LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
as Lender,
and
AMETECH, INC. AND
ENVIRONMENTAL TRANSPORTATION SERVICES, INC.
collectively, as Borrower
Dated: July 17, 1997
TABLE OF CONTENTS
Page
____
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . 1
SECTION 2. CREDIT FACILITIES . . . . . . . . . . . . . 9
2.1 Revolving Loans. . . . . . . . . . . . 9
2.2 Letter of Credit Accommodations. . . . 10
2.3 Term Loan. . . . . . . . . . . . . . . 11
2.4 Availability Reserves
2.5 Joint and Several Liability;
Rights of Contribution. . . . . . . 12
SECTION 3. INTEREST AND FEES . . . . . . . . . . . . . 13
3.1 Interest . . . . . . . . . . . . . . . 13
3.2 Closing Fee. . . . . . . . . . . . . . 14
3.3 Servicing Fee. . . . . . . . . . . . . 14
3.4 Commitment Fee . . . . . . . . . . . . 14
SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . 15
4.1 Conditions Precedent to Initial Loans
and Letter of Credit Accommodations. . 15
4.2 Conditions Precedent to All Loans
and Letter of Credit Accommodations. . 18
SECTION 5. GRANT OF SECURITY INTEREST. . . . . . . . . 18
SECTION 6. COLLECTION AND ADMINISTRATION . . . . . . . 19
6.1 Borrower's Loan Account. . . . . . . . 19
6.2 Statements . . . . . . . . . . . . . . 19
6.3 Collection of Accounts . . . . . . . . 19
6.4 Payments . . . . . . . . . . . . . . . 20
6.5 Authorization to Make Loans. . . . . . 21
6.6 Use of Proceeds. . . . . . . . . . . . 21
SECTION 7. COLLATERAL REPORTING AND COVENANTS. . . . . 22
7.1 Collateral Reporting . . . . . . . . . 22
7.2 Accounts Covenants . . . . . . . . . . 20
7.3 Inventory Covenants. . . . . . . . . . 23
i
7.4 Equipment Covenants. . . . . . . . . . 24
7.5 Power of Attorney. . . . . . . . . . . 24
7.6 Right to Cure. . . . . . . . . . . . . 25
7.7 Access to Premises . . . . . . . . . . 25
SECTION 8. REPRESENTATIONS AND WARRANTIES. . . . . . . 26
8.1 Corporate Existence, Power
and Authority; Subsidiaries. . . . . . 26
8.2 Financial Statements; No
Material Adverse Change. . . . . . . . 26
8.3 Chief Executive Office; Collateral
Locations. . . . . . . . . . . . . . . 26
8.4 Priority of Liens; Title to
Properties . . . . . . . . . . . . . . 26
8.5 Tax Returns. . . . . . . . . . . . . . 27
8.6 Litigation . . . . . . . . . . . . . . 27
8.7 Compliance with Other Agreements
and Applicable Laws. . . . . . . . . . 27
8.8 Accuracy and Completeness of
Information. . . . . . . . . . . . . . 27
8.9 Survival of Warranties; Cumulative . . 28
8.10 Environmental Compliance . . . . . . . 28
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS. . . . . 29
9.1 Maintenance of Existence . . . . . . . 29
9.2 New Collateral Locations . . . . . . . 29
9.3 Compliance with Laws,
Regulations, Etc. . . . . . . . . . . 29
9.4 Payment of Taxes and Claims. . . . . . 30
9.5 Insurance. . . . . . . . . . . . . . . 31
9.6 Financial Statements and Other
Information. . . . . . . . . . . . . . 31
9.7 Sale of Assets, Consolidation,
Merger, Dissolution, Etc. . . . . . . 32
9.8 Encumbrances . . . . . . . . . . . . . 33
9.9 Indebtedness . . . . . . . . . . . . . 33
9.10 Loans, Investments, Guarantees, Etc. . 35
9.11 Dividends and Redemptions. . . . . . . 36
9.12 Transactions with Affiliates . . . . . 36
9.13 Adjusted Net Worth . . . . . . . . . . 36
9.14 Costs and Expenses . . . . . . . . . . 36
9.15 After Acquired Real Property . . . . . 37
9.16 Further Assurances . . . . . . . . . . 37
SECTION 10. EVENTS OF DEFAULT AND REMEDIES. . . . . . . 37
10.1 Events of Default. . . . . . . . . . . 37
10.2 Remedies . . . . . . . . . . . . . . . 39
ii
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW . . . . . . . . 40
11.1 Governing Law; Choice of Forum;
Service of Process;Jury Trial
Waiver . . . . . . . . . . . . . . . . 40
11.2 Waiver of Notices. . . . . . . . . . . 42
11.3 Amendments and Waivers . . . . . . . . 42
11.4 Waiver of Counterclaims. . . . . . . . 42
11.5 Indemnification. . . . . . . . . . . . 42
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS. . . . . . 43
12.1 Term . . . . . . . . . . . . . . . . . 43
12.2 Notices. . . . . . . . . . . . . . . . 44
12.3 Partial Invalidity . . . . . . . . . . 45
12.4 Successors . . . . . . . . . . . . . . 45
12.5 Entire Agreement . . . . . . . . . . . 45
12.6 Nonapplicability of Article
5069-15.01 et seq. . . . . . . . . . . 45
12.7 Waiver of Consumer Rights. . . . . . . 45
12.8 Oral Agreements Ineffective. . . . . . 45
iii
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Schedule 8.4 Existing Liens
Schedule 8.7 Compliance With Agreements
Schedule 8.10 Environmental Matters
Schedule 9.3 Compliance With Laws
Schedule 9.9 Permitted Indebtedness
Schedule 9.11 Permitted Dividends and Other Dis-
tributions on Capital Stock
i
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of July 17, 1997, is
entered into by and among CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), a Texas corporation ("Lender"), on the one hand, and
AMETECH, INC., an Oklahoma corporation ("Ametech"), and
ENVIRONMENTAL TRANSPORTATION SERVICES, INC., an Oklahoma
corporation ("ETS") (Ametech and ETS being individually and
collectively referred to as "Borrower"), on the other hand.
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into certain
financing arrangements with Borrower pursuant to which Lender may
make loans and provide other financial accommodations to Borrower;
and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article
9 of the Uniform Commercial Code shall have the meanings given
therein unless otherwise defined in this Agreement. All references
to the plural herein shall also mean the singular and to the
singular shall also mean the plural. All references to Borrower
and Lender pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" 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 and as this Agreement
now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. An Event of Default shall
exist or continue or be continuing until such Event of Default is
waived in accordance with Section 11.3. Any accounting term used
herein unless otherwise defined in this Agreement shall have the
meanings customarily given to such term in accordance with GAAP.
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1
"Accounts" shall mean all present and future rights of Borrower
to payment for goods sold or leased or for services rendered, which
are not evidenced by instruments or chattel paper, and whether or
not earned by performance.
"Adjusted Net Worth" shall mean as to any Person, at any time,
in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to: (a) the difference
between: (i) the aggregate net book value of all assets of such
Person and its subsidiaries, calculating the book value of
inventory for this purpose on a first-in-first-out basis, after
deducting from such book values all appropriate reserves in
accordance with GAAP (including all reserves for doubtful
receivables, obsolescence, depreciation and amortization) and (ii)
the aggregate amount of the indebtedness and other liabilities of
such Person and its subsidiaries (including tax and other proper
accruals) plus (b) indebtedness of such Person and its subsidiaries
which is subordinated in right of payment to the full and final
payment of all of the Obligations on terms and conditions
acceptable to Lender.
"Xxxxxxxx Mortgage" shall mean that certain Mortgage and
Security Agreement, dated as of November 29, 1996, by and between
ETS and Xxxx X. Xxxxxxxx, Xx., an individual, as recorded with the
Oklahoma County Clerk on December 27, 1996, Document Number
96177118, Book 7000, Pages 1145-1157, respecting Borrower's Real
Property located in Oklahoma City, Oklahoma.
"Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time
establish and revise in good faith reducing the amount of Revolving
Loans and Letter of Credit Accommodations which would otherwise be
available to Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Lender in good faith, do or may affect
either (i) the Collateral or any other property which is security
for the Obligations or its value, (ii) the assets, business or
prospects of Borrower or any Obligor or (iii) the security
interests and other rights of Lender in the Collateral (including
the enforceability, perfection and priority thereof) or (b) to
reflect Lender's good faith belief that any collateral report or
financial information furnished by or on behalf of Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or
misleading in any material respect or (c) in respect of any state
of facts which Lender determines in good faith constitutes an Event
of Default or may, with notice or passage of time or both,
constitute an Event of Default.
"Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
"CIT Note" shall mean that certain Promissory Note, dated as of
even date herewith, in the original principal amount of Two Hundred
Twenty-Five Thousand Dollars ($225,000), executed by Borrower to
the order of The CIT Group/Equipment Finance.
"Collateral" shall have the meaning set forth in Section 5
hereof.
2
"Effective Date" shall mean the date upon which all the
conditions precedent in Section 4 hereof are satisfied to Lender's
satisfaction and the initial Loans are made hereunder.
"Eligible Accounts" shall mean Accounts created by Borrower
which are and continue to be based on the criteria set forth below.
Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale
and delivery of goods by Borrower or rendition of services by
Borrower in the ordinary course of its business which transactions
are completed in accordance with the terms and provisions contained
in any documents related thereto, and for which Borrower has
received any and all required paperwork and proof of delivery of
such goods or rendition of services giving rise to such Accounts;
(b) such Accounts are not unpaid more than ninety (90)
days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions
contained in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the account debtor may be conditional or
contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of
America, or, if the account debtor with respect to such Accounts is
not located in the United States, then, at Lender's option, if such
Accounts are payable in the United States in United States currency
and either: (i) the account debtor has delivered to Borrower an
irrevocable letter of credit issued or confirmed by a bank
satisfactory to Lender, sufficient to cover such Account, in form
and substance satisfactory to Lender and, if required by Lender,
the original of such letter of credit has been delivered to Lender
or Lender's agent and the issuer thereof notified of the assignment
of the proceeds of such letter of credit to Lender, or (ii) such
Account is subject to credit insurance payable to Lender issued by
an insurer and on terms and in an amount acceptable to Lender, or
(iii) such Account is otherwise acceptable in all respects to
Lender (subject to such lending formula with respect thereto as
Lender may determine);
(f) such Accounts do not consist of progress xxxxxxxx,
xxxx and hold invoices or retainage invoices, except as to xxxx and
hold invoices, if Lender shall have received an agreement in
writing from the account debtor, in form and substance reasonably
satisfactory to Lender, confirming the unconditional obligation of
the account debtor to take the goods related thereto and pay such
invoice;
(g) the account debtor with respect to such Accounts has
not asserted a counterclaim, defense or dispute and does not have,
and does not assert any right of setoff against such Accounts or
the Borrower;
3
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such
Accounts or reduce the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid
and perfected security interest of Lender and any goods giving rise
thereto are not, and were not at the time of the sale thereof,
subject to any liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee
of the account debtor with respect to such Accounts is an officer,
employee or agent of or affiliated with Borrower directly or
indirectly by virtue of family membership, ownership, control,
management or otherwise;
(k) the account debtors with respect to such Accounts are
not any foreign government, the United States of America, any
State, political subdivision, department, agency or instrumentality
thereof, unless, if the account debtor is the United States of
America, any State, political subdivision, department, agency or
instrumentality thereof, upon Lender's request, the Federal
Assignment of Claims Act of 1940, as amended or any similar State
or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) the Borrower is not aware of any proceedings or
actions which are threatened or pending against the account debtors
with respect to such Accounts which might result in any material
adverse change in any such account debtor's financial condition;
(m) such Accounts of a single account debtor or its
affiliates do not constitute more than twenty-five (25%) percent of
all otherwise Eligible Accounts at any one time (but the portion of
the Accounts not in excess of such percentage may be deemed
Eligible Accounts), except with respect to the Accounts of Xxxxxxx
Environmental Services, Inc. ("Xxxxxxx") after consummation of the
acquisition of Xxxxxxx Chem-Waste, Inc., a Delaware corporation
pursuant to the terms of that certain Stock Purchase Agreement,
dated as of February 6, 1997, among Rollins, Laidlaw, Inc., a
Canadian corporation, and Xxxxxxx Transportation, Inc., a Delaware
corporation, in which case such Accounts will not exceed, at
Lender s option, thirty-five percent (35%) of all otherwise
Eligible Accounts at any one time;
(n) such Accounts are not owed by an account debtor who
has Accounts unpaid more than ninety (90) days after the date of
the original invoice for them which constitute more than twenty-
five percent (25%) of the total Accounts of such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with
respect to such account debtors as determined in good faith by
Lender from time to time (but the portion of the Accounts not in
excess of such credit limit may still be deemed Eligible Accounts);
and
4
(p) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as determined by Lender.
General criteria for Eligible Accounts may be established and
revised from time to time by Lender in good faith. Any Accounts
which are not Eligible Accounts shall nevertheless be part of the
Collateral.
"Eligible Equipment" shall mean Equipment which is subject to a
first priority, valid and perfected security interest in favor of
Lender and which has otherwise been determined to be acceptable to
Lender in good faith. Any Equipment which is not Eligible
Equipment shall nevertheless be part of the Collateral.
"Environmental Laws" shall mean all Federal, State and local
laws, legislation, rules, regulations, codes, ordinances, licenses
and permits (including any conditions imposed therein) held by
Borrower, programs, orders, consent decrees, authorizations,
judicial or administrative decisions, injunctions or agreements
between Borrower and any governmental authority, (a) relating to
pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground
water, drinking water, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural
resource), or to human health or the environment, (b) relating to
the exposure to, or the use, storage, recycling, treatment,
generation, manufacture, processing, distribution, transportation,
handling, labeling, production, release or disposal, or threatened
release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term
"Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto) ("RCRA"), the Federal Solid Waste Disposal and
the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and
(iii) any common law or equitable doctrine that could impose
liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any
Hazardous Materials.
"Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, office equipment, computers and
computer hardware and software (whether owned or licensed),
vehicles, tools, parts, furniture, fixtures, goods, all
attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located, including, but not limited
to, dump trucks, vacuum tank trucks, tractors, trailers, vans and
container boxes.
"Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
"Financing Agreements" shall mean, collectively, this Agreement,
the Mortgages and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time
5
hereafter executed and/or delivered by Borrower or any Obligor in
connection with this Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set
forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial
Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied,
except that, for purposes of Section 9.13 hereof, GAAP shall be
determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the
audited financial statements delivered to Lender prior to the date
hereof.
"Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, as such terms are
defined in any applicable Environmental Laws, including, without
limitation, hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and
any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated
under any Environmental Law (including, without limitation any that
are or become classified as hazardous or toxic under any
Environmental Law).
"Information Certificate" shall mean the Information Certificate
of Borrower constituting Exhibit A hereto containing material
information with respect to Borrower, its business and assets
provided by or on behalf of Borrower to Lender in connection with
the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.
"Initial Excess Availability" shall mean the amount, as
determined in good faith by Lender, calculated at the time of the
initial loans under this Agreement, equal to: (a) the result of
the calculation set forth in Section 2.1 hereof; minus (b) the sum
of: (i) the amount of all then outstanding and unpaid Obligations,
plus (ii) the aggregate amount of all then outstanding and unpaid
trade payables of Borrower which are more than thirty (30) days
past due as of such time, plus (iii) the amount by which Borrower's
then outstanding checks exceed Borrower's then current balances of
the banks where such checks are drawn, plus (iv) all costs and
expenses payable by Borrower to Lender on the Closing Date of this
Agreement.
"Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired spare parts and supplies of whatsoever kind or
nature, wherever located.
6
"Judgment Reserve" shall mean an availability reserve in an
amount equal to any unpaid portion of the judgment against Borrower
in connection with that certain employee suit brought by Xxxxxxx X.
Xxxxxx against Borrower.
"Licensing Payment Reserve" shall mean an availability reserve
calculated on a monthly basis equal to the aggregate amount of
licensing payments payable by Borrower which will accrue during the
month of determination.
"Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from
time to time either (a) issued or opened by Lender for the account
of Borrower or any Obligor or (b) with respect to which Lender has
agreed to indemnify the issuer or guaranteed to the issuer the
performance by Borrower of its obligations to such issuer.
"Loans" shall mean the Revolving Loans and the Term Loan.
"Maximum Credit" shall mean the amount of Eleven Million Dollars
($11,000,000).
"Mortgages" shall mean, individually and collectively, each of
the following (as the same may now or hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced):
(a) the Deed of Trust with Security Agreement, Financing Statement
For Fixture Filing and Assignment of Rents, dated as of even date
herewith, executed by Borrower in favor of Lender, with respect to
the Real Property and related assets of Borrower located in
Chattanooga, Tennessee, and (b) the Mortgage with Security
Agreement, Financing Statement and Assignment of Rents, dated as of
even date herewith, executed by Borrower in favor of Lender, with
respect to the Real Property and related assets of Borrower located
in Oklahoma City, Oklahoma.
"Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included
in the amount thereof and (b) returns, discounts, claims, credits
and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed with respect thereto.
"Obligations" shall mean the then outstanding amount of any and
all Revolving Loans, the Term Loan, Letter of Credit Accommodations
and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Lender and/or its
affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal
term of this Agreement or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of
interest and other amounts which would accrue and become due but
for the commencement of such case), whether direct or indirect,
7
absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
"Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who
is the owner of any property which is security for the Obligations,
other than Borrower.
"Orderly Liquidation Value" shall mean, for Equipment, the value
which is attainable through an orderly liquidation of such
Equipment within a time frame of six (6) to twelve (12) months, the
balance being sold at a public auction, as determined by appraisals
in form, scope and methodology acceptable to Lender conducted at
Borrower's expense by an appraiser acceptable to Lender.
"Payment Account" shall have the meaning set forth in Section
6.3 hereof.
"Permanent Reserve" shall mean an availability reserve in an
amount equal to Three Hundred Thousand Dollars ($300,000).
"Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without
limitation, any corporation which elects subchapter S status under
the Internal Revenue Code of 1986, as amended), business trust,
unincorporated association, joint stock corporation, trust, joint
venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
"Prime Rate" shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its
office in Philadelphia, Pennsylvania, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
"Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, together with all buildings, structures,
and other improvements located thereon and all licenses, easements
and appurtenances relating thereto, wherever located, relating to
the real property and related assets of Borrower, as more
particularly described in the Mortgages, located in Oklahoma City,
Oklahoma and Chattanooga, Tennessee.
"Records" shall mean all of Borrower's present and future books
of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and
other data relating to the Collateral or any account debtor,
together with the tapes, disks, diskettes and other data and
software storage media and devices, file cabinets or containers in
or on which the foregoing are stored (including any rights of
Borrower with respect to the foregoing maintained with or by any
other person).
8
"Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis
(involving advances, repayments and readvances) as set forth in
Section 2.1 hereof.
"Term Loan" shall mean the term loan made by Lender to Borrower
as provided for in Section 2.3 hereof.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to Borrower
from time to time in amounts requested by Borrower up to the amount
equal to the sum of:
(i) eighty percent (80%) of the Net Amount of
Eligible Accounts, less
(ii) the sum of: (A) any Availability Reserves, (B)
the Permanent Reserve, (C) the Judgment Reserve, and (D) the
Licensing Payment Reserve.
(b) Lender may, in its good faith discretion, from time to
time, reduce the lending formula with respect to Eligible Accounts
to the extent that Lender determines in good faith that: (A) the
dilution with respect to the Accounts for any period (based on the
ratio of (1) the aggregate amount of reductions in Accounts other
than as a result of payments in cash to (2) the aggregate amount of
total sales) has increased in any material respect or may be
reasonably anticipated to increase in any material respect above
historical levels, or (B) the general creditworthiness of account
debtors has materially declined as determined by Lender in good
faith. In determining whether to reduce the lending formula(s),
Lender may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts or in
establishing Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding at
any time shall not exceed the Maximum Credit. In the event that the
outstanding amount of any component of the Loans, or the aggregate
amount of the outstanding Loans and Letter of Credit
Accommodations, exceed the amounts available under the lending
formulas, the sublimits for Letter of Credit Accommodations set
forth in Section 2.2(c) or the Maximum Credit, as applicable, such
event shall not limit, waive or otherwise affect any rights of
Lender in that circumstance or on any future occasions and Borrower
shall, upon demand by Lender, which may be made at any time or from
time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.
9
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions
contained herein, at the request of Borrower, Lender agrees to
provide or arrange for Letter of Credit Accommodations for the
account of Borrower containing terms and conditions acceptable to
Lender and the issuer thereof. Any payments made by Lender to any
issuer thereof and/or related parties in connection with the Letter
of Credit Accommodations shall constitute additional Revolving
Loans to Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged
by any bank or issuer in connection with the Letter of Credit
Accommodations, Borrower shall pay to Lender a letter of credit fee
at a rate equal to one and three quarters percent (1.75%) per annum
on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding
month. Such letter of credit fee shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and
the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations, the Revolving Loans available to Borrower (subject
to the Maximum Credit and any Availability Reserves) are equal to
or greater than an amount equal to one hundred (100%) percent of
the face amount thereof and all other commitments and obligations
made or incurred by Lender with respect thereto. Effective on the
issuance of each Letter of Credit Accommodation, the amount of
Revolving Loans which might otherwise be available to Borrower
shall be reduced by the applicable amount set forth in this Section
2.2(c).
(d) Except in Lender's discretion, the amount of all
outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Lender in
connection therewith, shall not at any one time exceed Five Hundred
Thousand Dollars ($500,000). At any time an Event of Default
exists or has occurred and is continuing, upon Lender's request,
Borrower will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to
Lender for the Letter of Credit Accommodations, and in either case,
the Revolving Loans otherwise available to Borrower shall not be
reduced as provided in Section 2.2(c) to the extent of such cash
collateral.
(e) Borrower shall indemnify and hold Lender harmless from
and against any and all losses, claims, damages, liabilities, costs
and expenses which Lender may suffer or incur in connection with
any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any
losses, claims, damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent with respect to any
Letter of Credit Accommodation. Borrower assumes all risks with
respect to the acts or omissions of the drawer under or beneficiary
of any Letter of Credit Accommodation and for such purposes the
10
drawer or beneficiary shall be deemed Borrower's agent. Borrower
assumes all risks for, and agrees to pay, all foreign, Federal,
State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents,
drafts or acceptances thereunder. Borrower hereby releases and
holds Lender harmless from and against any acts, waivers, errors,
delays or omissions, whether caused by Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination
or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed
to grant Borrower any right or authority to pledge the credit of
Lender in any manner. Lender shall have no liability of any kind
with respect to any Letter of Credit Accommodation provided by an
issuer other than Lender unless Lender has duly executed and
delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit
Accommodation. Borrower shall be bound by any interpretation made
in good faith by Lender, or any other issuer or correspondent under
or in connection with any Letter of Credit Accommodation or any
documents, drafts or acceptances thereunder, notwithstanding that
such interpretation may be inconsistent with any instructions of
Borrower. Lender shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of
Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any
instructions as to acceptance or rejection of any documents or
goods or (C) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders, and (ii) at all
times, (A) grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances, or
documents, and (B) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or
any letters of credit included in the Collateral. Lender may take
such actions either in its own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other
agreement in favor of any issuer or correspondent relating to any
Letter of Credit Accommodation, shall be deemed to have been
granted or undertaken by Borrower to Lender. Any duties or
obligations undertaken by Lender to any issuer or correspondent in
any application for any Letter of Credit Accommodation, or any
other agreement by Lender in favor of any issuer or correspondent
relating to any Letter of Credit Accommodation, shall be deemed to
have been undertaken by Borrower to Lender and to apply in all
respects to Borrower.
2.3 Term Loan. Lender is making a Term Loan to Borrower in the
original principal amount equal to the lesser of: (i) eighty
percent (80%) of the Orderly Liquidation Value of Eligible
Equipment; and (ii) Five Million Nine Hundred Sixty Thousand
Dollars ($5,960,000). The Term Loan is (a) evidenced by a Term
Promissory Note in such original principal amount duly executed and
delivered by Borrower to Lender concurrently herewith; (b) to be
11
repaid, together with interest and other amounts, in accordance
with this Agreement, the Term Promissory Note, and the other
Financing Agreements and (c) secured by all of the Collateral.
2.4 Availability Reserves. All Revolving Loans otherwise
available to Borrower pursuant to the lending formulas and subject
to the Maximum Credit and other applicable limits hereunder shall
be subject to Lender's continuing right to establish and revise
Availability Reserves.
2.5 Joint and Several Liability; Rights of Contribution.
(a) Each Borrower states and acknowledges that: (i)
pursuant to this Agreement, Borrowers desire to utilize their
borrowing potential on a consolidated basis to the same extent
possible if they were merged into a single corporate entity; (ii)
it has determined that it will benefit specifically and materially
from the advances of credit contemplated by this Agreement; (iii)
it is both a condition precedent to the obligations of Lender
hereunder and a desire of Borrowers that each Borrower execute and
deliver to Lender this Agreement; and (iv) Borrowers have requested
and bargained for the structure and terms of and security for the
advances contemplated by this Agreement.
(b) Each Borrower hereby irrevocably and unconditionally:
(i) agrees that it is jointly and severally liable to Lender for
the full and prompt payment of all the Obligations and the full and
prompt performance of all obligations of any Borrower under this
Agreement or any other Loan Document, notwithstanding anything
herein or in any other Loan Document specifying that a particular
Borrower is responsible for a given payment or performance; (ii)
agrees to fully and promptly perform all of its obligations
hereunder with respect to each advance of credit hereunder as if
such advance had been made directly to it; and (iii) agrees as a
primary obligation to indemnify Lender on demand for and against
any loss incurred by Lender as a result of any of the Obligations
of any of the Borrowers being or becoming void, voidable,
unenforceable or ineffective for any reason whatsoever, whether or
not known to Lender or any Person, the amount of such loss being
the amount which Lender would otherwise have been entitled to
recover from any Borrower.
(c) It is the intent of each Borrower that the
indebtedness, obligations and liability hereunder of no one of them
be subject to challenge on any basis. Accordingly, as of the date
hereof, the liability of each Borrower under this Section 2.5,
together with all of its other liabilities to all Persons as of the
date hereof and as of any other date on which a transfer is deemed
to occur by virtue of this Agreement, calculated in amount
sufficient to pay its probable net liabilities on its existing
Indebtedness as the same become absolute and matured ("Dated
Liabilities") is, and is to be, less than the amount of the
aggregate of a fair valuation of its property as of such
corresponding date ("Dated Assets"). To this end each Borrower
under this Section 2.5 (i) grants to and recognizes in the other
Borrower, ratably, rights of subrogation and contribution in the
amount, if any, by which the Dated Assets of such Borrower, but for
the aggregate of subrogation and contribution in its favor
recognized herein, would exceed the Dated Liabilities of such
Borrower or, as the case may be (ii) acknowledges receipt of and
12
recognizes its right to subrogation and contribution ratably from
the other Borrower in the amount, if any, by which the Dated
Liabilities of such Borrower, but for the aggregate of subrogation
and contribution in its favor recognized herein, would exceed the
Dated Assets of such Borrower under this Section 2.5. In
recognizing the value of the Dated Assets and the Dated
Liabilities, it is understood that Borrowers will recognize, to at
least the same extent of their aggregate recognition of liabilities
hereunder, their rights to subrogation and contribution hereunder.
It is a material objective of this Section 2.5 that each Borrower
recognizes rights to subrogation and contribution rather than be
deemed to be insolvent (or in contemplation thereof) by reason of
an arbitrary interpretation of its joint and several obligations
hereunder.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender interest: (i) on the
outstanding principal amount of the Revolving Loans at a rate of
one and one half percent (1.50%) per annum in excess of the Prime
Rate, and (ii) on the outstanding principal balance of the Term
Loans at a rate of one and three quarters percent (1.75%) per annum
in excess of the Prime Rate, except that Borrower shall pay to
Lender interest, at Lender's option, without notice, at the rate of
three and one half percent (3.50%) per annum in excess of the Prime
Rate with respect to the Receivable Loans, and three and three
quarters percent (3.75%) per annum in excess of the Prime Rate with
respect to the Term Loan: (x) on the non-contingent Obligations
for the period from and after the date of termination or non-
renewal hereof, or the date of the occurrence of an Event of
Default, and for so long as such Event of Default is continuing as
determined by Lender and until such time as Lender has received
full and final payment of all such Obligations (notwithstanding
entry of any judgment against Borrower) or such Event of Default is
waived by Lender, and (y) on the Revolving Loans at any time
outstanding in excess of the amounts available to Borrower under
Section 2 (whether or not such excess(es), arise or are made with
or without Lender's knowledge or consent and whether made before or
after an Event of Default). All interest accruing hereunder on and
after the occurrence of any of the events referred to in clauses
(x) and (y) above shall be payable on demand.
(b) Interest shall be payable by Borrower to Lender
monthly in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate shall
increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month
after any change in such Prime Rate is announced based on the Prime
Rate in effect on the last day of the month in which any such
change occurs. No agreements, conditions, provisions or
stipulations contained in this Agreement or any other instrument,
document or agreement between Borrower and Lender or default of
Borrower, or the exercise by Lender of the right to accelerate the
payment of the maturity of principal and interest, or to exercise
any option whatsoever contained in this Agreement or any other
Financing Agreement, or the arising of any contingency whatsoever,
shall entitle Lender to contract for, charge, or receive, in any
event, interest exceeding the maximum rate of interest permitted by
applicable state or federal law in effect from time to time
13
(hereinafter "Maximum Legal Rate"). In no event shall Borrower be
obligated to pay interest exceeding such Maximum Legal Rate and all
agreements, conditions or stipulations, if any, which may in any
event or contingency whatsoever operate to bind, obligate or compel
Borrower to pay a rate of interest exceeding the Maximum Legal
Rate, shall be without binding force or effect, at law or in
equity, to the extent only of the excess of interest over such
Maximum Legal Rate. In the event any interest is contracted for,
charged or received in excess of the Maximum Legal Rate ("Excess"),
Borrower acknowledges and stipulates that any such contract,
charge, or receipt shall be the result of an accident and bona fide
error, and that any Excess received by Lender shall be applied,
first, to reduce the principal then unpaid hereunder; second, to
reduce the other Obligations; and third, returned to Borrower, it
being the intention of the parties hereto not to enter at any time
into a usurious or otherwise illegal relationship. Borrower
recognizes that, with fluctuations in the Prime Rate and the
Maximum Legal Rate, such a result could inadvertently occur. By
the execution of this Agreement, Borrower covenants that (i) the
credit or return of any Excess shall constitute the acceptance by
Borrower of such Excess, and (ii) Borrower shall not seek or pursue
any other remedy, legal or equitable, against Lender, based in
whole or in part upon contracting for, charging or receiving of any
interest in excess of the maximum authorized or receiving of any
interest in excess of the maximum authorized by applicable law.
For the purpose of determining whether or not any Excess has been
contracted for, charged or received by Lender, all interest at any
time contracted for, charged or received by Lender in connection
with this Agreement shall be amortized, prorated, allocated and
spread in equal parts during the entire term of this Agreement.
3.2 Closing Fee. Borrower shall pay to Lender as a closing fee
the amount of One Hundred Sixty-Five Thousand Dollars ($165,000),
which shall be fully earned as of and payable on the date hereof.
3.3 Servicing Fee. Borrower shall pay to Lender quarterly a
servicing fee in an amount equal to Three Thousand Dollars ($3,000)
in respect of Lender's services for each quarter (or part thereof)
while this Agreement remains in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the
first day of each quarter hereafter.
3.4 Commitment Fee. Borrower shall pay to Lender monthly a
commitment fee at a rate equal to one half of one percent (.50%)
percent per annum calculated upon the amount by which the Maximum
Credit less the outstanding amount of the Term Loan exceeds the
average daily principal balance of the outstanding Revolving Loans
and Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in effect
and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each
month in arrears.
14
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to
Lender making the initial Loans and providing the initial Letter of
Credit Accommodations hereunder:
(a) Lender shall have received evidence, in form and
substance satisfactory to Lender, that Lender has valid perfected
and first priority security interests in and liens upon the
Collateral and any other property which is intended to be security
for the Obligations or the liability of any Obligor in respect
thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(b) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other
documents as Lender may request to evidence and effectuate the
termination by certain existing lenders to Borrower of their
respective financing arrangements with Borrower and the termination
and release by them, as the case may be, of any interest in and to
any assets and properties of Borrower, duly authorized, executed
and delivered by each of them, including, but not limited to, (i)
Uniform Commercial Code termination statements for all Uniform
Commercial Code financing statements previously filed by any of
them or their predecessors, as secured party and Borrower, as
debtor and (ii) satisfactions and discharges of any mortgages,
deeds of trust or deeds to secure debt by Borrower in favor of such
existing lenders, in form acceptable for recording in the
appropriate government office, other than the Xxxxxxxx Mortgage;
(c) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements
shall be satisfactory in form and substance to Lender, and Lender
shall have received all information and copies of all documents,
including, without limitation, records of requisite corporate
action and proceedings which Lender may have requested in
connection therewith, such documents where requested by Lender or
its counsel to be certified by appropriate corporate officers or
governmental authorities;
(d) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of
Lender's latest field examination and no change or event shall have
occurred which would impair the ability of Borrower or any Obligor
to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Lender to enforce
the Obligations or realize upon the Collateral;
(e) Lender shall have completed a field review of the
Records and such other information with respect to the Collateral
as Lender may require to determine the amount of Revolving Loans
available to Borrower, the results of which shall be satisfactory
to Lender, not more than five (5) business days prior to the date
hereof;
(f) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and
other agreements from third persons which Lender may deem necessary
15
or desirable in order to permit, protect and perfect its security
interests in and liens upon the Collateral or to effectuate the
provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgments by
lessors, mortgagees and warehousemen of Lender's security interests
in the Collateral, waivers by such persons of any security
interests, liens or other claims by such persons to the Collateral
and agreements permitting Lender access to, and the right to remain
on, the premises to exercise its rights and remedies and otherwise
deal with the Collateral;
(g) Lender shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other
Financing Agreements, in form and substance satisfactory to Lender,
and certificates of insurance policies and/or endorsements naming
Lender as loss payee;
(h) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrower
with respect to the Financing Agreements and such other matters as
Lender may request;
(i) Lender shall have received, in form, scope and
methodology satisfactory to Lender, Phase I hazardous waste and
environmental audits, upon which Lender is expressly entitled to
rely, conducted by an independent environmental engineering firm at
Borrower's expense, of Borrower's Real Property located in Oklahoma
City, Oklahoma and Chattanooga, Tennessee, confirming (i) Borrower
is in compliance with all material applicable Environmental Laws
with respect to the Real Property covered by such audit, and
(ii) there is no material actual liability of Borrower for any
remedial action with respect to any environmental conditions
applicable to the Real Property covered by such audit;
(j) Lender shall have received, in form and substance
satisfactory to Lender, valid and effective title insurance
commitments issued by companies and agents acceptable to Lender (i)
insuring the priority, amount and sufficiency of the Mortgages,
(ii) insuring against matters that are not disclosed by surveys and
(iii) containing any reasonable, standard and legally available
endorsements, assurances or affirmative coverage requested by
Lender for protection of its interests;
(k) Lender shall have received, in form and substance
satisfactory to Lender, (i) current agings and rollforwards of
Accounts through and including the date hereof, (ii) any and all
supporting documentation necessary to allow Lender to accurately
identify and verify Eligible Accounts at or before the date hereof,
and (iii) all such financial information, budgets, cash flows and
other information respecting the Collateral and the business of
Borrower as Lender may reasonably request;
(l) Lender shall have received a certificate executed by
the Vice President Finance of Borrower setting forth in reasonable
detail the sources and uses of the funds in the transactions
contemplated herein;
16
(m) Lender shall have received, in form and substance
satisfactory to Lender, a certificate from Borrower, regarding the
Equipment of Borrower, which includes a listing of all Equipment and
the locations of such Equipment, signed by the Vice President-
Finance, dated as of the date hereof;
(n) Borrower shall have entered into one or more lockbox
and/or blocked account agreements acceptable to Lender;
(o) Lender shall have received, in form and substance
satisfactory to Lender, a closing certificate signed by the President
and Vice President Finance of Borrower dated as of the date hereof,
stating that (i) the representations and warranties set forth in
Section 8 hereof are true and correct on and as of such date, (ii)
all exhibits and schedules in this Agreement and the Other Financing
Agreements are true, correct and complete, (iii) all covenants,
conditions and agreements in this Agreement required to be satisfied
on or before the date hereof have been complied with, and, (iv) no
Event of Default or event or condition which, with notice or passage
of time or both, would constitute an Event of Default, has occurred
or is continuing;
(p) the Initial Excess Availability as determined by
Lender, as of the date hereof, shall be not less than Four Hundred
Thousand Dollars ($400,000) after giving effect to (i) the initial
Loans made or to be made and Letter of Credit Accommodations issued
or to be issued in connection with the initial transactions
hereunder, and (ii) the payment of any and all reasonable out of
pocket fees and expenses incurred by Lender in connection with the
initial transactions hereunder;
(q) Xxxx X. Xxxxxxxx, Xx., an individual, shall have
executed and delivered a subordination agreement, which shall be in
form, scope and substance satisfactory to Lender in its sole
discretion;
(r) Lender shall have received an executed copy of the CIT
Note, and The CIT Group/Equipment Finance shall have executed and
delivered a subordination agreement in form and substance
satisfactory to Lender;
(s) the accounts payable and cash of Borrower shall be at
a level and in a condition acceptable to Lender;
(t) Lender shall have received written instructions from
Borrower directing the application of proceeds of the initial Loans
made pursuant to this Agreement;
(u) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed
and delivered to Lender, in form and substance satisfactory to
Lender; and
(v) such other documents and information as Lender may
reasonably request.
17
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of Credit Accommodations to Borrower, including
the initial Loans and Letter of Credit Accommodations and any future Loans
and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of the making of each such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto; and
(b) no Event of Default and no event or condition which, with notice or
passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such
Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Lender as security, the following
property and interests in property, whether now owned or hereafter acquired
or existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 All present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee,
choses in action and other claims and existing and future leasehold interests
in equipment, real estate and fixtures), chattel paper, documents,
instruments, letters of credit, bankers' acceptances and guaranties;
5.3 All present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Borrower now or hereafter held or
received by or in transit to Lender or its affiliates or at any other
depository or other institution from or for the account of Borrower, whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and
all present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
18
evidencing, Accounts or other Collateral, including, without limitation,
returned, repossessed and reclaimed goods, and (d) deposits by and property
of account debtors or other persons securing the obligations of account
debtors;
5.4 Inventory;
5.5 Equipment;
5.6 Real Property located in Oklahoma City, Oklahoma and Chattanooga,
Tennessee;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties
for loss or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments made by or on behalf of Borrower and (c) all other appropriate
debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in
the loan account(s) shall be made in accordance with Lender's customary
practices as in effect from time to time.
6.2 Statements. Lender shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s) maintained by
Lender for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall
be subject to subsequent adjustment by Lender but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrower
and conclusively binding upon Borrower as an account stated except to the
extent that Lender receives a written notice from Borrower of any specific
exceptions of Borrower thereto within thirty (30) days after the date such
statement has been mailed by Lender. Until such time as Lender shall have
rendered to Borrower a written statement as provided above, the balance in
Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Lender by Borrower.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, with such banks as are acceptable to
Lender into which Borrower shall promptly deposit and direct its account
debtors to directly remit all payments on Accounts and all payments
constituting proceeds of Inventory or other Collateral in the identical form
19
in which such payments are made, whether by cash, check or other manner. The
banks at which the Blocked Accounts are established shall enter into an
agreement, in form and substance satisfactory to Lender, providing that all
items received or deposited in the Blocked Accounts are the property of
Lender, that the depository bank has no lien upon, or right to setoff
against, the Blocked Accounts, the items received for deposit therein, or
the funds from time to time on deposit therein and that the depository bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis, all funds received or deposited into the Blocked Accounts to such bank
account of Lender as Lender may from time to time designate for such purpose
("Payment Account"). Borrower agrees that all payments made to such Blocked
Accounts or other funds received and collected by Lender, whether on the
Accounts or as proceeds of Inventory or other Collateral or otherwise shall
be the property of Lender.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) business day following the date of
receipt of immediately available funds by Lender in the Payment Account.
For purposes of calculating the amount of the Revolving Loans available to
Borrower such payments will be applied (conditional upon final collection) to
the Obligations on the business day of receipt by Lender in the Payment
Account, if such payments are received within sufficient time (in accordance
with Lender's usual and customary practices as in effect from time to time)
to credit Borrower's loan account on such day, and if not, then on the next
business day.
(c) Borrower and all of its affiliates, subsidiaries, employees or
agents shall, acting as trustee for Lender, receive, as the property of
Lender, any monies, checks, notes, drafts or any other payment relating to
and/or proceeds of Accounts or other Collateral which come into their
possession or under their control and immediately upon receipt thereof, shall
deposit or cause the same to be deposited in the Blocked Accounts, or remit
the same or cause the same to be remitted, in kind, to Lender. In no event
shall the same be commingled with Borrower's own funds. Borrower agrees to
reimburse Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person in connection with
such Blocked Accounts. The obligation of Borrower to reimburse Lender for
such amounts pursuant to this Section 6.3 shall survive the termination or
non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time
to time. Lender may apply payments received or collected from Borrower or
for the account of Borrower (including, without limitation, the monetary
proceeds of collections or of realization upon any Collateral) to such of
the Obligations, whether or not then due, in such order and manner as
Lender determines. At Lender's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of
Borrower. Borrower shall make all payments to Lender on the Obligations
free and clear of, and without deduction or withholding for or on account
of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
20
fees, deductions, withholding, restrictions or conditions of any kind. If
after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force
and effect as if such payment or proceeds had not been received by Lender.
Borrower shall be liable to pay to Lender, and does hereby indemnify and
hold Lender harmless for the amount of any payments or proceeds surrendered
or returned by Lender pursuant to this Section 6.4. This Section 6.4 shall
remain effective notwithstanding any contrary action which may be taken by
Lender in reliance upon such payment or proceeds. This Section 6.4 shall
survive the payment of the Obligations and the termination or non-renewal of
this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the Loans
and provide the Letter of Credit Accommodations based upon telephonic or
other instructions received from anyone purporting to be an officer of
Borrower or other authorized person or, at the discretion of Lender, if
such Loans are necessary to satisfy any Obligations. All requests for Loans
or Letter of Credit Accommodations hereunder shall specify the date on which
the requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a business day) and the amount of the
requested Loan. Requests received after 11:00 a.m. Central Time on any day
shall be deemed to have been made as of the opening of business on the
immediately following business day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have
been made to, and at the request of and for the benefit of, Borrower when
deposited to the credit of Borrower or otherwise disbursed or established
in accordance with the instructions of Borrower or in accordance with
the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrower shall use the initial proceeds of the Loans
provided by Lender to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower
to Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter
of Credit Accommodations provided by Lender to Borrower pursuant to the
provisions hereof shall be used by Borrower only for general operating,
working capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin security or
for the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the Loans to be considered a "purpose credit" within
the meaning of Regulation G of the Board of Governors of the Federal Reserve
System, as amended.
21
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a regular basis
as required by Lender, a schedule of Accounts; (b) on a monthly basis or more
frequently as Lender may request, (i) roll forward inventory reports, and
(ii) agings of accounts payable, (c) upon Lender's request, (i) copies of
customer statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of shipping and
delivery documents, and (iii) copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by Borrower;
(d) agings of accounts receivable on a monthly basis or more frequently
as Lender may request; and (e) such other reports as to the Collateral as
Lender shall reasonably request from time to time. If any of Borrower's
records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Lender and to follow
Lender's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrower shall notify Lender promptly of: (i) any material delay
in Borrower's performance of any of its obligations to any account debtor or
the assertion of any material claims, offsets, defenses or counterclaims by
any account debtor, or any material disputes with account debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information relating to the financial condition of any account debtor that
the Borrower becomes aware of, and (iii) any event or circumstance which,
to Borrower's knowledge would cause Lender to consider any then existing
Accounts as no longer constituting Eligible Accounts. No credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted
to any account debtor without Lender's consent, except in the ordinary course
of Borrower's business in accordance with practices and policies previously
disclosed in writing to Lender. So long as no Event of Default exists or
has occurred and is continuing, Borrower shall settle, adjust or compromise
any claim, offset, counterclaim or dispute with any account debtor. At any
time that an Event of Default exists or has occurred and is continuing,
Lender shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors
or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement,
(iii) no credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor except as reported to
Lender in accordance with this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of Borrower's
business in accordance with practices and policies previously disclosed to
Lender, (iv) there shall be no setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto except
as reported to Lender in accordance with the terms of this Agreement, and
22
(v) none of the transactions giving rise thereto will violate any applicable
State or Federal laws or regulations, all documentation relating thereto
will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(c) Lender shall have the right at any time or times, in Lender's name
or in the name of a nominee of Lender, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(d) Borrower shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Borrower, all
chattel paper and instruments which Borrower now owns or may at any time
acquire immediately upon Borrower's receipt thereof, except as Lender may
otherwise agree.
(e) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors
that the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any
duty to do so, and Lender shall not be liable for its failure to collect
or enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iv) take whatever other action Lender
may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is continuing,
at Lender's request, all invoices and statements sent to any account debtor
shall state that the Accounts and such other obligations have been assigned
to Lender and are payable directly and only to Lender and Borrower shall
deliver to Lender such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts
as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory owned by Borrower:
(a) Borrower shall at all times maintain inventory records reasonably
satisfactory to Lender, keeping correct and accurate records of Inventory,
Borrower's cost therefor and daily withdrawals therefrom and additions
thereto; (b) Borrower shall conduct a physical count of the Inventory at
least once each year, but at any time or times as Lender may request on or
after an Event of Default, and promptly following such physical inventory shall
supply Lender with a report in the form and with such specificity as may be
reasonably satisfactory to Lender concerning such physical count; (c)
Borrower shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Lender, except for sales
of Inventory in the ordinary course of Borrower's business, the use and
consumption of such Inventory in the ordinary maintenance of Borrower's
Equipment constituting motor vehicles, and except to move Inventory directly
from one location set forth or permitted herein to another such location; (d)
23
Borrower shall use, store and maintain the Inventory, with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including, but not limited to, the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and
all rules, regulations and orders related thereto); (e) Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; and (f) Borrower shall keep the
Inventory in good and useable condition.
7.4 Equipment Covenants. With respect to the Equipment: (a) Borrower
shall, at its expense, no more than once in any twelve (12) month period, but
at any time or times as Lender may request on or after the occurrence and
continuance of an Event of Default, deliver or cause to be delivered to
Lender written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender;
(b) Borrower shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted); (c) Borrower shall
use the Equipment with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with all
applicable laws; (d) the Equipment is and shall be used in Borrower's
business and not for personal, family, household or farming use; (e)
Borrower shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the business of Borrower or to move
Equipment directly from one location set forth or permitted herein to another
such location and except for the movement or location of motor vehicles or
rolloff boxes used by or for the benefit of Borrower in the ordinary course
of business; (f) the Equipment is now and shall remain personal property
and Borrower shall not permit any of the Equipment to be or become a part of
or affixed to real property; (g) Borrower assumes all responsibility and
liability arising from the use of the Equipment; and (h) Borrower shall
provide Lender, within one hundred twenty (120) days after the initial
funding of the Loans hereunder, all certificates of title with respect to
motor vehicles constituting part of the Equipment, noting Lender's lien on
the face of such certificates of title and satisfying such other conditions
as may be required for perfection of Lender's security interests in such
Equipment.
7.5 Power of Attorney. Borrower hereby irrevocably designates and appoints
Lender (and all persons designated by Lender) as Borrower's true and lawful
attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name, to:
(a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and
is continuing (i) demand payment on Accounts or other proceeds of Inventory
or other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect
any Account or other Collateral, (iv) sell or assign any Account upon such
terms, for such amount and at such time or times as the Lender deems
advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi)
discharge and release any Account, (vii) prepare, file and sign Borrower's
name on any proof of claim in bankruptcy or other similar document against
an account debtor, (viii) notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Lender,
and open and dispose of all mail addressed to Borrower, and (ix) do all
24
acts and things which are reasonably necessary, in Lender's determination,
to fulfill Borrower's obligations under this Agreement and the other
Financing Agreements, and (b) at any time to (i) take control in any manner
of any item of payment to Borrower in connection with an Account, or
proceeds thereof, (ii) have access to any lockbox or postal box into which
Borrower's mail is deposited, (iii) endorse Borrower's name upon any items
of payment or proceeds thereof relating to an Account and deposit the same
in the Lender's account for application to the Obligations, (iv) endorse
Borrower's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (v) sign Borrower's name on
any verification of Accounts and notices thereof to account debtors and
(vi) execute in Borrower's name and file any UCC financing statements or
amendments thereto relating to the Collateral. Borrower hereby releases
Lender and its officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, including, without limitation,
as a result of Lender's own negligence, except as a result of Lender's own
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Lender may, at its option, (a) cure any default by
Borrower under any agreement with a third party or pay or bond on appeal
any judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (c) pay any amount, incur any expense or
perform any act which, in Lender's judgment, is necessary or appropriate
to preserve, protect, insure or maintain the Collateral and the rights of
Lender with respect thereto. Lender may add any amounts so expended to
the Obligations and charge Borrower's account therefor, such amounts
to be repayable by Borrower on demand. Lender shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing
so, be deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and
to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Lender, at
the cost and expense of Borrower, Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours, or at
any time if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral
and all of Borrower's books and records, including, without limitation, the
Records, and Borrower shall promptly furnish to Lender such copies of such
books and records or extracts therefrom as Lender may request, and use
during normal business hours such of Borrower's personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing
and if an Event of Default exists or has occurred and is continuing for the
collection of Accounts and realization of other Collateral.
25
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which shall
survive the execution and delivery of this Agreement), the truth and accuracy
of which are a continuing condition of the making of Loans and providing
Letter of Credit Accommodations by Lender to Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower is a
corporation duly organized and in good standing under the laws of its state
of incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of
the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure
to so qualify would not have a material adverse effect on Borrower's
financial condition, results of operation or business, on a consolidated
basis, or the rights of Lender in or to any of the Collateral. The
execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are all
within Borrower's corporate powers, have been duly authorized and are not
in contravention of law or the terms of Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any
indenture, agreement or undertaking to which Borrower is a party or by
which Borrower or its property are bound. This Agreement and the other
Financing Agreements constitute legal, valid and binding obligations of
Borrower enforceable in accordance with their respective terms. Borrower
does not have any subsidiaries except as set forth on the Information
Certificate.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower which have been or may hereafter be delivered
by Borrower to Lender have been prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of Borrower as
at the dates and for the periods set forth therein. Except as disclosed
in any interim financial statements furnished by Borrower to Lender prior to
the date of this Agreement, there has been no material adverse change in the
assets, liabilities, properties and financial condition of Borrower, on a
consolidated basis, since the date of the most recent audited financial
statements furnished by Borrower to Lender prior to the date of this
Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of Borrower and Borrower's Records concerning Accounts are located
only at the address set forth below and its only other places of business
and the only other locations of Collateral, if any, are the addresses set
forth in the Information Certificate, subject to the right of Borrower to
establish new locations in accordance with Section 9.2 below, except for
motor vehicles and rolloff boxes that constitute Collateral. The
Information Certificate correctly identifies any of such locations
which are not owned by Borrower and sets forth the owners and/or operators
thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated
on Schedule 8.4 hereto and the other liens permitted under Section 9.8
26
hereof. Borrower has good and marketable title to all of its properties
and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Lender and
such others as are specifically listed on Schedule 8.4 hereto or permitted
under Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in
writing to Lender). All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Borrower has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are
being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower and with respect to which adequate reserves have
been set aside on its books. Adequate provision has been made for the
payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificate, there
is no present investigation by any governmental agency pending, or to
Borrower's knowledge threatened, against or affecting Borrower, its assets
or business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of Borrower's knowledge threatened, against Borrower
or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against
Borrower would result in any material adverse change in the assets,
business or prospects of Borrower, on a consolidated basis, or would
materially impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a
party or of Lender to enforce any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. Except as set
forth in Schedules 8.7 or 8.10 hereto, Borrower is not in default in any
material respect under, or in violation in any material respect of any of
the terms of, any agreement, contract, instrument, lease or other commitment
to which it is a party or by which it or any of its assets are bound, which
default would have a material adverse effect on Borrower on a consolidated
basis, andBorrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local governmental
authority, in which the failure to comply would have a material adverse
effect on Borrower on a consolidated basis.
8.8 Accuracy and Completeness of Information. All information furnished
by or on behalf of Borrower in writing to Lender in connection with this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all
information on the Information Certificate is true and correct in all
material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make
such information not misleading. No event or circumstance has occurred
which has had or could reasonably be expected to have a material adverse
27
affect on the business, assets or prospects of Borrower on a consolidated
basis, which has not been fully and accurately disclosed to Lender in
writing or in this Agreement.
8.9 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to
have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to
have been relied on by Lender regardless of any investigation made or
information possessed by Lender. The representations and warranties set
forth herein shall be cumulative and in addition to any other representations
or warranties which Borrower shall now or hereafter give, or cause to be
given, to Lender.
8.10 Environmental Compliance.
(a) Except as set forth on Schedule 8.10 hereto, Borrower has not
generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any
applicable Environmental Law or any license, permit, certificate, approval
or similar authorization thereunder and the operations of Borrower complies
in all material respects with all Environmental Laws and all licenses,
permits, certificates, approvals and similar authorizations thereunder, the
failure of which would have a material adverse effect on Borrower on a
consolidated basis.
(b) Except as set forth on Schedule 8.10 hereto, there has been no
pending, or to the best of Borrower's knowledge threatened, investigation,
proceeding, complaint, order, directive, claim, citation or notice by any
governmental authority, with respect to any non-compliance with or violation
of the requirements of any Environmental Law by Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental
matter, which would have a material adverse effect on the Borrower on a
consolidated basis or its business, operations or assets on a consolidated
basis.
(c) Except as set forth on Schedule 8.10 hereto, Borrower, on a
consolidated basis, has no actual material liability in connection with a
release, spill or discharge, threatened or actual, of any Hazardous Materials
or the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials.
(d) Except as set forth on Schedule 8.10 hereto, Borrower has all
licenses, permits, certificates, approvals or similar authorizations required
to be obtained or filed in connection with the operations of Borrower under
any Environmental Law in which the failure to have or obtain would have a
material adverse effect on Borrower on a consolidated basis and all of such
licenses, permits, certificates, approvals or similar authorizations are
valid and in full force and effect.
28
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Borrower shall at all times preserve, renew
and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on the business as presently or proposed
to be conducted in which the failure to maintain would have a material
adverse effect on Borrower on a consolidated basis. Borrower shall give
Lender thirty (30) days prior written notice of any proposed change in its
corporate name, which notice shall set forth the new name and Borrower
shall deliver to Lender a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation of Borrower as soon
as it is available.
9.2 New Collateral Locations. Borrower may open any new location within
the continental United States provided Borrower gives Lender thirty (30) days
prior written notice of the intended opening of any such new location and
executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including, without limitation, UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Except as set forth on Schedules 8.7, 8.10 and 9.3 hereto, Borrower
shall, at all times, comply in all material respects with all laws, rules,
regulations, licenses, permits, approvals and orders applicable to it and
duly observe all requirements of any Federal, State or local governmental
authority, including the Employee Retirement Security Act of 1974, as
amended, the Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, and all statutes, rules,
regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws, in which the failure to do so would have a material adverse effect on
the Borrower on a consolidated basis.
(b) Borrower shall establish and maintain, at its expense, an environmental
management system to assure and monitor its continued compliance with all
Environmental Laws in all of its operations in accordance with the require-
ments of all applicable Environmental Laws and laws and regulations of the
U.S. Department of Transportation, which system shall include written
policies and procedures, as applicable, best environmental management
practices, and environmental training for all relevant employees, and shall,
only upon Lender s reasonable request, cause an annual written operations
compliance review to be conducted by an experienced outside environmental
consultant familiar with the requirements of Environmental Laws. At
Lender's request, copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be
29
promptly furnished, or caused to be furnished, by Borrower to Lender.
Borrower shall take prompt and appropriate action to respond to any non-
compliance with any of the Environmental Laws and shall regularly report
to Lender on such response.
(c) Borrower shall give both oral and written notice to Lender as soon
as possible upon Borrower's receipt of any notice of, or Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any material amount of Hazardous
Material or (ii) any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any material non-compliance
with or violation of any material amount of Environmental Law by Borrower or
(B) the release, spill or discharge, threatened or actual, of any Hazardous
Material or (C) any other environmental, health or safety matter, which
materially and adversely affects Borrower on a consolidated basis or its
business, operations or assets on a consolidated basis.
(d) Without limiting the generality of the foregoing, whenever Lender
reasonably determines that there is a material non-compliance, or any
condition which requires any action by or on behalf of Borrower in order to
avoid any material non-compliance, with any Environmental Law, of which non-
compliance would result in a material adverse effect on the Borrower on a
consolidated basis, Borrower shall, at Lender's request and Borrower's
expense: (i) cause an independent environmental engineer acceptable to Lender
to conduct such tests of the site where Borrower's non-compliance or alleged
non-compliance with such Environmental Laws has occurred as to such non-
compliance and prepare and deliver to Lender a report as to such non-
compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(e) Borrower shall indemnify and hold harmless Lender, its directors,
officers, employees, agents, invitees, representatives, successors and
assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys' fees and legal expenses) directly
or indirectly arising out of or attributable to Borrower's use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the costs
of any required or necessary repair, cleanup or other remedial work with
respect to any property of Borrower and the preparation and implementation
of any closure, remedial or other required plans. All representations,
warranties, covenants and indemnifications in this Section 9.3 shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
9.4 Payment of Taxes and Claims. Borrower shall duly pay and discharge
all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower and with respect to which adequate reserves
have been set aside on its books. Borrower shall be liable for any tax or
penalties imposed on Lender as a result of the financing arrangements
provided for herein and Borrower agrees to indemnify and hold Lender harmless
30
with respect to the foregoing, and to repay to Lender on demand the amount
thereof, and until paid by Borrower such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrower to pay any income or franchise taxes
attributable to the income of Lender from any amounts charged or paid
hereunder to Lender. The foregoing indemnity shall survive the payment of
the Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain with financially
sound and reputable insurers insurance with respect to the Collateral against
loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of established
reputation engaged in the same or similar businesses and similarly situated,
except that Borrower self insures all loss due to collision on its motor
vehicles. Said policies of insurance shall be satisfactory to Lender as to
form, amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance,
and, if Borrower fails to do so, Lender is authorized, but not required, to
obtain such insurance at the expense of Borrower. All policies shall provide
for at least thirty (30) days prior written notice to Lender of any
cancellation or reduction of coverage and that Lender may act as attorney
for Borrower in obtaining, and at any time an Event of Default exists or
has occurred and is continuing, adjusting, settling, amending and canceling
such insurance. Borrower shall cause Lender to be named as a loss payee, as
its interest may appear, and an additional insured (but without any liability
for any premiums) under such insurance policies and Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies
in form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be
payable to Lender as its interests may appear and further specify that Lender
shall be paid regardless of any act or omission by Borrower or any of its
affiliates. At its option, prior to the occurrence and continuance of an
Event of Default, any insurance proceeds received by Lender at any time shall
be applied to the cost of repairs or replacement of Collateral. After the
occurrence and continuance of an Event of Default, any insurance proceeds
received by the Lender at any time shall be applied to payment of the
Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower and its subsidiaries
(if any) in accordance with GAAP and Borrower shall furnish or cause to be
furnished to Lender: (i) within thirty (30) days after the end of each
fiscal month, monthly unaudited consolidated financial statements, and, if
Borrower has any subsidiaries, unaudited consolidating financial statements
(including in each case balance sheets, statements of income and loss and
statements of shareholders' equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of
Borrower and its subsidiaries as of the end of and through such fiscal
month and (ii) within one hundred five (105) days after the end of each
fiscal year, audited consolidated financial statements and, if Borrower
31
has any subsidiaries, audited consolidating financial statements of
Borrower and its subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the
results of the operations of Borrower and its subsidiaries as of the end
of and for such fiscal year, together with the opinion of independent
certified public accountants, which accountants shall be an independent
accounting firm selected by Borrower and reasonably acceptable to Lender,
that such financial statements have been prepared in accordance with GAAP,
and present fairly the results of operations and financial condition of
Borrower and its subsidiaries as of the end of and for the fiscal year
then ended.
(b) Borrower shall promptly notify Lender in writing of the details of
(i) any loss, damage, investigation, action, suit, proceeding or claim
relating to a material portion of the Collateral or any other property which
is security for the Obligations or which would result in any material adverse
change in Borrower's business, properties, assets, goodwill or financial
condition on a consolidated basis, and (ii) the occurrence of any Event of
Default or event which, with the passage of time or giving of notice or
both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which
Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Lender such
budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Lender, at
Borrower's expense, copies of the financial statements of Borrower and any
reports or management letters prepared by such accountants or auditors on
behalf of Borrower and to disclose to Lender such information as they may
have regarding the business of Borrower. Any documents, schedules,
invoices or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender one (1) year after the same are delivered to Lender,
except as otherwise designated by Borrower to Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
shall not, directly or indirectly, (a) merge into or with or consolidate
with any other Person or permit any other Person to merge into or with or
consolidate with it, or (b) sell, assign, lease, transfer, abandon or
otherwise dispose of any stock or indebtedness to any other Person or any
of its assets to any other Person (except for (i) sales of Inventory in
the ordinary course of business and (ii) the disposition of worn-out or
obsolete Equipment or Equipment no longer used in the business of
Borrower so long as (A) any proceeds are paid to Lender and (B) such
sales do not involve Equipment having an aggregate fair market value in
excess of Two Hundred Thousand Dollars ($200,000) for all such Equipment
32
disposed of in any fiscal year of Borrower), or (c) form or acquire any
subsidiaries, or (d) wind up, liquidate or dissolve or (e) agree to do
any of the foregoing, except that nothing contained herein shall limit or
prohibit Ametech from selling, transferring or assigning its capital stock
under any employee stock option plan or under the proposed Asset Purchase
Agreement to be entered into among Borrower, Xxxxxxxx Trucking Company,
Inc. and Xxx Xxxxxxxx.
9.8 Encumbrances. Borrower shall not create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except: (a) liens and
security interests of Lender; (b) liens securing the payment of taxes,
either not yet overdue or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to
Borrower and with respect to which adequate reserves have been set
aside on its books; (c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of Borrower's
business to the extent: (i) such liens secure indebtedness which is not
overdue or (ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost
and expense and at the sole risk of the insurer or being contested in good
faith by appropriate proceedings diligently pursued and available to
Borrower, in each case prior to the commencement of foreclosure or
other similar proceedings and with respect to which adequate reserves have
been set aside on its books; (d) zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real property which
do not interfere in any material respect with the use of such real
property or ordinary conduct of the business of Borrower as presently
conducted thereon or materially impair the value of the real property which
may be subject thereto; (e) purchase money security interests in Equipment
(including capital leases) and purchase money mortgages on real estate not
to exceed Twenty Thousand Dollars ($20,000) in the aggregate at any one
time outstanding so long as such security interests and mortgages do not
apply to any property of Borrower other than the Equipment or real estate
so acquired, and the indebtedness secured thereby does not exceed the cost
of the Equipment or real estate so acquired, as the case may be; (f) liens
and security interests of Xxxx X. Xxxxxxxx, Xx. under the Xxxxxxxx Mortgage,
which liens and security interests are, in all respects, subject and
subordinate in priority to the liens and security interests of Lender
pursuant to the subordination agreement between Lender and Xxxx X.
Xxxxxxxx, Xx., dated as of even date herewith; (g) the security interests
and liens set forth on Schedule 8.4 hereto; (h) liens or deposits under
workmen's compensation, unemployment insurance, Social Security and other
similar laws; (i) liens relating to obligations with respect to
surety, appeal bonds, performance bonds, bids, tenders and other
obligations of like nature, (j) mechanic, materialmen and other like liens
arising in the ordinary course of business securing obligations which are
not overdue or being contested in good faith by appropriate proceedings
and adequately reserved against; and (k) statutory liens in favor of
landlords.
9.9 Indebtedness. Borrower shall not incur, create, assume, become or
be liable in any manner with respect to, or permit to exist, any obligations
or indebtedness, except:
33
(a) the Obligations;
(b) trade obligations and normal accruals in the ordinary course of
business, or with respect to which Borrower is contesting in good faith the
amount or validity thereof by appropriate proceedings diligently pursued
and available to Borrower and with respect to which adequate reserves have
been set aside on its books;
(c) purchase money indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement;
(d) indebtedness of Borrower to Xxxx X. Xxxxxxxx, Xx., an individual,
evidenced by that certain Amended and Restated Promissory Note, dated as of
November 1, 1996, issued by Borrower payable to Xxxx X. Xxxxxxxx, Xx., an
individual, which indebtedness is subject and subordinate in right of payment
to the right of Lender to receive the prior final payment and satisfaction
in full of all of the Obligations; provided, that: (i) the principal
amount of such indebtedness shall not exceed One Hundred Ninety-Five Thousand
Dollars ($195,000), less the aggregate amount of all repayments, repurchases
or redemptions, whether optional or mandatory in respect thereof, plus
interest thereon at the rate provided for in such agreement or instrument
as in effect on the date hereof, (ii) Borrower shall not, directly or
indirectly, make any payments in respect of such indebtedness, including, but
not limited to, any prepayments or other non-mandatory payments, except
that until an Event of Default, or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have
occurred and be continuing, Borrower may make regularly scheduled payments of
interest in accordance with the terms of such agreement or instrument as in
effect on the date hereof, (ii) Borrower shall not, directly or indirectly,
(A) amend, modify, alter or change any terms of such indebtedness or any
agreement, document or instrument related thereto, or (B) redeem, retire,
defease, purchase or otherwise acquire such indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrower
shall furnish to Lender all notices, demands or other materials concerning
such indebtedness either received by Borrower or on its behalf, promptly
after receipt thereof, or sent by Borrower or on its behalf, concurrently
with the sending thereof, as the case may be;
(e) indebtedness of Borrower to The CIT Group/Equipment Finance,
evidenced by the CIT Note, which indebtedness is subject and subordinate
in right of payment to the right of Lender to receive the prior final
payment and satisfaction in full of all of the Obligations; provided, that:
(i) the principal amount of such indebtedness shall not exceed Two Hundred
Twenty-Five Dollars ($225,000), less the aggregate amount of all repayments,
repurchases or redemptions, whether optional or mandatory in respect thereof,
plus interest thereon at the rate provided for in such agreement or
instrument as in effect on the date hereof, (ii) the interest on such note
shall not begin to accrue until August 30, 1998, (iii) Borrower shall not,
directly or indirectly, make any payments in respect of such indebtedness,
including, but not limited to, any prepayments or other non-mandatory
payments, except that until an Event of Default, or event which with notice
or passage of time or both would constitute an Event of Default, shall exist
or have occurred and be continuing, Borrower may, beginning August 30, 1998,
34
make regularly scheduled payments of interest and principal in monthly
amounts not to exceed $10,000 in accordance with the terms of such agreement
or instrument as in effect on the date hereof; provided, that, after giving
effect to such payments Borrower shall have availability to borrow an
additional $600,000 under Section 2 hereof, (iv) Borrower shall not, directly
or indirectly, (A) amend, modify, alter or change any terms of such
indebtedness or any agreement, document or instrument related thereto, or
(B) redeem, retire, defease, purchase or otherwise acquire such indebtedness,
or set aside or otherwise deposit or invest any sums for such purpose, and
(v) Borrower shall furnish to Lender all notices, demands or other materials
concerning such indebtedness either received by Borrower or on its behalf,
promptly after receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
(f) indebtedness of Borrower as described in the Judgment Reserve;
(g) indebtedness resulting from a judgment (other than as described
in (e) above) rendered against the Borrower that is being appealed by the
Borrower in good faith and in a timely manner for which an adequate reserve
has been recorded in Borrower's books or which is fully covered by insurance;
(h) indebtedness set forth on Schedule 9.9 hereof; and
(i) other indebtedness not otherwise permitted in this Section 9.9
in an amount not to exceed One Hundred Thousand Dollars ($100,000) at any
one time.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not, directly
or indirectly, make any loans or advance money or property to any person,
or invest in (by capital contribution, dividend or otherwise) or purchase
or repurchase the stock or indebtedness or all or a substantial part of
the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any Person or agree to do any of
the foregoing, except: (a) the endorsement of instruments for collection or
deposit in the ordinary course of business; (b) investments in: (i) short-
term direct obligations of the United States Government, (ii) negotiable
certificates of deposit issued by any bank satisfactory to Lender, payable
to the order of the Borrower or to bearer and delivered to Lender, and
(iii) commercial paper rated A1 or P1; provided, that, as to any of the
foregoing, unless waived in writing by Lender, Borrower shall take such
actions as are deemed necessary by Lender to perfect the security interest
of Lender in such investments; (c) the guarantees set forth in the
Information Certificate; (d) loans, advances and investments between the
Borrowers subject to the restrictions of Section 9.12 hereof; and (e)
Borrower may make additional loans, advances or investments in and to
subsidiaries that are not Borrowers in an amount not to exceed Five
Thousand Dollars ($5,000) in the aggregate per annum. It is recognized
that Ametech and all of its subsidiaries (including, but not limited to,
ETS) file consolidated income tax returns and payroll tax returns and pay
such, if any, on a consolidated basis, and that such filings and payment of
taxes in connection therewith shall not be considered a loan, investment,
guarantee or capital contribution for purposes of this Section 9.10.
35
9.11 Dividends and Redemptions. Borrower shall not, directly or indirectly,
declare or pay any dividends on account of any shares of class of capital
stock of Borrower now or hereafter outstanding, or set aside or otherwise
deposit or invest any sums for such purpose, or redeem, retire, defease,
purchase or otherwise acquire any shares of any class of capital stock (or
set aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or
make any other distribution (by reduction of capital or otherwise) in
respect of any such shares or agree to do any of the foregoing, except
as set forth on Schedule 9.11 hereto.
9.12 Transactions with Affiliates. Borrower shall not enter into any
transaction for the purchase, sale or exchange of property or the rendering
of any service to or by any affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon
fair and reasonable terms no less favorable to the Borrower than Borrower
would obtain in a comparable arm's length transaction with an unaffiliated
person; provided, however, that nothing in this Section 9.12 shall limit or
restrict transactions between one Borrower and another Borrower so long as
such transactions do not exceed Five Thousand Dollars ($5,000) in the
aggregate in any one year.
9.13 Adjusted Net Worth. Borrower shall, at all times, maintain Adjusted
Net Worth of not less than the following:
Applicable Period Minimum Adjusted Net Worth
__________________ ___________________________
July 18, 1997 through
July 31, 1998 $2,900,000
August 1, 1998 and thereafter $3,200,000
9.14 Costs and Expenses. Borrower shall pay to Lender on demand all
reasonable out-of-pocket costs, expenses, filing fees and taxes paid or
payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense
of the Obligations, Lender's rights in the Collateral, this Agreement, the
other Financing Agreements and all other documents related hereto or
thereto, including any amendments, supplements or consents which may
hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including, but not limited to: (a) all costs
and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b) subject to
the terms of this Agreement, all costs, expenses and fees for title
insurance and other insurance premiums, environmental audits, surveys,
assessments, engineering reports and inspections, appraisal fees and search
fees; (c) costs and expenses of remitting loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Lender's customary charges and fees with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and expenses
36
of preserving and protecting the Collateral; (f) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing
the security interests and liens of Lender, selling or otherwise realizing
upon the Collateral, and otherwise enforcing the provisions of this Agreement
and the other Financing Agreements or defending any claims made or threatened
against Lender arising out of the transactions contemplated hereby and
thereby (including, without limitation, preparations for and consultations
concerning any such matters); (g) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Lender during the
course of periodic field examinations of the Collateral and Borrower's
operations, plus a per diem charge at the rate of Six Hundred Dollars ($600)
per person per day for Lender's examiners in the field and office; and (h)
the reasonable fees and disbursements of counsel (including legal assistants)
to Lender in connection with any of the foregoing.
9.15 After Acquired Real Property. If Borrower hereafter acquires any
title to the Real Property, fixtures or any other property that is of the
kind or nature described in the Mortgages and such Real Property, fixtures
or other property at any one location has a fair market value in an amount
equal to or greater than Fifty Thousand Dollars ($50,000) (or if an Event
of Default has occurred and is continuing, then regardless of the fair
market value of such assets), without limiting any other rights of Lender,
or duties or obligations of Borrower, upon Lender's request, Borrower shall
execute and deliver to Lender a mortgage, deed of trust or deed to secure
debt, as Lender may determine, in form and substance substantially similar
to the Mortgages and as to any provisions relating to specific state laws
satisfactory to Lender and in form appropriate for recording in the real
estate records of the jurisdiction in which such Real Property or other
property is located granting to Lender a first and only lien and mortgage
on and security interest in such Real Property, fixtures or other property
(except as Borrower would otherwise be permitted to incur hereunder or
under the Mortgages or as otherwise consented to in writing by Lender) and
such other agreements, documents and instruments as Lender may require in
connection therewith.
9.16 Further Assurances. At the request of Lender at any time and from time
to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary
or proper to evidence, perfect, maintain and enforce the security interests
and the priority thereof in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Financing
Agreements. Lender may at any time and from time to time request a
certificate from an officer of Borrower representing that all conditions
precedent to the making of Loans and providing Letter of Credit
Accommodations contained herein are satisfied. In the event of such request
by Lender, Lender may, at its option, cease to make any further Loans or
provide any further Letter of Credit Accommodations until Lender has
received such certificate and, in addition, Lender has determined that such
conditions are satisfied. Where permitted by law, Borrower hereby authorizes
Lender to execute and file one or more UCC financing statements signed only
by Lender.
37
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay when due any of the Obligations, (ii)
Borrower fails to perform any of the terms, covenants, conditions or
provisions contained in Section 9.6 of this Agreement and such failure to
perform is not cured to Lender s satisfaction within five (5) days after
the sooner to occur of Borrower s receipt of notice of such failure from
Lender or the date on which such failure becomes known to any officer of
Borrower, or (iii) Borrower fails to perform any of the other terms,
covenants, conditions or provisions contained in this Agreement or any of
the other Financing Agreements;
(b) any representation, warranty or statement of fact made by Borrower
to Lender in this Agreement, the other Financing Agreements or any other
agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect as of the
date when made or furnished;
(c) except as previously disclosed to Lender in this Agreement, any
judgment for the payment of money is rendered against Borrower in excess of
Twenty-Five Thousand Dollars ($25,000) in any one case or in excess of
Twenty-Five Thousand Dollars ($25,000) in the aggregate and shall remain
undischarged or unvacated for a period in excess of thirty (30) days
or execution shall at any time not be effectively stayed, or any judgment
other than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any of their assets which could
have a material adverse effect on Borrower on a consolidated basis;
(d) Borrower becomes insolvent (however defined or evidenced; provided,
however, that a Borrower shall not be deemed insolvent hereunder due to being
jointly and severally liable in connection with the Obligations), makes an
assignment for the benefit of creditors, makes or sends notice of a bulk
transfer or calls a meeting of its creditors or principal creditors;
(e) a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at law or in equity)
is filed against Borrower all or any part of its properties and such petition
or application is not dismissed within thirty (30) days after the date of its
filing or Borrower shall file any answer admitting or not contesting such
petition or application or indicates its consent to, acquiescence in or
approval of, any such action or proceeding or the relief requested is granted
sooner;
38
(f) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a
law or equity) is filed by Borrower for all or any part of its property; or
(g) any default by Borrower under any agreement, document or instrument
relating to any indebtedness for borrowed money owing to any person other than
Lender, or any capitalized lease obligations, contingent indebtedness in
connection with any guarantee, letter of credit, indemnity or similar type of
instrument in favor of any person other than Lender, in any case in an amount
in excess of Twenty-Five Thousand Dollars ($25,000), which default continues
for more than the applicable cure period, if any, with respect thereto, or any
default by Borrower, except such defaults pending as of the date of this
Agreement and disclosed in this Agreement or any Schedule or certificate
attached hereto, under any material contract, lease, license or other obligation
to any person other than Lender, which default continues for more than the
applicable cure period, if any, with respect thereto;
(h) any change in the controlling ownership of Borrower;
(i) the indictment or threatened indictment of Borrower under any
criminal statute, or commencement or threatened commencement of criminal or
civil proceedings against Borrower, pursuant to which statute or proceedings
the penalties or remedies sought or available include forfeiture of any
material amount of the property of Borrower constituting Collateral;
(j) there shall be a material adverse change in the business, assets
or prospects of Borrower on a consolidated basis after the date hereof; or
(k) there shall be an event of default under any of the other Financing
Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this Agree-
ment, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without
notice to or consent by Borrower or any Obligor, except as such notice or
consent is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Lender hereunder, under any of the
other Financing Agreements, the Uniform Commercial Code or other applicable
law, are cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions,
and shall include, without limitation, the right to apply to a court of
equity for an injunction to restrain a breach or threatened breach by
Borrower of this Agreement or any of the other Financing Agreements. Lender
may, at any time or times, proceed directly against Borrower or any Obligor
to collect the Obligations without prior recourse to the Collateral.
39
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of
any Event of Default described in Sections 10.1(e) and 10.1(f), all
Obligations shall automatically become immediately due and payable), (ii)
with or without judicial process or the aid or assistance of others, enter
upon any premises on or in which any of the Collateral may be located and
take possession of the Collateral or complete processing, manufacturing and
repair of all or any portion of the Collateral, (iii) require Borrower, at
Borrower's expense, to assemble and make available to Lender any part or all
of the Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or
in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose, (vi) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board,
at any office of Lender or elsewhere) at such prices or terms as Lender may
deem reasonable, for cash, upon credit or for future delivery, with the
Lender having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of Borrower, which right or equity of redemption is
hereby expressly waived and released by Borrower and/or (vii) terminate
this Agreement. If any of the Collateral is sold or leased by Lender upon
credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Lender.
If notice of disposition of Collateral is required by law, five (5) days
prior notice by Lender to Borrower designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable
notice thereof and Borrower waives any other notice. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of
any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition
of the Collateral to payment of the Obligations, in whole or in part and
in such order as Lender may elect, whether or not then due. Borrower shall
remain liable to Lender for the payment of any deficiency with interest at
the highest rate provided for herein and all costs and expenses of collection
or enforcement, including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice,
(i) cease making Loans or arranging for Letter of Credit Accommodations or
reduce the lending formulas or amounts of Revolving Loans and Letter of
Credit Accommodations available to Borrower and/or (ii) terminate any
provision of this Agreement providing for any future Loans or Letter of
Credit Accommodations to be made by Lender to Borrower and/or (iii)
terminate this Agreement.
40
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of Texas (without giving
effect to principles of conflicts of law).
(b) Borrower and Lender irrevocably consent and submit to the non-
exclusive jurisdiction of the State of Texas and the United States District
Court for the Northern District of Texas and waive any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements
or in any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Lender
shall have the right to bring any action or proceeding against Borrower or
its property in the courts of any other jurisdiction which Lender deems
necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the
U. S. mails, or, at Lender's option, by service upon Borrower in any other
manner provided under the rules of any such courts. Within thirty (30)
days after such service, Borrower shall appear in answer to such process,
failing which Borrower shall be deemed in default and judgment may
be entered by Lender against Borrower for the amount of the claim and other
relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
41
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT BORROWER OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
(e) LENDER SHALL NOT HAVE ANY LIABILITY TO BORROWER
(WHETHER IN TORT, CONTRACT, EQUITY OR OTHERWISE) FOR LOSSES
SUFFERED BY BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN
ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION HEREWITH, UNLESS IT IS DETERMINED BY A
FINAL AND NON-APPEALABLE JUDGMENT OR COURT ORDER BINDING ON
LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN ANY
SUCH LITIGATION, LENDER SHALL BE ENTITLED TO THE BENEFIT OF THE
REBUTTABLE PRESUMPTION THAT IT ACTED IN GOOD FAITH AND WITH THE
EXERCISE OF ORDINARY CARE IN THE PERFORMANCE BY IT OF THE TERMS
OF THIS AGREEMENT.
11.2 Waiver of Notices. Borrower hereby expressly waives demand, present-
ment, notice of intent to accelerate, notice of acceleration, protest and
notice of protest and notice of dishonor with respect to any and all
instruments and commercial paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations,
the Collateral and this Agreement, except such as are expressly provided
for herein. No notice to or demand on Borrower which Lender may elect to
give shall entitle Borrower to any other or further notice or demand in
the same, similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course
of conduct, but only by a written agreement signed by an authorized officer
of Lender. Lender shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers
and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be enforceable only to
the extent specifically set forth therein. A waiver by Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to
or waiver of any such right, power and/or remedy which Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom
or relating hereto or thereto.
42
11.5 INDEMNIFICATION. BORROWER SHALL INDEMNIFY AND HOLD
LENDER, AND ITS DIRECTORS, AGENTS, EMPLOYEES AND COUNSEL,
HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES, COSTS OR EXPENSES IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST ANY OF THEM IN CONNECTION WITH ANY LITIGATION,
INVESTIGATION, CLAIM OR PROCEEDING COMMENCED OR THREATENED
RELATED TO THE NEGOTIATION, PREPARATION, EXECUTION, DELIVERY,
ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF THIS AGREEMENT,
ANY OTHER FINANCING AGREEMENTS, OR ANY UNDERTAKING OR
PROCEEDING RELATED TO ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY ACT, OMISSION, EVENT OR TRANSACTION RELATED OR
ATTENDANT THERETO, INCLUDING, WITHOUT LIMITATION, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES, COSTS OR EXPENSES, CAUSED BY
THE LENDER AND LENDER'S DIRECTORS' AGENTS, EMPLOYEES AND
COUNSEL, AND FURTHER INCLUDING, WITHOUT LIMITATION, AMOUNTS PAID
IN SETTLEMENT, COURT COSTS, AND THE FEES AND EXPENSES OF COUNSEL,
EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART
OF LENDER OR ITS AGENTS OR AFFILIATES. TO THE EXTENT THAT THE
UNDERTAKING TO INDEMNIFY, PAY AND HOLD HARMLESS SET FORTH IN
THIS SECTION 11.5 MAY BE UNENFORCEABLE BECAUSE IT VIOLATES ANY
LAW OR PUBLIC POLICY, BORROWER SHALL PAY THE MAXIMUM PORTION
WHICH IT IS PERMITTED TO PAY UNDER APPLICABLE LAW TO LENDER IN
SATISFACTION OF INDEMNIFIED MATTERS UNDER THIS SECTION. THE
FOREGOING INDEMNITY SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE TERMINATION OR NON-RENEWAL OF THIS
AGREEMENT.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date two (2)
years from the date hereof (the "Renewal Date"), and from year to year
thereafter, unless sooner terminated pursuant to the terms hereof; provided,
that, Lender may, at its option, extend the Renewal Date to the date one
(1) year from the Renewal Date by giving Borrower notice at least sixty
(60) days prior to the second anniversary of this Agreement. Lender or
Borrower (subject to Lender's right to extend the Renewal Date as provided
above) may terminate this Agreement and the other Financing Agreements
effective on the Renewal Date or on the anniversary of the Renewal Date in
any year by giving to the other party at least sixty (60) days prior
written notice; provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrower shall pay to
Lender, in full, all outstanding and unpaid Obligations and shall furnish
43
cash collateral to Lender in such amounts as Lender determines are reasonably
necessary to secure Lender from loss, cost, damage or expense, including
reasonable attorneys' fees and legal expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment. Such cash collateral shall be remitted by wire
transfer in Federal funds to such bank account of Lender, as Lender may,
in its discretion, designate in writing to Borrower for such purpose.
Interest shall be due until and including the next business day, if the
amounts so paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Dallas, Texas time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge Borrower of its respective duties, obligations and
covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and Lender's
continuing security interest in the Collateral and the rights and remedies
of Lender hereunder, under the other Financing Agreements and applicable law,
shall remain in effect until all such Obligations have been fully and finally
discharged and paid.
(c) If for any reason this Agreement is terminated prior to the end of
the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's
lost profits as a result thereof, Borrower agrees to pay to Lender, upon
the effective date of such termination, an early termination fee in the
amount set forth below if such termination is effective in the period
indicated:
Amount Period
______ __________
(i) Four Percent (4%) of First twelve (12) month period
Maximum Credit following the Effective Date
(ii) Two Percent (2%) of Second twelve (12) month period
Maximum Credit following the Effective Date
(iii) One Percent (1%) of Third twelve (12) month period
Maximum following the Effective Date
if this Agreement is renewed
pursuant to Section 12.1(a).
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower
agrees that it is reasonable under the circumstances currently existing.
The early termination fee provided for in this Section 12.1 shall be
deemed included in the Obligations.
44
12.2 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower
at its chief executive office set forth below, or to such other address as
either party may designate by written notice to the other in accordance with
this provision, and (b) deemed to have been given or made: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt;
if by nationally recognized overnight courier service with instructions to
deliver the next business day, one (1) business day after sending; and
if by certified mail, return receipt requested, five (5) days after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be
construed and enforced only to such extent as shall be permitted by
applicable law.
12.4 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Lender, Borrower and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document
referred to herein or therein without the prior written consent of Lender.
Lender may, after notice to Borrower, assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and
further may assign, or sell participations in, all or any part of the Loans,
the Letter of Credit Accommodations or any other interest herein to another
financial institution or other person, in which event, the assignee or
participant shall have, to the extent of such assignment or participation,
the same rights and benefits as it would have if it were the Lender
hereunder, except as otherwise provided by the terms of such assignment or
participation.
12.5 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
12.6 NONAPPLICABILITY OF ARTICLE 5069-15.01 ET SEQ. BORROWER AND
LENDER HEREBY AGREE THAT, EXCEPT FOR SECTION 15.10(B) THEREOF, THE
PROVISIONS OF TEX. REV. CIV. STAT. XXX. ART. 5069-15.01 ET SEQ. (XXXXXX
1987) (REGULATING CERTAIN REVOLVING CREDIT LOANS AND REVOLVING
TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR ANY OF
THE OTHER FINANCING AGREEMENTS.
45
12.7 WAIVER OF CONSUMER RIGHTS. EACH BORROWER HEREBY WAIVES
ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER
PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE CODE, A
LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
CONSULTATION WITH AN ATTORNEY OF SUCH BORROWER'S OWN
SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. EACH
BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT SUCH
BORROWER (a) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION RELATIVE TO LENDER, AND (b) HAS BEEN REPRESENTED BY LEGAL
COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.
BORROWER HAS READ AND UNDERSTANDS
SECTION 12.7:
KW
________ (INITIALS OF
AUTHORIZED OFFICER OF AMETECH)
KW
_________ (INITIALS OF
AUTHORIZED OFFICER OF ETS)
12.8 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE
OTHER FINANCING AGREEMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
BORROWER AND LENDER EACH
READ AND UNDERSTAND THIS
SECTION 12.8:
KW
________________ (INITIALS OF AUTHORIZED OFFICER OF AMETECH)
KW
________________ (INITIALS OF AUTHORIZED OFFICER OF ETS)
GE
________________ (INITIALS OF AUTHORIZED OFFICER OF LENDER)
46
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be
duly executed as of the day and year first above written.
LENDER BORROWER
_______ ________
CONGRESS FINANCIAL CORPORATION AMETECH, INC.,
(SOUTHWEST) an Oklahoma corporation
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxxxx
__________________________ ______________________________
Name: Xxxx Xxxxxx Name: Xxxxx Xxxxxxxxxx
________________________ ____________________________
Title: V. P. Title: V. P. Finance
________________________ ___________________________
Address:
_______ ENVIRONMENTAL TRANSPORTATION
0000 Xxxx Xxxxxx, Xxxxx 0000 SERVICES, INC.,
Xxxxxx, Xxxxx 00000 an Oklahoma corporation
Attn: Loan Administrator
By: /s/ Xxxxx Xxxxxxxxxx
_____________________________
Name: Xxxxx Xxxxxxxxxx
___________________________
Title: V. P. Finance
___________________________
Chief Executive Office:
______________________
0000 X.X. 00xx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
47
