrower's liabilities to exceed Borrower's assets or leave Borrower with too
little capital to properly conduct all of its business as now conducted or
contemplated to be conducted.
(k) No representation or warranty contained in any Credit
Document and no statement contained in any certificate, schedule, list,
financial statement or other papers furnished to Lender by or on behalf of
Borrower contains, or will contain, any untrue statement of material fact, or
omits, or will omit, to state a material fact necessary to make the statements
contained therein not misleading.
(l) Except as disclosed to Lender in writing, none of the
proceeds of the Notes will be used for the purpose of purchasing or carrying,
directly or indirectly, any margin stock or for any other purpose which would
make such credit a "purpose credit" within the meaning of Regula tion U of the
Board of Governors of the Federal Reserve System.
(m) Borrower possess all material permits, licenses, patents,
trademarks, tradenames and copyrights required to conduct their businesses.
(n) Borrower and the Collateral are in compliance with all
material applicable Legal Requirements and Borrower manages and operates (and
will continue to manage and operate) its businesses in accordance with good
industry practices.
(o) With respect to each Plan, Borrower and each member of a
Controlled Group for the employees of Borrower have fulfilled their obligations,
including obligations under the minimum funding standards of ERISA and the Code
and are in compliance in all material respects with the provisions of ERISA and
the Code. No event has occurred which could result in a liability
of Borrower or any member of a Controlled Group for the employees of Borrower to
the PBGC or a Plan (other than to make contributions in the ordinary course).
Since the effective date of Title IV of ERISA, there have not been any nor are
there now existing any events or conditions that would cause the Lien provided
under Section 4068 of ERISA to attach to any property of Borrower or any member
of a Controlled Group for the employees of Borrower. There are no Unfunded
Liabilities with respect to any Plan. No "prohibited transaction" has occurred
with respect to any Plan.
(p) To the best knowledge and belief of Borrower, (i) Borrower
(and its properties, assets, business and operations) has been and is in
compliance with all applicable Requirements of Environmental Law and
Environmental Permits, (ii) Borrower (or any of its properties, assets, business
and operations) are not subject to any (A) Environmental Claims or (B)
Environmental Liabilities, in either case direct or contingent, and whether
known or unknown, arising from or based upon any act, omission, event, condition
or circumstance occurring or existing on or prior to the date hereof, and (iii)
Borrower has not received any notice of any violation or alleged violation of
any Requirements of Environmental Law or Environmental Permit or any
Environmental Claim in connection with their respective assets, properties,
business or operations. The liability (including without limitation any
Environmental Liability and any other damage to persons or property), if any, of
Borrower with respect to its properties, assets, business and operations which
is reasonably expected to arise in connection with Requirements of Environmental
Laws currently in effect and other environmental matters presently known by such
entity will not have a material adverse effect on the business, condition
(financial or otherwise), operations, properties or prospects of such entity or
on the ability of such entity to perform its material obligations under any
Credit Document to which it is a party. Borrower does not know of any event or
condition with respect to Environmental Matters with respect to any of their
respective properties which could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations,
properties or prospects of the applicable entity or on the ability of such
entity to perform its material obligations under any Credit Document to which it
is a party. The provisions of this Section are cumulative of the provisions
relating to this subject matter in the other Credit Documents.
(q) Borrower currently has no Subsidiaries.
(r) Borrower's fiscal year is January 1 to December 31.
10. Affirmative Covenants. Borrower covenants and agrees that prior
to termination of this Agreement:
(a) Borrower shall (and shall cause each of its Subsidiaries
to) at all times (i) pay when due all taxes and governmental charges of every
kind upon it or against its income, profits or Property, unless and only to the
extent that the same shall be contested diligently in good faith and reserves
deemed adequate by Lender have been established therefor; (ii) to the extent
applicable, do all things necessary to preserve its existence, qualifications,
rights and franchises in all states where such qualification is necessary or
desirable; (iii) comply in all material respects with all applicable Legal
Requirements (including Requirements of Environmental Law) in respect of the
conduct of its business and the ownership of its Property; (iv) cause its
Property to be protected, maintained and kept in good repair and make all
replacements and additions to its Property as may be reasonably
necessary to conduct its business properly and efficiently, and (v) pay
punctually and discharge when due, or renew or extend, any debt incurred by it
and discharge, perform and observe the covenants, provisions and conditions to
be performed, discharged and observed on its part in connection therewith, or in
connection with any agreement or other instrument relating thereto or in
connection with any mortgage, pledge or lien existing at any time upon any of
its property or assets; provided, however, that nothing contained in this
subparagraph (v) shall require payment, discharge, renewal or extension of any
such indebtedness or discharge, performance or observance of any such cove
nants, provisions and conditions so long as any claims which may be asserted
against Borrower with respect to any such indebtedness or any such covenants,
provisions and conditions shall be contested diligently and in good faith and
reserves with respect thereto deemed adequate by Lender shall be established.
(b) Borrower shall furnish or cause to be furnished to Lender
copies of each of the following: (1) as soon as available and in any within 90
days after the end of each fiscal year of Borrower, Annual Financial Statements
of Borrower; (2) as soon as available and in any event within 45 days after the
end of each calendar quarter (including the last calendar quarter), Quarterly
Financial Statements of Borrower; (3) on or before 45 days after the end of each
calendar quarter, a compliance certificate ("Compliance Certificate") in the
form of Exhibit B attached hereto, duly executed by an appropriate officer
acceptable to Lender on behalf of Borrower; (4) on the date hereof and within 20
days after the end of each calendar month, a Borrowing Base Certificate as at
the date hereof or the last day of such calendar month, as the case may be,
together with such related supporting information as Lender may reasonably
request; (5) on or before 45 days after the end of each calendar quarter, a
listing and aging of the Accounts of Borrower (with agings from the date of
invoice as opposed to days past-due), as well as an accounts payable aging from
Borrower, as of the end of such calendar month, prepared in reasonable detail
and containing such related information as Lender may reasonably request; (6)
from time to time, at any time upon the request of Lender, but at the cost of
Borrower, a report of an independent collateral field examiner (which may be, or
be affiliated with, Lender) with respect to the Accounts components included in
the Borrowing Base (provided, however, that so long as no Event of Default has
occurred and is continuing, Lender shall not require such a report more than one
time per calendar year); and (7) such other information relating to the
financial condition, operations, prospects or business of Borrower as from time
to time may be reasonably requested by Lender, including without limitation a
fixed asset report. Each delivery of a financial statement pursuant to this
Paragraph shall constitute a republication of the representations and warranties
contained in Paragraph 9.
(c) Borrower and its Subsidiaries on a consolidated basis
shall have and maintain:
(1) a Current Ratio of not less than 1.50 to 1.00 as
of the end of each calendar quarter;
(2) a Debt to Tangible Net Worth Ratio not greater
than 1.50 to 1.00 as of the end of each calendar quarter; and
(3) a Fixed Charge Coverage Ratio of not less than
1.20 to 1.00, to be tested for compliance as of the end of
each calendar quarter on a Rolling Four Quarters basis.
(d) Borrower shall permit Lender to inspect its Property, to
examine its files, books and records and make and take away copies thereof, and
to discuss its affairs with its officers and accountants, all at such times and
intervals and to such extent as Lender may reasonably desire. Lender shall use
its best efforts to maintain the confidentiality of any and all information
furnished or provided to Lender by Borrower in connection with the Loans.
(e) Borrower shall promptly execute and deliver (or cause to
be executed and delivered), at Borrower's expense, any and all other and further
instruments which may be reasonably requested by Lender to cure any defect in
the execution and delivery of any Credit Document or more fully to describe
particular aspects of the agreements and undertakings set forth in the Credit
Documents.
(f) Borrower shall maintain books of record and account in
accordance with GAAP.
(g) Borrower shall (and shall cause each of its Subsidiaries
to) maintain insurance with such insurers, on such of its Property, in such
amounts and against such risks as is typically maintained by similar companies
in similar industries, and furnish Lender satisfactory evidence thereof promptly
upon request. These insurance provisions are cumulative of the insurance
provisions of the Security Documents. Lender shall be named as loss payee or
additional insured, as its interest appears, of such insurance covering any
Collateral and shall be provided with copies of the policies of insurance and a
certificate of the insurer that the insurance required by this Paragraph may not
be canceled, reduced or affected in any manner without thirty (30) days' prior
written notice to Lender.
(h) Borrower shall notify Lender immediately upon acquiring
knowledge of the occurrence of, or if Borrower causes or intends to cause, as
the case may be: (1) the institution of any lawsuit or administrative proceeding
affecting Borrower, the adverse determination under which could have a material
adverse effect on the business, condition (financial or otherwise), operations,
Property or prospects of Borrower or on its ability to perform its respective
obligations under any Credit Document to which it is a party; (2) any material
adverse change, either in any case or in the aggregate, in the assets,
liabilities, business, condition (financial or otherwise), operations, Property
or prospects of Borrower; (3) any Event of Default or any Default, together with
a detailed statement by an appropriate officer or other responsible party
acceptable to Lender on behalf of Borrower of the steps being taken to cure the
effect of such Event of Default or Default; (4) the receipt of any notice from,
or the taking of any other action by, the holder of any Indebtedness of Borrower
with respect to a claimed default, together with a detailed statement by an
appropriate officer or other responsible party acceptable to Lender on behalf of
Borrower specifying the notice given or other action taken by such holder and
the nature of the claimed default and what action Borrower is taking or proposed
to take with respect thereto; and (5) the occurrence of a material default or
event of default by Borrower under any agreement to which it is a party, which
default or event of default
could reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, Property or prospects of
Borrower.
(i) Borrower shall cause each Person who is a landlord of any
property occupied and utilized by Borrower in connection with the operation and
conduct of their respective businesses to execute and deliver to Lender
landlord's subordination agreements in Proper Form, whereby each of such
landlords validly subordinate any and all Liens held by such landlords against
all or any portion of the Collateral to the Liens in favor of Lender. Borrower
represents and warrants to Lender that it does not currently occupy or use any
real property under any lease agreement.
11. Negative Covenants. Borrower further covenants and agrees that
prior to termination of this Agreement:
(a) Borrower will not create, incur, suffer or permit to
exist, or assume or guarantee, directly or indirectly, or become or remain
liable with respect to any Indebtedness, whether direct, indirect, absolute,
contingent or otherwise, except the following: (1) Indebtedness to Lender; (2)
Indebtedness secured by Liens permitted by Paragraph 11(b) hereof; (3)
Indebtedness existing on the date of this Agreement under Capital Lease
Obligations as reflected in Borrower's financial statements dated as of December
31, 1997 delivered to Lender in connection with its request for this credit
facility, and all renewals and extensions (but not increases) thereof; (4)
currently contemplated non-revolving Indebtedness of Borrower to Key Corporate
Capital, Inc., or its affiliates or assignees or other equipment lessors, under
equipment leases, in the aggregate amount of no more than $1,500,000.00, and all
renewals and extensions (but not increases) thereof; (5) Indebtedness incurred
in connection with the acquisition of machinery and equipment used in the
business of Borrower and not held as inventory for sale or lease, provided that
the aggregate amount of all such Indebtedness shall not exceed $200,000.00; and
(6) current accounts payable and unsecured current liabilities, not the result
of borrowing, to vendors, suppliers and persons for goods and services normally
required by it in the ordinary course of business and on ordinary trade terms;
provided, that no such Indebtedness shall be created or incurred if the creation
or incurring of such Indebtedness would result in a Default under the other
provisions of this Agreement, including without limitation under Paragraph
10(c).
(b) Borrower will not create or suffer to exist any Lien upon
any of its Property now owned or hereafter acquired, or acquire any Property
upon any conditional sale or other title retention device or arrangement or any
purchase money security agreement, or in any manner directly or indirectly sell,
assign, pledge or otherwise transfer any of its Accounts or contract rights;
provided, however, that Borrower may create or suffer to exist: (a) artisans' or
mechanics' Liens arising in the ordinary course of business, and Liens for
taxes, but only to the extent that payment of the foregoing shall not at the
time be due or Borrower is diligently and in good faith contesting the
indebtedness or obligation secured by such Liens and has set aside on its books
reserves with respect thereto deemed adequate by Lender; (b) Liens in effect on
the date hereof and disclosed to Lender in writing prior to the date hereof,
provided that neither the Indebtedness secured thereby nor the Property covered
thereby shall increase; (c) Liens in favor of Lender; and (d) purchase money
Liens against equipment and/or machinery purchased with the Indebtedness
permitted under Paragraph 11(a)(5) of this Agreement.
(c) Borrower will not, in any single transaction or series of
transactions, directly or indirectly: (1) consolidate, terminate, liquidate or
dissolve; (2) be a party to any consolidation, termination, merger or
consolidation; (3) modify or amend any of its Organizational Documents; or (4)
other than sale of inventory in the ordinary course of business, sell, convey or
lease any of its assets having a value in excess of $50,000.00 (based on the
lower of cost or market value), provided, that in no event will Borrower sell,
convey or lease any of such assets if such assets are subject to a Lien in favor
of Lender, other than inventory in the ordinary course of business. Borrower
will not acquire all or substantially all of the assets of any Person or any
indicia of equity rights (whether issued and outstanding capital stock,
partnership interests or otherwise) of any other Person.
(d) Unless otherwise approved by Lender in writing, Borrower
will not: (1) redeem, retire or otherwise acquire, directly or indirectly, any
shares of its capital stock, other than the exercise by Borrower of its
redemption rights with respect to the redeemable common stock purchase warrants
issued by Borrower under the terms of the prospectus dated December 3, 1997, if
done in accordance with and at the price set forth in the prospectus, and as
long as no Default would occur under the other provisions of this Agreement,
including without limitation under Paragraph 10(c), as a result of Borrower
exercising such redemption rights; (2) pay any dividend, bonus or other
non-salary compensation; or (3) make any other distribution of any Property or
cash to officers, employees and/or stockholders. Notwithstanding the foregoing,
if the Borrower's Net Income for a fiscal year equals or exceeds $2,000,000.00,
Borrower shall be entitled during the following fiscal year to pay dividends to
its shareholders as long as no Default would occur under the other provisions of
this Agreement, including without limitation under Paragraph 10(c), as a result
of the payment of such dividends; provided, however, that if Borrower's Net
Income for any fiscal year thereafter is less than $2,000,000.00, such dividends
will thereafter be prohibited until Borrower again achieves Net Income of at
least $2,000,000.00 for a subsequent fiscal year.
(e) Borrower will not allow its President or its Chief
Financial Officer to be replaced, removed or otherwise changed without the prior
written consent of Lender.
(f) Borrower will not change the nature of its business or
enter into any business which is substantially different from the business in
which it is presently engaged.
(g) Borrower will not enter into any transaction or agreement
with any officer, director, partner, trustee or owner or holder of any indicia
of equity rights (whether issued and outstanding capital stock, partnership
interests or otherwise) of Borrower (or any Affiliate or Subsidiary of any such
Person) unless the same is upon terms substantially similar to those obtainable
from wholly unrelated sources.
(h) Borrower will not form, create or acquire any Subsidiary
without the prior written consent of Lender.
(i) Borrower will not change the address of its chief
executive office (which is Borrower's address for notice contained herein),
location, name or identity without notifying Lender of such change in writing at
least thirty (30) days before the effective date of such change and unless
Borrower shall have taken such actions, satisfactory to Lender, to have caused
an security interest in the Collateral to be at all times fully perfected and in
full force and effect.
12. Event of Default. The occurrence of any of the following events
(including any required notice or passage of time) shall hereinafter be referred
to as an Event of Default:
(a) any part of the debt evidenced by any of the Notes is not
paid when due, whether by lapse of time or acceleration or otherwise, unless
such default is fully cured within three (3) Business Days after such due date;
(b) Borrower fails to perform, observe or comply with, or
defaults under, any of the terms, covenants, conditions or provisions of this
Agreement or any other Credit Document (other than any such failure or default
described in one or more of the other subparagraphs of this Paragraph) unless
such failure or default is fully cured within thirty (30) calendar days after
Lender has given Borrower written notice thereof (such cure period to run
concurrently with and not in addition to, any other grace or cure period
provided for in any of the other Credit Documents with respect to the same
default);
(c) Borrower fails to perform, observe or comply with, or
defaults under, Paragraphs 10(b), 10(c) or 10(h) of this Agreement.
(d) any representation or warranty made in any Credit Document
or in any other report or other paper now or hereafter provided to Lender
pursuant or incident to any Credit Document or the debt evidenced by any of the
Notes proves to have been untrue or misleading in any material respect as of the
date made or deemed made;
(e) Borrower: (i) voluntarily suspends transaction of
business; (ii) becomes insolvent or unable to pay its debts as they mature;
(iii) commences a voluntary case in bankruptcy or a voluntary petition seeking
reorganization or to effect a plan or other arrangement with creditors; (iv)
makes an assignment for the benefit of creditors; (v) applies for or consents to
the appointment of a receiver or trustee for any such person or entity or for
any substantial portion of its property; or (vi) makes an assignment to an agent
authorized to liquidate any substantial part of its assets;
(f) in respect of Borrower: (i) an involuntary case shall be
commenced with any court or other authority seeking liquidation, reorganization
or a creditor's arrangement of any such person or entity; (ii) an order of any
court or other authority shall be entered appointing any receiver or trustee for
any such person or entity or for any substantial portion of its property; or
(iii) a writ or warrant of attachment or any similar process shall be issued by
any court or other authority against any substantial portion of the property of
any such person or entity, and such petition seeking liquidation, reorganization
or a creditor's arrangement or such order appointing a receiver or trustee is
not vacated or stayed, or such writ, warrant of attachment or similar process is
not vacated, released or bonded off within sixty (60) days after its entry or
levy;
(g) the dissolution, liquidation or termination of Borrower;
(h) any action, suit or proceeding shall be commenced against
or affecting Borrower or involving the validity or enforceability of any Credit
Document, at law or in equity, or before any governmental authority, which in
Lender's reasonable judgment, impairs or would impair
Lender's ability to collect the debt evidenced by any of the Notes when due or
the enforceability of any Credit Document;
(i) any one or more final judgments for the payment of money
in an aggregate amount of at least $50,000.00 shall be rendered against Borrower
and the same shall remain unstayed or undischarged for a period of sixty (60)
days;
(j) Borrower shall be prevented or relieved by any
governmental authority from performing or observing any material term, covenant
or condition of any Credit Document;
(k) any material adverse change shall occur in the assets,
financial condition, business, operations, affairs or circumstances of Borrower;
(l) Borrower shall fail to pay when due any principal of or
interest on any borrowed money obligation or the holder of such other borrowed
money obligation declares, or has the right to declare, such borrowed money
obligation due before its stated maturity because of default;
(m) Borrower shall be in default under or in violation of any
Legal Requirement of any Governmental Authority having jurisdiction over any
such party or any such party's property, which in Lender's reasonable judgment,
impairs or would impair Lender's ability to collect the debt evidenced by any of
the Notes when due or the enforceability of any Credit Document;
(n) Borrower shall claim, or any court shall find or rule,
that Lender does not have a valid Lien on any of the Collateral;
(o) except for the sale of Inventory in the ordinary course of
business, the sale, encumbrance or abandonment of any of the Collateral, the
making of any levy, seizure or attachment of or on any of the Collateral or the
loss, theft, substantial damage or destruction of any of any of the Collateral
which is not sufficiently covered by insurance that is otherwise payable to
Lender as loss payee and which, in Lender's reasonable judgment, impairs or
would impair Lender's ability to collect the debt evidenced by any of the Notes
when due or the enforceability of any Credit Document;
(p) Borrower shall have concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud any of its creditors, or made or suffered a transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law, or shall have made any transfer of its property to or for the
benefit of a creditor at a time when other creditors similarly situated have not
been paid, or, while insolvent, shall have suffered or permitted any creditor to
obtain a lien upon any of its property through legal proceedings or distraint
which is not vacated with sixty (60) days from its date;
(q) Borrower fails to pay when due any amount which he or it
is liable to pay to the PBGC or its successor or to a Plan, or notice of intent
to terminate any Plan is filed under ERISA, or PBGC commences proceedings under
ERISA to terminate any Plan or to cause a trustee to be appointed to administer
any Plan, or a proceeding is commenced by any fiduciary of any Plan to enforce
Section 515 or Section 4219(c)(5) of ERISA, or PBGC becomes entitled to obtain a
decree adjudicating that any Plan must be terminated;
(r) a default, an event of default or a similar event (however
denominated) shall occur under any Credit Document, unless such default, event
of default or similar event is fully cured within thirty (30) calendar days
after Lender has given Borrower written notice thereof (such cure period to run
concurrently with and not in addition to, any other grace or cure period
provided for in any of the other Credit Documents with respect to the same
default).
Upon the occurrence of any Default, and at any time thereafter prior to such
Default being cured to the reasonable satisfaction of Lender, Lender's
obligation, if any, to make Revolving Loans and Advance/Term Loans shall cease
and terminate. Upon the occurrence of any Event of Default, and at any time
thereafter, Lender shall have the right, at its option, (1) to terminate its
obligations to make further Revolving Loans (whereupon the Revolving Commitment
shall be terminated) and further Advance/Term Loans and to declare the unpaid
balance of the indebtedness evidenced by any or all of the Notes to be
immediately due and payable without notice (including notice of intent to
accelerate and notice of acceleration), protest or demand or presentment for
payment, all of which are hereby expressly waived by Borrower and (2) to enforce
or avail itself of any and all powers, rights and remedies available at law or
provided in this Agreement, the Notes, the other Credit Documents or any other
document executed pursuant hereto or in connection herewith. Notwithstanding any
provision in this Paragraph to the contrary, upon the occurrence of any Event of
Default, Lender shall have the right, immediately and without notice, to take
possession of and exercise possessory rights with regard to any property
securing payment of the indebtedness evidenced by the Notes. All powers, rights
and remedies of Lender set forth in this Paragraph shall be cumulative and not
exclusive of any other power, right or remedy available to Lender under the law
or under this Agreement, the Notes, the other Credit Documents or any other
document executed pursuant hereto or in connection herewith to enforce the
performance or observance of the covenants and agreements contained in this
Agreement, and no delay or omission of Lender to exercise any power, right or
remedy accruing to Lender shall impair any such power, right or remedy, or shall
be construed to be a waiver of the right to exercise any such power, right or
remedy. Every power, right or remedy of Lender set forth in this Agreement, the
Notes, the other Credit Documents or any other document executed pursuant hereto
or in connection herewith, or afforded by law may be exercised from time to
time, and as often as may be deemed expedient by Lender.
13. Lender's Right to Cure. If Borrower should fail to comply with
any of their agreements, covenants or obligations under any Credit Document,
then Lender (in Borrower's name or in Lender's own name) may perform them or
cause them to be performed for Borrower's account and at Borrower's expense, but
shall have no obligation to perform any of them or cause them to be performed.
Any and all expenses thus incurred or paid by Lender shall be Borrower's
obligations to Lender due and payable on demand, and each shall bear interest
from the date Lender pays it until the date Borrower repays it to Lender, at the
Past Due Rate. Upon making any such payment or incurring any such expense,
Lender shall be fully and automatically subrogated to all of the rights
of the person, corporation or body politic receiving such payment. Any amounts
owing by Borrower to Lender pursuant to this or any other provision of this
Agreement shall be secured by all instruments securing the Notes. The amount and
nature of any such expense and the time when it was paid shall be fully
established by the affidavit of Lender or any of Lender's officers or agents.
The exercise of the privileges granted to Lender in this Paragraph shall in no
event be considered or constitute a cure of the default or a waiver of Lender's
right at any time after an Event of Default to declare the Notes to be at once
due and payable, but is cumulative of such right and of all other rights given
by this Agreement, the Notes and the Credit Documents and of all rights given
Lender by law.
14. Usury Not Intended; Savings Provisions. Notwithstanding any
provision to the contrary contained in any Credit Document, it is expressly
provided that in no case or event shall the aggregate of any amounts accrued or
paid pursuant to this Agreement which under applicable laws are or may be deemed
to constitute interest ever exceed the maximum nonusurious interest rate
permitted by applicable Texas or federal laws, whichever permit the higher rate.
In this connection, Borrower and Lender stipulate and agree that it is their
common and overriding intent to contract in strict compliance with applicable
usury laws. In furtherance thereof, none of the terms of this Agreement shall
ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the maximum
rate permitted by applicable laws. Borrower shall never be liable for interest
in excess of the maximum rate permitted by applicable laws. If, for any reason
whatever, such interest paid or received during the full term of the applicable
indebtedness produces a rate which exceeds the maximum rate permitted by
applicable laws, Lender shall credit against the principal of such indebtedness
(or, if such indebtedness shall have been paid in full, shall refund to the
payor of such interest) such portion of said interest as shall be necessary to
cause the interest paid to produce a rate equal to the maximum rate permitted by
applicable laws. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread in equal parts throughout the
full term of the applicable indebtedness, so that the interest rate is uniform
throughout the full term of such indebtedness. The provisions of this Paragraph
shall control all agreements, whether now or hereafter existing and whether
written or oral, between Borrower and Lender.
15. Documentation Requirements. Each written instrument required by
this Agreement, the Notes or the other Credit Documents to be furnished to
Lender shall be duly executed by the person or persons specified (or where no
particular person is specified, by such person as Lender shall require), duly
acknowledged where reasonably required by Lender and, in the case of affidavits
and similar sworn instruments, duly sworn to and subscribed before a notary
public duly authorized to act by governmental authority; shall be furnished to
Lender in one or more copies as required by Lender; and shall in all respects be
in form and substance satisfactory to Lender and to its legal counsel.
16. Credit Documents Cumulative. The benefits, rights and remedies
of Lender and the security contained herein or provided for in the Notes, the
other Credit Documents or any other document executed pursuant hereto or in
connection herewith are cumulative; provided, however, that to the extent of any
conflict between any provision of this Agreement and any provision contained in
the Notes, the other Credit Documents (other than the Construction Loan
Agreement) or any other document executed pursuant hereto or in connection
herewith, the provisions of this Agreement shall control.
17. Satisfaction of Conditions. Where evidence of the existence or
nonexistence of any circumstance or condition is required by this Agreement, the
Notes, the other Credit Documents or any other document executed pursuant hereto
or in connection herewith to be furnished to Lender, such evidence shall in all
respects be in form and substance reasonably satisfactory to Lender, and the
duty to furnish such evidence shall not be considered satisfied until Lender
shall have acknowledged that it is satisfied therewith.
18. Survival. All covenants, agreements, representations and
warranties made by Borrower in this Agreement, the Notes, the other Credit
Documents and any other document executed pursuant hereto or in connection
herewith, and in any certificates or other documents or instruments delivered
pursuant to this Agreement, the Notes, the other Credit Documents or any other
document executed pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement, the Notes, the other Credit Documents
and the other documents executed pursuant hereto or in connection herewith, and
shall continue in full force and effect until full payment of the indebtedness
evidenced by the Notes and/or secured by the Credit Documents, complete
performance of all of the obligations of Borrower under the Credit Documents and
final termination of Lender's obligations, if any, to make any further advances
under the Revolving Note or the Advance/Term Note or to provide any other
financial accommodation to Borrower (provided, however, that all reimbursement
obligations, indemnification and hold harmless obligations and other similar
obligations of Borrower under any of the Credit Documents shall survive such
payment, performance and termination). All such covenants, agreements,
representations and warranties shall be binding upon any successors and assigns
of Borrower, but any attempted assignment of any rights of Borrower hereunder
without the prior written consent of Lender shall be null and void. No Person
other than Borrower shall have any right or action hereon or any rights to Loans
at any time, the Loans shall not constitute a trust fund for the benefit of any
third parties and no third party shall under any circumstances have or be
entitled to any Lien or any trust impressed on any undisbursed Loans.
19. Borrower Agrees to Pay or Reimburse Lender's Expenses. To the
extent not prohibited by applicable law, Borrower will pay all reasonable costs
and expenses and reimburse Lender for any and all reasonable expenditures of
every character incurred or expended from time to time, regardless of whether an
Event of Default shall have occurred, in connection with:
(a) the preparation, negotiation, documentation, closing,
renewal, revision, modification, increase, review or restructuring of any Loan
or credit facility secured by the Credit Documents, including legal, accounting,
auditing, architectural, engineering and inspection services and disbursements,
or in connection with collecting or attempting to enforce or collect any Credit
Document;
(b) Lender's evaluating, monitoring, administering and
protecting the Collateral, provided, however, that except with respect to any
such costs incurred in connection with Lender's monitoring of the construction
under the Construction Loan Agreement and except for any such costs which
Borrower is specifically required to pay under the provisions of the Credit
Documents, Borrower will only be obligated to pay these costs under this
Subparagraph (b) if an Event of Default shall have occurred;
(c) Lender's creating, perfecting and realizing upon Lender's
Liens on the Collateral, and all costs and expenses relating to Lender's
exercising any of its rights and remedies under any Credit Document or at law,
including all appraisal fees, consulting fees, filing fees, taxes, brokerage
fees and commissions, title review and abstract fees, litigation report fees,
UCC search fees, other fees and expenses incident to title searches, reports and
security interests, escrow fees, attorneys' fees, legal expenses, court costs,
other fees and expenses incurred in connection with any complete or partial
liquidation of the Collateral, and all fees and expenses for any professional
services relating to the Collateral or any operations conducted in connection
therewith. Provided, that no right or option granted by Borrower to Lender or
otherwise arising pursuant to any provision of any Credit Document shall be
deemed to impose or admit a duty on Lender to supervise, monitor or control any
aspect of the character or condition of the Collateral or any operations
conducted in connection therewith for the benefit of Borrower or any person or
entity other than Lender. BORROWER AGREES TO INDEMNIFY, DEFEND AND HOLD LENDER,
ITS SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS, ATTORNEYS, ADVISORS AND EMPLOYEES
(COLLECTIVELY "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY AND ALL
ENVIRONMENTAL LIABILITIES AND ANY AND ALL OTHER LOSS, LIABILITY, OBLIGATION,
DAMAGE, PENALTY, JUDGMENT, CLAIM, DEFICIENCY, EXPENSE, ACTION, SUIT, COST AND
DISBURSEMENT OF ANY KIND OR NATURE WHATSOEVER (INCLUDING INTEREST, PENALTIES,
ATTORNEYS' FEES AND AMOUNTS PAID IN SETTLEMENT) IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE INDEMNIFIED PARTIES GROWING OUT OF OR RESULTING FROM ANY
CREDIT DOCUMENT OR ANY TRANSACTION OR EVENT CONTEMPLATED THEREIN (EXCEPT THAT
SUCH INDEMNITY SHALL NOT BE PAID TO ANY INDEMNIFIED PARTY TO THE EXTENT THAT
SUCH LOSS, ETC. IS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNIFIED PARTY). Any amount to be paid under this Paragraph
by Borrower to Lender shall be a demand obligation owing by Borrower to Lender
and shall bear interest from the date of expenditure until paid at the Past Due
Rate.
20. Amendments in Writing. This Agreement shall not be changed
orally but shall be changed only by agreement in writing signed by Borrower and
Lender. Any waiver or consent with respect to this Agreement shall be effective
only in the specific instance and for the specific purpose for which given. No
course of dealing between the parties, no usage of trade and no parol or
extrinsic evidence of any nature shall be used to supplement or modify any of
the terms or provisions of this Agreement.
21. Notices. Any notice, request or other communication required or
permitted to be given hereunder shall be given in writing by delivering it
against receipt for it, by depositing it with an overnight delivery service or
by depositing it in a receptacle maintained by the United States Postal Service,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the respective parties at the addresses shown herein (and if so
given, shall be deemed given three (3) Business Days after mailing). Borrower's
address for notice may be changed at any time and from
time to time, but only after thirty (30) days' advance written notice to Lender
and shall be the most recent such address furnished in writing by Borrower to
Lender. Lender's address for notice may be changed at any time and from time to
time, but only after thirty (30) days' advance written notice to Borrower and
shall be the most recent such address furnished in writing by Lender to
Borrower. Actual notice, however and from whomever given or received, shall
always be effective when received.
22. Gender; "Including" is Not Limiting; Section Headings. The
masculine and neuter genders used in this Agreement each includes the masculine,
feminine and neuter genders, and whenever the singular number is used, the same
shall include the plural where appropriate, and vice versa. Wherever the term
"including" or a similar term is used in this Agreement, it shall be read as if
it were written "including by way of example only and without in any way
limiting the generality of the clause or concept referred to." The headings used
is this Agreement are included for reference only and shall not be considered in
interpreting, applying or enforcing this Agreement.
23. Venue. This Agreement is performable in Xxxxxx County, Texas,
which shall be a proper place of venue for suit on or in respect of this
Agreement. Borrower irrevocably agrees that any legal proceeding in respect of
this Agreement shall be brought in the district courts of Xxxxxx County, Texas
or the United States District Court for the Western District of Texas, Austin
Division (collectively, the "Specified Courts"). Borrower hereby irrevocably
submits to the nonexclusive jurisdiction of the state and federal courts of the
State of Texas. Borrower hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to any
Credit Document brought in any Specified Court, and hereby further irrevocably
waives any claims that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Nothing herein shall affect the
right of Lender or Borrower to serve process in any manner permitted by
applicable law. Borrower and Lender agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. As
used in the preceding sentence, "final judgment" shall mean a judgment entered
by a court which is final as contemplated by the Texas Rules of Civil Procedure
or the Federal Rules of Civil Procedure, as applicable, and which is subject to
no further appeal. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES
OF AMERICA FROM TIME TO TIME IN EFFECT.
24. Rights Cumulative; Delay Not Waiver. Lender's exercise of any
right, benefit or privilege under any of the Credit Documents or any other
papers or at law or in equity shall not preclude the concurrent or subsequent
exercise of Lender's other present or future rights, benefits or privileges. The
remedies provided in this Agreement are cumulative and not exclusive of any
remedies provided by law, the Credit Documents or any other papers. No failure
by Lender to exercise, and no delay in exercising, any right under any Credit
Document or any other papers shall operate as a waiver thereof.
25. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this Agreement shall
not be affected thereby, and this Agreement shall be liberally
construed so as to carry out the intent of the parties to it. Each waiver in
this Agreement is subject to the overriding and controlling rule that it shall
be effective only if and to the extent that (a) it is not prohibited by
applicable law and (b) applicable law neither provides for nor allows any
material sanctions to be imposed against Lender for having bargained for and
obtained it.
26. Entire Agreement. This Agreement, the Notes and the other Credit
Documents together embody the entire agreement and understanding between
Borrower and Lender with respect to the subject matter hereof and supersede all
prior conflicting or inconsistent agreements, consents and understandings
relating to such subject matter. Borrower acknowledges and agrees that there is
no oral agreement between Borrower and Lender which has not been incorporated in
this Agreement, the Note and the other Credit Documents.
THIS AGREEMENT, THE NOTES, THE OTHER CREDIT DOCUMENTS
AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES
SUBSTANTIALLY CONCURRENTLY HEREWITH CONSTITUTE A WRITTEN LOAN
AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES AND
LENDER. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
AND LENDER.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------
Title: Vice President
--------------------------------
Lender's Address:
000 Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Manager, Commercial Lending Division
SURREY, INC., a Texas corporation
By: /s/ Xxxx van der Xxxxx
-----------------------------------
Name: Xxxx van der Xxxxx
---------------------------------
Title: Vice President
--------------------------------
Borrower's Address:
00000 Xxxxxx Xxx Xxxx
Xxxxxxx, Xxxxx 00000
EXHIBITS:
A - Request for Advance
B - Borrowing Base Certificate
C - Compliance Certificate
D - Rate Selection Notice
REQUEST FOR CREDIT
---------------
Chase Bank of Texas,
National Association
000 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Manager, Commercial Lending Division
Gentlemen:
The undersigned hereby certifies that he is the ____________________
of Surrey, Inc. ("Borrower"), and that as such is authorized to execute this
Request for Advance (the "Request") on behalf of Borrower pursuant to the Loan
Agreement (as it may be amended, supplemented or restated from time to time, the
"Loan Agreement") dated as of April 8, 1998 by and between Borrower and Chase
Bank of Texas, National Association. The Revolving Loan being requested hereby
is to be in the amount set forth in (b) below and is requested to be made on
_________________________, which is a Business Day. On behalf of Borrower, the
undersigned further certifies, represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the Loan
Agreement unless otherwise specified herein):
a. As of the date hereof:
(1) The current Borrowing Base is: $__________
(2) Aggregate outstanding amount
of Revolving Loans is: $__________
(3) The available Revolving Commitment [the
amount by which the lesser of (x) the amount
in (a)(1) above or (y) $1,000,000 exceeds
the amount in (a)(2) above],
if positive, is: $__________
b. If and only if the available Revolving Commitment is
positive, Borrower hereby requests under this Request a
Revolving Loan in the amount of $____________ (which is
no more than the available Revolving Commitment).
EXHIBIT A
c. The representations and warranties made in each Credit
Document are true and correct in all respects on and as
of the time of delivery hereof, with the same force and
effect as if made on and as of the time of delivery
hereof.
d. No Default has occurred and is continuing or will occur
as a result of the requested Revolving Loan.
Thank you for your attention to this matter.
Very truly yours,
Print Name:______________________________
of Surrey, Inc.
EXHIBIT A
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that he is the ____________________
of Surrey, Inc. ("Borrower"), and that as such is authorized to execute this
Borrowing Base Certificate on behalf of Borrower pursuant to the Loan Agreement
(as it may be amended, supplemented or restated from time to time, the "Loan
Agreement") dated April 8, 1998 by and between Borrower and Chase Bank of Texas,
National Association. On behalf of Borrower, the undersigned further certifies,
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Loan Agreement unless otherwise specified
herein):
(1) As of ________________, the components of the Borrowing
Base are as follows:
Eligible Accounts of Borrower: $____________
(2) The Borrowing Base determined on the basis of the above
information is equal to the sum of ____ % of line (1)
above; or $___________.
(3) The Eligible Accounts are calculated in accordance with
the Loan Agreement and the schedule(s), if any, attached
hereto.
Dated ________________.
Very truly yours,
Print Name:______________________________
of Surrey, Inc.
EXHIBIT B
COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ____________________
of Surrey, Inc. ("Borrower"), and that as such is authorized to execute this
certificate on behalf of Borrower pursuant to the Loan Agreement (the "Loan
Agreement") dated as of April 8, 1998 by and between Borrower and Chase Bank of
Texas, National Association; and that a review of Borrower has been made under
his supervision with a view to determining whether Borrower has fulfilled all of
its obligations under the Loan Agreement and the other Credit Documents; and on
behalf of Borrower further certifies, represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the Loan
Agreement unless otherwise specified):
(a) Each Obligor has fulfilled its respective
obligations under the Credit Documents.
(b) Except as described on the continuation pages
attached hereto (if any), the representations and warranties made in
each Credit Document are true and correct in all respects on and as
of the time of delivery hereof, with the same force and effect as if
made on and as of the time of delivery hereof.
(c) The financial statements delivered to Lender
concurrently with this Compliance Certificate have been prepared in
accordance with GAAP consistently followed throughout the period
indicated and fairly present the financial condition and results of
operations of the applicable Persons as at the end of, and for, the
period indicated.
(d) No Default has occurred and is continuing. In this
regard, the compliance with the provisions of Paragraph 10(c) of the
Loan Agreement is as follows:
SECTION 10(c)(1) -- CURRENT RATIO
actual Current Ratio for Borrower as of the date hereof:
__.____ :1.00
required Current Ratio for Borrower as of the date
hereof:
less than 1.50:1.00
SECTION 10(c)(2) -- DEBT TO TANGIBLE NET WORTH RATIO
actual Debt to Tangible Net Worth Ratio for Borrower as
of the date hereof:
__.____ :1.00
required Debt to Tangible Net Worth Ratio for Borrower
as of the date hereof:
EXHIBIT C
more than 1.50:1.00
SECTION 10(c)(3) -- FIXED CHARGE RATIO
actual Fixed Charge Ratio for Borrower as of the date
hereof:
__.____ :1.00
required Fixed Charge Ratio for Borrower as of the date
hereof:
less than 1.20:1.00
(e) Based on the actual Debt to Tangible Net Worth
Ratio shown above, the Applicable Margin to be effective after
Lender's review of the Quarterly Financial Statements delivered with
this Compliance Certificate is _______%.
(f) There has occurred no material adverse change in
the assets, liabilities, financial condition, business or affairs of
any Obligor since the date of the Loan Agreement.
DATED as of ______________.
Very truly yours,
__________________________________
Print Name: ______________________
____________________ of Surrey, Inc.
EXHIBIT C
RATE SELECTION NOTICE
Surrey, Inc., a Texas corporation, and Chase Bank of Texas, National
Association, a national banking association, executed and delivered that certain
Loan Agreement (as amended, supplemented and restated, the "Loan Agreement")
dated as of April 8, 1998. Any term used herein and not otherwise defined herein
shall have the meaning herein ascribed to it in the Loan Agreement.
In accordance with the Loan Agreement, Borrower hereby notifies
Lender of the exercise of an Interest Option.
A. Current Revolving Loan borrowings
1. Interest Options now in effect: ______________
2. Amounts: $___________, $__________, $__________
3. Expiration of current Interest
Periods, if applicable: ______, 199_, _____, 199_, _____, 199_
B. Proposed Revolving Loan borrowing
1. Amount: $______________
2. Date Interest Option
is to be effective: _________, 199_
3. Interest Option to be applicable
(check one):
[ ] Base Rate
[ ] LIBOR Rate
4. LIBOR Interest Period (check one if applicable):
[ ] 1 month [ ] 3 months
[ ] 2 months [ ] 6 months
EXHIBIT D
C. Current Advance/Term Loan borrowings
1. Interest Options now in effect: ______________
2. Amounts: $___________, $__________, $__________
3. Expiration of current Interest
Periods, if applicable: ______, 199_, _____, 199_, _____, 199_
D. Proposed Advance/Term Loan borrowing
1. Amount: $______________
2. Date Interest Option
is to be effective: _________, 199_
3. Interest Option to be applicable (check one):
[ ] Base Rate
[ ] LIBOR Rate
4. LIBOR Interest Period (check one if applicable):
[ ] 1 month [ ] 3 months
[ ] 2 months [ ] 6 months
Borrowers represents and warrants that the Interest Options and the
LIBOR Interest Period (if applicable) selected above comply with all provisions
of the Loan Agreement and that there exists no Event of Default or any event
which, with the passage of time, the giving of notice or both, would be an Event
of Default.
SURREY, INC., a Texas corporation
By:
-----------------------------------
Date:_____________, 199_ Name:
---------------------------------
Title:
--------------------------------
EXHIBIT D
