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EXHIBIT 10.13
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CREDIT AGREEMENT
among
ULTRAK, INC.,
Borrower
BANK ONE, TEXAS, N.A.,
Administrative Agent
and
CERTAIN LENDERS,
Lenders
FEBRUARY 16, 0000
[XXXX ONE LOGO]
$20,000,000 TERM LOAN
$30,000,000 REVOLVING FACILITY
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND TERMS.............................................................1
1.1 Definitions.......................................................................1
1.2 Time References..................................................................14
1.3 Other References.................................................................14
1.4 Accounting Principles............................................................15
SECTION 2. COMMITMENT.......................................................................15
2.1 Term Loan........................................................................15
2.2 Revolving Facility...............................................................15
2.3 Borrowing Procedure..............................................................15
2.4 Letters of Credit................................................................16
2.5 Borrowing Requests and LC Requests...............................................18
2.6 Termination......................................................................18
SECTION 3. TERMS OF PAYMENT.................................................................19
3.1 Notes and Payments...............................................................19
3.2 Interest and Principal Payments..................................................19
3.3 Interest Options.................................................................20
3.4 Quotation of Rates...............................................................20
3.5 Default Rate.....................................................................20
3.6 Interest Recapture...............................................................21
3.7 Interest Calculations............................................................21
3.8 Maximum Rate.....................................................................21
3.9 Interest Periods.................................................................22
3.10 Conversions......................................................................22
3.11 Order of Application.............................................................22
3.12 Sharing of Payments, Etc.........................................................22
3.13 Offset...........................................................................23
3.14 Booking Borrowings...............................................................23
3.15 Basis Unavailable or Inadequate for LIBOR Rate...................................23
3.16 Additional Costs.................................................................23
3.17 Change in Governmental Requirements..............................................24
3.18 Funding Loss.....................................................................25
3.19 Foreign Lenders, Participants, and Assignees.....................................25
SECTION 4. FEES.............................................................................25
4.1 Treatment of Fees................................................................25
4.2 Arrangement and Underwriting Fees................................................25
4.3 Unused Facility Fee..............................................................25
4.4 LC Fees..........................................................................26
4.5 Prepayment Fee...................................................................26
SECTION 5. SECURITY.........................................................................26
5.1 Guaranty.........................................................................26
5.2 Collateral.......................................................................26
5.3 Creation of Liens and Further Assurances.........................................27
5.4 Change in Tax Laws...............................................................27
5.5 Release of Collateral............................................................27
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SECTION 6. CONDITIONS PRECEDENT.............................................................27
6.1 Initial Advances.................................................................27
6.2 All Borrowings...................................................................29
SECTION 7. REPRESENTATIONS AND WARRANTIES...................................................30
7.1 Purpose and Regulation U.........................................................30
7.2 Corporate Existence, Good Standing, Authority and Locations......................30
7.3 Subsidiaries and Names...........................................................31
7.4 Authorization and Contravention..................................................31
7.5 Binding Effect...................................................................31
7.6 Financials.......................................................................31
7.7 Solvency.........................................................................31
7.8 Litigation.......................................................................31
7.9 Taxes............................................................................32
7.10 Environmental Matters............................................................32
7.11 Employee Plans...................................................................32
7.12 Properties; Liens................................................................32
7.13 Government Regulations...........................................................32
7.14 Transactions with Affiliates.....................................................32
7.15 Debt.............................................................................33
7.16 Leases...........................................................................33
7.17 Labor Matters....................................................................33
7.18 Intellectual Property............................................................33
7.19 Insurance........................................................................33
7.20 Year 2000 Issues.................................................................33
7.21 Full Disclosure..................................................................33
SECTION 8. AFFIRMATIVE COVENANTS............................................................33
8.1 Certain Items Furnished..........................................................34
8.2 Use of Credit....................................................................35
8.3 Books and Records................................................................35
8.4 Inspections......................................................................35
8.5 Taxes............................................................................35
8.6 Payment of Obligation............................................................35
8.7 Expenses.........................................................................36
8.8 Maintenance of Existence, Assets and Business....................................36
8.9 Insurance........................................................................36
8.10 Compliance with Governmental Requirements........................................36
8.11 Subsidiary Guaranties and Pledges................................................36
8.12 Indemnification..................................................................37
8.13 Post-Closing Covenants...........................................................38
SECTION 9. NEGATIVE COVENANTS...............................................................38
9.1 Payroll Taxes....................................................................38
9.2 Debt.............................................................................39
9.3 Liens............................................................................39
9.4 Employee Plans...................................................................40
9.5 Transactions with Affiliates.....................................................40
9.6 Compliance with Governmental Requirements and Documents..........................41
9.7 Investments......................................................................41
9.8 Distributions; Other Payments....................................................42
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9.9 Disposition of Assets............................................................42
9.10 Mergers, Consolidations, Dispositions and Dissolutions...........................42
9.11 Assignment.......................................................................43
9.12 Fiscal Year and Accounting Methods...............................................43
9.13 New Businesses...................................................................43
9.14 Government Regulations...........................................................43
9.15 Strict Compliance................................................................43
SECTION 10. FINANCIAL COVENANTS..............................................................43
10.1 Leverage Ratio...................................................................43
10.2 Fixed Charge Coverage Ratio......................................................43
10.3 Minimum Net Worth................................................................44
10.4 Capital Expenditures.............................................................44
10.5 Liquidity Ratio..................................................................44
10.6 Effect of Special Charges........................................................44
SECTION 11. EVENT OF DEFAULT.................................................................45
11.1 Payment of Obligation............................................................45
11.2 Covenants........................................................................45
11.3 Debtor Relief....................................................................45
11.4 Judgments and Attachments........................................................45
11.5 Government Action................................................................45
11.6 Misrepresentation................................................................45
11.7 Ownership of Other Companies.....................................................45
11.8 Change of Control of Borrower....................................................45
11.9 Change in Management.............................................................46
11.10 Other Funded Debt................................................................46
11.11 Hedging Agreements...............................................................46
11.12 Validity and Enforceability......................................................46
11.13 Material Agreement Default or Cancellation.......................................46
11.14 LCs..............................................................................47
SECTION 12. RIGHTS AND REMEDIES..............................................................47
12.1 Remedies Upon Event of Default...................................................47
12.2 Company Waivers..................................................................47
12.3 Performance by Administrative Agent..............................................47
12.4 Not in Control...................................................................48
12.5 Course of Dealing................................................................48
12.6 Cumulative Rights................................................................48
12.7 Application of Proceeds..........................................................48
12.8 Certain Proceedings..............................................................48
12.9 Expenditures by Administrative Agent or Lenders..................................49
12.10 Diminution in Value of Collateral................................................49
SECTION 13. ADMINISTRATIVE AGENT AND LENDERS.................................................49
13.1 Administrative Agent.............................................................49
13.2 Expenses.........................................................................50
13.3 Proportionate Absorption of Losses...............................................50
13.4 Delegation of Duties; Reliance...................................................51
13.5 Limitation of Administrative Agent's Liability...................................51
13.6 Event of Default.................................................................52
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13.7 Collateral Matters...............................................................52
13.8 Limitation of Liability..........................................................53
13.9 Relationship of Lenders..........................................................53
13.10 Benefits of Agreement............................................................53
SECTION 14. MISCELLANEOUS....................................................................53
14.1 Nonbusiness Days.................................................................53
14.2 Communications...................................................................53
14.3 Form and Number of Documents.....................................................53
14.4 Exceptions to Covenants..........................................................53
14.5 Survival.........................................................................54
14.6 Governing Governmental Requirements..............................................54
14.7 Invalid Provisions...............................................................54
14.8 Conflicts Between Credit Documents...............................................54
14.9 Discharge and Certain Reinstatement..............................................54
14.10 Amendments, Consents, Conflicts, and Waivers.....................................54
14.11 Multiple Counterparts............................................................55
14.12 Parties..........................................................................55
14.13 Venue, Service of Process, and Jury Trial........................................56
14.14 Entirety.........................................................................57
SCHEDULES
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Schedule 2 - Lenders and Commitments
Schedule 7.3 - Information Regarding Companies
Schedule 7.8 - Litigation
EXHIBITS
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Exhibit A - Term Note
Exhibit B - Revolving Note
Exhibit C - Guaranty Agreement
Exhibit D - Security Agreement
Exhibit E - Borrowing Request
Exhibit F - Conversion Notice
Exhibit G - LC Request
Exhibit H - Compliance Certificate
Exhibit I - Permitted Acquisition Compliance Certificate
Exhibit J - Opinion of Borrower's Counsel
Exhibit K - Assignment and Assumption Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of February 16, 1999, among
ULTRAK, INC., a Delaware corporation ("BORROWER"), certain Lenders (defined
below), and BANK ONE, TEXAS, N.A., as Administrative Agent (defined below) for
itself and the other Lenders.
PRELIMINARY STATEMENT
A. Borrower is a U.S.-based multinational corporation that designs,
manufactures, markets, sells and services electronic products and systems for
use in security and surveillance, industrial and medical video and professional
audio markets worldwide.
B. Borrower has requested that Lenders extend credit to Borrower to
provide for, among other things, (i) a term loan facility in the aggregate
principal amount of $20,000,000, and (ii) a revolving loan and standby letter of
credit facility in the aggregate principal amount of up to $30,000,000.
C. The credit facilities described above shall (i) be secured by
unlimited guaranties from each of Borrower's Domestic Subsidiaries (defined
below), (ii) be further secured by Lender Liens (defined below) on all of the
assets of the Domestic Companies (defined below), and (iii) be further secured
by Lender Liens on a certain percentage of the capital stock of Borrower's
directly-owned Foreign Subsidiaries (defined below) and by a pledge of all notes
receivable now or in the future executed by any Foreign Subsidiary in favor of
Borrower or any other Domestic Company (defined below).
D. Lenders are willing to extend the requested credit on the terms and
conditions of this agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower,
Lenders and Administrative Agent agree as follows:
SECTION 1. DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Credit Documents:
"ACQUISITION" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
by any Company of all or substantially all of the assets of a Person or of any
business or division of a Person, (b) the acquisition by any Company of more
than 50% of any class of Voting Stock (or similar ownership interests) of any
Person (provided that, formation or organization of any entity shall not
constitute an "Acquisition" to the extent that the amount of the loan, advance,
investment, or capital contribution in such entity constitutes a permitted
investment under SECTION 9.7), or (c) a merger, consolidation, amalgamation, or
other combination by any Company with another Person.
"ADJUSTED CURRENT ASSETS" means, at any time, for the Companies on a
consolidated basis, (i) current assets as defined by GAAP, minus (ii) prepaid
expenses, minus (iii) investments in discontinued operations, minus (iv)
advances for inventory purchases, minus (v) marketable securities (including,
without limitation, the Permitted Investments described in CLAUSES (f) through
(h) of SECTION 9.7), minus (vi) Non-Qualifying Accounts Receivable.
"ADJUSTED CURRENT LIABILITIES" means, at any time, for the Companies on
a consolidated basis, (i) current liabilities as defined by GAAP (including,
without limitation, all outstanding indebtedness under the Revolving Facility),
minus (ii) CMLTD.
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"ADMINISTRATIVE AGENT" means, at any time, Bank One, Texas, N.A. (or
its successor appointed under SECTION 13), acting as administrative, managing,
syndication and collateral agent for Lenders under the Credit Documents.
References to Administrative Agent in respect of LCs are to that institution in
its individual capacity.
"AFFILIATE" of a Person means any other Person who directly or
indirectly controls, is controlled by, or is under common control with that
Person. For purposes of this definition (a) "control," "controlled by," and
"under common control with" mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities or other interests, by contract or otherwise) and
(b) the Companies are "Affiliates" of each other.
"APPLICABLE MARGIN" means, for any day, the percentage of interest over
the Base Rate or the LIBOR Rate, as the case may be, that is applicable when the
Base Rate or LIBOR Rate, as applicable, is determined under this agreement,
which margin of interest shall be determined in accordance with the provisions
as follows:
(a) From the Closing Date through the quarterly period for
which Administrative Agent has received the corresponding quarterly
Financials and Compliance Certificate, and (without duplication) has
therefor received the Financials and Compliance Certificate for the
year ending December 31, 1998, in each case, the receipt of which
occurred within the time periods prescribed by this agreement, the
Applicable Margin shall be 1.250% for LIBOR Rate Borrowings and 0.000%
for Base Rate Borrowings and the Applicable Percentage shall be 0.250%.
(b) After Administrative Agent's timely receipt of the
Financials and Compliance Certificates referred to in the preceding
CLAUSE (a), (i) the Applicable Margin and Applicable Percentage in
effect for the quarterly (the "INITIAL RESET PERIOD") period
immediately following the most recent quarterly period covered by such
Financials shall be based upon the ratio of the Companies' Funded Debt
to EBITDA as determined from such Financials and related Compliance
Certificate and (ii) the Applicable Margin and Applicable Percentage in
effect for each successive quarterly period (an "APPLICABLE PERIOD")
subsequent to the Initial Reset Period shall be based upon the ratio of
the Companies' Funded Debt to EBITDA as determined from the quarterly
Financials and related Compliance Certificate covering the quarterly
period immediately preceding such Applicable Period, in each case, such
Applicable Margin shall conform to the corresponding margin set forth
in the table in the following CLAUSE (d) of this definition, and such
Applicable Percentage shall conform to the corresponding margin set
forth in the table contained in the definition of the term Applicable
Percentage; provided, however, at all times the foregoing shall be
subject to the provisions of CLAUSE (e) of this definition.
(c) For purposes of the definitions of the terms Applicable
Margin and Applicable Percentage, EBITDA is calculated for the
Companies' most recently-completed-four-fiscal quarters, and Funded
Debt is determined as of the last day of that four-fiscal-quarter
period.
(d) The Applicable Margin is based on the corresponding ratio
of the Companies' Funded Debt to EBITDA as stated in the table below.
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APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
RATIO OF FUNDED DEBT TO BASE RATE BORROWINGS LIBOR RATE BORROWINGS
EBITDA
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Less than or equal to 4.00 to 1.00, 0.000% 1.250%
but greater than or equal to 3.00
to 1.00
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Less than 3.00 to 1.00, but greater 0.000% 1.000%
than or equal to 2.00 to 1.00
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Less than 2.00 to 1.00 0.000% 0.750%
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(e) If Borrower fails to furnish to Administrative Agent any
Financials and related Compliance Certificate within the time periods
and of the nature and scope required by this agreement, then the
maximum Applicable Margin and Applicable Percentage shall apply for the
entirety of the applicable quarterly period unless Administrative
Agent, in its absolute discretion, otherwise agrees with respect to a
particular quarterly period. Notwithstanding anything to the contrary
contained in any Credit Document, (i) at all times that an Event of
Default shall exist and the Default Rate shall not be in effect, the
Applicable Margin and the Applicable Percentage shall be the maximum
Applicable Margin and Applicable Percentage, respectively and (ii) at
all times that the Default Rate shall be in effect, it shall be in
effect in lieu of any Applicable Margin, and the Applicable Percentage
shall be the maximum Applicable Percentage.
"APPLICABLE PERCENTAGE" means, for any day, a percentage applicable
under SECTION 4.3, subject to adjustment (upwards or downwards, as appropriate),
which is calculated and determined as provided in the definition of the term
Applicable Margin and is based on the corresponding ratio of the Companies'
Funded Debt to EBITDA, as follows:
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RATIO OF FUNDED DEBT TO EBITDA APPLICABLE PERCENTAGE
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Less than or equal to 4.00 to 1.00, but greater than or equal to 0.250%
3.00 to 1.00
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Less than 3.00 to 1.00, but greater than or equal to 2.00 to 1.00 0.125%
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Less than 2.00 to 1.00 0.125%
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"APPROVED FOREIGN CREDIT INSURANCE" means a policy of private insurance
that (a) insures the payment and collection of individual accounts on which the
account debtor is Foreign, (b) is issued by one or more Persons acceptable to
Administrative Agent in its sole discretion, (c) is in form and substance
acceptable to Administrative Agent in its sole discretion, including, without
limitation, containing provisions for the payment of claims within 120 days of
the request therefor, and (d) has been pledged and assigned to Administrative
Agent for Lenders in a manner acceptable to Administrative Agent in its sole
discretion.
"ASSIGNEE" is defined in SECTION 14.12(c).
"ASSIGNMENTS" is defined in SECTION 14.12(c).
"BASE RATE" means, for any day, the greater of (i) an annual interest
rate equal from day to day to the floating annual interest rate established by
Administrative Agent from time to time as its base rate of interest,
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which may not be the lowest or best interest rate charged by Administrative
Agent on loans similar to the Borrowings and (ii) the sum of the Fed Funds Rate
plus 0.5%.
"BASE RATE BORROWING" means a Borrowing bearing interest at the sum of
the Base Rate plus the Applicable Margin.
"BORROWER" is defined in the preamble to this agreement.
"BORROWING" means any amount disbursed (i) by one or more Lenders to or
on behalf of Borrower under the Credit Documents, either as an original
disbursement of funds or a renewal, extension, modification or continuation of
an amount outstanding, or a payment under an LC, or (ii) by any Lender in
accordance with, and to satisfy a Company's obligations under, any Credit
Document.
"BORROWING DATE" is defined in SECTION 2.3(a).
"BORROWING REQUEST" means a request, subject to SECTION 2.3(a),
substantially in the form of EXHIBIT D and otherwise in form and scope
acceptable to Administrative Agent.
"BUSINESS DAY" means (i) for purposes of any LIBOR Rate Borrowing, a
day when commercial banks are open for international business in London,
England, and (ii) for all other purposes, any day other than Saturday, Sunday
and any other day that commercial banks are authorized by applicable
Governmental Requirements to be closed in Texas.
"CAPITAL LEASE" means any capital lease or sublease that is required by
GAAP to be capitalized on a balance sheet.
"XXXXXXXXX" means Xxxxxxxxx Security, S.p.A., an Italian public
corporation.
"XXXXXXXXX AGREEMENT" means that certain Acquisition Agreement dated
April 9, 1997, among Xxxx Xxxxxxxxx, Patrizia Monaro, Xxxxxxxxx, Videosys,
Albenita Enterprises Limited, an Irish private limited liability company,
Borrower, and Ultrak Holdings, relating to the acquisition by Ultrak Holdings of
Xxxxxxxxx and Videosys.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss.ss.9601 et seq.
"CLOSING DATE" means February 16, 1999.
"CMLTD" means, for any Person, the current maturities of long-term Debt
(inclusive of the term Debt extended under this agreement) plus the current
maturities of Capital Leases.
"COLLATERAL" is defined in SECTION 5.2.
"COMMITMENT" means, at any time and for any Lender, the amounts stated
beside that Lender's name on the most recently amended SCHEDULE 2 for the
Revolving Facility (which amount is subject to reduction and cancellation as
provided in this agreement) and the Term Loan.
"COMMITMENT PERCENTAGE" means, for any Lender, the proportion (stated
as a percentage) that its Commitment bears to the total Commitments of all
Lenders.
"COMPANIES" means at any time, Borrower and each of its Subsidiaries.
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"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT H, and otherwise in form and scope satisfactory to Administrative
Agent, and signed by Borrower's president, chief financial officer or treasurer.
"CONVERSION NOTICE" means a request, subject to SECTION 3.10,
substantially in the form of EXHIBIT F and otherwise in form and scope
satisfactory to Administrative Agent.
"CREDIT DOCUMENTS" means (a) this agreement, certificates and reports
delivered under this agreement, and exhibits and schedules to this agreement,
(b) all agreements, documents, and instruments in favor of Administrative Agent
or Lenders (or Administrative Agent on behalf of Lenders) ever delivered under
this agreement or otherwise delivered in connection with all or any part of the
Obligation (other than Assignments), (c) all LCs and LC Agreements, and (d) all
renewals, extensions, modifications and restatements of, and amendments and
supplements to, any of the foregoing, which are made in accordance with the
provisions of the respective Credit Documents.
"CURRENT FINANCIALS," unless otherwise specified:
(a) means either (i) the Companies' Consolidated Financials
for the year ended December 31, 1997, together with the Companies'
Financials for the nine months ended on September 30, 1998, or (ii) at
any time after annual Financials are first delivered under SECTION 8.1,
the Companies' annual Financials then most recently delivered to
Administrative Agent under SECTION 8.1(a), together with the Companies'
quarterly Financials then most recently delivered to Administrative
Agent under SECTION 8.1(b); but
(b) does not include the results of operation and cash flows
for any Company for the time period before it becomes a member of
Borrower's consolidated group.
"DEBT" means, with respect to any Person on any date of determination
(without duplication), (i) all obligations for borrowed money, (ii) all
obligations evidenced by bonds, debentures, notes or similar instruments, (iii)
all obligations to pay the deferred purchase price of property or services
except trade accounts payable arising in the ordinary course of business which
are paid when due in accordance with ordinary-course payment terms or which are
being contested in good faith in appropriate proceedings, (iv) all obligations
arising under acceptance facilities or facilities for the discount or sale of
accounts receivable, (v) all direct or contingent obligations in respect of
letters of credit, (vi) Capital Lease obligations, (vii) liabilities secured (or
for which the holder of any obligations or liabilities has an existing Right,
contingent or otherwise, to be so secured) by any Lien existing on property
owned or acquired by that Person and (viii) all guaranties, endorsements and
other contingent obligations for liabilities or obligations or the maintenance
of financial condition of others, including obligations to repurchase or
purchase properties or to maintain or cause to maintain any financial condition.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar Governmental Requirements affecting creditors' Rights.
"DEBT SERVICE REQUIREMENTS" means, for any period, the sum of (i) the
Companies' CMLTD plus (ii) the Companies' Interest Expense, plus (iii) rental
payments in respect of the Companies' operating leases.
"DEFAULT RATE" means, for any day, an annual interest rate equal from
day to day to the lesser of either (i) the Base Rate plus 2.5% or (ii) the
Maximum Rate.
"DISTRIBUTION" means, with respect to any shares of any capital stock
or other equity securities issued by a Person (i) the retirement, redemption,
purchase, repurchase or other acquisition for value of those securities, (ii)
the declaration or payment of any dividend on or with respect to those
securities, (iii) any loan
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or advance by that Person to, or other investment by that Person in, the holder
of any of those securities and (iv) any other payment by that Person with
respect to those securities.
"DOMESTIC COMPANY" means all Companies other than Foreign Subsidiaries.
"DOMESTIC SUBSIDIARY" means all Subsidiaries other than Foreign
Subsidiaries.
"EBITDA" means, with respect to any Person and for any period (without
duplication) the amount equal to (i) Net Income plus (ii) to the extent deducted
in calculating such Net Income, the sum of (a) Interest Expense plus (b) Tax
expense plus (c) depreciation and amortization from its continuing operations
minus (iii) to the extent included in calculating such Net Income, any gains
that are extraordinary items.
"EBITR" means, with respect to any Person and for any period (without
duplication) the amount equal to (i) Net Income plus (ii) to the extent deducted
in calculating such Net Income, the sum of (a) Interest Expense plus (b) Tax
expense plus (c) rental payments in respect of that Person's operating leases
minus (iii) to the extent included in calculating such Net Income, any gains
that are extraordinary items.
"EMPLOYEE PLAN" means any employee-pension-benefit plan (i) covered by
Title IV of ERISA and established or maintained by Borrower or any ERISA
Affiliate (other than a Multiemployer Plan) or (ii) established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
contributes, under the Governmental Requirements of any foreign country.
"ENVIRONMENTAL INVESTIGATION" means any health, safety or environmental
site assessment, investigation, study, review, audit, compliance audit or
compliance review conducted at any time or from time to time (whether at the
request of Administrative Agent or any Lender, upon the order or request of any
Governmental Authority, at the voluntary instigation of any Company or Affiliate
of any Company or otherwise) concerning any Real Property or the business
operations or activities of any Company or Affiliate of any Company, including,
without limitation, (i) air, soil, groundwater or surface-water sampling and
monitoring, (ii) repair, cleanup, remediation, or detoxification, (iii)
preparation and implementation of any closure, remedial, spill, emergency or
other plans, and (iv) any health, safety, or environmental compliance audit or
review.
"ENVIRONMENTAL GOVERNMENTAL REQUIREMENT" means any applicable
Governmental Requirement that relates to (a) the condition of air, ground or
surface water, soil, or other environmental media, (b) the environment or
natural resources, (c) safety or health, (d) the regulation of any contaminants,
wastes, and Hazardous Substances, including, without limitation, CERCLA, OSHA,
the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.),
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et
seq.), the Safe Drinking Water Act (42 U.S.C. ss. 201 and ss. 300f et seq.), the
Rivers and Harbors Act (33 U.S.C. ss. 401 et seq.), the Oil Pollution Act (33
U.S.C. ss. 2701 et seq.), and state and local Governmental Requirements, and any
future enacted or adopted Governmental Requirements, in each case, now existing
or hereafter adopted, which are analogous to any of the preceding referenced
requirements, or (e) the Release or threatened Release of Hazardous Substances.
"ENVIRONMENTAL LIABILITY" means any liability, loss, fine, penalty,
charge, lien, damage, cost or expense of any kind to the extent that it results
directly or indirectly, in whole or in part, (i) from the violation of any
Environmental Governmental Requirement, (ii) from the Release or threatened
Release of any Hazardous Substance, (iii) from removal, remediation, or other
actions in response to the Release or threatened Release of any Hazardous
Substance, (iv) from actual or threatened damages to natural resources, (v) from
the imposition of injunctive relief or other orders, (vi) from personal injury,
death, or property damage which occurs
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as a result of any Company's use, storage, handling, or the Release or
threatened Release of a Hazardous Substance, or (vii) from any Environmental
Investigation performed at, on, or for any Real Property.
"ENVIRONMENTAL PERMIT" means any permit or license from any Person
defined in CLAUSE (i) of the definition of Governmental Authority that is
required under any Environmental Governmental Requirement for the lawful conduct
of any business, process or other activity.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person that, for purposes of Title IV of
ERISA, is a member of Borrower's controlled group or is under common control
with Borrower within the meaning of Section 414 of the IRC (which provisions are
deemed by this agreement to apply to Foreign Persons).
"EVENT OF DEFAULT" is defined in SECTION 11.
"FED FUNDS RATE" means, for any day, the annual rate (rounded upwards,
if necessary, to the nearest 0.01%) determined by Administrative Agent (which
determination is conclusive and binding, absent manifest error) to be equal to
(i) the weighted average of the rates on overnight federal-funds transactions
with member banks of the Federal Reserve System arranged by federal-funds
brokers on that day, as published by the Federal Reserve Bank of New York on the
next Business Day or (ii) if the rates referred to in the preceding CLAUSE (i)
are not published for any day, the average of the quotations at approximately
10:00 a.m. received by Administrative Agent from three federal-funds brokers of
recognized standing selected by Administrative Agent in its sole discretion.
"FINANCIALS" of a Person means balance sheets, profit and loss
statements, and statements of cash flow prepared (i) according to GAAP (subject
to year-end audit adjustments with respect to interim Financials) and (ii)
except as stated in SECTION 1.4, in comparative form to prior year-end figures
or corresponding periods of the preceding fiscal year or other relevant period,
as applicable. The term "Financials" shall also include the reconciliations of
capital and surplus included as part of the Companies' annual financial
statements.
"FOREIGN" means, in respect of any Person, a Person organized under the
Governmental Requirements of a jurisdiction other than, or domiciled outside of,
the United States of America or one of its states, territories, commonwealths,
or possessions.
"FOREIGN SUBSIDIARIES" means all Subsidiaries that are Foreign.
"FUNDED DEBT" means, with respect to any Person on any date of
determination (without duplication), the sum of (a) all outstanding (direct or
contingent) Debt of such Person which is described by any of CLAUSES (i), (ii),
(iv), (v) or (vi) of the definition of the term Debt, plus (b) all of Borrower's
and Borrower's Affiliates' outstanding obligations under, or in respect of, the
TROL Financing.
"FUNDING LOSS" means any loss, expense or reduction in yield (but not
any Applicable Margin) that any Lender reasonably incurs because (i) Borrower
fails or refuses (for any reason whatsoever other than a default by
Administrative Agent or the Lender claiming that loss, expense or reduction in
yield) to take any Borrowing that it has requested under this agreement or (ii)
Borrower prepays or pays any Borrowing or converts any Borrowing to a Borrowing
of another Type, in each case, other than on the last day of the applicable
Interest Period.
"GAAP" means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time.
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"GOVERNMENTAL AUTHORITY" means any (i) local, state, territorial,
federal or Foreign judicial, executive, regulatory, administrative, legislative
or governmental agency, board, bureau, commission, department or other
instrumentality, (ii) private arbitration board or panel or (iii) central bank.
"GOVERNMENTAL REQUIREMENTS" means all applicable statutes, laws,
treaties, ordinances, rules, regulations, orders, writs, injunctions, decrees,
judgments, opinions and interpretations of any Governmental Authority.
"GUARANTY" means a guaranty agreement substantially in the form of
EXHIBIT C and otherwise in form and scope acceptable to Administrative Agent.
"GUARANTOR" means each Person that executes a Guaranty as required by
the terms of this agreement.
"HAZARDOUS SUBSTANCE" means (a) any substance that is reasonably
expected to require removal, remediation, or other response under any
Environmental Governmental Requirement, (b) any substance that is designated,
defined or classified as a hazardous waste, hazardous material, pollutant,
contaminant, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic, radioactive, dangerous, or toxic or hazardous substance under any
Environmental Governmental Requirement, including, without limitation, any
hazardous substance within the meaning of ss.101(14) of CERCLA, (c) petroleum,
oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet
fuel, and other petroleum hydrocarbons, (d) asbestos and asbestos-containing
materials in any form, (e) polychlorinated biphenyls, (f) urea formaldehyde
foam, or (g) any substance the presence of which on any Real Property either (i)
poses or threatens to pose a hazard to the health or safety of persons or to the
environment, or (ii) could reasonably be expected to constitute a health or
safety hazard to persons or the environment if emanated or migrated from the
Real Property.
"HEDGING AGREEMENT" means, for any Person, any present or future,
whether master or single, agreement, document or instrument providing for or
constituting an agreement to enter into interest rate swaps, floors, caps or
collars, forward-rate agreements or other similar transactions, including,
without limitation, any "ISDA Master Agreement" between Borrower and any other
Person contemplated by SECTION 8.13.
"INTEREST EXPENSE" means, with respect to any Person and for any period
(without duplication), all interest on that Person's Debt, whether paid in cash
or accrued as a liability and payable in cash during any subsequent period
(including, without limitation, the interest component of Capital Leases), as
determined by GAAP.
"INTEREST PERIOD" is determined in accordance with SECTION 3.9.
"INVESTMENT" means, in respect of any Person, any loan, advance,
extension of credit or capital contribution to that Person, any investment in
that Person, or any purchase or commitment to purchase any equity securities or
Debt issued by that Person or substantially all of the assets or a division or
other business unit of that Person.
"IRC" means the Internal Revenue Code of 1986.
"LC" means a standby letter of credit issued by Administrative Agent
under this agreement pursuant to an LC Agreement.
"LC AGREEMENT" means a standby letter of credit application and
agreement (in form and substance satisfactory to Administrative Agent) submitted
by Borrower to Administrative Agent for an LC for its own account (and for its
benefit or the benefit of any other Company).
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"LC EXPOSURE" means, at any time and without duplication, the sum of
(a) the aggregate face amount of all undrawn and uncancelled LCs plus (b) the
aggregate unpaid reimbursement obligations of Borrower under drawings under any
LC.
"LC REQUEST" means a request substantially in the form of EXHIBIT G.
"LC SUBFACILITY" means a subfacility of the Revolving Facility for the
issuance of LCs, as described in SECTION 2.4, under which the LC Exposure may
never exceed $5,000,000 in the aggregate.
"LENDER LIEN" means any present or future first-priority Lien securing
the Obligation and assigned, conveyed, or granted to or created in favor of
Administrative Agent for the benefit of Lenders.
"LENDERS" means the financial institutions (including, without
limitation, Administrative Agent in respect of its share of Borrowings and LCs)
named on SCHEDULE 2 or on the most recently amended SCHEDULE 2, if any,
delivered by Administrative Agent under this agreement, and, subject to this
agreement, their respective successors and assigns (but not any Participant who
is not otherwise a party to this agreement).
"LIBOR RATE" means, for a LIBOR Rate Borrowing and for the relevant
Interest Period, the annual interest rate (rounded upward, if necessary, to the
nearest 0.01%) equal to the quotient obtained by dividing (i) the rate that
deposits in United States dollars are offered to Administrative Agent in the
London interbank market at approximately 11:00 a.m. London time two Business
Days before the first day of that Interest Period in an amount comparable to
that LIBOR Rate Borrowing and having a maturity approximately equal to that
Interest Period by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to the relevant Interest Period.
"LIBOR RATE BORROWING" means a Borrowing bearing interest at the sum of
the LIBOR Rate plus the Applicable Margin.
"LIEN" means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners (other than title of the lessor
under an operating lease).
"LITIGATION" means any action, proceeding, investigation or hearing by
or before any Governmental Authority.
"MATERIAL ADVERSE EVENT" means any circumstance or event that,
individually or collectively, is reasonably expected to result (at any time
before the Commitments are fully cancelled or terminated and the Obligation is
fully paid and performed) in any (i) material impairment of (a) the ability of
Borrower or any other Company to perform any of its payment or other material
obligations under any Credit Document or (b) the ability of Administrative Agent
or any Lender to enforce any of those obligations or any of its Rights under the
Credit Documents, (ii) material and adverse effect on the business, management
or financial condition of Borrower or of the Companies as a whole, as
represented to Lenders in the Financials then most recently received by it or
(iii) Event of Default or Potential Default.
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"MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for a Lender,
the maximum non-usurious amount and the maximum non-usurious rate of interest
that, under applicable Governmental Requirements of the State of Texas or
federal laws of the United States of America (as applicable), that Lender is
permitted to contract for, charge, take, reserve or receive on the Obligation.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the IRC (or any similar type
of plan established or regulated under the Governmental Requirements of any
foreign country) to which Borrower or any ERISA Affiliate is making, or has
made, or is accruing, or has accrued, an obligation to make contributions.
"NET INCOME" of any Person means that Person's profit or loss
determined in accordance with GAAP.
"NET PROCEEDS" means the aggregate cash proceeds received by Borrower
or any of its Subsidiaries in respect of any Permitted Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Permitted Asset Sale), net of the direct
costs relating to such Permitted Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions), any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"NON-QUALIFYING ACCOUNTS RECEIVABLE" means any account or any portion
of any account remaining unpaid more than 90 days from the date it was initially
invoiced.
"NOTES" means all of the Revolving Notes and Term Notes.
"OBLIGATION" means all present and future (i) Debts, liabilities and
obligations of any Company to Administrative Agent, or any Lender and related to
any Credit Document, whether principal, interest, fees, costs, attorneys' fees
or otherwise, (ii) Debts, liabilities, or obligations owed by any Company to
Administrative Agent or any Lender or their respective Affiliates under any
Hedging Agreement (including, without limitation, with respect to any
"Transaction" [as defined in any Hedging Agreement] entered into pursuant to any
Hedging Agreement, all present and future amounts due and payable by any
Company, whether such amounts are due and payable on the date(s) scheduled
therefor, on the occurrence of an "Early Termination Date" [as defined in any
Hedging Agreement], or otherwise) to the extent relating to interest payable
under this agreement, (iii) any of the foregoing amounts that would become due
but for the operation of 11 U.S.C. ss. 502 and 503 or any other provision of
Title 11 of the United States Code, (iv) pre- and post-maturity interest on any
of the foregoing, including all post-petition interest if any Company
voluntarily or involuntarily files for protection under any Debtor Relief Law
and (v) renewals, extensions, rearrangements and modifications of any character
whatsoever of any the foregoing.
"ORGANIZATIONAL DOCUMENTS" means, for any Person, the documents for its
formation and organization, which, for example, (i) for a corporation are its
corporate charter and bylaws, (ii) for a partnership are its certificate of
partnership (if applicable) and partnership agreement, (iii) for a limited
liability company are its certificate of organization and regulations and (iv)
for a trust is the trust agreement or indenture under which it is created.
"OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C.
ss. 651 et seq.
"OVERHEAD ALLOCATION" means the monthly allocation made by Borrower
whereby overhead and administrative costs for the Companies on a consolidated
basis are allocated and charged against individual Companies. The amount of
these non-cash charges are added to the principal balance of the intercompany
notes evidencing the Permitted Intercompany Advances.
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"PARTICIPANT" is defined in SECTION 14.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED ACQUISITION" means:
(a) any Acquisition by a Company with respect to which each of
the following requirements shall have been satisfied:
(i) as of the closing of any Acquisition, the
Acquisition has been approved and recommended by the board of
directors or other similar governing body of the Person to be
acquired or from which such business is to be acquired;
(ii) the Purchase Price for the Acquisition is less
than or equal to $3,000,000, and the aggregate Purchase Price
for all Acquisitions during the term of this agreement is less
than or equal to $5,000,000;
(iii) not less than 7 Business Days prior to
consummation of any Acquisition, Borrower shall have delivered
to Administrative Agent a written description of the targeted
entity to be acquired and its operations and a copy of the
related purchase agreement, to the extent available (and, upon
the request of Administrative Agent, all of the schedules and
exhibits thereto);
(iv) as of the closing of any Acquisition, after
giving effect to such Acquisition, the acquiring party must be
Solvent and the Companies, on a consolidated basis, must be
Solvent;
(v) prior to consummation of any Acquisition,
Borrower shall have satisfied the conditions precedent to a
Permitted Acquisition as set forth in SECTION 6.3;
(vi) as of the closing of any Acquisition, no Event
of Default or Potential Default shall exist or occur as a
result of, and after giving effect to, such Acquisition; and
(viii) as of the closing of any Acquisition, if such
Acquisition is structured as a merger, Borrower (or if such
merger is with any Company other than Borrower, then such
Company) must be the surviving entity after giving effect to
such merger (provided that, if such merger is with a
Subsidiary formed solely for the purpose of consummating the
merger, then the target entity may be the surviving entity
after giving effect to such merger so long as all other
requirements in the Credit Documents are satisfied
concurrently with such merger); and
(b) any other Acquisition for which the prior written consent
of Required Lenders has been obtained; provided that at the request of
Administrative Agent, Borrower shall have delivered to Administrative
Agent the following (i) three-year income and balance sheet projections
in respect of the Companies and the entity to be acquired, after giving
effect to such Acquisition; and (ii) such other information in respect
of such Acquisition as Administrative Agent or Required Lenders shall
have reasonably requested.
"PERMITTED ACQUISITION COMPLIANCE CERTIFICATE" means a certificate
signed by a Responsible Officer of Borrower, substantially in the form of
EXHIBIT I.
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"PERMITTED ASSET SALE" means (i) any sale and disposition of inventory
in the ordinary course of business for fair and adequate consideration, (ii) any
sale of assets which are obsolete or are no longer in use and which are not
significant to the continuation of the Companies' business, (iii) upon prior
written notice to, and completion of all actions necessary to confirm, reaffirm
or re-establish Lender Liens to the satisfaction of Administrative Agent, any
sale and disposition from any Company to any other Company provided, in all
respects, such sale and disposition is otherwise subject to SECTION 9.5, (iv)
any disposition of assets where substantially similar assets have been or are
being acquired, (v) any sale of assets relating to mergers and consolidations
permitted under this agreement, (vi) any other sales and dispositions which,
when added to the market value of all other assets sold pursuant to this CLAUSE
(vi) during the term of this Agreement, have a market value of $5,000,000 or
less, and (vii) any other sales and dispositions approved in advance by
Administrative Agent.
"PERMITTED DEBT" is defined in SECTION 9.2.
"PERMITTED INTERCOMPANY ADVANCES" means the aggregate of (a) up to
$15,000,000 in the aggregate of loans, advances or extensions of credit by
Borrower to its Foreign Subsidiaries that exist on the Closing Date (such amount
including Overhead Allocations for periods prior to the Closing Date), (b) up to
$5,000,000 in the aggregate of loans, advances, extensions of credit by Borrower
to its Foreign Subsidiaries or the forgiveness of intercompany accounts
receivable by Borrower in favor of its Foreign Subsidiaries for periods from and
after the Closing Date, (c) Overhead Allocations for periods from and after the
Closing Date, and (d) accrued interest on Permitted Intercompany Advances
otherwise permitted by CLAUSES (a)-(c) above.
"PERMITTED INTERCOMPANY GUARANTY" means a guaranty by Borrower of a
payment or other obligation of a Subsidiary owing to a third party, provided
that the aggregate contingent liability under all such guaranties outstanding at
any one time cannot exceed $1,000,000.
"PERMITTED INVESTMENT" is defined in SECTION 9.7.
"PERMITTED LIENS" is defined in SECTION 9.3.
"PERMITTED PUBLIC COMPANY HOLDINGS" means securities of companies
approved in advance by Administrative Agent as being eligible for inclusion as
"Permitted Public Company Holdings" or securities that meet all of the following
criteria:
(a) such securities are traded on a nationally-recognized
stock exchange or are securities as to which bids and offer quotations
are reported in the automated quotation system operated by the National
Association of Securities Dealers, Inc.;
(b) the sale or other transfer of such securities is not
restricted in any way (other than restrictions imposed by applicable
securities laws); and
(c) the market capitalization of each company that has issued
such securities must equal or exceed $1,000,000,000 (except that
Southwest Securities is exempted from the requirements of this CLAUSE
(c)).
"PERSON" means any individual, entity or Governmental Authority.
"POTENTIAL DEFAULT" means any event, occurrence or circumstance the
existence of which, upon any required notice, time lapse, or both, could
reasonably be expected to become an Event of Default.
"PRINCIPAL DEBT" means, at any time, the unpaid principal balance of
all Borrowings.
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"PRO RATA" and "PRO RATA PART" mean, at any time and for any Lender,
the proportion (stated as a percentage) that the Principal Debt owed to it bears
to the total Principal Debt owed to all Lenders.
"PURCHASE PRICE" means with respect to any Acquisition the "purchase
price" as specified and determined in accordance with the purchase agreement or
other related acquisition documents evidencing such Acquisition (including,
without limitation, cash paid and debt assumed).
"REAL PROPERTY" means any land, buildings, fixtures and other
improvements to land now or in the future directly or indirectly owned by any
Company, leased to or otherwise operated by any Company or subleased by any
Company to any other Person.
"REFINANCED DEBT" means the Debt of Borrower which will be repaid on
the Closing Date.
"RELEASE" means any "release" as defined under any Environmental
Governmental Requirement.
"REPRESENTATIVES" means, with respect to a Person, its representatives,
officers, directors, employees, accountants, attorneys, insurers, shareholders
and agents.
"REQUIRED LENDERS" means, at any time, (a) while there are no more than
two Lenders, 100% of the Lenders, and (b) while there are more than two Lenders,
any combination of Lenders holding (directly or indirectly) at least either (i)
66 2/3% of the total Commitments while there is no Principal Debt or LC Exposure
or (ii) 66 2/3% of the Principal Debt plus the LC Exposure while there is any
Principal Debt or LC Exposure.
"RESERVE REQUIREMENT" means, for any LIBOR Rate Borrowing and for the
relevant Interest Period, the total reserve requirements (including all basic,
supplemental, emergency, special, marginal and other reserves required by
applicable Governmental Requirements) applicable to eurocurrency fundings or
liabilities as of the first day of that Interest Period in amount and maturity
of such Borrowing.
"RESPONSIBLE OFFICER" means Borrower's chairman, president, chief
executive officer, chief financial officer or treasurer.
"REVOLVING FACILITY" means the revolving line of credit facility
described in SECTION 2.2.
"REVOLVING FACILITY TERMINATION DATE" means the earlier of (i) the
Stated Termination Date and (ii) the effective date that Lender's commitments to
lend and issue LCs under this agreement are fully cancelled or terminated.
"REVOLVING NOTE" means one of the promissory notes substantially in the
form of EXHIBIT B and otherwise in form and scope acceptable to Administrative
Agent.
"RIGHTS" means rights, remedies, powers, privileges and benefits.
"SECURITY AGREEMENT" means a security agreement substantially in the
form of EXHIBIT D and otherwise in form and scope acceptable to Administrative
Agent.
"SOLVENT" means, as to any Person, that (i) the aggregate fair market
value of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise), (ii) such Person has
sufficient cash flow to enable it to pay its debts as they mature and (iii) such
Person does not have unreasonably small capital to conduct its businesses.
"STATED TERMINATION DATE" means February 16, 2002.
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"SUBSIDIARY" of any Person means any other Person of which (i) more
than 50% (in number of votes) of the stock (or equivalent interests) is owned of
record or beneficially, directly or indirectly, by that Person or (ii) such
Person serves as a general partner or a similar capacity. Unless otherwise
specified or the context otherwise requires, "Subsidiary" refers to a Subsidiary
of Borrower.
"TAXES" means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income or any of its properties,
franchises or assets.
"TERM LOAN" means the term loan described in SECTION 2.1.
"TERM NOTE" means one of the promissory notes substantially in the form
of EXHIBIT A and otherwise in form and scope satisfactory to Administrative
Agent.
"TROL FINANCING" means the Tax Retention Operating Lease Financing
arrangements dated as of March 31, 1997, originally provided in favor of Ultrak
Operating and Borrower by NationsBank of Texas, N.A., as such financing
arrangements are amended and assigned contemporaneously with the execution and
delivery of this agreement.
"TYPE" means any type of Borrowing determined with respect to the
applicable interest option.
"UCC" means the Uniform Commercial Code as enacted in Texas or other
applicable jurisdictions.
"ULTRAK HOLDINGS" means Ultrak Holdings Limited, a United Kingdom
company and wholly-owned subsidiary of Borrower.
"ULTRAK GP" means Ultrak GP, Inc., a Delaware corporation and
wholly-owned subsidiary of Borrower.
"ULTRAK LP" means Ultrak LP, Inc., a Delaware corporation and
wholly-owned subsidiary of Borrower.
"ULTRAK OPERATING" means Ultrak Operating, L.P., a Texas limited
partnership.
"VIDEOSYS" means Videosys Limited, a United Kingdom private limited
liability company.
"VOTING STOCK" means securities (as such term is defined in Section
2(1) of the Securities Act of 1933, as amended) of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
1.2 Time References. Unless otherwise specified, in the Credit
Documents (i) time references (e.g., 10:00 a.m.) are to time in Dallas, Texas,
and (ii) in calculating a period from one date to another, the word "from" means
"from and including" and the word "to" or "until" means "to but excluding."
1.3 Other References. Unless otherwise specified, in the Credit
Documents (i) where appropriate, the singular includes the plural and vice
versa, and words of any gender include each other gender, (ii) heading and
caption references may not be construed in interpreting provisions, (iii)
monetary references are to currency of the United States of America, (iv)
section, paragraph, annex, schedule, exhibit and similar references are to the
particular Credit Document in which they are used, (v) references to "telecopy,"
"telefax," "facsimile," "fax" or similar terms are to facsimile or telecopy
transmissions, (vi) references to "including" mean including without limiting
the generality of any description preceding that word, (vii) the rule of
construction that references to general items that follow references to specific
items are limited to the same type or character of those specific items is not
applicable in the Credit Documents, (viii) references to any Person include that
Person's heirs, personal representatives, successors, trustees, receivers and
permitted assigns, (ix) references to any Governmental Requirement include every
amendment or supplement to it, rule and regulation adopted
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under it, and successor or replacement for it and (x) references to any Credit
Document or other document include every renewal and extension of it, amendment,
modification and supplement to it, and replacement or substitution for it, as
each is made in accordance with the applicable provisions of such Credit
Document.
1.4 Accounting Principles. Unless otherwise specified, in the Credit
Documents (i) GAAP determines all accounting and financial terms and compliance
with financial covenants, (ii) GAAP in effect on the date of this agreement
determines compliance with financial covenants, (iii) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period and (iv) while
the Financials for the Companies are on a consolidated basis, (a) all accounting
and financial terms and compliance with reporting covenants must be on a
consolidated basis, as applicable and (b) compliance with financial covenants
must be on a consolidated basis.
SECTION 2. COMMITMENT. Subject to the provisions in the Credit Documents, each
Lender severally but not jointly agrees to extend credit to Borrower under the
Term Loan and under the Revolving Facility in accordance with the following
provisions.
2.1 Term Loan. Each Lender severally but not jointly agrees to lend to
Borrower that Lender's Commitment Percentage of the Term Loan in a single
Borrowing on the Closing Date. If Borrower pays or prepays any portion of the
Term Loan under this agreement, that portion may not be reborrowed.
2.2 Revolving Facility. Each Lender severally but not jointly agrees to
lend to Borrower from time to time that Lender's Commitment Percentage of
Borrowings under the Revolving Facility which Borrower may borrow, repay and
reborrow under this agreement subject further to the following conditions:
(a) Each Borrowing may only occur on a Business Day on or
after the Closing Date and before the Revolving Facility Termination
Date;
(b) Each Borrowing may only be $50,000 or a greater integral
multiple of $50,000 if a Base Rate Borrowing or $500,000 or a greater
integral multiple of $500,000 if a LIBOR Rate Borrowing;
(c) The sum of (i) the Principal Debt outstanding under the
Revolving Facility plus (ii) the LC Exposure may never exceed the total
Commitments for the Revolving Facility;
(d) The sum of (i) the Principal Debt under the Revolving
Facility, plus (ii) the LC Exposure, plus (iii) the Principal Debt
under the Term Loan may never exceed the total Commitments; and
(e) The sum of the Principal Debt under the Revolving Facility
plus the LC Exposure (in each case whether direct or participated) owed
to any Lender may never exceed that Lender's Commitment for the
Revolving Facility.
2.3 Borrowing Procedure. The following procedures apply to all
Borrowings:
(a) Borrowing Request. Borrower may request a Borrowing only
by making or delivering a Borrowing Request (that may be telephonic if
confirmed in writing within two Business Days) to Administrative Agent,
which is irrevocable and binding on Borrower, stating the Type, amount
and Interest Period for each Borrowing and which must be received by
Administrative Agent no later than (i) 12:00 noon on the Business Day
before the date on which funds are requested (the "BORROWING DATE") for
any LIBOR Rate Borrowing or (ii) 12:00 noon on the Borrowing Date for
any Base Rate Borrowing. Administrative Agent shall promptly notify
each Lender of any Borrowing Request.
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(b) Funding. Each Lender shall remit its Commitment Percentage
of each requested Borrowing to Administrative Agent's principal office
in Dallas, Texas, in funds that are available for immediate use by
Administrative Agent by 2:00 p.m. on the applicable Borrowing Date.
Subject to receipt of those funds, Administrative Agent shall (unless
to its actual knowledge any of the applicable conditions precedent have
not been satisfied by Borrower or waived by the requisite Lenders under
SECTION 14.10) make those funds available to Borrower by (at Borrower's
option) (i) wiring the funds to or for the account of Borrower at the
direction of Borrower or (ii) depositing the funds in Borrower's
account with Administrative Agent.
(c) Funding Assumed. Absent contrary written notice from a
Lender, Administrative Agent may assume that each Lender has made its
Commitment Percentage of the requested Borrowing available to
Administrative Agent on the applicable Borrowing Date, and
Administrative Agent may, in reliance upon such assumption (but shall
not be required to), make available to Borrower a corresponding amount.
If a Lender fails to make its Commitment Percentage of any requested
Borrowing available to Administrative Agent on the applicable Borrowing
Date, Administrative Agent may recover the applicable amount on demand,
(i) from that Lender together with interest, commencing on the
Borrowing Date and ending on (but excluding) the date Administrative
Agent recovers the amount from that Lender, at an annual interest rate
equal to the Fed Funds Rate, or (ii) if that Lender fails to pay its
amount upon demand, then from Borrower. No Lender is responsible for
the failure of any other Lender to make its Commitment Percentage of
any Borrowing; however, failure of any Lender to make its Commitment
Percentage of any Borrowing does not excuse any other Lender from
making its Commitment Percentage of any Borrowing.
2.4 Letters of Credit.
(a) Conditions. Subject to the terms and conditions of this
agreement and applicable Governmental Requirements, Administrative
Agent (itself or through one of its Affiliates, and references in this
SECTION 2.4 to "Administrative Agent" include those Affiliates) agrees,
if requested by Borrower, to issue LCs upon Borrower's making or
delivering an LC Request and delivering an LC Agreement, both of which
must be received by Administrative Agent no later than the second
Business Day before the Business Day on which the requested LC is to be
issued, so long as (i) no LC may have an expiration date more than one
year from its date of issuance, (ii) no LC may expire after a date 30
Business Days before the Revolving Facility Termination Date, (iii) the
LC Exposure does not exceed $5,000,000, and (iv) the limitations in
SECTIONS 2.2(c), (d) and (e) are not exceeded.
(b) Participation. Immediately upon Administrative Agent's
issuance of any LC, Administrative Agent shall be deemed to have sold
and transferred to each other Lender, and each other Lender shall be
deemed irrevocably and unconditionally to have purchased and received
from Administrative Agent, without recourse or warranty, an undivided
interest and participation to the extent of such Lender's Commitment
Percentage under the Revolving Facility in the LC and all applicable
Rights of Administrative Agent in the LC (other than Rights to receive
certain fees provided in SECTION 4.4 to be for Administrative Agent's
sole account).
(c) Reimbursement Obligation. To induce Administrative Agent
to issue and maintain LCs, and to induce Lenders to participate in
issued LCs, Borrower agrees to pay or reimburse Administrative Agent
(i) on the date when any draft or draw request is presented under any
LC, the amount paid or to be paid by Administrative Agent and (ii)
promptly, upon demand, the amount of any additional fees Administrative
Agent customarily charges for the application and issuance of an LC,
for amending LC Agreements, for honoring drafts and draw requests, and
for taking similar action in connection with letters of credit. If
Borrower has not reimbursed Administrative Agent for any drafts or
draws paid or to be paid by the date of Administrative Agent's demand
for reimbursement, Administrative Agent is irrevocably authorized to
fund Borrower's reimbursement obligations as a Base
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Rate Borrowing under the Revolving Facility if proceeds are available
under the Revolving Facility and if the conditions in this agreement
for such a Borrowing (other than any notice requirements or minimum
funding amounts) have, to Administrative Agent's knowledge, been
satisfied. The proceeds of that Borrowing shall be advanced directly to
Administrative Agent to pay Borrower's unpaid reimbursement
obligations. If funds cannot be advanced under the Revolving Facility,
then Borrower's reimbursement obligation shall constitute a demand
obligation. Borrower's obligations under this section are absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim, or defense to payment that Borrower may have at
any time against Administrative Agent or any other Person. From
Administrative Agent's demand for reimbursement to the date paid
(including any payment from proceeds of a Base Rate Borrowing), unpaid
reimbursement amounts accrue interest that is payable on demand at the
Default Rate thereafter.
(d) General. Administrative Agent shall promptly notify
Borrower of the date and amount of any draft or draw request presented
for honor under any LC (but failure to give notice will not affect
Borrower's obligations under this agreement). Administrative Agent
shall pay the requested amount upon presentment of a draft or draw
request unless presentment on its face does not comply with the terms
of the applicable LC. When making payment, Administrative Agent may
disregard (i) any default or potential default that exists under any
other agreement and (ii) obligations under any other agreement that
have or have not been performed by the beneficiary or any other Person
(and Administrative Agent is not liable for any of those obligations).
Borrower's reimbursement obligations to Administrative Agent and
Lenders, and each Lender's obligations to Administrative Agent, under
this section are absolute and unconditional irrespective of, and
Administrative Agent is not responsible for, (i) the validity,
enforceability, sufficiency, accuracy, or genuineness of documents or
endorsements (even if they are in any respect invalid, unenforceable,
insufficient, inaccurate, fraudulent, or forged), (ii) any dispute by
any Company with or any Company's claims, setoffs, defenses,
counterclaims, or other Rights against Administrative Agent, any
Lender, or any other Person, or (iii) the occurrence of any Potential
Default or Event of Default. However, nothing in this agreement
constitutes a waiver of Borrower's Rights to assert any claim or
defense based upon the gross negligence or willful misconduct of
Administrative Agent or any Lender. Administrative Agent shall promptly
distribute reimbursement payments received from Borrower to all Lenders
according to their Pro Rata Part of the Revolving Facility.
(e) Obligation of Lenders. If Borrower fails to reimburse
Administrative Agent as provided in SECTION 2.4(c) within 24 hours
after Administrative Agent's demand for reimbursement, and funds cannot
be advanced under the Revolving Facility to satisfy the reimbursement
obligations, Administrative Agent shall promptly notify each Lender of
Borrower's failure, of the date and amount paid, and of each Lender's
Commitment Percentage of the unreimbursed amount. Each Lender shall
promptly and unconditionally make available to Administrative Agent in
immediately available funds its Commitment Percentage of the unpaid
reimbursement obligation, subject to the limitations of SECTION 2.2(d).
Funds are due and payable to Administrative Agent before the close of
business on the Business Day when Administrative Agent gives notice to
each Lender of Borrower's reimbursement failure (if notice is given
before 1:00 p.m.) or on the next succeeding Business Day (if notice is
given after 1:00 p.m.). All amounts payable by any Lender accrue
interest after the due date at the Fed Funds Rate from the day the
applicable draft or draw is paid by Administrative Agent to (but not
including) the date the amount is paid by the Lender to Administrative
Agent.
(f) Duties of Administrative Agent. Administrative Agent
agrees with each Lender that it will exercise and give the same care
and attention to each LC as it gives to its other letters of credit.
Each Lender and Borrower agree that, in paying any draft or draw under
any LC, Administrative Agent has no responsibility to obtain any
document (other than any documents expressly required by the respective
LC) or to ascertain or inquire as to any document's validity,
enforceability, sufficiency, accuracy, or genuineness or the authority
of any Person delivering it. Neither Administrative Agent
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nor its Representatives will be liable to any Lender or any Company for
any LC's use or for any beneficiary's acts or omissions. Any action,
inaction, error, delay, or omission taken or suffered by Administrative
Agent or any of its Representatives in connection with any LC,
applicable draws, drafts or documents, or the transmission, dispatch,
or delivery of any related message or advice, if in good faith and in
conformity with applicable Governmental Requirements and in accordance
with the standards of care specified in the Uniform Customs and
Practices for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 (as amended or modified), is
binding upon the Companies and Lenders and does not place
Administrative Agent or any of its Representatives under any resulting
liability to any Company or any Lender. Administrative Agent is not
liable to any Company or any Lender for any action taken or omitted, in
the absence of gross negligence or willful misconduct, by
Administrative Agent or its Representatives in connection with any LC.
(g) Cash Collateral. On the Revolving Facility Termination
Date, and if requested by Required Lenders while an Event of Default
exists, Borrower shall provide Administrative Agent, for the benefit of
Lenders, cash collateral in an amount to equal the then-existing LC
Exposure.
(h) INDEMNIFICATION. BORROWER SHALL PROTECT, INDEMNIFY, PAY,
AND SAVE ADMINISTRATIVE AGENT, EACH LENDER, AND THEIR RESPECTIVE
REPRESENTATIVES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS,
LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) WHICH ANY OF THEM MAY INCUR OR BE SUBJECT
TO AS A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT, OR
THE FAILURE OF ADMINISTRATIVE AGENT TO HONOR A DRAFT OR DRAW REQUEST
UNDER ANY LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT OR
WRONG) OF ANY PRESENT OR FUTURE GOVERNMENTAL AUTHORITY. HOWEVER, NO
PERSON IS ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(i) LC Agreements. Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not
incorporated into this agreement in any manner. The fees and other
amounts payable with respect to each LC are as provided in this
agreement, drafts and draws under each LC are part of the Obligation,
only the events specified in this agreement as an Event of Default
shall constitute a default under any LC, and the terms of this
agreement control any conflict between the terms of this agreement and
any LC Agreement.
2.5 Borrowing Requests and LC Requests. Each Borrowing Request and LC
Request constitutes a representation and warranty by Borrower that as of the
Borrowing Date or the date of issuance of the requested LC, as the case may be,
that all of the conditions precedent in SECTION 6 have been satisfied.
2.6 Termination. Upon giving at least five Business Days prior written
and irrevocable notice to Administrative Agent, Borrower may terminate all or
part of the unused portion of the Revolving Facility. Each partial termination
must be in an amount of not less than $1,000,000 or a greater integral multiple
of $1,000,000, and must be ratable in accordance with each Lender's Commitment
Percentage. At the time of any termination, Borrower shall pay to Administrative
Agent, for the account of each Lender, as applicable, all accrued and unpaid
fees under this agreement, the interest attributable to the amount of that
reduction, and any related Funding Loss. Any part of the Commitment for the
Revolving Facility that is terminated may not be reinstated.
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SECTION 3. TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) Notes. The Term Loan is evidenced by the Term Notes, one
payable to each Lender in the stated amount of its Commitment for the
Term Loan. Principal Debt under the Revolving Facility is evidenced by
the Revolving Notes, one payable to each Lender in the stated amount of
its Commitment for the Revolving Facility.
(b) Payment. Borrower must make each payment and prepayment on
the Obligation to Administrative Agent's principal office in Dallas,
Texas in immediately available funds by 1:00 p.m. on the day due;
otherwise, but subject to SECTION 3.8, those funds continue to accrue
interest as if they were received on the next Business Day.
Administrative Agent shall promptly pay to each Lender the part of any
payment or prepayment to which that Lender is entitled under this
agreement on the same day Administrative Agent receives the funds from
Borrower.
(c) Payment Assumed. Unless Administrative Agent has received
notice from Borrower prior to the date on which any payment is due
under this agreement that Borrower will not make that payment in full,
Administrative Agent may assume that Borrower has made the full payment
due and Administrative Agent may, in reliance upon that assumption,
cause to be distributed to each Lender on that date the amount then due
to each Lender. If and to the extent Borrower does not make the full
payment due to Administrative Agent, each Lender shall repay to
Administrative Agent on demand the amount distributed to that Lender by
Administrative Agent together with interest for each day from the date
that Lender received payment from Administrative Agent until the date
that Lender repays Administrative Agent (unless such repayment is made
on the same day as such distribution), at an interest rate equal to the
Fed Funds Rate.
3.2 Interest and Principal Payments.
(a) Interest. Accrued interest on each LIBOR Rate Borrowing is
due and payable on the 15th day of each January, April, July and
October, commencing on the first of those dates that follows the
Closing Date, and on the last day of its respective Interest Period.
Accrued interest on each Base Rate Borrowing is due and payable on the
15th day of each January, April, July and October, commencing on the
first of those dates that follows the Closing Date. Accrued interest is
also due and payable (irrespective of the Type of Borrowing) (i) on the
Revolving Facility Termination Date in respect of accrued interest on
the Revolving Facility, and (ii) on the final maturity date of the Term
Loan as set forth in CLAUSE (d) below in respect of accrued interest on
the Term Loan.
(b) Revolving Facility Principal. The Principal Debt under the
Revolving Facility is due and payable on the Revolving Facility
Termination Date. Before that date, Borrower may at any time prepay,
without penalty (except as provided in this agreement) and in whole or
in part, the Principal Debt under the Revolving Facility, so long as
(i) each voluntary partial prepayment must be in a principal amount not
less than $1,000,000, or a greater integral multiple of $1,000,000 and
(ii) Borrower shall pay any related Funding Loss upon demand.
Conversions under SECTION 3.10 are not prepayments.
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(c) Revolving Facility Mandatory Prepayments. Immediately upon
a Permitted Asset Sale as described in CLAUSE (v) or (vi) of the
definition of "Permitted Asset Sale," Borrower shall make a mandatory
prepayment to Administrative Agent (with any related Funding Loss)
under the Revolving Facility in an amount equal to 80% of the Net
Proceeds of such Permitted Asset Sale, but only to the extent Borrower
is not able to use such proceeds to prepay the Term Loan as required by
CLAUSE (f)(i) below.
(d) Term Loan Principal. The Principal Debt under the Term
Loan is due and payable in installments of $833,333.33 on the 15th day
of each January, April, July and October, commencing April 15, 2000,
and ending on January 15, 2002, the a final payment of all remaining
Principal Debt under the Term Loan being due and payable on February
16, 2002.
(e) Term Loan Voluntary Prepayments. Borrower may, by giving
notice to Administrative Agent no later than five Business Days before
the date of the prepayment, prepay, without penalty (except as provided
in this agreement) and in whole or part, the Principal Debt under the
Term Loan, so long as (i) the notice by Borrower specifies the amount
to be prepaid, (ii) each voluntary partial prepayment must be in a
principal amount of not less than $1,000,000, or a greater integral
multiple of $1,000,000, plus accrued interest on the amount prepaid to
the date of the prepayment and (iii) Borrower shall pay any related
Funding Loss upon demand. Conversions under SECTION 3.10 are not
prepayments. No voluntary prepayment of the Term Loan may be
reborrowed. Voluntary prepayments of the Term Loan shall be applied to
installments in order of maturity.
(f) Term Loan Mandatory Prepayments.
(i) Immediately upon a Permitted Asset Sale as
described in CLAUSE (v) or (vi) of the definition of
"Permitted Asset Sale," Borrower shall make a mandatory
prepayment to Administrative Agent (with any related Funding
Loss) on the Term Loan in an amount equal to 80% of the Net
Proceeds of such Permitted Asset Sale. No such mandatory
prepayment of the Term Loan may be reborrowed.
(ii) All prepayments under this CLAUSE (f) shall be
applied to installments in inverse order of maturity.
3.3 Interest Options. Except that the LIBOR Rate may not be selected
when an Event of Default of Potential Default exists, and except as otherwise
provided in this agreement, Borrowings bear interest at an annual rate equal to
the lesser of (i) the Base Rate plus the Applicable Margin or the LIBOR Rate
plus the Applicable Margin (in each case as designated or deemed designated by
Borrower), as the case may be and (ii) the Maximum Rate. Each change in the Base
Rate, LIBOR Rate or Maximum Rate is effective, without notice to Borrower or any
other Person, upon the effective date of change.
3.4 Quotation of Rates. Borrower may call Administrative Agent before
delivering a Borrowing Request to receive an indication of the interest rates
then in effect, but the indicated rates do not bind Administrative Agent or
Lenders or affect the interest rate that is actually in effect when Borrower
makes a Borrowing Request or on the Borrowing Date.
3.5 Default Rate. All past-due Principal Debt and, unless prohibited by
applicable Government Requirements, past-due interest accruing on the Principal
Debt shall, at Administrative Agent's option, bear interest on the amount
thereof from time to time outstanding from the date due (stated or by
acceleration) at the Default Rate until paid, regardless whether payment is made
before or after entry of a judgment.
3.6 Interest Recapture. If the designated interest rate applicable to
any Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is
limited to the Maximum Rate, but any subsequent
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reductions in the designated rate shall not reduce the interest rate thereon
below the Maximum Rate until the total amount of accrued interest equals the
amount of interest that would have accrued if that designated rate had always
been in effect. If at maturity (stated or by acceleration), or at final payment
of the Notes, the total interest paid or accrued is less than the interest that
would have accrued if the designated rates had always been in effect, then, at
that time and to the extent not prohibited by applicable Governmental
Requirements, Borrower shall pay an amount equal to the difference between (a)
the lesser of the amount of interest that would have accrued if the designated
rates had always been in effect and the amount of interest that would have
accrued if the Maximum Rate had always been in effect, and (b) the amount of
interest actually paid or accrued on the Notes.
3.7 Interest Calculations. Interest on all LIBOR Rate Borrowings will
be calculated on the basis of a 360-day year consisting of twelve 30-day months
(including the first day but excluding the last day). Interest on all Base Rate
Borrowings will be calculated on the basis of a year consisting of 365 or 366
days, as the case may be (including the first day but excluding the last day).
All interest rate determinations and calculations by Administrative Agent are
conclusive and binding absent manifest error.
3.8 Maximum Rate. It is the intent of Administrative Agent, Lenders and
Borrower in the execution and performance of the Credit Documents to remain in
strict compliance with applicable Governmental Requirements from time to time in
effect, including applicable laws limiting the amount or rate of interest.
Administrative Agent, Lenders and Borrower stipulate and agree that none of the
terms and provisions contained in the Credit Documents shall ever be construed
to create a contract to pay for the use, forbearance or detention of money with
interest at a rate or in an amount in excess of the Maximum Rate or Maximum
Amount. For purposes of the Credit Documents, "interest" shall include the
aggregate of all charges which constitute interest under applicable Governmental
Requirements that are contracted for, charged, reserved, received or paid under
the Credit Documents. Borrower shall never be required to pay unearned interest
and shall never be required to pay interest at a rate or in an amount in excess
of the Maximum Rate or Maximum Amount, and the provisions of this section shall
control over all other provisions of the Credit Documents, and of any other
instrument pertaining to or securing the Obligation, which may be in actual or
apparent conflict herewith. If the Obligation is prepaid, or if the maturity of
the Obligation is accelerated for any reason, or if under any contingency the
effective rate or amount of interest which would otherwise be payable under the
Credit Documents would exceed the Maximum Rate or Maximum Amount, or in the
event any Lender or any holder of the Notes shall charge, contract for, take,
reserve or receive monies that are deemed to constitute interest which would, in
the absence of this provision, increase the effective rate or amount of interest
payable under the Credit Documents to a rate or amount in excess of that
permitted to be charged, contracted for, taken, reserved or received under
applicable Governmental Requirements then in effect, then the principal amount
of the Obligation or the amount of interest which would otherwise be payable
under the Notes or both shall be reduced to the amount allowed under applicable
Governmental Requirements as now or hereinafter construed by the courts having
jurisdiction, and all such moneys so charged, contracted for, taken, reserved or
received that are deemed to constitute interest in excess of the Maximum Rate
shall immediately be returned to or credited to the account of Borrower upon
such determination. Administrative Agent, Lenders and Borrower further stipulate
and agree that, without limitation of the foregoing, all calculations of the
rate or amount of interest contracted for, charged, taken, reserved or received
under the Credit Documents which are made for the purpose of determining whether
such rate or amount exceeds the Maximum Rate or Maximum Amount, shall be made to
the extent not prohibited by applicable Governmental Requirements, by
amortizing, prorating, allocating and spreading during the period of the full
stated term of the Notes, all interest at any time contracted for, charged,
taken, reserved or received from Borrower or otherwise by Lenders or any other
holder of the Notes. If the Governmental Requirements of the State of Texas are
applicable for purposes of determining the "Maximum Rate" or the "Maximum
Amount," then those terms mean the indicated rate ceiling from time to time in
effect under Chapter 1D, Subtitle 1, Title 79, Revised Civil Statutes of Texas,
as amended.
3.9 Interest Periods. When Borrower requests any LIBOR Rate Borrowing,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, one, three
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or six months, subject to the following conditions: (i) the initial Interest
Period for a LIBOR Rate Borrowing commences on the applicable Borrowing Date or
conversion date, and each subsequent Interest Period applicable to any Borrowing
commences on the day when the next preceding applicable Interest Period expires;
(ii) if any Interest Period for a LIBOR Rate Borrowing begins on a day for which
no numerically corresponding Business Day in the calendar month at the end of
the Interest Period exists, then the Interest Period ends on the last Business
Day of that calendar month; (iii) if Borrower is required to pay any portion of
a LIBOR Rate Borrowing before the end of its Interest Period in order to comply
with the payment provisions of the Credit Documents, Borrower shall also pay any
related Funding Loss; (iv) no Interest Period for any portion of Principal Debt
may extend beyond the scheduled repayment date for that portion of Principal
Debt; and (v) no more than six Interest Periods may be in effect at one time.
3.10 Conversions. Subject to the dollar limits of SECTION 2.2(B) and
provided that Borrower may not convert to or select a new Interest Period for a
LIBOR Rate Borrowing at any time when an Event of Default exists, Borrower may
(i) convert a LIBOR Rate Borrowing on the last day of the applicable Interest
Period to a Base Rate Borrowing, (ii) convert a Base Rate Borrowing at any time
to a LIBOR Rate Borrowing and (iii) elect a new Interest Period for a LIBOR Rate
Borrowing. That election may be made by telephonic request to Administrative
Agent no later than 12:00 noon on the Business Day before the conversion date or
the last day of the Interest Period, as the case may be (for conversion to a
LIBOR Rate Borrowing or election of a new Interest Period), and no later than
12:00 noon on the last day of the Interest Period (for conversion to a Base Rate
Borrowing). Borrower shall provide a Conversion Notice to Administrative Agent
no later than three days after the date of the conversion or election. Absent
Borrower's telephonic request for conversion or election of a new Interest
Period or if an Event of Default exists, then, a LIBOR Rate Borrowing shall be
deemed converted to a Base Rate Borrowing effective when the applicable Interest
Period expires.
3.11 Order of Application.
(a) No Event of Default. If no Event of Default exists, any
payment shall be applied to the Obligation in the order and manner as
Borrower directs except as otherwise specifically provided in the
Credit Documents.
(b) Event of Default or No Direction. If an Event of Default
exists, or if Borrower fails timely to give direction, any payment
(including proceeds from the exercise of any Rights) shall be applied
in the following order: (i) To all fees and expenses for which
Administrative Agent or Lenders have not been paid or reimbursed in
accordance with the Credit Documents (and if such payment is less than
all unpaid or unreimbursed fees and expenses, then the payment shall be
paid against unpaid and unreimbursed fees and expenses in the order of
incurrence or due date); (ii) to accrued interest on the Principal
Debt; (iii) to any LC reimbursement obligations that are due and
payable and that remain unfunded by any Borrowing under the Revolving
Facility; (iv) to the remaining Principal Debt in the order as Required
Lenders may elect (but Required Lenders agree to apply proceeds in an
order that will minimize any Funding Loss); (v) to the remaining
Obligation in the order and manner Required Lenders deem appropriate;
(vi) as a deposit with Administrative Agent, for the benefit of
Lenders, as security for and payment of any subsequent LC reimbursement
obligations.
(c) Pro Rata. Each payment or prepayment shall be distributed
to each Lender in accordance with its Pro Rata Part of that payment or
prepayment
3.12 Sharing of Payments, Etc. If any Lender obtains any payment or
prepayment with respect to the Obligation (whether voluntary, involuntary, or
otherwise, including, without limitation, as a result of exercising its Rights
under SECTION 3.13) that exceeds the part of that payment or prepayment that it
is then entitled to receive under the Credit Documents, then that Lender shall
purchase from the other Lenders participations that will cause the purchasing
Lender to share the excess payment or prepayment ratably with each other Lender.
If all or any portion of any excess payment or prepayment is subsequently
recovered from
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the purchasing Lender, then the purchase shall be rescinded and the purchase
price restored to the extent of the recovery. Borrower agrees that any Lender
purchasing a participation from another Lender under this section may, to the
fullest extent permitted by applicable Governmental Requirements, exercise all
of its Rights of payment (including the Right of offset) with respect to that
participation as fully as if that Lender were the direct creditor of Borrower in
the amount of that participation.
3.13 Offset. If an Event of Default exists, to the extent not
prohibited by applicable Governmental Requirements, each Lender may exercise
(for the benefit of all Lenders in accordance with SECTION 3.12) the Rights of
offset and banker's Lien against each and every account and other property, or
any interest therein, that any Company may now or hereafter have with, or which
is now or hereafter in the possession of, that Lender to the extent of the full
amount of the Obligation owed (directly or participated) to it.
3.14 Booking Borrowings. To the extent permitted by applicable
Governmental Requirements, any Lender may make, carry, or transfer its
Borrowings at, to, or for the account of any of its branch offices or the office
or branch of any of its Affiliates. However, no Affiliate or branch is entitled
to receive any greater payment under SECTION 3.16 than the transferor Lender
would have been entitled to receive with respect to those Borrowings, and a
transfer may not be made if, as a direct result of it, SECTION 3.15 or 3.17
would apply to any of the Obligation. If any of the conditions of SECTIONS 3.16
or 3.17 ever apply to a Lender, that Lender shall, to the extent possible, carry
or transfer its Borrowings at, to, or for the account of any of its branch
offices or the office or branch of any of its Affiliates so long as the transfer
is consistent with the other provisions of this section, does not create any
burden or adverse circumstance for that Lender that would not otherwise exist,
and eliminates or ameliorates the conditions of SECTIONS 3.16 or 3.17, as
applicable.
3.15 Basis Unavailable or Inadequate for LIBOR Rate. If on or before
any date when a LIBOR Rate is to be determined for a Borrowing, Administrative
Agent or any Lender determines (and Required Lenders agree with that
determination) that the basis for determining the applicable rate is not
available or that the resulting rate does not accurately reflect the cost to
Lenders of making or converting Borrowings at that rate for the applicable
Interest Period, then Administrative Agent shall promptly notify Borrower and
Lenders of that determination (which is conclusive and binding on Borrower
absent manifest error), and the applicable Borrowing shall bear interest at the
sum of the Base Rate plus the Applicable Margin. Until Administrative Agent
notifies Borrower that those circumstances giving rise to such notice no longer
exist, Lenders' commitments under this agreement to make, or to convert to,
LIBOR Rate Borrowings, as the case may be, shall be suspended.
3.16 Additional Costs. Each Lender severally and not jointly agrees to
notify Administrative Agent, the other Lenders, and Borrower within 180 days
after it has actual knowledge that any circumstances exist that would give rise
to any payment obligation by Borrower under CLAUSES (A) through (C) below.
Although no Lender shall have any liability to Administrative Agent, any other
Lender, or any Company for its failure to give that notice, Borrower is not
obligated to pay any amounts under those clauses that arise, accrue or are
imposed more than 180 days before that notice to the extent it is applicable to
those amounts. To demand payment under this section, any such Lender must
generally be making similar demand for similar additional costs under credit
agreements to which it is party that contain similar provisions to this section.
(a) Reserves. With respect to any LIBOR Rate Borrowing (i) if
any change in any present Governmental Requirement, any change in the
interpretation or application of any present Governmental Requirement,
or any future Governmental Requirement imposes, modifies or deems
applicable (or if compliance by any Lender with any requirement of any
Governmental Authority results in) any requirement that any reserves
(including, without limitation, any marginal, emergency, supplemental,
or special reserves) be maintained (other than any reserve included in
the Reserve Requirement) and if (ii) those reserves reduce any sums
receivable by that Lender under this agreement or increase the costs
incurred by Lender in advancing or maintaining any portion of any LIBOR
Rate Borrowing, then (iii) that Lender (through Administrative Agent)
shall deliver to Borrower a certificate
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setting forth in reasonable detail the calculation of the amount
necessary to compensate it for its reduction or increase (which
certificate is conclusive and binding absent manifest error), and (iv)
Borrower shall pay that amount to that Lender within ten Business Days
after demand. The provisions of and undertakings and indemnifications
in this CLAUSE (A) survive the satisfaction and payment of the
Obligation and termination of this agreement.
(b) Capital Adequacy. With respect to any Borrowing or LC, if
any change in any present Governmental Requirement, any change in the
interpretation or application of any present Governmental Requirement,
or any future Governmental Requirement regarding capital adequacy, or
if compliance by Administrative Agent (as issuer of LCs) or any Lender
with any request, directive or requirement imposed in the future by any
Governmental Authority regarding capital adequacy, or if any change in
its written policies or in the risk category of this transaction, in
any of the foregoing events or circumstances, reduces the rate of
return on its capital as a consequence of its obligations under this
agreement to a level below that which it otherwise could have achieved
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by it to be material (and it may, in
determining the amount, utilize reasonable assumptions and allocations
of costs and expenses and use any reasonable averaging or attribution
method), then (unless the effect is already reflected in the rate of
interest then applicable under this agreement) Administrative Agent or
that Lender (through Administrative Agent) shall notify Borrower and
deliver to Borrower a certificate setting forth in reasonable detail
the calculation of the amount necessary to compensate it (which
certificate is conclusive and binding absent manifest error), and
Borrower shall pay that amount to Administrative Agent or that Lender
within ten Business Days after demand. The provisions of and
undertakings and indemnification in this CLAUSE (b) shall survive the
satisfaction and payment of the Obligation and termination of this
agreement.
(c) Taxes. Any Taxes payable by Administrative Agent or any
Lender or ruled by a Governmental Authority to be payable by
Administrative Agent or any Lender in respect of this agreement or any
other Credit Document shall, if permitted by applicable Governmental
Requirements, be paid by Borrower, together with interest and
penalties, if any, except for Taxes payable on or measured by the
overall net income of Administrative Agent or that Lender (or any other
Person with whom Administrative Agent or that Lender files a
consolidated, combined, unitary, or similar Tax return) and except for
interest and penalties incurred as a result of the gross negligence or
willful misconduct of Administrative Agent or that Lender.
Administrative Agent or that Lender (through Administrative Agent)
shall notify Borrower and deliver to Borrower a certificate setting
forth in reasonable detail the calculation of the amount of Taxes
payable, which certificate is conclusive and binding (absent manifest
error), and Borrower shall pay that amount to Administrative Agent for
its account or the account of that Lender, as the case may be, within
ten Business Days after demand. If Administrative Agent or that Lender
subsequently receives a refund of the Taxes paid to it by Borrower,
then the recipient shall promptly pay the refund to Borrower.
3.17 Change in Governmental Requirements. If any Governmental
Requirement makes it unlawful for any Lender to make or maintain LIBOR Rate
Borrowings, then that Lender shall promptly notify Borrower and Administrative
Agent, and (i) as to undisbursed funds, that requested Borrowing shall be made
as a Base Rate Borrowing and (ii) as to any outstanding Borrowing (a) if
maintaining the Borrowing until the last day of the applicable Interest Period
is unlawful, the Borrowing shall be converted to a Base Rate Borrowing as of the
date of notice, in which event Borrower will not be required to pay any related
Funding Loss or (b) if not prohibited by applicable Governmental Requirements,
the Borrowing shall be converted to a Base Rate Borrowing as of the last day of
the applicable Interest Period or (c) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Borrowing, without penalty but
with related Funding Loss.
3.18 Funding Loss. BORROWER SHALL INDEMNIFY EACH LENDER AGAINST, AND
PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER DEMANDS
THAT BORROWER PAY ANY
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FUNDING LOSS, THAT LENDER SHALL DELIVER TO BORROWER AND ADMINISTRATIVE AGENT A
CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS FOR IMPOSING FUNDING
LOSS AND THE CALCULATION OF THE AMOUNT, WHICH CALCULATION IS CONCLUSIVE AND
BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND UNDERTAKINGS AND
INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND PAYMENT OF THE
OBLIGATION AND TERMINATION OF THIS AGREEMENT.
3.19 Foreign Lenders, Participants, and Assignees. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Assignee (by executing an Assignment) that is not organized under the
Governmental Requirements of the United States of America or one of its states
(a) represents to Administrative Agent and Borrower that (i) no Taxes are
required to be withheld by Administrative Agent or Borrower with respect to any
payments to be made to it in respect of the Obligation and (ii) it has furnished
to Administrative Agent and Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224, Form 1001, Form W-8, or any other form
acceptable to Administrative Agent and Borrower that entitles it to a complete
exemption from U.S. federal withholding Tax on all interest or fee payments
under the Credit Documents, and (b) covenants to (i) provide Administrative
Agent and Borrower a new Form 4224, Form 1001, Form W-8, or other form
acceptable to Administrative Agent and Borrower upon the expiration or
obsolescence according to applicable Governmental Requirements of any previously
delivered form, duly executed and completed by it, entitling it to a complete
exemption from U.S. federal withholding Tax on all interest and fee payments
under the Credit Documents, and (ii) comply from time to time with all
applicable Governmental Requirements with regard to the withholding Tax
exemption. If any of the foregoing is not true at any time or the applicable
forms are not provided, then Borrower and Administrative Agent (without
duplication) may deduct and withhold from interest and fee payments under the
Credit Documents any Tax at the maximum rate under the IRC or other applicable
Governmental Requirement, and amounts so deducted and withheld shall be treated
as paid to that Lender, Participant, or assignee, as the case may be, for all
purposes under the Credit Documents.
SECTION 4. FEES.
4.1 Treatment of Fees. The fees described in this SECTION 4 (i) are not
compensation for the use, detention or forbearance of money, (ii) are in
addition to, and not in lieu of, interest and expenses otherwise described in
the Credit Documents, (iii) are payable in accordance with SECTION 3.1, (iv) are
non-refundable, (v) to the fullest extent not prohibited by applicable
Governmental Requirements, bear interest, if not paid when due, on the amount
thereof from time to time unpaid at the Default Rate and (vi) with respect to
the fees referenced in SECTIONS 4.3 and 4.4, are calculated on the basis of the
actual number of days (including the first day but excluding the last day)
elapsed, as if each calendar year consisted of 360 days, unless such amount is
determined to constitute interest and if so, such computation would result in an
interest rate deemed to exceed (notwithstanding the foregoing) the Maximum Rate
in which event the computation is made on the basis of a year of 365 or 366
days, as the case may be.
4.2 Arrangement and Underwriting Fees. Borrower shall pay to
Administrative Agent arrangement, structure, management, documentation, due
diligence and custodial fees in amounts and upon such payment terms as may be
separately agreed upon by Borrower and Administrative Agent in writing.
4.3 Unused Facility Fee. From and after the Closing Date, Borrower
shall pay to Administrative Agent for the account of each Lender, according to
each Lender's Commitment Percentage on the day the fee is payable, an unused
facility fee for the Revolving Facility. The fee accrues on the last day of each
December, March, June and September, and is due and payable on the 15th day of
each January, April, July and October, commencing on April 15, 1999, and on the
Revolving Facility Termination Date. Each payment of the fee is equal to the
following, determined for the calendar quarter (or portion of a calendar quarter
commencing on the Closing Date or ending on the Revolving Facility Termination
Date) preceding and including the date it accrues: From the Closing Date until
the Revolving Facility Termination Date, the product of (i) the Applicable
Percentage times (ii) the amount by which the average-daily total Commitment for
only the Revolving Facility
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exceeds the sum of the average-daily Principal Debt under only the Revolving
Facility plus the average-daily LC Exposure for standby LCs, times (iii) a
fraction with the number of days in the applicable quarter or portion of it as
the numerator and 365 as the denominator.
4.4 LC Fees. As a condition precedent to the issuance (including,
without limitation, the extension) of each LC, Borrower shall pay to
Administrative Agent:
(a) For the account of each Lender, according to each Lender's
Commitment Percentage on the day the fee is payable, an issuance fee,
payable quarterly in arrears, equal to a percentage of the average-face
amount of that LC during each applicable quarterly period, which
percentage is equal to the Applicable Margin in effect for LIBOR Rate
Borrowings on the first day of the quarterly period for which a payment
is payable; and
(b) For the account of Administrative Agent, payable on the
date of issuance, a fronting fee of the greater of (A) $300 or (B)
0.125% of the face amount of each standby LC.
4.5 Prepayment Fee. If the Obligation is entirely prepaid at any time
prior to February 16, 2000, Borrower shall pay to Administrative Agent for the
account of each Lender, according to each Lender's Commitment Percentage on the
day the fee is payable, a prepayment fee equal to 0.250% multiplied by the total
Commitments of all Lenders as of the Closing Date. Notwithstanding the
foregoing, no prepayment fee will be assessed against Borrower if the Obligation
is prepaid solely from the proceeds of an underwritten public offering of
Borrower's stock or debt securities, or from the proceeds of an acquisition of
Borrower by an unrelated third party.
SECTION 5. SECURITY.
5.1 Guaranty. Borrower shall cause each of its present and future
Subsidiaries to (a) unconditionally guarantee the full payment and performance
of the Obligation by execution of a Guaranty (other than any Foreign Subsidiary
the execution of a Guaranty by which would create a material Tax obligation for
the Companies that would not otherwise exist) and (b) grant liens in all
Collateral now or hereafter owned by any of the, by due execution and delivery
of a Security Agreement to Administrative Agent for Lenders.
5.2 Collateral. Borrower shall cause full payment and performance of
the Obligation to be secured by Lender Liens on all of the items and types of
property (together with its proceeds, the "COLLATERAL"), described in the
present and future Credit Documents creating Lender Liens, including, without
limitation:
(a) Present and future accounts receivable, inventory, general
intangibles, contract rights, equipment, fixtures, patents, trademarks,
other intellectual property and all other personal property of each
present and future Domestic Company;
(b) 100% of the present and future issued and outstanding
capital stock, partnership interests, and other equity interests of all
of Borrower's present and future Domestic Subsidiaries;
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(c) Approximately all (but not less than 65%) of the present
and future issued and outstanding capital stock, partnership interests,
and other equity interests of all of Borrower's present and future
Foreign Subsidiaries the pledge of which would not create a material
Tax obligation for the Companies that would not otherwise exist; and
(d) All present and future notes receivable executed by a
Foreign Subsidiary in favor of Borrower.
5.3 Creation of Liens and Further Assurances. Borrower covenants and
agrees that the Lender Liens described in SECTION 5.2 shall be created and
perfected as a condition to funding any Borrowings or the issuance of any LC.
Furthermore, Borrower shall, and shall cause each other appropriate Company to,
perform the acts, duly authorize, execute, acknowledge, deliver, file, and
record any additional writings, and pay all filing fees and costs as
Administrative Agent or Required Lenders may reasonably deem appropriate or
necessary to perfect and maintain the Lender Liens and preserve and protect the
Rights of Administrative Agent and Lenders under any Credit Document.
5.4 Change in Tax Laws. Notwithstanding anything to the contrary set
forth in this SECTION 5, in the event the Tax laws regarding Foreign
Subsidiaries are changed to remove the creation of a material Tax obligation for
the Companies, each such Foreign Subsidiary may, at Borrower's discretion,
execute a Guaranty in exchange for a release of the pledge of its securities.
5.5 Release of Collateral. Whenever Lenders no longer have any
commitment to extend credit under any Credit Document and the Obligation has
been fully paid and performed, then Administrative Agent and Lenders shall, upon
Borrower's written request and at Borrower's cost and expense, cause the Lender
Liens on all Collateral to be released and all Guaranties to be terminated and
released.
SECTION 6. CONDITIONS PRECEDENT.
6.1 Initial Advances. The obligation of Lenders to make the initial
advances under this agreement is subject to the condition precedent that, on or
before the date of such advance, Administrative Agent and Lenders have received,
there shall have been performed and there shall exist, the documents, actions
and other matters set forth below, each in form, scope and substance, and (as
applicable) dated as of a date, satisfactory to Administrative Agent and
Lenders:
(a) Credit Agreement. This agreement duly executed by
Borrower, Administrative Agent and each initial Lender;
(b) Revolving Notes. The Revolving Notes duly executed and
delivered by Borrower;
(c) Term Notes. The Term Notes duly executed and delivered by
Borrower;
(d) Guaranties. A Guaranty duly executed and delivered by each
of Borrower's Domestic Subsidiaries;
(e) Collateral Documents. Copies (in sufficient counterparts)
of each of the documents, instruments and agreements listed below, each
duly executed and delivered by the respective parties indicated below:
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(i) A Security Agreement executed by each Domestic
Company;
(ii) UCC-1 Financing Statements from each Domestic
Company in favor of Administrative Agent as "Secured Party",
to be filed in the appropriate central and local recording
offices;
(iii) Stock certificates evidencing all capital stock
pledged pursuant to the Security Agreement, together with
stock powers delivered in blank;
(iv) Original certificates of title, together with
executed applications for title, for all vehicles, rigs,
trailers, containers and similar equipment covered by any
jurisdiction's certificate of title laws that are used in
connection with the Domestic Companies' business;
(v) (a) Original promissory notes and similar
instruments payable to any Company, properly assigned or
endorsed in favor of Administrative Agent for Lenders, and (b)
such other documents as to evidence and perfect Lenders' Liens
in all investment property, deposit accounts and instruments
(as such terms are defined in the UCC as enacted in the State
of Texas);
(f) Officers' Certificate. A certificate signed by a duly
authorized officer of Borrower stating that (to the best knowledge and
belief of the officer, after reasonable and due investigation and
review of matters pertinent to the subject matter of the certificate):
(i) all of the representations and warranties contained in SECTION 7
and in the other Credit Documents, are true and correct as of the
Closing Date; and (ii) no Potential Default, Event of Default or
Material Adverse Event has occurred and is continuing or would result
from the transactions contemplated by the Credit Documents;
(g) Resolutions. Resolutions of Borrower and each other
Domestic Company approving the execution, delivery and performance of
this agreement, the Notes and the other Credit Documents to which it is
a party and the transactions contemplated herein and therein, duly
adopted by such Domestic Company's Board of Directors and accompanied
by a certificate of the Secretary or Assistant Secretary of each such
Person stating that the resolutions are true and correct, have not been
altered or repealed and are in full force and effect;
(h) Incumbency Certificates. Signed certificates of the
Secretary or Assistant Secretary of Borrower and each other Domestic
Company certifying the names of the officers of such Domestic Company
authorized to sign each of the Credit Documents to which it is a party
and the other documents or certificates to be delivered pursuant to the
Credit Documents by such Person, together with the true signatures of
each such officer. Administrative Agent and Lenders may conclusively
rely on each such certificate until they receive, and have had a
reasonable opportunity to act upon, a further certificate of the
Secretary or Assistant Secretary of any such Domestic Company canceling
or amending the prior certificate and submitting the signatures of the
officers named in the further certificate;
(i) Governmental Certificates. Certificates of existence, good
standing and tax payment (or other similar instruments) for Borrower
and each other Domestic Company, issued by the Secretary of State of
the state of incorporation of such Persons, each dated within twenty
(20) days of the initial Borrowing, and a copy of each of the licenses
or authority issued to such Person enabling it to do business in other
states;
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(j) Articles of Incorporation. A copy of the articles or
certificate of incorporation (as the case may be) of Borrower and each
other Company, and all amendments thereto, certified by the Secretary
of State and taxing authority of the state of incorporation of such
corporation, and dated within twenty (20) days of the date of the
initial Borrowing;
(k) Bylaws. A copy of the Bylaws of Borrower and each other
Company, and all amendments thereto, certified by the Secretary or
Assistant Secretary of such Person as being true, correct and complete
as of the date of such certification;
(l) Payments to the Lender. The payment to Administrative
Agent of: (i) all fees to be received by Administrative Agent pursuant
to this agreement or any other Credit Documents, and (ii) all
third-party costs incurred in connection with this agreement, including
all reasonable attorneys' fees, costs and out-of-pocket expenses of
Administrative Agent's counsel incurred or estimated to have been
incurred through the Closing Date in connection with the preparation,
execution and delivery of the Credit Documents and the consummation of
the transactions contemplated thereby;
(m) Insurance Policies. Copies of all insurance policies
required by SECTION 8.9, together with loss payee and notice of
cancellation endorsements in favor of Administrative Agent with respect
to all insurance policies concerning collateral;
(n) UCC and Tax and Judgment Lien Searches; Releases. The
results of Uniform Commercial Code searches showing all financing
statements and other documents or instruments, and tax and judgment
Lien searches showing all tax and judgment Liens, on file against
Borrower and the other Domestic Companies in such jurisdictions as
Administrative Agent shall require, such searches to be as of a date no
more than thirty (30) days prior to the date of the initial Borrowing.
A release and termination duly executed and delivered by each Person in
whose favor (i) such UCC or tax and judgment Lien searches reflect an
interest exists or (ii) any other search or information reflects an
interest exists in any property or rights of any Domestic Company;
(o) Opinion of Counsel. A favorable opinion addressed to
Administrative Agent and Lenders as to the matters set forth in EXHIBIT
J hereto of Gardere & Xxxxx, L.L.P., legal counsel to the Companies;
(p) TROL Financing. Documents, instruments, reports, opinions
and other items necessary to amend and refinance the TROL Financing;
and
(q) Additional Information. Such other documents, instruments,
reports, opinions and information as reasonably required by
Administrative Agent, any Lender and their respective counsel.
6.2 All Borrowings. The obligation of Lenders to extend Borrowings
under this agreement (including the initial advances) is subject to the
following conditions precedent:
(a) No Default or Potential Default. As of the date of the
making of the Borrowing, there exists no Event of Default or Potential
Default;
(b) Compliance with Credit Agreement. Each Company has
performed and complied with all agreements and conditions contained in
this agreement and each other Credit Document that are required to be
performed or complied with by it before or at the date of the
Borrowing;
(c) No Material Adverse Event. As of the date of making the
Borrowing, no Material Adverse Event has occurred and is continuing;
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(d) Borrowing Request. Administrative Agent has timely
received from Borrower a properly completed Borrowing Request, executed
by a Responsible Officer of Borrower; and
(e) Representations and Warranties. The representations and
warranties contained in SECTION 7 and the other Credit Documents are
true in all respects on the date of, and after giving effect to, the
Borrowing, with the same force and effect as though made on and as of
that date.
6.3 Permitted Acquisitions. Prior to the consummation of any
Acquisition (whether or not the purchase price for such Acquisition is funded by
Borrowings), Borrower shall deliver to Administrative Agent the following items:
(a) all supplements to, or revisions of, SCHEDULES 7.3 and 7.8
which are required to make the disclosures in such Schedules accurate
after giving effect to such Acquisition, so long as, on or prior to the
date of consummation of such Acquisition, the consent of Required
Lenders with respect to such revised or supplemental Schedules have
been obtained; and
(b) a Permitted Acquisition Compliance Certificate in form and
substance acceptable to Administrative Agent.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Administrative Agent and Lenders as follows:
7.1 Purpose and Regulation U.
(a) Subject to the other provisions in the Credit Documents,
including, without limitation, CLAUSE (b) below, the proceeds of the
Term Loan will be used to refinance the term loan portion of the
Refinanced Debt and for general corporate purposes, and the proceeds of
the Revolving Facility will be used to refinance the revolving loan
portion of the Refinanced Debt, for general corporate purposes, working
capital uses in the ordinary course of business, Permitted
Acquisitions, and permitted stock repurchases.
(b) The proceeds of the Revolving Facility and Term Loan will
be used by Borrower solely for the purposes specified in SECTION
7.1(a). None of such proceeds will be used for the purpose of
purchasing or carrying any "margin stock"as defined in Regulation U or
G of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 221 and 207), or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a
margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation U
or G. No Company is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stocks. No Company, nor any
Person acting on behalf of any Company, has taken or will take any
action that might cause the Notes or any other of the Credit Documents,
including this Credit Agreement, to violate Regulations U or G or any
other regulations of the Board of Governors of the Federal Reserve
System or to violate Section 7 of the Securities Exchange Act of 1934
or any rule or regulation thereunder, in each case as now in effect or
as the same may hereinafter be in effect. For the avoidance of doubt,
no proceeds of the Revolving Facility or Term Loan may be used to
purchase any securities, including without limitation, any of the
Permitted Investments described in CLAUSES (f) through (h) of SECTION
9.7.
7.2 Corporate Existence, Good Standing, Authority and Locations. Each
Company is duly organized, validly existing and in good standing under the
Governmental Requirements of its jurisdiction of incorporation or formation, as
applicable. Except where the failure to qualify would not result in a Material
Adverse Event, each Company is duly qualified to transact business and is in
good standing as a foreign corporation or partnership (as applicable) in each
jurisdiction where the nature and extent of its business and
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properties require due qualification and good standing (and each of such
jurisdictions is identified in SCHEDULE 7.3). Each Company possesses all
requisite authority and power to conduct its business as is now being conducted
and as proposed to be conducted (including under the Credit Documents) and to
own and operate its assets as now owned and operated and as proposed to be owned
and operated (including under the Credit Documents). Each Company's chief
executive office and other principal offices are described on SCHEDULE 7.3. The
present location of each Company's books and records concerning accounts and
accounts receivable is at its chief executive office.
7.3 Subsidiaries and Names. SCHEDULE 7.3 describes (i) each Company,
(ii) every name or trade name used by each Company during the five-year period
before the date of this agreement (or during the period such Company has been a
Subsidiary, if shorter) and (iii) every change of each Company's name during the
four-month period before the date of this agreement. All of the outstanding
shares of capital stock (or similar voting interests) of each Company are (1)
duly authorized, validly issued, fully paid and nonassessable, (2) owned of
record and beneficially as described in SCHEDULE 7.3, free and clear of any
Liens, except Permitted Liens and (3) not subject to any warrant, option or
other acquisition Right of any Person or subject to any voting, ownership or
transfer restriction except (a) restrictions imposed by securities laws and
general corporate laws and (b) restrictions expressly noted in the certificates
evidencing such shares.
7.4 Authorization and Contravention. The execution and delivery by each
Company of each Credit Document to which it is a party and the performance by it
of its obligations under those Credit Documents (i) are within its corporate or
partnership power (as applicable), (ii) have been duly authorized by all
necessary corporate or partnership action (as applicable), (iii) require no
consent of, action by, or filing with, any Governmental Authority (except any
action or filing that has been taken or made or consent that has been received,
and is completed and in final form and full force and effect, on or before the
Closing Date), (iv) do not violate any provision of its Organizational
Documents, (v) do not violate any provision of any Governmental Requirement
applicable to it or result in any breach of, or default under, any material
agreement of the Companies, or (vi) result in, or requires the imposition of,
any Liens on any property of any Company, other than in favor of Administrative
Agent for Lenders.
7.5 Binding Effect. Upon execution by each Company of each Credit
Document to which it is a party, each such Credit Document will constitute a
legal and binding obligation of each such party, enforceable against each such
party in accordance with that Credit Document's terms except as that
enforceability may be limited by Debtor Relief Laws and general principles of
equity.
7.6 Financials. The Current Financials were prepared in accordance with
GAAP and present fairly, in all material respects, the Companies' consolidated
(if applicable) financial condition, results of operations and cash flows as of,
and for the portion of the fiscal year ending on, their dates (subject only to
normal year-end adjustments for interim statements). Except for transactions
directly related to, or specifically contemplated or expressly permitted by, the
Credit Documents, no material adverse changes have occurred in the Companies'
consolidated (if applicable) financial condition from that shown in the Current
Financials.
7.7 Solvency. On each Borrowing Date, each Company is, and after giving
effect to the requested Borrowing will be, Solvent.
7.8 Litigation.
(a) Except as shown on SCHEDULE 7.8, no Company is subject to,
or aware of the threat of, any Litigation involving any Company, or any
of their respective properties, which if adversely determined against
any of them, reasonably could be expected to result in a Material
Adverse Event, and
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(b) No outstanding and unpaid judgments against any Company
exist that reasonably could be expected to result in a Material Adverse
Event.
7.9 Taxes. Except where the non-compliance of any of the following
reasonably could not be expected to result in a Material Adverse Event, (i) all
returns, reports and other information of each Company required to be filed in
respect to a present or future liability for any Taxes have been prepared in
compliance with all requisite Governmental Requirements, and as so prepared,
have been properly filed (or extensions have been granted) and (ii) all Taxes
imposed upon each Company that are due and payable have been timely and fully
paid except as are being contested as permitted by SECTION 8.5.
7.10 Environmental Matters.
(a) No Company has received notice from any Governmental
Authority that it has any actual or potential Environmental Liability,
and no Company has knowledge that it has any Environmental Liability,
which actual or potential Environmental Liability in either case
reasonably could be expected to constitute a Material Adverse Event.
(b) No Company has received notice from any Governmental
Authority that any Real Property is affected by, and no Company has
knowledge that any Real Property is affected by, any Release of any
Hazardous Substance which reasonably could be expected to constitute a
Material Adverse Event.
7.11 Employee Plans. Except where not a Material Adverse Event (i) no
Employee Plan subject to ERISA has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 512 of the IRC), (ii) neither any
Company nor any ERISA Affiliate has incurred liability (except for liabilities
for premiums that have been paid or that are not past due) under ERISA to the
PBGC in connection with any Employee Plan, (iii) neither any Company nor any
ERISA Affiliate has withdrawn in whole or in part from participation in a
Multiemployer Plan in a manner that has given rise to a withdrawal liability
under Title IV of ERISA, (iv) neither any Company nor any ERISA Affiliate has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC), (v) no "reportable event" (as defined in Section 4043
of ERISA) has occurred excluding events for which the notice requirement is
waived under applicable PBGC regulations, (vi) neither any Company nor any ERISA
Affiliate has any liability, or is subject to any Lien, under ERISA or the IRC
to or on account of any Employee Plan, (vii) each Employee Plan subject to ERISA
and the IRC complies in all material respects, both in form and operation, with
ERISA and the IRC and (viii) no Multiemployer Plan subject to the IRC is in
reorganization within the meaning of Section 418 of the IRC.
7.12 Properties; Liens. Each Company has good and marketable title to
all its property reflected on the Current Financials except for property that is
obsolete or that has been disposed of in the ordinary course of business between
the date of the Current Financials and the date of this agreement or, after the
date of this agreement, as permitted by SECTIONS 9.9 or 9.10. No Lien exists on
any property of any Company except Permitted Liens. Except for the Credit
Documents, no Company is party or subject to any agreement, instrument or order
which in any way restricts any Company's ability to allow Liens to exist upon
any of its assets.
7.13 Government Regulations. No Company is subject to regulation under
the Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
7.14 Transactions with Affiliates. Except for transactions with other
Companies as permitted by SECTION 9.5, no Company is a party to a transaction
(other than of an inconsequential nature) with any of its Affiliates.
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7.15 Debt. No Company has any Debt except Permitted Debt.
7.16 Leases. Except where it could not reasonably be expected to result
in a Material Adverse Event, (i) each Company enjoys peaceful and undisturbed
possession under all leases necessary or desirable for the operation of its
properties and assets and (ii) all material leases under which any Company is a
lessee are in full force and effect.
7.17 Labor Matters. Except where it could not reasonably be expected to
result in a Material Adverse Event (i) no actual or threatened strikes, labor
disputes, slow downs, walkouts, work stoppages or other concerted interruptions
of operations that involve any employees employed at any time in connection with
the business activities or operations at any Real Property exist, (ii) hours
worked by and payment made to the employees of any Company have not been in
violation of the Fair Labor Standards Act or any other applicable Governmental
Requirements pertaining to labor matters, (iii) all payments due from any
Company for employee health and welfare insurance, including, without
limitation, workers compensation insurance, have been paid or accrued as a
liability on its books and (iv) the business activities and operations of each
Company are in compliance with OSHA and other applicable health and safety
Governmental Requirements.
7.18 Intellectual Property. Except where it could not reasonably be
expected to result in a Material Adverse Event, (i) each Company owns or has the
right to use all material licenses, patents, patent applications, copyrights,
service marks, trademarks, trademark applications, trade names, trade secrets
and other intellectual property rights necessary or desirable to continue to
conduct its businesses as presently conducted by it and proposed to be conducted
by it immediately after the date of this agreement, (ii) each Company is
conducting its business without infringement or claim of infringement of any
license, patent, copyright, service xxxx, trademark, trade name, trade secret or
other intellectual property right of others and (iii) no infringement or claim
of infringement by others of any material license, patent, copyright, service
xxxx, trademark, trade name, trade secret or other intellectual property of any
Company exists.
7.19 Insurance. Each Company maintains the insurance required by
SECTION 8.9.
7.20 Year 2000 Issues. Borrower has implemented a Year 2000 compliance
program to ensure that the Companies' computer systems and applications will
function properly beyond 1999. Borrower believes that it has allocated adequate
resources for this purpose and expects its Year 2000 date conversion program to
be successfully completed on a timely basis. To the knowledge of Borrower, the
ability of the Companies' significant suppliers, customers and others with which
they conduct business to identify and resolve their own Year 2000 issues can not
reasonably be expected to have a material adverse effect on the Companies or
their business. Prior to the date hereof, Borrower has disclosed in writing to
Administrative Agent and Lenders the steps that Borrower has taken to become
Year 2000 compliant and the costs Borrower expects to incur in connection
therewith. Borrower does not expect that the Companies will have to incur
expenditures in excess of $1,000,000 after the Closing Date to address this
issue.
7.21 Full Disclosure. All information furnished to Administrative Agent
or Lenders by or on behalf of any Company in connection with the Credit
Documents was, and all information furnished to Administrative Agent or Lenders
in the future by or on behalf of any Company will be, in each case, when so
furnished, true, complete and accurate in all material respects or where
estimates or projections were or will be therein made and so designated, based
on good faith, reasonable estimates or projections on the date the information
is stated or certified.
SECTION 8. AFFIRMATIVE COVENANTS. For so long as any Lender is committed to lend
or issue LCs under this agreement and until the Obligation has been fully paid
and performed, Borrower covenants and agrees with Administrative Agent and
Lenders as follows:
8.1 Certain Items Furnished. Borrower shall furnish the following to
each Lender:
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(a) Annual Financials, Etc. Promptly after preparation but no
later than 90 days after the last day of each fiscal year of Borrower,
audited Financials showing the Companies' consolidated financial
condition and results of operations as of, and for the year ended on,
that last day, accompanied by (i) the opinion, without qualification,
of a firm of independent certified public accountants acceptable to
Required Lenders (Xxxxx Xxxxxxxx L.L.P. and any "Big Five" accounting
firm being expressly acceptable to Required Lenders), based on an audit
using generally accepted auditing standards, that the consolidated
portion of those Financials were prepared in accordance with GAAP and
present fairly, in all material respects, the Companies' consolidated
financial condition and results of operations and (ii) with respect to
the period covered by such Financials, a Compliance Certificate. In
addition, Borrower shall furnish to each Lender, promptly after
preparation but no later than 90 days after the last day of each fiscal
year of Borrower, company-prepared consolidating Financials showing the
Companies' consolidated financial condition and results of operations
as of, and for the year ended on, that last day. The consolidating
Financials described above will also provide reasonable detail as to
the financial condition and results of operations of the Domestic
Companies as a group and the Foreign Subsidiaries as a group.
(b) Quarterly Financials, Etc. Promptly after preparation but
no later than 45 days after the last day of each fiscal quarter of
Borrower, Financials showing the Companies' consolidated and
consolidating financial condition and results of operations for that
fiscal quarter and for the period from the beginning of the current
fiscal year to the last day of that fiscal quarter, accompanied by a
Compliance Certificate with respect to the period covered by such
Financials. The consolidating Financials described above will also
provide reasonable detail as to the financial condition and results of
operations of the Domestic Companies as a group and the Foreign
Subsidiaries as a group.
(c) Accounts Receivable Agings and Inventory Listings.
Promptly upon Administrative Agent's or any Lender's request, an
accounts receivable aging or an inventory listing with respect to any
fiscal quarter, each in form and detail reasonably satisfactory to
Administrative Agent or the requesting Lender.
(d) Annual Business Plans. Promptly after preparation but no
later than 30 days after the last day of each fiscal year of Borrower,
the annual business plan for the Companies prepared by Borrower, in
form reasonably acceptable to Administrative Agent, setting forth
management's projections for the next succeeding fiscal year.
(e) Other Reports. Promptly after preparation and
distribution, accurate and complete copies of all reports and other
communications about material financial matters or material corporate
plans or projections by or for any Company for distribution to any
Governmental Authority or any existing or potential creditor including,
without limitation, (i) each Form 10-K, 10-Q, and S-8 filed with the
Securities and Exchange Commission, and (ii) each interim or special
audit report and management letter issued by the Companies' accountants
with respect to the Companies or their financial records, but excluding
(x) credit, trade and other reports prepared and distributed in the
ordinary course of business and (y) information otherwise furnished to
Administrative Agent and Lenders under this agreement.
(f) Employee Plans. As soon as possible and within 30 days
after Borrower knows that any event which would constitute a reportable
event under Section 4043(b) of Title IV of ERISA with respect to any
Employee Plan subject to ERISA has occurred, or that the PBGC has
instituted or will institute proceedings under ERISA to terminate that
plan, deliver a certificate of a Responsible Officer of Borrower
setting forth details as to that reportable event and the action which
Borrower or an ERISA Affiliate, as the case may be, proposes to take
with respect to it, together with a copy of any notice of that
reportable event which may be required to be filed with the PBGC, or
any notice delivered by the PBGC evidencing its intent to institute
those proceedings or any notice to the PBGC that the plan is
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to be terminated, as the case may be. For all purposes of this section,
Borrower is deemed to have all knowledge of all facts attributable to
the plan administrator under ERISA.
(g) Other Notices. Promptly after Borrower knows or receives
any notification thereof (whichever shall first occur), notice of (i)
the existence and status of any Litigation or Environmental Liability
that if determined adversely to any Company, could reasonably be
expected to result in a Material Adverse Event, (ii) any change in any
fact or circumstance (other than of an inconsequential nature)
represented or warranted by any Company in any Credit Document, and
(iii) an Event of Default, Potential Default or Material Adverse Event,
specifying the nature thereof and what action the Companies have taken,
are taking and propose to take.
(h) Other Information. Promptly when reasonably requested by
Administrative Agent or any Lender, such information (not otherwise
required to be furnished under this agreement) about any Company's
business affairs, assets, liabilities, results of operation and
financial condition (all in form and substance satisfactory to
Administrative Agent or that Lender).
8.2 Use of Credit. Borrower shall use the proceeds of Borrowings only
for the purposes represented in this agreement.
8.3 Books and Records. Each Company shall maintain books, records and
accounts necessary to prepare Financials in accordance with GAAP.
8.4 Inspections. Upon reasonable request and at least 5-days' advance
notice (but during the pendency of an Event of Default, no advance notice is
required), each Company shall allow Administrative Agent or any Lender (or their
respective Representatives) to inspect any of that Company's properties, to
review reports, files and other records and to make and take away copies, to
conduct tests or investigations and to discuss any of its affairs, conditions
and finances with its other creditors, directors, officers, employees, outside
accountants or representatives from time to time, during reasonable business
hours (but during the pendency of an Event of Default, at any time). Without
limiting the foregoing, the Companies shall allow Administrative Agent to
perform field examinations to test such systems and controls of the Companies as
it deems appropriate. Borrower shall reimburse Administrative Agent for the
reasonable expenses of one such field exam every twelve months (the expected
expense relating to each such annual field exam is $10,000). Additional field
exams may be conducted at the sole expense of Administrative Agent and Lenders;
provided, however, that Borrower shall reimburse Administrative Agent for the
reasonable expenses of follow-up examinations by Administrative Agent that are
reasonably required by Administrative Agent to address matters of concern
arising as a result of any prior field exam.
8.5 Taxes. Each Company shall promptly pay when due any and all Taxes
except Taxes that are being contested in good faith by lawful proceedings
diligently conducted, against which reserve or other provision required by GAAP
has been made and in respect of which levy and execution of any Lien sufficient
to be enforced has been and continues to be stayed.
8.6 Payment of Obligation. Each Company shall promptly pay (or renew
and extend) all of its obligations as they become due (unless the obligations,
other than the Obligation or any part thereof, are being contested in good faith
by appropriate proceedings).
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8.7 Expenses. Within fifteen Business Days after demand accompanied by
an invoice describing the costs, fees and expenses in reasonable detail,
Borrower shall pay (i) all costs, fees and expenses paid or incurred by or on
behalf of Administrative Agent incident to any Credit Document (including,
without limitation, the reasonable fees and expenses of Administrative Agent's
counsel in connection with the negotiation, preparation, delivery and execution
of the Credit Documents and any related amendment, waiver or consent) and (ii)
all reasonable costs and expenses incurred by Administrative Agent in connection
with the enforcement of the obligations of any Company under the Credit
Documents or the exercise of any Rights under the Credit Documents (including,
without limitation, reasonable allocated costs of in-house counsel, other
reasonable attorneys' fees and court costs), all of which are part of the
Obligation, bearing interest (if not paid within fifteen Business Days after
demand accompanied by an invoice describing the costs, fees and expenses in
reasonable detail) on the portion thereof from time to time unpaid at the
Default Rate until paid.
8.8 Maintenance of Existence, Assets and Business. Each Company shall
(i) except as permitted in SECTION 9.9 and SECTION 9.10, maintain its corporate
or partnership (as applicable) existence and good standing in its state of
incorporation or formation (as applicable) and (ii) except where the failure to
perform any of the following could not reasonably be expected to result in a
Material Adverse Event (a) maintain its authority to transact business and good
standing in all other states, (b) maintain all licenses, permits and franchises
(including, without limitation, Environmental Permits) necessary or desirable
for its business and (c) keep all of its assets that are useful in and necessary
to its business in good working order and condition (ordinary wear and tear
excepted) and make all necessary repairs and replacements.
8.9 Insurance. Each Company shall, at its cost and expense, maintain
with financially sound, responsible and reputable insurance companies or
associations, or as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdictions in which it
operates, insurance concerning its properties and businesses against casualties
and contingencies and of types and in amounts (and with co-insurance and
deductibles) as is customary in the case of similar businesses. In addition,
Borrower shall and shall cause each other Company to, (i) name Administrative
Agent as additional insured on all general and comprehensive liability insurance
and as loss payee on all insurance covering any Collateral (or any portion
thereof), (ii) deliver copies of the policies and endorsements for the insurance
required by this SECTION 8.9 to Administrative Agent promptly after issuance and
renewal of each and (iii) cause each policy of insurance to provide that it will
not be cancelled or modified (as to term, coverage, scope, property or risks
covered, change or addition of loss payee or additional insured or otherwise)
without 30 days prior written notice to Administrative Agent.
8.10 Compliance with Governmental Requirements. Each Company shall (i)
operate and manage its businesses and otherwise conduct its affairs in
compliance with all Governmental Requirements (including without limitation, all
Environmental Governmental Requirements and Environmental Permits) except to the
extent noncompliance reasonably could be expected not to constitute a Material
Adverse Event, (ii) promptly deliver to Administrative Agent a copy of any
notice received from any Governmental Authority alleging that any Company is not
in compliance with any Governmental Requirements (including any Environmental
Governmental Requirements or Environmental Permits) if the allegation reasonably
could constitute a Material Adverse Event and (iii) promptly deliver to
Administrative Agent a copy of any notice received from any Governmental
Authority alleging that any Company has any potential Environmental Liability if
the allegation reasonably could constitute a Material Adverse Event.
8.11 Subsidiary Guaranties and Pledges. Borrower shall cause all of its
present and future Domestic Subsidiaries, whether now existing or in the future
formed or acquired as permitted by the Credit Documents, promptly and fully to
comply with SECTIONS 5.1 and 5.2 and its capital stock or other equity
securities to become subject to Lender Liens as required by SECTION 5.2.
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8.12 Indemnification.
(a) AS USED IN THIS SECTION: (i) "INDEMNITOR" MEANS BORROWER
AND (PURSUANT TO ITS GUARANTY OR ITS EXECUTION AND DELIVERY OF, OR
CONSENT TO, ANY OTHER CREDIT DOCUMENT) EACH OTHER COMPANY; (ii)
"INDEMNITEE" MEANS ADMINISTRATIVE AGENT, EACH LENDER, EACH PRESENT AND
FUTURE AFFILIATE OF ADMINISTRATIVE AGENT AND EACH LENDER, EACH PRESENT
AND FUTURE REPRESENTATIVE OF ADMINISTRATIVE AGENT AND EACH LENDER OR
ANY OF THOSE AFFILIATES AND EACH PRESENT AND FUTURE SUCCESSOR AND
ASSIGN OF ADMINISTRATIVE AGENT AND EACH LENDER OR ANY OF THOSE
AFFILIATES OR REPRESENTATIVES; AND (iii) "INDEMNIFIED LIABILITIES"
MEANS ALL PRESENT AND FUTURE, KNOWN AND UNKNOWN, FIXED AND CONTINGENT,
ADMINISTRATIVE, INVESTIGATIVE, JUDICIAL AND OTHER CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, INVESTIGATIONS, SUITS, PROCEEDINGS, AMOUNTS
PAID IN SETTLEMENT, DAMAGES, JUDGMENTS, PENALTIES, COURT COSTS,
LIABILITIES AND OBLIGATIONS, AND ALL PRESENT AND FUTURE COSTS, EXPENSES
AND DISBURSEMENTS (INCLUDING ALL REASONABLE ATTORNEYS' FEES AND
EXPENSES WHETHER OR NOT SUIT OR OTHER PROCEEDING EXISTS OR ANY
INDEMNITEE IS PARTY TO ANY SUIT OR OTHER PROCEEDING) IN ANY WAY RELATED
TO ANY OF THE FOREGOING, THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST, ANY INDEMNITEE AND IN ANY WAY RELATING TO OR
ARISING OUT OF ANY (1) CREDIT DOCUMENT OR TRANSACTION CONTEMPLATED BY
ANY CREDIT DOCUMENT, (2) ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO
ANY COMPANY, OR ACT, OMISSION, STATUS, OWNERSHIP, OR OTHER
RELATIONSHIP, CONDITION, OR CIRCUMSTANCE CONTEMPLATED BY, CREATED
UNDER, OR ARISING PURSUANT TO OR IN CONNECTION WITH ANY CREDIT
DOCUMENT, OR (3) INDEMNITEE'S SOLE OR CONCURRENT ORDINARY NEGLIGENCE.
(b) EACH INDEMNITOR AGREES, JOINTLY AND SEVERALLY, TO
INDEMNIFY PROTECT AND DEFEND EACH INDEMNITEE FROM AND AGAINST, HOLD
EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND ON DEMAND PAY OR
REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED LIABILITIES.
(c) THE FOREGOING PROVISIONS (i) ARE NOT LIMITED IN AMOUNT
EVEN IF THAT AMOUNT EXCEEDS THE OBLIGATION, (ii) INCLUDE, WITHOUT
LIMITATION, REASONABLE FEES AND EXPENSES OF ATTORNEYS AND OTHER COSTS
AND EXPENSES OF LITIGATION OR PREPARING FOR LITIGATION AND DAMAGES OR
INJURY TO PERSONS, PROPERTY, OR NATURAL RESOURCES ARISING UNDER ANY
STATUTORY OR COMMON LAW GOVERNMENTAL REQUIREMENT, PUNITIVE DAMAGES,
FINES, AND OTHER PENALTIES, AND (iii) ARE NOT AFFECTED BY THE SOURCE OR
ORIGIN OF ANY HAZARDOUS SUBSTANCE, AND (iv) ARE NOT AFFECTED BY ANY
INDEMNITEE'S INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF
DEALING, OR WAIVER.
(d) However, no Indemnitee is entitled to be indemnified under
the Credit Documents for its own fraud, gross negligence, or wilful
misconduct.
(e) Although failure to do so does not reduce or impair any
Indemnitor's obligations under this section, each Indemnitee shall
promptly notify Borrower of any event about which the Indemnitee has
received written notice and that is reasonably likely to result in any
Indemnified Liability. Each Indemnitor may, at its own cost and
expense, participate in the defense in any proceeding involving any
Indemnified Liability. If no Event of Default or Potential Default
exists, Indemnitors may assume the defense in that proceeding on behalf
of the applicable Indemnitees, including the employment of counsel if
first approved (which approval may not be unreasonably withheld) by the
applicable Indemnitees. If Indemnitors assume any defense, they shall
keep the applicable Indemnitees fully advised of the status of, and
shall consult with, and receive the concurrence of, those Indemnitees
before taking any material position in respect of, that proceeding.
If Indemnitors consent, if an Event of Default, Potential Default or
Material Adverse Event exists or if any Indemnitee reasonably
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determines that an actual conflict of interests exists between
Indemnitors and that Indemnitee with respect to the subject matter of
the proceeding or that Indemnitors are not diligently pursuing the
defense, then (i) that Indemnitee may, at Indemnitors' joint and
several expense, employ counsel to represent that Indemnitee that is
separate from counsel for Indemnitors or any other Person in that
proceeding and (ii) Indemnitors are no longer entitled to assume the
defense on behalf of that Indemnitee. No Indemnitor may agree to the
settlement of any Indemnified Liability, or any matters or issues
material to or necessary for the resolution of any such liability,
without the prior written consent of the applicable Indemnitees unless,
as agreed to in writing by an Indemnitee, that settlement fully
relieves those Indemnitees of any liability whatsoever for that
Indemnified Liability. If an Indemnitee agrees to the settlement of any
Indemnified Liability without the prior written consent of Indemnitors
(which consent may not be unreasonably withheld), then Indemnitors are
no longer obligated for that Indemnified Liability in respect of that
Indemnitee.
(f) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER
UNDERTAKINGS UNDER THIS SECTION SURVIVE THE FORECLOSURE OF ANY LENDER
LIEN OR ANY TRANSFER IN LIEU OF THAT FORECLOSURE, THE SALE OR OTHER
TRANSFER OF ANY COLLATERAL OR REAL PROPERTY TO ANY PERSON, THE
SATISFACTION OF THE OBLIGATION, THE TERMINATION OF THE CREDIT DOCUMENTS
AND THE RELEASE OF ANY OR ALL LENDER LIENS.
8.13 Post-Closing Covenants. Notwithstanding any other provision of
this agreement or any other Credit Document:
(a) Interest Rate Hedging Agreement. Within 180 days of the
Closing Date, Borrower shall enter into a Hedging Agreement with
Administrative Agent, any Lender, or any other bank incorporated under
the Governmental Requirements of the United States of America or any of
its states with a short-term certificate of deposit credit rating of at
least P-2 by Xxxxx'x Investors Service, Inc., or A-2 by Standard &
Poor's Corporation, on terms acceptable to Administrative Agent and
Borrower, regarding the hedging of Borrower's interest rate risk with
respect to a $20,000,000 portion of the Obligation.
(b) Delivery of Certain Stock Certificates. Within 30 days of
the Closing Date, Borrower shall deliver to Administrative Agent the
original stock certificates covering the shares of Detection Systems,
Inc. pledged as Collateral as described on SCHEDULE 5-B of the Security
Agreement (together with all appropriate stock powers executed in
blank). Within 180 days of the Closing Date, Borrower shall deliver to
Administrative Agent the original stock certificates covering the
shares of the companies (other than Detection Systems, Inc.) pledged as
Collateral as described on SCHEDULE 5-B of the Security Agreement
(together with all appropriate stock powers executed in blank).
(c) Other Deliveries. Borrower shall cooperate with
Administrative Agent's counsel in a timely manner to obtain, complete,
file or otherwise complete all collateral documents not obtained on the
Closing Date.
SECTION 9. NEGATIVE COVENANTS. For so long as any Lender is committed to lend or
issue LCs under this agreement and until the Obligation has been fully paid and
performed, Borrower covenants and agrees with Administrative Agent and Lenders
as follows:
9.1 Payroll Taxes. No Company may directly or indirectly use any
proceeds of any Borrowing (i) for any purpose other than as represented in this
agreement, or (ii) for the payment of wages of employees unless a timely payment
to or deposit with the United States of America of all amounts of Tax required
to be deducted and withheld with respect to such wages is also made.
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9.2 Debt. No Company may:
(a) Create, incur or suffer to exist (directly or indirectly)
any direct, indirect, fixed or contingent liability for any Debt except
the following (the "PERMITTED DEBT"):
(i) the Obligation;
(ii) the TROL Financing;
(iii) Unsecured Debt of any Company not otherwise
permitted by this SECTION 9.2, so long as
(1) no Event of Default, Potential Default
or Material Adverse Event (y) exists on the date any
such Debt is created, incurred or assumed or (z)
arises as a result of, or after giving effect to, any
such Debt incurrence,
(2) the aggregate amount of all such
additional Debt does not exceed $5,000,000 at any
time, and
(3) such additional Debt is subordinated to
the Obligation on terms acceptable to Required
Lenders;
(iv) any Debt relating to Hedging Agreements entered
into with respect to assets on the Companies' consolidated
balance sheet;
(v) the Permitted Intercompany Guaranties; and
(vi) the Permitted Intercompany Advances, so long as
such Permitted Intercompany Advances are evidenced by written
promissory notes pledged to Administrative Agent for the
benefit of Lenders as contemplated by the Credit Documents,
including, without limitation, SECTION 5.2(c).
(b) Except for the Obligation, prepay, purchase, repurchase,
defease or redeem, or cause to be prepaid, purchased, repurchased,
defeased or redeemed, any principal of, or any premium (if any) or
interest on, any of its Debt, or fund or cause to be funded any sinking
or similar fund for any such Debt.
9.3 Liens. No Company may (i) create, incur or suffer or permit to be
created or incurred or to exist any Lien upon any of its properties except a
Permitted Lien or (ii) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets or properties except (a) the Credit
Documents, (b) any lease that places a Lien prohibition on only the property
subject to that lease, and (c) arrangements and agreements that apply only to
property subject to Permitted Liens. The following are PERMITTED LIENS:
(a) Lender Liens;
(b) Liens securing the TROL Financing so long as such liens
are limited to the Real Property located at 0000 Xxxxxx Xxxxx Xxxxx,
Xxxxxxxxxx, Xxxxx;
(c) Liens arising under Debt related to any Hedging Agreements
permitted by this agreement;
(d) Any interest or title of a lessor in property being leased
under an operating lease that does not constitute Debt;
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(e) Banker's Liens and Rights of setoff or recoupment;
(f) Pledges or deposits made to secure any Company's payment
of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits or to participate in any fund in
connection with workers' compensation, unemployment insurance, pensions
or other social security programs which (in each case) are not made
with any Collateral other than cash proceeds thereof arising in the
ordinary course;
(g) Deposits (i) to secure any Company's performance of bids,
trade contracts (except for the repayment of borrowed money) or leases
arising in the ordinary course of business, which in each case are
limited to no more than 10% of the face amount thereof, or (ii) to
secure statutory obligations, surety or appeal bonds, or indemnity,
performance or other similar bonds incurred in the ordinary course of
its business which (in each case) are not made with any Collateral
other than cash proceeds thereof arising in the ordinary course;
(h) Zoning and similar restrictions on the use of, and
easements, restrictions, covenants, title defects and similar
encumbrances on, Real Property that do not impair the use of such Real
Property (other than of an inconsequential nature) and that are not
violated by existing or proposed structures or land use;
(i) If no Lien has been filed in any jurisdiction or agreed to
(i) claims and Liens for Taxes not yet due and payable, (ii) statutory
mechanic's Liens and materialman's Liens for services or materials and
similar statutory Liens incident to construction and maintenance of
Real Property, in each case for which payment is not yet due and
payable, (iii) statutory landlord's Liens for rental not yet due and
payable and (iv) statutory Liens of warehousemen and carriers and
similar statutory Liens securing obligations that are not yet due and
payable; and
(j) The following if (i) the validity or amount is being
contested in good faith and by appropriate and lawful proceedings
diligently conducted, (ii) reserve or other appropriate provision (if
any) required by GAAP has been made, (iii) levy and execution has not
issued or continues to be stayed, (iv) they do not individually or
collectively detract from the value of the property of the Person in
question or impair the use of that property in the operation of its
business (other than, in each case, of an inconsequential nature) and
(v) (other than ad valorem Tax Liens given statutory priority) they are
subordinate to the Lender Liens to the extent that they cover
Collateral: (1) Claims and Liens for Taxes; (2) claims and Liens upon,
and defects of title to, real or personal property, including any
attachment of personal or real property or other legal process before
adjudication of a dispute on the merits; (3) claims and Liens of
statutory mechanics, materialmen's, warehousemen's, carriers',
landlords' or other like Liens; (4) Liens incident to construction and
maintenance of Real Property; and (5) adverse judgments, attachments or
orders on appeal for the payment of money.
9.4 Employee Plans. No Company may permit any of the events or
circumstances described in SECTION 7.11 to exist or occur except where the
failure to perform the foregoing could not reasonably be expected to result in a
Material Adverse Event.
9.5 Transactions with Affiliates. No Company may enter into any
transaction with any of its Affiliates except (i) transactions permitted under
SECTIONS 9.7(j) and (k) and SECTION 9.9 and (ii) transactions (other than
Investments) in the ordinary course of business and upon fair and reasonable
terms not materially less favorable than it could obtain or could become
entitled to in an arm's-length transaction with a Person that was not its
Affiliate.
9.6 Compliance with Governmental Requirements and Documents. No Company
shall (i) violate the provisions of any Governmental Requirements (including,
without limitation, OSHA and Environmental
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Governmental Requirements) applicable to it or of any material agreement to
which it is a party or by which any of its property is subject or bound if that
violation alone, or when aggregated with all other violations, reasonably could
be expected to result in a Material Adverse Event, (ii) violate any provision of
its Organizational Documents or (iii) repeal, replace or amend any provision of
its Organizational Documents if that action reasonably could be expected to
result in a Material Adverse Event.
9.7 Investments. No Company may make any Investments except the
following (the "PERMITTED INVESTMENTS"):
(a) (i) Readily marketable, direct, full faith and credit
obligations of the United States of America or obligations guaranteed
by the full faith and credit of the United States of America and (ii)
readily marketable obligations of an agency or instrumentality of, or
corporation owned, controlled or sponsored by, the United States of
America that are generally considered in the securities industry to be
implicit obligations of the United States of America, in each case, due
within one year after the acquisition of it (collectively, "GOVERNMENT
SECURITIES");
(b) Readily marketable direct obligations of any state of the
United States of America given on the date of such investment a credit
rating of at least Aa by Xxxxx'x Investors Service, Inc. or AA by
Standard & Poor's Corporation, in each case due within one year from
the making of the investment;
(c) Certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, (i) any Lender
or (ii) any bank incorporated under the Governmental Requirements of
the United States of America or any of its states and given on the date
of the investment a short-term certificate of deposit credit rating of
at least P-2 by Xxxxx'x Investors Service, Inc., or A-2 by Standard &
Poor's Corporation, in each case due within one year after the date of
the making of the investment;
(d) Certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any branch or
office located in the United States of America of a bank incorporated
under the Governmental Requirements of any jurisdiction outside the
United States of America having on the date of the investment a
short-term certificate of deposit credit rating of a least P-2 by
Xxxxx'x Investors Service, Inc., or A-2 by Standard & Poor's
Corporation, in each case due within one year after the date of the
making of the investment;
(e) Extensions of trade credit by any Company made in the
ordinary course of its business in a manner consistent with generally
accepted industry practices;
(f) Up to $18,000,000 (at cost) of Permitted Public Company
Holdings, provided that the cost basis of such investment, when added
to the cost basis of the Permitted Investments described in CLAUSES (g)
and (h) of this SECTION 9.7, may never exceed $18,000,000 in the
aggregate;
(g) Borrower's investment from time to time in Detection
Systems, Inc., provided that the cost basis of such investment, when
added to the cost basis of the Permitted Investments described in
CLAUSES (f) and (h) of this SECTION 9.7, may never exceed $18,000,000
in the aggregate;
(h) Borrower's 10% interest in Securion 24 Co. Ltd., a
Japanese company, which interest was acquired by Borrower in August
1997 for approximately $2,200,000 in cash;
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(i) Customary capital contributions or other similar
investments by any Company for the formation of any other Company
(provided that the amount so contributed for the formation of any
Company shall not exceed $100,000);
(j) Loans, advances, or extensions of credit by any Domestic
Company to any other Domestic Company;
(k) The Permitted Intercompany Advances, so long as such
Permitted Intercompany Advances are evidenced by written promissory
notes pledged to Administrative Agent for the benefit of Lenders as
contemplated by the Credit Documents, including, without limitation,
SECTION 5.2(c); and
(l) Permitted Acquisitions.
9.8 Distributions; Other Payments. No Company may declare, make or pay
any Distribution except (i) Distributions paid in the form of additional equity
that is not required to be redeemed or is redeemable at the option of the holder
if certain events or conditions occur or exist or otherwise, (ii) Distributions
to Borrower from any other Company, (iii) Distributions from a Foreign
Subsidiary to Ultrak Holdings, (iv) Distributions from Ultrak Operating to
Ultrak GP and Ultrak LP, (v) Distributions of up to $117,210 per year
representing preferred stock dividends from Borrower to Xx. Xxxxxx X. Xxxxxx
made in respect of Borrower's Series A Preferred Stock, (vi) up to $4,000,000 in
stock repurchases by Borrower relating to the "put rights" under the Xxxxxxxxx
Agreement (which are exercisable under certain circumstances during the period
from April 9, 1999 to April 9, 2000), and (vii) up to $2,000,000 in other stock
repurchases by the Companies in the aggregate during the term of this Agreement.
9.9 Disposition of Assets. No Company may sell, assign, lease, transfer
or otherwise dispose of any of its assets (including, without limitation, equity
interests in any other Company) other than a Permitted Asset Sale.
Notwithstanding the foregoing, Borrower may sell its Permitted Investments
described in SECTIONS 9.7(f)-(h) without being required to prepay the
Obligation.
9.10 Mergers, Consolidations, Dispositions and Dissolutions. No Company
may merge or consolidate with any other Person, acquire, or in one or a series
of related transactions, dispose (by sale, lease, sale-leaseback or otherwise)
of all or substantially all of its assets and properties or dissolve except:
(a) if no Event of Default, Potential Default or Material
Adverse Event exists or will exist as a result of it, any merger or
consolidation between Companies (so long as (i) if Borrower is
involved, it is the survivor, and (ii) if both Domestic Companies
(other than Borrower) and Foreign Subsidiaries are involved, one or
more Domestic Companies that have each previously executed a Guaranty
and a Security Agreement are the survivors);
(b) if no Event of Default, Potential Default or Material
Adverse Event exists or will exist as a result of it, any Permitted
Acquisition;
(c) any disposition (by sale, lease, sale-leaseback or
otherwise) of all or substantially all of the assets and properties of,
or any dissolution of, any Domestic Company (other than Borrower) if
substantially all of its assets and properties have been conveyed to
any other Domestic Company that has previously executed and delivered a
Guaranty and a Security Agreement;
(d) any disposition (by sale, lease, sale-leaseback or
otherwise) of all or substantially all of the assets and properties of,
or any dissolution of, any Foreign Subsidiary if substantially all of
its assets and properties have been conveyed to any other Company; and
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(e) any Permitted Asset Sale so long as all mandatory
prepayments of the Obligation have been made.
9.11 Assignment. No Company may assign or transfer any of its Rights,
duties or obligations under any of the Credit Documents.
9.12 Fiscal Year and Accounting Methods. No Company may change either
its fiscal year for accounting purposes or any material aspect of its method of
accounting.
9.13 New Businesses. No Company may engage in any business except the
businesses in which it is presently engaged and any other reasonably related
business.
9.14 Government Regulations. No Company may conduct its business in a
way that it becomes regulated under the Investment Company Act of 1940, as
amended, or the Public Utility Holding Company Act of 1935, as amended.
9.15 Strict Compliance. No Company may indirectly do anything that it
may not directly do under any covenant in any Credit Document.
SECTION 10. FINANCIAL COVENANTS. For so long as any Lender is committed to lend
or issue LCs under this agreement, and until the Obligation has been fully paid
and performed, Borrower covenants and agrees with Administrative Agent and
Lenders as follows:
10.1 Leverage Ratio. The ratio of the Companies' consolidated Funded
Debt as of the last day of each fiscal quarter to the Companies' consolidated
EBITDA for the four fiscal quarters then ended shall at no time exceed:
================================================================================
FOR QUARTER(S) ENDED RATIO
--------------------------------------------------------------------------------
12/31/98 through 3/31/99 4.00 to 1.00
--------------------------------------------------------------------------------
6/30/99 3.75 to 1.00
--------------------------------------------------------------------------------
9/30/99 3.50 to 1.00
--------------------------------------------------------------------------------
12/31/99 3.00 to 1.00
--------------------------------------------------------------------------------
3/31/2000 and each fiscal quarter 2.75 to 1.00
ending thereafter
================================================================================
10.2 Fixed Charge Coverage Ratio. The ratio of the Companies'
consolidated EBITR for the four fiscal quarters ending on the dates set forth
below to the Companies' consolidated Debt Service Requirements for the four
fiscal quarters then ended shall at all times exceed:
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================================================================================
FOR QUARTER(S) ENDED RATIO
--------------------------------------------------------------------------------
12/31/98 3.00 to 1.00
--------------------------------------------------------------------------------
3/31/99 through 12/31/99 2.00 to 1.00
--------------------------------------------------------------------------------
3/31/2000 and each fiscal quarter ending 2.50 to 1.00
thereafter
================================================================================
10.3 Minimum Net Worth. The Companies' consolidated stockholders'
equity shall not at any time be less than the sum of (a) $135,200,000 plus (b)
an amount equal to 75% of the Companies' consolidated Net Income (without
deduction for losses) for each fiscal quarter ending after September 30, 1998,
and before the date of determination plus (c) 100% of the net (i.e., gross less
usual and customary brokerage and after related costs and expenses) proceeds
from the issuance and sale of any equity securities by any Company after
September 30, 1998, other than the proceeds of any issuance and sale of any
capital stock which is required to be redeemed, or is redeemable at the option
of the holder, if certain events or conditions occur or exist or otherwise, less
(d) the amount of any stock purchases permitted by SECTION 9.8(vi) or (vii)
which occur after September 30, 1998.
10.4 Capital Expenditures. For any fiscal year of Borrower, capital
expenditures for the acquisition, construction, improvement or replacement of
land, buildings, equipment or other fixed or capital assets or leaseholds
(excluding expenditures properly chargeable to repairs or maintenance) for the
Companies shall not exceed (a) $4,500,000 for Borrower's fiscal year ending
December 31, 1999, and (b) $4,000,000 for any fiscal year thereafter.
10.5 Liquidity Ratio. The ratio of the Companies' consolidated Adjusted
Current Assets to the Companies' consolidated Adjusted Current Liabilities shall
at all times exceed 1.25 to 1.00.
10.6 Effect of Special Charges. The financial covenants in this SECTION
10 have been negotiated assuming that Borrower will take a $1,000,000 special
charge in the fourth quarter of its fiscal year 1998 (relating to discontinued
operations) and a $1,500,000 special charge in the first quarter of its fiscal
year 1999 (relating to a plant closure and consolidation of its European
operations). If for any reason the $1,000,000 special charge described above is
not taken in the fourth quarter of fiscal year 1998, Borrower agrees to
negotiate in good faith with Administrative Agent and Lenders to amend the
financial covenant requirements in this SECTION 10 to reflect ratios and amounts
that would otherwise have been agreed upon by Administrative Agent and Lenders
on the Closing Date had it not been for consideration of this special charge. If
for any reason the $1,500,000 special charge described above is taken in the
second quarter of fiscal year 1999 rather than the first quarter, Borrower,
Administrative Agent and Lenders hereby agree that the minimum Fixed Charge
Coverage Ratio as set forth in SECTION 10.2 shall be deemed to be amended to
2.50 to 1.00 for the quarter ended March 31, 1999, with no further action
required by any party. If for any reason the $1,500,000 special charge described
above is taken in the third quarter of fiscal year 1999 rather than the first or
second quarter, Borrower, Administrative Agent and Lenders hereby agree that the
minimum Fixed Charge Coverage Ratio as set forth in SECTION 10.2 shall be deemed
to be amended to 2.25 to 1.00 for the quarter ended June 30, 1999, with no
further action required by any party. If for any reason the $1,500,000 special
charge described above is not taken in either the first, second or third
quarters of fiscal 1999, Borrower agrees to negotiate in good faith with
Administrative Agent and Lenders to amend the financial covenant requirements in
this SECTION 10 to reflect ratios and amounts that would otherwise have been
agreed upon by Administrative Agent and Lenders on the Closing Date had it not
been for consideration of this special charge.
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SECTION 11. EVENT OF DEFAULT. The term "EVENT OF DEFAULT" means the occurrence
of any one or more of the following:
11.1 Payment of Obligation. Borrower's failure or refusal to pay (i)
principal of any Note, or any part thereof, on or before the date when due
(including any required mandatory prepayment when due), or (ii) any other part
of the Obligation on or before five Business Days after the date due.
11.2 Covenants. Any Company's failure or refusal to punctually and
properly perform, observe and comply with any of the covenants in SECTIONS 9 and
10. It shall also constitute an Event of Default if any Company fails or refuses
to punctually and properly perform, observe and comply with any covenant or
agreement in any Credit Document (other than covenants to pay the Obligation and
covenants set forth in SECTIONS 9 and 10) applicable to it, and that failure or
refusal continues for 10 Business Days after that Company has, or with the
exercise at reasonable diligence should have had, notice of that failure or
refusal.
11.3 Debtor Relief. Any Company (i) is not Solvent, (ii) fails to pay
its debts generally as they become due, (iii) voluntarily seeks, consents to or
acquiesces in the benefit of any Debtor Relief Law or (iv) becomes a party to or
is made the subject of any proceeding provided for by any Debtor Relief Law
(except as a creditor or claimant) that could suspend or otherwise adversely
affect the Rights of Administrative Agent or any Lender under the Credit
Documents (unless, if the proceeding is instituted by a Person other than a
Company, the applicable petition is dismissed within 60 days after its filing).
11.4 Judgments and Attachments. Where the amount in controversy or of
any judgment, as the case may be, against any Company exceeds, individually with
respect to such Company or in the aggregate with respect to all Companies,
$500,000, the Companies (or any of them) fail (i) to have discharged any
attachment, sequestration or similar proceeding against any properties of any
Company prior to the realization on any property of any Company, and in any
event, within 30 days following the commencement of any such proceedings, (ii)
to pay any money judgment against any Company within 30 days before the date on
which any Company's assets may be lawfully sold to satisfy that judgment or
(iii) to pay a judgment in excess of $500,000 and such judgment remains unpaid
and unstayed for more than 30 days.
11.5 Government Action. Unless otherwise covered by any event described
in SECTION 11.4, (i) the entry or issuance of an order by any Governmental
Authority (including the United States Justice Department) seeking to cause any
Company to divest a significant portion of its assets under any antitrust,
restraint of trade, unfair competition, industry regulation or similar
Governmental Requirements, or (ii) the commencement of any action or proceeding
by any Governmental Authority (a) for the purpose of condemning, seizing or
otherwise appropriating, or taking custody or control of all or any substantial
portion of, any Company's assets or (b) which assert any material violation by,
or material liability against, any Company based on any Environmental
Governmental Requirement.
11.6 Misrepresentation. Any representation or warranty made by any
Company in any Credit Document at any time proves to have been false or
incorrect in any material respect when made.
11.7 Ownership of Other Companies. Except as a result of transactions
permitted by this agreement, any Company (other than Borrower) fails to
constitute the direct or indirect wholly owned Subsidiary of Borrower.
11.8 Change of Control of Borrower. Upon the occurrence of any of the
following (each a "CHANGE OF CONTROL"): (i) the individuals who, as of the date
of this agreement, constitute the members of Borrower's board of directors (for
purposes of this SECTION 11.8(i), the "INCUMBENT BOARD") do not constitute or
cease for any reason to constitute at least 75% of Borrower's board of
directors; (ii) any "person" (other than Xx. Xxxxxx X. Xxxxxx) or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Securities and Exchange
Act of 1934, as amended (the "EXCHANGE ACT")) is or becomes the "beneficial
owner" (as defined in Rules 13d-3
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and 13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the contractual
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 25% of the total
voting power of the outstanding capital stock (having full voting power) of
Borrower (for the purpose of this CLAUSE (ii), such person shall be deemed to
beneficially own any such capital stock (having full voting power) of a
specified corporation held by a parent corporation, if such person is the
beneficial owner (as defined in this CLAUSE (ii)), directly or indirectly, of
more than 25% of the total voting power of the capital stock (having full voting
power) of such parent corporation); (iii) the sale, transfer, sale-leaseback or
other disposition, in one or a series of related transactions, of all or
substantially all of the property of Borrower, or of Borrower and its
Subsidiaries taken, as a whole, to any Person other than a Company; (iv) the
merger or consolidation of Borrower into another Person, where the other Person
is the surviving and continuing entity; or (v) the adoption of a plan relating
to the liquidation or dissolution of Borrower or of Borrower and its
Subsidiaries taken as a whole. For purposes of CLAUSE (i) of this SECTION 11.8,
any individual who becomes a member of the board of directors or who obtains a
voting interest after the date of this agreement and whose election, or
nomination for election, was approved by a vote of the individuals comprising at
least 75% of the incumbent board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest, as those terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act) shall be deemed to be a member of the
incumbent board.
11.9 Change in Management. Any material change in the management of
Borrower or the Companies as a whole, including, without limitation, Xx. Xxxxxx
X. Xxxxxx no longer serving as the chairman of the board or chief executive
officer of Borrower.
11.10 Other Funded Debt. In respect of any Funded Debt of any Company
(other than the Obligation) individually or collectively of at least $500,000
(i) any Company fails to make any payment when due, (ii) any default or other
event or condition occurs or exists beyond the applicable grace or cure period,
the effect of which is to permit any holder of that Funded Debt to cause
(whether or not it elects to cause) any of such Funded Debt to become due before
its stated maturity or regularly scheduled payment dates, or (iii) any of that
Funded Debt is declared to be due and payable or required to be prepaid by any
Company before its stated maturity.
11.11 Hedging Agreements. Any default or event of default occurs in
respect of any Hedging Agreement entered into by any Company.
11.12 Validity and Enforceability. This agreement, any Note, Guaranty
or any other Credit Document ceases to be in full force and effect or is
declared to be null and void, or the validity or enforceability of any Credit
Document or Lender Lien is contested by any Company or any other Person, or any
Company or any other Person asserts the absence of, or denies that it has, any
liability or obligations under any Credit Document to which it is a party except
in accordance with that document's express provisions, or any Lender Lien shall
fail to constitute a valid, perfected-first priority lien in favor of
Administrative Agent for Lenders, except in accordance with the express
provisions of any applicable Credit Document.
11.13 Material Agreement Default or Cancellation. The default under, or
breach or cancellation of, any agreement or other contractual arrangement to
which any Company is a party or beneficiary or by which any of its property is
bound or subject, which reasonably could be expected to result in any (i)
significant impairment of (a) the ability of Borrower or any other Company to
perform any of its payment or other material obligations under any Credit
Document or (b) the ability of Administrative Agent or Lenders to enforce any of
those obligations or any of their respective Rights under the Credit Documents,
(ii) significant and adverse effect on the business, management or financial
condition of the Borrower or of the Companies as a whole, as represented to
Lenders in the Financials then most recently received by them or (iii) event or
circumstance that could result in an Event of Default or Potential Default
pursuant to SECTIONS 11.1 through 11.13 (inclusive) or SECTION 11.14.
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11.14 LCs. Administrative Agent is served with, or becomes subject to,
a court order, injunction, or other process or decree restraining or seeking to
restrain it from paying any amount under any LC and either (a) a drawing has
occurred under the LC, and Borrower has refused to reimburse Administrative
Agent for payment, or (b) the expiration date of the LC has occurred, but the
Right of the beneficiary to draw under the LC has been extended past the
expiration date in connection with the pendency of the related court action or
proceeding, and Borrower has failed to deposit with Administrative Agent cash
collateral in an amount equal to Administrative Agent's maximum exposure under
the LC.
SECTION 12. RIGHTS AND REMEDIES.
12.1 Remedies Upon Event of Default.
(a) Debtor Relief. If an Event of Default exists under SECTION
11.3, the commitment to extend credit under this agreement
automatically terminates and the entire unpaid principal balance of the
Obligation, together with all interest accrued thereon, and all other
amounts then accrued and unpaid, automatically become and shall be due
and payable without any action of any kind whatsoever.
(b) Other Events of Default. If any Event of Default exists,
Administrative Agent may (with the consent of, and must, upon the
request of Required Lenders), do any one or more of the following: (i)
If the maturity of the Obligation has not already been accelerated
under SECTION 12.1(a), declare the entire unpaid principal balance of
all or any part of the Obligation, together with all interest accrued
thereon, and all other amounts then accrued and unpaid, immediately due
and payable, whereupon it is due and payable; (ii) terminate the
commitments of Lenders to extend credit under this agreement; (iii)
reduce any claim to judgment; (iv) demand payment of an amount equal to
the LC Exposure then existing and retain as collateral for the LC
Exposure any amounts received from any Company, from any property of
any Company, through offset or otherwise; and (v) exercise any and all
other legal or equitable Rights afforded by the Credit Documents, by
applicable Governmental Requirements or otherwise at law or in equity.
(c) Offset. If an Event of Default exists, to the extent not
prohibited by applicable Governmental Requirements, each Lender may
exercise the Rights of offset and banker's lien against each and every
account and other property, or any interest therein, which any Company
may now or hereafter have with, or which is now or hereafter in the
possession of, that Lender to the extent of the full amount of the
Obligation owed to that Lender.
12.2 Company Waivers. To the extent not prohibited by applicable
Governmental Requirements, Borrower and (pursuant to its Guaranty or its
execution and delivery of, or consent to, any other Credit Document) each other
Company waives, in respect to any action taken by Administrative Agent or
Lenders at any time and from time to time pursuant to SECTION 12.1, presentment,
demand for payment, protest, acceleration, notice of protest and nonpayment,
NOTICE OF INTENTION TO ACCELERATE, NOTICE OF ACCELERATION, and all other notices
and acts, and agrees that its liability with respect to all or any part of the
Obligation is not affected by any renewal or extension in the time of payment of
all or any part of the Obligation, by any indulgence, increase or other
modification to, or by any release or change in any security for the payment of,
all or any part of the Obligation.
12.3 Performance by Administrative Agent. If any Company's covenant,
duty or agreement is not performed in accordance with the terms of the Credit
Documents, Administrative Agent may at its option (but subject to the approval
of Required Lenders), perform or attempt to perform that covenant, duty or
agreement on behalf of that Company, and any amount expended by or on behalf of
Administrative Agent in its performance or attempted performance is payable by
the Companies, jointly and severally, to Administrative Agent on demand, becomes
part of the Obligation, and bears interest on the portion thereof from time to
time unpaid at the Default Rate from the date of Administrative Agent's
expenditure until paid. However,
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Administrative Agent does not assume and shall never have, except by its express
written consent, any liability or responsibility for the performance of any
Company's covenants, duties or agreements.
12.4 Not in Control. Nothing in any Credit Document gives or may be
deemed to give to Administrative Agent or any Lender the Right to exercise
control over any Company's Real Property, other assets, affairs or management or
to preclude or interfere with any Company's compliance with any Governmental
Requirement or require any act or omission by any Company that may be harmful to
Persons or property. Any "Material Adverse Event" or other materiality or
substantiality qualifier of any representation, warranty, covenant, agreement or
other provision of any Credit Document is included for credit documentation
purposes only and does not imply and should not be deemed to mean that
Administrative Agent or any Lender acquiesces in any non-compliance by any
Company with any applicable Governmental Requirement, document, or otherwise or
does not expect the Companies to promptly, diligently and continuously carry out
all appropriate removal, remediation, compliance, closure or other activities
required or appropriate in accordance with all Environmental Governmental
Requirements. Administrative Agent's and Lenders' power is limited to the Rights
provided in, or referred to by, the Credit Documents. All of those Rights exist
solely to preserve and protect the Collateral and to assure payment and
performance of the Obligation in accordance with the terms of the Credit
Documents, and may be exercised in a manner determined to be appropriate by
Administrative Agent or Lenders in their sole respective good faith business
judgment.
12.5 Course of Dealing. The acceptance by Administrative Agent or
Lenders of any partial payment on the Obligation is not a waiver of any Event of
Default then existing. No waiver by Administrative Agent, Required Lenders or
Lenders of any Event of Default is a waiver of any other then-existing or
subsequent Event of Default. No delay or omission by Administrative Agent,
Required Lenders or Lenders in exercising any Right under the Credit Documents
impairs that Right or is a waiver thereof or any acquiescence therein, nor will
any single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Credit Documents or
otherwise.
12.6 Cumulative Rights. All Rights available to Administrative Agent,
Required Lenders and Lenders under the Credit Documents are cumulative of and in
addition to all other Rights granted to Administrative Agent, Required Lenders
and Lenders at law or in equity, whether or not the Obligation is due and
payable and whether or not Administrative Agent, Required Lenders or Lenders
have instituted any suit for collection, foreclosure, or other action in
connection with the Credit Documents.
12.7 Application of Proceeds. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the Obligation according to SECTION 3.
12.8 Certain Proceedings. Borrower shall promptly execute and deliver,
or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers
Administrative Agent or Required Lenders reasonably request in connection with
the obtaining of any consent, approval, registration (other than securities law
registrations), qualification, permit, license or authorization of any
Governmental Authority or other Person necessary or appropriate for the
effective exercise of any Rights under the Credit Documents. Because Borrower
agrees that Administrative Agent's and Required Lenders' remedies under
applicable Governmental Requirements for failure of Borrower to comply with the
provisions of this section would be inadequate and that failure would not be
adequately compensable in damages, Borrower agrees that the covenants of this
section may be specifically enforced.
12.9 Expenditures by Administrative Agent or Lenders. Any sums spent by
Administrative Agent or any Lender in the exercise of any Right under any Credit
Document is payable by the Companies to Administrative Agent within 15 Business
Days of written demand, becomes part of the Obligation, and bears interest on
the portion thereof from time to time unpaid at the Default Rate from the date
spent until the date repaid.
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12.10 Diminution in Value of Collateral. Neither Administrative Agent
nor any Lender has any liability or responsibility whatsoever for any diminution
in or loss of value of any collateral now or in the future securing payment or
performance of any of the Obligation (other than diminution in or loss of value
caused by its own gross negligence or willful misconduct).
SECTION 13. ADMINISTRATIVE AGENT AND LENDERS.
13.1 Administrative Agent.
(a) Appointment. Each Lender appoints Administrative Agent
(including, without limitation, each successor Administrative Agent in
accordance with this SECTION 13) as its nominee and agent to act in its
name and on its behalf (and Administrative Agent and each such
successor accepts that appointment): (i) To act as its nominee and on
its behalf in and under all Credit Documents; (ii) to arrange the means
whereby its funds are to be made available to Borrower under the Credit
Documents; (iii) to take any action that it properly requests under the
Credit Documents (subject to the concurrence of other Lenders as may be
required under the Credit Documents); (iv) to receive all documents and
items to be furnished to it under the Credit Documents; (v) to be the
secured party, mortgagee, beneficiary, recipient and similar party in
respect of any collateral for the benefit of Lenders; (vi) to promptly
distribute to it all material information, requests, documents, and
items received from Borrower under the Credit Documents; (vii) to
promptly distribute to it its ratable part of each payment or
prepayment (whether voluntary, as proceeds of collateral upon or after
foreclosure, as proceeds of insurance thereon, or otherwise) in
accordance with the terms of the Credit Documents; and (viii) to
deliver to the appropriate Persons requests, demands, approvals, and
consents received from it. However, Administrative Agent may not be
required to take any action that exposes it to personal liability or
that is contrary to any Credit Document or applicable Governmental
Requirements.
(b) Successor. Administrative Agent may assign all of its
Rights and obligations as Administrative Agent under the Credit
Documents to any of its Affiliates, which Affiliate shall then be the
successor Administrative Agent under the Credit Documents.
Administrative Agent may also voluntarily resign and shall resign upon
the request of Required Lenders for cause (i.e., Administrative Agent
is continuing to fail to perform its responsibilities as Administrative
Agent under the Credit Documents). If the initial or any successor
Administrative Agent ever ceases to be a party to this agreement or if
the initial or any successor Administrative Agent ever resigns (whether
voluntarily or at the request of Required Lenders), then Required
Lenders shall (which, if no Event of Default or Potential Default
exists, is subject to Borrower's approval that may not be unreasonably
withheld) appoint the successor Administrative Agent from among Lenders
(other than the resigning Administrative Agent). If Required Lenders
fail to appoint a successor Administrative Agent within 30 days after
the resigning Administrative Agent has given notice of resignation or
Required Lenders have removed the resigning Administrative Agent, then
the resigning Administrative Agent may, on behalf of Lenders, appoint a
successor Administrative Agent, which must be a commercial bank having
a combined capital and surplus of at least $1,000,000,000 (as shown on
its most recently published statement of condition). Upon its
acceptance of appointment as successor Administrative Agent, the
successor Administrative Agent succeeds to and becomes vested with all
of the Rights of the prior Administrative Agent, and the prior
Administrative Agent is discharged from its duties and obligations of
Administrative Agent under the Credit Documents (but, when used in
connection with LCs issued and outstanding before the appointment of
the successor Administrative Agent, "Administrative Agent" shall
continue to refer solely to the prior Administrative Agent, but any LCs
issued or renewed after the appointment of any successor Administrative
Agent shall be issued or renewed by the successor Administrative
Agent), and each Lender shall execute the documents that any Lender,
the resigning or removed Administrative Agent, or the successor
Administrative Agent reasonably request to reflect the change. After
any Administrative Agent's resignation or removal as Administrative
Agent under
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the Credit Documents, the provisions of this section inure to its
benefit as to any actions taken or not taken by it while it was
Administrative Agent under the Credit Documents.
(c) Rights as Lender. Administrative Agent, in its capacity as
a Lender, has the same Rights under the Credit Documents as any other
Lender and may exercise those Rights as if it were not acting as
Administrative Agent. The term "Lender", unless the context otherwise
indicates, includes Administrative Agent. Administrative Agent's
resignation or removal does not impair or otherwise affect any Rights
that it has or may have in its capacity as an individual Lender. Each
Lender and Borrower agree that Administrative Agent is not a fiduciary
for Lenders or for Borrower but is simply acting in the capacity
described in this agreement to alleviate administrative burdens for
Borrower and Lenders, that Administrative Agent has no duties or
responsibilities to Lenders or Borrower except those expressly set
forth in the Credit Documents, and that Administrative Agent in its
capacity as a Lender has the same Rights as any other Lender.
(d) Other Activities. Administrative Agent or any Lender may
now or in the future be engaged in one or more loan, letter of credit,
leasing, hedging agreement, or other financing transactions with
Borrower, act as trustee or depositary for Borrower, or otherwise be
engaged in other transactions with Borrower (collectively, the "OTHER
ACTIVITIES") not the subject of the Credit Documents. Without limiting
the Rights of Lenders specifically set forth in the Credit Documents,
neither Administrative Agent nor any Lender is responsible to account
to the other Lenders for those other activities, and no Lender shall
have any interest in any other Lender's activities, any present or
future guaranties by or for the account of Borrower that are not
contemplated by or included in the Credit Documents, any present or
future offset exercised by Administrative Agent or any Lender in
respect of those other activities, any present or future property taken
as security for any of those other activities, or any property now or
hereafter in Administrative Agent's or any other Lender's possession or
control that may be or become security for the obligations of Borrower
arising under the Credit Documents by reason of the general description
of indebtedness secured or of property contained in any other
agreements, documents, or instruments related to any of those other
activities (but, if any payments in respect of those guaranties or that
property or the proceeds thereof is applied by Administrative Agent or
any Lender to reduce the Obligation, then each Lender is entitled to
share ratably in the application as provided in the Credit Documents).
13.2 Expenses. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees and other costs of collection) incurred by Administrative Agent
(while acting in such capacity) in connection with any of the Credit Documents
if Administrative Agent is not reimbursed from other sources within 30 days
after incurrence. Each Lender is entitled to receive its Pro Rata Part of any
reimbursement that it makes to Administrative Agent if Administrative Agent is
subsequently reimbursed from other sources.
13.3 Proportionate Absorption of Losses. Except as otherwise provided
in the Credit Documents, nothing in the Credit Documents gives any Lender any
advantage over any other Lender insofar as the Obligation is concerned or
relieves any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other obliger on the Obligation having any
credit, allowance, setoff, defense, or counterclaim solely with respect to all
or any part of that Lender's Pro Rata Part of the Obligation).
13.4 Delegation of Duties; Reliance. Lenders may perform any of their
duties or exercise any of their Rights under the Credit Documents by or through
Administrative Agent, and Lenders and Administrative Agent may perform any of
their duties or exercise any of their Rights under the Credit Documents by or
through their respective Representatives. Administrative Agent, Lenders, and
their respective Representatives (a) are entitled to rely upon (and shall be
protected in relying upon) any written or oral statement believed by it or them
to be genuine and correct and to have been signed or made by the proper Person
and, with respect to legal
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matters, upon opinion of counsel selected by Administrative Agent or that Lender
(but nothing in this CLAUSE (a) permits Administrative Agent to rely on (i) oral
statements if a writing is required by this agreement or (ii) any other writing
if a specific writing is required by this agreement), (b) are entitled to deem
and treat each Lender as the owner and holder of its portion of the Obligation
for all purposes until, written notice of the assignment or transfer is given to
and received by Administrative Agent (and any request, authorization, consent,
or approval of any Lender is conclusive and binding on each subsequent holder,
assignee, or transferee of or Participant in that Lender's portion of the
Obligation until that notice is given and received), (c) are not deemed to have
notice of the occurrence of an Event of Default unless a responsible officer of
Administrative Agent, who handles matters associated with the Credit Documents
and transactions thereunder, has actual knowledge or Administrative Agent has
been notified by a Lender or Borrower, and (d) are entitled to consult with
legal counsel (including counsel for Borrower), independent accountants, and
other experts selected by Administrative Agent and are not liable for any action
taken or not taken in good faith by it in accordance with the advice of counsel,
accountants, or experts.
13.5 Limitation of Administrative Agent's Liability.
(a) Exculpation. Neither Administrative Agent nor any of its
Affiliates or Representatives will be liable for any action taken or
omitted to be taken by it or them under the Credit Documents in good
faith and believed by it or them to be within the discretion or power
conferred upon it or them by the Credit Documents or be responsible for
the consequences of any error of judgment (except for fraud, gross
negligence, or willful misconduct), and neither Administrative Agent
nor any of its Affiliates or Representatives has a fiduciary
relationship with any Lender by virtue of the Credit Documents (but
nothing in this agreement negates the obligation of Administrative
Agent to account for funds received by it for the account of any
Lender).
(b) Indemnity. Unless indemnified to its satisfaction against
loss, cost, liability, and expense, Administrative Agent may not be
compelled to do any act under the Credit Documents or to take any
action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Credit
Documents. If Administrative Agent requests instructions from Lenders,
or Required Lenders, as the case may be, with respect to any act or
action in connection with any Credit Document, Administrative Agent is
entitled to refrain (without incurring any liability to any Person by
so refraining) from that act or action unless and until it has received
instructions. In no event, however, may Administrative Agent or any of
its Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no Lender
has any right of action against Administrative Agent as a result of
Administrative Agent's acting or refraining from acting under this
agreement in accordance with instructions of Required Lenders.
(c) Reliance. Administrative Agent is not responsible to any
Lender or any Participant for, and each Lender represents and warrants
that it has not relied upon Administrative Agent in respect of, (i) the
creditworthiness of any Company and the risks involved to that Lender,
(ii) the effectiveness, enforceability, genuineness, validity, or the
due execution of any Credit Document (except by Administrative Agent),
(iii) any representation, warranty, document, certificate, report, or
statement made therein (except by Administrative Agent) or furnished
thereunder or in connection therewith, (iv) the adequacy of any
collateral now or hereafter securing the Obligation or the existence,
priority, or perfection of any Lien now or hereafter granted or
purported to be granted on the collateral under any Credit Document, or
(v) observation of or compliance with any of the terms, covenants, or
conditions of any Credit Document on the part of any Company. EACH
LENDER AGREES TO INDEMNIFY ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES
AND HOLD THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S
COMMITMENT PERCENTAGE OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE
EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
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THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY
WAY RELATING TO OR ARISING OUT OF THE CREDIT DOCUMENTS OR ANY ACTION
TAKEN OR OMITTED BY THEM UNDER THE CREDIT DOCUMENTS IF ADMINISTRATIVE
AGENT AND ITS REPRESENTATIVES ARE NOT REIMBURSED FOR SUCH AMOUNTS BY
ANY COMPANY. ALTHOUGH ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES HAVE
THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR THEIR OWN
ORDINARY NEGLIGENCE, ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES DO
NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR
THEIR OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT.
13.6 Event of Default. While an Event of Default exists, Lenders agree
to promptly confer in order that Required Lenders or Lenders, as the case may
be, may agree upon a course of action for the enforcement of the Rights of
Lenders. Administrative Agent is entitled to act or refrain from taking any
action (without incurring any liability to any Person for so acting or
refraining) unless and until it has received instructions from Required Lenders.
In actions with respect to any Company's property, Administrative Agent is
acting for the ratable benefit of each Lender.
13.7 Collateral Matters.
(a) General Authorization. Each Lender authorizes and directs
Administrative Agent to enter into the Credit Documents for the Lender
Liens and agrees that any action taken by Administrative Agent
concerning any Collateral (with the consent or at the request of
Required Lenders) in accordance with any Credit Document, that
Administrative Agent's exercise (with the consent or at the request of
Required Lenders) of powers concerning the Collateral in any Credit
Document and that all other reasonably incidental powers are authorized
and binding upon all Lenders.
(b) Maintaining Lender Liens. Administrative Agent is
authorized on behalf of all Lenders, without the necessity of any
notice to or further consent from any Lender, from time to time before
an Event of Default or Potential Default, to take any action with
respect to any Collateral or Credit Documents related to Collateral
that may be necessary to perfect and maintain perfected the Lender
Liens upon the Collateral.
(c) Limitation of Obligations. Except to use the same standard
of care that it ordinarily uses for collateral for its sole benefit,
Administrative Agent has no obligation whatsoever to any Lender or to
any other Person to assure that the Collateral exists or is owned by
any Company or is cared for, protected, or insured or has been
encumbered or that the Lender Liens have been properly or sufficiently
or lawfully created, perfected, protected, or enforced or are entitled
to any particular priority.
(d) Standard of Care. Administrative Agent shall exercise the
same care and prudent judgment with respect to the Collateral and the
Credit Documents as it normally and customarily exercises in respect of
similar collateral and security documents.
(e) Release of Collateral. Lenders irrevocably authorize
Administrative Agent, at its option and in its discretion, to release
any Lender Lien upon any Collateral (i) upon full payment of the
Obligation, (ii) constituting property being disposed of as permitted
under any Credit Document, (iii) constituting property in which no
Company owned any interest at the time the Lender Lien was granted or
at any time after that, (iv) constituting property leased to any
Company under a lease that has expired or been terminated in a
transaction permitted under the Credit Documents or is about to expire
and that has not been, and is not intended by that Company to be,
renewed, (v) consisting of an instrument evidencing Debt pledged to
Administrative Agent (for the benefit of Lenders), if the underlying
Debt has been paid in full, or (vi) if approved, authorized, or
ratified in writing by Lenders. Upon request
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by Administrative Agent at any time, Lenders shall confirm in writing
Administrative Agent's authority to release particular types or items
of Collateral under this CLAUSE (e).
13.8 Limitation of Liability. No Lender or any Participant will incur
any liability to any other Lender or Participant except for acts or omissions in
bad faith, and neither Administrative Agent nor any Lender or Participant will
incur any liability to any other Person for any act or omission of any other
Lender or any Participant.
13.9 Relationship of Lenders. The Credit Documents do not create a
partnership or joint venture among Administrative Agent and Lenders or among
Lenders.
13.10 Benefits of Agreement. None of the provisions of this section
inure to the benefit of any Company or any other Person except Administrative
Agent and Lenders. Therefore, no Company or any other Person is entitled to rely
upon, or entitled to raise as a defense, in any manner whatsoever, the failure
of Administrative Agent or any Lender to comply with these provisions.
SECTION 14. MISCELLANEOUS.
14.1 Nonbusiness Days. Any payment or action that is due under any
Credit Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest shall continue to accrue on any applicable payment
until payment is in fact made) unless the payment concerns a LIBOR Rate
Borrowing, in which case if the next-succeeding Business Day is in the next
calendar month, then such payment shall be made on the next-preceding Business
Day.
14.2 Communications. Unless otherwise specifically provided, whenever
any Credit Document requires or permits any consent, approval, notice, request
or demand from one party to another, communication must be in writing (which may
be by telex or fax) to be effective and shall be deemed to have been given (i)
if by telex, when transmitted to the appropriate telex number and the
appropriate answer back is received, (ii) if by fax, when transmitted to the
appropriate fax number (and all communications sent by fax must be confirmed
promptly thereafter by telephone; but any requirement in this parenthetical
shall not affect the date when the fax shall be deemed to have been delivered),
(iii) if by mail, on the third Business Day after it is enclosed in an envelope
and properly addressed, stamped, sealed and deposited in the appropriate
official postal service, or (iv) if by any other means, when actually delivered.
Until changed by notice pursuant to this agreement, the address (and fax number)
for Administrative Agent, each initial Lender and Borrower is stated beside
their respective signatures to this agreement. The address (and fax number) for
each Lender who becomes party to this agreement after the Closing Date shall be
stated beside its name on the then most recently amended SCHEDULE 2.
14.3 Form and Number of Documents. The form, substance and number of
counterparts of each writing to be furnished under this agreement must be
reasonably satisfactory to Administrative Agent and its counsel.
14.4 Exceptions to Covenants. No Company may take or fail to take any
action that is permitted as an exception to any of the covenants contained in
any Credit Document if that action or omission would result in the breach of any
other covenant contained in any Credit Document.
14.5 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Credit Documents survive all
closings under the Credit Documents and, except as otherwise indicated, are not
affected by any investigation made by any party.
14.6 Governing Governmental Requirements. Unless otherwise stated in
any Credit Document, the Governmental Requirements of the State of Texas and of
the United States of America govern the Rights and
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duties of the parties to the Credit Documents and the validity, construction,
enforcement, and interpretation of the Credit Documents.
14.7 Invalid Provisions. Any provision in any Credit Document held to
be illegal, invalid or unenforceable is fully severable; the appropriate Credit
Document shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect and
shall not be affected by the severed provision. Administrative Agent, Lenders
and each Company party to the affected Credit Document agree to negotiate, in
good faith, the terms of a replacement provision as similar to the severed
provision as may be possible and be legal, valid and enforceable.
14.8 Conflicts Between Credit Documents. The provisions of this
agreement control if in conflict (i.e., the provisions contradict each other as
opposed to a Credit Document containing additional provisions not in conflict)
with the provisions of any other Credit Document.
14.9 Discharge and Certain Reinstatement. Borrower's obligations under
the Credit Documents remain in full force and effect until Lenders have no
commitment to extend credit under the Credit Documents and the Obligation is
fully paid (except for provisions under the Credit Documents which by their
terms expressly survive payment of the Obligation and termination of the Credit
Documents). If any payment under any Credit Document is ever rescinded or must
be restored or returned for any reason, then all Rights and obligations under
the Credit Documents in respect of that payment are automatically reinstated as
though the payment had not been made when due.
14.10 Amendments, Consents, Conflicts, and Waivers.
(a) Required Lenders. Unless otherwise specifically provided
(i) the provisions of this agreement may be amended, modified, or
waived, only by an instrument in writing executed by Borrower,
Administrative Agent, and Required Lenders and supplemented only by
documents delivered or to be delivered in accordance with the express
terms of this agreement, and (ii) the other Credit Documents may only
be the subject of an amendment, modification, or waiver that has been
approved by Required Lenders and Borrower.
(b) All Lenders. Any amendment to or consent or waiver under
this agreement or any Credit Document that purports to accomplish any
of the following must be by an instrument in writing executed by
Borrower and Administrative Agent and executed (or approved, as the
case may be) by each Lender: (i) Extends the due date or decreases the
amount of any scheduled payment or amortization of the Obligation
beyond the date specified in the Credit Documents; (ii) decreases any
rate or amount of interest, fees, or other sums payable to
Administrative Agent or Lenders under this agreement (except such
reductions as are contemplated by this agreement); (iii) changes the
definition of "COMMITMENT," "COMMITMENT PERCENTAGE," "REQUIRED
LENDERS," or "PRO RATA PART;" (iv) increases any one or more Lenders'
Commitment; (v) waives compliance with, amends, or fully or partially
releases -- except as expressly provided in the Credit Documents or for
when a Company merges into another Person or dissolves when
specifically permitted in the Credit Documents -- any Guaranty or
Collateral; or (vi) changes this CLAUSE (b) or any other matter
specifically requiring the consent of all Lenders under this agreement.
(c) Conflicts. Any conflict or ambiguity between the terms and
provisions of this agreement and terms and provisions in any other
Credit Document is controlled by the terms and provisions of this
agreement.
(d) Waivers. No course of dealing or any failure or delay by
Administrative Agent, any Lender, or any of their respective
Representatives with respect to exercising any Right of Administrative
Agent or any Lender under this agreement operates as a waiver thereof.
A waiver must
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be in writing and signed by Administrative Agent and Lenders (or
Required Lenders, if permitted under this agreement) to be effective,
and a waiver will be effective only in the specific instance and for
the specific purpose for which it is given.
14.11 Multiple Counterparts. Any Credit Document may be executed in a
number of identical counterparts, and by each party thereto on separate
counterparts (including, at Administrative Agent's discretion, counterparts or
signature pages executed and transmitted by fax) with the same effect as if all
signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument.
14.12 Parties.
(a) Parties Bound. Each Credit Document binds and inures to
the parties to it, any intended beneficiary of it, and each of their
respective successors and permitted assigns. No Company may assign or
transfer any Rights or obligations under any Credit Document without
first obtaining all Lenders' consent, and any purported assignment or
transfer without such consent is void. No Lender may transfer, pledge,
assign, sell any participation in, or otherwise encumber its portion of
the Obligation except as permitted by CLAUSES (b) or (c) below.
(b) Participations. Any Lender may (subject to the provisions
of this section, in accordance with applicable Governmental
Requirements, in the ordinary course of its business, and at any time)
sell to one or more Persons (each a "PARTICIPANT") participating
interests in its portion of the Obligation. The selling Lender remains
a "Lender" under the Credit Documents, the Participant does not become
a "Lender" under the Credit Documents, and the selling Lender's
obligations under the Credit Documents remain unchanged. The selling
Lender remains solely responsible for the performance of its
obligations and remains the holder of its share of the Principal Debt
for all purposes under the Credit Documents. Borrower and
Administrative Agent shall continue to deal solely and directly with
the selling Lender in connection with that Lender's Rights and
obligations under the Credit Documents, and each Lender must retain the
sole right and responsibility to enforce due obligations of the
Companies. Participants have no Rights under the Credit Documents
except certain voting rights as provided below. Subject to the
following, each Lender may obtain (on behalf of its Participants) the
benefits of SECTION 3 with respect to all participations in its part of
the Obligation outstanding from time to time so long as Borrower is not
obligated to pay any amount in excess of the amount that would be due
to that Lender under SECTION 3 calculated as though no participations
have been made. No Lender may sell any participating interest under
which the Participant has any Rights to approve any amendment,
modification, or waiver of any Credit Document except as to matters in
SECTION 14.10(b)(i) and (ii).
(c) Assignments. Each Lender may make assignments to the
Federal Reserve Bank. Each Lender may also assign to one or more
assignees (each an "ASSIGNEE") all or any part of its Rights and
obligations under the Credit Documents so long as (i) the assignor
Lender and Assignee execute and deliver to Administrative Agent and
Borrower for their consent and acceptance (that may not be unreasonably
withheld in any instance and is not required if the Assignee is an
Affiliate of the assigning Lender) an assignment and assumption
agreement in substantially the form of EXHIBIT K (an "ASSIGNMENT") and
pay to Administrative Agent a processing fee of $2,500, (ii) the
assignment is for an identical percentage of the assignor Lender's
Rights and obligations under the Term Loan and the Revolving Facility,
(iii) the assignment must be for a minimum total Commitment of
$5,000,000 and, if the assigning Lender retains any Commitment, it must
be a minimum total Commitment of $5,000,000, and (iv) the conditions
for that assignment set forth in the applicable Assignment are
satisfied. The "Effective Date" in each Assignment must (unless a
shorter period is agreeable to Borrower and Administrative Agent) be at
least five Business Days after it is executed and delivered by the
assignor Lender and the Assignee to Administrative Agent and Borrower
for acceptance. Once
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that Assignment is accepted by Administrative Agent and Borrower, and
subject to all of the following occurring, then, on and after the
"Effective Date" stated in it (i) the Assignee automatically becomes a
party to this agreement and, to the extent provided in that Assignment,
has the Rights and obligations of a Lender under the Credit Documents,
(ii) the assignor Lender, to the extent provided in that Assignment, is
released from its obligations to fund Borrowings under this agreement
and its reimbursement obligations under this agreement and, in the case
of an Assignment covering all of the remaining portion of the assignor
Lender's Rights and obligations under the Credit Documents, that Lender
ceases to be a party to the Credit Documents, (iii) Borrower shall
execute and deliver to the assignor Lender and the Assignee the
appropriate Notes in accordance with this agreement following the
transfer, (iv) upon delivery of the Notes under CLAUSE (iii) preceding,
the assignor Lender shall return to Borrower all Notes previously
delivered to that Lender under this agreement, and (v) SCHEDULE 2 is
automatically deemed to be amended to reflect the name, address,
telecopy number, and Commitment of the Assignee and the remaining
Commitment (if any) of the assignor Lender, and Administrative Agent
shall prepare and circulate to Borrower and Lenders an amended SCHEDULE
2 reflecting those changes.
14.13 Venue, Service of Process, and Jury Trial. BORROWER AND (PURSUANT
TO ITS GUARANTY OR ITS EXECUTION AND DELIVERY OF, OR CONSENT TO, ANY OTHER
CREDIT DOCUMENT) EACH COMPANY, IN EACH CASE FOR ITSELF AND ITS SUCCESSORS AND
ASSIGNS, IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS IN TEXAS, (b) WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE GOVERNMENTAL REQUIREMENTS, ANY OBJECTION THAT IT MAY NOW OR IN THE
FUTURE HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN
CONNECTION WITH ANY CREDIT DOCUMENT AND THE OBLIGATION BROUGHT IN THE DISTRICT
COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, (c) WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (d) CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THOSE
COURTS IN ANY LITIGATION BY THE MAILING OF COPIES OF THAT PROCESS BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND DELIVERY, OR BY
DELIVERY BY A NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED
COMPLETE UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS
AGREEMENT, (e) AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY CREDIT
DOCUMENT ARISING OUT OF OR IN CONNECTION WITH THE CREDIT DOCUMENTS OR THE
OBLIGATION MAY BE BROUGHT IN ONE OF THE FOREGOING COURTS, AND (f) WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE GOVERNMENTAL REQUIREMENTS, ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY CREDIT DOCUMENT. The scope of each of the foregoing waivers is intended
to be all encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. BORROWER AND (PURSUANT TO ITS GUARANTY OR ITS
EXECUTION AND DELIVERY OF, OR CONSENT TO, ANY OTHER CREDIT DOCUMENT) EACH OTHER
COMPANY ACKNOWLEDGES THAT THESE WAIVERS ARE A MATERIAL INDUCEMENT TO
ADMINISTRATIVE AGENT'S AND EACH LENDER'S AGREEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT ADMINISTRATIVE AGENT AND EACH LENDER HAS ALREADY RELIED ON
THESE WAIVERS IN ENTERING INTO THIS AGREEMENT, AND THAT ADMINISTRATIVE AGENT AND
EACH LENDER WILL CONTINUE TO RELY ON EACH OF THESE WAIVERS IN RELATED FUTURE
DEALINGS. BORROWER AND (PURSUANT TO ITS GUARANTY OR ITS EXECUTION AND DELIVERY
OF, OR CONSENT TO, ANY OTHER CREDIT DOCUMENT) EACH OTHER COMPANY FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS WITH ITS LEGAL
COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY AGREES TO EACH WAIVER FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. The waivers in this section are irrevocable,
meaning that they may not be modified either orally or in writing, and these
waivers apply to any future renewals, extensions, amendments, modifications, or
replacements in respect of the applicable Credit Document. In connection with
any Litigation, this agreement may be filed as a written consent to a trial by
the court.
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14.14 Entirety. THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER, THE OTHER COMPANIES, LENDERS, AND ADMINISTRATIVE AGENT AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS]
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DULY EXECUTED AND DELIVERED by each of the signatories hereto as of the
date first stated in this agreement.
Address for Notice ULTRAK, INC., as Borrower
Ultrak, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: Xx. Xxx X. Xxxxx,
Vice President - Finance By:
Fax No.: (000) 000-0000 -----------------------------------
Xxx X. Xxxxx, Vice President - Finance
Address for Notice BANK ONE, TEXAS, N.A.,
as Administrative Agent and a Lender
Bank One, Texas, N.A.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx, By:
Vice President -----------------------------------
Fax No.: (000) 000-0000 Xxxx X. Xxxxxx, Vice President
Address for Notice XXXXX FARGO BANK (TEXAS),
NATIONAL ASSOCIATION,
Xxxxx Fargo Bank (Texas), as a Lender
National Association
0000 Xxxx @ Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxx, By:
Vice President -----------------------------------
Fax No.: (000) 000-0000 Xxxx Xxxxxxxx, Vice President
64
SCHEDULE 2
LENDERS AND COMMITMENTS
=================================================================================================
NAME AND ADDRESS OF LENDER REVOLVING FACILITY TERM LOAN COMBINED
COMMITMENT
-------------------------------------------------------------------------------------------------
BANK ONE, TEXAS, N.A
0000 XXXX XXXXXX, 0XX XXXXX
XXXXXX, XX 00000 $21,900,000 $14,600,000 $36,500,000
ATTENTION: XXXX X. XXXXXX, VICE
PRESIDENT
TEL 214/000-0000
FAX 214/000-0000
------------------------------------------------------------------------------------------------
XXXXX FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
0000 XXXX @ XXXXX, 0XX XXXXX $ 8,100,000 $ 5,400,000 $13,500,000
XXXXXX, XXXXX 00000
ATTENTION: XXXX XXXXXXXX, VICE
PRESIDENT
TEL 214/000-0000
FAX 214/000-0000
------------------------------------------------------------------------------------------------
TOTAL $30,000,000 $20,000,000 $50,000,000
================================================================================================
1
65
SCHEDULE 7.3
INFORMATION REGARDING COMPANIES
========================================================================================================
INFORMATION REGARDING COMPANIES
========================================================================================================
STATE OF STATES QUALIFIED STILL USING
NAME/ INCORPORATION/ AS FOREIGN TRADE NAMES USED IN NAME?
OWNERSHIP FORMATION CORP./ENTITY LAST FOUR MONTHS Y/N
--------------------------------------------------------------------------------------------------------
Ultrak, Inc. Delaware None None Not
applicable
--------------------------------------------------------------------------------------------------------
Ultrak Operating, L.P. Texas Nevada International Business Y
* Ultrak GP, Inc. Development
is the 1% Groupe Bisset USA Y
General Partner MAXPRO USA Y
of Ultrak Ultrak Special Projects Y
Operating, L.P. GPS Standard Y
Ultrak International; Y
* Ultrak LP, Inc. is Ultrak OEM Y
the 99% Limited Ultrak Financial Services Y
Partner of Ultrak Mobile Video Products Y
Operating, L.P. The Focus Company Y
Smart Choice Y
Exxis Security Y
Closed Circuit Service Y
Industrial Vision Source Y
CCTV Source Y
Loss Prevention Electronics Y
Ultrak - Denver Y
Ultrak, Ltd. Y
Ultrak
--------------------------------------------------------------------------------------------------------
Ultrak GP, Inc. Delaware Texas None Not
* 100% owned by applicable
Ultrak, Inc.
--------------------------------------------------------------------------------------------------------
===============================================================================================
INFORMATION REGARDING COMPANIES
===============================================================================================
NAME/ CHIEF EXECUTIVE OTHER PRINCIPAL OFFICES
OWNERSHIP OFFICE
-----------------------------------------------------------------------------------------------
Ultrak, Inc. 0000 Xxxxxx Xxxxx Xx. Xxxx
Xxxxxxxxxx, Xxxxx 00000
-----------------------------------------------------------------------------------------------
Ultrak Operating, L.P. 1301 Waters Ridge Dr. 4301 South Cameron
* Ultrak GP, Inc. Xxxxxxxxxx, Xxxxx 00000 Suite 12
is the 1% Xxx Xxxxx, Xxxxxx 00000
General Partner
of Ultrak 0000 Xxxx 00xx Xxx.
Operating, L.P. Xxxxxxxxxxx, Xxxxxxxx 00000
* Ultrak LP, Inc. is 0000 Xxxxxxxxx Xx.
the 99% Limited Suite 319
Partner of Ultrak Fort Lauderdale, Florida
Operating, L.P.
-----------------------------------------------------------------------------------------------
Ultrak GP, Inc. 0000 Xxxxxx Xxxxx Xx. None
* 100% owned by Xxxxxxxxxx, Xxxxx 00000
Ultrak, Inc.
-----------------------------------------------------------------------------------------------
1
66
------------------------------------------------------------------------------------------------
Ultrak LP, Inc. Delaware None None Not
* 100% owned by applicable
Ultrak, Inc.
------------------------------------------------------------------------------------------------
Diamond Electronics, Ohio Texas Diamond Y
Inc. Diamond Electronics Y
* 100% owned by
Ultrak, Inc.
------------------------------------------------------------------------------------------------
Monitor Dynamics, Inc. California Texas Monitor Y
* 100% owned by Virginia MDI Y
Ultrak, Inc.
------------------------------------------------------------------------------------------------
Ultrak Holdings Limited United Kingdom None None Not
* 100% owned by applicable
Ultrak, Inc.
------------------------------------------------------------------------------------------------
Groupe Xxxxxx, X.X. France None Ultrak France Y
* 100% owned by Bisset Y
Ultrak Holdings
Limited
------------------------------------------------------------------------------------------------
MAXPRO Systems Pty., Australia None Ultrak Australia Y
Ltd. MAXPRO Y
* 100% owned by MAXPRO Systems Y
Ultrak, Inc.
------------------------------------------------------------------------------------------------
VideV GmbH Germany None Ultrak Germany Y
* 100% owned by VideV Y
Ultrak Holdings
Limited
------------------------------------------------------------------------------------------------
Intervision Express England None Ultrak U.K. Y
Limited Intervision Y
* 100% owned by Intervision Express Y
Ultrak Holdings
Limited
------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Ultrak LP, Inc. 0000 Xxxxx Xxxxxx Xxxxxx None
* 100% owned by Suite 1300
Ultrak, Inc. X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx
00000
Attn: Xxxxxxx Kudarczuk
-------------------------------------------------------------------------------------------
Diamond Electronics, 0000 Xxxxxxxx Xxxx Xxxx
Xxx. Xxxxxxx, Xxxx 00000
* 100% owned by
Ultrak, Inc.
-------------------------------------------------------------------------------------------
Monitor Dynamics, Inc. 0000 Xxxxx Xxxxxx 00000 Xxxxxx Xxxx Xx.
* 100% owned by Rancho Cucamonga, CA Suite 1B
Ultrak, Inc. 91730 Xxxxxxx, Xxxxxxxx 00000
-------------------------------------------------------------------------------------------
Ultrak Holdings Limited MSP Secretaries, Ltd. None
* 100% owned by 00 Xxxxxx Xxxxxx
Ultrak, Inc. Xxxxxx
XX0 0XX
XX
-------------------------------------------------------------------------------------------
Groupe Xxxxxx, X.X. 00 Xxx, Xxxxxxxxx Xxxxxxx Xxxx
* 100% owned by F-95103 Argenteuil
Ultrak Holdings CEDEX
Limited France
-------------------------------------------------------------------------------------------
MAXPRO Systems Pty., 1/25 Irving Dr. Xxxxx 00, 000 Xxxxxx Xxxxxx
Ltd. Xxxxxx, XX 0000 Xxxxx Xxxxxx, XXX 00000
* 100% owned by Australia Australia
Ultrak, Inc.
-------------------------------------------------------------------------------------------
VideV GmbH XxxXxxxxxxxx Xxx 00 None
* 100% owned by X-00000 Xxxxxxxxxx
Ultrak Holdings Germany
Limited
-------------------------------------------------------------------------------------------
Intervision Express Xxxx 000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx Xxxxxx Summit
* 100% owned by Xxxxxxx, Xxxxxxx
Xxxxxx Xxxxxxxx XX0 0XX
Limited U.K.
-------------------------------------------------------------------------------------------
2
67
----------------------------------------------------------------------------------------------------------
Xxxxxxxxx Security S.p.A. Italy None Ultrak Italy Y
* 100% owned by Xxxxxxxxx Y
Ultrak Holdings Xxxxxxxxx Security Y
Limited
----------------------------------------------------------------------------------------------------------
Philtech Electronic South Africa None Ultrak South Africa Y
Services (Proprietary) Philtech Y
Limited Philtech Electronic Y
* 100% owned by Philtech Electronic Services Y
Ultrak, Inc.
----------------------------------------------------------------------------------------------------------
Ultrak (Asia) Pte. Ltd. Republic of None Ultrak Asia Y
* 100% owned by Singapore
Ultrak, Inc.
----------------------------------------------------------------------------------------------------------
Security Procurement, Netherlands None None Not
B.V. applicable
* 100% owned by
Groupe Xxxxxx,
X.X.
----------------------------------------------------------------------------------------------------------
Security Procurement- France None None Not
France applicable
* 100% owned by
Group Xxxxxx,
X.X.
----------------------------------------------------------------------------------------------------------
Videosys Limited United Kingdom None None Not
* 100% owned by applicable
Ultrak Holdings
Limited
----------------------------------------------------------------------------------------------------------
Ultrak Belgium Belgium None None Not
* 100% owned by applicable
Ultrak Holdings
Limited
----------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Xxxxxxxxx Security S.p.A. Xxx Xxxxxxx 0/0 Xxxx
* 100% owned by I-31020 San Vendemiano
Ultrak Holdings (Treviso)
Limited Italy
--------------------------------------------------------------------------------
Philtech Electronic Quality House None
Services (Proprietary) Saint Xxxxxxxxxxx House
Limited Saint Xxxxxxx
* 100% owned by Bedfordview 2007
Ultrak, Inc. South Africa
--------------------------------------------------------------------------------
Ultrak (Asia) Pte. Ltd. 000 Xxxxxxxxx Xxxx None
* 100% owned by #00-00 Xxxxxxxxx Xxxx.
Xxxxxx, Xxx. Xxxxxxxxx 000000
--------------------------------------------------------------------------------
Security Procurement, Forum Administrations, None
B.V. B.V.
* 100% owned by Weena 336
Groupe Bisset, 3012 NJ Rotterdam
S.A. X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxxxxxxxxxx
--------------------------------------------------------------------------------
Security Procurement- 00 Xxx, Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxx F-95103 Argenteuil
* 100% owned by CEDEX
Group Bisset, France
S.A.
--------------------------------------------------------------------------------
Videosys Limited Xxxxx House None
* 100% owned by 000-000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxxxx Xxxxxx, XX XX0 0XX
Limited
--------------------------------------------------------------------------------
Ultrak Belgium Xxxxx Xxxxxx Park Plaza None
* 100% owned by Koningin Xxxxxxxxxxx 0
Ultrak Holdings Antwerp B-2018
Limited Belgium
--------------------------------------------------------------------------------
3
68
SCHEDULE 7.3 (CONT'D)
ORGANIZATIONAL CHART
Attached Hereto
4
69
SCHEDULE 7.8
LITIGATION
None
1
70
EXHIBIT A
TERM NOTE
$__________________ February 16, 1999
FOR VALUE RECEIVED, the undersigned, ULTRAK, INC., a Delaware
corporation ("BORROWER"), irrevocably and unconditionally promises to pay to the
order of __________________, a __________________ ("LENDER", and together with
each subsequent holder hereof, "PAYEE"), at the principal banking office of
Administrative Agent (hereinafter referenced) at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000 (i) the principal amount of ___________________ AND NO/100 DOLLARS
($___________________) in installments on the dates and in the principal amounts
provided for in the Credit Agreement hereinafter referenced, and (ii) interest
on the unpaid principal amount of this Note from time to time remaining
outstanding and unpaid from the date hereof until it shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meaning and effect as used and defined in that certain
Credit Agreement dated as of February 16, 1999 (as amended and otherwise
modified, and in effect, the "CREDIT AGREEMENT"), by and between Borrower,
certain Lenders, and Bank One Texas, N.A., as Administrative Agent for those
Lenders. Reference is hereby made to the Credit Agreement for all intents and
purposes.
This Note is a "Term Note" executed by Borrower and is referred to in,
governed by, and subject to, and is entitled to the benefits of, the terms and
provisions of the Credit Agreement as therein stated and referenced. Reference
is hereby made to the Credit Agreement for a statement of the agreements,
rights, remedies, benefits and obligations of Payee and the covenants,
agreements, rights, duties and obligations of Borrower in relation hereto,
including provisions for acceleration of the maturity hereof, interest rate and
amount limitations, voluntary and mandatory prepayments and scheduled payments
hereon; but this reference to the Credit Agreement, or any provision thereof,
shall not affect or impair the irrevocable, absolute and unconditional
obligation of Borrower to pay principal of, and interest on, this Note when due.
Unless the maturity of this Note shall have sooner occurred, the outstanding
principal balance of this Note and all accrued and unpaid interest thereon shall
be finally and fully payable on February 16, 2002.
The date, amount, Type, and interest rate and duration of each
Borrowing made by Lender to Borrower, and each payment made on account of the
principal thereof, and accrued interest thereon, shall be recorded by Payee on
its books and records, and prior to any transfer of this Note, endorsed by Payee
on a schedule attached hereto or any continuation thereof; and all recordations
and endorsements made by Payee shall, absent manifest error, be conclusive of
all such matters and binding on all Persons. Payee's failure to make or error in
making any such recordations or endorsements shall not diminish, reduce or
relieve Borrower's obligation to pay (i) all Borrowings made by Lender to
Borrower and then outstanding and (ii) all accrued and earned interest on the
amounts thereof from time to time outstanding and unpaid, pursuant to this Note.
Upon the occurrence of an Event of Default, this Note may be declared
to be, or shall become, forthwith due and immediately payable in the manner,
upon the conditions and with the effect, provided for and referred to in the
Credit Agreement.
If this Note is placed in the hands of an attorney for collection
(whether or not any proceeding is filed in connection therewith), or collected
through suit, the Bankruptcy Court or any other judicial proceeding, Borrower
irrevocably and unconditionally agrees to pay all costs, expenses and fees
incurred by Payee, including reasonable attorneys' fees and expenses, and any
assessed court and related costs, in addition to all other amounts owing
hereunder.
1
71
Borrower and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, NOTICE
OF INTENT TO ACCELERATE MATURITY, NOTICE OF ACCELERATION OF MATURITY, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against Borrower or any other Persons liable
herefor, or to enforce its rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Each of Borrower and Payee hereby agrees that Chapter 15 of Subtitle 3,
Title 79, Revised Civil Statutes of Texas, 1925, as amended, shall not apply to
this Note or the loan transaction evidenced by, and referred to in, the Credit
Agreement in any manner, including without limitation, to any account or
arrangement evidenced or created by, or provided for in, this Note or the Credit
Agreement.
This Note is secured by, among other things, Liens on the personal
property of Borrower and certain other Companies, as well as the guaranty of
payment of certain of Borrower's Subsidiaries, pursuant to the Credit Documents
referred to in the Credit Agreement. Reference is made to such Credit Documents
for a description of the Collateral and such guaranties, and the rights,
benefits and remedies of Payee in respect thereto.
This Note (including its validity, enforceability and interpretation)
shall be governed by, and construed in accordance with, the laws of the State of
Texas (without regard to conflict of law principles) and, to the extent
controlling, federal laws of the United States of America. This Note has been
executed, delivered and accepted and is payable at, Dallas, Dallas County,
Texas.
THIS NOTE AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
ULTRAK, INC.
By:
------------------------------------
Xxx X. Xxxxx, Vice President - Finance
2
72
EXHIBIT B
REVOLVING NOTE
$_____________ February 16,1999
FOR VALUE RECEIVED, the undersigned, ULTRAK, INC., a Delaware
corporation ("BORROWER"), irrevocably and unconditionally promises to pay to the
order of ________________, a ___________________ ("LENDER", and together with
each subsequent holder hereof, "PAYEE"), at the principal banking office of
Administrative Agent (hereinafter referenced) at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000, (i) the principal amount of ___________________ AND NO/100 DOLLARS
($_________________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of all Revolving Facility Borrowings made by Lender to Borrower
pursuant to the Credit Agreement hereinafter referenced), on the dates and in
the principal amounts provided for in the Credit Agreement, and (ii) interest on
the unpaid principal amount of each such Revolving Facility Borrowing from time
to time remaining outstanding and unpaid from the date of each such Revolving
Facility Borrowing until it shall be paid in full, at the rates per annum and on
the dates provided for in the Credit Agreement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meaning and effect as used and defined in that certain
Credit Agreement dated as of February 16, 1999 (as amended and otherwise
modified, and in effect, the "CREDIT AGREEMENT"), by and between Borrower,
certain Lenders, and Bank One Texas, N.A., as Administrative Agent for those
Lenders. Reference is hereby made to the Credit Agreement for all intents and
purposes.
This Note is a "Revolving Note" executed by Borrower and is referred to
in, governed by, and subject to, and is entitled to the benefits of, the terms
and provisions of the Credit Agreement as therein stated and referenced.
Reference is hereby made to the Credit Agreement for a statement of the
agreements, rights, remedies, benefits and obligations of Payee and the
covenants, agreements, rights, duties and obligations of Borrower in relation
hereto, including provisions for acceleration of the maturity hereof, interest
rate and amount limitations and voluntary and mandatory prepayments hereon; but
this reference to the Credit Agreement, or any provision thereof, shall not
affect or impair the irrevocable, absolute and unconditional obligation of
Borrower to pay principal of, and interest on, this Note when due. Unless the
maturity of this Note shall have sooner occurred, the outstanding principal
balance of this Note and all accrued and unpaid interest thereon shall be
finally and fully payable on the Revolving Facility Termination Date.
The date, amount, Type, and interest rate of each Revolving Facility
Borrowing made by Lender to Borrower, and each payment made on account of the
principal thereof, and accrued interest thereon, shall be recorded by Payee on
its books and records, and prior to any transfer of this Note, endorsed by Payee
on a schedule attached hereto or any continuation thereof; and all recordations
and endorsements made by Payee shall, absent manifest error, be conclusive of
all such matters and binding on all Persons. Payee's failure to make or error in
making any such recordations or endorsements shall not diminish, reduce or
relieve Borrower's obligation to pay (i) all Revolving Facility Borrowings made
by Lender and then outstanding and (ii) all accrued and earned interest on the
amounts thereof from time to time outstanding and unpaid, pursuant to this Note.
Upon the occurrence of an Event of Default, this Note may be declared
to be, or shall become, forthwith due and immediately payable in the manner,
upon the conditions (if any) and with the effect, provided for and referred to
in the Credit Agreement.
1
73
If this Note is placed in the hands of an attorney for collection
(whether or not any proceeding is filed in connection therewith), or collected
through suit, the Bankruptcy Court or any other judicial proceeding, Borrower
irrevocably and unconditionally agrees to pay all costs, expenses and fees
incurred by Payee, including reasonable attorneys' fees and expenses, and any
assessed court and related costs, in addition to all other amounts owing
hereunder.
Borrower and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, NOTICE
OF INTENT TO ACCELERATE MATURITY, NOTICE OF ACCELERATION OF MATURITY, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against Borrower or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Each of Borrower and Payee hereby agrees that Chapter 15, Subtitle 79,
Revised Civil Statutes of Texas, 1925, as amended, shall not apply to this Note
or the loan transaction evidenced by, and referred to in, the Credit Agreement
in any manner, including without limitation, to any account or arrangement
evidenced or created by, or provided for in, this Note or the Credit Agreement.
This Note is secured by, among other things, Liens on the personal
property of Borrower and certain other Companies, as well as the guaranty of
payment of certain of Borrower's Subsidiaries, pursuant to the Credit Documents
referred to in the Credit Agreement. Reference is made to such Credit Documents
for a description of the Collateral and such guaranties, and the rights,
benefits and remedies of Payee in respect thereto.
This Note (including its validity, enforceability and interpretation)
shall be governed by, and construed in accordance with, the laws of the State of
Texas (without regard to conflict of law principles) and, to the extent
controlling, federal laws of the United States of America. This Note has been
executed, delivered and accepted and is payable at, Dallas, Dallas County,
Texas.
THIS NOTE AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
ULTRAK, INC.
By:
-------------------------------------
Xxx X. Xxxxx, Vice President - Finance
2
74
EXHIBIT C
GUARANTY AGREEMENT
WHEREAS, ULTRAK, INC., a Delaware corporation ("BORROWER"), has entered
into a Credit Agreement of even date herewith with certain lenders which are or
may from time to time become parties thereto (each a "LENDER" and collectively,
"LENDERS"), and BANK ONE, TEXAS, N.A., a national banking association, as
administrative agent for itself and the other Lenders (in such capacity,
together with its successors in such capacity, "ADMINISTRATIVE AGENT"), pursuant
to which Lenders have agreed to make available (a) a revolving credit facility
to Borrower with advances thereunder not to exceed an aggregate principal amount
of $30,000,000 at any time outstanding, and (b) a term loan to Borrower in the
principal amount of $20,000,000 (such Credit Agreement, as may be amended,
extended, restated, supplemented or modified from time to time, the "CREDIT
AGREEMENT"); terms defined in the Credit Agreement and not otherwise defined
herein are used herein as defined therein; and
WHEREAS, Administrative Agent and Lenders have conditioned their
obligations under the Credit Agreement upon the execution and delivery by
Guarantor (hereinafter defined) of this Guaranty Agreement (this "GUARANTY");
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, ___________________, a
____________ corporation ("GUARANTOR"), hereby irrevocably and unconditionally
guarantees to Administrative Agent and Lenders, the full and prompt payment and
performance of the Guaranteed Indebtedness (hereinafter defined), this Guaranty
being upon the following terms:
1. The term "GUARANTEED INDEBTEDNESS", as used herein means all of the
Obligation and shall include any and all post-petition interest and expenses
(including reasonable attorneys' fees) whether or not allowed under any
bankruptcy, insolvency, or other similar law.
2. This Guaranty shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness and
termination of the Commitments. No set-off, counterclaim, recoupment, reduction,
or diminution of any obligation, or any defense of any kind or nature which
Borrower may have against Administrative Agent, any Lender or any other party,
or which Guarantor may have against Borrower or any other party (other than
Administrative Agent or any Lender), shall be available to, or shall be asserted
by, Guarantor against Administrative Agent, any Lender or any subsequent holder
of the Guaranteed Indebtedness or any part thereof or against payment of the
Guaranteed Indebtedness or any part thereof.
3. It is the intention of Guarantor, Administrative Agent and Lenders
that the amount of the Guaranteed Indebtedness not exceed the maximum amount
permitted by applicable laws, including fraudulent conveyance, fraudulent
transfer or similar laws applicable to Guarantor. Accordingly, and
notwithstanding anything to the contrary in this Guaranty, any Credit Document,
or any other agreement or instrument executed in connection with the payment of
any of the Guaranteed Indebtedness, if, after giving effect to this Guaranty and
applicable laws, the obligations of Guarantor under this Guaranty would
otherwise be set aside, terminated, annulled or avoided for such reason by a
court of competent jurisdiction in a proceeding actually pending before such
court, the amount of the Guaranteed Indebtedness shall be limited to the maximum
amount permitted by applicable laws which would not (a) render Guarantor
insolvent, (b) result in the fair saleable value of Guarantor's assets being
less than the amount required to pay its debts and other liabilities (including
contingent liabilities) as they mature, or (c) leave Guarantor with unreasonably
small capital to carry out its business as conducted prior to the execution of
this Guaranty and as proposed to be conducted, including its capital needs.
1
75
4. If Guarantor becomes liable for any indebtedness owing by Borrower
to Administrative Agent or any Lender by endorsement or otherwise, other than
under this Guaranty, such liability shall not be in any manner impaired or
affected hereby, and the rights of Administrative Agent and Lenders hereunder
shall be cumulative of any and all other rights that Administrative Agent and
Lenders may ever have against Guarantor. The exercise by Administrative Agent or
any Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.
5. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Administrative Agent, for the
benefit of Lenders, upon demand in lawful currency of the United States of
America and it shall not be necessary for Administrative Agent, in order to
enforce such payment by Guarantor, first to institute suit or exhaust its
remedies against Borrower or others liable on such Guaranteed Indebtedness, or
to enforce any rights against any collateral which shall ever have been given to
secure such Guaranteed Indebtedness.
6. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower or otherwise, all such amounts
otherwise subject to acceleration under the terms of the Guaranteed Indebtedness
shall nonetheless be payable by Guarantor hereunder forthwith on demand by
Administrative Agent.
7. Guarantor hereby agrees that its obligations under this Guaranty
shall not be released, discharged, diminished, impaired, reduced, or affected
for any reason or by the occurrence of any event, including, without limitation,
one or more of the following events, whether or not with notice to or the
consent of Guarantor: (a) the taking or accepting of collateral as security for
any or all of the Guaranteed Indebtedness or the sale, release, surrender,
exchange, or subordination of any collateral now or hereafter securing any or
all of the Guaranteed Indebtedness; (b) any partial release of the liability of
Guarantor hereunder, or the full or partial release of Borrower or any other
guarantor from liability for any or all of the Guaranteed Indebtedness; (c) the
dissolution, insolvency, or bankruptcy of Borrower, Guarantor, or any other
party at any time liable for the payment of any or all of the Guaranteed
Indebtedness; (d) any renewal, extension, modification, waiver, amendment, or
rearrangement of any or all of the Guaranteed Indebtedness or any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance,
waiver, settlement, or compromise that may be granted or given by Administrative
Agent or any Lender to Borrower, Guarantor, or any other party ever liable for
any or all of the Guaranteed Indebtedness; (f) the subordination of the payment
of all or any part of the Guaranteed Indebtedness to the payment of any
obligations, indebtedness, or liabilities which may be due or become due to
Administrative Agent, any Lender or others; (g) the application of any deposit
balance, fund, payment, collections through process of law or otherwise, or
other collateral of Borrower to the satisfaction and liquidation of the
indebtedness or obligations of Borrower to Administrative Agent or any Lender,
if any, not guaranteed under this Guaranty; (h) the application of any sums paid
to Administrative Agent or any Lender by Guarantor, any other guarantor of all
or any part of the Guaranteed Indebtedness, Borrower or others to the Guaranteed
Indebtedness in such order and manner as Administrative Agent may determine in
accordance with the Credit Agreement; (i) any neglect, delay, omission, failure,
or refusal of Administrative Agent or any Lender to take or prosecute any action
for the collection of any of the Guaranteed Indebtedness or to foreclose or take
or prosecute any action in connection with any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (j) the unenforceability or invalidity of any or all of
the Guaranteed Indebtedness or of any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (k) any payment by Borrower or any other party to Administrative
Agent or any Lender is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason Administrative Agent or
any Lender is required to refund any payment or pay the amount thereof to
someone else; (l) the settlement or compromise of any of the Guaranteed
Indebtedness; (m) the non-perfection of any security interest or lien securing
any or all of the Guaranteed Indebtedness; (n) any impairment of any collateral
securing any or all of the Guaranteed Indebtedness; (o) the failure of
Administrative Agent or any Lender to sell any collateral
2
76
securing any or all of the Guaranteed Indebtedness in a commercially reasonable
manner or as otherwise required by law; (p) any change in the corporate
existence, structure, or ownership of Borrower; (q) any other circumstance which
might otherwise constitute a defense available to, or discharge of, Borrower;
(r) the unenforceability of all or an part of the Guaranteed Indebtedness
against Borrower by reason of the fact that the Guaranteed Indebtedness exceeds
the amount permitted by law; (s) the act of creating all or any part of the
Guaranteed Indebtedness is ultra xxxxx; or (t) the officers creating all or any
part of the Guaranteed Indebtedness acted in excess of their authority.
8. Guarantor hereby represents and warrants to Administrative Agent and
Lenders the following:
(a) This Guaranty may reasonably be expected to benefit,
directly or indirectly, Guarantor.
(b) Guarantor is familiar with, and has independently reviewed
the books and records regarding, the financial condition of Borrower
and is familiar with the value of any and all collateral intended to be
security for the payment of all or any part of the Guaranteed
Indebtedness. However, Guarantor is not relying on such financial
condition or collateral as an inducement to enter into this Guaranty.
(c) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition of
Borrower, and Guarantor is not relying on Administrative Agent or the
Lenders to provide such information to Guarantor either now or in the
future.
(d) Guarantor has the power and authority to execute, deliver,
and perform this Guaranty and any other agreements executed by
Guarantor contemporaneously herewith, and the execution, delivery, and
performance of this Guaranty and any other agreements executed by
Guarantor contemporaneously herewith do not and will not violate (i)
any agreement or instrument to which Guarantor is a party, or (ii) any
law, rule, regulation, or order of any Governmental Authority to which
Guarantor is subject.
(e) Neither Administrative Agent, Lenders, nor any other party
has made any representation, warranty, or statement to Guarantor in
order to induce Guarantor to execute this Guaranty.
(f) The financial statements and other financial information
regarding Guarantor heretofore and hereafter delivered to
Administrative Agent and any Lender are and shall be true and correct
in all material respects and fairly present the financial position of
Guarantor as of the dates thereof, and no material adverse change has
occurred in the financial condition of Guarantor as reflected in those
financial disclosures.
(g) As of the date hereof, and after giving effect to this
Guaranty, including without limitation, all rights of contribution and
subrogation, and the obligations evidenced hereby, Guarantor is and
will be Solvent (to the extent necessary, taking into account any
rights of contribution, reimbursement and subrogation).
(h) All representations and warranties about Guarantor made in
the Credit Agreement are true and correct.
(i) This Guaranty is the legal and binding obligation of
Guarantor, enforceable in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application relating
to the enforcement of creditors' rights.
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9. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or Lender has any Commitment
under the Credit Agreement:
(a) Guarantor shall not, so long as its obligations under this
Guaranty continue, transfer or pledge any material portion of its
assets for less than full and adequate consideration; provided that,
Guarantor may make Distributions to Borrower as contemplated by SECTION
9.8 of the Credit Agreement.
(b) Guarantor shall promptly furnish to Administrative Agent
at any time and from time to time such financial statements and other
financial information as Administrative Agent may require, in form and
substance reasonably satisfactory to Administrative Agent.
(c) Guarantor acknowledges that certain covenants and other
provisions in the Credit Agreement are applicable to it or are imposed
upon it and agrees to promptly and properly comply with or be bound by
each of them.
(d) Guarantor shall promptly inform Administrative Agent of
(i) any litigation or governmental investigation against Guarantor or
affecting any security for all or any part of the Guaranteed
Indebtedness or this Guaranty which, if determined adversely, might
have a material adverse effect upon the financial condition of
Guarantor or upon such security or might cause a default under any of
the Credit Documents, (ii) any claim or controversy which might become
the subject of such litigation or governmental investigation, and (iii)
any material adverse change in the financial condition of Guarantor.
10. (a) Guarantor hereby agrees that the Subordinated Indebtedness
(hereinafter defined) shall be subordinate and junior in right of payment to the
prior payment in full of all Guaranteed Indebtedness, and Guarantor hereby
assigns the Subordinated Indebtedness to Administrative Agent, for the benefit
of Lenders, as security for the Guaranteed Indebtedness. If any sums shall be
paid to Guarantor by Borrower or any other person or entity on account of the
Subordinated Indebtedness, such sums shall be held in trust by Guarantor for the
benefit of Administrative Agent and shall forthwith be paid to Administrative
Agent without affecting the liability of Guarantor under this Guaranty and may
be applied by Administrative Agent and Lenders against the Guaranteed
Indebtedness in the order and manner described in SECTION 3.11 of the Credit
Agreement. Upon the request of Administrative Agent, Guarantor shall execute,
deliver, and endorse to Administrative Agent such documents and instruments as
Administrative Agent may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty, the term "SUBORDINATED INDEBTEDNESS"
means all indebtedness, liabilities, and obligations of Borrower to Guarantor,
whether such indebtedness, liabilities, and obligations now exist or are
hereafter incurred or arise, or whether the obligations of Borrower thereon are
direct, indirect, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such indebtedness, liabilities, or
obligations are evidenced by a note, contract, open account, or otherwise, and
irrespective of the person or persons in whose favor such indebtedness,
obligations, or liabilities may, at their inception, have been, or may hereafter
be created, or the manner in which they have been or may hereafter be acquired
by Xxxxxxxxx.
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(x) Xxxxxxxxx agrees that any and all liens, security interests,
judgment liens, charges, or other encumbrances upon Borrower's assets securing
payment of any Subordinated Indebtedness shall be and remain inferior and
subordinate to any and all liens, security interests, judgment liens, charges,
or other encumbrances upon Borrower's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such encumbrances in
favor of Guarantor or Administrative Agent presently exist or are hereafter
created or attached. Without the prior written consent of Required Lenders,
Guarantor shall not (i) file suit against Borrower or exercise or enforce any
other creditor's right it may have against Borrower, or (ii) foreclose,
repossess, sequester, or otherwise take steps or institute any action or
proceedings, judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding to enforce any liens, security
interests, collateral rights, judgments or other encumbrances held by Guarantor
on assets of Borrower.
(c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving
Borrower as debtor, Administrative Agent shall have the right to prove and vote
any claim under the Subordinated Indebtedness and to receive directly from the
receiver, trustee or other court custodian all dividends, distributions, and
payments made in respect of the Subordinated Indebtedness. Administrative Agent
may apply such dividends, distributions, and payments against the Guaranteed
Indebtedness in such order and manner as Administrative Agent and Lenders may
determine in their sole discretion.
(d) Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty.
11. Guarantor waives (a) promptness, diligence, and notice of
acceptance of this Guaranty and notice of the incurring of any obligation,
indebtedness, or liability to which this Guaranty applies or may apply and
waives presentment for payment, notice of nonpayment, protest, demand, notice of
protest, notice of intent to accelerate, notice of acceleration, notice of
dishonor, diligence in enforcement, and indulgences of every kind, and (b) the
taking of any other action by Administrative Agent, including without
limitation, giving any notice of default or any other notice to, or making any
demand on, Borrower, any other guarantor of all or any part of the Guaranteed
Indebtedness or any other party.
12. In addition to any other waivers, agreements and covenants of
Guarantor set forth herein, Guarantor hereby further waives and releases all
claims, causes of action, defenses and offsets for any act or omission of
Administrative Agent, its directors, officers, employees, representatives,
counsel or agents in connection with (i) Administrative Agent's or such other
parties' administration of the Guaranteed Indebtedness or (ii) Administrative
Agent's or such other parties' ordinary negligence, but not including (iii)
Administrative Agent's or such other parties' willful misconduct and gross
negligence.
13. This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of all or any part of the Guaranteed
Indebtedness is rescinded or must otherwise be returned by Administrative Agent
or any Lender upon the insolvency, bankruptcy, or reorganization of Borrower,
Guarantor, any other guarantor of all or any part of the Guaranteed
Indebtedness, or otherwise, all as though such payment had not been made.
14. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to any of the Guaranteed Indebtedness shall, if the
statute of limitations in favor of Guarantor against Administrative Agent or any
Lender shall have commenced to run, toll the running of such statute of
limitations and, if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.
15. This Guaranty is for the benefit of Administrative Agent and
Lenders and their respective successors and assigns, and in the event of an
assignment of the Guaranteed Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the indebtedness so assigned,
may be transferred
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with such indebtedness. This Guaranty is binding not only on Guarantor, but on
Guarantor's successors and assigns.
16. Guarantor recognizes that Administrative Agent and Lenders are
relying upon this Guaranty and the undertakings of Guarantor hereunder in making
extensions of credit to Borrower under the Credit Agreement and further
recognizes that the execution and delivery of this Guaranty is a material
inducement to Administrative Agent and Lenders in entering into the Credit
Agreement. Guarantor hereby acknowledges that there are no conditions to the
full effectiveness of this Guaranty.
17. This Guaranty is a Credit Document and, therefore, this Guaranty is
subject to the applicable provisions of the Credit Agreement, all of which
applicable provisions are incorporated herein by reference. Moreover, Guarantor
acknowledges and agrees that this Guaranty is subject to the offset provisions
in favor of Lenders in the Credit Agreement.
18. Guarantor expressly assumes all responsibilities to remain informed
of the financial condition of Borrower and any circumstances affecting (a)
Borrower's ability to perform under the Credit Agreement and the other Credit
Documents to which it is a party or (b) any collateral securing all or any part
of the Guaranteed Indebtedness.
19. In the event that Guarantor is entitled to receive any notice under
the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any collateral securing all or any
part of the Guaranteed Indebtedness or this Guaranty, reasonable notice shall be
deemed given when such notice is deposited in the United States mail, postage
prepaid, at the address for Guarantor set forth on the signature page of this
Guaranty, five days prior to the date any public sale, or after which any
private sale, of any such collateral is to be held; provided, however, that
notice given in any other reasonable manner or at any other reasonable time
shall be sufficient.
20. No delay on the part of Administrative Agent or any Lender in
exercising any right hereunder or failure to exercise the same shall operate as
a waiver of such right. In no event shall any waiver of the provisions of this
Guaranty be effective unless the same be in writing and signed by the
appropriate parties in accordance with the Credit Agreement, and then only in
the specific instance and for the purpose given.
21. CHOICE OF FORUM; CONSENT TO SERVICE OF PROCESS AND JURISDICTION.
(a) THE OBLIGATIONS OF GUARANTOR UNDER THIS GUARANTY ARE
PERFORMABLE IN DALLAS COUNTY, TEXAS.
(b) TO THE MAXIMUM EXTENT NOT EXPRESSLY PROHIBITED BY LAW
APPLICABLE THERETO, GUARANTOR (FOR ITSELF AND ITS PROPERTY) HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY (AND AFTER IT HAS CONSULTED OR
HAS HAD AN OPPORTUNITY TO CONSULT WITH ITS OWN COUNSEL) IRREVOCABLY AND
UNCONDITIONALLY:
(i) AGREES AND CONSENTS THAT ANY SUIT, ACTION OR
PROCEEDING AGAINST GUARANTOR (OR ITS PROPERTY) WITH RESPECT TO
THIS GUARANTY OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT
HEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS,
COUNTY OF DALLAS OR IN THE UNITED STATES COURTS LOCATED IN
DALLAS, TEXAS, AND APPELLATE COURTS THEREOF;
(ii) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
SUCH COURTS FOR THE PURPOSE OF ANY SUCH SUIT, ACTION OR
PROCEEDING;
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(iii) AGREES AND CONSENTS TO THE SERVICE OF PROCESS
IN ANY SUIT, ACTION OR PROCEEDING IN ANY SAID COURTS BY THE
MAILING THEREOF BY ADMINISTRATIVE AGENT BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO GUARANTOR AT THE ADDRESS
FOR NOTICE FOR GUARANTOR AS PROVIDED ON THE SIGNATURE PAGE TO
THIS GUARANTY;
(iv) WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY BROUGHT
IN SAID COURTS;
(v) WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SAID COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM; AND
(vi) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ADMINISTRATIVE AGENT TO EFFECT SERVICE OF PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
ADMINISTRATIVE AGENT'S RIGHT TO COMMENCE ANY SUIT, ACTION OR
PROCEEDING IN ANY OTHER JURISDICTION.
22. Nothing contained herein shall be construed as an obligation on the
part of Administrative Agent or Lenders to extend or continue to extend credit
to Borrower.
23. Notwithstanding any other provision of this Guaranty or of any
instrument or agreement evidencing, governing or securing all or any part of the
Guaranteed Indebtedness, Guarantor and Administrative Agent by its acceptance
hereof agree that Guarantor shall never be required or obligated to pay interest
in excess of the maximum nonusurious interest rate as may be authorized by
applicable law for the written contracts which constitute the Guaranteed
Indebtedness. It is the intention of Guarantor, Administrative Agent, and
Lenders to conform strictly to the applicable laws which limit interest rates,
and any of the aforesaid contracts for interest, if and to the extent payable by
Guarantors, shall be held to be subject to reduction to the maximum nonusurious
interest rate allowed under said law.
24. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT TO A LENDING
TRANSACTION CONSUMMATED AND PERFORMABLE IN THE STATE OF TEXAS, AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
25. Guarantor shall pay on demand all reasonable attorneys' fees and
all other costs and expenses incurred by Administrative Agent or any Lender in
connection with the enforcement or collection of this Guaranty.
26. THIS GUARANTY TOGETHER WITH THE OTHER CREDIT DOCUMENTS REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGE FOLLOWS
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EXECUTED as of the 16th day of February, 1999.
GUARANTOR:
--------------------------------------
a _____________ corporation
By:
-----------------------------------
Xxx X. Xxxxx, Vice President - Finance
Address for Notices:
Ultrak, Inc.
0000 Xxxxxx Xxxxx Xx.
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxx
Vice President - Finance
Fax Number: (000) 000-0000
Telephone Number: (000) 000-0000
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EXHIBIT D
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is executed as of February 16, 1999, by:
o ULTRAK, INC., a Delaware corporation ("BORROWER/DEBTOR");
o ULTRAK GP, INC., a Delaware corporation ("ULTRAK GP"), ULTRAK
LP, INC., a Delaware corporation ("ULTRAK LP"), ULTRAK
OPERATING, L.P., a Texas limited partnership ("ULTRAK
OPERATING"), DIAMOND ELECTRONICS, INC., an Ohio corporation
("DIAMOND"), and MONITOR DYNAMICS, INC., a California
corporation ("MONITOR") (Ultrak GP, Ultrak LP, Ultrak
Operating, Diamond and Monitor are hereinafter referred to
collectively as the "SUBSIDIARY DEBTORS").
o BANK ONE, TEXAS, N.A., a national banking association (in its
capacity as Administrative Agent for the Lenders now or in the
future party to the Credit Agreement described below, "SECURED
PARTY").
Borrower/Debtor, Secured Party and Lenders have executed the Credit
Agreement (as renewed, extended, amended or restated, the "CREDIT AGREEMENT"),
dated as of February 16, 1999, and certain other Credit Documents. The execution
and delivery of this agreement are requirements to Secured Party's and Lenders'
execution of the Credit Agreement and the other Credit Documents, are integral
to the transactions contemplated by the Credit Documents, and are conditions
precedent to Lenders' obligations to extend credit under the Credit Agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower/Debtor
and Subsidiary/Debtors jointly and severally agree with Secured Party for the
benefit of Lenders as follows:
1. Definitions. Terms defined in the Credit Agreement or the UCC have
the same meanings when used - unless otherwise defined - in this agreement. If
the definition given a term in the Credit Agreement conflicts with the
definition given that term in the UCC, then the Credit Agreement definition
controls to the extent allowed by applicable Governmental Requirements. If the
definition given a term in Chapter 9 of the UCC conflicts with the definition
given that term in any other chapter of the UCC, then the Chapter 9 definition
controls. Furthermore, as used in this agreement:
"ACCOUNTS" means any "account," as such term is defined in Chapter 9 of
the UCC, now owned or hereafter acquired by any Debtor, and, in any event, shall
include, without limitation, each of the following, whether now owned or
hereafter acquired by a Debtor: (a) all rights of such Debtor to payment for
goods sold or leased or services rendered, whether or not earned by performance;
(b) all accounts receivable of such Debtor; (c) all rights of such Debtor to
receive any payment of money or other form of consideration; (d) all security
pledged, assigned, or granted to or held by such Debtor to secure any of the
foregoing; (e) all guaranties of, or indemnifications with respect to, any of
the foregoing, and (f) all rights of such Debtor as an unpaid seller of goods or
services, including, but not limited to, all rights of stoppage in transit,
replevin, reclamation, and resale.
"BORROWER/DEBTOR" is defined in the preamble to this agreement and
includes, without limitation, Borrower/Debtor, Borrower/Debtor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party appointed for Borrower or for all or substantially
all of Borrower/Debtor's assets under any Debtor Relief Laws.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Chapter 9 of the UCC, now owned or hereafter acquired by any Debtor.
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"COLLATERAL" is defined in PARAGRAPH 4 below.
"COPYRIGHTS" means and includes, in each case whether now or hereafter
arising, all of any Debtor's right, title and interest in and to: (a) any and
all copyrights and applications therefor, including, without limitation, those
set forth on SCHEDULE 1 hereto; (b) all continuations, divisions, renewals,
extensions, modifications, substitutions, continuations-in-part, or reissues
thereof; (c) all income, royalties, claims, profits, damages, awards, and
payments due and/or payable under and with respect to any of the foregoing,
including such with respect to claims made for past or future infringement; (d)
the right to xxx for past, present and future infringements of any of the
foregoing; and (e) all other rights and benefits corresponding to any of the
foregoing throughout the world.
"CREDIT AGREEMENT" is defined in the recitals to this agreement.
"DEBTORS" means Borrower/Debtor and Subsidiary/Debtors.
"DOCUMENT" means any "document," as such term is defined in Chapter 9
of the UCC, now owned or hereafter acquired by any Debtor, including, without
limitation, all documents of title and warehouse receipts of such Debtor.
"EQUIPMENT" means any "equipment," as such term is defined in Chapter 9
of the UCC, now owned or hereafter acquired by any Debtor and, in any event,
shall include, without limitation, all machinery, equipment, furnishings, and
fixtures now owned or hereafter acquired by any such Debtor and any and all
additions, substitutions, and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment, and
accessories installed thereon or affixed therein.
"FINANCING STATEMENT" means a financing statement executed by any
Debtor in favor of Secured Party.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Chapter 9 of the UCC, now owned or hereafter acquired by any Debtor
and, in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by any such Debtor: (a) all of such
Debtor's franchises, licenses, permits, proprietary information, customer lists,
blueprints, plans, specifications, goodwill, registrations, designs and
inventions; (b) all of such Debtor's books, records, data, plans, manuals,
computer software, and computer programs; (c) all of such Debtor's contract
rights, partnership interests and joint venture interests, deposit accounts,
investment accounts, and certificates of deposit; (d) all rights of such Debtor
to repayment under letters of credit and similar agreements; (e) all tax refunds
and tax refund claims of such Debtor; (f) all choses in action and causes of
action of such Debtor (whether arising in contract, tort, or otherwise and
whether or not currently in litigation) and all judgments in favor of such
Debtor; (g) all rights and claims of such Debtor under warranties and
indemnities; and (h) all rights of such Debtor under any insurance, surety or
similar contract or arrangement.
"INSTRUMENT" means any "instrument," as such term is defined in Chapter
9 of the UCC, now owned or hereafter acquired by any Debtor.
"INTELLECTUAL PROPERTY" means the Patents, Trademarks, Copyrights and
other intellectual property now owned or hereafter acquired by any Debtor.
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"INVENTORY" means any "inventory," as such term is defined in Chapter 9
of the UCC, now owned or hereafter acquired by any Debtor, and, in any event,
shall include, without limitation, each of the following, whether now owned or
hereafter acquired by any such Debtor: (a) all goods and other personal property
of such Debtor that are held for sale or lease or to be furnished under any
contract of service; (b) all raw materials, work-in-process, finished goods,
inventory, supplies, and materials of such Debtor; (c) all wrapping, packaging,
advertising, and shipping materials of such Debtor; (d) all goods that have been
returned to, repossessed by, or stopped in transit by such Debtor; and (e) all
Documents evidencing any of the foregoing.
"INVESTMENT PROPERTY" means "investment property," as such term is
defined in Section 9.115(a)(6) of the UCC.
"MASTER NOTES" means all present and future promissory notes executed
by a Subsidiary in favor of Borrower/Debtor in respect of intercompany advances
and accruals, including, without limitation, those promissory notes listed on
SCHEDULE 2 hereto.
"MOTOR VEHICLE" means all cars, trucks, trailers, vans and other motor
vehicles now owned or hereafter acquired by any Debtor which are used by any
such Debtor in its business, including, without limitation, (a) those motor
vehicles listed on SCHEDULE 3 hereto, and any and all attachments components,
parts, equipment and accessories installed thereon or affixed thereto, and (b)
those motor vehicles ever identified to Secured Party as Collateral (whether by
a supplement to this agreement or otherwise), including any and all attachments,
components, parts, equipment and accessories installed thereon and affixed
thereto.
"OBLIGOR" means any Person obligated with respect to any of the
Collateral, whether as a party to a contract, an account debtor, issuer of any
securities, or otherwise.
"OBLIGATION" means the "Obligation," as defined in the Credit
Agreement, including, without limitation, all present and future indebtedness,
liabilities, and obligations of each Debtor arising under this agreement, and
all present and future costs, attorneys' fees, and expenses reasonably incurred
by Secured Party or any Lender to enforce any Debtor's or any other obligor's
payment of any of the Obligation, including, without limitation (to the extent
lawful), all present and future amounts that would become due but for the
operation of xx.xx. 502 or 506 or any other provision of Title 11 of the United
States Code and all present and future accrued and unpaid interest (including,
without limitation, all post-petition interest if any Debtor voluntarily or
involuntarily becomes subject to any Debtor Relief Law).
"PARTNERSHIP INTERESTS" means, whether now owned or acquired in the
future by any Debtor, all present and future limited, general or other
partnership rights and interests now or in the future owned by any Debtor and
issued by, or from time to time arising under the partnership agreement for the
formation of those partnerships listed on SCHEDULE 4 hereto, including, without
limitation, all rights to receive distributions of money or assets.
"PATENTS" means and includes, in each case whether now or hereafter
arising, all of any Debtor's right, title and interest in and to: (a) any and
all patents and patent applications, including, without limitation, those set
forth on SCHEDULE 1 hereto; (b) all of the inventions and improvements described
and claimed therein; (c) all continuations, divisions, renewals, extensions,
modifications, substitutions, continuations-in-part, or reissues thereof; (d)
all income, royalties, claims, profits, damages, awards, and payments due and/or
payable under and with respect to any of the foregoing, including such with
respect to claims made for past or future infringement; (e) the right to xxx for
past, present and future infringements of any of the foregoing; and (f) all
other rights and benefits corresponding to any of the foregoing throughout the
world.
"PROCEEDS" means any "proceeds," as such term is defined in Chapter 9
of the UCC and, in any event, shall include, but not be limited to, (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to any
Debtor from time to time with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable to such Debtor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
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Governmental Authority (or any person acting under color of Governmental
Authority), and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"SECURED PARTY" is defined in the preamble to this agreement and
includes its successor appointed under SECTION 13 of the Credit Agreement and
acting as administrative agent for Lenders under the Credit Documents.
"SECURITIES" means (a) all shares of stock of the Subsidiaries of
Borrower/Debtor now owned or hereafter acquired by Borrower/Debtor including,
without limitation, each of the shares listed on SCHEDULE 5-A hereto, and all
dividends, cash, stock dividends, instruments and other investment property from
time to time received, receivable by, or otherwise distributed to
Borrower/Debtor for its own account in respect of or in exchange for any or all
of such shares, and the certificates representing such shares (so long as the
Securities do not include more than the number of voting shares required to be
pledged under the Credit Agreement), and (b) all shares of stock of any other
Person now owned or hereafter acquired by any Debtor including, without
limitation, all of the shares listed on SCHEDULE 5-B hereto, and all dividends,
cash, stock dividends, instruments and other investment property from time to
time received, receivable by, or otherwise distributed to such Debtor for its
own account in respect of or in exchange for any or all of such shares, and the
certificates representing such shares.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and assignments made under PARAGRAPH 2 below, which is a
"LENDER LIEN," as defined in the Credit Agreement.
"TRADEMARKS" means and includes, in each case whether now existing or
hereafter arising, all of any Debtor's right, title and interest in and to: (a)
any and all trademarks (including service marks), trade names, trade dress,
trade styles, and the registrations and applications for registration thereof,
and the goodwill of the business symbolized thereby, including those set forth
on SCHEDULE 1 hereto; (b) all renewals, extensions, modifications or
substitutions thereof; (c) all income, royalties, claims, profits, damages,
awards and payments due and/or payable under and with respect to any of the
foregoing, including such with respect to claims made for past or future
infringement; (d) the right to xxx for past, present and future infringements of
any of the foregoing; and (e) all other rights and benefits corresponding to any
of the foregoing throughout the world.
"UCC" means the Uniform Commercial Code as adopted in Texas or any
other applicable jurisdiction.
2. Security Interest. To secure the prompt, unconditional and complete
payment and performance of the Obligation when due, each Debtor jointly and
severally grants to Secured Party a security interest in the Collateral
identified for it in PARAGRAPH 4 below and jointly and severally pledges and
collaterally transfers and assigns that Collateral to Secured Party, all upon
and subject to the terms and conditions of this agreement. If the grant, pledge
or collateral transfer or assignment of any specific item of the Collateral is
expressly prohibited by any contract, then the Security Interest nonetheless
remains effective to the extent allowed by UCC ss.9.318 or other applicable
Governmental Requirements, but is otherwise limited by that prohibition.
3. No Assumption or Modification. The Security Interest is given as
security only in order to secure the prompt, unconditional and complete payment
and performance of the Obligation when due. Neither Secured Party nor any Lender
assumes or may become liable for any Debtors' liabilities, duties or obligations
under or in connection with the Collateral. Neither Secured Party's acceptance
of this agreement nor its taking any action in carrying out this agreement,
constitutes Secured Party's approval of the Collateral or Secured Party's
assumption of any obligation under or in connection with the Collateral. This
agreement does not affect or modify any Debtors' obligations with respect to any
Collateral.
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4. Collateral. The term "COLLATERAL" means the following items and
types of property, wherever located and now or in the future acquired or
existing:
(a) For Borrower/Debtor and each other
Debtor, all of its:
(i) Accounts;
(ii) Chattel Paper;
(iii) Instruments (including, without limitation,
the Master Notes);
(iv) General Intangibles, Partnership Interests
and Securities;
(v) Investment Property;
(vi) Documents;
(vii) Equipment (including, without limitation,
all Motor Vehicles);
(viii) Inventory;
(ix) Intellectual Property;
(x) all other goods and personal property of any
Debtor whether tangible or intangible;
(xi) all Proceeds and products of any or all of
the foregoing.
5. Fraudulent Conveyance. Notwithstanding any contrary provision, each
Debtor agrees that, if - but for the application of this paragraph - any of the
Obligation or the Security Interest would constitute a preferential transfer
under 11 U.S.C. ss.547, a fraudulent conveyance under 11 U.S.C. ss.548, or a
fraudulent conveyance or transfer under any state fraudulent conveyance,
fraudulent transfer or similar Governmental Requirement in effect from time to
time (each a "FRAUDULENT CONVEYANCE"), then the Obligation and Security Interest
remains enforceable to the maximum extent possible without causing any of the
Obligation or the Security Interest to be a fraudulent conveyance, and this
agreement is automatically amended to carry out the intent of this paragraph.
6. Representations and Warranties. Debtors jointly and severally
represent and warrant to Secured Party on behalf of Lenders that:
(a) Credit Agreement. All representations and warranties in
the Credit Agreement that are applicable to each Debtor or its assets
or operations are accurate and complete and are ratified and confirmed.
(b) Binding Obligation. This agreement creates a legal, valid
and binding Lender Lien in and to the Collateral (subject to delivery
to Secured Party of the stock certificates for the Securities) in favor
of Secured Party and enforceable against the Debtor owning the
Collateral. For Collateral in which the Security Interest may have been
perfected by the filing of Financing Statements, once those Financing
Statements have been properly filed in the jurisdictions contemplated
by the Credit Documents, the Security Interest in that Collateral will
be fully perfected. For the Securities, the taking by Secured Party of
physical possession in Texas of the stock certificates representing the
Securities will perfect the Security Interest in that Collateral. Once
perfected, the Security Interest will constitute a first-priority
Lender Lien on the Collateral, subject to no other Liens. The creation
of the Security Interest does not require the consent of any Person
that has not been obtained.
(c) Locations. SCHEDULE 7.3 to the Credit Agreement accurately
describes (i) the location of each Debtor's principal place of business
and chief executive office, (ii) if different from CLAUSE (i)
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above, the one or more locations of its books and records concerning
its Accounts, (iii) the locations where any of its Inventory (except
when temporarily in the hands of a third-party contractor for
processing and until sold in the ordinary course of business) is
currently and will - subject to PARAGRAPH 7(b) below - in the future be
maintained, and (iv) none of the locations described on SCHEDULE 7.3 to
the Credit Agreement have changed within six months before the date of
this agreement. Except as stated in CLAUSE (iii) above, each Debtor's
Inventory is currently and will be in its possession. No Equipment of
any Debtor is kept at any location except the real properties for such
Debtors identified on SCHEDULE 7.3 to the Credit Agreement.
(d) Accounts. Each Debtor's Accounts (i) arise from its sales
or rendition of services, (ii) are due to that Debtor, and (iii) are
not subject to any material setoff, counterclaim, defense, allowance,
adjustment (other than discounts for prompt payment shown on the
invoice), or material dispute, objection or complaint by any Obligor.
(e) Securities. All Securities are duly authorized, validly
issued, fully paid and non-assessable, and the transfer of them is not
subject to any restrictions other than restrictions imposed by
applicable Governmental Requirements. The Securities described on
SCHEDULES 5-A and 5-B are approximately the maximum number of shares of
each Subsidiary that may be pledged without creating a material Tax
obligation for the Companies that would not otherwise exist. With
respect to all Collateral that is Securities which are subject to Rule
144 under the Securities Act of 1933, as such rule and act are amended
at the time in question and any successor in whole or in part thereto,
(a) the applicable Debtor is the beneficial and record owner thereof,
free and clear of any Liens or transfer restrictions (other than
restrictions on the amount thereof which may be sold, and the manner in
which sales may be made, imposed by such Rule 144), (b) the applicable
Debtor acquired such Securities directly from the issuer thereof more
than two (2) years prior to the date hereof in transactions not
involving any public offering, (c) the applicable Debtor paid the
purchase price therefor in cash more than two (2) years prior to the
date hereof, (d) since such date of acquisition, the applicable Debtor
has not had a short position in, or any put or option to dispose of,
any capital stock of any issuer thereof or Securities convertible into
capital stock of any issuer thereof, (e) neither the applicable Debtor,
nor any person or entity, the sales of which are required by Rule 144
to be aggregated with the sales of such Debtor, has sold any capital
stock of any issuer of such Securities during the period of six (6)
months prior to the date hereof, other than sales pursuant to an
effective registration statement under the Securities Act of 1933, as
amended, and (f) to such Debtor's best knowledge, each issuer of such
Securities has timely filed all reports required to be filed by it
under the Securities Exchange Act of 1934, as amended.
(f) Perfection. Upon the filing of Uniform
Commercial Code financing statements in the
jurisdictions listed on SCHEDULE 6 attached hereto,
the filing of this Security Agreement or any
assignment documents contemplated at closing with the
United States Patent and Trademark Office, and upon
the Secured Party's obtaining possession or control
of all Securities of the Debtors, the security
interest in favor of the Secured Party created herein
will constitute a valid and perfected lien upon and
security interest in the Collateral, subject to no
equal or prior liens (it is recognized that such
property may be covered by certain liens in respect
of the Refinanced Debt that are being released
concurrently with the closing of the Credit
Agreement).
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(g) Intellectual Property.
(i) All of the Intellectual Property is
subsisting, valid and enforceable. The information
contained on SCHEDULE 1 hereto is true, correct and
complete. No Debtor owns any material item of
Intellectual Property except as set forth on SCHEDULE
1 hereto.
(ii) The specified Debtors are the sole and
exclusive owners of the entire and unencumbered
right, title and interest in and to the Intellectual
Property free and clear of any liens, charges or
encumbrances, including, without limitation, any
pledges, assignments, licenses, user agreements and
covenants by any Debtor not to xxx third Persons (it
is recognized that such property may be covered by
certain liens in respect of the Refinanced Debt that
are being released concurrently with the closing of
the Credit Agreement).
(iii) No claim has been made that the use of
any material amount of the Intellectual Property
violates or may violate the rights of any third
Person.
(iv) The subject matter of the Intellectual
Property identified on SCHEDULE 1 hereto has been
properly registered or filed with the United States
Patent and Trademark Office.
(h) Additional Collateral. The foregoing representations and
warranties will be true and correct in all respects with respect to any
additional Collateral or additional specific descriptions of certain
collateral delivered to Secured Party in the future by any Debtor.
The failure of any of these representations or warranties to be accurate and
complete does not impair the Security Interest in any Collateral.
7. Covenants. While any Lender is committed to lend or extend credit
under the Credit Agreement and until the Obligation is fully paid and performed,
each Debtor jointly and severally covenants and agrees with Secured Party on
behalf of Lenders that, without first obtaining Secured Party's written notice
of Required Lenders' consent to the contrary:
(a) Credit Agreement. Each Debtor shall promptly and fully
comply with and perform all covenants and agreements in the Credit
Agreement that are applicable to it or its assets or operations, each
of which is ratified and confirmed.
(b) Certain Relocations and Changes. Each Debtor shall give
Secured Party 30 days' written notice before any proposed (i)
relocation of its principal place of business or chief executive
office, (ii) relocation of the place where its books and records
concerning its Accounts are kept, (iii) change of its name, and (iv)
relocation of any Collateral (other than delivery of Inventory in the
ordinary course of business to third-party contractors for processing
and sales of Inventory in the ordinary course of business) to a
location not described on SCHEDULE 7.3 to the Credit Agreement as being
a location for that Debtor or any other relocation that would cause the
Lender Liens to be impaired in any way.
(c) Estoppel and Other Agreements. Each Debtor shall:
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(i) Within 90 days after the date of this agreement
and at all times after that time, with respect to any of its
Inventory that is from time to time delivered to any
third-party contractor for processing in the ordinary course
of business, deliver to Secured Party a bailee, estoppel and
subordination agreement providing that such third-party
contractor holds that Inventory as Secured Party's bailee,
subordinates to the Security Interest all right, title and
interest it may have in and to that Inventory, and covenants
to keep that Inventory segregated and clearly marked as being
owned by that Debtor, which agreement must otherwise be in
form and substance reasonably acceptable to Secured Party and
its special counsel; and
(ii) Either (A) cause the landlord or lessor for each
location where any of its Inventory is maintained to execute
and deliver to Secured Party an estoppel and subordination
agreement in substantially the form of the attached SCHEDULE 7
or such other form as may be reasonably acceptable to Secured
Party and its special counsel, or (B) deliver to Secured Party
a legal opinion or other evidence (in each case that is
reasonably satisfactory to Secured Party and its special
counsel) that neither the applicable lease nor the
Governmental Requirements of the jurisdiction in which that
location is situated provide for contractual, common law, or
statutory landlord's Liens. The requirements of this clause
(c)(ii) are modified as follows: (x) an executed landlord
estoppel and subordination agreement with respect to the 0000
Xxxxxx Xxxxx Xx., Xxxxxxxxxx, Xxxxx location will be delivered
by Borrower/Debtor to Secured Party promptly after the Closing
Date and (y) executed landlord estoppel and subordination
agreements or legal opinions as described above with respect
to all other locations leased by any Debtor will be delivered
as soon as practicable on a best efforts basis on the part of
Borrower/Debtor, provided that at all times at least 85% of
the Debtors' aggregate inventory will be maintained at
locations either owned by a Debtor or leased by a Debtor and
covered by a landlord estoppel and subordination agreement or
legal opinion as described above.
(d) Foreign Account Debtors. With respect to
any Account on which the account debtor is Foreign,
Borrower shall promptly cause such Account to be (i)
supported by one or more letters of credit that are
in form and substance (and are issued by one or more
Persons) acceptable to Secured Party in its sole
discretion; or (ii) supported by Approved Foreign
Credit Insurance in amounts and on terms acceptable
to Secured Party in its sole discretion.
Notwithstanding the preceding sentence, up to
$2,000,000 in the aggregate of Accounts owed by
Foreign account debtors may be excluded from the
requirements set forth in CLAUSES (i) and (ii) of the
preceding sentence if Borrower/Debtor so elects. In
addition, additional Accounts owed by Foreign account
debtors may be excluded from the requirements set
forth in CLAUSES (i) and (ii) of the first sentence
of this CLAUSE (d) if request therefor is made by
Borrower/Debtor and agreed to by Secured Party in its
sole discretion.
(e) Governmental Accounts. With respect to
any Accounts owed by the U.S. federal government, any
state or local government, or any agency, department
or instrumentality thereof, as to which a valid,
perfected, first-priority lien on it, or the ability
to obtain direct payment of the proceeds of it, is
governed by any Governmental Requirement other than
the applicable UCC, Borrower shall promptly cause all
actions and documents deemed appropriate by Secured
Party under applicable Governmental Requirements to
be taken and delivered to assign and perfect a first-
priority lien on such Accounts in favor of Secured
Party for Lenders, or to cause Secured Party to
obtain direct payment of the proceeds of such
Accounts. Notwithstanding the preceding
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sentence, up to $2,000,000 in the aggregate of
Accounts owed by governmental authorities as
described above may be excluded from the requirements
set forth in the preceding sentence of this CLAUSE
(e) if Borrower/Debtor so elects. In addition,
additional Accounts owed by governmental authorities
as described above may be excluded from the
requirements set forth in the first sentence of this
CLAUSE (e) if request therefor is made by
Borrower/Debtor and agreed to by Secured Party in its
sole discretion.
(f) Other Notices and Actions. Each Debtor shall promptly
notify Secured Party of (i) any change in any material fact or
circumstance represented or warranted by any Debtor with respect to any
of the Collateral, (ii) any claim, action or proceeding challenging the
Security Interest or affecting title to all or any portion of the
Collateral or the Security Interest (and, at Secured Party's request,
that Debtor shall appear in and defend any such action or proceeding at
that Debtor's expense), (iii) any default or event of default by that
Debtor or any other party under or in connection with any portion
(individually or collectively) of the Collateral (and it shall
immediately use reasonable efforts to remedy the same or immediately
demand that the same be remedied).
(g) Record of Collateral. Each Debtor shall maintain at its
chief executive office a current record of where all of its Collateral
is located and permit Secured Party or its representatives to inspect
and make copies from those records pursuant to the Credit Agreement and
furnish to Secured Party, from time to time, such documents, lists,
descriptions, certificates and other information necessary or helpful
to keep Secured Party informed with respect to the identity, location,
status, condition, terms of, parties to, and value of the Collateral.
(h) Collateral in Trust. Each Debtor shall (i) hold in trust
(and not commingle with its other assets) for Secured Party all of its
Collateral that is contracts, chattel paper, instruments or documents
of title at any time received by it, (ii) promptly deliver that
Collateral to Secured Party unless Secured Party at its option gives
Debtor written permission to retain any of it, and (iii) cause each
contract, chattel paper, instrument or document of title so retained to
be marked to state that it is assigned to Secured Party and each
instrument to be endorsed to the order of Secured Party (but failure to
be so marked or endorsed may not impair the Security Interest in any
such Collateral).
(i) Perform Obligations. Each Debtor shall perform all of its
material obligations under or in connection with all of its Collateral
in accordance with customary business practices.
(j) Amendments, Etc. No Debtor may amend, alter or modify, or
permit the amendment, alteration or modification of, any material
portion (individually or collectively) of any Collateral (other than
the processing of Inventory in the ordinary course of business).
(k) Impairment of Collateral. No Debtor may do or permit any
act that is reasonably likely to adversely impair the value or
usefulness of any material portion of any Collateral.
(l) Further Assurances. Debtors shall deliver such documents,
instrument, certificates or other documents as are necessary from time
to time to maintain and protect the Lender Liens in the Collateral and
to update the schedules attached to this agreement so as to cause such
schedules to remain true, correct and complete.
8. Remedies Under Default. While an Event of Default exists, Secured
Party is, subject to the Credit Agreement, entitled to exercise any one or more
of the following Rights:
(a) Rights. Secured Party may exercise any and all Rights
available to a secured party under the UCC, in addition to any and all
other Rights afforded by this agreement and the other Credit Documents,
at law, in equity, or otherwise, including, without limitation (i)
requiring Debtors to
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assemble Collateral and make it available to Secured Party at a place
to be designated by Secured Party which is reasonably convenient to the
applicable Debtor and Secured Party, (ii) applying by appropriate
judicial proceedings for appointment of a receiver for Collateral,
(iii) applying to the Obligation any cash held by Secured Party under
this agreement, (iv) reducing any claim to judgment, (v) exercising the
Rights of offset or banker's Lien against the interest of each Debtor
in and to every account and other property of each Debtor in Secured
Party's possession to the extent of the full amount of the Obligation,
(vi) foreclosing the Security Interest and any other Liens Secured
Party may have or otherwise realize upon any and all of the Rights
Secured Party may have in and to Collateral, and (vii) bringing suit or
other proceedings before any Governmental Authority either for specific
performance of any covenant or condition contained in any of the Credit
Documents, or in aid of the exercise of any Right granted to Secured
Party in any Credit Document.
(b) Notice. If any Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market,
Secured Party may sell or otherwise dispose of that Collateral without
notification, advertisement, or other notice of any kind. Otherwise,
reasonable notice of the time and place of any public sale of the
Collateral, or reasonable notification of the time after which any
private sale or other intended disposition of the Collateral is to be
made, shall be sent to Debtors and to any other Person entitled to
notice under the UCC. Notice sent or given not less than ten calendar
days prior to the taking of the action to which the notice relates is
reasonable notice. It is not necessary that the Collateral be at the
location of the sale.
(c) Sales of Securities. In connection with the sale of any
Collateral that is securities, Secured Party is authorized, but not
obligated, to limit prospective purchasers, to the extent deemed
necessary or desirable by Secured Party to render that sale exempt from
the registration and similar requirements under applicable Governmental
Requirements, and no sale so made in good faith by Secured Party may be
deemed not to be "commercially reasonable" because so made.
(d) Other Sales. Secured Party's sale of less than all
Collateral does not exhaust Secured Party's Rights under this agreement
and Secured Party is specifically empowered to make successive sales
until all Collateral is sold. If the proceeds of a sale of less than
all Collateral is less than the Obligation, then this agreement and the
Security Interest remain in full force and effect as to the unsold
portion of the Collateral just as though no sale had been made. In the
event any sale under this agreement is not completed or is, in Secured
Party's opinion, defective, that sale does not exhaust Secured Party's
Rights under this agreement, and Secured Party is entitled to cause a
subsequent sale or sales to be made. All statements of fact or other
recitals made in any xxxx of sale or assignment or other instrument
evidencing any foreclosure sale under this agreement - whether about
nonpayment of the Obligation, the occurrence of any Event of Default,
Secured Party's having declared all of the Obligation to be due and
payable, notice of time, place and terms of sale and the properties to
be sold having been duly given, or any other act or thing having been
duly done by Secured Party - shall be taken as prima facie evidence of
the truth of the facts so stated and recited. Secured Party may appoint
or delegate any one or more Persons as agent to perform any act or acts
necessary or incident to any sale held by Secured Party, including the
sending of notices and the conduct of sale, but such acts must be done
in the name and on behalf of Secured Party.
(e) Obligors. While an Event of Default (other than as
described in Section 11.3 of the Credit Agreement) exists, Secured
Party may, after three days' notice to Borrower/Debtor, notify or
require each Obligor to make payment directly to Secured Party, and
Secured Party may take control of the proceeds paid to Secured Party.
While an Event of Default described in Section 11.3 of the Credit
Agreement exists, Secured Party may at any time, without any required
notice to Borrower/Debtor, notify or require each Obligor to make
payment directly to Secured Party, and Secured Party may take control
of the proceeds paid to Secured Party. Until Secured Party elects to
exercise these Rights, each Debtor is authorized to collect and enforce
the Collateral and to retain and expend all payments made on
Collateral. While Secured Party is entitled to and elects to exercise
these Rights, Secured Party has the Right in its own name or in the
name of the applicable Debtor to
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(i) compromise or extend time of payment with respect to Collateral for
such amounts and upon such terms as Secured Party may reasonably
determine, (ii) demand, collect, receive, receipt for, xxx for,
compound, and give acquittance for any and all amounts due or to become
due with respect to Collateral, (iii) take control of cash and other
proceeds of any Collateral, (iv) endorse the applicable Debtor's name
on any notes, acceptances, checks, drafts, money orders, or other
evidences of payment on Collateral that may come into Secured Party's
possession, (v) sign the applicable Debtor's name on any invoice or
xxxx of lading relating to any Collateral, on any drafts against
Obligors or other Persons making payment with respect to Collateral, on
assignments and verifications of accounts or other collateral, and on
notices to Obligors making payment with respect to Collateral, (vi)
send requests for verification of obligations to any Obligor, and (vii)
do all other acts and things reasonably necessary to carry out the
intent of this agreement. If any Obligor fails to make payment on any
Collateral when due, Secured Party is authorized, in its sole
discretion, either in its own name or in the applicable Debtor's name,
to take such action as Secured Party reasonably shall deem appropriate
for the collection of any amounts owed with respect to Collateral or
upon which a delinquency exists. However, Secured Party is neither (x)
liable for its failure to collect, or for its failure to exercise
diligence in the collection of, any amounts owed with respect to
Collateral (except for its own fraud, gross negligence, willful
misconduct, or violation of any applicable Government Requirement), nor
(y) under any duty whatever to anyone except the applicable Debtor and
Lenders to account for funds that it shall actually receive under this
agreement. A receipt given by Secured Party to any Obligor is a full
and complete release, discharge and acquittance to that Obligor, to the
extent of any amount so paid to Secured Party. Secured Party may apply
or set off amounts paid and the deposits against any liability of the
applicable Debtor to Secured Party. Regarding the existence of any
Event of Default for purposes of this agreement, each Debtor agrees
that the Obligors on any Collateral may rely upon written certification
from Secured Party that an Event of Default exists.
(f) Power-of-Attorney. Secured Party is deemed to be
irrevocably appointed as each Debtor's agent and attorney-in-fact with
all Right to enforce all of that Debtor's Rights under or in connection
with the Collateral effective and operable at all times while an Event
of Default exists. All reasonable costs, expenses and liabilities
incurred and all payments made by Secured Party, as that Debtor's agent
and attorney-in-fact (including, without limitation, reasonable
attorneys' fees and expenses) are considered a loan by Secured Party to
that Debtor that is repayable on demand, accrues interest at the
Default Rate until paid, and is part of the Obligation.
(g) Application of Proceeds. While an Event of Default exists,
Secured party shall apply the proceeds of any sale or other disposition
of Collateral in the following order: (i) payment of all its reasonable
expenses incurred in retaking, holding and preparing any Collateral for
disposition, in arranging for such disposition, and in actually
disposing of the same (all of which are part of the Obligation); (ii)
repayment of amounts reasonably expended by Secured Party under
XXXXXXXXX 0 xxxxx; (xxx) payment of the balance of the Obligation in
the order and manner specified in the Credit Agreement; and (iv)
delivery either (A) to Borrower/Debtor for the account of all Debtors,
or (B) as a court of competent jurisdiction may direct.
9. Other Rights.
(a) Performance. If any Debtor fails to preserve the priority
of the Security Interest in any Collateral or otherwise fails to
perform any of its obligations under any Credit Document with respect
to any Collateral, then Secured Party may, at its option, but without
being required to do so, prosecute or defend any suits in relation to
the Collateral or take any other action that such Debtor is required,
but has failed, to take. Any amount that is reasonably expended or paid
by Secured Party in connection with the foregoing (including, without
limitation, court costs and reasonable attorneys' fees and expenses)
bears interest at the Default Rate from the date spent or incurred
until repaid and is payable (with that interest) by Debtors to Secured
Party upon demand and is part of the Obligation.
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(b) Collateral in Secured Party's Possession. If, while an
Event of Default exists, any Collateral comes into Secured Party's
possession, Secured Party may use that Collateral for the purpose of
preserving it or its value pursuant to the order of a court of
appropriate jurisdiction or in accordance with any other Rights held by
Secured Party in respect of that Collateral. Debtors jointly and
severally covenant to promptly reimburse and pay to Secured Party, at
Secured Party's request, the amount of all reasonable expenses, costs,
Taxes and other charges incurred by Secured Party in connection with
its custody and preservation of that Collateral, all of which bear
interest at the Default Rate from the date spent or incurred until
repaid and are (with that interest) payable by Debtors to Secured Party
upon demand and are part of the Obligation. Except for Secured Party's
own fraud, gross negligence, or willful misconduct (i) the risk of
accidental loss or damage to, or diminution in value of, any Collateral
is on Debtors, (ii) Secured Party has no liability for failure to
obtain or maintain insurance or to determine whether any insurance in
effect is adequate as to amount or risks insured, (iii) Secured Party
has no duty to fix or preserve Rights against any Obligors in respect
of any Collateral and is never liable for any failure to use diligence
to collect any amount payable in respect of any Collateral (other than
to account to Debtors and Lenders for what Secured Party may actually
collect or receive).
(c) Record Ownership of Securities. While an Event of Default
exists, Secured Party may have any Collateral that is securities and
that is in the possession of Secured Party, or its nominee or nominees,
registered in its name, or in the name of its nominee or nominees, as
pledgee.
(d) Voting of Securities. As long as no Event of Default
exists, the applicable Debtor may exercise all voting Rights pertaining
to any Collateral that is securities. While an Event of Default exists,
the Right to vote any Collateral that is securities is vested
exclusively in Secured Party. Accordingly, each applicable Debtor
irrevocably constitutes and appoints Secured Party as that Debtor's
proxy and attorney-in-fact - effective only while an Event of Default
exists but with full power of substitution - to vote, and to act with
respect to, any Collateral that is securities standing in the name of
that Debtor or with respect to which that Debtor is entitled to vote
and act. That proxy is coupled with an interest, is irrevocable, and
continues until the Obligation is fully paid and performed.
(e) Certain Proceeds. The provisions of this CLAUSE (E) are
applicable only while an Event of Default exists. Notwithstanding any
contrary provision, all dividends or distributions of property in
respect of, and all proceeds of, any Collateral that is securities -
whether those dividends, distributions or proceeds result from a
subdivision, combination or reclassification of the outstanding capital
stock of any issuer or as a result of any merger, consolidation,
acquisition, or other exchange of assets to which any issuer may be a
party, or otherwise - are part of the Collateral, shall, if received by
any Debtor, be held in trust for Secured Party's benefit, and shall
immediately be delivered to Secured Party (accompanied by proper
instruments of assignment or stock or bond powers executed by the
applicable Debtor in accordance with Secured Party's instructions) to
be held subject to the terms of this agreement. Any cash proceeds of
any Collateral that come into Secured Party's possession (including,
without limitation, insurance proceeds) may, at Secured Party's option,
be applied in whole or in part to the Obligation (to the extent then
due), be fully or partially released to or under the written
instructions of that applicable Debtor for any general or specific
purpose, or be fully or partially retained by Secured Party as
additional Collateral. Any cash Collateral in Secured Party's
possession may be invested by Secured Party in certificates of deposit
issued by Secured Party, any Lender, or any other state or national
bank having combined capital and surplus greater than $100,000,000 or
in securities issued or guaranteed by the United States of America or
any of its agencies. Secured Party is never obligated to make any
investment and never has any liability to any Debtor or any Lender for
any loss that may result from any investment or non-investment. All
interest and other amounts earned from any investment may be dealt with
by Secured Party in the same manner as other cash Collateral.
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(f) INDEMNIFICATION. DEBTORS JOINTLY AND SEVERALLY ASSUME ALL
LIABILITY FOR ALL COLLATERAL, FOR THE SECURITY INTEREST, AND FOR ANY
USE, POSSESSION, MAINTENANCE AND MANAGEMENT OF, ALL COLLATERAL
(INCLUDING, WITHOUT LIMITATION, ANY TAXES ARISING AS A RESULT OF, OR IN
CONNECTION WITH, THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT) AND
JOINTLY AND SEVERALLY AGREE TO ASSUME LIABILITY FOR, AND TO INDEMNIFY
AND HOLD SECURED PARTY, EACH LENDER AND THEIR RESPECTIVE
REPRESENTATIVES (THE "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST,
AND DEFEND EACH INDEMNIFIED PARTY AGAINST, ALL CLAIMS, CAUSES OF
ACTION, OR LIABILITY, FOR INJURIES TO OR DEATHS OF PERSONS AND DAMAGE
TO PROPERTY HOWSOEVER ARISING FROM OR INCIDENT TO SUCH USE, POSSESSION,
MAINTENANCE AND MANAGEMENT (WHETHER SUCH PERSONS BE AGENTS OR EMPLOYEES
OF ANY DEBTOR OR OF THEIR PARTIES, OR SUCH DAMAGE BE TO PROPERTY OF ANY
DEBTOR OR OF OTHERS) AND ALL LOSSES, DAMAGES, CLAIMS, COSTS, PENALTIES,
LIABILITIES AND EXPENSES, INCLUDING, WITHOUT LIMITATION, COURT COSTS
AND ATTORNEYS' FEES, HOWEVER ARISING OR INCURRED BECAUSE OF, INCIDENT
TO, OR WITH RESPECT TO COLLATERAL OR ANY USE, POSSESSION, MAINTENANCE
OR MANAGEMENT OF IT (THE "INDEMNIFIED LIABILITIES"). HOWEVER, NO
INDEMNIFIED PARTY IS ENTITLED TO INDEMNITY UNDER THIS PARAGRAPH FOR ITS
OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD, OR FOR ANY
INDEMNIFIED LIABILITY ARISING FROM ITS ACTIONS AFTER SECURED PARTY HAS
FORECLOSED THE SECURITY INTEREST OR ACCEPTED CONVEYANCE IN LIEU OF
FORECLOSURE OR (EXCEPT FOR THE SECURITIES) TAKEN POSSESSION OF ANY
COLLATERAL. The provisions of this paragraph survive the payment and
performance of the Obligation and the release of the Security Interest.
(g) Subrogation. If any of the Obligation is given in renewal
or extension or applied toward the payment of Debt secured by any Lien,
Secured Party is subrogated to all of the Rights, titles, interests and
Liens securing that Debt.
10. Miscellaneous.
(a) Term. This agreement terminates when no Lender has any
commitment to lend or extend credit under the Credit Agreement and the
Obligation is fully paid and performed. No Obligor on any Collateral is
obligated to inquire about the termination of this agreement and is
fully protected in making payments directly to Secured Party, which
payments Secured Party shall pay to Borrower/Debtor on behalf of
Debtors after termination of this agreement.
(b) No Release. Neither the Security Interest, any Debtor's
obligations, nor Secured Party's or any Lenders' Rights under this
agreement are released, diminished, impaired, or adversely affected by
the occurrence of any one or more of the following events (i) the
taking or accepting of any other security or assurance for any
Obligation; (ii) any release, surrender, exchange, subordination or
loss of any security or assurance at any time existing in connection
with the Obligation; (iii) the modification of, amendment to, or waiver
of compliance with any terms of any other Credit Document without the
consent of Debtors except as required in that Credit Document; (iv) any
present or future insolvency, bankruptcy, or lack of corporate or trust
power of any party at any time liable for the payment of any
Obligation; (v) except as specifically required by any other Credit
Document, any renewal, extension or rearrangement of the payment of any
Obligation (either with or without notice to or consent of any Debtor)
or any adjustment, indulgence, forbearance or compromise that may be
granted or given by Secured Party or any Lender to any Debtor (vi) any
neglect, delay, omission, failure or refusal of Secured Party or any
Lender to take or prosecute any action in connection with any
agreement, document, guaranty or instrument evidencing, securing or
assuring the payment of any Obligation; (vii) any failure of Secured
Party or any Lender to notify any Debtor of any renewal, extension or
assignment of any Obligation, or the release of any security under any
other document or instrument, or of any other action taken or refrained
from being taken by Secured Party or any Lender against any Debtor, or
any new agreement between Secured Party, any Lender, and any Debtor, it
being understood that, except as expressly required by the Credit
Agreement, neither Secured Party nor any Lender is required to give any
Debtor any notice of any kind under any
13
95
circumstances whatsoever with respect to or in connection with the
Obligation, including, without limitation, notice of acceptance of this
agreement or any Collateral ever delivered to or for the account of
Secured Party under this agreement; (viii) the illegality, invalidity
or unenforceability of any Obligation against any third party obligated
with respect to it by reason of the fact that the Obligation, or the
interest paid or payable with respect to any of it, exceeds the amount
permitted by applicable Governmental Requirements, the act of creating
any of it is ultra xxxxx, or the officers, partners or trustees
creating any of it acted in excess of their authority, or for any other
reason; or (ix) if any payment by any party obligated with respect to
any Obligation is held to constitute a preference under applicable
Governmental Requirements or for any other reason Secured Party or any
Lender is required to refund any payment on any Obligation or pay the
amount of it to someone else.
(c) Waivers. To the maximum extent lawful, except to the
extent expressly otherwise provided in this agreement or in any other
Credit Document, Debtors jointly and severally waive (i) any Right to
require Secured Party or any Lender to proceed against any other
Person, to exhaust Rights in Collateral, or to pursue any other Right
that Secured Party or any Lender may have; (ii) with respect to the
Obligation, presentment and demand for payment, protest, notice of
protest and nonpayment, notice of acceleration, and notice of intent to
accelerate; and (iii) all Rights of marshaling with respect of any
Collateral.
(d) Financing Statement. Secured Party may at any time file
this agreement (or a carbon, photographic, or other reproduction of
this agreement) as a financing statement, but the failure of Secured
Party to do so does not impair the validity or enforcement of this
agreement.
(e) VENUE AND SERVICE OF PROCESS. SUBJECT TO THE VENUE AND
SERVICE OF PROCESS PROVISIONS IS THE CREDIT AGREEMENT, EACH DEBTOR (i)
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY TEXAS STATE
OR FEDERAL COURT, (ii) IRREVOCABLY WAIVES -- TO THE FULLEST EXTENT
PERMITTED BY LAW -- ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE HAVE
TO THE LAYING OF VENUE OF ANY LITIGATION BROUGHT IN CONNECTION WITH ANY
CREDIT DOCUMENT OR THE OBLIGATION BROUGHT IN DISTRICT COURTS OF DALLAS
COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, DALLAS DIVISION (iii) IRREVOCABLY WAIVES ANY CLAIMS
THAT ANY LITIGATION BROUGHT IN ANY OF THOSE COURTS HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM, (iv) IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THOSE COURTS IN ANY LITIGATION BY THE MAILING OF
COPIES OF THAT LEGAL PROCESS BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY, OR BY DELIVERY BY A
NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE IS DEEMED COMPLETE
UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS AS PROVIDED IN THIS
AGREEMENT, AND (v) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST
ANY PARTY TO ANY CREDIT DOCUMENT ARISING OUT OF OR IN CONNECTION WITH
THE CREDIT DOCUMENTS OR THE OBLIGATION MAY BE BROUGHT IN ONE OF THOSE
COURTS. The scope of each of these waivers is intended to be
all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction -- including,
without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. These waivers
are a material inducement to the agreement by Secured Party and each
Lender to enter into the Credit Documents, and they have each relied --
and may continue to rely -- on these waivers in its dealings with
Debtors. Each Debtor represents and warrants that it has reviewed these
waivers with its legal counsel, and that it knowingly and voluntarily
agrees to each waiver following consultation with legal counsel. These
waivers are irrevocable, may not be modified either orally or in
writing, and apply to any renewals, extensions, amendments, and
replacements of any Credit Document.
(g) Credit Document. This agreement is a Credit Document and
is subject to applicable provisions of SECTIONS 1 and 14 of the Credit
Agreement, all of which are incorporated in this agreement by reference
the same as if set forth in this agreement verbatim.
14
96
(h) Communications. For purposes of SECTION 14.2 of the Credit
Agreement, each Debtor's address and telecopy number are the same as
Borrower/Debtor's.
(i) Amendments, Etc.. No amendment, waiver, or discharge to or
under this agreement is valid unless it is in writing and signed by the
party against whom it is sought to be enforced as is otherwise in
conformity with the requirements of SECTION 14.10 of the Credit
Agreement.
(j) ENTIRETY. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO
WHICH ANY DEBTOR IS A PARTY REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(k) Secured Party and Lenders. Secured Party is the agent for
each Lender under the Credit Agreement. The Security Interest and all
Rights granted to Secured Party under or in connection with this
agreement are for each Lender's ratable benefit. Secured Party may,
without the joinder of any Lender, exercise any Rights in Secured
Party's or Lenders' favor under or in connection with this agreement,
including, without limitation, conducting any foreclosure sales and
executing full or partial releases of, amendments or modifications to,
or consents or waivers under this agreement. Secured Party's and each
Lender's Rights and obligations vis-a-vis each other may be subject to
one or more separate agreements between those parties. However, no
Debtor need inquire about any such agreement or is subject to any terms
of it unless that Debtor specifically joins it. Therefore, neither any
Debtor nor its successors or assigns is entitled to any benefits or
provisions of any such separate agreement or is entitled to rely upon
or raise as a defense any party's failure or refusal to comply with the
provisions of it.
(l) Parties. This agreement benefits Secured Party, Lenders,
and their respective successors and assigns and binds each Debtor and
its successors and assigns. Upon appointment of any successor
Administrative Agent under the Credit Agreement, all of the Rights of
Secured Party under this agreement automatically vests in that new
Administrative Agent as successor Secured Party on behalf of Lenders
without any further act, deed, conveyance, or other formality other
than that appointment. The Rights of Secured Party and Lenders under
this agreement may be transferred with any assignment of the
Obligations. The Credit Agreement contains provisions governing
assignments of the Obligations and of Rights and obligations under this
agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGE FOLLOWS]
15
97
EXECUTED as of the date first stated above.
ULTRAK, INC.
By:
------------------------------------
Xxx X. Xxxxx, Vice President - Finance
ULTRAK GP, INC.
By:
------------------------------------
Xxx X. Xxxxx, Vice President - Finance
ULTRAK, LP, INC.
By:
------------------------------------
Xxx X. Xxxxx, Vice President - Finance
ULTRAK OPERATING, L.P.
By: Ultrak GP, Inc. its General Partner
By:
------------------------------------
Xxx X. Xxxxx, Vice President - Finance
DIAMOND ELECTRONICS, INC.
By:
------------------------------------
Xxx X. Xxxxx, Vice President - Finance
16
98
MONITOR DYNAMICS, INC.
By:
-------------------------------------
Xxx X. Xxxxx, Vice President - Finance
Secured Party executes this agreement in acknowledgment of PARAGRAPH 10(J)
above.
BANK ONE, TEXAS, N.A., as Administrative
Agent for Lenders and as Secured Party
By:
-------------------------------------
Xxxx X. Xxxxxx, Vice President
17
99
SCHEDULE 1
TO
SECURITY AGREEMENT
INTELLECTUAL PROPERTY
I. PATENTS.
UNITED STATES ISSUED PATENTS
PATENT NO. ISSUE DATE TITLE
4,107,611* 08/15/78 POLICE PROTECTION
METHOD AND APPARATUS
4,367,458* 01/04/83 SUPERVISED WIRELESS
SECURITY SYSTEM
4,754,262 06/28/88 MULTIPLEXED ALARM SYSTEM
WITH MICROCOMPUTER
5,053,589 10/01/91 VIBRATION SENSING DEVICE
5,319,394 06/07/94 SYSTEM FOR RECORDING
AND MODIFYING BEHAVIOR
OF PASSENGER IN
PASSENGER VEHICLES
5,495,288 02/27/96 REMOTE ACTIVATED
SURVEILLANCE SYSTEM
5,786,850 07/28/98 MULTIPLE ROOM PORTABLE
CAMERA SYSTEM
5,825,411 10/20/98 VIDEO SIGNAL ROUTING
SYSTEM
FOREIGN ISSUED PATENTS
COUNTRY PATENT NO. TITLE
Australia* 8176494 ULTRASONIC SECURITY
SYSTEM FOR DWELLING HOUSE
Canada* 1171514 ULTRASONIC SECURITY
SYSTEM FOR DWELLING HOUSE
Europe* 58721 ULTRASONIC SECURITY
SYSTEM FOR DWELLING HOUSE
Japan* 57501358 ULTRASONIC SECURITY
SYSTEM FOR DWELLING HOUSE
18
100
Mexico* 151041 ULTRASONIC SECURITY
SYSTEM FOR DWELLING HOUSE
Australia 574157 MULTIPLEXED ALARM SYSTEM
WITH MICROCOMPUTER
Austria 44183 MULTIPLEXED ALARM SYSTEM
WITH MICROCOMPUTER
Europe 173735 MULTIPLEXED ALARM SYSTEM
WITH MICROCOMPUTER
Germany 3571164 MULTIPLEXED ALARM SYSTEM
WITH MICROCOMPUTER
Japan 61501599 MULTIPLEXED ALARM SYSTEM
WITH MICROCOMPUTER
Australia 9740861 VIDEO SIGNAL ROUTING SYSTEM
Australia 9742341 MODULAR MULTIPLEXING
SYSTEM FOR CAMERAS
IN SURVEILLANCE SYSTEM
Australia 9741616 PHASE COMPENSATION FOR
VIDEO CAMERA
Australia 9664870 VIDEO MULTIPLEXING SYSTEM
FOR USE WITH
MULTIPLE CAMERAS
China 1195448 VIDEO MULTIPLEXING SYSTEM
FOR USE WITH
MULTIPLE CAMERAS
Europe 838119 VIDEO MULTIPLEXING SYSTEM
FOR USE WITH
MULTIPLE CAMERAS
-----------------------------
* An "*" indicates that Borrower believes that the marked item of
Intellectual Property may have been previously conveyed to a third-party.
Therefore, any representations in the Credit Documents as to the ownership of
these indicated assets shall be deemed to be modified to reflect the uncertainty
in ownership of these items. These items of Intellectual Property are listed to
indicate that any interest of any Company in the indicated Intellectual Property
is included as part of the Collateral.
19
101
II. TRADEMARKS.
UNITED STATES APPLICATIONS
SERIAL NUMBER FILE DATE XXXX
75/241,658 02/13/97 POINTGUARD
75/314,028 06/24/97 DIGITAL SCRATCH PAD
UNITED STATES REGISTRATIONS
REB. NO. REG. DATE XXXX
1,872,339 01/10/95 SMART CHOICE
1,877,470 02/07/95 ULTRAK
1,991,642 08/06/96 THE WITNESS
2,008,964 10/15/96 BABYCAM
2,014,348 11/05/96 OBSERVISION
2,093,478 09/02/97 EASY WATCH
2,179,024 08/04/98 ULTRAK AND DESIGN
2,181,001 08/11/98 QUALITY PRODUCTS
THAT MAKE A DIFFERENCE
FOREIGN REGISTRATIONS
COUNTRY REG. NO. XXXX
Canada TMA498,350 ULTRAK
European Community 37267 ULTRAK
Italy 608469 ULTRAK
III. COPYRIGHTS. None.
20
102
SCHEDULE 2
TO
SECURITY AGREEMENT
MASTER NOTES
1. Promissory Note in the stated principal amount of $23,000,000, dated
December 31, 1998, executed by Ultrak Holdings Limited in favor of
Ultrak, Inc.
2. Promissory Note in the stated principal amount of $4,000,000, dated
December 31, 1998, executed by Philtech Electronic Services Limited in
favor of Ultrak, Inc.
3. Promissory Note in the stated principal amount of $4,000,000, dated
December 31, 1998, executed by Maxpro Systems, Pty., Ltd., in favor of
Ultrak, Inc.
4. Promissory Note in the stated principal amount of $1,000,000, dated
December 31, 1998, executed by Ultrak (Asia) Pte. Ltd. in favor of
Ultrak, Inc.
21
103
SCHEDULE 3
TO
SECURITY AGREEMENT
MOTOR VEHICLES
None
22
104
SCHEDULE 4
TO
SECURITY AGREEMENT
PARTNERSHIP INTERESTS
1. Ultrak Operating, L.P., a Texas limited partnership. The appropriate
Debtors agree to cause the partnership records of Ultrak Operating,
L.P. to be marked to reflect the pledge of their partnership interests
under this agreement.
23
105
SCHEDULE 5-A
TO
SECURITY AGREEMENT
STOCK OF SUBSIDIARIES
(Borrower)
1. Ultrak GP, Inc., a Delaware corporation.
a. Stock Certificate No. 1 evidencing 1,000 shares owned by
Ultrak, Inc. These shares represent 100% of the issued and
outstanding shares of capital stock of Ultrak GP, Inc.
2. Ultrak LP, Inc., a Delaware corporation.
a. Stock Certificate No. 1 evidencing 1,000 shares owned by
Ultrak, Inc. These shares represent 100% of the issued and
outstanding shares of capital stock of Ultrak LP, Inc.
3. Diamond Electronics, Inc., an Ohio corporation.
a. Stock Certificate No. ____ evidencing 4,809,219 shares owned
by Ultrak, Inc. These shares represent 100% of the issued and
outstanding shares of capital stock of Diamond Electronics,
Inc.
4. Monitor Dynamics, Inc., a California corporation.
a. Stock Certificate No. _________ evidencing ____________ shares
owned by Ultrak, Inc. These shares represent 100% of the
issued and outstanding shares of capital stock of Monitor
Dynamics, Inc.
5. Maxpro Systems Pty. Ltd., an Australian corporation.
a. Certificate No. 21 evidencing 92 shares owned by Ultrak, Inc.
b. Certificate No. 22 evidencing 92 shares owned by Ultrak, Inc.
c. Certificate No. 23 evidencing 92 shares owned by Ultrak, Inc.
d. Certificate No. 24 evidencing 92 shares owned by Ultrak, Inc.
The shares described in 5(a)-(d) above represent at least 65%
of the issued and outstanding shares of capital stock of
Maxpro Systems Pty. Ltd.
6. Ultrak Holdings Limited, a company organized and existing under the
laws of the United Kingdom.
a. Certificate No. 2 evidencing 1 share owned by Ultrak, Inc.
This share represents at least 65% of the issued and
outstanding shares of capital stock of Ultrak Holdings
Limited.
7. Philtech Electronic Services (Proprietary) Limited, a South African
company.
a. Certificate No. 4 evidencing 51 shares owned by Ultrak, Inc.
b. Certificate No. 5 evidencing 49 shares owned by Ultrak, Inc.
The shares described in 7(a)-(b) above represent at least 65%
of the issued and outstanding shares of capital stock of
Philtech Electronic Services (Proprietary) Limited.
24
106
8. Ultrak (Asia) Pte. Ltd., a Republic of Singapore company.
a. Certificate No. 4 evidencing 140,000 shares owned by Ultrak,
Inc.
b. Certificate No. 5 evidencing 35,000 shares owned by Ultrak,
Inc. The shares described in 8(a)-(b) above represent at least
65% of the issued and outstanding shares of capital stock of
Ultrak (Asia) Pte. Ltd.
9. Security Procurement, B.V., a Dutch corporation.
a. Certificate No. _____ evidencing __________ shares owned by
Ultrak, Inc. These shares represent at least 65% of the issued
and outstanding shares of capital stock of Security
Procurement, B.V.
25
107
SCHEDULE 5-B
TO
SECURITY AGREEMENT
OTHER STOCK
1. 100% of the capital stock of Detection Systems, Inc. now or hereafter
owned by any Company.
2. 100% of the capital stock of Delta Airlines now or hereafter owned by
any Company.
3. 100% of the capital stock of Southwest Securities now or hereafter
owned by any Company.
4. 100% of the capital stock of Lafarge Corporation now and hereafter
owned by any Company.
5. 100% of the capital stock of Securion 24 Co., Ltd now and hereafter
owned by any Company.
26
108
SCHEDULE 6
TO
SECURITY AGREEMENT
LOCATIONS FOR FILING FINANCING STATEMENTS
1. Ultrak, Inc.
a. Texas Secretary of State
2. Ultrak Operating, L.P.
a. Texas Secretary of State
b. Nevada Secretary of State
c. Colorado Secretary of State
d. Florida Secretary of State
3. Ultrak GP, Inc.
a. Texas Secretary of State
4. Ultrak LP, Inc.
a. Texas Secretary of State
b. Delaware Secretary of State
5. Diamond Electronics, Inc.
a. Texas Secretary of State
b. Ohio Secretary of State
6. Monitor Dynamics, Inc.
a. Texas Secretary of State
b. California Secretary of State
c. Virginia Secretary of State
27
109
SCHEDULE 7
TO
SECURITY AGREEMENT
LANDLORD ESTOPPEL AND SUBORDINATION AGREEMENT
Dated as of _________________
Bank One, Texas, N.A., Administrative Agent
0000 Xxxx Xx.
Xxxxxx, Xxxxx 00000
Re: LESSEE : __________________________________
PREMISES: __________________________________, described on the
attached EXHIBIT A
The undersigned is the landlord ("LANDLORD") under a lease (as renewed,
extended, amended, or substituted, the "LEASE") covering the Premises. Landlord
understands that Lessee is or will be party to, or a guarantor under, a Credit
Agreement (as renewed, extended, amended, or restated the "CREDIT AGREEMENT")
with you and certain lenders which requires (a) granting to you on behalf of
those lenders security interests in, among other things, all of Lessee's present
and future inventory and equipment now or in the future located at the Premises
(together with all cash and non-cash proceeds, the "COLLATERAL") and (b)
subordinating in your favor on behalf of those lenders any liens, security
interests, and other rights to which Landlord might be entitled in the
Collateral.
To satisfy those requirements and induce you and those lenders to
extend credit under the Credit Agreement, Landlord agrees that, notwithstanding
anything to the contrary in the Lease, until all of Lessee's obligations to you
and those lenders have been paid and performed in full (a) all liens, security
interests, and other rights to which Landlord might be entitled in the
Collateral are subordinate and inferior to any present or future security
interests granted to you on behalf of those lenders in the Collateral,
regardless of the order in which any liens, security interests, and rights in
the Collateral were or will be created, attached, pledged, filed, recorded,
registered, or perfected, (b) Landlord intends that the Collateral will not
become fixtures and will be and remain personal property, notwithstanding the
manner of their annexation to the Premises, their adaptability to the uses and
purposes for which the Premises are used, and the intentions of the party making
the annexation, (c) Landlord will notify you in writing by Certified Mail,
Return Receipt Requested, at the above address, if Lessee defaults on its lease
obligations and grant to you the right but not the obligation to cure those one
or more defaults, (d) you and your representatives are entitled to enter upon
the Premises and assemble, appraise, display, sever, remove, maintain, prepare
for sale or lease, repair, lease, transfer, or sell at one or more public
auctions or private sales any Collateral, and (e) you may, without notice to
Landlord or Landlord's consent and without affecting the validity of this
agreement, increase, extend the times of payment of, or otherwise modify any of
Lessee's debts to you or the performance of any of the terms and conditions of
the Credit Agreement or related documents. This agreement inures to you, those
lenders, and the respective successors and assigns
28
110
of each and binds Landlord and Landlord's heirs, personal representatives,
successors, and assigns. Landlord waives notice of acceptance of this agreement.
Very truly yours,
------------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
------------------------------------------
Telephone:
--------------------------------
Telecopy:
---------------------------------
29
111
EXHIBIT E
BORROWING REQUEST
ADMINISTRATIVE AGENT: Bank One, Texas, N.A. DATE: _________________, ____
BORROWER: Ultrak,Inc.
================================================================================
This request is delivered under the Credit Agreement (as renewed,
extended, and amended, the "CREDIT AGREEMENT") dated as of February 16, 1999,
between Borrower, certain Lenders, and Administrative Agent. Terms defined in
the Credit Agreement have the same meanings when used -- unless otherwise
defined -- in this request.
Borrower requests a $____________________ Borrowing under the Revolving
Facility (the "REQUESTED BORROWING") to be funded on ____________________,
_____(1) (the "REQUESTED BORROWING DATE"), as a:
--------------------------------------------------------------------------------
category amount interest rate category
--------------------------------------------------------------------------------
Revolving Facility Borrowing $ [ ] LIBOR Rate
[ ] Base Rate
--------------------------------------------------------------------------------
Borrower certifies that as of the Requested Borrowing Date -- after
giving effect to the Requested Borrowing -- (a) the representations and
warranties of Borrower in the Credit Documents are true and correct in all
material respects except to the extent that (i) a representation or warranty
speaks to a specific date or (ii) the facts on which a representation or
warranty is based have changed by transactions or conditions contemplated or
permitted by the Credit Documents, (b) no Event of Default, Potential Default or
Material Adverse Event exists, and (d) Borrower has otherwise complied with all
conditions of the Credit Documents to permit the Requested Borrowing to be
extended.
ULTRAK, INC.
By:
---------------------------------
Name:
-------------------------------
(2)Title:
---------------------------
----------------
(1) Must be a Business Day prior to the Revolving Facility Termination
Date.
(2) Must be a Responsible Officer of Borrower.
1
112
EXHIBIT F
CONVERSION NOTICE
ADMINISTRATIVE AGENT: Bank One, Texas, N.A. DATE:____________,____
BORROWER: Ultrak, Inc.
This notice is delivered under the Credit Agreement (as renewed,
extended, and amended, the "CREDIT AGREEMENT") dated as of February 16, 1999,
between Borrower, certain Lenders, and Administrative Agent. Terms defined in
the Credit Agreement have the same meanings when used -- unless otherwise
defined -- in this notice.
Borrower presently has a _______________________ (1) Borrowing (the
"EXISTING BORROWING") in the amount of $________________ which, if a LIBOR
Rate Borrowing, has an Interest Period of __________________________ (2)
ending on _______________________ . On _______________________ (the
"CONVERSION DATE"), Borrower shall partially pay, continue in full or part as
the same Type of Borrowing, or convert in full or part to another Type of
Borrowing and -- if applicable -- with the Interest Period(s) designated below
[check applicable boxes]:
[ ] Amount to be paid, if any, $__________________.
[ ] Balance to be in the following Types of Borrowings with --
if applicable -- the following Interest Periods(s):
================================================================================
TYPE AMOUNT(3) INTEREST PERIOD(4)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
Borrower certifies that on the Conversion Date -- after giving effect
to the above action(s) -- (a) all of the representations and warranties of the
Companies in the Credit Documents will be true and correct in all material
respects (unless they speak to a specific date or are based on facts which have
changed by transactions contemplated or expressly permitted by the Credit
Documents) and (b) no Material Adverse Event, Event of Default, or Potential
Default will exist.
ULTRAK, INC.
By:
--------------------------------------
Name:
------------------------------------
(5)Title:
--------------------------------
-------------------------
(1) Base Rate or LIBOR Rate.
(2) One, three or six months.
(3) Must be at least $50,000 or a greater integral multiple of $50,000 if a
Base Rate Borrowing and a least $500,000 or a greater integral multiple
of $500,000 if a LIBOR Rate Borrowing.
(4) Must be a one, three or six month period.
(5) Must be a Responsible Officer of Borrower.
1
113
EXHIBIT G
LC REQUEST
ADMINISTRATIVE AGENT: Bank One, Texas, N.A. DATE:____________,____
BORROWER: Ultrak, Inc.
================================================================================
This request is delivered under the Credit Agreement (as renewed,
extended and amended, the "CREDIT AGREEMENT") dated as of February 16, 1999,
between Borrower, certain Lenders and Administrative Agent. Terms defined in the
Credit Agreement have the same meanings when used -- unless otherwise defined --
in this request.
Borrower requests the issuance of an LC under the LC Subfacility. The
terms on which the LC is requested to be issued are as follows:
(a) Face amount of the LC(1)
--------------------
(b) Date on which the LC is to be issued(2)
--------------------
(c) Expiration Date of the LC(3)
--------------------
Accompanying this request is a duly executed and properly completed LC
Agreement (in form and substance satisfactory to Administrative Agent), together
with the payment of any LC fees due and payable pursuant to SECTION 4.4 of the
Credit Agreement.
Borrower certifies that as of the date of issuance of the requested LC
-- after giving effect to the issuance of the requested LC -- (a) all of the
representations and warranties of the Companies in the Credit Documents will be
true and correct in all material respects (unless they speak to a specific date
or are based on facts which have changed by transactions contemplated or
expressly permitted by the Credit Documents), (b) no Material Adverse Event,
Event of Default, or Potential Default will exist, (c) no limitation in SECTION
2.2 or 2.4 of the Credit Agreement will be exceeded, and (d) Borrower has
otherwise complied with all conditions in the Credit Documents to permit the
issuance of the requested LC.
ULTRAK, INC.
By:
-----------------------------------------
Name:
---------------------------------------
(4)Title:
-----------------------------------
----------------
(1) May not cause the LC Exposure to exceed the LC Subfacility.
(2) No earlier than the third Business Day following the date of this
request.
(3) No later than the earlier of one year from the date of issuance or 30
Business Days prior to the Revolving Facility Termination Date.
(4) Must be a Responsible Officer of Borrower.
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EXHIBIT H
COMPLIANCE CERTIFICATE
ADMINISTRATIVE AGENT: Bank One, Texas, N.A. DATE: ___________, ____
BORROWER: Ultrak, Inc.
SUBJECT PERIOD: ____________________ ended _______________, 199___
================================================================================
This certificate is delivered under the Credit Agreement (as renewed,
extended, and amended, the "CREDIT AGREEMENT") dated as of February 16, 1999,
between Borrower, certain Lenders and Administrative Agent. Terms defined in the
Credit Agreement have the same meanings when used -- unless otherwise defined --
in this certificate.
The undersigned officer certifies to Administrative Agent and Lenders
that on the date of this certificate:
1. The undersigned officer is the officer of Borrower designated below.
2. Borrower's financial statements that are attached to this
certificate were prepared in accordance with GAAP and present fairly the
Companies' consolidated (if applicable) financial condition and results of
operations as of -- and for the fiscal year or portion of the fiscal year ending
on -- the last day of the Subject Period.
3. The undersigned officer supervised a review of the Companies'
activities during the Subject Period in respect of the following matters and has
determined the following: (a) the representations and warranties in the Credit
Agreement are true and correct in all material respects, except (i) to the
extent that a representation or warranty speaks to a specific date or the facts
on which it is based have changed by transactions or conditions contemplated or
permitted by the Credit Documents and (ii) for the changes, if any, described on
the attached Schedule; (b) each Company has complied with all of its obligations
under the Credit Documents, other than for the deviations, if any, described on
the attached Schedule; (c) no Event of Default or Potential Default exists or is
imminent, other than those, if any, described on the attached Schedule; and (d)
the Companies' compliance with certain negative covenants in SECTION 9 and the
financial covenants in SECTION 10 of the Credit Agreement is accurately
calculated on the attached Schedule.
By:
--------------------------------------
Name:
------------------------------------
(1)Title:
--------------------------------
---------------------
(1) Must be a Responsible Officer of Borrower.
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SCHEDULE TO COMPLIANCE CERTIFICATE
(for the period ending ___________________________)
A. Describe deviations from performance or compliance with covenants,
if any, pursuant to CLAUSE (3)(a) or (3)(b) of the attached certificate. If
none, so state.
B. Describe Material Adverse Events, Events of Default or Potential
Defaults, if any, pursuant to CLAUSE (3)(c) of the attached certificate. If
none, so state.
C. Reflect compliance with SECTIONS 9 and 10 of the Credit Agreement at
the end of the Subject Period pursuant to CLAUSE (3)(d) of the attached
certificate.
TABLE 1
================================================================================
COVENANT AT END OF SUBJECT PERIOD
================================================================================
SECTION 9.8 DISTRIBUTIONS; OTHER PAYMENTS
--------------------------------------------------------------------------------
(a) Preferred stock dividends to Xx. Xxxxxx X. Xxxxxx $
during the current year (maximum of $117,210 per year)
--------------------------------------------------------------------------------
(b) Stock repurchases relating to the Xxxxxxxxx Agreement $
since the Closing Date (maximum of $4,000,000 during
the term of the Credit Agreement)
--------------------------------------------------------------------------------
(c) Other stock repurchases since the Closing Date $
(maximum of $2,000,000 during the term of the Credit
Agreement)
================================================================================
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TABLE 2
=============================================================================================================
COVENANT AT END OF SUBJECT PERIOD
=============================================================================================================
SECTION 10.1 LEVERAGE RATIO
-------------------------------------------------------------------------------------------------------------
(a) Net Income for the four fiscal quarters then ended $
-------------------------------------------------------------------------------------------------------------
(b) Interest Expense for that period $
-------------------------------------------------------------------------------------------------------------
(c) Tax expense for that period $
-------------------------------------------------------------------------------------------------------------
(d) Depreciation expense for that period $
-------------------------------------------------------------------------------------------------------------
(e) Amortization expense for that period $
-------------------------------------------------------------------------------------------------------------
(f) Gains that are extraordinary items $
-------------------------------------------------------------------------------------------------------------
(g) EBITDA for that period -- total of Lines (a) through (e) $
minus Line (f)
-------------------------------------------------------------------------------------------------------------
(h) Funded Debt $
-------------------------------------------------------------------------------------------------------------
(i) Ratio of Line (h) to Line (g) ___ to 1.00
-------------------------------------------------------------------------------------------------------------
(j) MAXIMUM RATIO ___ to 1.00
=============================================================================================================
TABLE 3
=============================================================================================================
COVENANT AT END OF SUBJECT PERIOD
=============================================================================================================
SECTION 10.2 FIXED CHARGE COVERAGE RATIO
-------------------------------------------------------------------------------------------------------------
(a) Net Income for the four fiscal quarters then ended $
-------------------------------------------------------------------------------------------------------------
(b) Interest Expense for that period $
-------------------------------------------------------------------------------------------------------------
(c) Tax Expense for that period $
-------------------------------------------------------------------------------------------------------------
(d) Rental payments in respect of operating leases $
-------------------------------------------------------------------------------------------------------------
(e) Gains that are extraordinary items $
-------------------------------------------------------------------------------------------------------------
(f) EBITR for that period -- total of Lines (a) through (d) $
minus Line (e)
-------------------------------------------------------------------------------------------------------------
(g) CMLTD for that period $
-------------------------------------------------------------------------------------------------------------
(h) Interest Expense for that period $
-------------------------------------------------------------------------------------------------------------
(i) Rental payments in respect of operating leases $
-------------------------------------------------------------------------------------------------------------
(j) Debt Service Requirements for that period -- total of $
Lines (g) through (i)
-------------------------------------------------------------------------------------------------------------
(k) Ratio of Line (f) to Line (j) ____ to 1.00
-------------------------------------------------------------------------------------------------------------
(l) MINIMUM RATIO ____ to 1.00
=============================================================================================================
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TABLE 4
=================================================================================================
COVENANT AT END OF SUBJECT PERIOD
=================================================================================================
SECTION 10.3 MINIMUM NET WORTH
-------------------------------------------------------------------------------------------------
(a) Base amount $135,200,000
-------------------------------------------------------------------------------------------------
(b) 75% of consolidated Net Income (without deduction for $
losses) after September 30, 1998
-------------------------------------------------------------------------------------------------
(c) 100% of net proceeds from the issuance and sale of any $
equity securities by any Company after September 30,
1998
-------------------------------------------------------------------------------------------------
(d) 100% of the amount of any permitted stock repurchases $
occurring after September 30, 1998
-------------------------------------------------------------------------------------------------
(e) Sum of Line (a) through Line (c) minus Line (d) $
-------------------------------------------------------------------------------------------------
(f) Net Worth -- must be greater than Line (e) $
=================================================================================================
TABLE 5
=================================================================================================
COVENANT AT END OF SUBJECT PERIOD
=================================================================================================
SECTION 10.4 CAPITAL EXPENDITURES
-------------------------------------------------------------------------------------------------
(a) Capital expenditures for the current fiscal year (maximum $
of $4,500,000 for fiscal 1999 and $4,000,000 for any
fiscal year thereafter)
=================================================================================================
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118
TABLE 6
========================================================================================================
COVENANT AT END OF SUBJECT PERIOD
========================================================================================================
SECTION 10.5 LIQUIDITY RATIO
--------------------------------------------------------------------------------------------------------
Current assets as defined by GAAP $
--------------------------------------------------------------------------------------------------------
Prepaid expenses $
--------------------------------------------------------------------------------------------------------
Investments in discontinued operations $
--------------------------------------------------------------------------------------------------------
Advances for inventory purchases $
--------------------------------------------------------------------------------------------------------
Marketable securities $
--------------------------------------------------------------------------------------------------------
Non-Qualifying Accounts Receivable $
--------------------------------------------------------------------------------------------------------
Adjusted Current Assets - Line $
--------------------------------------------------------------------------------------------------------
(a) minus Lines (b)-(f)
--------------------------------------------------------------------------------------------------------
Current liabilities as defined by GAAP (including, without $
limitation, all outstanding indebtedness under the
Revolving Facility)
--------------------------------------------------------------------------------------------------------
CMLTD $
--------------------------------------------------------------------------------------------------------
Adjusted Current Liabilities - Line (h) minus Line (i) $
--------------------------------------------------------------------------------------------------------
Ratio of Line (g) to Line (j) _____ to 1.00
--------------------------------------------------------------------------------------------------------
MINIMUM RATIO 1.25 to 1.00
========================================================================================================
5
119
EXHIBIT I
PERMITTED ACQUISITION COMPLIANCE CERTIFICATE
ADMINISTRATIVE AGENT: Bank One, Texas, N.A. DATE:____________________
BORROWER: Ultrak, Inc.
================================================================================
This certificate is delivered under the Credit Agreement dated as of
February 16, 1999 (as renewed, extended and amended, the "CREDIT AGREEMENT")
between Borrower, certain Lenders and Administrative Agent. Terms defined in the
Credit Agreement have the same meanings when used unless otherwise defined in
this certificate.
______________[name of Company] intends to acquire ___________________
[the "SUBJECT ACQUISITION"], on ________________, ____ (the "ACQUISITION DATE").
In connection with such Subject Acquisition, Borrower hereby confirms the
following:
(a) all of the representations and warranties under the
Credit Documents are true and correct immediately
prior to and after giving effect to the Subject
Acquisition;
(b) the Subject Acquisition meets all of the requirements
to qualify as a Permitted Acquisition under the
Credit Agreement, including, without limitation, that
(i) as of the Acquisition Date, the Subject
Acquisition has been approved and recommended by the
board of directors or other similar governing body of
the Person to be acquired or from which such business
is to be acquired, (ii) the Purchase Price for the
Subject Acquisition is less than or equal to
$3,000,000 and the aggregate Purchase Price for all
Acquisitions during the term of the Credit Agreement
is less than or equal to $5,000,000, (iii) not less
than 7 Business Days prior to consummation of the
Subject Acquisition, the Borrower has delivered to
Administrative Agent a written description of the
targeted entity to be acquired and its operations and
a copy of the related purchase agreement, to the
extent available (and, upon the request of
Administrative Agent, all of the schedules and
exhibits thereto), (iv) as of the Acquisition Date,
after giving effect to the Subject Acquisition, the
acquiring party is or will be Solvent and the
Companies, on a consolidated basis, are or will be
Solvent, (v) as of the Acquisition Date, no Event of
Default or Potential Default exists or will occur as
a result of, and after giving effect to, the Subject
Acquisition, (vi) as of the Acquisition Date, if the
Subject Acquisition is structured as a merger,
Borrower (or if such merger is with any Company other
than Borrower, then such Company) is the surviving
entity after giving effect to such merger, and (vii)
if required, the consent of Required Lenders to the
Subject Acquisition has been obtained and Borrower
has delivered to Administrative Agent all information
regarding the Acquisition requested by Administrative
Agent, including, without limitation, all of the
information specifically referred to in clause (b) of
the definition of "Permitted Acquisition" in the
Credit Agreement.
(c) after giving effect to the Subject Acquisition, any
Debt (if any) incurred or assumed by the Companies in
connection with the Subject Acquisition will be
permitted by SECTION 9.2.
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(d) prior to the consummation of the Subject Acquisition,
Borrower has delivered to Administrative Agent all
supplements to, or revisions of, Schedules 7.3 and
7.8 to of the Credit Agreement which are required to
make the disclosures in such Schedules accurate after
giving effect to the Subject Acquisition, and has
obtained the consent of Required Lenders with respect
to such revised or supplemental Schedules ([ ] check
here if no such revised or supplemental Schedules are
required as a result of the Subject Acquisition).
ULTRAK, INC.
By:
------------------------------------------
Name:
----------------------------------------
(1)Title:
------------------------------------
---------------------
(1) Must be a Responsible Officer of Borrower.
2
121
EXHIBIT J
OPINION OF BORROWER'S COUNSEL
The opinion delivered by counsel to the Companies must be in form and
substance acceptable to Administrative Agent and its special counsel and cover
the following matters:
1. To the best of that counsel's knowledge, except as described on
SCHEDULE 7.3 to the Credit Agreement (a) Borrower has no Subsidiaries and (b) no
Company has used or transacted business under any other corporate or trade name
in the six-month period preceding the date of this agreement.
2. Each Company is duly organized, validly existing, and in good
standing under the Governmental Requirements of the jurisdiction in which it is
incorporated as stated on SCHEDULE 7.3 to the Credit Agreement.
3. Each Company is duly qualified to transact business and is in good
standing as a foreign corporation or other entity in each jurisdiction so
indicated on SCHEDULE 7.3 to the Credit Agreement and in each other jurisdiction
where, to the best of that counsel's knowledge, the nature and extent of that
Company's business and properties require due qualification and good standing.
4. Each Company possesses all requisite corporate power and authority
to conduct its business as is now being -- or is contemplated by the Credit
Agreement to be -- conducted.
5. The execution and delivery by each Company of each Credit Document
to which it is a party and the performance by it of its related obligations (a)
are within its corporate power, (b) have been duly authorized by all necessary
corporate action on its behalf, (c) except for any action or filing that has
been taken or made on or before the date of this opinion, require no action by
or filing with any Governmental Authority, (d) do not violate any provision of
its charter or bylaws, (e) do not violate any provision of any Governmental
Requirement applicable to it or any material agreements to which it is a party
and of which that counsel is aware, and (f) do not result in the creation or
imposition of any Lien on any asset of any Company.
6. Upon execution and delivery by all parties to it, each Credit
Document will constitute a legal and binding obligation of each Company party to
it, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable Debtor Relief Laws and general
principles of equity.
7. Lender Liens are created and perfected on each item of Collateral
described in the Credit Documents.
8. Except as disclosed on SCHEDULE 7.8 to the Credit Agreement (a) no
Company is subject to, or aware of the threat of, any Litigation that is
reasonably likely to be determined adversely to it or, if so adversely
determined, would be a Material Adverse Event, and (b) no outstanding or unpaid
judgments against any Company exist.
9. No Company is subject to regulation under the Investment Company Act
of 1940, as amended, or the Public Utility Holding Company Act of 1935, as
amended.
1
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EXHIBIT K
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT is entered into effective as of _______________, 199__,
between _____________________. ("ASSIGNOR"), and _____________________________
("ASSIGNEE").
ULTRAK, INC., a Delaware corporation ("BORROWER"), certain lenders
("LENDERS"), and Bank One, Texas, N.A. (in its capacity as Administrative Agent
for Lenders, "ADMINISTRATIVE AGENT"), are party to the Credit Agreement (as
renewed, extended, and amended, the "CREDIT AGREEMENT") dated as of February 16,
1999. Terms defined in the Credit Agreement have the same meanings when used,
unless otherwise defined, in this agreement. This agreement is entered into as
required by SECTION 14.12 of the Credit Agreement and is not effective until
consented to by Borrower and Administrative Agent, which consents may not under
the Credit Agreement be unreasonably withheld.
ACCORDINGLY, for adequate and sufficient consideration, Assignor and
Assignee agree as follows:
1. Assignment and Assumption. By this agreement, and effective as of
_______________, 199__ (the "EFFECTIVE DATE"), Assignor sells and assigns to
Assignee (without recourse to Assignor) and Assignee purchases and assumes from
Assignor a _____% interest (the "ASSIGNED INTEREST") in and to all of Assignor's
Rights and obligations under the Credit Agreement (except any Rights and
obligations pertaining to Assignor's role as Administrative Agent) as of the
Effective Date, including, without limitation, the Assigned Interest in (a)
Assignor's Commitment as of the Effective Date, (b) Notes held by Assignor as of
the Effective Date, (c) all Principal Debt owed to Assignor on the Effective
Date, (d) all interest accruing in respect of the Assigned Interest after the
Effective Date, and (e) all fees accruing in respect of the Assigned Interest
under SECTION 4 of the Credit Agreement after the Effective Date.
2. Assignor Provisions. Assignor (a) represents and warrants to
Assignee that as of the Effective Date (i) $____________ is outstanding (without
reduction for any assignments that have not yet become effective) under the
Credit Agreement, including $____________ under the Revolving Facility and
$______________ under the Term Loan, (ii) Assignor is the legal and beneficial
owner of the Assigned Interest, which is free and clear of any adverse claim,
and (iii) Assignor has not been notified of an existing Event of Default or
Potential Default, and (b) makes no representation or warranty to Assignee and
assumes no responsibility to Assignee with respect to (i) any statements,
warranties, or representations made in or in connection with any Credit
Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of any Credit Document, or (iii) the financial condition
of any Company or guarantor or the performance or observance by any Company or
guarantor of any of its obligations under any Credit Document.
3. Assignee Provisions. Assignee (a) represents and warrants to
Assignor, Borrower, and Administrative Agent that Assignee is legally authorized
to enter into this agreement, (b) confirms that it has received a copy of the
Credit Agreement, copies of the Current Financials, and such other documents and
information as it deems appropriate to make its own credit analysis and decision
to enter into this agreement, (c) agrees with Assignor, Borrower, and
Administrative Agent that Assignee shall -- independently and without reliance
upon Administrative Agent, Assignor, or any other Lender and based on such
documents and information as Assignee deems appropriate at the time -- continue
to make its own credit decisions in taking or not taking action under the Credit
Documents, (d) appoints and authorizes Administrative Agent to take such action
as Administrative Agent on its behalf and to exercise such powers under the
Credit Documents as are delegated to Administrative Agent by the terms of the
Credit Documents and all other reasonably-incidental powers, (e) agrees with
Assignor, Borrower, and Administrative Agent that Assignee shall perform and
comply with all provisions of the Credit Documents applicable to Lenders in
accordance with their respective terms, and (f) if Assignee is not organized
under the Governmental Requirements of the United States of America or one of
its states, it (i) represents and warrants to Assignor, Administrative Agent,
and Borrower that no Taxes
1
123
are required to be withheld by Assignor, Administrative Agent, or Borrower with
respect to any payments to be made to it in respect of the Obligation, and it
has furnished to Administrative Agent and Borrower two duly completed copies of
either U.S. Internal Revenue Service Form 4224, Form 1001, Form W-8, or any
other form acceptable to Administrative Agent that entitles Assignee to
exemption from U.S. federal withholding Tax on all interest payments under the
Credit Documents, (ii) covenants to provide Administrative Agent and Borrower a
new Form 4224, Form 1001, Form W-8, or other form acceptable to Administrative
Agent upon the expiration or obsolescence of any previously delivered form
according to applicable Governmental Requirements, duly executed and completed
by it, and to comply from time to time with all applicable Governmental
Requirements with regard to the withholding Tax exemption, and (iii) agrees with
Administrative Agent and Borrower that, if any of the foregoing is not true or
the applicable forms are not provided, then Administrative Agent and Borrower
(without duplication) may deduct and withhold from interest payments under the
Credit Documents any United States federal-income Tax at the full rate
applicable under the UCC.
4. Credit Agreement and Commitments. From and after the Effective Date
(a) Assignee shall be a party to the Credit Agreement and (to the extent
provided in this agreement) have the Rights and obligations of a Lender under
the Credit Documents and (b) Assignor shall (to the extent provided in this
agreement) relinquish its Rights and be released from its obligations under the
Credit Documents. On the Effective Date, after giving effect to this and certain
other assignment and assumption agreements that become effective on the
Effective Date, but without giving effect to any other assignments that have not
yet become effective, Assignor's total Commitment and Assignee's total
Commitment will be as follows:
================================================================================
LENDER REVOLVING
FACILITY TERM LOAN
--------------------------------------------------------------------------------
Assignor
--------------------------------------------------------------------------------
Assignee
================================================================================
5. Notes. Assignor and Assignee request Borrower to issue new Notes to
Assignor and Assignee in the amounts of their respective Commitments under
PARAGRAPH 4 above and otherwise issued in accordance with the Credit Agreement.
Within 30 days of the delivery of those Notes, Assignor shall return to Borrower
all original Notes previously delivered to Assignor under the Credit Agreement.
6. Payments and Adjustments. From and after the Effective Date,
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees, and other amounts) to
Assignee. Assignor and Assignee shall make all appropriate adjustments in
payments for periods before the Effective Date by Administrative Agent or with
respect to the making of this assignment directly between themselves. Assignor
agrees to apply any payments and proceeds with respect to the Obligation ratably
with Assignee.
7. Conditions Precedent. PARAGRAPHS 1 through 6 above are not effective
until counterparts of this agreement are executed and delivered by Assignor and
Assignee to -- and are executed in the spaces below by -- Borrower and
Administrative Agent.
8. Incorporated Provisions. Although this agreement is not a Credit
Document, the provisions of SECTIONS 1 and 14 of the Credit Agreement applicable
to Credit Documents are incorporated into this instrument by reference the same
as if this agreement were a Credit Document and those provisions were set forth
in this agreement verbatim.
9. Communications. For purposes of SECTION 14.2 of the Credit
Agreement, Assignee's address and telecopy number -- until changed under that
section -- are beside its signature below.
2
124
10. Amendments, Etc. No amendment, waiver, or discharge to or under
this agreement is valid unless in writing that is signed by the party against
whom it is sought to be enforced and is otherwise in conformity with the
requirements of the Credit Agreement.
11. ENTIRETY. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
ASSIGNOR AND ASSIGNEE ABOUT ITS SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF ASSIGNOR
AND ASSIGNEE. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN ASSIGNOR AND
ASSIGNEE.
12. Parties. This agreement binds and benefits Assignor, Assignee, and
their respective successors and assigns that are permitted under the Credit
Agreement.
EXECUTED as of ______________, 199__, and effective as of the date
first stated above.
_____________________________, ________________________________, as Assignee
as Assignor
By: By:
-------------------------- ------------------------------------------
Name: Name:
------------------------ ----------------------------------------
Title: Title:
----------------------- ---------------------------------------
(Address)
------------------------------------
---------------------------------------------
Attn:
----------------------------------------
(Telephone No.) (___) ___-____
As of the Effective Date, Administrative Agent and Borrower consent to
this agreement and the transactions contemplated in it.
BANK ONE, TEXAS, N.A., as Administrative Agent ULTRAK, INC., as Borrower
By: By:
---------------------------------- ---------------------------
Xxxx X. Xxxxxx, Vice President Name:
-------------------------
Title:
------------------------
3
