EXHIBIT 2.2
CREDIT AGREEMENT
among
THE MORNINGSTAR GROUP INC.
Borrower
NATIONSBANK OF TEXAS, N.A.,
as a Lender,
as Swing Line Lender, and as Agent
and
THE LENDERS NAMED HEREIN,
Lenders
$220,000,000
December 2, 1996
TABLE OF CONTENTS
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Page
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SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Number and Gender of Words . . . . . . . . . . . . . . 15
1.3 Accounting Principles . . . . . . . . . . . . . . . . . 15
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Facilities . . . . . . . . . . . . . . . . . . . . . . 15
2.1.1 Revolving Credit Facility . . . . . . . . . . . 15
2.1.2 Term Loan . . . . . . . . . . . . . . . . . . . 15
2.2 Loan Procedure . . . . . . . . . . . . . . . . . . . . 15
2.3 LC Subfacility . . . . . . . . . . . . . . . . . . . . 16
2.4 Swing Line Subfacility . . . . . . . . . . . . . . . . 19
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . 20
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . 20
3.2 Interest and Principal Payments . . . . . . . . . . . . 20
3.3 Interest Options . . . . . . . . . . . . . . . . . . . 23
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . 23
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . 23
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . 23
3.7 Interest Calculations . . . . . . . . . . . . . . . . . 23
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . 24
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . 24
3.10 Conversions . . . . . . . . . . . . . . . . . . . . . 24
3.11 Order of Application . . . . . . . . . . . . . . . . . 25
3.12 Sharing of Payments, Etc.. . . . . . . . . . . . . . . 25
3.13 Offset . . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 Booking Loans . . . . . . . . . . . . . . . . . . . . 25
3.15 Basis Unavailable or Inadequate for LIBOR . . . . . . 26
3.16 Additional Costs . . . . . . . . . . . . . . . . . . . 26
3.17 Change in Laws . . . . . . . . . . . . . . . . . . . . 27
3.18 Funding Loss . . . . . . . . . . . . . . . . . . . . . 27
3.19 Foreign Lenders . . . . . . . . . . . . . . . . . . . 27
3.20 Replacement of Lenders . . . . . . . . . . . . . . . . 28
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . 29
4.2 Underwriting and Administrative Fees . . . . . . . . . 29
4.3 LC Fees . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4 Revolving Credit Commitment Fee . . . . . . . . . . . . 29
SECTION 5 SECURITY . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . 30
5.2 Collateral . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Additional Security and Guaranties . . . . . . . . . . 30
5.4 Financing Statements . . . . . . . . . . . . . . . . . 30
SECTION 6 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . 30
6.1 Initial Revolving Credit Facility Loan . . . . . . . . 30
6.2 Term Loan . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Each Loan . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 31
7.1 Purpose of Credit Facility . . . . . . . . . . . . . . 31
7.2 Corporate Existence, Good Standing, Authority and
Compliance . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 31
7.4 Authorization and Contravention . . . . . . . . . . . . 31
7.5 Binding Effect . . . . . . . . . . . . . . . . . . . . 32
7.6 Financial Statements; Fiscal Year . . . . . . . . . . . 32
7.7 Litigation . . . . . . . . . . . . . . . . . . . . . . 32
7.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Environmental Matters . . . . . . . . . . . . . . . . . 32
7.10 Employee Plans . . . . . . . . . . . . . . . . . . . . 32
7.11 Properties; Liens . . . . . . . . . . . . . . . . . . 32
7.12 Chief Executive Offices; Real Estate Interests . . . . 33
7.13 Government Regulations . . . . . . . . . . . . . . . . 33
7.14 Transactions with Affiliates . . . . . . . . . . . . . 33
7.15 Debt . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.16 Material Agreements . . . . . . . . . . . . . . . . . 33
7.17 Insurance . . . . . . . . . . . . . . . . . . . . . . 33
7.18 Labor Matters . . . . . . . . . . . . . . . . . . . . 33
7.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . 33
7.20 Trade Names . . . . . . . . . . . . . . . . . . . . . 34
7.21 Intellectual Property . . . . . . . . . . . . . . . . 34
7.22 Full Disclosure . . . . . . . . . . . . . . . . . . . 34
SECTION 8 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . 34
8.1 Items to be Furnished . . . . . . . . . . . . . . . . . 34
8.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 35
8.3 Books and Records . . . . . . . . . . . . . . . . . . . 35
8.4 Inspections . . . . . . . . . . . . . . . . . . . . . . 35
8.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.6 Payment of Obligations . . . . . . . . . . . . . . . . 35
8.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . 35
8.8 Maintenance of Existence, Assets, and Business; Name
Change . . . . . . . . . . . . . . . . . . . . . . . . 36
8.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . 36
8.10 Preservation and Protection of Rights . . . . . . . . 36
8.11 Environmental Laws . . . . . . . . . . . . . . . . . . 36
8.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 36
8.13 Indemnification . . . . . . . . . . . . . . . . . . . 37
8.14 Financial Hedges . . . . . . . . . . . . . . . . . . . 37
SECTION 9 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . 37
9.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Payment of Obligations . . . . . . . . . . . . . . . . 37
9.3 Employee Plans . . . . . . . . . . . . . . . . . . . . 37
9.4 Debt . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.6 Transactions with Affiliates . . . . . . . . . . . . . 38
9.7 Compliance with Laws and Documents . . . . . . . . . . 38
9.8 Loans, Advances and Investments . . . . . . . . . . . . 38
9.9 Management Fees . . . . . . . . . . . . . . . . . . . . 40
9.10 Sale of Assets . . . . . . . . . . . . . . . . . . . . 40
9.11 Acquisitions, Mergers and Dissolutions . . . . . . . . 41
9.12 Assignment . . . . . . . . . . . . . . . . . . . . . . 41
9.13 Fiscal Year and Accounting Methods . . . . . . . . . . 41
9.14 New Businesses . . . . . . . . . . . . . . . . . . . . 41
9.15 Government Regulations . . . . . . . . . . . . . . . . 41
SECTION 10 FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . 41
10.1 Maximum Leverage Ratio . . . . . . . . . . . . . . . . 42
10.2 Minimum Fixed Charge Coverage Ratio . . . . . . . . . 42
10.3 Minimum Net Worth . . . . . . . . . . . . . . . . . . 43
10.4 Capital Expenditures . . . . . . . . . . . . . . . . . 43
SECTION 11 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 44
11.1 Payment of Obligation . . . . . . . . . . . . . . . . 44
11.2 Covenants . . . . . . . . . . . . . . . . . . . . . . 44
11.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . 45
11.4 Judgments and Attachments . . . . . . . . . . . . . . 45
11.5 Government Action . . . . . . . . . . . . . . . . . . 45
11.6 Misrepresentation . . . . . . . . . . . . . . . . . . 45
11.7 Ownership of Other Companies . . . . . . . . . . . . . 45
11.8 Default Under Other Agreements . . . . . . . . . . . . 45
11.9 LCs . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.10 Validity and Enforceability of Loan Papers . . . . . 45
11.11 Change of Control . . . . . . . . . . . . . . . . . . 46
11.12 SEC Reporting Requirements . . . . . . . . . . . . . 46
11.13 Financial Hedges . . . . . . . . . . . . . . . . . . 46
SECTION 12 RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . 46
12.1 Remedies Upon Default . . . . . . . . . . . . . . . . 46
12.2 Company Waivers. . . . . . . . . . . . . . . . . . . 46
12.3 Performance by Agent . . . . . . . . . . . . . . . . . 47
12.4 Not in Control . . . . . . . . . . . . . . . . . . . . 47
12.5 Course of Dealing . . . . . . . . . . . . . . . . . . 47
12.6 Cumulative Rights . . . . . . . . . . . . . . . . . . 47
12.7 Application of Proceeds . . . . . . . . . . . . . . . 47
12.8 Diminution in Value of Collateral . . . . . . . . . . 47
12.9 Certain Proceedings . . . . . . . . . . . . . . . . . 47
SECTION 13 AGREEMENT AMONG LENDERS . . . . . . . . . . . . . . . 48
13.1 Agent . . . . . . . . . . . . . . . . . . . . . . . . 48
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . 49
13.3 Proportionate Absorption of Losses . . . . . . . . . . 49
13.4 Delegation of Duties; Reliance . . . . . . . . . . . . 49
13.5 Limitation of Agent's Liability . . . . . . . . . . . 49
13.6 Default; Collateral . . . . . . . . . . . . . . . . . 50
13.7 Limitation of Liability . . . . . . . . . . . . . . . 50
13.8 Relationship of Lenders . . . . . . . . . . . . . . . 50
13.9 Collateral Matters . . . . . . . . . . . . . . . . . . 51
13.10 Benefits of Agreement . . . . . . . . . . . . . . . . 51
SECTION 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 52
14.1 Headings; Schedules and Exhibits . . . . . . . . . . . 52
14.2 Nonbusiness Days; Time . . . . . . . . . . . . . . . . 52
14.3 Communications . . . . . . . . . . . . . . . . . . . . 52
14.4 Form and Number of Documents . . . . . . . . . . . . . 52
14.5 Exceptions to Covenants . . . . . . . . . . . . . . . 52
14.6 Survival . . . . . . . . . . . . . . . . . . . . . . . 52
14.7 Governing Law . . . . . . . . . . . . . . . . . . . . 52
14.8 Invalid Provisions . . . . . . . . . . . . . . . . . . 52
14.9 Venue; Service of Process; Jury Trial . . . . . . . . 53
14.10 Amendments, Consents, Conflicts and Waivers . . . . . 53
14.11 Multiple Counterparts . . . . . . . . . . . . . . . . 54
14.12 Successors and Assigns; Participations . . . . . . . 55
14.13 Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances . . . . . . . 56
14.14 Confidentiality . . . . . . . . . . . . . . . . . . . 56
14.15 Entirety . . . . . . . . . . . . . . . . . . . . . . 57
SCHEDULES AND EXHIBITS
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Schedule 1 Parties, Addresses, Commitments and Wiring
Information
Schedule 2 Existing Debt and Existing Liens
Schedule 2.3 Existing LCs
Schedule 6.1 Conditions Precedent
Schedule 6.2 Term Loan Conditions Precedent
Schedule 7.2 Jurisdictions of Incorporation and Business
Schedule 7.3 Corporate Structure
Schedule 7.7 Litigation
Schedule 7.9 Environmental Matters
Schedule 7.12 Chief Executive Office, Location of Material
Assets and Real Estate Interests
Schedule 7.14 Transactions with Affiliates
Schedule 7.16 Material Agreements
Schedule 7.20 Trade Names
Exhibit A Revolving Credit Note
Exhibit B Term Note
Exhibit C Guaranty
Exhibit D Loan Request
Exhibit E Conversion Request
Exhibit F LC Request
Exhibit G Compliance Certificate
Exhibit H Assignment
Exhibit I Swing Line Note
CREDIT AGREEMENT
This Credit Agreement is entered into as of December 2, 1996,
among THE MORNINGSTAR GROUP INC., a Delaware corporation ("Borrower"),
the Lenders (defined below), and NATIONSBANK OF TEXAS, N.A., a
national banking associations, individually as a Lender, as Swing Line
Lender, and as Agent for itself and the other Lenders.
Borrower has requested Lenders to extend credit not to exceed an
aggregate principal amount of $220,000,000, to be allocated as
follows:
A. A revolving credit facility of up to $60,000,000, to be
funded by Lenders ("Revolving Credit Facility") and
B. A term loan in a principal amount not to exceed
$160,000,000, to be funded by Lenders ("Term Loan").
Lenders are willing to extend the requested credit on the terms and
conditions of this Agreement. Accordingly, the undersigned agree as
follows:
SECTION 1 DEFINITIONS AND TERMS.
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1.1 Definitions. As used in the Loan Papers:
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Acquisition means the acquisition of Presto by Borrower under the
terms of the Acquisition Agreement.
Acquisition Agreement means that certain Stock Purchase Agreement
among Presto, Presto shareholders, and Borrower, dated October 20,
1996.
Affiliate means with respect to any Person (the "relevant
Person") (a) any other Person that directly, or indirectly through one
or more intermediaries, controls the relevant Person (a "Controlling
Person") or (b) any Person (other than the relevant Person) which is
controlled by or is under common control with the relevant Person. As
used in this definition, the term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise; provided that in no event
shall the Agent or any Lender be deemed an Affiliate of Borrower or
any of its Subsidiaries.
Agent means NationsBank of Texas, N.A., a national banking
association, and its successor or successors as agent for Lenders
under this Agreement.
Agreement means this Credit Agreement, as amended, supplemented
or restated from time to time.
Applicable Margin means, for any day, the margin of interest over
the Base Rate or LIBOR, as the case may be, that is applicable when an
applicable interest rate is determined under this Agreement:
(a) from the date of this Agreement through and including
August 31, 1997, the Applicable Margin shall be (i) for LIBOR
Loans or Swing Line Loans, 1.375% per annum and (ii) for Base
Rate Loans, 0.250% per annum;
(b) after August 31, 1997, the Applicable Margin is subject
to adjustment (upwards or downwards, as appropriate) based on the
ratio of Funded Debt to EBITDA, and shall be the applicable per
annum percentage set out in the appropriate intersection in the
following table:
Applicable Applicable
Margin Margin for
Ratio of Funded Debt to for Base LIBOR Loans or
EBITDA Rate Loans Swing Line loans
Less than 2.0 to 1.0 0.0% 0.50%
Greater than or equal to 0.0% 0.75%
2.0 to 1.0, but less than
2.5 to 1.0
Greater than or equal to 0.0% 1.125%
2.5 to 1.0, but less than
3.0 to 1.00
Greater than or equal to 0.125% 1.25%
3.0 to 1.0, but less than
3.5 to 1.0
Greater than or equal to 0.375% 1.50%
3.5 to 1.0, but less than
4.0 to 1.0
Greater than or equal to 0.75% 2.00%
4.0 to 1.0
The ratio of Funded Debt to EBITDA is determined from the Current
Financials and any related Compliance Certificate. EBITDA is
calculated for the most recently-completed four fiscal quarters of
Borrower and Funded Debt is calculated as of the last day of such four
fiscal quarter period. The Applicable Margin, as adjusted to reflect
such calculations, shall become effective on the first day following
the end of the four fiscal quarter period for which such calculation
is made, notwithstanding that Current Financials are delivered, and
the calculations are actually made,
at a later date. However, if Borrower fails to timely deliver to
Agent the Current Financials and any related Compliance Certificate,
then the ratio of Funded Debt to EBITDA shall be deemed to be the next
greater ratio (as set out above) than the ratio in effect during the
immediately preceding fiscal quarter and the Applicable Margin based
on such ratio shall become effective as provided in the immediately
preceding sentence and shall remain in effect until a new Applicable
Margin can be calculated, which new Applicable Margin shall become
effective on the date the Current Financials are delivered.
Applicable Percentage means, for any day, the applicable per
annum commitment fee percentage calculated under this Agreement,
(a) from the date of this Agreement through and including
August 31, 1997, the Applicable Percentage shall be 0.42% per
annum;
(b) after August 31, 1997, the Applicable Percentage is
subject to adjustment (upwards or downwards, as appropriate)
based on the ratio of Funded Debt to EBITDA, and shall be the
applicable per annum percentage set out in the appropriate
intersection in the following table:
Ratio of Funded Debt to Applicable
EBITDA Percentage
Less than 2.0 to 1.0 0.20%
Greater than or equal to 2.0 to 0.25%
1.0, but less than 2.5 to 1.0
Greater than or equal to 2.5 to 0.325%
1.0, but less than 3.0 to 1.00
Greater than or equal to 3.0 to 0.375%
1.0, but less than 3.5 to 1.0
Greater than or equal to 3.5 to 0.45%
1.0, but less than 4.0 to 1.0
Greater than or equal to 4.0 to 1.0 0.50%
The ratio of Funded Debt to EBITDA is determined from the Current
Financials and any related Compliance Certificate. EBITDA is
calculated for the most recently-completed four fiscal quarters of
Borrower and Funded Debt is calculated as of the last day of such four
fiscal quarter period. The Applicable Percentage, as adjusted to
reflect such calculations, shall become effective on the first day
following the end of the four fiscal quarter period for which such
calculation is made, notwithstanding that Current Financials are
delivered, and the calculations are actually made, at a later date.
However, if Borrower fails to timely deliver to
Agent the Current Financials and any related Compliance Certificate,
then the ratio of Funded Debt to EBITDA shall be deemed to be the next
greater ratio (as set out above) than the ratio in effect during the
immediately preceding fiscal quarter and the Applicable Percentage
based on such ratio shall become effective as provided in the
immediately preceding sentence and shall remain in effect until a new
Applicable Percentage can be calculated, which new Applicable
Percentage shall become effective on the date the Current Financials
are delivered.
Base Rate means, for any day, the greater of (a) the annual
interest rate most recently announced by Agent as its prime rate (or,
if the Person then acting as Agent under this Agreement is not a bank
organized under the Laws of the United States or any State, then the
rate announced by NationsBank of Texas, N.A. as its prime rate) in
effect at its principal office, automatically fluctuating upward and
downward with and as specified in each announcement without special
notice to Borrower or any other Person (which prime rate may not
necessarily represent the lowest or best rate actually charged to a
customer), and (b) the sum of the Federal Funds Rate plus 0.5%.
Base Rate Loan means a Loan bearing interest at the sum of the
Base Rate plus the Applicable Margin.
Borrower is defined in the preamble to this Agreement.
Business Day means (a) for all purposes, any day other than
Saturday, Sunday, and any other day that commercial banks are
authorized by Law to be closed in Texas or New York and (b) for
purposes of any LIBOR Loan, a day that satisfies the requirements of
clause (a) and on which commercial banks are open for domestic or
international business in London.
Capital Expenditure means, without duplication, the following,
calculated on a consolidated basis for the Companies in accordance
with GAAP: (a) the gross amount of expenditures for fixed or capital
assets determined in accordance with GAAP (excluding any such assets
acquired in connection with normal replacement and maintenance
programs properly expensed in accordance with GAAP) plus (b) to the
extent not included in clause (a), the aggregate amount of all
monetary obligations under any Capital Lease required to be
capitalized in accordance with GAAP (excluding the portion thereof
allocable to interest expense).
Capital Lease means any capital lease or sublease that has been
(or under GAAP is required to be) capitalized on a balance sheet.
Cash Flow means EBITDA minus Cash Taxes (or plus refunds of Cash
Taxes).
Cash Taxes means, for the period determined, the amount that
would be included as a provision for income taxes on a consolidated
financial statement of the Companies in accordance with GAAP and
adjusted for changes in deferred taxes.
Change of Control Event means the occurrence of any transaction
or event by which (a) any Person, or two or more Persons acting in
concert, acquire beneficial ownership (within the meaning of Rule 13d-
3 of the Securities Exchange Commission under the Securities Exchange
Act of 1934) of 50% or more of the outstanding shares of Borrower's
voting stock, or (b) a majority of the Board of Directors of Borrower
shall consist of Persons who are not Continuing Directors.
Closing Date means the date this Agreement and the Loan Papers
are fully executed and delivered.
Code means the Internal Revenue Code of 1986, as amended, and
related rules and regulations.
Collateral is defined in Section 5.2.
Commitment means, for each Lender, the amounts for the Revolving
Credit Facility and the Term Loan (subject to reduction and
cancellation as provided in this Agreement) stated beside a Lender's
name on Schedule 1, as most recently amended under this Agreement.
Commodity Hedge means any purchase and sale contract with known
prices which are intended to reduce or eliminate the risk of
fluctuations in the price of commodities used by any Company in the
ordinary course of its business.
Company or Companies means, at any time, Borrower and each of its
Subsidiaries, now or hereafter existing (and, as of the date the
Acquisition is consummated, shall include Presto and its
Subsidiaries).
Compliance Certificate means a certificate substantially in the
form of Exhibit G and signed by a Responsible Officer.
Continuing Director means, at any date, any individual who (a)
was a member of the Board of Directors of the Borrower on the Closing
Date or (b) was nominated for election or elected to the Board of
Directors of the Borrower with the affirmative vote of a majority of
the Continuing Directors who were members of the Board of Directors at
the time of such nomination or election.
Conversion Request means a request substantially in the form of
Exhibit E.
Current Financials means, at any time, the consolidated Financial
Statements of Borrower and its Subsidiaries most recently delivered to
Agent under Sections 8.1(a) or 8.1(b), as the case may be.
Debt of any Person means, at any date, without duplication (and
calculated in accordance with GAAP), (a) all obligations required by
GAAP to be classified upon such Person's balance sheet as liabilities
(other than accrued expenses or payables of such Person arising in the
ordinary course of business), (b) all Funded Debt of such Person,
(c) liabilities secured (or for which the holder of the Debt has an
existing Right, contingent or otherwise, to be so secured) by any Lien
on property or assets owned or acquired by that Person whether or not
such Debt is assumed by such Person, provided that if such Debt has
not been assumed by (or is otherwise non-recourse to) such Person, the
amount of such Debt shall be deemed to be equal to the lesser of (i)
the aggregate unpaid amount of such Debt, and (ii) the fair market
value of the property or asset encumbered, as determined by such
Person in good faith, (d) all obligations of such Person in respect of
banker's acceptances, letters of credit, surety or other bonds, and
similar instruments, (e) all obligations to pay the deferred purchase
price of property or services (other than accrued expenses or payables
of such Person arising in the ordinary course of business and Funded
Debt), and (f) all endorsements, guaranties (direct or indirect), or
other obligations to purchase or otherwise acquire or assure payment
of Debt of others, and other contingent obligations of such Person
with respect to Debt of others, provided that the amount of any
obligation under this clause (f) shall be deemed to be the amount
equal to the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.
Debtor Relief Laws means Title 11 of the United States Code and
all other applicable state or federal liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, suspension of payments or similar Laws affecting
creditors' Rights in effect from time to time.
Default is defined in Section 11.
Default Rate means an annual rate of interest equal from day to
day to the lesser of (a) the then-existing Base Rate plus 2% and
(b) the Maximum Rate.
Distribution means, with respect to any shares of any capital
stock or other equity securities or other equivalent equity interests
issued by a Person, (a) the declaration or payment of any cash
dividend on or with respect to those securities by such Person, (b)
any other cash payment by that Person with respect to those
securities, and (c) any retirement, redemption, purchase or other
acquisition for value (other than shares of any capital stock of such
Person) of its capital stock or other equity securities.
EBITDA means, (a) in respect of any period, the following,
calculated on a consolidated basis for the Companies in accordance
with GAAP: net income before interest expenses, Taxes, non-cash
operating charges (such as depreciation and amortization expense),
non-cash charges in respect of pension and retiree benefits, and
extraordinary gains and losses, and (b) includes, on a pro forma
basis, EBITDA of any Person acquired in accordance with Section 9.11
for the four fiscal quarters immediately preceding the date of such
acquisition (but may not exclude expenses incurred during such period
which Borrower expects to eliminate in future periods, unless Agent
approves such exclusion and expenses in advance in writing).
Employee Plan means an employee pension benefit plan covered by
Title IV of ERISA and established or maintained by any Company.
Environmental Law means any applicable Law that relates to
pollution or protection of the environment.
ERISA means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
Excess Cash Flow means, in respect of any period, the following,
calculated on a consolidated basis for the Companies in accordance
with GAAP: (a) net income (excluding gains from dispositions of
assets), plus non-cash operating charges (such as depreciation and
amortization expense), plus other noncash charges, minus other noncash
income for such period, minus (b) the sum of payments on Term Loan
Principal Debt, plus scheduled principal payments on other Funded Debt
of the Companies (excluding payments pursuant to the refinancing of
the Existing Bank Debt and payments on the Revolving Credit Principal
Debt except to the extent accompanied by a reduction to the Revolving
Credit Commitment), plus Capital Expenditures during such period plus
cash Distributions by Borrower in compliance with the terms of this
Agreement, plus the amount of deposits made in connection with
Financial Hedges, plus the amount of the increase (or minus the amount
of the decrease), if any, in Working Capital from the
first day to the last day of such period, plus the principal amount of
loans and advances made by Borrower in the ordinary course of business
to its directors, officers and employees in compliance with the terms
of this Agreement, provided that the aggregate amount of such loans
and advances included in this clause (b) may not exceed $500,000 in
any fiscal year.
Existing Bank Debt means the indebtedness under that certain
Second Amended and Restated Credit Agreement dated as of May 4, 1992,
among Borrower, The Long-Term Credit Bank of Japan, Limited, as agent,
and the lenders party thereto, as amended.
Existing Lease means that certain equipment lease agreement
between Borrower and NationsBanc Leasing Corporation of North Carolina
dated January 4, 1994.
Facilities means the Revolving Credit Facility and the Term Loan.
Federal Funds Rate means, for any day, the annual rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined (which
determination is conclusive and binding, absent manifest error) by
Agent to be equal to the weighted average of the rates on overnight
federal funds transactions with member banks of the Federal Reserve
System arranged by federal funds brokers on that day as published by
the Federal Reserve Bank of New York on the next Business Day; or, if
those rates are not published for any day, the average of the
quotations at approximately 10:00 a.m. received by Agent from three
federal funds brokers of recognized standing selected by Agent in its
reasonable discretion.
Financial Hedge means a swap, collar, floor, cap, or other
contract between any Company and any Lender or Affiliate of any Lender
(or another Person reasonably acceptable to Agent), which is intended
to reduce or eliminate the risk of fluctuations in interest rates and
which is legal and enforceable under applicable Law or any foreign
exchange contract.
Financial Statements of a Person means balance sheets, profit and
loss statements, and statements of cash flow prepared (a) in
accordance with GAAP, and (b) other than as stated in Section 1.3, in
comparative form to corresponding periods of the preceding fiscal
year, as applicable.
Fixed Charges means, in respect of any period, the following,
calculated on a consolidated basis for the Companies in accordance
with GAAP: the sum of (a) scheduled principal and cash interest
payments on Funded Debt, and (b) cash Distributions by Borrower.
Funded Debt of any Person means, when determined, the following,
calculated on a consolidated basis for such Person and its
Subsidiaries, in accordance with GAAP: (a) all obligations for
borrowed money (whether as a direct obligation on a promissory note,
bond, zero coupon bond, debenture or other similar instrument, as an
unsatisfied reimbursement obligation on a drawn letter of credit, as a
guaranty (if payment on such obligation has been demanded), or
otherwise) plus (without duplication) (b) that portion of all Capital
Lease obligations required to be capitalized in accordance with GAAP.
Funding Loss, means, without duplication, for each LIBOR loan (a)
the administrative or reemployment costs customarily charged by a
Lender when (i) Borrower fails or refuses (for any reason other than
such Lender's failure to comply with this Agreement) to take any Loan
that it has requested under this Agreement, or (ii) Borrower prepays
or pays any Loan or converts any Loan to a Loan of another Type, in
each case, before the last day of the applicable Interest Period, plus
(b) an amount equal to the excess of the amount of interest that would
have accrued on the Loan at the elected interest rate during the
remainder of the applicable Interest Period (but for such failure,
refusal, prepayment, payment or conversion) over the amount of
interest that would accrue on the same Type of Loan for an Interest
Period of the same duration as the remainder of the applicable
Interest Period.
GAAP means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board that
are applicable from time to time.
Guaranty means a guaranty substantially in the form of Exhibit C.
Hazardous Substance means any substance (a) the presence of which
requires removal, remediation, or investigation under any
Environmental Law, or (b) that is defined or classified as a hazardous
waste, hazardous material, pollutant, contaminant or toxic or
hazardous substance under any Environmental Law.
Intellectual Property means (a) common law, federal statutory,
state statutory and foreign trademarks or service marks (including,
without limitation, all registrations and pending applications for any
such trademark or service mark), trademark or service mark licenses,
(b) United States and foreign patents (including, without limitation,
all pending applications, continuations, continuations-in-part,
divisions, reissues, substitutions and extensions of existing patents
or applications), and patent licenses, (c) copyrights (including,
without limitation, all registrations and pending applications), and
copyright licenses, and (d) trade secrets, but does not include any
licenses (including, without limitation, liquor licenses) or any
permits (including, without limitation, sales tax permits) issued by a
Tribunal and in which (i) the licensee's or permittee's interest is
defeasible by such Tribunal and (ii) the licensee or permittee has no
right beyond the terms, conditions and periods of the license or
permit.
Interest Period is determined in accordance with Section 3.9.
Issuing Lender means NationsBank of Texas, N.A., any other Lender
selected by Borrower and approved in writing by Agent (which approval
may not be unreasonably withheld), or in respect of the LCs set out on
Schedule 2.3 and issued by it, The Long Term Credit Bank of Japan,
Limited.
Laws means all applicable statutes, laws, treaties, ordinances,
rules, regulations, orders, writs, injunctions, decrees, judgments,
and legally binding opinions and interpretations of any Tribunal.
LC means (a) a letter of credit (in such form as shall be
customary in respect of obligations of a similar nature) issued by
Issuing Lender under this Agreement and under an LC Agreement, and (b)
the letters of credit set out on Schedule 2.3.
LC Agreement means a letter of credit application and agreement
(in form and substance satisfactory to Issuing Lender) submitted by
Borrower to Issuing Lender for a letter of credit for the account of
any Company.
LC Exposure means, at any time, (without duplication) the sum of
(a) the aggregate undrawn and uncancelled portions of all outstanding
LCs plus (b) the aggregate unpaid reimbursement obligations of
Borrower under drawings or drafts under any LC, excluding Loans to
fund such reimbursement obligations under Section 2.3.
LC Request means a request substantially in the form of Exhibit
F.
Lender Liens means Liens in favor of Lenders, or Agent on behalf
of Lenders, securing any of the Obligation.
Lenders means the institutions named on Schedule 1 (or on the
most recently amended Schedule 1, if any, delivered by Agent under
this Agreement), and, subject to this Agreement, their
respective successors and assigns (but not any Participant who is not
otherwise a party to this Agreement).
LIBOR means, with respect to any LIBOR Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the term "LIBOR" shall mean, for any LIBOR Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page (or any successor page or any successor service for the
purpose of displaying London interbank offered rates of major banks)
as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period; provided that if more than one rate is specified on
Reuters Screen LIBO Page (or any successor page), the applicable rate
shall be the arithmetic mean of all such rates.
LIBOR Loan means a Loan bearing interest at the sum of LIBOR plus
the Applicable Margin.
Lien means, with respect to any asset, any interest in such asset
securing an obligation owed to, or a claim by, a Person, other than
the owner of the asset, whether such interest is based on contract,
constitutional common law, or statutory law, and including, but not
limited to, any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind in
respect of such asset, and any other arrangement for a creditor's
claim to be satisfied from such asset or its proceeds prior to the
claims of other creditors or the owners of the asset.
Litigation means any action by or before any Tribunal.
Loan means (without duplication) any amount disbursed by any
Lender to Borrower or on behalf of any Company under any Loan Paper,
either as an original disbursement of funds, the continuation of an
amount outstanding, or payment of an LC reimbursement obligation.
Loan Date means for any Loan the date for which funds are
requested by Borrower.
Loan Papers means (a) this Agreement and exhibits and schedules
to this Agreement, (b) the Notes, the Guaranty, the
Security Documents, and all agreements, documents and instruments in
favor of Agent or Lenders (or Agent on behalf of, or for the benefit
of, Lenders) ever executed or delivered in connection with or under
this Agreement or any part of the Obligation, (c) all LCs and LC
Agreements, (d) any Financial Hedge between any Company and any Lender
or an Affiliate of a Lender, (e) all renewals, extensions and
restatements of, and amendments and supplements to, any of the
foregoing, and (f) all certificates and other documents delivered,
issued or executed in connection with or pursuant to any of the
foregoing.
Loan Request means a request substantially in the form of
Exhibit D.
Material Adverse Event means any circumstance or event that,
individually or collectively with other circumstances or events,
reasonably is expected to result in any (a) impairment of the ability
of any Company to perform any of its payment or other material
obligations under any Loan Paper, (b) material impairment of the
ability of Agent or any Lender to enforce (i) any of the material
obligations of any Company under this Agreement or (ii) any of their
respective Rights under the Loan Papers, (c) material and adverse
effect on the financial condition of the Companies as a whole as
represented to Lenders in the Financial Statements of Borrower dated
as of December 31, 1995, and June 30, 1996, (d) material and adverse
effect on Collateral having a net book value at least equal to 15% of
the net book value of all tangible assets of the Companies as set out
in the most recent Financial Statements delivered in accordance with
Section 8.1(a), or (e) Default.
Material Agreement means any agreement required to be filed or
otherwise disclosed under Exhibits 4 or 10 of Item 601 of Regulation
S-K.
Maximum Amount and Maximum Rate respectively mean, for a Lender,
the maximum non-usurious amount and the maximum non-usurious rate of
interest that, under applicable Law, such Lender is permitted to
contract for, charge, take, reserve or receive on the Obligation held
by such Lender.
Multiemployer Plan means a multiemployer plan as defined in
Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to
which any Company (or any Person that, for purposes of Title IV of
ERISA, is a member of Borrower's controlled group or is under common
control with Borrower within the meaning of Section 414 of the Code)
is making, or has made, or is accruing, or has accrued, an obligation
to make contributions.
Net Equity Proceeds means the net cash proceeds (after all costs
of issuance, registration, and selling) received by any Company from
the issuance and sale of equity securities.
Net Worth means stockholders' equity as shown on a balance sheet
and determined in accordance with GAAP.
Notes means all outstanding and unpaid Revolving Credit Notes,
Term Notes, and the Swing Line Note.
Obligation means all present and future Debt and obligations, and
all renewals, increases and extensions thereof, or any part thereof,
now or hereafter owed (a) to Agent or any Lender (including Swing Line
Lender) by any Company under any Loan Paper, together with all
interest accruing thereon, fees, costs and expenses (including,
without limitation, all attorneys' fees and expenses incurred in the
enforcement or collection thereof) payable under the Loan Papers or in
connection with the protection of Rights under the Loan Papers, or (b)
under the Existing Lease.
Participant is defined in Section 14.12(b).
PBGC means the Pension Benefit Guaranty Corporation, or any
successor thereof, established under ERISA.
Permitted Debt means:
(a) the Obligation;
(b) Debt arising from endorsing negotiable instruments for
collection in the ordinary course of business;
(c) Capital Leases;
(d) Current liabilities incurred in the ordinary course of
business;
(e) purchase money Debt, including all extensions,
renewals, refinancings and modifications thereof, provided that
the principal amount does not increase;
(f) trade payables that are for goods furnished or services
rendered in the ordinary course of business and that are payable
in accordance with customary trade terms;
(g) Subordinated Debt of Borrower;
(h) Debt of any Company existing on the Closing Date and
listed on Schedule 2, and all extensions, renewals,
refinancings and modifications thereof, provided that the
principal amount does not increase;
(i) Debt arising from or under Financial Hedges or
Commodity Hedges;
(j) Debt of any Company owing to any other Company;
(k) contingent obligations under any guaranty by any
Company of any other Company's obligations as lessee under any
lease which is otherwise permitted under this Agreement;
(l) Debt arising from leases of vehicles and other
equipment by any Company in the ordinary course of business and
consistent with past practices of such Company;
(m) Debt constituting deposits to secure the performance of
bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds and performance
bonds and other obligations of a like nature that are incurred in
the ordinary course of business, not to exceed $5,000,000 in the
aggregate at any time outstanding;
(n) indemnities arising under agreements entered into by
any Company in the ordinary course of business;
(o) Letters of credit issued as part of the Existing Bank
Debt which (i) remain outstanding after the Existing Bank Debt is
fully paid and terminated and (ii) are not listed on Schedule
2.3;
(p) Debt arising on account of deferred Taxes, deferred
workers compensation liabilities or deferred employee medical
liabilities; and
(q) additional Debt not to exceed $2,000,000 in aggregate
principal amount at any time outstanding.
Permitted Encumbrances means, with respect to any real property,
the exceptions to title set out in the title insurance policy or title
commitment delivered with respect thereto, all of which exceptions
must be acceptable to Agent in its reasonable discretion.
Permitted Liens means:
(a) Liens now or hereafter securing the Obligation;
(b) any Lien securing Debt incurred for the purchase or
capital lease of one or more assets if such Lien encumbers only
the assets so purchased or leased;
(c) pledges or deposits made to secure payment of workers'
compensation, unemployment insurance, or other forms of
governmental insurance or benefits or to participate in any fund
in connection with workers' compensation, unemployment insurance,
pensions, or other social security programs;
(d) the following, if (i) no amounts are due and payable
and no Lien has been filed (or agreed to), (ii) (1) the validity
or amount secured thereby is being contested in good faith by
lawful proceedings diligently conducted, (2) reserve or other
provision required by GAAP has been made, and (3) levy and
execution thereon have been (and continue to be) stayed or
payment thereof is covered in full (subject to the customary
deductible) by insurance, or (iii) such Liens do not in the
aggregate materially detract from the value of any Company's
property or assets or materially impair the use thereof in the
operation of the business of such Company:
(A) Liens for Taxes;
(B) Liens upon property, including any attachment of
property or other legal process prior to adjudication of a
dispute on the merits; and
(C) Liens imposed by operation of law (including,
without limitation, Liens of mechanics, materialmen,
warehousemen, carriers and landlords and similar Liens);
(e) any interest or title of a lessor, sublessor, licensee
or licensor under any lease or license agreement permitted by
this Agreement;
(f) Liens in existence on the date hereof which are listed
on Schedule 2, and renewals, replacements and extension of such
Liens, provided that the aggregate principal amount of the Debt
secured by such Liens does not increase and such Liens do not
encumber any additional assets of any Company;
(g) Permitted Encumbrances and other easements, rights-of-
way, restrictions (including zoning restrictions), encroachments,
protrusions and other similar charges or encumbrances, and minor
title deficiencies, in each case
whether now or hereafter in existence, which do not secure Debt
and do not materially interfere with the conduct of the business
of any Company or materially impair such Company's title to, or
right to transfer, the property so encumbered;
(h) Licenses, leases or subleases granted to other Persons
in the ordinary course of business not materially interfering
with the conduct of the business of any Company;
(i) precautionary UCC financing statement filings regarding
operating leases entered into by any Company in the ordinary
course of business;
(j) Liens arising out of the existence of judgments or
awards not constituting a Default under Section 11.4, provided
that no cash or property is deposited or delivered to secure the
respective judgment or award (or any appeal bond in respect
thereof, except as permitted by clause (l) below);
(k) contractual landlord's liens under leases to which any
Company is a lessee;
(l) (i) Liens (other than any Lien imposed by ERISA) to
secure the performance of tenders, statutory obligations (other
than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade
contracts, performance and return of money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money), (ii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure the payments of
customs duties in connection with the importation of goods, (iii)
deposits made to secure statutory obligations in the form of
excise taxes, and (iv) deposits made in the ordinary course of
business to secure liability for premiums to insurance carriers,
provided that the amount of such obligations under clause (i),
duties under clause (ii), and deposits under clauses (iii) and
(iv) shall not exceed $3,000,000 in the aggregate at any time
outstanding;
(m) Liens in favor of a banking institution arising as a
matter of law encumbering the deposits (including the right of
setoff) held by such banking institutions incurred in the
ordinary course of business and which are within the general
parameters customary in the banking industry;
(n) Liens arising in connection with a Financial Hedge or
Commodity Hedge;
(o) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered
into by any Company in the ordinary course of business in
accordance with the past practices of such Company; and
(p) Liens not otherwise permitted by the foregoing clauses
(a) through (o) to the extent attaching to properties and assets
to secure Permitted Debt.
Person means any individual, partnership, entity or Tribunal.
Potential Default means the occurrence of any event or the
existence of any circumstance that would, upon notice or lapse of time
or both, become a Default.
Presto means Presto Food Products, Inc., a California
corporation.
Principal Debt means, at any time, the unpaid principal balance
of all Loans.
Pro Rata and Pro Rata Part means, when determined for any Lender,
(a) if there is no Principal Debt or LC Exposure, the proportion
(stated as a percentage) that such Lender's Commitment bears to the
Total Commitment, or (b) if there is any Principal Debt or LC
Exposure, the proportion (stated as a percentage) that the sum of (i)
the Principal Debt owed to such Lender and (ii) (without duplication)
the LC Exposure of such Lender, bears to the (x) aggregate Principal
Debt owed to and (y) (without duplication) the LC Exposure of, all
Lenders.
Purchaser is defined in Section 14.12(c).
Representatives means representatives, officers, directors,
employees, attorneys and agents.
Required Lenders means any combination of Lenders holding at
least (a) 50% of the Total Commitment, if no Principal Debt or LC
Exposure is outstanding, or (b) 50% of the Total Commitment Usage if
any Principal Debt or LC Exposure is outstanding, provided that in
each case, the combination of Lenders comprising Required Lenders from
time to time may not include any Lender which has failed to remit its
Pro Rata Part of a requested Loan.
Responsible Officer means the chairman, president, chief
executive officer, chief financial officer, senior vice president or
vice president-finance of Borrower.
Revolving Credit Facility is defined in the preamble to this
Agreement.
Revolving Credit Commitment means, at any time, the sum of all
Commitments for all Lenders under the Revolving Credit Facility as set
out on Schedule I (as reduced or canceled under this Agreement) then
in effect.
Revolving Credit Commitment Usage means, at any time, the sum of
(a) the Revolving Credit Principal Debt, plus (b) the LC Exposure,
plus (c) the Swing Line Principal Debt.
Revolving Credit Note means a promissory note substantially in
the form of Exhibit A.
Revolving Credit Principal Debt means, at any time, the unpaid
principal balance of all Loans under the Revolving Credit Facility.
Revolving Credit Termination Date means the earlier of
(a) December 1, 2002, and (b) the effective date that Lenders'
commitments to lend under the Revolving Credit Facility are otherwise
canceled or terminated in accordance with this Agreement.
Rights means rights, remedies, powers, privileges and benefits.
Security Documents means, collectively, any security agreement,
pledge agreement, mortgage, deed of trust or other agreement or
document, together with all related financing statements and stock
powers, in form and substance satisfactory to Agent and its legal
counsel, executed and delivered by any Person in connection with this
Agreement to create a Lender Lien on any of its real or personal
property, as amended, supplemented or restated.
Solvent means, as to a Person, that (a) the aggregate fair market
value of its assets exceeds its liabilities, (b) it has sufficient
cash flow to enable it to pay its Debts as they mature, and (c) it
does not have unreasonably small capital to conduct its businesses.
Subordinated Debt means any unsecured Funded Debt for which a
Company is directly and primarily obligated that (a) does not have any
stated maturity before the latest maturity of any part of the
Obligation if such indebtedness was created after the Closing Date,
(b) has terms that are no more restrictive upon the Company than the
terms of the Loan Papers, and (c) is subordinated, upon terms
satisfactory to Agent, to the payment
and collection of the Obligation, and any extensions, renewals and
refinancings of such Funded Debt which satisfy the criteria set out in
the foregoing clauses (a), (b) and (c).
Subsidiary of any Person means any entity of which more than 50%
(in number of votes) of the stock (or equivalent interests) is owned
of record or beneficially, directly or indirectly, by that Person.
Swing Line Subfacility means the subfacility under the Revolving
Credit Facility described in Section 2.4.
Swing Line Lender means NationsBank of Texas, N.A., and its
successors in such capacity.
Swing Line Loan means a Loan bearing interest at the Swing Line
Rate plus the Applicable Margin, and which is made under the Swing
Line Subfacility.
Swing Line Maturity Date means the earlier of December 1, 2002,
and the Revolving Credit Termination Date.
Swing Line Note means a promissory note substantially in the form
of Exhibit I.
Swing Line Principal Debt means, at any time, the unpaid
principal balance of all Loans under the Swing Line Subfacility.
Swing Line Rate means, for any day, the annual interest rate
equal to the sum of the Federal Funds Rate on such day, plus 0.25%.
Taxes means, for any Person, taxes, assessments or other
governmental charges or levies imposed upon it, its income, or any of
its properties, franchises or assets.
Term Loan is defined in the preamble to this Agreement.
Term Loan Commitment means, at any time, the sum of all
Commitments for all Lenders under the Term Loan as set out on Schedule
I (as reduced or canceled under this Agreement) then in effect.
Term Loan Maturity Date means the earlier of (a) December 1,
2002, or (b) the acceleration of maturity of Term Loan in accordance
with Section 12 of this Agreement.
Term Loan Principal Debt means, at any time, the unpaid principal
balance of the Term Loan.
Term Note means a promissory note substantially in the form of
Exhibit B.
Termination Date means, as applicable, the Revolving Credit
Termination Date or the Term Loan Maturity Date.
Total Commitment means, at any time, the sum of the Revolving
Credit Commitment and the Term Loan Commitment.
Total Commitment Usage means, at any time, the sum of (a) the
Revolving Credit Commitment Usage and (b) the Term Loan Principal
Debt.
Tribunal means any (a) local, state, or federal judicial,
executive, or legislative instrumentality, or (b) private arbitration
board or panel.
Type means any type of Loan determined with respect to the
applicable interest option.
UCP means The Uniform Customs and Practice for Documentary
Credits, 1993 Revision, International Chamber of Commerce Publication
No. 500 (as amended or modified).
Working Capital means the difference of current assets minus
current liabilities (excluding the current portion of long term Debt)
as determined in accordance with GAAP.
1.2 Number and Gender of Words. The singular includes the
--------------------------
plural where appropriate and vice versa, and words of any gender
include each other gender where appropriate.
1.3 Accounting Principles. Under the Loan Papers, unless
---------------------
otherwise stated, (a) GAAP determines all accounting and financial
terms, (b) GAAP in effect on the date of this Agreement determines
compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all
material respects to those applied during the preceding comparable
period, and (d) while Borrower has any consolidated Subsidiaries, all
accounting and financial terms and compliance with financial covenants
must be on a consolidated basis, as applicable.
SECTION 2 COMMITMENT.
--------- ----------
2.1 Facilities. Subject to and upon the terms and the
----------
provisions in this Agreement, each Lender severally and not jointly
agrees to lend to Borrower under Revolving Credit Facility and under
Term Loan on the following conditions:
2.1.1 Revolving Credit Facility. Each Lender agrees to
-------------------------
lend, at any time and from time to time, Borrower such Lender's
Pro Rata Part of one or more Loans under the Revolving Credit
Facility which Borrower may borrow, repay and reborrow under this
Agreement;
(a) Each Loan under the Revolving Credit Facility must
occur on a Business Day and no later than the Business Day
immediately preceding the Revolving Credit Termination Date;
(b) Each Loan must be in an amount not less than (i)
$1,000,000 or a greater integral multiple of $100,000 (if a
Base Rate Loan, other than any Swing Line Loan), (ii)
$1,000,000 or a greater integral multiple of $100,000 (if a
LIBOR Loan), (iii) $250,000 or a greater integral multiple
of $100,000 (if a Swing Line Loan);
(c) When determined, (i) the Revolving Credit
Commitment Usage may not exceed the Revolving Credit
Commitment, and (ii) no Lender's Pro Rata Part of the
Revolving Credit Commitment Usage may exceed such Lender's
Commitment under the Revolving Credit Facility.
2.1.2 Term Loan. Each Lender agrees to lend to Borrower
---------
its Pro Rata Part of the Term Loan, which Borrower may borrow no
later than the second Business Day after the Closing Date and may
pay or prepay under the terms of this Agreement, but which may
not be reborrowed, and the Term Loan Principal Debt may not
exceed the Term Loan Commitment.
2.2 Loan Procedure. The following procedures apply to Loans
--------------
other than Swing Line Loans (see Section 2.4) and drawings under an LC
(see Section 2.3):
(a) Borrower may request a Loan (i) by delivering to Agent
a Loan Request or (ii) by telephonic notice to Agent promptly
confirmed by delivery to Agent of a Loan request. The Loan
Request or telephonic notice must be received by Agent no later
than 12:00 noon on (i) the third Business Day preceding the Loan
Date for any LIBOR Loan or (ii) on the day of the Loan Date for
any Base Rate Loan. Agent shall promptly notify each Lender of
its receipt of any Loan Request and its contents. A Loan Request
is irrevocable and binding on Borrower.
(b) By 11:00 a.m. on the applicable Loan Date, each Lender
shall remit its Pro Rata Part of each requested Loan
by wire transfer to Agent pursuant to Agent's wire transfer
instructions on Schedule 1 (or as otherwise directed by Agent) in
funds that are available for immediate use by Agent. Subject to
receipt of such funds, Agent shall make such funds available to
Borrower as directed in the Loan Request (unless it has actual
knowledge that any applicable condition precedent either has not
been satisfied by Borrower or has not been waived by Required
Lenders).
(c) Absent contrary written notice from a Lender, Agent may
assume that each Lender has made its Pro Rata Part of the
requested Loan available to Agent on the applicable Loan Date,
and Agent may, in reliance upon such assumption (but is not
required to), make available to Borrower a corresponding amount.
If a Lender fails to make its Pro Rata Part of any requested Loan
available to Agent on the applicable Loan Date, Agent may recover
the applicable amount on demand (i) from that Lender, together
with interest at the Federal Funds Rate for the period commencing
on the date the amount was made available to Borrower by Agent
and ending on (but excluding) the date Agent recovers the amount
from that Lender, or (ii) if that Lender fails to pay its amount
upon demand, then from Borrower (after written notice from
Agent), together with interest at an annual interest rate equal
to the rate applicable to the requested Loan for the period
commencing on the date funds are advanced and ending on (but
excluding) the date Agent recovers the amount from Borrower. No
Lender is responsible for the failure of any other Lender to make
its Pro Rata Part of any Loan. Nothing in this Section 2.2 shall
be deemed to relieve any Lender from its obligation to make Loans
hereunder or to prejudice any Rights which Borrower may have
against any Lender as a result of such Lender's failure to make
Loans hereunder.
2.3 LC Subfacility.
--------------
(a) Subject to the terms and conditions of this Agreement
and applicable Law, Issuing Lender agrees, at any time and from
time to time (but not later than 30 days prior to the Revolving
Credit Termination Date), to issue LCs under the Revolving Credit
Facility upon Borrower's delivery of an LC Request and a duly
executed LC Agreement, each of which must be received by Issuing
Lender no later than 12:00 noon on the second Business Day before
the requested LC is to be issued; provided that the LC Exposure
may not exceed $15,000,000, and the Revolving Credit Commitment
Usage may not exceed the Revolving Credit Commitment (as such
amount is reduced and canceled in accordance with this
Agreement). Each LC must expire no later than 13 months after
such LC's
issuance, provided that (i) any LC may, at Borrower's request,
provide that it is self-extending upon its expiration date for
successive periods of 6 to 12 months each unless Issuing Lender
has given the beneficiary under such LC at least 30 days (but no
more than 120 days) prior written notice to the contrary, and
(ii) each LC must expire no later than the Revolving Credit
Termination Date.
(b) Immediately upon Issuing Lender's issuance of any LC,
Issuing Lender shall be deemed to have sold and transferred to
each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received
from Issuing Lender, without recourse or warranty, an undivided
interest and participation (to the extent of such Lender's Pro
Rata Part of the Revolving Credit Commitment) in the LC and all
applicable Rights of Issuing Lender in the LC (other than Rights
to receive certain fees provided for in Section 4.3). Issuing
Lender agrees to provide a copy of each LC to each other Lender
promptly after issuance. However, Issuing Lender's failure to
promptly send to Lenders a copy of an issued LC shall not affect
the rights and obligations of Issuing Lender and Lenders under
this Agreement.
(c) To induce Issuing Lender to issue and maintain LCs, and
to induce Lenders to participate in issued LCs, Borrower agrees
to pay or reimburse Issuing Lender the amount paid or to be paid
by Issuing Lender (i) within three Business Days after Borrower
receives written notice from Issuing Lender that any draft or
draw request has been properly presented under any LC, or, if the
draft or draw request is for payment at a future date, within one
Business Day before the payment date specified in the draw
request, and (ii) promptly, upon demand, the fees Issuing Lender
charges for the application and issuance of an LC as set out in
Section 4, and the amount of any additional, customary charges
for honoring drafts and draw requests, and taking similar action
in connection with letters of credit. If Borrower does not
timely pay or reimburse Issuing Lender for any drafts or draw
requests paid or to be paid, Agent is irrevocably authorized to
fund Borrower's reimbursement obligations as a Base Rate Loan
under the Revolving Credit Facility and the proceeds of the Base
Rate Loan shall be advanced directly to Issuing Lender to pay
Borrower's unpaid reimbursement obligations. If funds cannot be
advanced under the Revolving Credit Facility or if Agent elects
not to exercise the authority granted it for the immediately
preceding sentence to fund the reimbursement obligations as a
Base Rate Loan, then Borrower's reimbursement obligation shall
constitute a demand obligation. Borrower's
reimbursement obligations shall accrue interest (x) at the Base
Rate plus the Applicable Margin from the date Issuing Lender pays
the applicable draft or draw request through the date Issuing
Lender is paid or reimbursed by Borrower and, (y) if such
reimbursement obligations are not funded as a Base Rate Loan
under the Revolving Credit Facility, at the Default Rate from the
date Borrower becomes obligated to pay such reimbursement
obligation through the date Issuing Lender is paid or reimbursed
by Borrower. Borrower's obligations under this Section 2.3(c)
are absolute and unconditional irrespective of any setoff,
counterclaim or defense to payment that Borrower may have at any
time against Issuing Lender or any other Person.
(d) Issuing Lender shall promptly notify Borrower of the
date and amount of any draft or draw request presented for honor
under any LC (but failure to give notice will not affect
Borrower's obligations under this Agreement). Issuing Lender
shall pay the requested amount upon presentment of a draft or
draw request unless presentment on its face does not comply with
the terms of the applicable LC. When making payment, Issuing
Lender may disregard (i) any default or potential default that
exists under any other agreement and (ii) obligations under any
other agreement that have or have not been performed by the
beneficiary or any other Person (and Issuing Lender is not liable
for any of those obligations). Borrower's reimbursement
obligations to Issuing Lender and Lenders, and each Lender's
obligations to Issuing Lender, under this Section 2.3 are
absolute and unconditional irrespective of, and Issuing Lender is
not responsible for, (1) the validity, enforceability,
sufficiency, accuracy or genuineness of documents or endorsements
(even if they are in any respect invalid, unenforceable,
insufficient, inaccurate, fraudulent or forged), (2) any dispute
by any Company with or any Company's claims, setoffs, defenses,
counterclaims or other Rights against Issuing Lender, any Lender
or any other Person, or (3) the occurrence of any Potential
Default or Default, provided that Borrower or any Lender may
assert a separate claim against Issuing Lender for its gross
negligence, willful misconduct or breach of this Agreement.
(e) If Borrower fails to timely reimburse Issuing Lender as
provided in Section 2.3(c) and funds are not advanced as a Base
Rate Loan under the Revolving Credit Facility to satisfy the
reimbursement obligations, Issuing Lender shall promptly notify
each Lender of Borrower's failure, of the date and amount paid,
and of each Lender's Pro Rata Part of the unreimbursed amount.
Each Lender shall promptly and unconditionally make available to
Issuing
Lender in immediately available funds its Pro Rata Part of the
unpaid reimbursement obligation. Such funds are due and payable
to Issuing Lender before the close of business on (i) the
Business Day Issuing Lender gives notice to each Lender of
Borrower's reimbursement failure if the notice is received by a
Lender before 2:00 p.m. in the time zone where such Lender's
office listed on Schedule 1 is located, or (ii) on the next
succeeding Business Day after the Business Day Issuing Lender
gives notice to each Lender of Borrower's reimbursement failure,
if notice is received after 2:00 p.m. in the time zone where such
Lender's office listed on Schedule 1 is located. All amounts
payable by any Lender accrue interest at the Federal Funds Rate
from the day such amounts become due from Lender to Issuing
Lender to (but not including) the date the amount is paid by
Lender to Issuing Lender. Issuing Lender shall promptly deliver
reimbursement payments received from Borrower to Agent which
shall promptly distribute that amount to all Lenders according to
their Pro Rata Part of the Revolving Credit Commitment.
(f) Borrower acknowledges that each LC is deemed issued
upon delivery to the beneficiary or Borrower. If Borrower
requests any LC be delivered to Borrower rather than the
beneficiary, and Borrower subsequently cancels that LC, Borrower
agrees to return it to Issuing Lender together with Borrower's
written certification that it has never been delivered to the
beneficiary. If any LC is delivered to the beneficiary under
Borrower's instructions, Borrower's cancellation is ineffective
without Issuing Lender's receipt of the LC and the beneficiary's
written consent to the cancellation. Borrower shall indemnify
Issuing Lender for all losses, costs, damages, expenses and
reasonable attorneys' fees suffered or incurred by Issuing Lender
resulting from any dispute concerning Borrower's cancellation of
any LC.
(g) Issuing Lender agrees with each Lender that it will
examine all documents with reasonable care to ascertain that they
appear on their face to be in accordance with the terms and
conditions of the LC. Each Lender and Borrower agree that, in
paying any draft or draw under any LC, Issuing Lender has no
responsibility to obtain any document (other than any documents
expressly required by the respective LC) or to ascertain or
inquire as to any document's validity, enforceability,
sufficiency, accuracy or genuineness or the authority of any
Person delivering it. Neither Issuing Lender nor its
Representatives will be liable to any Lender or any Company for
any LC's use or for any beneficiary's acts or omissions. Any
action, inaction, error, delay or omission taken or suffered by
Issuing Lender
or any of its Representatives in connection with any LC,
applicable draws, drafts or documents, or the transmission,
dispatch or delivery of any related message or advice, if in
conformity with applicable Laws and in accordance with the
standards of care specified in the UCP, is binding upon the
Companies and Lenders. Issuing Lender is not liable to any
Company or any Lender for any action taken or omitted by Issuing
Lender or its Representative in connection with any LC in the
absence of gross negligence, willful misconduct or breach of this
Agreement.
(h) On the Revolving Credit Termination Date, upon a
termination under Section 3.2(e)(i), while a Default exists under
Section 11.3, or upon any demand by Agent when any other Default
(or Potential Default in respect of Sections 10.1, 10.2, or 10.3
or the payment of any part of the Obligation) exists, Borrower
shall provide to Agent, for the benefit of Lenders, cash
collateral in an amount equal to the then-existing LC Exposure.
Any cash collateral provided by Borrower to Issuing Lender in
accordance with this Section 2.3(h) shall be deposited by Issuing
Lender in an interest bearing cash collateral account maintained
with Issuing Lender at the office of Issuing Lender and such
deposits will be invested in obligations issued or guaranteed by
the United States and, upon the surrender of any LC, Issuing
Lender shall deliver the funds deposited in such collateral
account to Borrower together with any investment earnings on such
funds.
(i) Borrower Shall Protect, Indemnify, Pay, And Save
Issuing Lender, Each Lender And Their Respective Representatives
Harmless From And Against Any And All Claims, Demands,
Liabilities, Damages, Losses, Costs, Charges And Expenses
(Including Reasonable Attorneys' Fees) Which Any Of Them May
Incur Or Be Subject To As A Consequence Of The Issuance Of Any
LC, Any Dispute About It, Any Cancellation Of Any LC By Borrower
(other than interest and fees which may otherwise accrue
thereon), Or The Failure Of Issuing Lender To Honor A Draft Or
Draw Request Under Any LC As A Result Of Any Act Or Omission
(Whether Right Or Wrong) Of Any Present Or Future Tribunal.
However, No Person Is Entitled To Indemnity Under This Section
2.3(i) FOR ITS OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH
OF THIS AGREEMENT.
(j) Although referenced in any LC, terms of any particular
agreement or other obligation to the beneficiary are not
incorporated into this Agreement in any manner. The fees and
other amounts payable with respect to each LC are as provided in
this Agreement, drafts and draws under each
LC are part of the Obligation, and the terms of this Agreement
control any conflict between the terms of this Agreement and any
LC Agreement.
2.4 Swing Line Subfacility.
----------------------
(a) For the convenience of the parties and subject to
Section 2.1.1(b)(iii), Swing Line Lender, solely for its own
account but as part of the Revolving Credit Facility, may, at any
time and from time to time, make any requested Loan directly to
Borrower as a Swing Line Loan without requiring each other Lender
to fund its Pro Rata Part thereof unless and until Section 2.4(b)
is applicable. Swing Line Loans are subject to the following
conditions:
(i) Each Swing Line Loan must occur on a Business Day
before the Swing Line Maturity Date;
(ii) When determined, (x) the Swing Line Principal
Debt may not exceed $10,000,000, and (y) the Revolving
Credit Commitment Usage may not exceed the Revolving Credit
Commitment;
(iii) Each Swing Line Loan is (x) available on same
day telephonic notice from Borrower to Swing Line Lender if
notice is received before 12:00 noon, (y) may be borrowed
for periods, at Borrower's election, of 1, 2, 3, 4, 5, 6, or
7 days, and (z) is due and payable at 12:00 noon on its due
date; and
(iv) Each Swing Line Loan may be prepaid on same-day
telephonic notice from Borrower to Swing Line Lender, if
notice is received before 12:00 noon.
(b) If Borrower fails to repay any Swing Line Loan when due
(or upon the earliest to occur of a Default, the Revolving Credit
Termination Date, or the date when the Revolving Credit
Commitments are canceled), Swing Line Lender shall notify Agent
and each Lender of Borrower's failure and the unpaid amount. No
later than the close of business on the date Swing Line Lender
gives notice (if notice is given before 12:00 noon on any
Business Day, or, if made at any other time, on the next Business
Day following the date of notice), each Lender shall irrevocably
and unconditionally purchase and receive from Swing Line Lender
its Pro Rata Part of such Swing Line Loan and shall make
available to Swing Line Lender in immediately available funds its
Pro Rata Part of such unpaid amount, together with interest from
the date when its payment was due to, but not including, the date
of payment, at the Default Rate. If a
Lender does not promptly pay its amount upon Swing Line Lender's
demand, and until Lender makes the required payment, Swing Line
Lender is deemed to continue to have outstanding a Swing Line
Loan in the amount of the Lender's unpaid obligation. Borrower
shall make each payment of all or any part of any Swing Line Loan
to Swing Line Lender for the ratable benefit of Swing Line Lender
and those Lenders who have funded their participations in Swing
Line Loan under this Section 2.4(b) (but all interest accruing on
Swing Line Loan before the funding date of any participation is
payable solely to Swing Line Lender for its own account).
SECTION 3 TERMS OF PAYMENT.
--------- ----------------
3.1 Notes and Payments.
------------------
(a) (i) The Revolving Credit Principal Debt (other than
under the Swing Line Principal Debt) shall be evidenced by
the Revolving Credit Notes, one payable to each Lender in
the maximum principal amount of its Commitment for the
Revolving Credit Facility.
(ii) The Term Loan Principal Debt shall be evidenced
by the Term Notes, one payable to each Lender in the stated
principal amount of its Commitment for the Term Loan.
(iii) The Swing Line Principal Debt shall be
evidenced by a Swing Line Note payable to Swing Line Lender
in the principal amount of $10,000,000.
(b) Borrower must make each payment and prepayment on the
Obligation (other than under the Swing Line Subfacility), without
offset, counterclaim, or deduction, to Agent's principal office
in Dallas, Texas, in funds that will be available for immediate
use by 1:00 p.m. on the day due. Payments received after such
time shall be deemed received on the next Business Day. Agent
shall pay to each Lender any payment to which that Lender is
entitled on the same day Agent receives the funds from Borrower
if Agent receives the payment or prepayment before 1:00 p.m., and
otherwise before 12:00 noon on the following Business Day. If
and to the extent that Agent does not make payments to Lenders
when due, unpaid amounts shall accrue interest payable by Agent
to such Lender at the Federal Funds Rate from the due date until
(but not including) the payment date.
(c) Borrower must make each payment and prepayment of the
Swing Line Subfacility without offset, counterclaim, or
deduction, to Swing Line Lender's principal office in Dallas,
Texas, in funds that will be available for immediate use by 12:00
noon on the day due. Payments received after such time shall be
deemed received on the next Business Day. If, under
Section 2.4(b), Lenders have purchased their respective Pro Rata
Parts of the Swing Line Loans being paid, Swing Line Lender shall
pay to each Lender any payment to which that Lender is entitled
on the same day Swing Line Lender receives the funds from
Borrower if Swing Line Lender receives the payment or prepayment
before 12:00 noon, and otherwise before 12:00 noon on the
following Business Day. If and to the extent that Swing Line
Lender does not make payments to Lenders when due, unpaid amounts
shall accrue interest payable by Swing Line Lender to such Lender
at the Federal Funds Rate from the due date until (but not
including) the payment date.
3.2 Interest and Principal Payments.
-------------------------------
(a) Interest Payments. Accrued interest on each LIBOR Loan
-----------------
is due and payable on the last day of its respective Interest
Period. If any Interest Period with respect to a LIBOR Loan is a
period greater than three months, then accrued interest is also
due and payable on the date three months after the commencement
of the Interest Period. Accrued interest on each Base Rate Loan
is due and payable on each March 31, June 30, September 30, and
December 31 (commencing December 31, 1996) and on the Termination
Date. Accrued interest on each Swing Line Loan is due and
payable on the earlier of the date such Loan is due under
Section 2.4(a)(iii) or prepaid under Section 2.4(a)(iv).
(b) Principal Payments.
------------------
(i) The Revolving Credit Principal Debt is due and
payable on the Revolving Credit Termination Date.
(ii) Principal payments on the Term Loan Principal
Debt are due and payable in quarterly installments
commencing March 31, 1997, and continuing on each June 30,
September 30, December 31 and March 31 thereafter, in the
amounts set out in the following table:
March 31, 1997, June 30, 1997, $2,000,000
September 30, 1997, and December 31,
1997
March 31, 1998, June 30, 1998, $3,750,000
September 30, 1998, and December 31,
1998
March 31, 1999, June 30, 1999, $5,000,000
September 30, 1999, and December 31,
1999
March 31, 2000, June 30, 2000, $7,500,000
September 30, 2000, and December 31,
2000
March 31, 2001, June 30, 2001, $8,750,000
September 30, 2001, and December 31,
2001
March 31, 2002, June 30, 2002, $13,000,000
September 30, 2002, and December 31,
2002
(c) Mandatory Repayment - Revolving Credit Facility. If
-----------------------------------------------
the Revolving Credit Commitment Usage ever exceeds the Revolving
Credit Commitment, then, on the next Business Day, Borrower shall
repay the Principal Debt under the Revolving Credit Facility in
at least the amount of that excess, together with (i) all accrued
and unpaid interest on the principal amount so prepaid and
(ii) any resulting Funding Loss.
(d) Mandatory Prepayments - Term Loan. Borrower shall make
---------------------------------
mandatory prepayments on the Term Loan equal to the following
amounts:
(i) 100% of the net cash proceeds (after selling
expenses and Taxes related thereto and any reserves for
retained liabilities until such liabilities are
extinguished) received by any Company from the disposition
of any asset (including proceeds from the disposition of the
stock of Subsidiaries and proceeds received as a result of
any casualty and including installment payments under
promissory notes or other non-cash consideration received by
such Company) other than (x) the first $5,000,000 in
proceeds from the disposition of assets (1) in the period
beginning on the Closing Date and ending on December 31,
1997 and (2) in each fiscal year thereafter, and
(y) proceeds from (A) dispositions permitted under Section
9.10(a), (b), (d) and (e), (B) sales or transfers of assets
or inventory between the Companies, (C) the licensing of
general intangibles in the ordinary course of business,
(D) the transfer of condemned property to the condemning
Tribunal, provided that on or before ten Business Days after
the Company's receipt of the net cash proceeds, a
Responsible Officer delivers to Agent a certificate
certifying that such proceeds will be used to repair,
restore or replace the remaining portion of the condemned
property within 180 days after such Company receives the net
cash proceeds, and (E) any insured casualty relating to an
asset of any Company, provided that on or before ten
Business Days after the Company's receipt of the net cash
proceeds, a Responsible Officer delivers to Agent a
certificate certifying that such proceeds will be used to
repair, restore or replace such asset within 180 days after
such Company receives the net cash proceeds;
(ii) on April 15 of each year, commencing with April
15, 1998, 75% of the Companies' Excess Cash Flow for the
preceding fiscal year;
(iii) 50% of the net cash proceeds (net of
underwriting discounts and commissions and other costs
associated therewith) received by any Company from an
issuance of Subordinated Debt; and
(iv) 50% of Net Equity Proceeds (other than Net Equity
Proceeds received from the issuance of capital stock of
Borrower (x) for the express purpose of (and which are
actually used for) consummating an acquisition permitted
under Section 9.11, and (y) as a result of the exercise of
options or similar instruments issued pursuant to any
employee benefit plans or as a result of any reissuance of
Borrower common stock to directors, executive officers,
members of management, or employees, provided that the
proceeds excluded under this clause (y) may not exceed
$2,000,000 in any fiscal year of Borrower).
Payments under Sections 3.2(d)(i), (iii), and (iv) shall be paid
to Agent immediately after receipt of the net cash proceeds;
provided that if the amount of the net cash proceeds exceeds the
amount of the Term Loan Principal Debt evidenced by Base Rate
Loans, then the amount of such excess shall be paid to Agent at
the earlier of 32 days after Borrower's receipt of the net cash
proceeds and the last day of the next Interest Period to expire.
If all or part of the proceeds excluded from the mandatory
prepayment requirements of this Section 3.2(d) in accordance with
Section 3.2(d)(i)(D) and (E), are not used as certified within
360 days after the date of the applicable
certificate, the remaining portion of such proceeds shall be
paid immediately to Agent as a mandatory prepayment of Term Loan
Principal Debt under this Section 3.2(d).
Any mandatory prepayment of Term Loan Principal Debt shall be
applied pro rata to the remaining installments of Term Loan
Principal Debt by applying to each remaining installment an
amount equal to the product of (a) the amount of such prepayment
multiplied by (b) the quotient of the amount of the applicable
installment divided by the Term Loan Principal Debt.
(e) Voluntary Reduction or Prepayment. Borrower may
---------------------------------
voluntarily reduce or prepay the Facilities at any time without
premium or penalty, subject to the following conditions:
(i) Without premium or penalty, but upon giving at
least five (5) Business Days prior written and irrevocable
notice to Agent, Borrower may terminate all or part of the
unused portion of the Revolving Credit Commitment. Each
partial termination must be in an amount of not less than
$1,000,000 or a greater integral multiple of $100,000, and
shall be apportioned ratably among all Revolving Credit
Facility Lenders. Once terminated, the Revolving Credit
Commitment may not be increased or reinstated;
(ii) Agent must receive Borrower's written payment
notice by 12:00 noon on (A) the second Business Day
preceding the date of payment of a LIBOR Loan and (B) the
Business Day of payment of a Base Rate Loan, which shall
specify (1) the payment date, (2) the Type and amount of the
Loan(s) to be paid, and (3) whether such payment is to be
applied to the Revolving Credit Facility or to the Term
Loan; such notice shall constitute an irrevocable and
binding obligation of Borrower to make a payment on the
designated date by 1:00 p.m. on such date;
(iii) each partial payment must be in a minimum amount
of at least $1,000,000 or a greater integral multiple of
$250,000 (if a LIBOR Loan), $1,000,000 or a greater integral
multiple of $100,000 (if a Base Rate Loan, other than under
the Swing Line Loan), or $100,000 or a greater integral
multiple (if a Loan under the Swing Line Loan);
(iv) all accrued interest on the principal amount
being prepaid must also be paid in full on the date of
payment;
(v) Borrower shall pay any related Funding Loss upon
demand.
Any voluntary prepayment of Term Loan Principal Debt shall be
applied first to the next succeeding scheduled quarterly payment
of Term Loan Principal Debt and shall then be applied equally to
the remaining installments of Term Loan Principal Debt based upon
the then remaining number of scheduled quarterly installments.
3.3 Interest Options. Except as specifically otherwise
----------------
provided, Loans bear interest at an annual rate equal to the lesser of
(a) the Base Rate plus the Applicable Margin, LIBOR plus the
Applicable Margin or Swing Line Rate plus the Applicable Margin (in
each case as designated or deemed designated by Borrower and, in the
case of LIBOR Loans, for the Interest Period designated by Borrower),
as the case may be, and (b) the Maximum Rate. Each change in the Base
Rate, Swing Line Rate, or Maximum Rate is effective, without notice to
Borrower or any other Person, upon the effective date of change.
3.4 Quotation of Rates. A Responsible Officer of Borrower may
------------------
call Agent before delivering a Loan Request to receive an indication
of the interest rates then in effect, but the indicated rates do not
bind Agent or Lenders or affect the interest rate that is actually in
effect when Borrower delivers its Loan Request or on the Loan Date.
3.5 Default Rate. If permitted by Law, all past-due Principal
------------
Debt, Borrower's past-due payment and reimbursement obligations in
connection with LCs, and past-due interest accruing on any of the
foregoing, bears interest from the date due (stated or by
acceleration), and after applicable grace periods, at the Default Rate
until paid, regardless whether payment is made before or after entry
of a judgment.
3.6 Interest Recapture. If the designated interest rate
------------------
applicable to any Loan exceeds the Maximum Rate, the interest rate on
that Loan is limited to the Maximum Rate, but any subsequent
reductions in the designated rate shall not reduce the interest rate
thereon below the Maximum Rate until the total amount of accrued
interest equals the amount of interest that would have accrued if that
designated rate had always been in effect. If at maturity (stated or
by acceleration), or at final payment of the Notes, the total interest
paid or accrued is less than the interest that would have accrued if
the designated rates
had always been in effect, then, at that time and to the extent
permitted by applicable Law, Borrower shall pay an amount equal to the
difference between (a) the lesser of the amount of interest that would
have accrued if the designated rates had always been in effect and the
amount of interest that would have accrued if the Maximum Rate had
always been in effect, and (b) the amount of interest actually paid or
accrued on the Notes.
3.7 Interest Calculations.
---------------------
(a) Interest will be calculated on the basis of actual
number of days elapsed (including the first day but excluding the
last day) but computed as if each calendar year consisted of 360
days for LIBOR Loans and Swing Line Loans (unless the calculation
would result in an interest rate greater than the Maximum Rate,
in which event interest will be calculated on the basis of a year
of 365 or 366 days, as the case may be), and 365 or 366 days, as
the case may be, for Base Rate Loans. All interest rate
determinations and calculations by Agent are conclusive and
binding absent manifest error.
(b) The provisions of this Agreement relating to
calculation of the Base Rate, Swing Line Rate, and LIBOR, are
included only for the purpose of determining the rate of interest
or other amounts to be paid under this Agreement that are based
upon those rates. Each Lender may fund and maintain its funding
of all or any part of each Loan as it selects.
3.8 Maximum Rate. Regardless of any provision contained in any
------------
Loan Paper or any document related thereto, it is the intent of the
parties to this Agreement that neither Agent nor any Lender (including
Swing Line Lender) contract for, charge, take, reserve, receive or
apply, as interest on all or any part of the Obligation any amount in
excess of the Maximum Rate or the Maximum Amount or receive any
unearned interest in violation of any applicable Law, and, if Lenders
ever do so, then any excess shall be treated as a partial repayment or
prepayment of principal and any remaining excess shall be refunded to
Borrower. In determining if the interest paid or payable exceeds the
Maximum Rate, Borrower and Lenders shall, to the maximum extent
permitted under applicable Law, (a) treat all Loans as but a single
extension of credit (and Lenders and Borrower agree that is the case
and that provision in this Agreement for multiple Loans is for
convenience only), (b) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (c) exclude voluntary
repayments or prepayments and their effects, and (d) amortize,
prorate, allocate and spread the total amount of interest throughout
the entire contemplated term of the
Obligation. However, if the Obligation is paid in full before the end
of its full contemplated term, and if the interest received for its
actual period of existence exceeds the Maximum Amount, Lenders shall
refund any excess (and Lenders may not, to the extent permitted by
Law, be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving or receiving interest in excess of
the Maximum Amount). If the Laws of the State of Texas are applicable
for purposes of determining the "Maximum Rate" or the "Maximum
Amount," then those terms mean the "indicated rate ceiling" from time
to time in effect under Article 5069-1.04, Title 79, Revised Civil
Statutes of Texas, as amended. Borrower agrees that Chapter 15,
Subtitle 79, Revised Civil Statutes of Texas, 1925, as amended (which
regulates certain revolving credit loan accounts and revolving tri-
party accounts), does not apply to the Obligation, other than Article
15.10(b).
3.9 Interest Periods. When Borrower requests any LIBOR Loan,
----------------
Borrower may elect the applicable interest period (each an "Interest
Period"), which may be, at Borrower's option, one, two, three or six
months for LIBOR Loans, subject to the following conditions: (a) the
initial Interest Period for a LIBOR Loan commences on the applicable
Loan Date or conversion date, and each subsequent Interest Period
applicable to any Loan commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a
LIBOR Loan begins on a day for which there exists no numerically
corresponding Business Day in the calendar month at the end of the
Interest Period ("Ending Calendar Month"), then the Interest Period
ends on the next succeeding Business Day of the Ending Calendar Month,
unless there is no succeeding Business Day in the Ending Calendar
Month in which case the Interest Period ends on the next preceding
Business Day of the Ending Calendar Month; (c) no Interest Period for
any portion of Principal Debt may extend beyond the scheduled
repayment date for that portion of Principal Debt; and (d) there may
not be in effect at any one time more than five Interest Periods under
the Revolving Credit Facility and (ii) five Interest Periods under the
Term Loan).
3.10 Conversions. Subject to the dollar limits and
-----------
denominations of Section 2.1.1 (regardless of whether a conversion
relates to a portion of the Revolving Credit Facility or to a portion
of the Term Loan) and the limitations on LIBOR Interest Periods of
Section 3.9, Borrower may (a) convert all or part of a LIBOR Loan to a
Base Rate Loan on the last day of the applicable Interest Period, (b)
(if no Default (or Potential Default in respect of Sections 10.1,
10.2, or 10.3 or the payment of any part of the Obligation) exists) at
any time convert all or part of a Base Rate Loan to a LIBOR Loan, and
(c) (if no Default (or Potential Default in respect of Sections 10.1,
10.2, or 10.3
or the payment of any part of the Obligation) exists) elect a new
Interest Period for all or part of a LIBOR Loan, in each case by
delivering a Conversion Request to Agent no later than 12:00 noon (i)
on the third Business Day before the conversion date or the last day
of the Interest Period, for the election of a new Interest Period, and
(ii) one Business Day before the last day of the Interest Period for
conversion to a Base Rate Loan. Absent Borrower's notice of
conversion or election of a new Interest Period, a LIBOR Loan shall be
converted to a Base Rate Loan when the applicable Interest Period
expires.
3.11 Order of Application.
--------------------
(a) Mandatory prepayments on the Term Loan under Section
3.2(d) and voluntary prepayments on the Term Loan under Section
3.2(e) shall be applied as set forth in such sections.
(b) If no Default or Potential Default exists, any other
payment shall be applied to (i) the fees and expenses for which
Agent, Lenders, or Swing Line Lender have not been paid or
reimbursed in accordance with the Loan Papers, (ii) accrued and
unpaid interest on the Term Loan Principal Debt, (iii) the Term
Loan Principal Debt in the manner provided in Section 3.2(e), and
(iv) then in the order and manner as Borrower directs.
(c) If a Default or Potential Default exists or if Borrower
fails to give directions, any other payment (including proceeds
from the exercise of any Rights) shall be applied in the
following order: (i) to all fees and expenses for which Agent or
Lenders have not been paid or reimbursed in accordance with the
Loan Papers (and if such payment is less than all unpaid or
unreimbursed fees and expenses, then the payment shall be paid
against unpaid and unreimbursed fees and expenses in the order of
incurrence or due date); (ii) to accrued and unpaid interest on
the Term Loan Principal Debt; (iii) to the Term Loan Principal
Debt in the manner provided in Section 3.2(d); (iv) to accrued
and unpaid interest on the Swing Line Principal Debt; (v) to
Swing Line Principal Debt; (vi) to any LC reimbursement
obligations that are due and payable and that remain unfunded by
any Loan under the Revolving Credit Facility; (vii) to accrued
and unpaid interest on the Revolving Credit Principal Debt;
(viii) to the Revolving Credit Principal Debt; (ix) to the
remaining Obligation; and (x) as a deposit with Agent, for the
benefit of Lenders, as security for and payment of any subsequent
LC reimbursement obligations.
3.12 Sharing of Payments, Etc.. If any Lender obtains any
-------------------------
amount (whether voluntary, involuntary or otherwise, including,
without limitation, as a result of exercising its Rights under Section
3.13) that exceeds its combined Pro Rata Part of the Revolving Credit
Commitment Usage or the Term Loan Commitment Usage, as applicable,
then that Lender shall purchase from the other Lenders participations
that will cause the purchasing Lender to share the excess amount
ratably with each other Lender which has a Commitment for the
applicable Facility. If all or any portion of any excess amount is
subsequently recovered from the purchasing Lender, then the purchase
shall be rescinded and the purchase price restored to the extent of
the recovery. Borrower agrees that any Lender purchasing a
participation from another Lender under this section may, to the
fullest extent permitted by Law, exercise all of its Rights of payment
(including the Right of offset) with respect to that participation as
fully as if that Lender were the direct creditor of Borrower in the
amount of that participation.
3.13 Offset. If a Default exists, each Lender is entitled, but
------
is not obligated, to exercise (for the benefit of all Lenders in
accordance with Section 3.12) the Rights of offset and banker's Lien
against each and every account (other than trust accounts held for the
benefit of third parties and so designated) and other property, or any
interest therein, that any Company may now or hereafter have with, or
which is now or hereafter in the possession of, that Lender to the
extent of the full amount of the Obligation owed to it.
3.14 Booking Loans. To the extent permitted by Law, any Lender
-------------
may make, carry or transfer its Loans at, to, or for the account of
any of its branch offices or the office of any of its Affiliates.
However, no Affiliate is entitled to receive any greater payment under
Section 3.16 than the transferor Lender would have been entitled to
receive with respect to those Loans. Each Lender agrees that on the
occurrence of any event giving rise to the operation of Section 3.16
or Section 3.17 with respect to such Lender, it will, if requested by
Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for
any Loans or LCs affected by such event, provided that such
designation is made on such terms that such Lender and its lending
office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the
operation of such provisions, and provided further that nothing in
this paragraph shall affect or postpone any of the obligations of
Borrower or the Right of any Lender provided in Sections 3.16 or 3.17.
3.15 Basis Unavailable or Inadequate for LIBOR. If, on or
-----------------------------------------
before any date when a LIBOR is to be determined for a Loan, Agent or
any Lender determines (and Required Lenders agree with that
determination) that the basis for determining the applicable rate is
not available or that the resulting rate does not accurately reflect
the cost to Lenders of making or converting Loans at that rate for the
applicable Interest Period, then Agent shall promptly notify Borrower
and Lenders of that determination (which is conclusive and binding on
Borrower absent manifest error) and the applicable Loan shall bear
interest at the sum of the Base Rate plus the Applicable Margin.
Until Agent notifies Borrower that those circumstances no longer
exist, Lenders' commitments under this Agreement to make, or to
convert to, LIBOR Loans (as the case may be) will be suspended.
3.16 Additional Costs.
----------------
With respect to any Law, requirement, request, directive or
change affecting banking institutions generally:
(a) With respect to any LIBOR Loan, if any future Law or
any change (after the date hereof) in present Law (i) imposes,
modifies, or deems applicable (or if compliance by any Lender
with any such requirement of any Tribunal results in) any such
requirement that any reserves, special deposits or similar
requirements (including, without limitation, any marginal,
emergency, supplemental or special reserves) be maintained, and
those requirements reduce any sums receivable by that Lender
under this Agreement or increase the costs incurred by that
Lender in advancing or maintaining any portion of any LIBOR Loan,
or (ii) imposes any other condition, the result of which is to
increase the cost to any Lender of making, funding or maintaining
such Loan or reduces any amount receivable by any Lender in
connection with such Loan, then that Lender (through Agent) shall
notify Borrower promptly and deliver to Borrower a certificate
setting forth in reasonable detail the calculation of the amount
necessary to compensate it for its reduction or increase (which
calculation is conclusive and binding absent manifest error), and
Borrower shall promptly pay that amount to that Lender upon
demand. The provisions of and undertakings and indemnification
set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Agreement.
(b) With respect to any Loan or LC, if any future Law or
any change (after the date hereof) in present Law regarding
capital adequacy or compliance by Agent (or Issuing Lender as
issuer of LCs) or any Lender with any
request, directive or requirement now existing or hereafter
imposed by any Tribunal or central bank regarding capital
adequacy, or any change in its written policies or in the risk
category of this transaction, reduces the rate of return on its
capital as a consequence of its obligations under this Agreement
to a level below that which it otherwise could have achieved
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by it to be material (and it may,
in determining the amount, use reasonable assumptions and
allocations of costs and expenses and use any reasonable
averaging or attribution method), then (unless the effect is
already reflected in the rate of interest then applicable under
this Agreement) Agent or Issuing Lender or that Lender (through
Agent) shall notify Borrower promptly and deliver to Borrower a
certificate setting forth in reasonable detail the calculation of
the amount necessary to compensate it (which calculation is
conclusive absent manifest error), and Borrower shall promptly
pay that amount to Agent or Issuing Lender or that Lender upon
demand. The provisions of and undertakings and indemnification
set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Agreement.
(c) Any Taxes payable by Agent or any Lender or ruled (by a
Tribunal or central bank) payable by Agent or any Lender after
the date hereof in respect of this Agreement or any other Loan
Paper shall, if permitted by Law, be paid by Borrower, together
with interest and penalties, if any (except for (i) (1) Taxes
imposed on or measured by the overall net income of Agent or that
Lender, (2) franchise or similar taxes of the Agent or that
Lender, and (3) amounts withheld for Taxes pursuant to the last
sentence of Section 3.19 and (ii) interest and penalties incurred
as a result of the gross negligence or willful misconduct of
Agent or any Lender). Agent or such Lender (through Agent) shall
notify Borrower promptly and deliver to Borrower a certificate
setting forth in reasonable detail the calculation of the amount
of payable Taxes (which calculation is conclusive and binding
absent manifest error), and Borrower shall promptly pay that
amount to Agent for its account or the account of such Lender, as
the case may be. If Agent or such Lender subsequently receives a
refund of the Taxes paid to it (or on its behalf) by Borrower,
then the recipient shall promptly pay the refund to Borrower.
Agent and each Lender shall provide Borrower with such forms or
other certificates as Borrower reasonably requests and which
establish a complete or partial exemption from Taxes.
3.17 Change in Laws. If any future Law or any change (after the
--------------
date hereof) in present Law makes it unlawful for any Lender to make
or maintain LIBOR Loans, then that Lender shall promptly notify
Borrower and Agent, and (a) as to undisbursed funds, that requested
Loan shall be made as a Base Rate Loan, and (b), as to any outstanding
Loan, (i) if maintaining the Loan until the last day of the applicable
Interest Period is unlawful, the Loan shall be converted to a Base
Rate Loan as of the date of notice, and Borrower shall pay any related
Funding Loss, or (ii) if not prohibited by Law, the Loan shall be
converted to a Base Rate Loan as of the last day of the applicable
Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Loan, without
penalty, together with any related Funding Loss. Each of Agent and
each Lender agree that, if it gives notice to Borrower of any of the
events described above, it shall promptly notify Borrower (and, in the
case of a Lender, Agent) if such event ceases to exist. If any such
event described above ceases to exist as to a Lender, the obligations
of such Lender to make LIBOR Loans and to convert Base Rate Loans into
LIBOR Loans on the terms and conditions contained herein shall be
reinstated. At any time that any LIBOR Loan is affected by the
circumstances described in Section 3.16 or 3.17, Borrower may either
(x) if the affected LIBOR Loan is then being made initially or
pursuant to a conversion, cancel the respective borrowing by giving
telephonic notice (confirmed in writing) to Agent on the same date
that Borrower was notified by the affected Lender or Agent pursuant to
Section 3.16, or (y) if the affected LIBOR Loan is then outstanding,
upon at least two Business Days written notice to Agent, require the
affected Lender to convert such LIBOR Loan into a Base Rate Loan,
provided that if more than one Lender is affected at any time, then
all affected Lenders must be treated the same pursuant to this Section
3.17.
3.18 Funding Loss. BORROWER AGREES TO INDEMNIFY EACH LENDER
------------
AGAINST, AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER.
When any Lender demands that Borrower pay any Funding Loss, that
Lender shall deliver to Borrower and Agent a certificate setting forth
in reasonable detail the basis for imposing Funding Loss and the
calculation of the amount, which calculation is conclusive and binding
absent manifest error. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this
Agreement.
3.19 Foreign Lenders. Each Lender that is organized under the
---------------
Laws of any jurisdiction other than the United States of America or
any State thereof (a) represents to Agent and Borrower that (i) no
Taxes are required to be withheld by Agent or Borrower with respect to
any payments to be made to it in respect
of the Obligation and (ii) it has furnished to Agent and Borrower two
duly completed copies of U.S. Internal Revenue Service Form 4224 or
Form 1001 (claiming entitlement to complete exemption from U.S.
federal withholding tax on all interest payments under the Loan
Papers), and Form W-8 (claiming exemption from U.S. backup withholding
taxes) (or, in each case, any other successor tax forms acceptable to
Agent and Borrower), and (b) covenants to (i) provide Agent and
Borrower a new tax form upon the expiration, inaccuracy or
obsolescence of any previously delivered form according to Law, duly
executed and completed by it, and (ii) comply from time to time with
all Laws with regard to the withholding tax exemption. If any of the
foregoing is not true or the applicable forms are not provided, then
Borrower and Agent (without duplication) may deduct and withhold from
interest or other payments under the Loan Papers United States federal
income tax at the full rate applicable under the Code and Borrower
shall have no liability to the applicable Lender under Section 3.16(c)
in respect of such withheld Taxes.
3.20 Replacement of Lenders. The Borrower may, if no Default
----------------------
then exists, replace any Lender (the "Replaced Lender") if the
following circumstances exist:
(a) the Replaced Lender fails to make available its Pro
Rata Part of any Loan or to fund its Pro Rata Part of any
unreimbursed payment under Section 2.3, or
(b) the Replaced Lender has notified Borrower or Agent that
it does not intend to comply with its obligations under Sections
2.1, 2.3 or 2.4(b), or
(c) an event occurs giving rise to the operation of Section
3.16 or Section 3.17, which results in the Replaced Lender
charging to Borrower increased costs in excess of those being
generally charged by the other Lenders and such Lender is not
able to eliminate the increased costs pursuant to Section 3.14,
or
(d) as provided in Section 14.10(e), Replaced Lender does
not consent to certain proposed amendments, consents or waivers
which have been approved by Lenders holding at least 66 % of the
Total Commitment and which comprise at least 66 % of all
Lenders.
The Replaced Lender shall be replaced with one or more banks or
financial institutions which are reasonably acceptable to Agent (each
a "Replacement Lender"). Each Replacement Lender shall
(i) sign one or more assignment agreements substantially in
the form of Exhibit I, under which it may
acquire either or both of (x) all or a percentage of (or if more
than one Replacement Lender replaces a Replaced Lender, its pro
rata percentage of) the Replaced Lenders Rights under the Loan
Papers with respect to the Revolving Credit Facility, and (y) all
or a percentage of (or if more than one Replacement Lender
replaces a Replaced Lender, its pro rata percentage of) the
Replaced Lenders Rights under the Loan Papers with respect to the
Term Loan, and
(ii) pay to the Replaced Lender an amount equal to (in each
case, in respect of the Commitment (Revolving Credit Facility or
Term Loan) and the percentage of that Commitment being assigned
to Replacement Lender) the sum of (x) (1) the Revolving Credit
Principal Debt funded by the Replaced Lender and outstanding on
the effective date of the assignment ("Effective Date"), together
with unpaid interest accruing before the Effective Date, (2)
unpaid drawings under LCs that have been funded by (and not
reimbursed to) such Replaced Lender, and (3) the commitment fee
(as described in Section 4 of the Credit Agreement) earned by the
Replaced Lender with respect to the Revolving Credit Facility
prior to the Effective Date and paid by Borrower after the
Effective Date, (y) the Term Loan Principal Debt funded by the
Replaced Lender and outstanding on the Effective Date, together
with unpaid interest accruing before the Effective Date, and (z)
all other fees described in Section 4 of the Credit Agreement
earned by the Replaced Lender and paid by Borrower after the
Effective Date, and
(iii) pay to Agent an amount equal to the percentage being
assigned to Replacement Lender of undrawn LCs that have not been
funded by the Replaced Lender pursuant to this Agreement, and
(iv) pay to Agent the fees associated with the assignment
of the Replaced Lender's interest in accordance with Section
14.12(c).
Upon execution of the respective assignment agreement, payment of
amounts referred to above and, delivery to the Replacement Lender of
the appropriate Note or Notes executed by Borrower, the Replacement
Lender shall become a Lender under this Agreement and the Replaced
Lender shall no longer be a Lender under this Agreement, except with
respect to indemnification provisions under this Agreement, which
shall survive as to such Replaced Lender.
Borrower may not require Lenders, and Lenders are not obligated, to
become Replacement Lenders or to purchase the interest of any Lender
Borrower wishes to replace under this Section 3.20.
SECTION 4 FEES.
--------- ----
4.1 Treatment of Fees. The fees described in this Section 4
-----------------
(a) are not compensation for the use, detention, or forbearance of
money, (b) are in addition to, and not in lieu of, interest and
expenses otherwise described in this Agreement, (c) are payable in
accordance with Section 3.1, (d) are non-refundable, (e) to the
fullest extent permitted by Law, bear interest, if not paid when due,
at the Default Rate, and (f) are calculated on the basis of actual
number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of 360 days,
unless computation would result in an interest rate in excess of the
Maximum Rate in which event the computation is made on the basis of a
year of 365 or 366 days, as the case may be. The fees described in
this Section 4 are in all events subject to the provisions of Section
3.8 of this Agreement.
4.2 Underwriting and Administrative Fees. Borrower shall pay to
------------------------------------
NationsBank of Texas, N.A., the fees described in the letter agreement
among them and NationsBanc Capital Markets, Inc., dated October 11,
1996.
4.3 LC Fees. Borrower shall pay to Issuing Lender, for its own
-------
account, a fronting fee for the issuance of each LC equal to 0.125% of
the face amount of such LC, provided that the amount of such fee shall
not be less than $350. Such fee shall be payable on the last day of
the fiscal quarter in which such LC is issued. In addition, Borrower
shall pay to Issuing Lender quarterly, in arrears, on each March 31,
June 30, September 30 and December 31 while such LC is outstanding, a
fee (calculated on a per annum basis) equal to the product of (a) the
Applicable Margin for LIBOR Loans then in effect multiplied by (b) the
face amount of the LC, multiplied by (c) the quotient of (i) the
number of days such LC was outstanding during such quarter, divided by
(ii) 365, provided that the amount of such fee (as calculated on a per
annum basis) shall not be less than $500.
4.4 Revolving Credit Commitment Fee. Borrower shall pay to
-------------------------------
Agent for the ratable account of Lenders a commitment fee, payable in
arrears on each March 31, June 30, September 30, and December 31
(commencing December 31, 1996), and on the Revolving Credit
Termination Date, equal to the Applicable Percentage of the amount by
which (a) the Revolving Credit Commitment exceeds (b) the average
daily Revolving Credit Commitment Usage, in each case during the
calendar quarter ending on such date. Solely for purposes of this
Section 4.4, "ratable" means, for any calculation period, with respect
to any Lender, the proportion that (i) the average daily unused
Commitment of that Lender for the Revolving Credit Facility during the
period bears to (ii) the
aggregate amount of the average daily unused Revolving Credit
Commitment during the period.
SECTION 5 SECURITY.
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5.1 Guaranty. Full and complete payment of the Obligation is
--------
guaranteed in accordance with the Guaranty executed by each Company
(other than Borrower).
5.2 Collateral. Full and complete payment of the Obligation is
----------
secured by a first priority Lien on all of the material assets of the
Companies, including without limitation (but, in each case, only with
respect to assets upon which Liens have been granted to Agent under
the Security Documents), all capital stock issued by each Subsidiary
of Borrower organized under the Laws of the United States (or any
state thereof) and 65% of the capital stock issued by each other
Subsidiary of Borrower, all material inventory, accounts, equipment,
fixtures, and Intellectual Property of any Company, all material real
estate owned by any Company, all material leasehold estates owned by
any Company, to the extent any required consents can be obtained, and
all other material assets of the Companies (together with proceeds
thereof and any additional collateral ever furnished under Section
5.3, the "Collateral"); all of the foregoing are more particularly
described in the Security Documents.
5.3 Additional Security and Guaranties. Agent may, without
----------------------------------
notice or demand and without affecting any Person's obligations under
the Loan Papers, from time to time (a) receive and hold additional
collateral from any Person for the payment of all or any part of the
Obligation and exchange, enforce or release all or any part of that
collateral and (b) accept and hold any endorsement or guaranty of
payment of all or any part of the Obligation and release any endorser
or guarantor, or any Person who has given any other security for the
payment of all or any part of the Obligation, or any other Person in
any way obligated to pay all or any part of the Obligation.
5.4 Financing Statements. Borrower will execute, or cause to be
--------------------
executed, financing statements, stock powers and other writings in the
form and content reasonably required by Agent, and Borrower will pay
all costs of filing any financing, continuation or termination
statements, or other action taken by Agent relating to the Collateral,
including, without limitation, costs and expenses of any Lien search
reasonably required by Agent.
SECTION 6 CONDITIONS PRECEDENT.
--------- --------------------
6.1 Initial Revolving Credit Facility Loan. In addition to the
--------------------------------------
items described in Section 6.3, Lenders will not be obligated to fund
the initial Loan under the Revolving Credit Facility, and Issuing
Lender will not be obligated to issue the initial LC, unless Agent has
timely received (a) a Loan Request (or, for LCs other than those
listed on Schedule 2.3, Issuing Lender has received an LC Request and
a duly executed LC Agreement), and (b) each of the items listed on
Schedule 6.1.
6.2 Term Loan. In addition to the items listed on Schedule 6.1
---------
and the items described in Section 6.3, Lenders will not be obligated
to fund the Term Loan unless Agent has timely received (a) a Loan
Request and (b) each of the items set out on Schedule 6.2.
6.3 Each Loan. Lenders will not be obligated to fund, continue,
---------
or convert any Loan, and Issuing Lender will not be obligated to issue
any LC, unless on the applicable Loan Date or issue date (and after
giving effect to the requested Loan or LC), as the case may be: (i)
all of the representations and warranties of the Companies in the Loan
Papers are true and correct in all material respects, except those
made as of a certain date, which shall be true and correct as of such
date; (ii) no Material Adverse Event, Default or Potential Default
exists; and (iii) the funding of the Loan or issuance of the LC, as
the case may be, is permitted by Law. Upon Agent's request, Borrower
shall deliver to Agent evidence substantiating any of the matters in
the Loan Papers that are necessary to enable Borrower to qualify for
the Loan or LC, as the case may be. Each condition precedent in this
Agreement (including, without limitation, those on Schedule 6.1 or
Schedule 6.2, as applicable) is material to the transactions
contemplated by this Agreement, and time is of the essence with
respect to each condition precedent. Subject to the prior approval of
Required Lenders, Lenders may fund, continue, or convert any Loan, and
Issuing Lender may issue any LC, without all conditions being
satisfied, but, to the extent permitted by Law, that funding and
issuance shall not be deemed to be a waiver of the requirement that
each condition precedent be satisfied as a prerequisite for any
subsequent funding or issuance, unless Required Lenders specifically
waive each item in writing.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and
--------- ------------------------------
warrants to Agent and Lenders as follows:
7.1 Purpose of Credit Facility. Borrower will use proceeds of
--------------------------
the Facilities to finance the Acquisition, refinance the Existing Bank
Debt and certain other existing Debt of Borrower
and Presto, for working capital and general corporate purposes of the
Companies and to pay fees and expenses incurred in connection with the
Acquisition and the Facilities. No Company is engaged principally, or
as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulations U or G of the Board of Governors of
the Federal Reserve System, as amended. No part of the proceeds of
any Loan will be used, directly or indirectly, for a purpose that
violates any Law, including without limitation, the provisions of
Regulations U or G.
7.2 Corporate Existence, Good Standing, Authority and
-------------------------------------------------
Compliance. Each Company is duly organized, validly existing and in
----------
good standing under the Laws of the jurisdiction in which it is
incorporated or organized as identified on Schedule 7.2 (or on the
most recently revised Schedule 7.2 delivered to Agent by Borrower
under Sections 8.8, 8.12, 9.10 or 9.11). Except where failure is not
a Material Adverse Event, each Company (a) is duly qualified to
transact business and is in good standing as a foreign corporation or
other entity in each jurisdiction where the nature and extent of its
business and properties require due qualification and good standing
(as identified on Schedule 7.2 or on the most recently revised
Schedule 7.2), (b) possesses all requisite authority, permits and
power to conduct its business as is now being, or is contemplated by
this Agreement to be, conducted, and (c) is in compliance with all
applicable Laws.
7.3 Subsidiaries. Borrower has no Subsidiaries except as
------------
disclosed on Schedule 7.3 (or on the most recently revised Schedule
7.3 delivered to Agent by Borrower under Sections 8.8, 8.12, 9.10 or
9.11). All of the outstanding shares of capital stock (or similar
voting interests) of Borrower's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and are owned of record
and beneficially as set forth on Schedule 7.3 (or any revised Schedule
7.3), free and clear of any Liens, restrictions, claims or Rights of
another Person, other than Permitted Liens and Liens securing the
Existing Bank Debt, and are not subject to any warrant, option or
other acquisition Right of any Person or subject to any transfer
restriction except for restrictions imposed by securities Laws and
general corporate Laws.
7.4 Authorization and Contravention. The execution and delivery
-------------------------------
by each Company of each Loan Paper or related document to which it is
a party and the performance by it of its obligations thereunder (a)
are within its corporate power, (b) have been duly authorized by all
necessary corporate action, (c) require no action by or filing with
any Tribunal (other than any action or filing that has been taken or
made on or before the
date of this Agreement), (d) do not violate any provision of its
charter or bylaws, (e) do not violate any provision of Law or any
order of any Tribunal applicable to it, other than violations that
individually or collectively are not a Material Adverse Event, (f) do
not violate any Material Agreements to which it is a party, other than
violations which are not a Material Adverse Event, and violations of
agreements, documents, and instruments executed in connection with the
Existing Bank Debt (which will be cured by paying off the Existing
Bank Debt with all or part of the proceeds of the initial Loan and
canceling the related agreements, documents, and instruments), or (g)
do not result in the creation or imposition of any Lien (other than
the Lender Liens) on any asset of any Company.
7.5 Binding Effect. Upon execution and delivery by all parties
--------------
thereto, each Loan Paper will constitute a legal and binding
obligation of each Company party thereto, enforceable against it in
accordance with its terms, except as enforceability may be limited by
applicable Debtor Relief Laws and general principles of equity.
7.6 Financial Statements; Fiscal Year. The Current Financials
---------------------------------
were prepared in accordance with GAAP (except as disclosed therein)
and present fairly, in all material respects, the consolidated
financial condition, results of operations, and cash flows of the
Companies as of, and for the portion of the fiscal year ending on the
date or dates thereof (subject only to normal year-end adjustments).
All material liabilities of the Companies as of the date or dates of
the Current Financials are reflected therein or in the notes thereto.
Except for transactions directly related to, or specifically
contemplated by, the Loan Papers (including, without limitation, the
Acquisition), no subsequent material adverse changes have occurred in
the consolidated financial condition of the Companies from that shown
in the Current Financials, nor has any Company incurred any subsequent
material liability other than Permitted Debt. The fiscal year of each
Company ends on December 31.
7.7 Litigation. Except as disclosed on Schedule 7.7 (or the
----------
most recently revised Schedule 7.7 delivered by Borrower to Agent
under Section 8.1(d)), no Company is subject to, or aware of the
threat of, any Litigation that is reasonably likely to be determined
adversely to any Company and, if so adversely determined, is a
Material Adverse Event. Except as permitted under Section 11.4, no
outstanding and unpaid judgments against any Company exist, and no
Company is a party to, or bound by, any judicial or administrative
order, judgment, decree or consent decree relating to any past or
present practice, omission, activity or undertaking which constitutes
a Material Adverse Event.
7.8 Taxes. All Tax returns of each Company required to be filed
-----
have been filed (or extensions have been granted) before delinquency,
other than returns for which the failure to file is not a Material
Adverse Event, and all Taxes imposed upon each Company that are due
and payable have been paid before delinquency, other than Taxes for
which the criteria for Permitted Liens (as specified in clause (d) of
the definition of "Permitted Liens") have been satisfied or for which
nonpayment is not a Material Adverse Event.
7.9 Environmental Matters. Except as disclosed on Schedule 7.9
---------------------
or (on the most recently revised Schedule 7.9 delivered by Borrower to
Agent under Section 8.1(d)), (a) no Company knows of any environmental
condition or circumstance that would constitute a Material Adverse
Event, (b) no Company has received any written notice which is
outstanding, that it is in material noncompliance with any
Environmental Law, (c) no Company knows that any Company is under any
affirmative obligation to remedy any violation of any Environmental
Law which would result in a Material Adverse Event if not remedied, or
(d) no facility of any Company is used for, or to the knowledge of
any Company has been used for, storage, treatment or disposal of any
Hazardous Substance, except in material compliance with Environmental
Law.
7.10 Employee Plans. Except where occurrence or existence is
--------------
not a Material Adverse Event, (a) no Employee Plan has incurred an
"accumulated funding deficiency" (as defined in section 302 of ERISA
or section 412 of the Code), (b) no Company has incurred liability
under ERISA to the PBGC in connection with any Employee Plan (other
than required insurance premiums, all of which have been timely paid),
(c) no Company has withdrawn in whole or in part from participation in
a Multiemployer Plan, (d) no Company has engaged in any "prohibited
transaction" (as defined in section 406 of ERISA or section 4975 of
the Code), and (e) no "reportable event" (as defined in section 4043
of ERISA) has occurred, excluding events for which the 30-day notice
requirement is waived under applicable PBGC regulations.
7.11 Properties; Liens. Each Company has good and indefeasible
-----------------
title to all its property reflected on the Current Financials (other
than property that is obsolete or that has been disposed in the
ordinary course of business or, after the date of this Agreement, as
otherwise permitted by Section 9.10 or Section 9.11 or consented to by
the Required Lenders). Except for Permitted Liens, no Lien exists on
any property of any Company, and the execution, delivery, performance
or observance of the Loan Papers will not require or result in the
creation of any Lien (other than Lender Liens) on any Company's
property.
7.12 Chief Executive Offices; Real Estate Interests. Each
----------------------------------------------
Company's chief executive office is located at the address on Schedule
7.12 (or on the most recently revised Schedule 7.12 delivered by
Borrower to Agent under Section 8.8). Each Company's books and
records concerning accounts and accounts receivable are located at its
chief executive office, and all of its inventory (other than inventory
on consignment, in transit or in the possession of a subcontractor of
any Company) is in its possession and, together with the Company's
other material assets, are located, until sold in the ordinary course
of business, at one or more of the locations on Schedule 7.12 (or on
the most recently revised Schedule 7.12 delivered by Borrower to Agent
under Section 8.8). Except as described on Schedule 7.12 (or on the
most recently revised Schedule 7.12 delivered by Borrower to Agent
under Section 8.8), no Company has any ownership, material leasehold,
or other material interest in real estate.
7.13 Government Regulations. No Company is subject to
----------------------
regulation under the Investment Company Act of 1940, as amended, or
the Public Utility Holding Company Act of 1935, as amended.
7.14 Transactions with Affiliates. Except as disclosed on
----------------------------
Schedule 7.14, (or on the most recently revised Schedule 7.14
delivered by Borrower to Agent under Section 9.6), no Company is a
party to a material transaction with any of its Affiliates (excluding
other Companies), other than transactions in the ordinary course of
business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an
arm's-length transaction with a Person that was not its Affiliate.
7.15 Debt. No Company is an obligor on any Debt, other than
----
Permitted Debt.
7.16 Material Agreements. No Company is a party to any
-------------------
Material Agreement, other than the Loan Papers and the Material
Agreements described on Schedule 7.16. All described Material
Agreements are in full force and effect, and no default exists on the
part of any Company thereunder (excluding defaults under agreements,
documents, and instruments executed in connection with the Existing
Debt, which will be cured by paying off the Existing Debt with all or
part of the proceeds of the initial Loan) that is a Material Adverse
Event.
7.17 Insurance. Each Company maintains with financially sound,
---------
responsible, and reputable insurance companies or associations (or, as
to workers' compensation or similar insurance, with an insurance fund
or by self-insurance authorized by the jurisdictions in which it
operates) insurance concerning
its properties and businesses against casualties and contingencies and
of types (including business interruption insurance) and in amounts
(and with co-insurance and deductibles) as is customary in the case of
similar businesses.
7.18 Labor Matters. No actual or threatened strikes, labor
-------------
disputes, slow downs, walkouts, or other concerted interruptions of
operations by the employees of any Company that are a Material Adverse
Event exist. Hours worked by and payment made to employees of the
Companies have not been in violation of the Fair Labor Standards Act
or any other applicable Law dealing with labor matters, other than any
violations, individually or collectively, that are not a Material
Adverse Event. All payments due from any Company for employee health
and welfare insurance have been paid or accrued as a liability on its
books, other than any nonpayments that are not, individually or
collectively, a Material Adverse Event.
7.19 Solvency. On each Loan Date, each Company is, and after
--------
giving effect to the requested Loan will be, Solvent.
7.20 Trade Names. To the knowledge of the Borrower, no Company
-----------
has used or transacted business under any other corporate or trade
name in the five-year period preceding the initial Loan Date, except
as disclosed on Schedule 7.20.
7.21 Intellectual Property. Each Company owns or has the
---------------------
Right to use all material Intellectual Property and licenses used in
its business. Each Company is conducting its business without
infringement or claim of infringement of any license or Intellectual
Property of others, other than any infringements or claims that, if
successfully asserted against or determined adversely to any Company,
would not, individually or collectively, constitute a Material Adverse
Event. To the knowledge of any Company, no infringement or claim of
infringement by others of any material license, or other material
Intellectual Property of any Company exists.
7.22 Full Disclosure. Each material fact or condition relating
---------------
to the Loan Papers or the financial condition, business or property of
any Company has been disclosed in writing to Agent. All information
previously furnished, furnished on the date of this Agreement, and
furnished in the future, by any Company to Agent in connection with
the Loan Papers (a) was, is, and will be, true and accurate in all
material respects or based on reasonable estimates on the date the
information is stated or certified, (b) did not, does not, and will
not, fail to state any fact the omission of which would otherwise make
any such information materially misleading, and (c) there has been no
material adverse change in respect of any Company, its business
operation, prospects, or financial condition since the date such
information was furnished.
SECTION 8 AFFIRMATIVE COVENANTS. So long as Lenders are committed to
--------- ---------------------
fund any Loans and Issuing Lender is committed to issue LCs under this
Agreement, and thereafter until the Obligation is paid in full,
Borrower covenants and agrees as follows:
8.1 Items to be Furnished. Borrower shall cause the following
---------------------
to be furnished to Agent:
(a) Promptly after preparation, and no later than 95 days
after the last day of each fiscal year of Borrower, Financial
Statements showing the consolidated financial condition and
results of operations of the Companies and a statement of
stockholders equity as of, and for the year ended on, that last
day, accompanied by:
(i) the unqualified opinion of a firm of
nationally-recognized independent certified public
accountants, based on an audit using generally accepted
auditing standards, that the Financial Statements were
prepared in accordance with GAAP and present fairly, in all
material respects, the consolidated financial condition and
results of operations of the Companies;
(ii) any management letter prepared by the accounting
firm delivered in connection with its audit; and
(iii) a Compliance Certificate with respect to the
Financial Statements.
(b) Promptly after preparation, and no later than 50 days
after the last day of each of the first three fiscal quarters of
the Companies' fiscal year, Financial Statements showing the
consolidated financial condition and results of operations of the
Companies for the fiscal quarter and for the period from the
beginning of the current fiscal year to the last day of the
fiscal quarter, accompanied by a Compliance Certificate with
respect to the Financial Statements.
(c) Promptly after preparation, and no later than 30 days
after the last day of each month which is not the last month in a
fiscal quarter of Borrower, Financial Statements showing the
consolidated financial condition and results of operations of the
Companies for the month and for the period
from the beginning of the current fiscal year to the last day of
such month.
(d) Notice (and delivery of a revised schedule if a
representation or warranty under Section 7 is affected), promptly
after any Company knows of (i) the existence and status of any
Litigation that, if determined adversely to any Company, could
reasonably be expected to result in a Material Adverse Event,
(ii) any material adverse change in any material fact or
circumstance represented or warranted by any Company in any Loan
Paper, (iii) the receipt by any Company of notice of any
violation or alleged violation of ERISA or any Environmental Law
(which individually or collectively with other violations or
allegations could reasonably be expected to result in a Material
Adverse Event), or (iv) a Default or Potential Default,
specifying the nature thereof and what action the Companies have
taken, are taking, or propose to take.
(e) Promptly after filing, copies of all material reports
or filings filed by or on behalf of any Company with the
Securities and Exchange Commission (including, without
limitation, copies of each Form 10-K, Form 10-Q, and Form 8-K).
(f) Promptly upon reasonable request by Agent or Required
Lenders (through Agent), information (not otherwise required to
be furnished under the Loan Papers) respecting the business
affairs, assets and liabilities of the Companies and
certifications and documents in the possession of or otherwise
reasonably available to the Companies in addition to those
mentioned in this Agreement.
8.2 Use of Proceeds. Borrower shall use the proceeds of Loans
---------------
only for the purposes represented in this Agreement.
8.3 Books and Records. Borrower will, and will cause each other
-----------------
Company to, maintain books, records and accounts necessary to prepare
financial statements in accordance with GAAP.
8.4 Inspections. Upon reasonable notice, Borrower will, and
-----------
will cause each other Company to, allow Agent or any Lender (or their
Representatives) to inspect any of its properties, to review reports,
files and other records and to make and take away copies, to conduct
tests or investigations, and to discuss any of its affairs, conditions
and finances with its directors, officers, responsible employees or
representatives from time to time, during reasonable business hours,
provided that Borrower may have a representative present at all such
tests, inspections, reviews and discussions.
8.5 Taxes. Borrower will, and will cause each other Company to
-----
promptly pay when due any and all Taxes, other than Taxes which are
being contested in good faith by lawful proceedings diligently
conducted, against which reserve or other provision required by GAAP
has been made; provided that all such Taxes shall, in any event, be
paid prior to any levy for execution in respect of any Lien on any
property of a Company.
8.6 Payment of Obligations. Borrower will, and will case each
----------------------
other Company to promptly pay (or renew and extend) all of its
material obligations as they become due (unless the obligations are
being contested in good faith by lawful proceedings diligently
conducted, against which reserve or other provision required by GAAP
has been made).
8.7 Expenses. Borrower shall promptly pay upon demand (a) all
--------
reasonable out-of-pocket costs, fees and expenses paid or incurred by
Agent or its Affiliates in connection with the arrangement,
syndication and negotiation of the Facilities and the negotiation,
preparation, delivery and execution of the Loan Papers and any related
amendment, waiver or consent (including in each case, without
limitation, the reasonable fees and expenses of Agent's counsel) and
(b) all reasonable out-of-pocket costs, fees and expenses of Lenders
and Agent incurred by Agent or any Lender in connection with the
enforcement of the obligations of any Company arising under the Loan
Papers after a Default or the exercise of any Rights arising under the
Loan Papers (including, but not limited to, reasonable attorneys'
fees, expenses and costs paid or incurred in connection with any
workout or restructure and any action taken in connection with any
Debtor Relief Laws, provided that Borrower shall only be obligated to
pay the fees, costs, and expenses of one law firm as legal counsel to
the Agent and the Lenders plus the fees and expenses of local counsel
in each jurisdiction where the Collateral is located), all of which
shall be a part of the Obligation and shall bear interest, if not paid
within 5 days after demand, at the Default Rate until paid.
8.8 Maintenance of Existence, Assets, and Business; Name Change.
-----------------------------------------------------------
Except as otherwise permitted by Section 9.11, Borrower will, and will
cause each other Company to, (a) maintain its corporate existence and
good standing in its state of incorporation and its authority to
transact business in all other states where failure to maintain its
authority to transact business is a Material Adverse Event;
(b) maintain all licenses, permits and franchises necessary for its
business where failure to do so is a Material Adverse Event; (c) keep
all of its assets that are necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make all
necessary repairs and replacements. No Company will change the
location of its chief executive office or the location of its
materials assets or change its name in any manner (except by
registering additional trade names) unless Agent receives prior
written notice of such change and revised Schedules 7.2, 7.3 or 7.12,
as applicable.
8.9 Insurance. Borrower will, and will cause each other Company
---------
to maintain with financially sound, responsible and reputable
insurance companies or associations (or, as to workers' compensation
or similar insurance, with an insurance fund or by self-insurance
authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against casualties and
contingencies and of types (including business interruption insurance)
and in amounts (and with co-insurance and deductibles) as is customary
in the case of similar businesses. At Agent's request, Borrower
shall, and shall cause each other Company to, deliver to Agent
certificates of insurance for each policy of insurance and evidence of
payment of all premiums and naming Agent as loss payee and requiring
30 days prior written notice to Agent of cancellation. If any
insurance policy covered by an insurance certificate previously
delivered to Agent is altered or canceled, then Borrower shall cause
to be promptly delivered to Agent a replacement certificate (in form
and substance reasonably satisfactory to Agent).
8.10 Preservation and Protection of Rights. Borrower will, and
-------------------------------------
will cause each other Company to perform the acts and duly authorize,
execute, acknowledge, deliver, file and record any additional writings
as Agent or Required Lenders may reasonably deem necessary or
appropriate to perfect and maintain the Lender Liens and preserve and
protect the Rights of Agent and Lenders under any Loan Paper.
8.11 Environmental Laws. Borrower will, and will cause each
------------------
other Company to conduct its business so as to comply with all
applicable Environmental Laws and shall promptly take corrective
action to remedy any non-compliance with any Environmental Law, except
where failure to comply or take action could not reasonably be
expected to be a Material Adverse Event.
8.12 Subsidiaries. Borrower shall pledge to Agent for the
------------
benefit of Lenders (a) all capital stock of each Person organized
under the Laws of the United States (or any state thereof) that
becomes a Subsidiary of Borrower after the date of this Agreement and
(b) 65% of the capital stock of each Person not organized under the
Laws of the United States (or any state thereof) which becomes a
Subsidiary of Borrower after the date of this Agreement (in each case,
whether as a result of acquisition, creation or otherwise) and shall
cause each such new Subsidiary to execute and deliver a Guaranty, in
each case within 10 days after
becoming a Subsidiary of Borrower. Borrower shall deliver to Agent
revised Schedules 7.2 and 7.3 reflecting such new Subsidiary within 10
days after it becomes a Subsidiary.
8.13 Indemnification. Borrower Will, And Will Cause Each Other
---------------
Company To, Jointly And Severally, Indemnify, Protect And Hold Agent
And Lenders And Their Respective Parents, Subsidiaries,
Representatives, Successors And Assigns (Including All Officers,
Directors, Employees And Agents)(Collectively, The "Indemnified
Parties") Harmless From And Against Any And All Liabilities,
Obligations, Losses, Damages, Penalties, Actions, Judgments, Suits,
Claims And Proceedings And All Costs, Expenses Related Thereto
(Including, Without Limitation, All Reasonable Attorneys' Fees And
Legal Expenses Whether Or Not Suit Is Brought) And Disbursements Of
Any Kind Or Nature (The "Indemnified Liabilities") That May At Any
Time Be Imposed On, Incurred By Or Asserted Against The Indemnified
Parties, In Any Way Relating To Or Arising Out Of (a) The Direct Or
Indirect Result Of The Violation By Any Company Of Any Environmental
Law, (b) Any Company's Generation, Manufacture, Production, Storage,
Release, Threatened Release, Discharge, Disposal Or Presence In
Connection With Its Properties Of A Hazardous Substance (Including,
Without Limitation, (i) All Damages Of Any Use, Generation,
Manufacture, Production, Storage, Release, Threatened Release,
Discharge, Disposal Or Presence, Or (ii) The Costs Of Any
Environmental Investigation, Monitoring, Repair, Cleanup Or
Detoxification And The Preparation And Implementation Of Any Closure,
Remedial Or Other Plans), Or (c) The Loan Papers Or Any Of The
Transactions Contemplated Therein (other than amounts payable under
Section 8.7). However, Although Each Indemnified Party Has The Right
To Be Indemnified Under The Loan Papers For Its Own Ordinary
Negligence, No Indemnified Party Has The Right To Be Indemnified Under
The Loan Papers For Its Own Fraud, Gross Negligence, Willful
Misconduct Or Breach Of Any Of the Loan Papers, Including Actions In
Violation Of The Asset Conservation Act of 1996 (or analagous
environmental lender liability laws). The Provisions Of And
Undertakings And Indemnification Set Forth In This Paragraph Shall
Survive The Satisfaction And Payment Of The Obligation And Termination
Of This Agreement.
8.14 Financial Hedges. Borrower shall enter into Financial
----------------
Hedges on terms reasonably acceptable to Agent and Borrower, and for
an aggregate notional amount reasonably acceptable to Borrower and
Agent, within 60 days after the Closing Date. Borrower shall give
Agent sufficient prior written notice of its entering into any
Financial Hedge to permit Agent to consult with Borrower concerning
such Financial Hedge.
SECTION 9 NEGATIVE COVENANTS. So long as Lenders are committed to
--------- ------------------
fund Loans and Issuing Lender is committed to issue LCs under
this Agreement, and thereafter until the Obligation is paid in full,
Borrower covenants and agrees as follows:
9.1 Taxes. Borrower may not and may not permit any Company to
-----
use any portion of the proceeds of any Loan to pay the wages of
employees, unless a timely payment to or deposit with the United
States of America of all amounts of Tax required to be deducted and
withheld with respect to such wages is also made.
9.2 Payment of Obligations. Borrower may not and may not permit
----------------------
any Company to voluntarily prepay principal of, or interest on, any
Debt other than the Obligation, if a Default or Potential Default
exists or would result from such payment.
9.3 Employee Plans. Except where a Material Adverse Event would
--------------
not result, Borrower may not and may not permit any Company to permit
any of the events or circumstances described in Section 7.10 to exist
or occur.
9.4 Debt. Borrower may not and may not permit any Company to
----
create, incur or suffer to exist any Debt, other than Permitted Debt.
9.5 Liens. Borrower may not and may not permit any Company to
-----
(a) create, incur or suffer or permit to be created or incurred or to
exist any Lien upon any of its assets other than Permitted Liens or
(b) enter into or permit to exist any arrangement or agreement that
directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets, other than the Loan Papers
and leases that place a Lien prohibition on only the leased property.
9.6 Transactions with Affiliates. Borrower may not and may not
----------------------------
permit any Company to enter into any material transaction with any of
its Affiliates (excluding other Companies), other than transactions
disclosed on Schedule 7.14 and transactions in the ordinary course and
upon fair and reasonable terms not materially less favorable than it
could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate, except that:
(i) Distributions may be made to the extent not
otherwise prohibited under this Agreement;
(ii) Borrower may enter into and consummate the
transactions contemplated by its Employee Plans; and
(iii) Borrower may enter into transactions with its
employees, officers or directors regarding employment
compensation and benefits, including without
limitation salaries, bonuses, stock options, relocation
loans and expenses, and similar benefits.
9.7 Compliance with Laws and Documents. Borrower may not and
----------------------------------
may not permit any Company to (a) violate the provisions of any Laws
applicable to it or of any Material Agreement to which it is a party
if that violation alone, or when aggregated with all other violations,
would be a Material Adverse Event, (b) violate the provisions of its
charter or bylaws, or (c) repeal, replace or amend any provision of
its charter or bylaws if that action would be a Material Adverse
Event.
9.8 Loans, Advances and Investments. Except as permitted by
-------------------------------
Section 9.11, Borrower may not and may not permit any Company to make
any loan, advance, extension of credit or capital contribution to,
make any investment in, or purchase or commit to purchase any stock or
other securities or evidences of Debt of, or interests in, any other
Person, other than
(a) expense accounts for and other loans or advances to its
directors, officers and employees in the ordinary course of
business;
(b) marketable obligations issued or unconditionally
guaranteed by the United States Government or issued by any of
its agencies and backed by the full faith and credit of the
United States of America, in each case maturing within one year
from the date of acquisition;
(c) short-term investment grade domestic and eurodollar
certificates of deposit or time deposits that are fully insured
by the Federal Deposit Insurance Corporation or are issued by
commercial banks organized under the Laws of the United States of
America or any of its states having combined capital, surplus,
and undivided profits of not less than $100,000,000 (as shown on
its most recently published statement of condition);
(d) commercial paper and similar obligations rated "P-1" by
Moody's Investors Service, Inc., or "A-1" by Standard & Poors
Ratings Group (a division of McGraw Hill, Inc.);
(e) readily marketable tax-free municipal bonds of a
domestic issuer rated "A-2" or better by Moody's Investors
Service, Inc., or "A" or better by Standard & Poors Ratings Group
(a division of McGraw Hill, Inc.), and maturing within one year
from the date of issuance;
(f) mutual funds or money market accounts investing
primarily in items described in clauses (b) through (e) above;
(g) cash or demand deposit accounts maintained in the
ordinary course of business;
(h) current trade and customer accounts receivable that are
for goods furnished or services rendered in the ordinary course
of business and that are payable in accordance with customary
trade terms;
(i) Financial Hedges to the extent permitted under this
Agreement;
(j) any Company may make loans to any other Company,
provided that all such loans are evidenced by promissory notes;
(k) Debt of any Company to another Company existing on the
date hereof and listed on Schedule 2;
(l) the Companies may sell or transfer assets to each other
to the extent permitted by this Agreement;
(m) Borrower may establish Subsidiaries to the extent
permitted by this Agreement;
(n) Borrower may repurchase its capital stock and/or
options to purchase such stock held by directors, officers and
employees of the Companies upon the death, disability, retirement
or termination of such directors, officers or employees or the
exercise of such options, or from the shareholders of Borrower so
long as the purpose is to acquire stock for reissuance to new
employees of Borrower and its Subsidiaries;
(o) promissory notes, bonds, debentures and other similar
non-cash consideration received by Borrower and its Subsidiaries
in connection with dispositions permitted by Section 9.10 so long
as that portion of the aggregate principal amount thereof which
exceeds the amount of reserves for such items does not exceed
$3,000,000 at any one time outstanding;
(p) Borrower and its Subsidiaries may acquire and own
investments (including Debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers
and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(q) investments by Borrower in any of its Subsidiaries;
(r) loans, advances or investments in existence on the date
hereof (other than intercompany Debt) as described on Schedule 2,
and extensions, renewals, modifications and restatements or
replacements thereof, provided that no such extension, renewal,
modification or restatement may (i) increase the amount of the
original loan, advance or investment, or (ii) adversely effect
the interest of the Lenders with respect to such original loan,
advance or investment or the interest of the Lenders under this
Agreement in any material respect;
(s) investments by Borrower in capital stock of
corporations that are not Subsidiaries of Borrower for the
purpose or purposes of extending or continuing, in the areas of
production, marketing, research and development and/or
advertising, the frozen and non-frozen refrigerated food product
lines of business currently engaged in by the Companies, provided
that (i) no Default exists at the time of the investment or would
result therefrom and (ii) such capital stock shall be represented
by certificates issued to Borrower and shall be delivered in
pledge to Agent, who will hold such certificates for the benefit
of the Lenders pursuant to the terms of a Security Document.
Notwithstanding anything in any Security Document to the
contrary, the Agent shall release from pledge and redeliver such
certificates to Borrower or its designee upon ten (10) days
written notice from Borrower of its intention to sell such
capital stock in a transaction which is not expressly prohibited
by this Agreement;
(t) Borrower's creation of and/or entry into partnership or
joint venture agreements for the purpose or purposes of extending
or continuing, the areas of the production, marketing, research
and development and/or advertising, the frozen and non-frozen
refrigerated food product lines of business currently engaged in
by the Companies, provided that (i) the total capital investment
of Borrower or any of its Subsidiaries in such partnerships or
joint ventures shall not at any time exceed $5,000,000, (ii) no
Default shall have occurred and be continuing or would result
therefrom, and (iii) to the extent permitted by its
organizational documents, Borrower's interest in such partnership
or joint venture shall be pledge to Agent for the benefit of
Lenders pursuant to the terms of a Security
Document. Notwithstanding anything in any Security Document to
the contrary, the Agent shall release from any such pledge upon
ten days written notice from Borrower of its intention to sell
such interest in a transaction which is not expressly prohibited
by this Agreement; and
(u) In addition to the foregoing, Borrower and the
Companies may make additional investments (which shall not be
counted in the limitations set forth above) as follows:
(i) investments in an aggregate amount not to exceed
$2,000,000 (at cost, without regard to any write-down or
write-up thereof) at any one time outstanding;
(ii) the investment of net cash proceeds from
dispositions of assets and Net Equity Proceeds not required
to be applied to prepay the Loans pursuant to Section
3.2(d); and
(iii) the investment of Excess Cash Flow generated
during prior fiscal years and not required to be applied to
prepay the Loans pursuant to Section 3.2(d).
9.9 Management Fees. Except as permitted by Section 9.6, no
---------------
Company may pay management fees to any Affiliate.
9.10 Sale of Assets. Borrower may not and may not permit any
--------------
Company to sell, assign, lease, transfer or otherwise dispose of any
of its assets, other than (a) sales or transfers of inventory in the
ordinary course of business, (b) the sale, discount or transfer of
delinquent accounts receivable in the ordinary course of business for
purposes of collection, (c) occasional sales, leases or other
dispositions of immaterial assets for consideration not less than fair
market value, (d) sales, leases or other dispositions of assets that
are obsolete, worn out, no longer useful in the Companies' business or
have negligible fair market value, (e) sales of equipment for a fair
and adequate consideration (but if replacement equipment is necessary
for the proper operation of the business of the seller, the seller
must promptly replace the sold equipment), (f) lease (as lessor) real
or personal property, so long as the assets subject to any such lease
are not necessary for the conduct of the Companies' business, (g)
transfers of condemned property to the respective Tribunal that has
condemned such property (whether by deed in lieu of condemnation or
otherwise), and transfers of property that has been subject to a
casualty to the respective insurer of such property as part of an
insurance settlement, (h) licenses and sublicenses by any Company of
software, trademarks or other Intellectual Property in the ordinary
course of business and which do not materially interfere with the
business of the Companies, (i) transfer or lease assets to or acquire
or lease assets from any Company, (j) the sale, lease or other
disposition of any other assets, provided that the aggregate net cash
proceeds of all assets subject to sales or other dispositions pursuant
to this clause (j) shall not exceed $5,000,000 in any fiscal year, and
(k) sales, assignments, leases, transfers or dispositions by a Company
to another Company if the transferee Company is organized under the
laws of the United States or any state thereof and conducts its
operations within the United States. Any sale of assets is subject to
the mandatory prepayment provisions of Section 3.2.
9.11 Acquisitions, Mergers and Dissolutions. Except as provided
--------------------------------------
in this Section 9.11, Borrower may not and may not permit any Company
to (a) acquire all or any substantial portion of stock issued by,
interest in, or assets of, any other Person, (b) merge or consolidate
with any other Person, or (c) liquidate, wind up or dissolve (or
suffer any liquidation or dissolution). Any Company may merge or
consolidate with another Company and the non-surviving entity may be
liquidated, wound up or dissolved, provided that if Borrower is a
party to such merger or consolidation, Borrower must be the surviving
entity. Borrower may consummate the Acquisition and may acquire all
or any substantial portion of stock issued by, interest in, or assets
of, any other Person organized under the laws of the United States of
America or any state thereof (the "Target"), and may form Subsidiaries
for such purpose, if (i) at least 15 days before such acquisition,
Borrower gives Agent a written description of the acquisition,
including the funding sources and the total investment or purchase
price, and a calculation on a pro forma basis (taking the acquisition
into account) showing that no Default under Section 10 will occur as a
result of such acquisition, together with a certificate from a
Responsible Officer representing, in such capacity and not
individually, to Agent and Lenders that the acquisition will not
reasonably be expected to result in the occurrence of a Default within
the four fiscal quarters after the date of the acquisition, (ii) the
Target is aware of, and has not objected to, the acquisition, (iii)
the Target is in the same or similar business as the Companies or a
business reasonably related thereto, (iv) on a pro forma basis (taking
the acquisition into account), there is not less than $13,000,000 of
availability under the Revolving Credit Facility, and (v) the
surviving entity of any merger or consolidation shall, concurrent with
such merger or consolidation, execute a Guaranty of the Obligation and
such other Security Documents as Agent reasonably deems necessary or
appropriate for such surviving entity to pledge all of its
material assets to secure the Obligation or its Guaranty of the
Obligation.
9.12 Assignment. Except as permitted under Section 9.11,
----------
Borrower may not and may not permit any Company to assign or transfer
any of its Rights, or cause to be delegated its duties, or obligations
under any of the Loan Papers, except that any Company may assign its
Rights to any other Company.
9.13 Fiscal Year and Accounting Methods. Borrower may not and
----------------------------------
may not permit any Company to change its fiscal year or its method of
accounting (other than immaterial changes in methods or as required by
GAAP) without the prior consent of Agent, which consent shall not be
unreasonably withheld or delayed.
9.14 New Businesses. Borrower may not and may not permit any
--------------
Company to engage in any business except the businesses in which they
are presently engaged and any other reasonably related business.
9.15 Government Regulations. Borrower may not and may not
----------------------
permit any Company to conduct its business in a way that it becomes
regulated under the Investment Company Act of 1940, as amended, or the
Public Utility Holding Company Act of 1935, as amended.
SECTION 10 FINANCIAL COVENANTS. So long as Lenders are committed to
---------- -------------------
fund Loans and Issuing Lender is committed to issue LCs under this
Agreement, and thereafter until the Obligation is paid and performed
in full, Borrower covenants and agrees as follows:
10.1 Maximum Leverage Ratio. As calculated as of the last day
----------------------
of each fiscal quarter of the Companies, the Companies shall not
permit the ratio of (a) the unpaid principal amount of Funded Debt of
the Companies existing as of such last day to (b) EBITDA for the four
fiscal quarters ending on such last day to exceed the following:
Maximum
Period Leverage Ratio
As of the last day of each fiscal quarter 4.25: 1.00
occurring after the Closing Date through and
including March 31, 1997
As of the last day of the fiscal quarters 4.00: 1.00
ending on June 30, 1997 and September 30,
1997
Maximum
Period Leverage Ratio
As of the last day of the fiscal quarters 3.75: 1.00
ending on December 31, 1997 and March 31,
1998
As of the last day of the fiscal quarters 3.50: 1.00
ending on June 30, 1998 and September 30,
1998
As of the last day of the fiscal quarters 3.25: 1.00
ending on December 31, 1998 and March 31,
1999
As of the last day of the fiscal quarters 3.0: 1.00
ending on June 30, 1999 and September 30,
1999
As of the last day of each fiscal quarter 2.75: 1.00
occurring after September 30, 1999 through
and including September 30, 2000
As of the last day of each fiscal quarter 2.25: 1.00
occurring after September 30, 2000 through
and including September 30, 2001
As of the last day of each fiscal quarter 2.00: 1.00
occurring after September 30, 2001
10.2 Minimum Fixed Charge Coverage Ratio. As calculated as of
-----------------------------------
the last day of each fiscal quarter of the Companies, the Companies
shall not permit the ratio of (a) Cash Flow for the four fiscal
quarters ending on such last day to (b) Fixed Charges in such four
fiscal quarters to be less than the following:
Minimum
Fixed Charge
Period Coverage
Ratio
As of the last day of each fiscal quarter 2.00 to 1.00
occurring after the Closing Date through and
including September 30, 1997:
As of the last day of each fiscal quarter 1.70 to 1.00
commencing with October 1, 1997 through and
including September 30, 1998:
Minimum
Fixed Charge
Period Coverage
Ratio
As of the last day of each fiscal quarter 1.35 to 1.00
occurring after September 30, 1998 through
and including September 30, 2000:
As of the last day of each fiscal quarter 1.15 to 1.00
occurring after September 30, 2000 through
and including December 31, 2001:
As of the last day of each fiscal quarter 1.00 to 1.00
occurring after December 31, 2001:
10.3 Minimum Net Worth. Borrower shall not permit the Net Worth
-----------------
(as at the end of each fiscal quarter) of the Companies to be less
than the sum of (a) 90% of Borrower's consolidated Net Worth as of
December 31, 1996, as set out in the Financial Statements for the
fiscal year ending on such date and delivered in accordance with
Section 8.1(a), plus (b) 60% of the Companies' net consolidated
positive net income earned in 1997 (unadjusted for net consolidated
losses), minus (c) any tax affected non-cash charges for non-recurring
items which arise from, or directly or indirectly relate to, any
acquisition permitted under Section 9.11 which is consummated on or
before December 31, 1997, plus (d) 75% of the Companies' net
consolidated positive net income (unadjusted for net consolidated
losses) earned after December 31, 1997, plus (e) 75% of any addition
to paid in capital after the Closing Date (other than as a result of
the exercise of options or similar instruments issued pursuant to an
employee benefit plan or as a result of any reissuance of Borrower
common stock to directors, executive officers, members of management
or employees, provided that the aggregate amount of such exclusions
from paid in capital may not exceed $2,000,000 in any fiscal year of
Borrower).
10.4 Capital Expenditures. Except as provided in this Section
--------------------
10.4, Borrower shall not permit Capital Expenditures in any fiscal
year to exceed the amount set out in the appropriate intersection in
the following table:
Year Capital Expenditures
1997 $20,000,000
1998 $20,000,000
1999 $16,000,000
2000 $14,000,000
2001 $14,000,000
2002 $14,000,000
Notwithstanding anything to the contrary in this Agreement, to the
extent that the aggregate amount of Capital Expenditures made by the
Companies in any fiscal year is less than the amount set out in this
Section 10.4, 50% of the amount of such difference may be carried
forward and used to make Capital Expenditures in the immediately
succeeding fiscal year (and the first Capital Expenditures made in any
fiscal year shall be deemed to be expenditures of the amount carried
forward from the prior fiscal year, if any). Capital Expenditures
made using proceeds which were not required to be prepaid on the Term
Loan pursuant to Section 3.2(d)(i)(D) and (E) shall not be subject to
the limitations imposed on Capital Expenditures under this
Section 10.4.
SECTION 11 DEFAULT. The term "Default" means the occurrence of any
---------- -------
one or more of the following events:
11.1 Payment of Obligation. The failure or refusal of any
---------------------
Company to pay (a) any principal payment contemplated by Section
3.2(b) of this Agreement or any amount in respect of its reimbursement
obligations in connection with any drawing under an LC after such
payment becomes due and payable hereunder, (b) any principal payment
(other than those contemplated by Section 3.2(b)), interest payment
contemplated to be made hereunder, or fees payable under Section 4,
within 3 Business Days after the due date, and (c) any other amount
contemplated to be paid hereunder in respect of fees, costs, expenses
or indemnities within 10 Business Days after demand therefor by Agent.
11.2 Covenants. The failure of any Company to punctually and
---------
properly perform, observe, and comply with:
(a) Any covenant or agreement contained in Section 2.3(h)
or Sections 8.2, 8.9, 9 and 10; or
(b) Any covenant or agreement contained in Sections 8.1,
8.3, 8.4, 8.7, 8.10, 8.11, 8.12, 8.13 and 8.14, and failure
continues for 10 days after the first to occur of (i) a
Responsible Officer knows of or (ii) Borrower receives notice
from Agent of, such failure; or
(c) Any other covenant or agreement or condition applicable
to it contained in any Loan Paper (other than the covenants to
pay the Obligation and the covenants in clauses (a) or (b)
preceding), and failure continues for 30 days after the first to
occur of (i) a Responsible Officer knows of or (ii) Borrower
receives notice from Agent of, such failure.
11.3 Debtor Relief. Any Company (a) is not Solvent, (b) fails
-------------
to pay its Debts generally as they become due, (c) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Relief Law,
(d) involuntarily becomes a party to or is made the subject of any
proceeding provided for by any Debtor Relief Law (other than as a
creditor or claimant) that could suspend or otherwise adversely affect
the Rights of Agent or any Lender granted in the Loan Papers and (i)
the petition is not controverted within 10 Business Days and is not
dismissed within 60 days, or (ii) an order for relief is entered under
Title 11 of the United States Code.
11.4 Judgments and Attachments. Any Company fails, within 60
-------------------------
days after entry, to stay, pay, bond or otherwise vacate or discharge
any (a) judgment or order for the payment of money (individually or
collectively outstanding on any date), the uninsured portion of which
exceeds $2,500,000, or (b) warrant of attachment, sequestration or
similar proceeding against any Company's assets having a value
(individually or collectively outstanding on any date) the uninsured
portion of which exceeds $2,500,000.
11.5 Government Action. (a) A final non-appealable order is
-----------------
issued by any Tribunal (including, but not limited to, the United
States Justice Department) seeking to cause any Company to divest a
significant portion of its assets under any antitrust, restraint of
trade, unfair competition, industry regulation or similar Laws, or (b)
any Tribunal condemns, seizes or otherwise appropriates, or takes
custody or control of any assets of any Company unless such action is
not a Material Adverse Event.
11.6 Misrepresentation. Any material representation or warranty
-----------------
made by any Company contained in any Loan Paper (other than those made
as of a specified date and which were true and correct when made) at
any time proves to have been incorrect in any material respect when
made.
11.7 Ownership of Other Companies. Borrower fails to own,
----------------------------
beneficially and of record, with power to vote, 100% of the issued and
outstanding shares of capital stock of any other Company.
11.8 Default Under Other Agreements. (a) Any default exists
------------------------------
under any agreement (other than payables arising in the ordinary
course of business and Subordinated Debt) to which a Company is a
party, the effect of which is to permit any Person (other than a
Company) to cause an amount to become due and payable by any Company
before its stated maturity and such amount, if accelerated, would
result in a Material Adverse Event, (b) any Debt in excess
(individually or collectively) of
$5,000,000 is declared to be due and payable or required to be prepaid
by any Company before its stated maturity, or (c) any Company fails to
pay when due (after lapse of any applicable grace period) any payment
in respect of Debt in excess (individually or collectively) of
$5,000,000.
11.9 LCs. Agent is served with, or becomes subject to, a court
---
order, injunction, or other process or decree restraining or seeking
to restrain it from paying any amount under any LC and a drawing has
occurred under the LC and Borrower has refused to reimburse Agent for
payment.
11.10 Validity and Enforceability of Loan Papers. Except in
------------------------------------------
accordance with its terms or as otherwise expressly permitted by this
Agreement, any Loan Paper at any time after its execution and delivery
ceases to be in full force and effect in any material respect (and
Borrower does not cure such event to Agent's reasonable satisfaction
within 10 days after Agent's written notice to Borrower of such
cessation) or is declared by a Tribunal to be null and void or its
validity or enforceability is contested by any Company party thereto
or any Company denies that it has any further liability or obligations
under any Loan Paper to which it is a party. If the validity or
enforceability of any Loan Paper is contested in any proceeding to
which no Company is a party, Borrower may participate in such
Litigation for the purpose of defending the validity or enforceability
of the Loan Paper.
11.11 Change of Control. There shall occur a Change of Control
-----------------
Event.
11.12 SEC Reporting Requirements. Borrower fails to comply with
--------------------------
any reporting requirements of the Securities Exchange Act of 1934, as
amended, for which the failure to report would constitute a Material
Adverse Event.
11.13 Financial Hedges. Any Company breaches any provision of
----------------
any Financial Hedge and the breach is not cured within any applicable
grace period.
SECTION 12 RIGHTS AND REMEDIES.
---------- -------------------
12.1 Remedies Upon Default.
---------------------
(a) If a Default exists under Section 11.3, the commitment
to extend credit and issue LCs under this Agreement automatically
terminates, the entire unpaid balance of the Obligation
automatically becomes due and payable without any action of any
kind whatsoever, and
Borrower must provide cash collateral in an amount equal to the
then-existing LC Exposure.
(b) If a Default occurs and is continuing, subject to the
terms of Section 13.5(b), Agent may (with the consent of, and
must, upon the request of, Required Lenders), do any one or more
of the following: (i) if the maturity of the Obligation has not
already been accelerated under Section 12.1(a), declare the
entire unpaid balance of all or any part of the Obligation
immediately due and payable, whereupon it is due and payable;
(ii) terminate the commitments of Lenders to extend credit or to
continue or convert any Loan under this Agreement; (iii) reduce
any claim to judgment; (iv) to the extent permitted by Law,
exercise (or request each Lender to, and each Lender is entitled
to, exercise) the Rights of offset or banker's Lien against the
interest of any Company in and to every account (other than trust
accounts held for the benefit of third parties and so designated)
and other property of any Company that are in the possession of
Agent or any Lender to the extent of the full amount of the
Obligation (and to the extent permitted by Law, each Company is
deemed directly obligated to each Lender in the full amount of
the Obligation for this purpose); (v) demand Borrower to provide
cash collateral in an amount equal to the LC Exposure then
existing; and (vi) exercise any and all other legal or equitable
Rights afforded by the Loan Papers, the Laws of the State of
Texas, or any other applicable jurisdiction.
(c) If, in reliance on Section 13.5(b), Agent refuses to
take any action under Section 12.1(b) at the request of Required
Lenders, then Required Lenders may take that action.
12.2 Company Waivers. To the extent permitted by Law, each
---------------
Company waives presentment and demand for payment, protest, notice of
intention to accelerate, notice of acceleration and notice of protest
and nonpayment, and agrees that its liability with respect to all or
any part of the Obligation is not affected by any renewal or extension
in the time of payment of all or any part of the Obligation, by any
indulgence, or by any release or change in any security for the
payment of all or any part of the Obligation.
12.3 Performance by Agent. If any covenant, duty or agreement
--------------------
of any Company is not performed in accordance with the terms of the
Loan Papers, Agent may, while a Default exists, at its option (but
subject to the approval of Required Lenders), perform or attempt to
perform that covenant, duty or agreement on behalf of that Company
(and any amount expended by Agent in its
performance or attempted performance is payable by the Companies,
jointly and severally, to Agent on demand, becomes part of the
Obligation, and bears interest at the Default Rate from the date of
Agent's expenditure until paid). However, neither Agent nor any
Lender assumes or shall have, except by its express written consent,
any liability or responsibility for the performance of any covenant,
duty or agreement of any Company.
12.4 Not in Control. None of the covenants or other provisions
--------------
contained in any Loan Paper shall, or shall be deemed to, give Agent
or Lenders the Right to exercise control over the assets (including,
without limitation, real property), affairs, or management of any
Company; the power of Agent and Lenders is limited to the Right to
exercise the remedies provided in this Section 12.
12.5 Course of Dealing. The acceptance by Agent or Lenders of
-----------------
any partial payment on the Obligation shall not be deemed to be a
waiver of any Default then existing. No waiver by Agent, Required
Lenders or Lenders of any Default shall be deemed to be a waiver of
any other then-existing or subsequent Default. No delay or omission
by Agent, Required Lenders or Lenders in exercising any Right under
the Loan Papers will impair that Right or be construed as a waiver
thereof or any acquiescence therein, nor will any single or partial
exercise of any Right preclude other or further exercise thereof or
the exercise of any other Right under the Loan Papers or otherwise.
12.6 Cumulative Rights. All Rights available to Agent, Required
-----------------
Lenders, and Lenders under the Loan Papers are cumulative of and in
addition to all other Rights granted to Agent, Required Lenders, and
Lenders at law or in equity, whether or not the Obligation is due and
payable and whether or not Agent, Required Lenders, or Lenders have
instituted any suit for collection, foreclosure, or other action in
connection with the Loan Papers.
12.7 Application of Proceeds. Any and all proceeds ever
-----------------------
received by Agent or Lenders from the exercise of any Rights
pertaining to the Obligation shall be applied to the Obligation
according to Section 3.11.
12.8 Diminution in Value of Collateral. Neither Agent nor any
---------------------------------
Lender has any liability or responsibility whatsoever for any
diminution in or loss of value of any collateral now or hereafter
securing payment or performance of all or any part of the Obligation
(other than diminution in or loss of value caused by its gross
negligence or willful misconduct).
12.9 Certain Proceedings. Borrower will promptly execute and
-------------------
deliver, or cause the execution and delivery of, all applications,
certificates, instruments, registration statements and all other
documents and papers Agent or Required Lenders reasonably request in
connection with the obtaining of any consent, approval, registration,
qualification, permit, license or authorization of any Tribunal or
other Person necessary or appropriate for the effective exercise of
any Rights under the Loan Papers. Because Borrower agrees that
Agent's and Required Lenders' remedies at Law for failure of Borrower
to comply with the provisions of this paragraph would be inadequate
and that failure would not be adequately compensable in damages,
Borrower agrees that the covenants of this paragraph may be
specifically enforced.
SECTION 13 AGREEMENT AMONG LENDERS.
---------- -----------------------
13.1 Agent.
-----
(a) Each Lender appoints Agent (and Agent accepts
appointment) as its nominee and agent, in its name and on its
behalf: (i) to act as its nominee and on its behalf in and under
all Loan Papers; (ii) to arrange the means whereby its funds are
to be made available to Borrower under the Loan Papers; (iii) to
take any action that it properly requests under the Loan Papers
(subject to the concurrence of other Lenders as may be required
under the Loan Papers); (iv) to receive all documents and items
to be furnished to it under the Loan Papers; (v) to be the
secured party, mortgagee, beneficiary, recipient and similar
party in respect of any collateral for the benefit of Lenders;
(vi) to promptly distribute to it all material information,
requests, documents and items received from Borrower under the
Loan Papers; (vii) to promptly distribute to it its ratable part
of each payment or prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance
thereon, or otherwise) in accordance with the terms of the Loan
Papers; and (viii) to deliver to the appropriate Persons
requests, demands, approvals and consents received from it.
However, Agent may not be required to take any action that
exposes it to personal liability or that is contrary to any Loan
Paper or applicable Law.
(b) If the initial or any successor Agent ever ceases to be
a party to this Agreement or if the initial or any successor
Agent ever resigns (whether voluntarily or at the request of
Required Lenders), then Required Lenders shall appoint the
successor Agent from among the Lenders (other than the resigning
Agent). If Required Lenders fail to
appoint a successor Agent within 30 days after the resigning
Agent has given notice of resignation or Required Lenders have
removed the resigning Agent, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, which must be a
commercial bank having a combined capital and surplus of at least
$1,000,000,000 (as shown on its most recently published statement
of condition). Upon its acceptance of appointment as successor
Agent, the successor Agent succeeds to and becomes vested with
all of the Rights of the prior Agent, and the prior Agent is
discharged from its duties and obligations of Agent under the
Loan Papers and each Lender shall execute such documents as any
Lender, the resigning or removed Agent, or the successor Agent
reasonably request to reflect the change. After any Agent's
resignation or removal as Agent under the Loan Papers, the
provisions of this Section 13 inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent
under the Loan Papers.
(c) Agent, in its capacity as a Lender, has the same Rights
under the Loan Papers as any other Lender and may exercise those
Rights as if it were not acting as Agent; the term "Lender"
shall, unless the context otherwise indicates, include Agent; and
Agent's resignation or removal shall not impair or otherwise
affect any Rights that it has or may have in its capacity as an
individual Lender. Each Lender and Borrower agree that Agent is
not a fiduciary for Lenders or for Borrower but simply is acting
in the capacity described in this Agreement to alleviate
administrative burdens for Borrower and Lenders, that Agent has
no duties or responsibilities to Lenders or Borrower except those
expressly set forth in the Loan Papers, and that Agent in its
capacity as a Lender has all Rights of any other Lender.
(d) Agent may now or hereafter be engaged in one or more
loan, letter of credit, leasing or other financing transactions
with Borrower, act as trustee or depositary for Borrower, or
otherwise be engaged in other transactions with Borrower
(collectively, the "other activities") not the subject of the
Loan Papers. Without limiting the Rights of Lenders specifically
set forth in the Loan Papers, Agent is not responsible to account
to Lenders for those other activities, and no Lender shall have
any interest in any other activities, any present or future
guaranties by or for the account of Borrower that are not
contemplated or included in the Loan Papers, any present or
future offset exercised by Agent in respect of those other
activities, any present or future property taken as security for
any of those other activities, or any property now or hereafter
in Agent's possession or control that may be or become security
for the obligations of Borrower arising under the Loan Papers by
reason of the general description of indebtedness secured or of
property contained in any other agreements, documents, or
instruments related to any of those other activities (but, if any
payments in respect of those guaranties or that property or the
proceeds thereof is applied by Agent to reduce the Obligation,
then each Lender is entitled to share ratably in the application
as provided in the Loan Papers).
13.2 Expenses. Each Lender shall pay its Pro Rata Part (based
--------
on the total Facilities) of any reasonable expenses (including,
without limitation, court costs, reasonable attorneys' fees and other
costs of collection) incurred by Agent (while acting in such capacity)
in connection with any of the Loan Papers if Agent is not reimbursed
from other sources within 30 days after incurrence. Each Lender is
entitled to receive its Pro Rata Part (based on the total Facilities)
of any reimbursement that it makes to Agent if Agent is subsequently
reimbursed from other sources.
13.3 Proportionate Absorption of Losses. Except as otherwise
----------------------------------
provided in the Loan Papers, nothing in the Loan Papers gives any
Lender any advantage over any other Lender insofar as the Obligation
is concerned or to relieve any Lender from absorbing its Pro Rata Part
of any losses sustained with respect to any portion of the Obligation
in which it participates (except to the extent unilateral actions or
inactions by any Lender result in Borrower or any other obligor on the
Obligation having any credit, allowance, setoff, defense, or
counterclaim solely with respect to all or any part of that Lender's
portion of the Obligation).
13.4 Delegation of Duties; Reliance. Lenders may perform any of
------------------------------
their duties or exercise any of their Rights under the Loan Papers by
or through Agent, and Lenders and Agent may perform any of their
duties or exercise any of their Rights under the Loan Papers by or
through their respective Representatives. Agent, Lenders and their
respective Representatives (a) are entitled to rely upon (and shall be
protected in relying upon) any written or oral statement believed by
it or them to be genuine and correct and to have been signed or made
by the proper Person and, with respect to legal matters, upon opinion
of counsel selected by Agent or that Lender (but nothing in this
clause (a) permits Agent to rely on (i) oral statements if a writing
is required by this Agreement or (ii) any other writing if a specific
writing is required by this Agreement), (b) are entitled to deem and
treat each Lender as the owner and holder of its portion of the
Principal Debt for all purposes until, subject to Section 14.12,
written notice of the assignment or transfer is
given to and received by Agent (and any request, authorization,
consent or approval of any Lender is conclusive and binding on each
subsequent holder, assignee or transferee of or Participant in that
Lender's portion of the Principal Debt until that notice is given and
received), (c) are not deemed to have notice of the occurrence of a
Default unless a responsible officer of Agent, who handles matters
associated with the Loan Papers and transactions thereunder, has
actual knowledge or Agent has been notified by a Lender or Borrower,
and (d) are entitled to consult with legal counsel (including counsel
for Borrower), independent accountants, and other experts selected by
Agent and are not liable for any action taken or omitted to be taken
in good faith by it in accordance with the advice of counsel,
accountants, or experts.
13.5 Limitation of Agent's Liability.
-------------------------------
(a) Neither Agent nor any of its Affiliates,
Representatives, successors or assigns will be liable for any
action taken or omitted to be taken by it or them under the Loan
Papers in good faith and believed by it or them to be within the
discretion or power conferred upon it or them by the Loan Papers
or be responsible for the consequences of any error of judgment
(except for fraud, gross negligence or willful misconduct), and
none of them has a fiduciary relationship with any Lender by
virtue of the Loan Papers (but nothing in this Agreement negates
the obligation of Agent to account for funds received by it for
the account of any Lender).
(b) Unless indemnified to its satisfaction, Agent may not
be compelled to do any act under the Loan Papers or to take any
action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Loan
Papers. If Agent requests instructions from Lenders, or Required
Lenders, as the case may be, with respect to any act or action in
connection with any Loan Paper, Agent is entitled to refrain
(without incurring any liability to any Person by so refraining)
from that act or action unless and until it has received
instructions. In no event, however, may Agent or any of its
Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil
liability or that is contrary to any Loan Paper or applicable
Law. Without limiting the generality of the foregoing, no Lender
has any right of action against Agent as a result of Agent's
acting or refraining from acting under this Agreement in
accordance with instructions of Required Lenders, or, if
unanimity is required, in accordance with instructions of all
Lenders.
(c) Agent is not responsible to any Lender or any
Participant for, and each Lender represents and warrants that it
has not relied upon Agent in respect of, (i) the creditworthiness
of any Company and the risks involved to that Lender, (ii) the
effectiveness, enforceability, genuineness, validity or due
execution of any Loan Paper (other than by Agent), (iii) any
representation, warranty, document, certificate, report or
statement made therein (other than by Agent) or furnished
thereunder or in connection therewith, (iv) the adequacy of any
collateral now or hereafter securing the Obligation or the
existence, priority or perfection of any Lien now or hereafter
granted or purported to be granted on the collateral under any
Loan Paper, or (v) the observance of or compliance with any of
the terms, covenants or conditions of any Loan Paper on the part
of any Company. Each Lender Agrees To Indemnify Agent And Its
Affiliates And Representatives And Successors And Assigns And
Hold Them Harmless From And Against (But Limited To Such Lender's
Pro Rata Part Of) Any And All Liabilities, Obligations, Losses,
Damages, Penalties, Actions, Judgments, Suits, Costs, Reasonable
Expenses And Reasonable Disbursements Of Any Kind Or Nature
Whatsoever That May Be Imposed On, Asserted Against, Or Incurred
By Them In Any Way Relating To Or Arising Out Of The Loan Papers
Or Any Action Taken Or Omitted By Them Under The Loan Papers If
Agent And Its Representatives Are Not Reimbursed For Such Amounts
By Any Company. Although Agent And Its Representatives Have The
Right To Be Indemnified Under This Agreement For Its Or Their Own
Ordinary Negligence, Agent And Its Representatives Do Not Have
The Right To Be Indemnified Under This Agreement For Its Or Their
Own Fraud, Gross Negligence Or Willful Misconduct.
13.6 Default; Collateral. If Agent receives notice of a Default
-------------------
from Borrower or any Lender, Agent shall notify Lenders of such
Default and Lenders agree to promptly confer in order that Required
Lenders or all Lenders, as the case may be, may agree upon a course of
action for the enforcement of the Rights of Lenders and Agent is
entitled to refrain from taking any action (without incurring any
liability to any Person for so refraining), unless and until it has
received instructions from Required Lenders. In actions with respect
to any property of Borrower, Agent is acting for the ratable benefit
of each Lender. Agent shall hold, for the ratable benefit of all
Lenders, any security it receives for the Obligation or any guaranty
of the Obligation it receives upon or in lieu of foreclosure.
13.7 Limitation of Liability. No Lender or any Participant will
-----------------------
incur any liability to any other Lender or Participant except for acts
or omissions in bad faith, and neither Agent nor
any Lender or Participant will incur any liability to any other Person
for any act or omission of any other Lender or any Participant.
13.8 Relationship of Lenders. The Loan Papers, and the
-----------------------
documents delivered in connection therewith, do not create a
partnership or joint venture among Agent and Lenders or among Lenders.
13.9 Collateral Matters.
------------------
(a) Each Lender authorizes and directs Agent to enter into
the Security Documents for the ratable benefit of Lenders. Each
Lender agrees that any action taken by Agent concerning any
Collateral with the consent of, or at the request of, Required
Lenders in accordance with the provisions of this Agreement, the
Security Documents or the other Loan Papers, and the exercise by
Agent (with the consent of, or at the request of, Required
Lenders) of powers concerning the Collateral set forth in any
Loan Paper, together with other reasonably incidental powers,
shall be authorized and binding upon all Lenders.
(b) Agent is authorized on behalf of all Lenders, without
the necessity of any notice to or further consent from any
Lender, from time to time before a Default or Potential Default,
to take any action with respect to any Collateral or Security
Documents that may be necessary to perfect and maintain perfected
the Lender Liens upon the Collateral granted by the Security
Documents.
(c) Agent has no obligation whatsoever to any Lender or to
any other Person to assure that the Collateral exists or is owned
by any Company or is cared for, protected or insured or has been
encumbered or that the Liens granted to Agent for the benefit of
Lenders under the Security Documents have been properly or
sufficiently or lawfully created, perfected, protected or
enforced, or are entitled to any particular priority.
(d) Agent shall exercise the same care and prudent judgment
with respect to the Collateral and the Security Documents as it
normally and customarily exercises in respect of similar
collateral and security documents.
(e) Lenders irrevocably authorize Agent, at its option and
in its discretion, to (i) release any Lender Lien upon any
Collateral (A) upon full payment of the Obligation; (B)
constituting property being sold or disposed of as permitted
under Section 9.10, if Agent determines that the property
being sold or disposed is being sold or disposed in accordance
with the requirements and limitations of Section 9.10 and Agent
concurrently receives all mandatory prepayments with respect
thereto, if any, in accordance with Section 3.2; (C) constituting
property in which no Company owned any interest at the time the
Lender Lien was granted or at any time thereafter;
(D) constituting property leased to any Company under a lease
that has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and that has not been,
and is not intended by that Company to be, renewed; (E)
consisting of an instrument evidencing Debt pledged to Agent (for
the benefit of Lenders), if the Debt evidenced thereby has been
paid in full; (F) in accordance with Section 9.8(s) and (t); or
(G) if approved, authorized or ratified in writing by Required
Lenders, subject to Section 14.10(b)(vi), (ii) to receive on
behalf of each of the Lenders and the Issuing Lender any payment
of principal, interest, fees or other amounts paid pursuant to
this Agreement or the other Loan Papers and to distribute to each
Lender its share of all payments so received as provided in this
Agreement, (iii) to receive all documents and items to be
furnished under the Loan Papers, (iv) to execute and deliver to
the Companies and other Persons, all requests, demands,
approvals, notices, and consents received from the Lenders or the
Issuing Lender, and (v) to take such other actions as may be
required by Required Lenders. Upon request by Agent at any time,
Lenders will confirm in writing Agent's authority to release
particular types or items of Collateral under this Section
13.9(e).
13.10 Benefits of Agreement. None of the provisions of this
---------------------
Section 13 inure to the benefit of any Company or any other Person
other than Agent and Lenders; consequently, no Company or any other
Person is entitled to rely upon, or to raise as a defense, in any
manner whatsoever, the failure of Agent or any Lender to comply with
these provisions.
SECTION 14 MISCELLANEOUS.
---------- -------------
14.1 Headings; Schedules and Exhibits. The headings, captions
--------------------------------
and arrangements used in any of the Loan Papers are, unless specified
otherwise, for convenience only and shall not be deemed to limit,
amplify or modify the terms of the Loan Papers, or affect the meaning
thereof. All references in this Agreement to Schedules and Exhibits
shall refer to the Schedules and Exhibits attached to this Agreement.
14.2 Nonbusiness Days; Time. Any payment or action that is due
----------------------
under any Loan Paper on a non-Business Day may be delayed
until the next-succeeding Business Day (but interest shall continue to
accrue on any applicable payment until payment is in fact made) unless
the payment concerns a LIBOR Loan, in which case if the next-
succeeding Business Day is in the next calendar month, then such
payment shall be made on the next-preceding Business Day. Unless
otherwise indicated, all time references (e.g., 10:00 a.m.) are to
Dallas, Texas time.
14.3 Communications. Unless otherwise specifically provided,
--------------
whenever any Loan Paper requires or permits any consent, approval,
notice, request, demand or other communication from one party to
another, communication must be in writing (which may be by telex or
telecopy) to be effective and shall be deemed to have been given
(a) if by telex, when transmitted to the appropriate telex number and
the appropriate answerback is received, (b) if by telecopy, when
transmitted to the appropriate telecopy number (and all communications
sent by telecopy must be confirmed promptly thereafter by telephone;
but any requirement in this parenthetical shall not affect the date
when the telecopy shall be deemed to have been delivered), (c) if by
mail, on the third Business Day after it is enclosed in an envelope
and properly addressed, stamped, sealed, certified mail, return
receipt requested, and deposited in the appropriate official postal
service, or (d) if by any other means, when actually delivered. Until
changed by notice pursuant to this Agreement, the address (and
telecopy number) for each party to a Loan Paper is set forth on
Schedule 1.
14.4 Form and Number of Documents. The form, substance, and
----------------------------
number of counterparts of each writing to be furnished under the Loan
Papers must be reasonably satisfactory to Agent and its counsel.
14.5 Exceptions to Covenants. Borrower may not and may not
-----------------------
permit any Company to take or fail to take any action that is
permitted as an exception to any of the covenants contained in any
Loan Paper if that action or omission would result in the breach of
any other covenant contained in this Agreement.
14.6 Survival. All covenants, agreements, undertakings,
--------
representations and warranties made in any of the Loan Papers survive
all closings under the Loan Papers and, except as otherwise indicated,
are not affected by any investigation made by any party.
14.7 Governing Law. Except as expressly provided in a Loan
-------------
Paper, the Laws (other than conflict-of-laws provisions) of the State
of Texas and of the United States of America govern the Rights and
duties of the parties to the Loan Papers and the
validity, construction, enforcement and interpretation of the Loan
Papers.
14.8 Invalid Provisions. Any provision in any Loan Paper held
------------------
to be illegal, invalid or unenforceable is fully severable; the
appropriate Loan Paper shall be construed and enforced as if that
provision had never been included; and the remaining provisions shall
remain in full force and effect and shall not be affected by the
severed provision. Agent, Lenders, and each Company party to the
affected Loan Paper agree to negotiate, in good faith, the terms of a
replacement provision as similar to the severed provision as may be
possible and be legal, valid and enforceable. However, if the
provision held to be illegal, invalid or unenforceable is a material
part of this Agreement, such invalid, illegal or unenforceable
provision shall be, to the extent permitted by Law, replaced by a
clause or provision judicially construed and interpreted to be as
similar in substance and content to the original terms of such
illegal, invalid or unenforceable clause or provision as the context
thereof would reasonably allow, so that such clause or provision would
thereafter be legal, valid and enforceable.
14.9 Venue; Service of Process; Jury Trial. EACH PARTY TO ANY
-------------------------------------
LOAN PAPER, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND
IN THE CASE OF BORROWER, FOR EACH OTHER COMPANY), (a) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS OF THE STATE OF TEXAS, (b) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN
CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BROUGHT IN DISTRICT
COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, (c) IRREVOCABLY
WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM,
(d) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE
COURTS IN ANY LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY, OR
BY DELIVERY BY A NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE
SHALL BE DEEMED COMPLETE UPON DELIVERY OF THE LEGAL PROCESS AT ITS
ADDRESS SET FORTH IN THIS AGREEMENT, (e) IRREVOCABLY AGREES THAT ANY
LEGAL PROCEEDING AGAINST ANY PARTY TO ANY LOAN PAPER ARISING OUT OF OR
IN CONNECTION WITH THE LOAN PAPERS OR THE OBLIGATION MAY BE BROUGHT IN
ONE OF THE AFOREMENTIONED COURTS, AND (f) IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY LOAN
PAPER. The scope of each of the foregoing waivers is intended to be
all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory
claims. Borrower (for itself and on behalf of each other Company)
acknowledges that these waivers are a material inducement to Agent's
and each Lender's agreement to enter into a business relationship,
that Agent and each Lender has already relied on these waivers in
entering into this Agreement, and that Agent and each Lender will
continue to rely on each of these waivers in related future dealings.
Borrower (for itself and on behalf of each other Company) further
warrants and represents that it has reviewed these waivers with its
legal counsel, and that it knowingly and voluntarily agrees to each
waiver following consultation with legal counsel. THE WAIVERS IN THIS
SECTION 14.9 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, SUPPLEMENTS, OR REPLACEMENTS TO OR OF THIS OR
ANY OTHER LOAN PAPER. In the event of Litigation, this Agreement may
be filed as a written consent to a trial by the court.
14.10 Amendments, Consents, Conflicts and Waivers.
-------------------------------------------
(a) Unless otherwise specifically provided, (i) this
Agreement may be amended only by an instrument in writing
executed by Borrower, Agent and Required Lenders and supplemented
only by documents delivered or to be delivered in accordance with
the express terms of this Agreement, and (ii) the other Loan
Papers may only be the subject of an amendment, modification or
waiver that has been approved by Required Lenders and Borrower.
(b) Any amendment to or consent or waiver under this
Agreement or any other Loan Paper that purports to accomplish any
of the following must be in writing executed by Borrower and
Agent and executed (or approved, as the case may be) by each
Lender (other than a Lender which has failed to remit its Pro
Rata Part of a requested Loan that remains outstanding) directly
affected thereby: (i) extend the due date or decrease the amount
of any scheduled payment of the Obligation beyond the date
specified in the Loan Papers; (ii) decrease any rate or amount of
interest, fees or other sums payable to Lenders under this
Agreement (except such reductions as are contemplated by this
Agreement); (iii) change the definition of "Applicable Margin,"
"Applicable Percentage," "Commitment," "Revolving Credit
Commitment," "Revolving Credit Commitment Usage," "Term Loan
Commitment," "Term Loan Principal Debt," "Required Lenders,"
"Termination Date,""Revolving Credit Termination Date," "Term
Loan Maturity Date," "Total Commitment Usage" or "Total
Commitment"; (iv) increase or decrease any one or
more Lenders' Commitments except as provided in this Agreement
(it being understood that waivers of Defaults or Potential
Defaults or waivers or modifications of conditions precedent or
covenants shall not constitute an increase of the Commitment of
any Lender, and that an increase in the available portion of any
Commitment of any Lender shall not constitute an increase in the
Commitment of such Lender); (v) release (in whole or in part) or
waive compliance with or amend any material provision of any
Guaranty (excluding waivers or amendments to cure any ambiguity,
omission, defect or inconsistency and waivers, amendments, or
releases to comply with or facilitate (or conform to changed
circumstances following) transactions permitted under Section
9.10 or Section 9.11); (vi), except as permitted by Section 9.10
or Section 13.9(e), consent to the release of any portion of the
Collateral under the Security Documents having a value equal to
or greater than $2,500,000 (or if the value of such Collateral
when added to the value of all other Collateral released during
the immediately preceding 12 month period is equal to or greater
than $2,500,000); (vii) change the provisions of Section 13 to
the detriment of any Lender; (viii) change any provision
requiring ratable distributions to Lenders; (ix) subject any
Lender to a greater obligation than expressly provided in this
Agreement; (x) change this clause (b) or any other matter
specifically requiring the consent of all Lenders under this
Agreement; or (xi) waive a Default under Section 11.1(a).
(c) Any conflict or ambiguity between the terms and
provisions of this Agreement and terms and provisions in any
other Loan Paper is controlled by the terms and provisions of
this Agreement.
(d) No course of dealing or any failure or delay by Agent,
any Lender, or any of their respective Representatives with
respect to exercising any Right of Agent or any Lender under this
Agreement operates as a waiver thereof. A waiver must be in
writing and signed by Agent and Lenders (or Required Lenders, if
permitted under this Agreement) to be effective, and a waiver
will be effective only in the specific instance and for the
specific purpose for which it is given.
(e) If, under clause (b) above, Lenders holding at least
66-2/3% of the Total Commitments and which comprise at least 66-
2/3% of the Lenders consent to a proposed amendment, waiver or
consent to any of the provisions of this Agreement, but all
Lenders do not consent, then Borrower shall have the right (so
long as all non-consenting Lenders are treated similarly) to
either (i) replace each
such non-consenting Lender with one or more Replacement Lenders
pursuant to Section 3.20, provided that each such Replacement
Lender consents to the proposed amendment, waiver or consent or
(ii) terminate such Lender's Commitment under the Revolving
Credit Facility and pay in full the portion of the Revolving
Credit Principal Debt evidenced by such Commitment and pay in
full such Lender's Commitment under the Term Loan, in each case
in accordance with this Agreement. If a Lender is replaced
under clause (i), such Lender's Commitment under the Term Loan
and the Revolving Credit Facility shall be immediately replaced
by Replacement Lenders (as defined in Section 3.20).
14.11 Multiple Counterparts. Each Loan Paper (other than the
---------------------
Notes) may be executed in a number of identical counterparts, each of
which shall be deemed an original for all purposes and all of which
constitute, collectively, one agreement; but, in making proof of
thereof, it shall not be necessary to produce or account for more than
one counterpart. Each Lender need not execute the same counterpart of
this Agreement so long as identical counterparts are executed by
Borrower, each Lender, and Agent. This Agreement shall become
effective when counterparts of this Agreement have been executed and
delivered to Agent by each Lender, Agent and Borrower, or, in the case
only of Lenders, when Agent has received telecopied, telexed or other
evidence satisfactory to it that each Lender has executed and is
delivering to Agent a counterpart of this Agreement.
14.12 Successors and Assigns; Participations.
--------------------------------------
(a) The Loan Papers bind and inure to the benefit of the
parties thereto, any intended beneficiary thereof, and each of
their respective successors and permitted assigns. No Lender may
transfer, pledge, assign, sell any participation in, or otherwise
encumber its portion of the Obligation except as permitted by
this Section 14.12.
(b) Subject to the provisions of this section and in
accordance with applicable Law, any Lender may, in the ordinary
course of its business, at any time sell to one or more Persons
(each a "Participant") participating interests in all or any part
of its Rights and obligations under the Loan Papers. The selling
Lender shall remain a "Lender" under this Agreement (and the
Participant shall not constitute a "Lender" under this Agreement)
and its obligations under this Agreement shall remain unchanged.
The selling Lender shall remain solely responsible for the
performance of its obligations under the Loan Papers and shall
remain the holder of its share of the Principal Debt for all
purposes under this Agreement. Borrower and Agent
shall continue to deal solely and directly with the selling
Lender in connection with that Lender's Rights and obligations
under the Loan Papers. Participants have no Rights under the
Loan Papers, other than certain voting Rights as provided below.
Subject to the following, each Lender may obtain (on behalf of
its Participants) the benefits of Section 3 with respect to all
participations in its part of the Obligation outstanding from
time to time so long as Borrower is not obligated to pay any
amount in excess of the amount that would be due to that Lender
under Section 3 calculated as though no participations have been
made. No Lender may sell any participating interest under which
the Participant has any Rights to approve any amendment,
modification or waiver of any Loan Paper, except to the extent
the amendment, modification or waiver extends the due date for
payment of any principal, interest or fees due under the Loan
Papers, reduces the interest rate or the amount of principal or
fees applicable to the Obligation (except reductions contemplated
by this Agreement), or releases any Guaranty or all or
substantially all of the Collateral, if any, for the Obligation
(other than releases of collateral permitted by Section 13.9(e)).
If a Participant is entitled to the benefits of Section 3 or a
Lender grants Rights to its Participant to approve amendments to
or waivers of the Loan Papers respecting the matters described in
the previous sentence, then that Lender must include a voting
mechanism in the relevant participation agreement whereby a
majority of its portion of the Obligation (whether held by it or
participated) shall control the vote for all of that Lender's
portion of the Obligation. Except in the case of the sale of a
participating interest to another Lender, the relevant
participation agreement shall prohibit the Participant from
transferring, pledging, assigning, selling participations in, or
otherwise encumbering its portion of the Obligation.
(c) Subject to the provisions of this section, any Lender
may at any time, in the ordinary course of its business, (i)
without the consent of Borrower or Agent, assign all or any part
of its Rights and obligations under the Loan Papers to any of its
Affiliates (each a "Purchaser") and (ii) upon the prior written
consent (which will not be unreasonably withheld) of Agent, and
(if no Default exists) Borrower, assign to any other Person that
is not a business competitor of any Company (each of which is
also a "Purchaser") all or any part (but if less than all, then
not less than $5,000,000) of its Rights and obligations under the
Loan Papers. In each case, the Purchaser shall assume those
Rights and obligations under an assignment agreement
substantially in the form of Exhibit H. An
assignment under this Section 14.12(c) may include a ratable
interest in the assigning Lender's Rights and obligations under
either or both of the Revolving Credit Facility or the Term Loan.
Upon (i) delivery of an executed copy of the assignment agreement
to Borrower and Agent and the recordation thereof in the Register
provided for in Section 14.12(e) and (ii) with respect to each
assignment after the completion of the syndication described
above, payment of a fee of $3,000 from the transferor to Agent,
then from and after the assignment's effective date (which shall
be after the date of delivery), the Purchaser shall for all
purposes be a Lender party to this Agreement and shall have all
the Rights and obligations of a Lender under this Agreement to
the same extent as if it were an original party to this Agreement
with commitments as set forth in the assignment agreement, and
the transferor Lender shall be released from its obligations
under this Agreement to a corresponding extent, and, except as
provided in the following sentence, no further consent or action
by Borrower, Lenders or Agent shall be required. Upon the
consummation of any transfer to a Purchaser under this clause
(c), the then-existing Schedule 1 shall automatically be deemed
to reflect the name, address, and Commitment of such Purchaser,
Agent shall deliver to Borrower and Lenders an amended Schedule 1
reflecting those changes, Borrower shall execute and deliver to
each of the transferor Lender and the Purchaser a Note or Notes,
as applicable, in the face amount of its Commitment or its
respective Commitments under the Facilities following transfer,
and, upon receipt of its new Note or Notes, as applicable, the
transferor Lender shall return to Borrower the relevant Note or
Notes previously delivered to it under this Agreement. A
Purchaser is subject to all the provisions in this section as if
it were a Lender signatory to this Agreement as of the date of
this Agreement.
(d) For avoidance of doubt, the parties to this Agreement
acknowledge that the second sentence of Section 14.12(a)
concerning assignments relates only to absolute assignments and
that such provisions do not prohibit assignments creating
security interests. Any Lender may at any time, without the
consent of Borrower or Agent, assign all or any part of its
Rights under the Loan Papers to a Federal Reserve Bank without
releasing the transferor Lender from its obligations thereunder.
(e) Agent shall maintain at its address on Schedule 1 a
copy of each Lender assignment agreement delivered to it in
accordance with the terms of Section 14.12(c) and a register for
the recordation of the identity of the principal amount, Type and
Interest Period of each Loan and
the names, addresses and Commitments of each Lender from time to
time (the "Register"). Agent will make reasonable efforts to
maintain the accuracy of the Register and to promptly update the
Register from time to time, as necessary. The entries in the
Register shall be conclusive in the absence of manifest error and
Borrower, Agent and Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement. The Register shall
be available for inspection by Borrower and each Lender, at any
reasonable time and from time to time upon reasonable prior
notice. No assignment by a Lender shall be effective unless it
has been recorded in the Register.
14.13 Discharge Only Upon Payment in Full; Reinstatement in
-----------------------------------------------------
Certain Circumstances. Each Company's obligations under the Loan
---------------------
Papers remain in full force and effect until the Total Commitment is
terminated and the Obligation is paid in full (except for provisions
under the Loan Papers which by their terms expressly survive payment
of the Obligation and termination of the Loan Papers). If at any time
any payment of the principal of or interest on any Note or any other
amount payable by Borrower or any other obligor on the Obligation
under any Loan Paper is rescinded or must be restored or returned upon
the insolvency, bankruptcy or reorganization of Borrower or otherwise,
the obligations of each Company under the Loan Papers with respect to
that payment shall be reinstated as though the payment had been due
but not made at that time.
14.14 Confidentiality. The Agent and each of the Lenders agree
---------------
to keep confidential any information concerning any Company (whether
prepared by any Company, their Representatives or otherwise) which is
furnished to the Agent and the Lenders by or on behalf of any Company
in connection with any Loan Paper which (a) is not information
previously provided by any Company to its creditors generally on a
nonconfidential basis and (b) is clearly marked "confidential" or is
otherwise specified to be confidential in writing at the time such
information is delivered to Agent (the "Confidential Information") and
agree not to provide such Confidential Information to anyone, except:
(i) to counsel and accountants retained by the Agent
or any Lender; provided that the Agent and each Lender shall
advise such counsel or accountants of the confidential
nature of such material,
(ii) to the extent that such Confidential Information
has been publicly disclosed,
(iii) to the extent that such Confidential Information
has been obtained by the Agent or any Lender from any Person
other than any Company or any other Person known by the
Agent or any Lender to be bound by a confidentiality
agreement with the Borrower,
(iv) upon the order of any Tribunal,
(v) upon the request or demand of any federal or state
bank regulatory authority and then, only to such authority,
(vi) upon the demand of any other regulatory agency or
authority of competent jurisdiction (not covered by clause
(iv) or (v) above) and then, only to such authority,
(vii) in connection with any Litigation involving the
Agent or any Lender and disclosure of such Confidential
Information is necessary as part of Agent's or Lenders'
defense to such Litigation or as a part of its claim in such
Litigation, or
(viii) to any actual or potential purchaser,
participant, assignee or transferee (a "Transferee") of any
Lender's claim or rights against any Company who signs a
confidentiality agreement containing provisions
substantially similar to those contained in this
Section 14.14; provided that such Lender shall notify the
Borrower in writing of the identity of such actual or
potential Transferee three days prior to the delivery of
such information.
14.15 Entirety. THIS AGREEMENT AND THE OTHER WRITTEN LOAN
--------
PAPERS (EACH AS AMENDED IN WRITING FROM TIME TO TIME) EXECUTED BY ANY
COMPANY, ANY LENDER OR AGENT REPRESENT THE FINAL AGREEMENT AMONG THE
COMPANIES, LENDERS AND AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BY THE PAR-
TIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[Remainder of page intentionally blank.
Signature page(s) follow.]
EXECUTED as of the day and year first mentioned.
THE MORNINGSTAR GROUP INC., a
Delaware corporation, as Borrower
By:
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Darron K. Ash
Chief Financial Officer
NATIONSBANK OF TEXAS, N.A., as
Agent and sole initial Lender
By:
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Bianca Hemmen
Senior Vice President