Exhibit 10.1
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of August 28, 1997
between
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
and
PIZZA INN, INC.
TABLE OF CONTENTS
Page
ARTICLE I - Definitions 1
Section 1.1 Definitions 1
Section 1.2 Other Definitional Provisions 14
ARTICLE II - Restructured Loans 14
Section 2.2 Commitment 14
Section 2.3 Revolving Credit Note 15
Section 2.4 Repayment of Advances 15
Section 2.5 Interest 15
Section 2.6 Borrowing Procedure 15
Section 2.7 Use of Proceeds 16
Section 2.8 Commitment Fee 16
Section 2.9 Reduction or Termination of Commitments 16
Section 2.10 Letters of Credit 16
ARTICLE III - Payments 19
Section 3.1 Method of Payment 19
Section 3.2 Voluntary Prepayment 19
Section 3.3 Mandatory Prepayment of Advances 20
Section 3.4 Withholding Taxes 20
Section 3.5 Computation of Interest 20
ARTICLE IV - Special Provisions Regarding Eurodollar Advances 20
Section 4.1 Conversions and Continuations 20
Section 4.2 Additional Costs 21
Section 4.3 Limitation on Types of Advances 22
Section 4.4 Illegality 23
Section 4.5 Treatment of Affected Advances 23
Section 4.6 Compensation 23
Section 4.7 Capital Adequacy 24
ARTICLE V - Security 24
Section 5.1 Collateral 24
Section 5.3 Setoff 25
ARTICLE VI - Conditions Precedent and Closing 26
Section 6.1 Renewal and Restructure 26
Section 6.2 New Advances 28
Section 6.3 Closing 28
ARTICLE VII - Representations and Warranties 29
Section 7.1 Corporate Existence 29
Section 7.2 Financial Statements 29
Section 7.3 Corporate Action; No Breach 29
Section 7.4 Operation of Business 30
Section 7.5 Litigation and Judgments 30
Section 7.6 Rights in Properties; Liens 30
Section 7.7 Enforceability 30
Section 7.8 Approvals 31
Section 7.9 Debt 31
Section 7.10 Taxes 31
Section 7.11 Use of Proceeds; Margin Securities 31
Section 7.12 ERISA 31
Section 7.13 Disclosure 31
Section 7.14 Subsidiaries 32
Section 7.15 Agreements 32
Section 7.16 Compliance with Laws 32
Section 7.17 Inventory 32
Section 7.18 Investment Company Act 32
Section 7.19 Public Utility Holding Company Act 32
Section 7.20 Environmental Matters 33
ARTICLE VIII - Positive Covenants 34
Section 8.1 Reporting Requirements 34
Section 8.2 Maintenance of Existence; Conduct of Business 36
Section 8.3 Maintenance of Properties 36
Section 8.4 Taxes and Claims 36
Section 8.5 Insurance 37
Section 8.6 Inspection Rights 37
Section 8.7 Keeping Books and Records 37
Section 8.8 Compliance with Laws 37
Section 8.9 Compliance with Agreements 37
Section 8.10 Further Assurances 37
Section 8.11 ERISA 37
ARTICLE IX - Negative Covenants 38
Section 9.1 Debt 38
Section 9.2 Limitation on Liens 38
Section 9.3 Mergers, Etc. 39
Section 9.4 Restricted Payments 40
Section 9.5 Investments 40
Section 9.6 Limitation on Issuance of Capital Stock 41
Section 9.7 Transactions With Affiliates 41
Section 9.8 Disposition of Assets 42
Section 9.9 Sale and Leaseback 42
Section 9.10 Prepayment of Debt 42
Section 9.11 Nature of Business 42
Section 9.12 Environmental Protection 42
Section 9.13 Accounting 43
ARTICLE X - Financial Covenants 43
Section 10.1 Current Ratio 43
Section 10.2 Leverage Ratio 43
ARTICLE XI - Default 44
Section 11.1 Events of Default 44
Section 11.2 Remedies 46
Section 11.3 Performance by the Bank 47
ARTICLE XII - Miscellaneous 47
Section 12.1 Expenses 47
SECTION 12.2 INDEMNIFICATION 48
Section 12.3 Limitation of Liability 48
Section 12.4 No Duty 49
Section 12.5 No Fiduciary Relationship 49
Section 12.6 Equitable Relief 49
Section 12.7 No Waiver; Cumulative Remedies 49
Section 12.8 Successors; Assignment 49
Section 12.10 Survival 50
Section 12.11 ENTIRE AGREEMENT. 50
Section 12.12 Amendments, Etc 50
Section 12.13 Maximum Interest Rate 50
Section 12.14 Notices 51
Section 12.15 Governing Law; Venue; Service of Process 51
Section 12.17 Counterparts 53
Section 12.18 Severability 53
Section 12.19 Headings 53
Section 12.20 Non-Application of Chapter 15 of Texas Credit Code 53
Section 12.21 Construction 54
Section 12.22 Independence of Covenants 54
Section 12.23 WAIVER OF JURY TRIAL 54
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement"), dated as of
August 28, 1997, is between PIZZA INN, INC., a corporation duly organized and
validly existing under the laws of the State of Missouri (the "Borrower"),
and XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, formerly known as First
Interstate Bank of Texas, N.A. (the "Bank").
R E C I T A L S:
WHEREAS, the Bank and The Provident Bank (collectively, the "Prior
Lenders"), and the Borrower have previously entered into the Prior Loan
Agreement (as defined herein); and
WHEREAS, the Bank acquired all of the rights and obligations of The
Provident Bank under the Prior Loan Agreement and became the sole lender
thereunder; and
WHEREAS, the Borrower has requested (a) that the existing principal
indebtedness under the Prior Loan Agreement in the approximate amount of
$6,900,000 be renewed, extended and restructured as a revolving credit loan in
an amount not to exceed Nine Million Five Hundred Thousand Dollars
($9,500,000) outstanding at any time, and (b) that the Prior Loan Agreement be
amended and restated in its entirety by entering into this Agreement; and
WHEREAS, the Borrower and the Bank are willing to consolidate, amend and
restate the Prior Loan Agreement in its entirety upon and subject to the
terms, conditions and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1 Definitions . As used in this Agreement, the following
terms have the following meanings:
"AAA" shall have the meaning set forth in Section 12.16 (b).
"Additional Costs" has the meaning specified in Section 4.2.
"Adjusted Eurodollar Rate" means, for any Eurodollar Advance for any
Interest Period, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined by the Bank to be equal to the quotient of (a)
the Eurodollar Rate for such Eurodollar Advance for such Interest Period
divided by (b) 1 minus the Reserve Requirement for such Eurodollar Advance for
such Interest Period.
"Advance" means the Existing Loans and any advance of funds by the Bank
to the Borrower pursuant to Article II and the Continuation or Conversion
thereof pursuant to the provisions hereof.
"Advance Request Form" means, a certificate, in substantially the form
of Exhibit "B" hereto, properly completed and signed by the Borrower
requesting an Advance.
"Affiliate" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, controls or is controlled
by, or is under common control with, such Person; (b) that directly or
indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Person in question. The term "control" means possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the Bank be
deemed an Affiliate of the Borrower or any of its Subsidiaries.
"Applicable Lending Office" means, for each Type of Advance, the
lending office of the Bank (or of an Affiliate of Bank) designated for such
Type of Advance below its name on the signature pages hereof or such other
office of Bank (or of an Affiliate of Bank) as Bank may from time to time
specify to the Borrower as the office by which its Advances of such Type are
to be made and maintained.
"Applicable Rate" means: (a) during the period that an Advance is a
Prime Rate Advance, the Prime Rate plus the Prime Rate Margin; and (b) during
the period that an Advance is a Eurodollar Advance, the Adjusted Eurodollar
Rate plus the Eurodollar Rate Margin.
"Assignment of Leases" means the Assignment of Leases and Rents dated
December 1, 1994 executed by the Borrower in favor of the Bank, as agent, for
the benefit of the Prior Lenders, together with all amendments, modifications
and renewals thereof.
"Authorized Officer" means the chief executive officer, the chief
operating officer, the chief financial officer, the controller or the
secretary of a corporation.
"Basle Accord" means, the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented
and otherwise modified and in effect from time to time, or any replacement
thereof.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in Dallas, Texas, and (b) with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and
notices in connection with Eurodollar Advances, any day which is a Business
Day described in clause (a) above and which is also a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Capital Expenditures" means expenditures of Borrower and the
Subsidiaries in respect of the purchase or other acquisition of fixed or
capital assets, less the amount of sale and leaseback transactions not
exceeding an aggregate of $600,000 in any twelve (12) month period.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations
are required to be classified and accounted for as a capital lease on a
balance sheet of such Person under GAAP. For purposes of this Agreement, the
amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Change of Control" means (a) the merger or consolidation of the
Borrower with any other corporation with the effect that the then existing
shareholders of the Borrower will hold less than fifty percent (50%) of the
total voting power of the surviving corporation, (b) the acquisition of at
least thirty-three and one-third percent (33 1/3%) of the voting power or
voting stock of the Borrower by any Person or related group of Persons other
than the executive officers of the Borrower, or (c) the sale, transfer, or
disposition of common stock by Mr. C. Xxxxxxx Xxxxxx such that his beneficial
interest in the Borrower falls below fifteen percent (15%) of the issued and
outstanding common stock of the Borrower.
"Closing Date" has the meaning specified in Section 6.3.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning specified in Section 5.1.
"Commitment" means the obligation of the Bank to make Advances
hereunder in an aggregate principal amount at any one time outstanding up to
but not exceeding Nine Million Five Hundred Thousand Dollars ($9,500,000), as
the same may be reduced pursuant to Section 2.8 or terminated pursuant to
Section 2.8 or 11.2.
"Consolidated Assets" means, at any particular time, all amounts which,
in conforming with the GAAP, would be included as assets on a consolidated
balance sheet of Borrower and the Subsidiaries.
"Consolidated Current Assets" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as current assets on
a consolidated balance sheet of the Borrower and the Subsidiaries, excluding
any prepaid expenses.
"Consolidated Current Liabilities" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as current
liabilities on a consolidated balance sheet of the Borrower and the
Subsidiaries.
"Consolidated Free Cash Flow" means, for any period, the aggregate
Consolidated Net Income calculated before federal income taxes, depreciation
and amortization but after deducting Capital Expenditures, any Federal income
taxes paid or payable in cash by the Borrower and any extraordinary gains of
the Borrower during the period in question; provided, however, that for the
purposes of determining the Eurodollar Rate Margin only, the amount of any
extraordinary losses during the period in question shall be added thereto.
"Consolidated Liabilities" means, at any particular time, all amounts
which, in conformity with GAAP, would be included as liabilities on a
consolidated balance sheet of the Borrower and the Subsidiaries.
"Consolidated Net Income" means, for any period, the aggregate net
income (or net loss) of the Borrower and the Subsidiaries on a consolidated
basis as determined in accordance with GAAP.
"Consolidated Net Worth" means, at any particular time, all amounts
which, in conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of the Borrower and the Subsidiaries; provided,
however, there shall be excluded therefrom: (a) any amount at which shares of
capital stock of the Borrower appear as an asset on the Borrower's balance
sheet, (b) loans and advances to any stockholder, director, officer, or
employee of the Borrower or any Affiliate of the Borrower, and (c) all assets
which are properly classified as intangible assets and are acquired subsequent
to June 26, 1994.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 4.1 of a Eurodollar Advance as a Eurodollar
Advance from one Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a
conversion pursuant to Article IV of one Type of Advance into another Type of
Advance.
"Current Ratio" means, at any particular time, the ratio of
Consolidated Current Assets to Consolidated Current Liabilities.
"Debt" means, as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than ninety (90)
days, (d) all Capital Lease Obligations of such Person, (e) all indebtedness
or other obligations of others Guaranteed by such Person, (f) all obligations
secured by a Lien existing on property owned by such Person, whether or not
the obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person, (g) all reimbursement obligations
of such Person (whether contingent or otherwise) in respect of letters of
credit, bankers' acceptances, surety or other bonds and similar instruments,
and (h) all liabilities of such Person in respect of unfunded vested benefits
under any Plan.
"Deed of Trust" means the Deed of Trust and Security Agreement dated
December 1, 1994, executed by the Borrower in favor of the Bank, as Agent
under the Prior Loan Agreement, for the benefit of the Prior Lenders, pursuant
to which Borrower has previously granted a Lien on the Real Property, together
with all amendments, modifications and renewals thereof.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means the lesser of (i) the Maximum Rate or (ii) the sum
of the Prime Rate in effect from day to day plus three and twenty-five one
hundredths percent (3.25%).
"Dispute" shall have the meaning set forth in Section 12.16(a).
"Dollars" and "$" mean lawful money of the United States of America.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq.,
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et
seq., the Clean Air Act, 42 U.S.C. 7401 et seq., the Clean Water Act, 33
U.S.C. 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C.
2601 et seq., as such laws, regulations, and requirements may be amended or
supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses
(including, without limitation, all reasonable fees, disbursements and
expenses of counsel, expert and consulting fees and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order or agreement with any
Governmental Authority or other Person, arising from environmental, health or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment, resulting from the past, present, or future operations
of such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Eurodollar Advances" means Advances the interest rates on which are
determined on the basis of the rates referred to in the definition of
"Adjusted Eurodollar Rate" in this Section 1.1.
"Eurodollar Rate" means, for any Eurodollar Advance for any Interest
Period, the rate per annum quoted by the Reference Bank at approximately 11:00
A.M. London time (or as soon thereafter as practicable) two Business Days
prior to the first day of such Interest Period for the offering by the
Reference Bank to leading banks in the London interbank market of Dollar
deposits in immediately available funds having a term comparable to such
Interest Period and in an amount comparable to the principal amount of the
Eurodollar Advance to be made by the Reference Bank to which such Interest
Period relates.
"Eurodollar Rate Margin" means, at such times and from time to time as
the relevant Funded Debt Ratio is in one of the following ranges, the
percentage per annum set forth opposite such Funded Debt Ratio:
Funded Debt Ratio Percentage
Less than 2.0 to 1.0 1.25%
2.0 to 1.0 or greater and less
than 2.5 to 1.0 1.50%
2.5 to 1.0 or greater and less
than 3.0 to 1.0 1.75%
3.0 to 1.0 or greater and less
than 3.5 to 1.0 2.00%
3.5 to 1.0 or greater 2.25%
The Borrower shall give written notice to the Bank of any changes in the
Funded Debt Ratio as of the end of any fiscal quarter which results in a
change to the Eurodollar Rate Margin concurrently with its delivery of the
items required under Section 8.1(c) hereof, and any change to the Eurodollar
Rate Margin shall be effective with respect to any Interest Period commencing
after the Bank has received such information.
"Event of Default" has the meaning specified in Section 11.1.
"Existing Letter of Credit" means the existing letter of credit with a
face amount of $230,000 issued by the Bank to Northwestern National Insurance
Company for the account of the Borrower pursuant to the Prior Loan Agreement.
"Existing Loans" means the existing revolving credit and term loans
provided by the Bank to the Borrower pursuant to the Prior Loan Agreement.
"Facility Fee" means $25,000.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on federal funds transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if such rate is not
so published on such next succeeding Business Day, the Federal Funds Rate for
any day shall be the average rate charged to Xxxxx Fargo Bank (Texas),
National Association on such day on federal funds transactions as determined
by the Bank.
"Fixed Charge Coverage Ratio" means, at any time, the quotient
determined by dividing (a) the sum of Consolidated Free Cash Flow plus
interest expenses of the Borrower and the Subsidiaries for the preceding
twelve (12) calendar months by (b) the sum of (i) all scheduled payments on
all Long Term Debt of the Borrower and the Subsidiaries and all scheduled
payments under Capital Lease Obligations of the Borrower and the Subsidiaries
during the preceding twelve (12) calendar months plus (ii) interest expenses
of the Borrower and the Subsidiaries for the preceding twelve (12) calendar
months.
"Foreign Subsidiaries" means PIBCO, Ltd., a Bermuda corporation, Pizza
Inn of South Africa, a South Africa corporation, and Pizza Inn Servicos De
Gestao De Franchising Lda., a Madeira, Portugal corporation, collectively.
"Funded Debt Ratio" means, at any time, the quotient determined by
dividing (a) the sum of all Debt for borrowed money and Capital Lease
Obligations of the Borrower and the Subsidiaries by (b) the Consolidated Free
Cash Flow for the preceding twelve (12) complete calendar months less the
amount of any purchases by the Borrower of its common stock in excess of
$800,000 during said period.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against loss in
respect thereof (in whole or in part), provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Guarantors" means all existing Subsidiaries (other than the Foreign
Subsidiaries) and any future Subsidiaries which become a party to the
Guaranty.
"Guaranty" means the Amended and Restated Guaranty of Guarantors in
favor of the Bank, in substantially the form of Exhibit F hereto, as the same
may be amended, supplemented or modified from time to time.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law,
including, without limitation, asbestos, petroleum, and polychlorinated
biphenyls.
"Interest Period" means the period commencing, with respect to any
Eurodollar Advances, on the date such Eurodollar Advances are made or
Converted from Advances of another Type or, in the case of each subsequent,
successive Interest Period applicable to a Eurodollar Advance, the last day of
the next preceding Interest Period with respect to such Advance, and ending on
the numerically corresponding day in the first, third or sixth calendar month
thereafter, as the Borrower may select as provided in Sections 2.5 or 4.1
hereof, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day or, if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day; (b) any
Interest Period which would otherwise extend beyond the Termination Date shall
end on the Termination Date; and (c) no more than three (3) Interest Periods
shall be in effect at the same time.
"Letter of Credit" means the existing Letter of Credit and any letter
of credit issued by the Bank for the account of the Borrower pursuant to
Section 2.10(a).
"Letter of Credit Disbursement" means a disbursement by the Bank to the
beneficiary of a Letter of Credit in connection with a drawing thereunder.
"Letter of Credit Liabilities" means, at any time, the aggregate face
amount of all outstanding Letters of Credit.
"Letter of Credit Request Form" means a certificate, substantially in
the form of Exhibit "E" hereto, properly completed and signed by the Borrower
requesting issuance of a Letter of Credit.
"Leverage Ratio" means, at any particular time, the ratio of
Consolidated Liabilities to Consolidated Net Worth.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
charge, hypothecation, assignment, preference, priority, or other encumbrance
of any kind or nature whatsoever (including, without limitation, any
conditional sale or title retention agreement), whether arising by contract,
operation of law, or otherwise.
"Loan Documents" means this Agreement, the Revolving Credit Note, the
Security Documents, the Guaranty, and all promissory notes, security
agreements, deeds of trust, assignments, guaranties, and other instruments,
documents, and agreements executed and delivered pursuant to or in connection
with this Agreement, as such instruments, documents, and agreements may be
amended, modified, renewed, extended, or supplemented from time to time.
"Long Term Debt" means any Debt for borrowed money which will not
mature or become due within the next twelve (12) months.
"Maximum Rate" means the maximum rate of interest under applicable law
that the Bank may charge the Borrower. The Maximum Rate shall be calculated
in a manner that takes into account any and all fees, payments, and other
charges in respect of the Loan Documents that constitute interest under
applicable law. Each change in any interest rate provided for herein based
upon the Maximum Rate resulting from a change in the Maximum Rate shall take
effect without notice to the Borrower at the time of such change in the
Maximum Rate. For purposes of determining the Maximum Rate under Texas law,
the applicable rate ceiling shall be the indicated rate ceiling described in,
and computed in accordance with, Article 5069-1.04, Vernon's Texas Civil
Statutes.
"Monthly Payment Date" means the last Business Day of each calendar
month of each year, the first of which shall be the first such day after the
Closing Date.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Obligated Party" means each Guarantor and any other Person who is or
becomes a party to any agreement that guarantees or secures payment and
performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities of
the Borrower to the Bank arising pursuant to any of the Loan Documents, now
existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligations, indebtedness, and
liabilities of the Borrower under this Agreement and the other Loan Documents,
and all interest accruing thereon and all attorneys' fees and other expenses
incurred in the enforcement or collection thereof.
"Operating Lease" means any lease (other than a lease constituting a
Capital Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and which is covered by
Title IV of ERISA.
"Pledged Shares" means all shares of stock of the Subsidiaries, owned
or to be owned by the Borrower or any of the Subsidiaries, and all dividends,
cash, stock dividends, instruments and other property from time to time
received, receivable by, or otherwise distributed to, the Borrower or any
Subsidiary for its account in respect of or in exchange for any or all of such
shares.
"Prime Rate" means, at any time, the rate of interest per annum then
most recently established by Xxxxx Fargo Bank (Texas), National Association as
its prime rate, which rate may not necessarily be the lowest rate of interest
charged by Xxxxx Fargo Bank (Texas), National Association to its borrowers.
Each change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect without notice to
the Borrower at the time of such change in the Prime Rate.
"Prime Rate Advances" means Advances that bear interest at rates based
upon the Prime Rate.
"Prime Rate Margin" means, at any time, the following percentage
determined by reference to the Funded Debt Ratio then existing:
Funded Debt Ratio Percentage
Less than 2.0 to 1.0 -1.00%
2.0 to 1.0 or greater and less than 2.5 to 1.0 -0.75%
2.5 to 1.0 or greater and less than 3.0 to 1.0 -0.50%
3.0 to 1.0 or greater and less than 3.5 to 1.0 -0.25%
3.5 to 1.0 or greater 0.00%
"Principal Office" means the Dallas office of the Bank, presently
located at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx.
"Prior Lenders" is defined in the recitals to this Agreement.
"Prior Loan Agreement" means that certain Loan Agreement dated December
1, 1994, among the Borrower and the Prior Lenders, as amended by (i) that
certain First Amendment to Loan Agreement dated Xxxxx 00, 0000, (xx) that
certain Second Amendment to Loan Agreement dated November 30, 1995, (iii) that
certain Third Amendment to Loan Agreement dated June 28, 1996 and (iv) that
certain Fourth Amendment to Loan Agreement dated April 1, 1997.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"Quarterly Payment Date" means the last day of each February, May,
August and November of each year, the first of which shall be the first such
day after the Closing Date.
"Real Property" means the real property and interests in real property
identified on Schedule 1 attached hereto and all improvements and fixtures
thereon and all appurtenances thereto.
"Reference Bank" means Xxxxx Fargo Bank (Texas), National Association.
If for any reason Xxxxx Fargo Bank (Texas), National Association shall no
longer participate in the Eurodollar market, then "Reference Bank" shall
thereafter mean such financial institution as the Bank may from time to time
specify to the Borrower.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means any change after the date of this Agreement
in United States federal, state, or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any
interpretations, directives, or requests applying to a class of banks
including the Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or
into or out of property owned by such Person, including, without limitation,
the movement of Hazardous Materials through or in the air, soil, surface
water, ground water, or property.
"Remedial Action" means all actions required to (a) clean up, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Reserve Requirement" means, for any Eurodollar Advance for any Interest
Period, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding one billion Dollars against
"Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect
any other reserves required to be maintained by such member banks by reason of
any Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets which
include Eurodollar Advances.
"Revolving Credit Note" means the promissory note executed by the
Borrower payable to the order of the Bank in the aggregate principal amount of
Nine Million Five Hundred Thousand Dollars ($9,500,000), in substantially the
form of Exhibit "A" hereto, representing the renewal, extension and
restructure of the Existing Loans and any additional Advances hereunder,
together with all amendments, modifications, and renewals thereof.
"RICO" means the Racketeer Influenced and Corrupt Organization Act of
1970, as amended from time to time.
"Security Agreement" means the Security Agreement dated December 1,
1994, executed by the Borrower and the Guarantors in favor of the Bank, as
Agent under the Prior Loan Agreement, pursuant to which Borrower and
Guarantors have previously granted a Lien on the Collateral described therein,
together with all amendments, modifications and renewals thereof.
"Security Documents" means, collectively, the Assignment of Leases, the
Deed of Trust, the Security Agreement, the Trademark Security Interest
Document, and all other mortgages, deeds of trust, security agreements,
assignments, financing statements, and other documents securing the
Obligations.
"Subsidiary" means any corporation of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power
to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned
or controlled by the Borrower or one or more of the Subsidiaries or by the
Borrower and one or more of the Subsidiaries.
"Termination Date" means 10:00 A.M. Dallas, Texas time on August 30,
1999, or such earlier date and time on which the Commitment terminates as
provided in this Agreement; provided, however, if such date is not a Business
Day, the "Termination Date" shall be the first Business Day following such
date.
"Trademark Security Interest Document" means the Trademark Security
Interest Document dated December 1, 1994, previously executed by the Borrower
in favor of the Bank, as Agent under the Prior Loan Agreement, pursuant to
which Borrower has previously granted a Lien on the Collateral described
therein, together with all amendments, modifications and renewals thereof.
"Type" means a type of Advance consisting of either a Prime Rate
Advance or a Eurodollar Advance.
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Section 2 Other Definitional Provisions . All definitions contained
in this Agreement are equally applicable to the singular and plural forms of
the terms defined. The words "hereof," "herein," and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II
Restructured Loans
Section 1 Renewal and Restructure of Existing 4oans. The aggregate
unpaid principal balance of the Existing Loans as of the date hereof is
$6,685,252.29. Subject to the terms and conditions of this Agreement, the
Bank hereby agrees to renew, extend and restructure the Existing Loans as part
of a revolving credit loan which shall be evidenced by the Revolving Credit
Note.
Section 2 Commitment . Subject to the terms and conditions of this
Agreement, the Bank agrees to make one or more additional Advances to the
Borrower from time to time from the Closing Date to and including the
Termination Date, provided that the aggregate amount of all Advances
(including the Existing Loans) at any time outstanding shall not exceed the
amount of the Commitment minus the Letter of Credit Liabilities. Subject to
the foregoing limitations, and the other terms and provisions of this
Agreement, the Borrower may borrow, repay, and reborrow hereunder the amount
of the Commitment by means of Prime Rate Advances and Eurodollar Advances and,
until the Termination Date, the Borrower may Convert Advances of one Type into
Advances of another Type. Advances of each Type made by the Bank shall be
made and maintained at the Bank's Applicable Lending Office for Advances of
such Type.
Section 3 Revolving Credit Note . The obligation of the Borrower to
repay the Bank for Advances and interest thereon shall be evidenced by the
Revolving Credit Note. The Revolving Credit Note shall be executed by the
Borrower, payable to the order of Bank, in the principal amount equal to the
Commitment as originally in effect, and dated the Closing Date.
Section 4 Repayment of Advances . The Borrower shall repay the
unpaid principal amount of all Advances on the Termination Date.
Section 5 Interest . The unpaid principal amount of the Advances
shall bear interest at a varying rate per annum equal from day to day to the
lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at any time
the Applicable Rate for any Advance shall exceed the Maximum Rate, thereby
causing the interest accruing on such Advance to be limited to the Maximum
Rate, then any subsequent reduction in the Applicable Rate for such Advance
shall not reduce the rate of interest on such Advance below the Maximum Rate
until the aggregate amount of interest accrued on such Advance equals the
aggregate amount of interest which would have accrued on such Advance if the
Applicable Rate had at all times been in effect. Accrued and unpaid interest
on the Advances shall be due and payable as follows:
(i) in the case of all Prime Rate Advances, on each Monthly Payment Date;
(ii) in the case of all Eurodollar Advances, on the last day of each
Interest Period applicable thereto, and with respect to any Interest Period
exceeding three (3) months, on the last day of the third month after
the commencement of such Interest Period; and
(iii) on the Termination Date.
Notwithstanding the foregoing, all outstanding principal of all Advances and
(to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due (whether at stated maturity, by acceleration, or otherwise)
shall bear interest at the Default Rate for the period from and including the
due date thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand.
Section 6 Borrowing Procedure . The Borrower shall give the Bank
notice by means of an Advance Request Form of each requested Advance at least
one (1) Business Day before the requested date of each Prime Rate Advance and
at least three (3) Business Days before the requested date of each Eurodollar
Advance, specifying: (a) the requested date of such Advance (which shall be
a Business Day), (b) the amount of such Advance, (c) the Type of the Advance,
and (d) in the case of a Eurodollar Advance, the duration of the Interest
Period for such Advance. The Bank at its option may accept telephonic
requests for Advances, provided that such acceptance shall not constitute a
waiver of the Bank's right to delivery of an Advance Request Form in
connection with subsequent Advances. Any telephonic request for an Advance by
the Borrower shall be promptly confirmed by submission of a properly completed
Advance Request Form to the Bank. Each Eurodollar Advance shall be in the
minimum amount of Fifty Thousand Dollars ($50,000) or an integral multiple
thereof. Not later than 1:00 p.m. Dallas, Texas time on the date specified
for each Advance hereunder, and subject to the other terms and conditions of
this Agreement, the Bank will make each Advance available to the Borrower by
depositing the same, in immediately available funds, in an account of the
Borrower (designated by the Borrower) maintained with the Bank at the
Principal Office. All notices by the Borrower under this Section shall be
irrevocable and shall be given not later than 10:00 A.M. Dallas, Texas, time
on the day which is not less than the number of Business Days specified above
for such notice. No more than three (3) Interest Periods shall be in effect
at the same time.
Section 7 Use of Proceeds . The proceeds of Advances shall be used
by the Borrower and the Subsidiaries for working capital in the ordinary
course of business and general corporate purposes.
Section 8 Commitment Fee . The Borrower agrees to pay to the Bank a
Commitment Fee (herein so called) on the daily average unused amount of the
Commitment, for the period from and including the date of this Agreement to
and including the Termination Date, at the rate of one-half of one percent
(1/2%) per annum based on a 360 day year and the actual number of days
elapsed; provided, however, that if at any time the Funded Debt Ratio is less
than 3.0 to 1.0, such rate shall be reduced to three-eighths of one percent
(3/8%) per annum. The accrued Commitment Fee shall be payable in arrears on
each Quarterly Payment Date and on the Termination Date. For the purpose of
calculating the Commitment Fee, the Commitment shall be deemed utilized to the
extent of all outstanding Advances and Letter of Credit Liabilities.
Section 9 Reduction or Termination of Commitments . The Borrower
shall have the right to terminate in whole or reduce in part the unused
portion of the Commitment upon at least two (2) Business Days' prior notice
(which notice shall be irrevocable) to the Bank specifying the effective date
thereof, whether a termination or reduction is being made, and the amount of
any partial reduction, provided that each partial reduction shall be in the
amount of One Hundred Thousand Dollars ($100,000) or an integral multiple of
$50,000 in excess thereof and the Borrower shall simultaneously prepay the
amount by which the unpaid principal amount of the Advances exceeds the
Commitment (after giving effect to such notice) plus accrued and unpaid
interest on the principal amount so prepaid. The Commitment may not be
reinstated after it has been terminated or reduced.
Section 10 Letters of Credit .
(a) Pursuant to the Prior Loan Agreement, the Bank has issued the
Existing Letter of Credit. Subject to the terms and conditions of this
Agreement, the Bank agrees to issue one or more additional Letters of Credit
for the account of the Borrower from time to time from the date hereof to and
including the Termination Date; provided, however, the outstanding Letter of
Credit Liabilities (including the face amount of the Existing Letter of
Credit) shall not at any time exceed an amount equal to the aggregate amount
of the Commitment minus the outstanding Advances. Each Letter of Credit shall
have an initial expiration date not to exceed 365 days from the date of
issuance, shall not have an expiration date beyond the Termination Date, shall
be payable in Dollars, shall be satisfactory in form and substance to the Bank
and shall be issued pursuant to such documents and instruments consistent with
this Agreement (including, without limitation, the Bank's standard application
for issuance of letters of credit as then in effect) as the Bank may
reasonably require. Each Letter of Credit shall be issued on at least five
(5) Business Days prior notice from the Borrower to the Bank by means of a
Letter of Credit Request Form describing the transaction proposed to be
supported thereby and specifying (1) the requested date of issuance (which
shall be a Business Day), (2) the face amount of the Letter of Credit, (3) the
expiration date of the Letter of Credit, (4) the name and address of the
beneficiary, (5) the conditions permitting the drawing or drawings thereunder
and (6) the form of the draft and any other documents required to be presented
at the time of any drawing (such request to set forth the exact wording of
such documents or to attach copies thereof). Upon fulfillment of the
applicable conditions precedent in this Section 2.10(a), the Bank shall make
the applicable Letter of Credit available to the Borrower or, if so requested
by the Borrower, to the beneficiary of the Letter of Credit.
(B) Each Letter of Credit Disbursement shall constitute and be deemed an
Advance (which shall initially be a Prime Rate Advance) by the Bank to the
Borrower as of the day and time such Letter of Credit Disbursement is made by
the Bank and in the amount of such Letter of Credit Disbursement. The
Borrower shall pay to the Bank a letter of credit fee on the outstanding face
amount of each Letter of Credit, for the period from and including the date of
issuance of such Letter of Credit to the date of its expiration or
termination, at a per annum rate equal to the applicable Eurodollar Rate
Margin based on a 360 day year and the actual number of days elapsed. The
accrued letter of credit fee shall be payable in arrears on each Quarterly
Payment Date and on the Termination Date.
(c) The obligations of the Borrower to reimburse the Bank for drawings
under each Letter of Credit shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and the other Loan Documents under all circumstances whatsoever, including
without limitation the following circumstances:
(i) Any lack of validity or enforceability of any Letter of Credit or
any other Loan Document;
(ii) Any amendment or waiver of or any consent to departure from any Loan
Documents;
(iii) The existence of any claim, setoff, counterclaim, defense or other
rights which Borrower, any Obligated Party, or any other Person may have at
any time against the beneficiary of any Letter of Credit, the Bank or any
other Person, whether in connection with this Agreement or any other Loan
Documents or any unrelated transaction;
(iv) Any statement, draft, or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid, or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(v) Payment by the Bank under any Letter of Credit against presentation
of a draft or other document which does not comply with the terms of such
Letter of Credit; or
(vi) Any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(d) he Borrower assumes all risk of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of any Letter of
Credit. Neither the Bank nor any of its affiliates, correspondents, officers
or directors shall have any responsibility or liability to the Borrower or any
Person for (i) any error, loss, omission, interruption or delay in
transmission, dispatch or delivery of any one or more messages or advices in
connection with any Letter of Credit, whether transmitted by cable, radio,
telegraph, mail or otherwise and despite any cipher or code which may be
employed, or (ii) any action, inaction or omission which may be taken or
suffered by it or them in good faith or through inadvertence in identifying or
failing to identify any beneficiary(ies) or otherwise in connection with any
Letter of Credit, or (iii) the validity, sufficiency or genuineness of
documents even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged, or (iv) any act, error,
neglect or default, omission, insolvency or failure in business of any of the
Bank's correspondents, or (v) any failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to draw upon such
Letter of Credit, or (vi) if any Letter of Credit is transferrable, the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason, or (vii) errors in interpretation
of technical terms, or (viii) any consequences arising from causes beyond the
control of the Bank. The happening of any one or more of the contingencies
referred to in the preceding sentence shall not affect, impair or prevent the
vesting of any of the Bank's rights or powers hereunder. If any Letter of
Credit (or any Loan Document executed in connection with a Letter of Credit)
shall be terminated or revoked by operation of law as to the Borrower or any
applicant under any Letter of Credit, or if the payment of any Letter of
Credit shall be restrained or attempted to be restrained by court order or any
other means, Borrower will indemnify and save the Bank harmless from any and
all loss, cost, damage, expense and attorneys' fees which may be suffered or
incurred by such Person. In furtherance and extension and not in limitation
of the specific provisions set forth above, any action taken or omitted by the
Bank under or in connection with any Letter of Credit, if taken or omitted in
good faith, shall not put the Bank under any resulting liability to the
Borrower or any other Person. The Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
ARTICLE III
Payments
Section 1 Method of Payment . All payments of principal, interest,
and other amounts to be made by the Borrower under this Agreement and the
other Loan Documents shall be made to the Bank at the Principal Office in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim, not later than 10:00 A.M., Dallas, Texas time on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day). The Borrower shall, at the time of making each such payment, specify to
the Bank the sums payable by the Borrower under this Agreement and the other
Loan Documents to which such payment is to be applied (and in the event that
the Borrower fails to so specify, or if an Event of Default has occurred and
is continuing, the Bank may apply such payment to the Obligations in such
order and manner as it may elect in its sole discretion, subject to Sections
3.2, 3.3 and 3.4 hereof). Whenever any payment under this Agreement or any
other Loan Document shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest and commitment fee, as the case may be.
Section 2 Voluntary Prepayment . The Borrower may, upon at least two
(2) Business Days' prior notice to the Bank, voluntarily prepay the Advances
in whole at any time or from time to time in part without premium or penalty
but with accrued interest to the date of prepayment on the amount so prepaid,
provided that (a) prepayment of Eurodollar Advances may give rise to a claim
by the Bank for compensation under Section 4.6, and (b) each partial
prepayment shall be in the principal amount of One Hundred Thousand Dollars
($100,000) or an integral multiple of Fifty Thousand Dollars ($50,000) in
excess of One Hundred Thousand Dollars ($100,000). All notices under this
Section shall be irrevocable and shall be given not later than 10:00 A.M.
Dallas, Texas, time on the day which is not less than the number of Business
Days specified above for such notice. If the Borrower fails to specify the
application of prepayments, prepayments shall be applied first to Prime Rate
Advances and then to Eurodollar Advances.
Section 3 Mandatory Prepayment of Advances . If at any time the
outstanding principal amount of all Advances exceeds the Commitment, the
Borrower shall prepay the amount of excess plus accrued and unpaid interest on
the amount so prepaid. Any such mandatory prepayments shall be applied first
to Prime Rate Advances and then to Eurodollar Advances.
Section 4 Withholding Taxes . All payments by the Borrower of
principal of and interest on the Advances and of all fees and other amounts
payable under any Loan Document are payable without deduction for or on
account of any present or future taxes, duties or other charges levied or
imposed by the United States of America or by any political subdivision or
taxing authority of or in any of the foregoing through withholding or
deduction with respect to any such payments. If any such taxes, duties or
other charges are so levied or imposed, the Borrower will pay additional
interest or will make additional payments in such amounts so that every net
payment of principal of and interest on the Advances and of all other amounts
payable by it under any Loan Document, after withholding or deduction for or
on account of any such present or future taxes, duties or other charges, will
not be less than the amount provided for herein or therein, provided that the
Borrower shall have no obligation to pay such additional amounts to the Bank
to the extent that such taxes, duties, or other charges are imposed on or
measured by the net income of the Bank by any jurisdiction. The Borrower
shall furnish promptly to the Bank official receipts evidencing any such
withholding or reduction.
Section 5 Computation of Interest . Interest on the Advances and all
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 365 days and the actual number of days elapsed (including the
first day but excluding the last day), except that interest on the Eurodollar
Advances shall be computed on the basis of a year of 360 days.
ARTICLE IV
Special Provisions Regarding Eurodollar Advances
Section 1 Conversions and Continuations . The Borrower shall have
the right from time to time to Convert all (but not less than all) of an
Advance of one Type into an Advance of another Type or to Continue Eurodollar
Advances as Eurodollar Advances by giving the Bank written notice at least one
(1) Business Day before Conversion into a Prime Rate Advance and at least
three (3) Business Days before Conversion into or Continuation of a Eurodollar
Advance, specifying: (a) the Conversion or Continuation date, (b) the amount
of the Advance to be Converted or Continued, (c) in the case of Conversions,
the Type of Advance to be Converted into, and (d) in the case of a
Continuation of or Conversion into a Eurodollar Advance, the duration of the
Interest Period applicable thereto; provided that (i) except for Conversions
into Prime Rate Advances, no Conversions shall be made while a Default has
occurred and is continuing, and (ii) no more than three (3) Interest Periods
shall be in effect at the same time. All notices by the Borrower under this
Section shall be irrevocable and shall be given to the Bank not later than
10:00 A.M. Dallas, Texas time on the day which is not less than the number of
Business Days specified above for such notice. If the Borrower shall fail to
give the Bank the notice as specified above for Continuation or Conversion of
a Eurodollar Advance prior to the end of the Interest Period with respect
thereto, such Eurodollar Advance shall be Converted automatically into a Prime
Rate Advance on the last day of the then current Interest Period for such
Eurodollar Advance.
Section 2 Additional Costs .
(a) The Borrower shall pay directly to the Bank from time to time such
amounts as the Bank may determine to be necessary to compensate it for any
costs incurred by the Bank which the Bank reasonably determines are
attributable to its making or maintaining of any Eurodollar Advances hereunder
or its obligation to make any of such Advances hereunder, or any reduction in
any amount receivable by the Bank hereunder in respect of any such Advances or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), resulting from any Regulatory
Change which:
(i) changes the basis of taxation of any amounts payable to the Bank
under this Agreement or the Revolving Credit Note in respect of any of such
Advances (other than taxes imposed on the overall net income of the Bank or
its Applicable Lending Office for any of such Advances by the jurisdiction in
which the Bank has its principal office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum capital,
capital ratio, or similar requirement relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or commitments of,
the Bank (including any of such Advances or any deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof); or
(iii) imposes any other condition affecting this Agreement or the Notes or
any of such extensions of credit or liabilities or commitments.
The Bank will notify the Borrower of any event occurring after the date of
this Agreement which will entitle the Bank to compensation pursuant to this
Article IV as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation (provided that any claim by the Bank
for compensation pursuant to this Article IV shall be made within ninety (90)
days after the initial occurrence of the event giving rise to such claim), and
will designate a different Applicable Lending Office for the Advances affected
by such event if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole opinion of the Bank,
violate any law, rule, or regulation or be in any way disadvantageous to the
Bank, provided that the Bank shall have no obligation to so designate an
Applicable Lending Office located in the United States of America. The Bank
will furnish the Borrower with a certificate setting forth the basis and the
amount of each request of the Bank for compensation under this Section 4.2(a).
If the Bank requests compensation from the Borrower under this Section
4.2(a), the Borrower may, by notice to the Bank suspend the obligation of the
Bank to make or Continue making, or Convert Advances into, Advances of the
Type with respect to which such compensation is requested until the Regulatory
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 4.5 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 4.2, in the event that, by reason of any Regulatory Change, the Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities
of the Bank which includes deposits by reference to which the interest rate on
Eurodollar Advances is determined as provided in this Agreement or a category
of extensions of credit or other assets of the Bank which includes Eurodollar
Advances or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Bank so
elects by notice to the Borrower, the obligation of the Bank to make or
Continue making, or Convert Advances into, Advances of such Type hereunder
shall be suspended until such Regulatory Change ceases to be in effect (in
which case the provisions of Section 4.5 hereof shall be applicable).
(c) Determinations and allocations by the Bank for purposes of this
Section 4.2 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Advances or of making or maintaining Advances or on
amounts receivable by it in respect of Advances, and of the additional amounts
required to compensate the Bank in respect of any Additional Costs, shall be
conclusive, provided that such determinations and allocations are made in good
faith and on a reasonable basis and without duplication of the Reserve
Requirement.
Section 3 Limitation on Types of Advances . Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Advances for any
Interest Period therefor, the Bank determines (which determination shall be
conclusive if made in good faith) that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Rate" in
Section 1.1 hereof are not being provided in the relative amounts or for the
relative maturities for purposes of determining the rate of interest for such
Advances as provided in this Agreement, then the Bank shall give the Borrower
prompt notice thereof specifying the relevant amounts or periods, and so long
as such condition remains in effect, the Bank shall be under no obligation to
make additional Eurodollar Advances or to Convert Prime Rate Advances into
Eurodollar Advances and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Eurodollar Advances, either
prepay such Eurodollar Advances or Convert such Eurodollar Advances into Prime
Rate Advances in accordance with the terms of this Agreement. The Bank shall
be deemed to have acted in good faith under this Section 4.3 if the Bank is
giving notice to its customers generally of the occurrence of either of the
conditions specified in this Section 4.3.
Section 4 Illegality . Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Bank or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar
Advances hereunder or (b) maintain Eurodollar Advances hereunder, then the
Bank shall promptly notify the Borrower thereof and the Bank's obligation to
make or maintain Eurodollar Advances and to Convert Prime Rate Advances into
Eurodollar Advances hereunder shall be suspended until such time as the Bank
may again make and maintain Eurodollar Advances (in which case the provisions
of Section 4.5 hereof shall be applicable).
Section 5 Treatment of Affected Advances . If the Eurodollar
Advances of the Bank (such Eurodollar Advances being hereinafter called
"Affected Advances") are to be Converted pursuant to Section 4.2 or 4.4
hereof, the Bank's Affected Advances shall be automatically Converted into
Prime Rate Advances on the last day(s) of the then current Interest Period(s)
for the Affected Advances (or, in the case of a Conversion required by Section
4.2(b) or 4.4 hereof, on such earlier date as the Bank may specify to the
Borrower), and, unless and until the Bank gives notice as provided below that
the circumstances specified in Section 4.2 or 4.4 hereof which gave rise to
such Conversion no longer exist:
(a) To the extent that the Bank's Affected Advances have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to the Bank's Affected Advances shall be applied instead to its Prime
Rate Advances; and
(b) All Advances which would otherwise be made or Continued by the Bank
as Eurodollar Advances shall be made as or Converted into Prime Rate Advances
and all Advances of the Bank which would otherwise be Converted into
Eurodollar Advances shall remain as Prime Rate Advances.
Section 6 Compensation . The Borrower shall pay to the Bank, upon
the request of the Bank, which request shall be made within one hundred eighty
(180) days after the occurrence of any event specified in subsection (a) or
(b) below, such amount or amounts as shall be sufficient (in the reasonable
opinion of the Bank) to compensate it for any loss, cost, or expense incurred
by it as a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Advance for
any reason (including, without limitation, the acceleration of the outstanding
Advances pursuant to Section 11.2) on a date other than the last day of an
Interest Period for such Eurodollar Advance; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article VI to
be satisfied) to borrow, Convert, or prepay a Eurodollar Advance on the date
for such borrowing, Conversion, or prepayment, specified in the relevant
notice of borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or
Converted or not borrowed for the period from the date of such payment,
Conversion, or failure to borrow to the last day of the Interest Period for
such Eurodollar Advance (or, in the case of a failure to borrow, the Interest
Period for such Eurodollar Advance which would have commenced on the date
specified for such borrowing) at the applicable rate of interest for such
Eurodollar Advance provided for herein minus (ii) the interest component of
the amount the Bank would have bid in the London interbank market.
Section 7 Capital Adequacy . If, after the date hereof, the Bank
shall have determined in good faith that the adoption or implementation of any
applicable law, rule, or regulation regarding capital adequacy (including,
without limitation, any law, rule, or regulation implementing the Basle
Accord), or any change therein, or any change in the interpretation or
administration thereof by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or compliance by
the Bank (or its parent) with any guideline, request, or directive regarding
capital adequacy (whether or not having the force of law) of any central bank
or other Governmental Authority (including, without limitation, any guideline
or other requirement implementing the Basle Accord), has or would have the
effect of reducing the rate of return on the Bank's (or its parent's) capital
as a consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which the Bank (or its parent) could have
achieved but for such adoption, implementation, change or compliance (taking
into consideration the Bank's policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to time, within ten
(10) Business Days after demand by the Bank, the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the Bank (or its
parent) for such reduction; provided that any claim by the Bank for
compensation pursuant to this Section 4.7 shall be made within ninety (90)
days after the initial occurrence of the event giving rise to such claim. A
certificate of the Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive, provided that the determination thereof is made in good faith and
on a reasonable basis. In determining such amount or amounts, the Bank may
use any reasonable averaging and attribution methods.
ARTICLE V
Security
Section 1 Collateral . Borrower hereby acknowledges, agrees and
confirms that, as continuing security for the full and complete payment and
performance of the Obligations, the Security Documents grant to the Bank a
Lien in the collateral described below (which, together with any other
property and collateral which may now or hereafter secure the Obligations or
any part thereof, is sometimes herein called the "Collateral").
(a) Borrower has previously granted to the Bank, for the benefit of the
Prior Lenders, a first priority lien on the Real Property and has previously
assigned to the Bank, for the benefit of the Prior Lenders, all present and
future rents, leases, and profits relating to the Real Property, pursuant to
the Deed of Trust and the Assignment of Leases.
(b) Each of the Borrower and the Guarantors have previously granted to
the Bank, for the benefit of the Prior Lenders, a first priority security
interest in all of its accounts, accounts receivable, equipment, machinery,
fixtures, inventory, chattel paper, documents, instruments, the Pledged
Shares, and general intangibles, whether now owned or hereafter acquired, and
all products and proceeds thereof, pursuant to the Security Agreement and
subject to exceptions set forth therein.
(c) Each of the Borrower and the Guarantors have previously executed or
shall execute and cause to be executed such further documents and instruments,
including without limitation, Uniform Commercial Code financing statements and
trademark security interest documents, as the Bank, in its reasonable
discretion, deems necessary or desirable to evidence and perfect its Liens and
security interests in the Collateral.
Section 2 Existing Liens to Continue. Borrower hereby acknowledges,
agrees and confirms that the Liens previously granted to the Bank, for the
benefit of the Prior Lenders, shall continue and survive the execution and
delivery of this Agreement, and all of the rights granted to the Bank pursuant
to the Security Documents shall also continue and survive the execution and
delivery of this Agreement and the other Loan Documents executed in connection
herewith; provided, however, that (a) after giving effect to the modifications
to the Security Documents required pursuant to Section 6.1 of this Agreement,
the Liens shall be in favor of the Bank, for its sole benefit, and such Liens
shall no longer be for the benefit of the Prior Lenders and (b) to the extent
there is any conflict, of whatever nature, between the conditions, terms and
provisions of the Security Documents and this Agreement and the other Loan
Documents executed in connection herewith, this Agreement and such new Loan
Documents shall govern, prevail and control any such conflict or
inconsistency.
Section 3 Setoff . If an Event of Default shall have occurred and is
continuing, the Bank is hereby authorized at any time and from time to time,
without prior notice to the Borrower (any such notice being hereby expressly
waived by the Borrower), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, the Revolving Credit Note, or any
other Loan Document, irrespective of whether or not the Bank shall have made
any demand under this Agreement or the Revolving Credit Note, or such other
Loan Document and although such obligations may be unmatured. The Bank agrees
promptly to notify the Borrower after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights and remedies of the Bank hereunder
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Bank may have.
Section 4 Guaranty. The Obligations have been and shall continue to
be unconditionally guaranteed in whole or in part by each of the Subsidiaries
(other than the Foreign Subsidiaries) pursuant to the Guaranty.
ARTICLE VI
Conditions Precedent and Closing
Section 1 Renewal and Restructure. The obligation of the Bank to
renew, extend and restructure the Existing Loans is subject to the condition
precedent that the Bank shall have received on or before the Closing Date all
of the following, each dated (unless otherwise indicated) the Closing Date, in
form and substance satisfactory to the Bank:
(a) Resolutions. (i) Resolutions of the Board of Directors of the
Borrower certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance by the Borrower of this Agreement and
the other Loan Documents to which the Borrower is or is to be a party; and
(ii) resolutions of the Board of Directors of each Guarantor certified by its
Secretary or Assistant Secretary which authorize the execution, delivery and
performance by the Guarantor of the Guaranty and the other Loan Documents to
which such Guarantor is or is to be a party.
(b) Incumbency Certificate. (i) A certificate of incumbency certified
by the Secretary or an Assistant Secretary of the Borrower certifying the
names of the officers of the Borrower authorized to sign this Agreement and
each of the other Loan Documents to which the Borrower is or is to be a party
(including the certificates contemplated herein) together with specimen
signatures of such officers; and (ii) a certificate of incumbency certified by
the Secretary or an Assistant Secretary of such Guarantor certifying the names
of the officers of such Guarantor authorized to sign the Loan Documents to
which such Guarantor is or is to be a party (including the certificates
contemplated herein) together with specimen signatures of such officers.
(c) Articles of Incorporation. (i) The articles of incorporation of
the Borrower certified by the Secretary of State of the state of incorporation
of the Borrower and dated within ten (10) days prior to the Closing Date; and
(ii) the articles of incorporation of each Subsidiary certified, in the case
of each Guarantor only, by the Secretary of State of the jurisdiction of
incorporation of such Subsidiary and dated within ten (10) days prior to the
Closing Date.
(d) Bylaws. (i) The bylaws of the Borrower certified by the Secretary
or an Assistant Secretary of the Borrower; and (ii) the bylaws of each
Subsidiary certified by the Secretary or an Assistant Secretary of such
Subsidiary.
(e) Governmental Certificates. (i) Certificates of the appropriate
government officials of the state of incorporation of the Borrower as to the
existence and good standing of the Borrower, each dated within ten (10) days
prior to the date of the Closing Date; and (ii) certificates of the
appropriate government officials of the jurisdiction of incorporation of each
Guarantor as to the existence of good standing of such Guarantor, each dated
within ten (10) days prior to the Closing Date.
(f) Revolving Credit Note. The Revolving Credit Note executed by the
Borrower.
(g) Amended and Restated Security Agreement. An Amended and Restated
Security Agreement, duly executed by the Borrower and the Guarantors,
reaffirming and amending as appropriate the provisions of the Security
Agreement.
(h) UCC-3 Amendments to Financing Statements. Form UCC-3 Amendments
to all existing Uniform Commercial Code financing statements covering the
Collateral, duly executed by the Borrower, amending as appropriate the
provisions thereof.
(i) Amendments to Other Security Documents. Amendments to other
Security Documents as may be necessary in order to preserve and perfect the
Bank's first priority Lien in the Collateral.
(j) Guaranty. The Guaranty duly executed by the Guarantors.
(k) Amendment to Trademark Document. An amendment to the Trademark
Security Interest Document, duly executed by the Borrower, reaffirming and
amending as appropriate the provisions thereof.
(l) Pledged Shares. Certificates evidencing the Pledged Shares,
accompanied by appropriate stock powers duly executed in blank by the Borrower
or the applicable Guarantor.
(m) Certain Leases. A certificate executed by an Authorized Officer
of the Borrower certifying that attached thereto are true and complete copies
of the leases covering each of the office or warehouse facilities leased by
the Borrower.
(n) Insurance Policies. Evidence of all insurance policies required
by Section 8.5, together with loss payable endorsements in favor of the Bank
with respect to all insurance policies covering Collateral.
(o) UCC Search. The results of a Uniform Commercial Code search
showing all financing statements and other documents or instruments on file
against the Borrower and each of the Guarantors in the offices of the
Secretary of State of Texas and the Oklahoma County Clerk, such search to be
as of a date no more than ten (10) days prior to the Closing Date;
(p) Opinion of Counsel. A favorable opinion of Akin, Gump, Strauss,
Xxxxx & Xxxx, L.L.P., legal counsel to the Borrower and the Guarantors, as to
the matters set forth in Exhibit "C" hereto, and such other matters as the
Bank may reasonably request.
(q) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including reasonable attorneys' fees) referred to in Section 12.1,
to the extent incurred, shall have been paid in full by the Borrower.
(r) Facility Fee. Evidence that the Facility Fee shall have been paid
in full by the Borrower.
(s) Additional Documentation. Such additional approvals, opinions,
or documents as the Bank or its legal counsel, Xxxxxxxx Xxxxxxxx & Xxxxxx
P.C., may reasonably request.
Section 2 New Advances . The obligation of the Bank to make any new
Advance (excluding any Continuation or Conversion) is subject to the following
additional conditions precedent:
(a) Advance Request Form. The Bank shall have received, in accordance
with Section 2.6, an Advance Request Form, dated the date of such Advance,
executed by an Authorized Officer of the Borrower;
(b) No Default. No Default shall have occurred and be continuing, or
would result from such Advance;
(c) Representations and Warranties. All of the representations and
warranties contained in Article VII hereof and in the other Loan Documents
shall be true and correct on and as of the date of such Advance with the same
force and effect as if such representations and warranties had been made on
and as of such date; and
(d) Additional Documentation. The Bank shall have received such
additional approvals, opinions, or documents as the Bank or its legal counsel,
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., may reasonably request.
Section 3 Closing. The closing of the transactions contemplated
hereby shall occur no later than August 29, 1997, at 10:00 A.M. (Dallas, Texas
time), or such later date and time as the parties hereto may mutually agree
(the "Closing Date") at the offices of Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C., 5400
Renaissance Tower, 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx 00000.
ARTICLE VII
Representations and Warranties
To induce the Bank to enter into this Agreement, the Borrower represents
and warrants to the Bank as follows:
Section 1 Corporate Existence . The Borrower and each Subsidiary (a)
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation; (b) has all requisite
corporate power and authority to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, condition (financial or otherwise),
operations, prospects, or properties. The Borrower has the corporate power
and authority to execute, deliver, and perform its obligations under this
Agreement and the other Loan Documents to which it is or may become a party.
Section 2 Financial Statements . The Borrower has delivered to the
Bank audited consolidated financial statements of the Borrower and its
Subsidiaries as at and for the fiscal year ended June 30, 1996, and unaudited
consolidated financial statements of the Borrower and its Subsidiaries for the
nine (9)-month period ended March 30, 1997. Such financial statements are
true and correct, have been prepared in accordance with GAAP, and fairly and
accurately present, on a consolidated basis, the financial condition of the
Borrower and its Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein. To
the best of Borrower's knowledge, neither the Borrower nor any of its
Subsidiaries has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments required by GAAP to be reflected in such
financial statements except as reflected in such financial statements. To the
best of Borrower's knowledge, there has been no material adverse change in the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any of its Subsidiaries since the effective date
of the most recent financial statements referred to in this Section.
Section 3 Corporate Action; No Breach . The execution, delivery, and
performance by the Borrower of this Agreement and the other Loan Documents to
which the Borrower is or may become a party, the execution, delivery and
performance by the Guarantors of the Guaranty and the other Loan Documents to
which they are or may become a party, and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate action on the part of the Borrower and the Guarantors and do not and
will not (a) violate or conflict with, or result in a breach of, or require
any consent under (i) the articles of incorporation or bylaws of the Borrower
or any of the Guarantors, (ii) any applicable law, rule, or regulation or any
order, writ, injunction, or decree of any Governmental Authority or
arbitrator, or (iii) any agreement or instrument to which the Borrower or any
of the Guarantors is a party or by which any of them or any of their property
is bound or subject, or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien (except as
provided in Article V) upon any of the revenues or assets of the Borrower or
any Guarantor.
Section 4 Operation of Business . The Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, service marks and tradenames, or rights thereto, necessary to
conduct their respective businesses substantially as now conducted and as
presently proposed to be conducted, and the Borrower and each of its
Subsidiaries are not in violation of any valid rights of others with respect
to any of the foregoing. Schedule 7 identifies all trademarks, trade names,
service marks, copyrights, patents and applications for any of the foregoing
owned by or issued to the Borrower or any of the Subsidiaries and includes the
name under which the rights are claimed, and the dates of issuance or
application, as the case may be. Except as set forth on Schedule 7, neither
the Borrower nor any Subsidiary pays any royalty for the use of such
trademarks, trade names, service marks, copyrights, patents and applications,
and Borrower has the exclusive right to bring actions for the infringement
thereof. No product made or sold by the Borrower or any Subsidiary violates
any license granted to the Borrower or such Subsidiary or, to the best of
Borrower's knowledge, infringes any trademark, trade name, service xxxx,
copyright or patent of another. There is no pending nor, to be best of
Borrower's knowledge, threatened claim of litigation against the Borrower or
any Subsidiary contesting its right to use any of the trademarks, trade names
and service marks or the validity of any of the copyrights and patents listed
on Schedule 7 or asserting the misuse thereof.
Section 5 Litigation and Judgments . Except as disclosed on Schedule
2 hereto, Borrower has no knowledge of any action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator pending or
threatened against or affecting the Borrower or any Subsidiary, that would, if
adversely determined, have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of
the Borrower or any Subsidiary or the ability of the Borrower to pay and
perform the Obligations. There are no outstanding judgments against the
Borrower or any Subsidiary.
Section 6 Rights in Properties; Liens . The Borrower and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in Section 7.2, and, to the best of Borrower's knowledge,
none of the properties, assets, or leasehold interests of the Borrower or any
Subsidiary is subject to any Lien, except as permitted by Section 9.2.
Section 7 Enforceability . This Agreement constitutes, and the other
Loan Documents to which the Borrower or any Guarantor is party, when
delivered, shall constitute the legal, valid, and binding obligations of the
Borrower or such Guarantor, enforceable against the Borrower or such Guarantor
in accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement
of creditors' rights.
Section 8 Approvals . No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is
or will be necessary for the execution, delivery, or performance by the
Borrower of this Agreement and by the Borrower or any Guarantor of the other
Loan Documents to which the Borrower or such Guarantor, as applicable, is or
may become a party or for the validity or enforceability thereof.
Section 9 Debt . The Borrower and its Subsidiaries have no Debt,
except as permitted under Section 9.1.
Section 10 Taxes . The Borrower and each Subsidiary have filed all
tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid,
subject to any matters being contested in good faith by appropriate
proceedings, all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable. The Borrower
knows of no pending investigation of the Borrower or any Subsidiary by any
taxing authority or of any pending but unassessed tax liability of the
Borrower or any Subsidiary.
Section 11 Use of Proceeds; Margin Securities . Neither the Borrower
nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations G, T, U, or X of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Advance will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock.
Section 12 ERISA . The Borrower and each Subsidiary are in compliance
in all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan with the result that there is an unfunded liability
currently or prospectively owed by Borrower or any Subsidiary. No notice of
intent to terminate a Plan has been filed, nor has any Plan been terminated.
No circumstances exist which constitute grounds entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings. Neither the Borrower
nor any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan. The Borrower and each ERISA Affiliate have met their
minimum funding requirements under ERISA with respect to all of their Plans,
and the present value of all vested benefits under each Plan do not exceed the
fair market value of all Plan assets allocable to such benefits, as determined
on the most recent valuation date of the Plan and in accordance with ERISA.
Neither the Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC under ERISA.
Section 13 Disclosure . No statement, information, report,
representation, or warranty made by the Borrower in this Agreement or in any
other Loan Document or furnished to the Bank by the Borrower or any Guarantor
in connection with this Agreement or any transaction contemplated hereby
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements herein or therein, when taken
as a whole, not misleading. There is no fact known to the Borrower which has
a material adverse effect, or which in the future could reasonably be expected
to have a material adverse effect, on the business, condition (financial or
otherwise), operations, prospects, or properties of the Borrower or any
Subsidiary that has not been disclosed in writing to the Bank.
Section 14 Subsidiaries . The Borrower has no Subsidiaries other than
those listed on Schedule 4 hereto, and Schedule 4 sets forth the jurisdiction
of incorporation of each Subsidiary and the percentage of the Borrower's
ownership of the outstanding voting stock of each Subsidiary. All of the
outstanding capital stock of each Subsidiary has been validly issued, is fully
paid, and is nonassessable.
Section 15 Agreements . Neither the Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any Subsidiary, or the ability of the Borrower
to pay and perform its obligations under the Loan Documents to which it is a
party. Neither the Borrower nor any Subsidiary is in default in any respect
in the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business to which it is a party.
Section 16 Compliance with Laws . Neither the Borrower nor any
Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator, the
violation of which would or could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise),
operations, prospects or properties of the Borrower or any Subsidiary.
Section 17 Inventory . All inventory of the Borrower and any
Subsidiary has been and will hereafter be produced in compliance with all
applicable laws, rules, regulations, and governmental standards, including,
without limitation, the minimum wage and overtime provisions of the Fair Labor
Standards Act, as amended (29 U.S.C. 201-219), and the regulations
promulgated thereunder.
Section 18 Investment Company Act . Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 19 Public Utility Holding Company Act . Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 20 Environmental Matters . Except as disclosed on Schedule 5
hereto:
(a) The Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all
Environmental Laws. The Borrower is not aware of, nor has the Borrower
received notice of, any past, present, or future conditions, events,
activities, practices, or incidents which may interfere with or prevent the
compliance or continued compliance of the Borrower and the Subsidiaries with
all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and the Borrower and its
Subsidiaries are in compliance with all of the terms and conditions of such
permits;
(c) No Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
properties or assets of the Borrower or any Subsidiary. The use which the
Borrower and the Subsidiaries make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any Hazardous Material
on, in, or from any of their properties or assets, except for the handling,
storage, use, transportation, or generation of materials and products used,
produced or generated in the business of food preparation, processing,
packaging, warehousing, transportation and restaurant operations including,
without limitation, chemicals for processing or preserving food products,
chemicals and other substances used for building and grounds maintenance,
disinfectants, pesticides, cleaning agents, motor fuels, lubricants,
processing by-products and food wastes, all of which have been stored, used,
transported and generated in compliance with all Environmental Laws;
(d) Neither the Borrower nor any of its Subsidiaries nor any of their
respective currently owned or leased properties or operations is subject to
any outstanding or, to the best of its knowledge, threatened order from or
agreement with any Governmental Authority or other Person or subject to any
judicial or docketed administrative proceeding with respect to (i) failure to
comply with Environmental Laws, (ii) Remedial Action, or (iii) any
Environmental Liabilities arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with the
currently owned or leased properties or operations of the Borrower or any of
its Subsidiaries that could reasonably be expected to give rise to any
Environmental Liabilities;
(f) Neither the Borrower nor any of its Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq., regulations
thereunder or any comparable provision of state law;
(g) Neither the Borrower nor any of its Subsidiaries has filed or failed
to file any notice required under applicable Environmental Law reporting a
Release; and
(h) 4To the best of Borrower's knowledge, no Lien arising under any
Environmental Law has attached to any property or revenues of the Borrower or
its Subsidiaries.
ARTICLE VIII
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants:
Section 1 Reporting Requirements . The Borrower will furnish to the
Bank:
(a) Annual Financial Statements. As soon as available, and in any
event within one hundred twenty (120) days after the end of each fiscal year
of the Borrower, beginning with the fiscal year ending in June of 1997, (i) a
copy of the annual audit report of the Borrower and the Subsidiaries for such
fiscal year containing, on a consolidated and (to the extent required by GAAP)
consolidating basis, balance sheets and statements of income, retained
earnings, and cash flow as at the end of such fiscal year and for the 12-month
period then ended, in each case setting forth in comparative form the figures
for the preceding fiscal year, all in reasonable detail and audited and
certified by Price Waterhouse, or other independent certified public
accountants of recognized standing acceptable to the Bank, to the effect that
such report has been prepared in accordance with GAAP; and (ii) a certificate
of such independent certified public accountants to the Bank (A) stating that
to their knowledge no Default has occurred and is continuing, or if in their
opinion a Default has occurred and is continuing, a statement as to the nature
thereof, and (B) confirming the calculations set forth in the officer's
certificate delivered simultaneously therewith;
(b) Quarterly Financial Statements. As soon as available, and in any
event within sixty (60) days after the end of each of the first three quarters
of each fiscal year of the Borrower, a copy of an unaudited financial report
of the Borrower and the Subsidiaries as of the end of such fiscal quarter and
for the portion of the fiscal year then ended, containing, on a consolidated
and (to the extent required by GAAP) consolidating basis, balance sheets and
statements of income, and cash flow, in each case setting forth in comparative
form the figures for the corresponding period of the preceding fiscal year,
all in reasonable detail certified by an Authorized Officer of the Borrower to
have been prepared in accordance with GAAP and to fairly and accurately
present (subject to the absence of footnotes and year-end audit adjustments)
the financial condition and results of operations of the Borrower and the
Subsidiaries, on a consolidated and (to the extent required by GAAP)
consolidating basis, at the date and for the periods indicated therein;
(c) Quarterly Calculations. As soon as available, and in any event
within forty-five (45) days after the end of each fiscal quarter of the
Borrower, (i) a certificate of an Authorized Officer of the Borrower in
substantially the form of Exhibit "D" hereto (A) stating to the best of such
officer's knowledge, no Default has occurred and is continuing, or if a
Default has occurred and is continuing, a statement as to the nature thereof
and the action that is proposed to be taken with respect thereto, and (B)
showing in reasonable detail the most recent calculations demonstrating
compliance with Article X and (ii) if applicable, the notice required under
the definition of "Eurodollar Rate Margin";
(d) Certificate of No Default. Concurrently with the delivery of each
of the financial statements referred to in subsection 8.1(a), a certificate of
an Authorized Officer of the Borrower in substantially the form of Exhibit "D"
hereto (i) stating that to the best of such officer's knowledge, no Default
has occurred and is continuing, or if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that is
proposed to be taken with respect thereto, and (ii) showing in reasonable
detail the most recent calculations demonstrating compliance with Article X;
(e) Management Letters. As soon as practicable and in any event
within five (5) days after receipt thereof, a copy of any management letter or
written report submitted to the Borrower or any Subsidiary by independent
certified public accountants with respect to the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any Subsidiary;
(f) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental
Authority or arbitrator affecting the Borrower or any Subsidiary which, if
determined adversely to the Borrower or such Subsidiary, is likely to result
in liability, over and above any portion covered by insurance, in excess of
$500,000;
(g) Notice of Default. As soon as practicable and in any event within
five (5) days after the Borrower knows or has reason to know of the occurrence
of any Default, a written notice setting forth the details of such Default and
the action that the Borrower has taken and proposes to take with respect
thereto;
(h) ERISA Reports. As soon as practicable and in any event within
five (5) days after the filing or receipt thereof, copies of all reports,
including annual reports, reports of Reportable Events, and material notices
which the Borrower or any Subsidiary files with or receives from the PBGC or
the U.S. Department of Labor under ERISA; and as soon as practicable and in
any event within five (5) days after the Borrower or any Subsidiary knows or
has reason to know that any Prohibited Transaction has occurred with respect
to any Plan or that the PBGC or the Borrower or any Subsidiary has instituted
or will institute proceedings under Title IV of ERISA to terminate any Plan, a
certificate of the Authorized Officer of the Borrower setting forth the
details as to such Prohibited Transaction or Plan termination and the action
that the Borrower proposes to take with respect thereto;
(i) Notice of Material Adverse Change. As soon as practicable and in
any event within five (5) days after the Borrower knows or has reason to know
of the occurrence thereof, written notice of any matter that is likely to have
a material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any Subsidiary;
(j) Proxy Statements, Etc. As soon as available, one copy of each
financial statement, report, notice or proxy statement sent by the Borrower or
any Subsidiary to its stockholders generally and one copy of each regular,
periodic or special report, registration statement, or prospectus filed by the
Borrower or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency;
(k) General Information. As soon as practicable, such other
information concerning the Borrower or any Subsidiary as the Bank may from
time to time reasonably request.
Section 2 Maintenance of Existence; Conduct of Business . The
Borrower will preserve and maintain, and will cause each Subsidiary to
preserve and maintain, its corporate existence and all of its material leases,
privileges, licenses, permits, franchises, qualifications, and rights that are
necessary or desirable in the ordinary conduct of its business. The Borrower
will conduct, and will cause each Subsidiary to conduct, its business in an
orderly and efficient manner in accordance with good business practices.
Section 3 Maintenance of Properties . The Borrower will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its material properties (tangible and intangible) necessary or useful
in the proper conduct of its business in good working order and condition.
Section 4 Taxes and Claims . The Borrower will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments, and
governmental charges imposed on it or its income or profits or any of its
property, and (b) all lawful claims for labor, material, and supplies, which,
if unpaid, might become a Lien upon any of its property; provided, however,
that neither the Borrower nor any Subsidiary shall be required to pay or
discharge any tax, levy, assessment, or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued, and for
which adequate reserves have been established.
Section 5 Insurance . The Borrower will maintain, and will cause
each of the Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies in such amounts and covering such risks as is
usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower and the
Subsidiaries operate, provided that in any event the Borrower will maintain
and cause each Subsidiary to maintain workmen's compensation insurance (or
utilize legally available alternatives to such insurance), property insurance,
comprehensive general liability insurance, products liability insurance, and
business interruption insurance reasonably satisfactory to the Bank. The
Borrower will provide evidence of all such insurance to the Bank, and all such
insurance must be reasonably satisfactory to the Bank. Each insurance policy
covering Collateral shall name the Bank as an additional loss payee and shall
provide that such policy will not be cancelled or reduced without thirty (30)
days' prior written notice to the Bank.
Section 6 Inspection Rights . At any reasonable time and from time
to time, the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Bank to examine, copy, and make extracts from its books
and records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants. Without limiting the generality of
the foregoing, the Borrower will permit, and will cause each Subsidiary to
permit, representatives of the Bank to conduct semi-annual field audits, the
cost of which will be borne by the Borrower in an amount not to exceed $10,000
annually.
Section 7 Keeping Books and Records . The Borrower will maintain,
and will cause each Subsidiary to maintain, proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.
Section 8 Compliance with Laws . The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.
Section 9 Compliance with Agreements . The Borrower will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its
properties or business.
Section 10 Further Assurances . The Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and
instruments and take such further action as may be reasonably requested by the
Bank to carry out the provisions and purposes of this Agreement and the other
Loan Documents and to create, preserve, and perfect the Liens of the Bank in
the Collateral.
Section 11 ERISA . The Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
Section 12 Change of Control. As soon as possible and in any event
within five (5) days after the Borrower knows or has reason to know that a
Change of Control has occurred or is contemplated, the Borrower shall give the
Bank notice thereof and shall offer to accelerate payment of all the
Obligations. The Bank shall have fifteen (15) days after its receipt of such
notice to notify the Borrower of its desire to accelerate payment of all the
Obligations, in which event the Borrower shall pay the Obligations in full
within thirty (30) days after the later of (a) the Bank's notice to the
Borrower of its desire to accelerate payment or (b) the occurrence of the
Change of Control. Notwithstanding the foregoing, the Bank agrees not to
exercise its right to accelerate payment of the Obligations pursuant to a
Change of Control which results from the death of C. Xxxxxxx Xxxxxx, provided
that Xxxxxx Xxxxxx assumes and remains in the position of chief executive
officer of the Borrower.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants:
Section 1 Debt . The Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any Debt, except:
(a) Debt to the Bank pursuant to the Loan Documents;
(b) Existing Debt described on Schedule 3 hereto and any renewal or
extension thereof which does not increase the outstanding amount thereof; and
(c) Debt of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or another Subsidiary; and
(d) Capital Lease Obligations and/or purchase money Debt for purchases
of equipment in the ordinary course of business not exceeding $1,600,000 in
the aggregate at any one time.
Section 2 Limitation on Liens . The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of its property, assets,
or revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on Schedule 6 hereto;
(b) Liens in favor of the Bank;
(c) Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of the Borrower or the Subsidiaries to use such
assets in their respective businesses;
(d) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers, or other
similar statutory Liens (including statutory landlord's Liens) securing
obligations that are not yet due and are incurred in the ordinary course of
business; and
(f) Liens resulting from good faith deposits to secure payments of
workmen's compensation or other social security programs, to secure the
performance of reinsurance agreements or to secure payments to utilities or
the performance of tenders, statutory obligations, surety and appeal bonds,
bids, contracts (other than for payment of Debt), or leases made in the
ordinary course of business.
(g) Purchase money liens, purchase money security interests or title
retention arrangements upon or in any equipment acquired or held by the
Borrower in the ordinary course of business to secure purchase money
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment; provided that such purchase money indebtedness does not exceed
limitations contained in clause (d) of Section 9.1 hereof; and provided,
further, that such purchase money liens, purchase money security interests or
title retention arrangements shall attach only to equipment so acquired and
shall not attach to any other Collateral;
(h) Attachment and judgment Liens not constituting an Event of Default
under Section 11(g) or 11(h);
(i) Inchoate Liens arising under ERISA to secure the contingent
liability of the Borrower or any Subsidiary; and
(j) Liens renewing and extending the Liens permitted hereunder, provided
that no such Lien is expanded to cover any additional property.
Section 3 Mergers, Etc. The Borrower will not, and will not permit
any Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any substantial part of the business or assets of any
Person or any shares or other evidence of beneficial ownership of any Person,
or wind-up, dissolve, or liquidate itself, except that (a) a wholly-owned
Subsidiary may be merged or consolidated with or into the Borrower (provided
that the Borrower shall be the continuing or surviving corporation), (b) the
Borrower may purchase or otherwise acquire the assets of existing franchisees
or area development rights up to an aggregate amount of $5,000,000 and (c) the
Borrower may purchase or otherwise acquire all or any substantial part of the
business or assets of any Person upon obtaining the prior written approval of
the Bank.
Section 4 Restricted Payments . The Borrower will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem,
purchase, retire, or otherwise acquire any of its capital stock, or permit any
of its Subsidiaries to purchase or otherwise acquire any capital stock of the
Borrower or another Subsidiary, or set apart any money for a sinking or other
analogous fund for any dividend or other distribution on its capital stock or
for any redemption, purchase, retirement, or other acquisition of any of its
capital stock; provided that the foregoing restrictions do not prohibit (a)
the purchase of common stock of the Borrower in open market transactions, so
long as no Default or Event of Default exists at the time of such purchase nor
would result after giving effect thereto; (b) dividend payments on any class
of capital stock payable solely in shares of capital stock of the Borrower;
(c) payments of dividends from any Subsidiary to the Borrower; (d) payments in
lieu of taxes to the Borrower or a Subsidiary pursuant to a tax sharing
agreement; (e) any exchange of stock not involving any cash consideration
pursuant to a stock option plan for employees or directors of the Borrower;
(f) payments of cash dividends on any class of capital stock of Borrower so
long as no Default or Event of Default exists at the time of such payment nor
would result after giving effect thereto at the time of such payment; and (g)
any other redemption, purchase, retirement or the acquisition of the
Borrower's capital stock upon obtaining the prior written approval of the
Bank.
Section 5 Investments . The Borrower will not make, and will not
permit any Subsidiary to make, any advance, loan, extension of credit (other
than trade credit extended to any franchisee or purchaser of inventory from
Borrower or any Subsidiary), or capital contribution to or investment in, or
purchase or own, or permit any Subsidiary to purchase or own, any stock,
bonds, notes, debentures, or other securities of, any Person, except:
(a) readily marketable direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the
date of acquisition;
(b) fully insured certificates of deposit with maturities of one year or
less from the date of acquisition issued by any commercial bank operating in
the United States of America having capital and surplus in excess of
$50,000,000;
(c) commercial paper of a domestic issuer if at the time of purchase
such paper is rated in one of the two highest rating categories of Standard
and Poor's Corporation or Xxxxx'x Investors Service, Inc.;
(d) advances, loans and capital contributions by the Borrower to any
Subsidiary which is in existence at the Closing Date, and advances or loans to
the Borrower by any Subsidiary;
(e) ans to franchisees in an aggregate amount not to exceed $100,000
to any one franchisee or $250,000 in the aggregate;
(f) loans or advances to employees of the Borrower in the ordinary
course of business not to exceed $100,000 to any one individual or $250,000 in
the aggregate;
(g) investments outstanding at any time with respect to hedging exposure
to foreign currency fluctuations in which the Borrower has currency exposure,
provided that the actual exposure covered by such investments does not exceed
$100,000;
(h) investments listed on Schedule 8;
(i) promissory notes or other evidences of indebtedness arising from
sales of franchises or area development rights or transfers of franchises,
equipment, and related property by the Borrower; and
(j) investments in joint ventures or other business combinations or
entities for the purpose of promoting franchise operations in an aggregate
amount not to exceed $100,000 in any one transaction or $250,000 in the
aggregate; provided that the Borrower shall form a separate Subsidiary to be a
partner or investor in any such joint venture or other business combination.
Notwithstanding the foregoing, the Borrower shall be permitted to form new
Subsidiaries subsequent to the Closing Date and make advances, loans and
capital contributions thereto, provided that each such new Subsidiary becomes
a party to the Guaranty, the Security Agreement and any other Loan Documents
requested by the Bank on terms satisfactory to the Bank within ten (10) days
after the formation thereof.
Section 6 Limitation on Issuance of Capital Stock . The Borrower
will not, and will not permit any of its Subsidiaries to, at any time issue,
sell, assign, or otherwise dispose of (a) any of its capital stock, (b) any
securities exchangeable for or convertible into or carrying any rights to
acquire any of its capital stock, or (c) any option, warrant, or other right
to acquire any of its capital stock, except pursuant to a stock option plan
for employees or directors of the Borrower.
Section 7 Transactions With Affiliates . The Borrower will not enter
into, and will not permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be obtained in a comparable arm's-length transaction with a Person not
an Affiliate of the Borrower or such Subsidiary.
Section 8 Disposition of Assets . The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets, without the prior written approval
of the Bank, except as follows:
(a) dispositions of inventory in the ordinary course of business;
(b) sales of franchises and area development rights;
(c) dispositions to the Borrower or a Subsidiary who is a party to
the Security Agreement;
(d) dispositions of worn-out or obsolescent equipment, provided that
the proceeds thereof are used to acquire replacements thereof; and
(e) sales of other assets at not less than the fair market value
thereof, provided that (i) no Default or Event of Default has occurred and is
continuing, (ii) the aggregate book value of all assets then proposed to be
disposed of plus the aggregate book value of all other assets disposed of by
the Borrower and the Subsidiaries pursuant to this subsection (e) in a twelve
month period immediately preceding the date of such proposed disposition does
not exceed five percent (5%) of Consolidated Assets at the end of the
preceding fiscal year, and (iii) the aggregate book value of all assets then
proposed to be disposed of plus the aggregate book value of all assets
disposed of by the Borrower and the Subsidiaries during the period from the
Closing Date to the date of such proposed disposition does not exceed ten
percent (10%) of Consolidated Assets at the end of the preceding fiscal year.
Section 9 Sale and Leaseback . The Borrower will not enter into, and
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that
has been or is to be sold or transferred, directly or indirectly, by it to
such Person, except sale and leaseback transactions involving expenditures not
to exceed an aggregate of $600,000 in any twelve (12) month period.
Section 10 Prepayment of Debt . The Borrower will not prepay, and
will not permit any Subsidiary to prepay, any Debt, except the Obligations.
Section 11 Nature of Business . The Borrower will not, and will not
permit any Subsidiary to, engage in any business other than existing
businesses and any business producing or offering for sale, by Borrower or
through contracts with third parties, any food product by any method of
marketing or distribution, or other products related to promoting or enhancing
the public reputation and good-will of Borrower or any Subsidiary.
Section 12 Environmental Protection . Except for the handling,
storage, use, transportation or generation of materials and products used,
produced or generated in the business of food preparation, processing,
packaging, warehousing, transportation and restaurant operations including,
without limitation, chemicals for processing or preserving food products,
chemicals and other substances used for building and grounds maintenance,
disinfectants, pesticides, cleaning agents, motor fuels, lubricants,
processing by-products and food wastes, all of which shall be handled, stored,
used, transported and generated in compliance with all Environmental Laws, the
Borrower will not, and will not permit any of its Subsidiaries to, (a) use (or
permit any tenant to use) any of their respective properties or assets for the
handling, processing, storage, transportation, or disposal of any Hazardous
Material, (b) generate any Hazardous Material, (c) conduct any activity that
is likely to cause a Release or threatened Release of any Hazardous Material,
or (d) otherwise conduct any activity or use any of their respective
properties or assets, in each case in any manner that is likely to violate any
Environmental Law or create any Environmental Liabilities for which the
Borrower or any of its Subsidiaries would be responsible, whereby such use or
activity is likely to have a material adverse effect on the business or
financial condition of the Borrower and its Subsidiaries when viewed as a
whole.
Section 13 Accounting . The Borrower will not, and will not permit
any of its Subsidiaries to, change its fiscal year or make any material change
(a) in accounting treatment or reporting practices, except as required by GAAP
and disclosed to the Bank, or (b) in tax reporting treatment, except as
required by law and disclosed to the Bank.
ARTICLE X
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants, such
performance and observance to be evidenced and tested for compliance as of the
end of each fiscal month:
Section 1 Current Ratio . The Borrower will at all times maintain a
Current Ratio of not less than 1.25 to 1.0.
Section 2 Leverage Ratio . The Borrower will at all times maintain a
Leverage Ratio of not greater than 2.0 to 1.0.
Section 3 Funded Debt Ratio. The Borrower will at all times maintain
a Funded Debt Ratio of not greater than 2.50 to 1.00.
Section 4 Fixed Charge Coverage Ratio. The Borrower will at all
times maintain a Fixed Charge Coverage Ratio of not less than 1.80 to 1.0.
Section 5 Operating Leases. The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any liability for payments under any
Operating Leases without the prior written approval of the Bank, which
approval shall not be unreasonably withheld, except for (a) liabilities under
Operating Leases in existence as of June 30, 1997, and (b) liabilities under
new Operating Leases which do not increase the Operating Lease obligations
(including taxes, insurance, maintenance, and similar expenses which the
Borrower or any Subsidiary is obligated to pay under any such Operating Lease)
of the Borrower and the Subsidiaries on a consolidated basis by an aggregate
amount in excess of Five Hundred Thousand Dollars ($500,000) per fiscal year
commencing with the fiscal year ending in June of 1998; provided that the
amount of any permitted increase in liabilities under Operating Leases not
incurred in any fiscal year may be carried forward to the next succeeding
fiscal year but not thereafter.
ARTICLE XI
Default
Section 1 Events of Default . Each of the following shall be deemed
an "Event of Default":
(a) The Borrower shall fail to pay when due any principal, interest or
fees, or any part thereof, and such failure continues for one (1) Business Day
after notice thereof by the Bank.
(b) The Borrower shall fail to pay when due the Obligations (other than
the Obligations described in subsection (a) above) or any part thereof, and
such failure continues for five (5) Business Days after notice thereof by the
Bank.
(c) Any representation or warranty made or deemed made by the Borrower
or any Obligated Party (or any of their respective officers) in any Loan
Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to have
been made.
(d) The Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in Section 8.1, Article IX, or Article
X of this Agreement and, in the case of Section 8.1(a), 8.1(b), 8.1(c),
8.1(d), 8.1(j) or 8.1(k) only, such failure shall continue for three (3)
Business Days after notice thereof to the Borrower by the Bank.
(e) The Borrower or any Obligated Party shall fail to perform, observe,
or comply with any other covenant, agreement, or term contained in this
Agreement or any other Loan Document (other than as provided in (a) through
(c) of this Section) and such failure shall continue for a period of twenty
(25) days after notice thereof to the Borrower by the Bank.
(f) The Borrower, any Subsidiary, or any Obligated Party shall commence
a voluntary proceeding seeking liquidation, reorganization, or other relief
with respect to itself or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it or shall make a general
assignment for the benefit of creditors or shall generally fail to pay its
debts as they become due or shall take any corporate action to authorize any
of the foregoing.
(g) An involuntary proceeding shall be commenced against the Borrower,
any Subsidiary, or any Obligated Party seeking liquidation, reorganization, or
other relief with respect to it or its debts under any bankruptcy, insolvency,
or other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official for it or
a substantial part of its property, and such involuntary proceeding shall
remain undismissed and unstayed for a period of forty-five (45) days.
(h) The Borrower, any Subsidiary, or any Obligated Party shall fail to
discharge within a period of forty-five (45) days after the commencement
thereof any attachment, sequestration, or similar proceeding or proceedings
involving an aggregate amount in excess of Five Hundred Thousand Dollars
($500,000) against any of its assets or properties.
(i) A final judgment or judgments for the payment of money in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate shall be rendered by
a court or courts against the Borrower, any of its Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision shall not
be made for such discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry thereof and the
Borrower or the relevant Subsidiary or Obligated Party shall not, within such
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal.
(j) The Borrower, any Subsidiary, or any Obligated Party shall fail to
pay when due (and after giving effect to any applicable grace period or any
extension of the applicable maturity date) any principal of or interest on any
Material Debt (other than the Obligations), or the maturity of any such
Material Debt shall have been accelerated, or any such Material Debt shall
have been required to be prepaid prior to the stated maturity thereof, or any
default shall have occurred (after giving effect to any applicable grace
period) that permits any holder or holders of such Debt or any Person acting
on behalf of such holder or holders to accelerate the maturity thereof or
require any such prepayment. For purposes of this subsection (i), the term
"Material Debt" means Debt owed by the Borrower or any Subsidiary, the
principal amount of which exceeds Five Hundred Thousand Dollars ($500,000).
(k) This Agreement, the Revolving Credit Note, the Security Documents,
the Guaranty, or any other material Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower, any
Subsidiary, any Obligated Party or any of their respective shareholders, or
the Borrower or any Obligated Party shall deny that it has any further
liability or obligation under any of such Loan Documents, or any lien or
security interest created by such Loan Documents shall for any reason cease to
be a valid, first priority (subject to exceptions permitted therein) perfected
security interest in and lien upon any of the Collateral purported to be
covered thereby.
(l) Any of the following events shall occur or exist with respect to the
Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving any
Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing
under Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042 of
ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings;
or (v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from
a Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, have subjected or could in the
reasonable opinion of the Bank subject the Borrower to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or
any combination thereof) which in the aggregate exceed or could reasonably be
expected to exceed Five Hundred Thousand Dollars ($500,000).
(m) The Borrower or any of its Subsidiaries, or any of their properties,
revenues, or assets, shall become the subject of an order of forfeiture,
seizure, or divestiture (whether under RICO or otherwise) and the same shall
not have been discharged (or provisions shall not be made for such discharge)
within forty-five (45) days from the date of entry thereof.
(n) A Change of Control shall occur, the Bank shall have given notice to
the Borrower pursuant to Section 8.12 that the Bank desires to accelerate
payment of all the Obligations, and the Borrower shall have failed to pay the
Obligations in full within the thirty (30) day period specified in Section
8.12.
Section 2 Remedies . If any Event of Default shall occur and be
continuing, the Bank may do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and accrued
and unpaid interest on the Revolving Credit Note and all other obligations of
the Borrower under the Loan Documents immediately due and payable, and the
same shall thereupon become immediately due and payable, without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(b) Termination of Commitment. Terminate the Commitment without
notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to
the Bank to secure payment and performance of the Obligations in accordance
with the terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by the
laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Subsection (e) or (f) of Section 11.1, the Commitment shall automatically
terminate, and the outstanding principal of and accrued and unpaid interest on
the Revolving Credit Note and all other obligations of the Borrower under the
Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, protest, or other formalities of any kind, all
of which are hereby expressly waived by the Borrower.
Section 3 Performance by the Bank . If, at any time after the
occurrence and during the continuance of an Event of Default, the Borrower
shall fail to perform any covenant or agreement in accordance with the terms
of the Loan Documents after notice from the Bank, the Bank may perform or
attempt to perform such covenant or agreement on behalf of the Borrower. In
such event, the Borrower shall, at the request of the Bank, promptly pay any
amount expended by the Bank in connection with such performance or attempted
performance to the Bank at the Principal Office, together with interest
thereon at the Default Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that the Bank shall not have any liability
or responsibility for the performance of any obligation of the Borrower under
this Agreement or any of the other Loan Documents.
ARTICLE XII
Miscellaneous
Section 1 Expenses . The Borrower hereby agrees to pay on demand:
(a) all reasonable out of pocket costs and expenses of the Bank in connection
with the preparation, negotiation, execution, and delivery of this Agreement
and the other Loan Documents and any and all amendments, modifications,
renewals, extensions, and supplements thereof and thereto, including, without
limitation, the reasonable fees and expenses of legal counsel for the Bank,
(b) all out of pocket costs and expenses of the Bank in connection with any
Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, the fees and expenses of legal counsel for the
Bank, (c) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of
this Agreement or any of the other Loan Documents, (d) all out of pocket
costs, expenses, assessments, and other charges incurred in connection with
any filing, registration, recording, or perfection of any security interest or
Lien contemplated by this Agreement or any other Loan Document, and (e) all
other reasonable out of pocket costs and expenses incurred by the Bank in
connection with this Agreement or any other Loan Document, including, without
limitation, all reasonable costs, expenses, and other charges incurred in
connection with obtaining any title report, survey, audit, or appraisal in
respect of the Collateral.
Section 2 INDEMNIFICATION . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN THE BORROWER SHALL INDEMNIFY THE BANK AND EACH OF ITS AFFILIATES AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT
WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION,
EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE
LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN
DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE
PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY
OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY
OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT
EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF
SUCH PERSON BUT NOT ARISING OUT OF OR RESULTING FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH PERSON.
Section 3 Limitation of Liability . None of the Bank, or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and the Borrower hereby waives, releases, and
agrees not to xxx any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents, except for such Person's
willful misconduct, gross negligence or failure to comply with the express
provisions of any of the Loan Documents. The Borrower hereby waives,
releases, and agrees not to xxx the Bank or any of its Affiliates, officers,
directors, employees, attorneys, or agents for punitive damages in respect of
any claim in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents.
Section 4 No Duty . All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Bank shall have the
right to act exclusively in the interest of the Bank and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to the Borrower or any of the Borrower's
shareholders or any other Person.
Section 5 No Fiduciary Relationship . The relationship between the
Borrower and each Bank is solely that of debtor and creditor, and the Bank
does not have any fiduciary or other special relationship with the Borrower,
and no term or condition of any of the Loan Documents shall be construed so as
to deem the relationship between the Borrower and the Bank to be other than
that of debtor and creditor.
Section 6 Equitable Relief . The Borrower recognizes that in the
event the Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Bank. The Borrower therefore agrees that the Bank, if the Bank so requests,
shall be entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
Section 7 No Waiver; Cumulative Remedies . No failure on the part of
the Bank to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement and the other Loan
Documents are cumulative and not exclusive of any rights and remedies provided
by law.
Section 8 Successors; Assignment . This Agreement shall be binding
upon and inure to the benefit of the Bank and the Borrower and their
respective successors and assigns; provided however, that (a) the Borrower may
not assign or transfer its interest hereunder without Bank's prior written
consent and (b) the Bank must give notice to the Borrower at least sixty (60)
days prior to assigning its interest hereunder.
Section 9 Participations. The Bank shall have the right at any time
and from time to time to grant participations in the Revolving Credit Note and
any other Loan Documents. Each actual or proposed participant shall be
entitled to receive all information received by the Bank regarding the
Borrower, including, without limitation, information required to be disclosed
to a participant pursuant to Banking Circular 181 (Rev., August 2, 1984),
issued by the Comptroller of the Currency (whether the actual or proposed
participant is subject to the circular or not).
Section 10 Survival . All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Bank or any closing shall affect the representations and
warranties or the right of the Bank to rely upon them. Without prejudice to
the survival of any other obligation of the Borrower hereunder, the
obligations of the Borrower under Article IV and Sections 12.1 and 12.2 shall
survive repayment of the Revolving Credit Note and termination of the
Commitments.
SECTION 11 ENTIRE AGREEMENT. THIS AGREEMENT, THE REVOLVING CREDIT
NOTE, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN
OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
Section 12 Amendments, Etc . No amendment or waiver of any provision
of this Agreement, the Revolving Credit Note, or any other Loan Document to
which the Borrower is a party, nor any consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be
agreed or consented to by the Bank and the Borrower, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
Section 13 Maximum Interest Rate . No provision of this Agreement or
of any other Loan Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors, successors, or
assigns of the Borrower shall be obligated to pay the excess amount of such
interest or any other excess sum paid for the use, forbearance, or detention
of sums loaned pursuant hereto. In the event any Bank ever receives,
collects, or applies as interest any such sum, such amount which would be in
excess of the maximum amount permitted by applicable law shall be applied as a
payment and reduction of the principal of the indebtedness evidenced by the
Revolving Credit Note; and, if the principal of the Revolving Credit Note has
been paid in full, any remaining excess shall forthwith be paid to the
Borrower. In determining whether or not the interest paid or payable exceeds
the Maximum Rate, the Borrower and each Bank shall, to the extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee,
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the entire contemplated
term of the indebtedness evidenced by the Revolving Credit Note so that
interest for the entire term does not exceed the Maximum Rate.
Section 14 Notices . All notices and other communications provided
for in this Agreement and the other Loan Documents to which the Borrower is a
party shall be given or made by telex, telegraph, telecopy, cable, or in
writing and telexed, telecopied, telegraphed, cabled, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such
party in a notice to each other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall
be deemed to have been duly given when transmitted by telex or telecopy,
subject to telephone confirmation of receipt, or delivered to the telegraph or
cable office, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the
mails, in each case given or addressed as aforesaid; provided, however,
notices to the Bank pursuant to Article II shall not be effective until
received by the Bank.
Section 15 Governing Law; Venue; Service of Process . This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. This Agreement
has been entered into in Dallas County, Texas, and it shall be performable for
all purposes in Dallas County, Texas. Any action or proceeding against the
Borrower under or in connection with any of the Loan Documents may be brought
in any state or federal court in Dallas County, Texas. The Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in any such court or that any such court is
an inconvenient forum. The Borrower agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of Section
12.13. Nothing herein or in any of the other Loan Documents shall affect the
right of the Bank to serve process in any other manner permitted by law or
shall limit the right of the Bank to bring any action or proceeding against
the Borrower or with respect to any of its property in courts in other
jurisdictions. Any action or proceeding by the Borrower against the Agent or
any Bank shall be brought only in a court located in Dallas County, Texas.
Section 16 Arbitration.
(a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in
accordance with the terms of this Agreement. A "Dispute" shall mean any
action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party
may by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as
the parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
Loan Documents. The arbitration shall be conducted at a location in Texas
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set
forth herein shall control. All statutes of limitation applicable to any
Dispute shall apply to any arbitration proceeding. All discovery activities
shall be expressly limited to matters directly relevant to the Dispute being
arbitrated. Judgment upon any award rendered in an arbitration may be entered
in any court having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the
protections afforded to it under 12 U.S.C. 91 or any similar applicable state
law.
(c)1 No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary
remedies, including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a court of
competent jurisdiction before, after or during the pendency of any arbitration
or other proceeding. The exercise of any such remedy shall not waive the
right of any party to compel arbitration hereunder.
(d) Arbitrator Qualifications and Powers Awards. Arbitrators must be
active members of the Texas State Bar with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of Texas, (ii) may grant any
remedy or relief that a court of the state of Texas could order or grant
within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they
deem necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Texas Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less
shall be decided by a single arbitrator who shall not render an award of
greater than $5,000,000 (including damages, costs, fees and expenses). By
submission to a single arbitrator, each party expressly waives any right or
claim to recover more than $5,000,000. Any Dispute in which the amount in
controversy exceeds $5,000,000 shall be decided by majority vote of a panel of
three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary,
in any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitration (i) the arbitrators shall not have
the power to make any award which is not supported by substantial evidence or
which is based on legal error, (ii) an award shall not be binding upon the
parties unless the findings of fact are supported by substantial evidence and
the conclusions of law are not erroneous under the substantive law of the
state of Texas, and (iii) the parties shall have in addition to the grounds
referred to in the Federal Arbitration Act for vacating, modifying or
correcting an award the right to judicial review of (A) whether the findings
of fact rendered by the arbitrators are supported by substantial evidence, and
(B) whether the conclusions of law are erroneous under the substantive law of
the state of Texas. Judgment confirming an award in such a proceeding may be
entered only if a court determines the award is supported by substantial
evidence and not based on legal error under the substantive law of the state
of Texas.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceedings within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose
the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business, by
applicable law or regulations, or to the extent necessary to exercise any
judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provisions most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of any of the Loan Documents or
any relationship between the parties.
Section 17 Counterparts . This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 18 Severability . Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 19 Headings . The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 20 Non-Application of Chapter 15 of Texas Credit Code . The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Loan Documents or to
the transactions contemplated hereby.
Section 21 Construction . The Borrower and the Bank acknowledge that
each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by the parties hereto.
Section 22 Independence of Covenants . All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
SECTION 23 WAIVER OF JURY TRIAL . TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING
TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
SECTION 24 NOTICE OF INDEMNIFICATION. THE PARTIES TO THIS AGREEMENT
HEREBY ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS CERTAIN
INDEMNIFICATION PROVISIONS PURSUANT TO SECTION 12.2 HEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
BORROWER:
PIZZA INN, INC.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Address for Notices:
0000 Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
BANK:
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Hrnaicky
Title: Assistant Vice President
Address for Notices:
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Lending Office for Prime Rate Advances
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Lending Office for Eurodollar Advances
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
