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EXHIBIT 10.81
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EZCORP, INC.
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF DECEMBER 15, 2000
WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION,
AS AGENT
AND
ISSUING BANK
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"), dated as
of December 15, 2000, is among EZCORP, INC., a Delaware corporation (the
"Borrower"), each of the banks or other lending institutions which is or which
may from time to time become a signatory hereto or any successor or assignee
thereof (individually, a "Lender" and, collectively, the "Lenders"), and WELLS
FARGO BANK TEXAS, NATIONAL ASSOCIATION, a national banking association
(successor by consolidation to Wells Fargo Bank (Texas), National Association),
as agent for itself and the other Lenders (in such capacity, together with its
successors in such capacity, the "Agent") and as the Issuing Bank (hereinafter
defined).
RECITALS
A. The Borrower, the Agent, the Issuing Bank and the Lenders have
entered into that certain Credit Agreement dated as of December 10, 1998, as
amended by (i) that certain First Amendment to Credit Agreement dated as of
September 29, 1999, (ii) that certain Second Amendment to Credit Agreement
dated as of March 31, 2000 and (iii) that certain Third Amendment to Credit
Agreement dated as of June 30, 2000 (as amended, the "Existing Credit
Agreement").
B. The Borrower has requested and the Agent, the Issuing Bank and the
Lenders have agreed to restructure the existing $85,000,000 revolving credit
facility, standby letter of credit subfacility and swing-line subfacility and
to amend and modify the Existing Credit Agreement upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"Advance" means an advance of funds by the Lenders or any of
them to the Borrower pursuant to Article II (inclusive of the Tranche
A Loan, the Tranche B Loan, the Tranche C Loan and the Swing Loan).
"Advance Request Form" means a certificate, in substantially
the form of Exhibit B-1 hereto, properly completed and signed by the
Borrower requesting an Advance.
"Affiliate" means, as to any Person, any other Person (a)
that directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, such
Person; (b) that directly or indirectly beneficially owns or holds
five percent (5%) or more of any class of voting stock of such Person;
or (c) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise; provided, however, in no
event shall the Agent or any Lender be deemed an Affiliate of the
Borrower or any of its Subsidiaries.
"Agent" has the meaning set forth in the introductory
paragraph of this Agreement.
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"Agreement" has the meaning set forth in the introductory
paragraph of this Agreement.
"Applicable Lending Office" means for each Lender, the
Lending Office of such Lender (or of an Affiliate of such Lender)
designated below its name on the signature pages hereof or such other
office of such Lender (or of an Affiliate of such Lender) as such
Lender may from time to time specify to the Borrower and the Agent as
the office by which its Advances are to be made and maintained.
"Applicable Rate" means the Base Rate plus the Base Rate
Margin.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and its assignee and accepted by
the Agent pursuant to Section 13.8, in substantially the form of
Exhibit D hereto.
"Base Rate" means as of any date of determination, a rate per
annum equal to the greater of (a) the Prime Rate in effect on such
day, or (b) the sum of the Federal Funds Rate in effect on such day
plus one-half of one percent (0.5%). Any change in the Base Rate due
to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or
the Federal Funds Rate, respectively, without notice to the Borrower.
"Base Rate Margin" means (a) for the Tranche A Loan, two and
one-half percent (2.5%) per annum, (b) for the Tranche B Loan, three
percent (3.0%) per annum, and (c) for the Tranche C Loan, three and
one-half percent (3.5%) per annum; provided however, so long as no
Default has occurred and is continuing, upon the occurrence of the
Term Loan Reduction Event, the "Base Rate Margin" means (i) for the
Tranche A Loan, one and one-half percent (1.5%) per annum, (ii) for
the Tranche B Loan, two percent (2.0%) per annum, and (iii) for the
Tranche C Loan, two and one-half percent (2.5%) per annum.
"Basle Accord" means the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence
of Capital Measurement and Capital Standards" dated July 1988, as
amended, supplemented and otherwise modified and in effect from time
to time, or any replacement thereof.
"Borrower" has the meaning set forth in the introductory
paragraph of this Agreement.
"Borrower Pledge Agreement" means the Borrower Pledge
Agreement of the Borrower in favor of the Agent for the benefit of the
Lenders, as executed by the Borrower in connection with the Existing
Credit Agreement and in addition, any Borrower Pledge Agreement in
substantially the form of Exhibit G-1 hereto, as the same may be
amended, supplemented, or modified.
"Borrower Security Agreement" means the Borrower Security
Agreement of the Borrower in favor of the Agent for the benefit of the
Lenders, as executed by the Borrower in connection with the Existing
Credit Agreement and in addition, any Borrower Security Agreement in
substantially the form of Exhibit F-1 hereto, as the same may be
amended, supplemented, or modified.
"Borrowing Base" means, at any time, an amount equal to the
sum of (a) sixty-five percent (65%) of Eligible Accounts, which
Eligible Accounts will not include more than $2,000,000 in the
aggregate of the Borrower's or any Subsidiary's interest in Pay-Day
Advance Loans (the amount under this clause (a) hereinafter referred
to as the "Eligible Accounts Amount"), plus (b) the sum of (x)
sixty-five percent (65%) of Eligible Jewelry Inventory, plus (y) forty
percent (40%) of Eligible General Merchandise Inventory, minus (z)
customer deposits received on layaway Inventory of the Borrower or the
applicable Subsidiary (the amount under this clause (b) hereinafter
referred to as the "Eligible Total Inventory Amount");
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provided that (i) fifty percent (50%) of the sum of Eligible Jewelry
Inventory plus the Eligible General Merchandise Inventory included for
purposes of the Borrowing Base shall consist of Eligible Jewelry
Inventory, and (ii) the total Eligible Total Inventory Amount included
in the Borrowing Base shall not be greater than the Eligible Accounts
Amount.
"Business Day" means any day on which commercial banks are
not authorized or required to close in San Francisco, California.
"Capital Expenditures" means, for any period, all
expenditures of the Borrower and its Subsidiaries which are classified
as additions to property, plant and equipment on the consolidated
statement of cash flows of the Borrower in accordance with GAAP,
including all such expenditures so classified as "recurring capital
expenditures" and all such expenditures associated with Capital Lease
Obligations.
"Capital Lease Obligation" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or
personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person
under GAAP. For purposes of this Agreement, the amount of such Capital
Lease Obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Cash Equivalent Investment" means, as to any Person, (a)
securities issued or directly and fully guaranteed or insured by the
United States or any agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than six months from the date
of acquisition, (b) time deposits and certificates of deposit of any
commercial bank having, or which is the principal banking subsidiary
of a bank holding company having, a long-term unsecured debt rating of
at least "AAA" or the equivalent thereof from Standard & Poor's
Corporation or "Aaa" or the equivalent thereof from Moody's Investors
Service, Inc. with maturities of not more than six months from the
date of acquisition by such Person, (c) repurchase obligations with a
term of not more than seven days for underlying securities of the
types described in clause (a) above entered into with any bank meeting
the qualifications specified in clause (b) above, (d) commercial paper
issued by any Person incorporated in the United States rated at least
A-1 or the equivalent thereof by Standard & Poor's Corporation or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc.
and in each case maturing not more than six months after the date of
acquisition by such Person and (e) investments in money market funds
substantially all of whose assets are comprised of securities of the
types described in clauses (a) through (d) above.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Collateral" means the property in which Liens have been
granted to the Agent for the benefit of the Lenders pursuant to the
Borrower Security Agreement, the Borrower Pledge Agreement, the
Subsidiary Security Agreement, the Subsidiary Pledge Agreement, the
Real Property Security Documents, or any other agreement, document, or
instrument executed by the Borrower or a Guarantor in accordance with
Section 8.13 of the Existing Credit Agreement, whether such Liens are
now existing or hereafter arise.
"Commitment" means, as to each Lender, collectively, the
obligation of such Lender to purchase participations (or with respect
to the Swing Lender or the Issuing Bank, hold other interests in) the
Swing Loan and in Letters of Credit as described in Articles II and
III hereunder, the Tranche A Commitment, the Tranche B Commitment and
the Tranche C Commitment.
"Commitment Fee" has the meaning specified in Section 2.11.
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"Commitment Fee Rate" means one quarter of one percent
(0.25%) per annum.
"Consolidated Net Income" means, at any time, the aggregate
net income or loss of the Borrower and its consolidated Subsidiaries
determined on a consolidated basis as determined in accordance with
GAAP.
"Consolidated Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as
stockholders' equity on a consolidated balance sheet of the Borrower
and the Subsidiaries; provided, however, there shall be excluded
therefrom any amount at which shares of capital stock of the Borrower
appear as an asset on the Borrower's balance sheet.
"Contribution and Indemnification Agreement" means the
Contribution and Indemnification Agreement executed by the Borrower
and the Guarantors in connection with the Existing Credit Agreement
and in addition, any Contribution and Indemnification Agreement in
substantially the form of Exhibit E hereto, as the same may be amended
or otherwise modified from time to time.
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90)
days, (d) all Capital Lease Obligations of such Person, (e) all Debt
or other obligations of others Guaranteed by such Person, (f) all
obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been
assumed by such Person or are non-recourse to the credit of such
Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, and (h)
all liabilities of such Person in respect of unfunded vested benefits
under any Plan.
"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of (a) the Maximum Rate or,
(b) the sum of the Base Rate in effect from day to day plus five
percent (5%).
"Deposit and Cash Management Services" means the deposit
and/or cash management products and services provided by a Lender in
connection with any deposit or other accounts of the Borrower or any
of its Subsidiaries, including without limitation, the extensions of
credit made by a Lender to or for the account of the Borrower or any
of its Subsidiaries in the ordinary course of business in connection
therewith.
"Dispute" has the meaning specified in Section 13.14.
"Dollars" and "$" mean lawful money of the United States of
America.
"EBITDA" means Consolidated Net Income, plus, to the extent
that any of the following were deducted in calculating such
Consolidated Net Income, interest expense, tax expenses, and
depreciation and amortization, but excluding all extraordinary items
of income and loss.
"Eligible Accounts" means, at any time, all pawn loan
receivables of the Borrower and its Subsidiaries reasonably
satisfactory to the Agent and all of the Borrower's and its
Subsidiaries' interests in Pay-Day Advance Loans reasonably
satisfactory to the Agent and that satisfy the following conditions:
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(a) The account complies in all material respects with all
applicable laws, rules, and regulations, including, without
limitation, usury laws, the Federal Truth in Lending Act, Regulation Z
of the Board of Governors of the Federal Reserve System, as
applicable, the provisions of the Texas Pawn Shop Act (Chapter 371 of
the Texas Finance Code) and similar laws governing the operation of
pawnshops in other states and local jurisdictions where the Borrower
or any of the Subsidiaries conduct business and the consumer loan
provisions of the Texas Finance Code;
(b) The account has not been outstanding at or beyond the
date applicable state law permits the pawned item relative to the
subject account to be sold by the applicable Subsidiary and is not
further subject to any federal or local laws, rules or ordinances;
(c) The account arises from an enforceable contract, the
performance of which has been completed by the applicable Subsidiary;
(d) The applicable Subsidiary has good and indefeasible title
to the account and the account is not subject to any Lien except Liens
in favor of Agent;
(e) The account is subject to a first priority, perfected
Lien in favor of the Agent;
(f) The account does not arise out of a contract with an
account debtor that, by its terms, prohibits or makes void or
unenforceable the grant of a security interest by the Subsidiary to
the Agent in and to such account;
(g) The account is not subject to any setoff, counterclaim,
defense, dispute, recoupment, or adjustment;
(h) The account is not evidenced by chattel paper unless such
chattel paper has been delivered to Agent;
(i) The account debtor has not notified the applicable
Subsidiary of any dispute concerning the transaction giving rise to
the account;
(j) The account is payable in Dollars by the account debtor;
and
(k) The account arises from a Pay-Day Advance Loan which has
not been due for more than ninety (90) days from the date such Pay-Day
Advance Loan was made.
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"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a
Lender, and (c) any other Person approved by the Agent, and, unless a
Default has occurred and is continuing at the time any assignment is
effected, in accordance with Section 13.8, the Borrower, such approval
not to be unreasonably withheld or delayed by the Borrower; provided,
however, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Eligible General Merchandise Inventory" means, at any time,
the difference of (1) all Inventory of the Borrower and the
Subsidiaries (excluding Jewelry Inventory), relative to transactions
occurring and maintained at store locations or the central jewelry
processing location in Austin, Texas which Inventory is (a) located at
locations either owned by the Borrower or applicable Subsidiary, or
leased by the Borrower or the applicable Subsidiary, (b) held for sale
or disposition in the ordinary course of such Subsidiary's business,
and (c) subject to a first priority, perfected Lien in favor of the
Agent, minus (2) the pro rata portion of the Inventory Valuation
Reserve on such Inventory. Eligible General Merchandise Inventory
shall not include (i) Inventory that has been shipped or delivered to
a customer on consignment, a sale-or-return basis, a rent or lease
basis, or on the basis of any similar understanding, (ii) Inventory
with respect to which a claim exists disputing the Borrower's or such
Subsidiary's title to or right to possession of such Inventory and
(iii) Inventory that the Agent in its sole discretion, has reasonably
determined to be unmarketable.
"Eligible Jewelry Inventory" means, at any time, the
difference of (a) all Jewelry Inventory of the Borrower and the
Subsidiaries, relative to transactions occurring and maintained at
store locations or the central jewelry processing location in Austin,
Texas which Jewelry Inventory is (1) located at locations either owned
by the Borrower or applicable Subsidiary, or leased by the Borrower or
the applicable Subsidiary, (2) held for sale or disposition in the
ordinary course of such Subsidiary's business, and (3) subject to a
first priority, perfected Lien in favor of the Agent, minus (b) the
pro rata portion of the Inventory Valuation Reserve on such Inventory.
Eligible Jewelry Inventory shall not include (i) Jewelry Inventory
that has been shipped or delivered to a customer on consignment, a
sale-or-return basis, a rent or lease basis, or on the basis of any
similar understanding, (ii) Jewelry Inventory with respect to which a
claim exists disputing the Borrower's or such Subsidiary's title to or
right to possession of such Jewelry Inventory and (iii) Jewelry
Inventory that the Agent in its sole discretion, has reasonably
determined to be unmarketable.
"Environmental Laws" means any and all federal, state, and
local laws, regulations, and requirements pertaining to health,
safety, or the environment, as such laws, regulations, and
requirements may be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses, (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting
fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim
or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order or agreement with any
Governmental Authority or other Person, arising from environmental,
health or safety conditions or the Release or threatened Release of a
Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrower,
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which is under common control (within the meaning of Section 414(c) of
the Code) with the Borrower, or which is otherwise affiliated with the
Borrower (within the meaning of Section 414(m) or Section 414(o) of
the Code).
"Event of Default" has the meaning specified in Section 11.1.
"Excess Cash Flow Amount" means, at any time, an amount equal
to seventy-five percent (75%) of the sum of the following: (a) the
Consolidated Net Income before taxes for the then most recently ended
Fiscal Quarter, minus (b) income taxes paid, Capital Expenditures and
payments on current maturities on long-term debt (including without
duplication Capital Lease Obligations, but excluding the Obligations),
plus (c) depreciation, amortization and any other non-cash expense or
income for such period, all in accordance with GAAP.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning set forth in the
recitals of this Agreement.
"Existing Debt" means the Debt listed on Schedule 9.1.
"Existing LCs" means those letters of credit described on
Schedule 1.1(b) issued pursuant to the Existing Credit Agreement.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day,
provided that (a) if the day for which such rate is to be determined
is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if such rate
is not so published on such next succeeding Business Day, the Federal
Funds Rate for any day shall be the average rate charged to Wells
Fargo Bank Texas, National Association (successor by consolidation to
Wells Fargo Bank (Texas), National Association) on such day on such
transactions as determined by the Agent.
"First Quarter" has the meaning specified in Section 10.6.
"Fiscal Quarter" means any three-month period ending December
31, March 31, June 30 or September 30.
"Fiscal Year" means each twelve month period ending September
30 of each year.
"Fixed Charge Coverage Ratio" means, for each Fiscal Quarter,
the quotient determined by dividing (a) the sum of EBITDA plus Rental
(hereinafter defined) minus Maintenance Capital Expenditures
(hereinafter defined) minus taxes paid in cash by the Borrower and its
consolidated Subsidiaries, in each case for such Fiscal Quarter and
the prior three (3) Fiscal Quarters by (b) the sum of the aggregate
interest expense and Rental of the Borrower and its consolidated
Subsidiaries, in each case for such Fiscal Quarter and the prior three
(3) Fiscal Quarters. As used herein the term "Rental" means the
amounts paid by the Borrower and each Subsidiary to lease facilities
for business operations. As used herein, the phrase "Maintenance
Capital Expenditures" means for each Fiscal Quarter, capital
expenditures equal to an aggregate amount equal to Three Thousand
Dollars ($3,000.00) multiplied by the Average Number of Stores
(hereinafter defined) operated by the Borrower and the Subsidiaries
for such Fiscal Quarter. As used herein, the phrase "Average Number of
Stores" for any Fiscal Quarter means the number of stores
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calculated by dividing the sum of the stores operated by the Borrower
and the Subsidiaries at the end of each month for the most recent four
(4) months by four (4).
"Funded Debt" means, at any particular time, the sum of the
following, calculated on a consolidated basis for the Borrower and the
Subsidiaries in accordance with GAAP: (a) all obligations for borrowed
money, including but not limited to senior bank debt, senior notes and
subordinated debt, (b) all obligations relating to the deferred
purchase price of property and services, (c) all Capital Lease
Obligations, (d) all obligations as a reimbursement obligor with
respect to an issued letter of credit or similar instrument (whether
drawn or undrawn), and (e) all obligations under a Guarantee of
borrowed money, or any other type of direct or contingent obligation.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis, as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting
Standards Board and/or their respective successors and which are
applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material
respects to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guarantor" means each and every domestic Subsidiary of the
Borrower whether now in existence or hereafter created which include
but are not limited to those Subsidiaries listed on Schedule 7.14.
"Guaranty" means the joint and several guaranty of each
Guarantor in favor of the Agent and the Lenders, as executed by such
Guarantor in connection with the Existing Credit Agreement and in
addition, any Guaranty in substantially the form of Exhibit C hereto,
as the same has been or may be amended, supplemented, or otherwise
modified from time to time.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law.
"Indemnity Account" means an indemnity account established
and maintained by the Borrower to secure the Borrower's obligations to
be incurred with County Bank of Rehoboth Beach, Delaware in connection
with Pay-Day Advance Loans, such obligations to be established and
governed by the Pay-Day Advance Loan Documents.
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"Inventory" means at any particular time, inventory (as
defined in the UCC) of the Borrower or any of the Subsidiaries
including, without limitation, all materials and goods held by or for
the benefit of the Borrower or any of the Subsidiaries for sale, lease
or consumption.
"Inventory Turnover" means, for each Fiscal Quarter, the
quotient determined by dividing the cost of Inventory items sold
during the most recent twelve (12) month period by the Average
Inventory (hereinafter defined) for such period. As used herein,
"Average Inventory" means Inventory calculated by dividing the total
of all ending Inventory for each month for the most recent thirteen
(13) months by thirteen (13).
"Inventory Valuation Reserve" means a valuation account on
the Inventory of the Borrower and its Subsidiaries used to reduce such
Inventory's carrying value to the lesser of cost or fair market value,
as determined by the Borrower after taking into account such factors
as obsolescence and broken or unmarketable Inventory.
"Issuing Bank" means, with respect to any Letter of Credit,
Wells Fargo Bank Texas, National Association (successor by
consolidation to Wells Fargo Bank (Texas), National Association).
"Jewelry Inventory" means, at any time, all gold, silver and
jewelry Inventory of the Borrower or any Subsidiary.
"LC Participation" means, with respect to any Lender, at any
time, the amount of participating interest held by such Lender (or in
the case of the Issuing Bank, other interests) in respect of a Letter
of Credit.
"Lender" has the meaning set forth in the introductory
paragraph of this Agreement.
"Letter of Credit" means, any standby letter of credit issued
by the Issuing Bank for the account of the Borrower pursuant to
Article III.
"Letter of Credit Disbursement" means a disbursement by the
Issuing Bank to the beneficiary of a Letter of Credit in connection
with a drawing thereunder.
"Letter of Credit Liabilities" means, at any time, the sum of
(a) the aggregate face amounts of all outstanding Letters of Credits
and (b) the aggregate amount of all Letter of Credit Disbursements for
which the Issuing Bank has not been reimbursed by the Borrower.
"Letter of Credit Request Form" means, a certificate, in
substantially the form of Exhibit B-2 hereto, properly completed and
signed by the Borrower requesting issuance of a Letter of Credit.
"Leverage Ratio" means, as of any Fiscal Quarter end the
ratio of Funded Debt to EBITDA, in each case for such Fiscal Quarter
and the prior three (3) Fiscal Quarters.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Litigation Fund Account" means a litigation fund account
established and maintained by the Borrower to secure the Borrower's
obligations to be incurred with County Bank of Rehoboth Beach,
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Delaware in connection with Pay-Day Advance Loans, such obligations to
be established and governed by the Pay-Day Advance Loan Documents.
"Loan Documents" means this Agreement, the Notes, the
Guaranties, the Contribution and Indemnification Agreement, the
Borrower Security Agreement, the Subsidiary Security Agreement, the
Borrower Pledge Agreement, the Subsidiary Pledge Agreement, the Real
Property Security Documents and all other promissory notes, security
agreements, assignments, deeds of trust, guaranties, and other
instruments, documents, and agreements now or hereafter executed and
delivered pursuant to or in connection with this Agreement, as such
instruments, documents, and agreements may be amended, modified,
renewed, extended, or supplemented from time to time.
"Loans" means, collectively, the Tranche A Loan, the Tranche
B Loan, the Tranche C Loan and the Swing Loan.
"Master Credit Notes" means the promissory notes of the
Borrower payable to the order of the Lenders in the aggregate
principal amount of the Commitments, in substantially the form of
Exhibit A-1 hereto, and all extensions, renewals, and modifications
thereof.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower and the Subsidiaries taken as
a whole, or (b) the validity of enforceability of this Agreement or
any of the other Loan Documents or the rights or remedies of the Agent
or the Lenders hereunder or thereunder. In determining whether any
individual event could reasonably be expected to result in a Material
Adverse Effect, notwithstanding that such event does not itself have
such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event and all other then
existing events could reasonably be expected to result in a Material
Adverse Effect.
"Material Debt" has the meaning specified in Section 11.1(h).
"Maximum Rate" means, at any time and with respect to any
Lender, the maximum rate of interest under applicable law that such
Lender may charge the Borrower. The Maximum Rate shall be calculated
in a manner that takes into account any and all fees, payments, and
other charges in respect of the Loan Documents that constitute
interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a
change in the Maximum Rate shall take effect without notice to the
Borrower at the time of such change in the Maximum Rate. For purposes
of determining the Maximum Rate under Texas law, the applicable rate
ceiling shall be the applicable weekly ceiling described in, and
computed in accordance with, Chapter 303 of the Texas Finance Code.
"Monthly Payment Date" means the third day of each calendar
month of each year, the first of which shall be January 3, 2001.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made
by the Borrower or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Net Proceeds" from any issuance, sale or disposition of any
shares of equity securities (or any securities convertible or
exchangeable for any such shares, or any rights, warrants, or options
to subscribe for or purchase any such shares) means the amount equal
to (a) the aggregate gross proceeds of such issuance, sale or other
disposition, less (b) the following: (i) placement agent fees, (ii)
underwriting discounts and commissions, (iii) bank and other lender
fees, and (iv) reasonable legal fees and other reasonable expenses
payable by the issuer in connection with such issuance, sale or other
disposition. "Net
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Proceeds" from any disposition of assets means the amount equal to (a)
the aggregate gross proceeds of such disposition, less (b) the
following: (i) sales or other similar taxes paid or payable by the
seller in connection with such disposition, (ii) reasonable broker
fees in connection with such disposition, (iii) reasonable legal fees
and other reasonable expenses payable by the seller in connection with
such disposition and (iv) the amount of any Debt secured by the assets
that must be repaid in connection with such disposition so long as it
is a Debt permitted under this Agreement.
"Notes" means, collectively, the Master Credit Notes and the
Swing Note.
"Obligated Party" means each Guarantor and any other Person
who is or becomes party to any written agreement that guarantees or
secures payment and performance of the Obligations or any part
thereof.
"Obligations" means, collectively, the Primary Obligations
and the Secondary Obligations.
"Pay-Day Advance Loan Documents" means the documents,
instruments and agreements which are acceptable to the Agent and the
Lenders and are more specifically described on Schedule 1.1(c)
attached hereto, and all amendments, modifications, renewals,
extensions, restatements and supplements thereto, copies of which have
been provided to the Agent and the Lenders and are satisfactory in
form and substance to the Agent and the Lenders; provided that if such
amendments, modifications, renewals, extensions, restatements and
supplements are non-substantive from the perspective of the economics
of the transactions evidenced by such documents, instruments and
agreements described on Schedule 1.1(c), prior approval by the Agent
and the Lenders is not required.
"Pay-Day Advance Loans" has the meaning specified in Section
9.9.
"Payment Office" means the operational office of the Agent in
San Francisco, California, presently located at 201 Third Street, 8th
Floor, San Francisco, California 94103.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Permitted Debt" means (a) the Obligations, (b) Existing Debt
and (c) Debt permitted by Section 9.1 of this Agreement.
"Permitted Liens" means Liens permitted by Section 9.2 of
this Agreement.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental
Authority, or other entity.
"Plan" means any employee benefit plan (within the meaning of
Section 3(3) of ERISA) established or maintained by the Borrower or
any ERISA Affiliate, which plan is subject to the provisions of ERISA.
"Primary Obligations" means all obligations, indebtedness,
and liabilities of the Borrower to the Agent, the Issuing Bank, and
the Lenders, or any of them, arising pursuant to any of the Loan
Documents, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligations, indebtedness, and liabilities of the
Borrower under this Agreement, the Notes and the other Loan Documents
(including without limitation, all of the Borrower's contingent
reimbursement obligations in respect of Letters of
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Credit), and all interest accruing thereon and all attorneys' fees and
other expenses incurred in the enforcement or collection thereof.
"Prime Rate" means, at any time, the rate of interest per
annum then most recently announced by Wells Fargo Bank, National
Association at its principal office in San Francisco as its prime
rate, which rate may not be the lowest rate of interest charged by
Wells Fargo Bank, National Association to its borrowers. Each change
in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect on the
date the change is announced by Wells Fargo Bank, National Association
without notice to the Borrower at the time of such change in the Prime
Rate.
"Principal Office" means the principal office of the Agent in
Phoenix, Arizona, presently located at 100 W. Washington, 7th Floor,
Phoenix, Arizona 85003.
"Prohibited Transaction" means any transaction set forth in
Section 406 or 407 of ERISA or Section 4975(c)(1) of the Code for
which there does not exist a statutory or administrative exemption.
"Quarterly Payment Date" means the third day of each January,
April, July and October of each year, the first of which shall be
January 3, 2001.
"Real Property" means the fee owned real property and
interests in fee owned real property of the Borrower and the
Subsidiaries, including without limitation, that fee owned real
property identified on Schedule 1.1(c) attached hereto, and all
improvements and fixtures thereon and all appurtenances thereto,
whether now existing or hereinafter arising.
"Real Property Security Documents" means all deeds of trust,
mortgages and other instruments, documents and agreements executed and
delivered by the Borrower or any Guarantor in favor of the Agent for
the benefit of the Lenders, which creates a Lien on such Person's
interests in the Real Property, as the same may be amended,
supplemented or modified.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as the same may be amended or
supplemented from time to time.
"Regulatory Change" means, with respect to any Lender, any
change after the date of this Agreement in United States federal,
state, or foreign laws or regulations (including Regulation D) or the
adoption or making after such date of any interpretations, directives,
or requests applying to a class of lenders including such Lender of or
under any United States federal or state, or any foreign, laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such
Person, including, without limitation, the movement of Hazardous
Materials through or in the air, soil, surface water, ground water, or
property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release
or minimize the further Release of Hazardous Materials so that they do
not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (c) perform
pre-remedial studies and investigations and post-remedial monitoring
and care.
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"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Required Lenders" means at any time while no Advances or
Letter of Credit Liabilities are outstanding, two or more Lenders
having at least sixty-six and two-thirds percent (66-2/3%) of the
aggregate amount of the Commitments and, at any time while Advances or
Letter of Credit Liabilities are outstanding, two or more Lenders
holding at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding aggregate principal amount of the Tranche A Advances, the
Tranche B Loan, the Tranche C Loan, the LC Participations, and the SL
Participations.
"RICO" means the Racketeer Influenced and Corrupt
Organization Act of 1970, as amended from time to time.
"Secondary Obligations" means all obligations, indebtedness,
and liabilities of the Borrower to the Lenders or any of them, arising
pursuant to or in connection with the Deposit and Cash Management
Services, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, including without limitation,
the obligations of the Borrower to pay all fees, costs and expenses
(including without limitation, reasonable attorneys' fees) provided
for in connection with the documentation governing the Deposit and
Cash Management Services.
"SL Participation" means, with respect to any Lender, at any
time, the amount of participating interest held by such Lender (or in
the case of the Swing Lender, other interests) in respect of the Swing
Loan.
"Specified Defaults" means the Events of Default which arose
under the Existing Credit Agreement solely by reason of the Borrower's
failure prior to the date hereof to comply with (a) Section 8.13(g)
(Post-Closing Items; Real Property Security Documents) of the Existing
Credit Agreement, (b) Section 10.2 (Leverage Ratio) of the Existing
Credit Agreement for the Fiscal Quarters ending June 30, 2000 and
September 30, 2000, and (c) Section 10.5 (Fixed Charge Coverage Ratio)
of the Existing Credit Agreement for the Fiscal Quarters ending June
30, 2000 and September 30, 2000.
"Subsidiary" means any corporation (or other entity) of which
at least a majority of the outstanding shares of stock (or other
ownership interests) having by the terms thereof ordinary voting power
to elect a majority of the board of directors (or similar governing
body) of such corporation (or other entity) (irrespective of whether
or not at the time stock (or other ownership interests) of any other
class or classes of such corporation (or other entity) shall have or
might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by the
Borrower or one or more of the Subsidiaries or by the Borrower and one
or more of the Subsidiaries.
"Subsidiary Pledge Agreement" means the Subsidiary Pledge
Agreement of each Guarantor in favor of the Agent for the benefit of
the Lenders, as executed by such Guarantor in connection with the
Existing Credit Agreement and in addition, any Subsidiary Pledge
Agreement in substantially the form of Exhibit G-2 hereto, as the same
may be amended, supplemented or modified.
"Subsidiary Security Agreement" means the Subsidiary Security
Agreement of each Guarantor in favor of the Agent for the benefit of
the Lenders, as executed by such Guarantor in connection with the
Existing Credit Agreement and in addition, any Subsidiary Security
Agreement in substantially the form of Exhibit F-2 hereto, as the same
may be amended, supplemented, or modified.
"Swing Commitment" means an amount (subject to reduction or
cancellation as herein provided) equal to Three Million Dollars
($3,000,000).
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"Swing Lender" means Wells Fargo Bank Texas, National
Association (successor by consolidation to Wells Fargo Bank (Texas),
National Association).
"Swing Loan" means the swing loan made or to be made
hereunder to the Borrower pursuant to Section 2.9.
"Swing Loan Advance" means an Advance under the Swing Loan.
"Swing Note" means the promissory note of the Borrower
payable to the order of the Swing Lender in the principal amount of
the Swing Commitment in substantially the form of Exhibit A-2 hereto,
and all extensions, renewals, and modifications thereof.
"Term Loan Reduction Event" means the occurrence or
completion of the following event: on or before June 30, 2001, the
Borrower has reduced the sum of the aggregate outstanding principal
amounts of the Tranche B Loan and the Tranche C Loan to equal to or
less than $20,000,000.
"Termination Date" means 8:00 A.M. San Francisco, California
time on December 3, 2001, or such earlier date and time on which the
Commitments terminate as provided in this Agreement.
"Tranche A Advance" means an Advance under the Tranche A
Loan.
"Tranche A Commitment" means, as to each Lender, the
obligation of such Lender to make Tranche A Advances as described in
Article II hereunder in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the
name of such Lender on Schedule 1.1(a) hereto under the heading
"Tranche A Commitment", as the same may be reduced pursuant to Section
2.13, or terminated pursuant to Section 2.13 or 11.2. As of the date
hereof, the aggregate amount of the Tranche A Commitments of all
Lenders equals Forty-Five Million Dollars ($45,000,000).
"Tranche A Loan" means the revolving credit loan made or to
be made hereunder to the Borrower pursuant to Section 2.1.
"Tranche B Commitment" means, as to each Lender, the
obligation of such Lender to make the Tranche B Loan as described in
Article II hereunder in the principal amount up to but not exceeding
the amount set forth opposite the name of such Lender on Schedule
1.1(a) hereto under the heading "Tranche B Commitment", as the same
may be terminated pursuant to Section 11.2. As of the date hereof, the
aggregate amount of the Tranche B Commitments of all Lenders equals
Thirty Million Dollars ($30,000,000).
"Tranche B Loan" means the term loan made or to be made
hereunder to the Borrower pursuant to Section 2.2.
"Tranche C Commitment" means, as to each Lender, the
obligation of such Lender to make the Tranche C Loan as described in
Article II hereunder in the principal amount up to but not exceeding
the amount set forth opposite the name of such Lender on Schedule
1.1(a) hereto under the heading "Tranche C Commitment", as the same
may be terminated pursuant to Section 11.2. As of the date hereof, the
aggregate amount of the Tranche C Commitments of all Lenders equals
Ten Million Dollars ($10,000,000).
"Tranche C Loan" means the term loan made or to be made
hereunder to the Borrower pursuant to Section 2.3.
"Tranche C Payment Amount" has the meaning specified in
Section 4.3(g).
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"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
Section 1.2 Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of
the terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II
Loans and Swing Loan
Section 2.1 Tranche A Loan. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make one or more Tranche A
Advances to the Borrower from time to time from the date hereof to but
excluding the Termination Date in an aggregate principal amount at any time
outstanding up to but not exceeding the amount of such Lender's Tranche A
Commitment as then in effect, provided that the aggregate amount of all Tranche
A Advances at any time outstanding shall not exceed (a) the lesser of (i) the
Tranche A Commitments or (ii) the Borrowing Base, minus (b) the sum of the
outstanding Swing Loan Advances and the Letter of Credit Liabilities.
Notwithstanding anything to the contrary contained herein, the Eligible Total
Inventory Amount advanced shall never exceed fifty percent (50%) of the
aggregate amount of all Tranche A Advances, Swing Loan Advances and Letter of
Credit Liabilities at any time outstanding. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the Borrower
may borrow, repay, and reborrow hereunder the amount of the Tranche A
Commitments by means of Advances. Tranche A Advances made by each Lender shall
be made and maintained at such Lender's Applicable Lending Office.
Section 2.2 Tranche B Loan. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to restructure a portion of the
loans outstanding under the Existing Credit Agreement as the Tranche B Loan to
the Borrower on the date hereof up to but not exceeding, the amount of such
Lender's Tranche B Commitment. The Borrower may not reborrow hereunder any
Tranche B Advance which have been repaid. The Tranche B Loan made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office.
Section 2.3 Tranche C Loan. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to restructure a portion of the
loans outstanding under the Existing Credit Agreement as the Tranche C Loan to
the Borrower on the date hereof up to but not exceeding the amount of such
Lender's Tranche C Commitment. The Borrower may not reborrow hereunder any
Tranche C Advance which have been repaid. The Tranche C Loan made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office.
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Section 2.4 Master Credit Notes. The obligation of the Borrower to
repay each Lender for Tranche A Advances, Tranche B Loan and Tranche C Loan
made by such Lender and interest thereon shall be evidenced by a Master Credit
Note executed by the Borrower, payable to the order of such Lender, in the
principal amount of such Lender's Commitment dated the date hereof.
Section 2.5 Repayment of Loans. The Borrower shall repay the
outstanding principal amount of the Loans on the Termination Date.
Section 2.6 Interest. The unpaid principal amount of the Loans shall
bear interest at a varying rate per annum equal from day to day to the lesser
of (a) the Maximum Rate, or (b) the Applicable Rate. If at any time the
Applicable Rate for any Advance shall exceed the Maximum Rate, thereby causing
the interest accruing on such Advance to be limited to the Maximum Rate, then
any subsequent reduction in the Applicable Rate for such Advance shall not
reduce the rate of interest on such Advance below the Maximum Rate until the
aggregate amount of interest accrued on such Advance equals the aggregate
amount of interest which would have accrued on such Advance if the Applicable
Rate had at all times been in effect. Accrued and unpaid interest on the
Advances shall be due and payable (i) on each Monthly Payment Date and (ii) on
the Termination Date.
Notwithstanding the foregoing, upon the occurrence and during the
continuance of an Event of Default, the outstanding principal amounts of all
Advances and (to the fullest extent permitted by law) any other amounts payable
by the Borrower under any Loan Document shall bear interest at the Default Rate
at the Required Lenders' option beginning upon the occurrence of such Event of
Default or such later date as selected by the Required Lenders. Interest
payable at the Default Rate shall be payable from time to time on demand.
Section 2.7 Tranche A Loan Borrowing Procedure. The Borrower shall
give the Agent notice by means of an Advance Request Form of each requested
Tranche A Advance at least one (1) Business Day before the requested date of
each Advance, specifying: (a) the requested date of such Tranche A Advance
(which shall be a Business Day) and (b) the amount of such Tranche A Advance.
Each Tranche A Advance shall be in a minimum principal amount of Five Hundred
Thousand Dollars ($500,000) or in greater increments of One Hundred Thousand
Dollars ($100,000). The Agent shall notify each Lender of the contents of each
such notice promptly. Not later than 11:00 A.M. San Francisco, California time
on the date specified for each Tranche A Advance hereunder, each Lender will
make available to the Agent at the Principal Office in immediately available
funds, for the account of the Borrower, its pro rata share of each Tranche A
Advance. After the Agent's receipt of such funds and subject to the other terms
and conditions of this Agreement, the Agent will make each Tranche A Advance
available to the Borrower by depositing the same, in immediately available
funds, in an account of the Borrower (designated by the Borrower) maintained
with the Agent at the Principal Office. All notices by the Borrower under this
Section shall be irrevocable and shall be given not later
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than 9:00 A.M. San Francisco, California time on the day which is not less than
the number of Business Days specified above for such notice.
Section 2.8 [Intentionally Deleted].
Section 2.9 Swing Loans.
(a) Making Swing Loans; Interest Rate. For the
convenience of the parties and as an integral part of the
transactions contemplated by the Loan Documents, the Swing
Lender, solely for its own account, agrees, on the terms and
conditions hereinafter set forth, to make Swing Loans to the
Borrower (which the Borrower may repay and reborrow from time
to time in accordance with the terms and provisions hereof)
from time to time on any Business Day during the period from
the date hereof to but excluding the Termination Date in an
aggregate principal amount at any one time outstanding which
shall not exceed the Swing Commitment; provided that, the
Swing Lender shall not be obligated to make any Swing Loan
(i) which when added to the then outstanding Tranche A
Advances plus the outstanding Letter of Credit Liabilities
plus the outstanding Swing Loan Advances would exceed the
lesser of (1) the Tranche A Commitments and (2) the Borrowing
Base, and (ii) at any time after any Lender has refused to
purchase a participation in any Swing Loan as provided in
Section 2.9(d). All Swing Loans shall bear interest at the
lesser of (A) the Maximum Rate and (B) the Applicable Rate
(subject to Section 2.6) and shall be included within the
Primary Obligations hereunder. Each Swing Loan shall be
subject to all the terms and conditions applicable to the
Tranche A Loan; provided that, (i) there shall be no minimum
Swing Loan Advance amount or repayment for a Swing Loan, and
(ii) each Swing Loan shall be available and may be prepaid on
same day telephonic notice to be followed promptly with an
Advance Request Form (except for telephonic notices of
prepayment) from the Borrower to the Swing Lender, so long as
such notice is received by the Swing Lender prior to 1:00
P.M. (San Francisco, California time).
(b) Swing Note. The Swing Loans made by the Swing
Lender shall be evidenced by a single promissory note of the
Borrower in substantially the form of Exhibit B-2 hereto,
payable to the order of the Swing Lender in a principal
amount equal to the Swing Commitment as originally in effect
and otherwise duly completed.
(c) Repayment of Swing Loans. Upon the earlier to
occur of (i) the date fourteen (14) Business Days after each
Swing Loan Advance, and (ii) demand by the Swing Lender, the
Borrower shall promptly borrow Tranche A Loans from the
Lenders, pursuant to Section 2.1 hereof and apply the
proceeds of such Tranche A Loans to the repayment of such
Swing Loan Advance then outstanding.
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(d) Participation of Lenders. In the event the
Borrower shall fail to repay any Swing Loan, each Lender
shall irrevocably and unconditionally purchase from the Swing
Lender an SL Participation in such Swing Loan in lawful money
of the United States and in the same day funds, in an amount
equal to such Lender's pro rata share (based on the Tranche A
Commitments) of the principal amount of such Swing Loans then
outstanding; provided that, no Lender shall be obligated to
purchase a participation in the Swing Loans which would cause
the outstanding Tranche A Advances owed to such Lender plus
such Lender's pro rata part of outstanding Letter of Credit
Liabilities to exceed such Lender's Tranche A Commitment. If
such amount is not in fact made available to the Swing Lender
by any Lender, the Swing Lender shall be entitled to recover
such amount on demand from such Lender together with accrued
interest thereon, for each day from the date of demand
therefor, if made prior to 11:00 A.M. (San Francisco,
California time) on any Business Day, or, if made at any
other time, from the next Business Day following the date of
such demand, until the date such amount is paid to the Swing
Lender by such Lender at the Federal Funds Rate. If such
Lender does not pay such amount forthwith upon the Swing
Lender's demand therefor, and until such time as such Lender
makes the required payment, the Swing Lender shall be deemed
to continue to have outstanding a Swing Loan in the amount of
such unpaid participation obligation for all purposes under
the Loan Documents other than those provisions requiring the
other Lenders to purchase a participation therein.
Thereafter, each payment of all or any part of the Primary
Obligations evidenced by the Swing Note shall be paid to the
Swing Lender for the ratable benefit of the Swing Lender and
the Lenders who are participants in the Swing Loan; provided
that, with respect to any participation hereunder, all
interest accruing on the Swing Loan (or any portion thereof)
to which such participation relates prior to the date of
purchase of any participation hereunder shall be payable
solely to the Swing Lender for its own account.
Section 2.10 Use of Proceeds. The proceeds of Advances shall be used
by the Borrower for working capital in the ordinary course of business and
other general corporate purposes.
Section 2.11 Fees. (a) On the date hereof and on or prior to each
December 6 during the term hereof, the Borrower agrees to pay to the Agent for
the account of the Agent an annual agent fee in an amount to be agreed to by
the Borrower and the Agent pursuant to a side letter agreement, (b) the
Borrower agrees to pay to the Agent for the account of the Lenders a
nonrefundable commitment fee ("Commitment Fee") on the average daily unused
amount of such Lender's Tranche A Commitment for the period from and including
the date of this Agreement to and including the Termination Date at the
Commitment Fee Rate based on a 360 day year and the actual number of days
elapsed, (c) on the date hereof, the Borrower agrees to pay to the Agent for
the account of the Lenders a nonrefundable amendment fee of $100,000, (d) on or
before June 3, 2001, if the Tranche B Loan has not been paid in full, the
Borrower
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agrees to pay to the Agent for the account of the Lenders a nonrefundable fee
of $100,000 on June 3, 2001, and (e) on or before the Termination Date, if the
Tranche C Loan has not been paid in full, the Borrower agrees to pay to the
Agent for the account of the Lenders a nonrefundable fee of $200,000 on the
Termination Date. The accrued Commitment Fee shall be payable in arrears on
each Quarterly Payment Date and on the Termination Date. For the purpose of
calculating the Commitment Fee hereunder, the Tranche A Commitments shall be
deemed utilized by the amount of all Tranche A Advances and all Letter of
Credit Liabilities and without giving effect to any Swing Loan Advances.
Section 2.12 [Intentionally Deleted].
Section 2.13 Reduction or Termination of Tranche A Commitments.
(a) Optional. The Borrower shall have the right to
terminate in whole or reduce in part the unused portion of
the Tranche A Commitments (including the Swing Commitment)
upon at least five (5) Business Days prior notice (which
notice shall be irrevocable) to the Agent and each Lender
specifying the effective date thereof, whether a termination
or reduction is being made, and the amount of any partial
reduction, provided that each partial reduction shall be in
the amount of Five Million Dollars ($5,000,000) (or in the
case of the Swing Commitment, One Million Dollars
[$1,000,000]) or an integral multiple thereof and the Tranche
A Commitments (other than the Swing Commitment) shall not be
reduced below the outstanding Letter of Credit Liabilities,
and the Borrower shall simultaneously prepay the amount by
which the unpaid principal amount of the Tranche A Advances
and outstanding Letter of Credit Liabilities exceeds the
Tranche A Commitments (after giving effect to such notice)
plus accrued and unpaid interest on the principal amount so
prepaid. The Tranche A Commitments may not be reinstated
after they have been terminated or reduced. In addition the
Swing Commitment may never be less than the Tranche A
Commitments (exclusive of the Swing Commitment).
(b) Mandatory. On the date of each sale of assets
(other than the sale of Inventory in the ordinary course of
business) by the Borrower or any Subsidiary resulting in Net
Proceeds or upon the occurrence of any other event requiring
a mandatory prepayment under Section 4.3, (i) the Tranche A
Commitments shall automatically reduce by the amount equal to
100% of the Net Proceeds from the sale of assets occurring on
such date or such lesser amounts applied to the Swing Loan
Advances, Tranche A Advances and Letter of Credit Liabilities
pursuant to Section 4.3, and (ii) the Borrower shall
simultaneously prepay the amount by which the unpaid
principal amount of the Tranche A Advances plus the Letter of
Credit Liabilities exceeds the Tranche A Commitments (after
giving effect to such reduction) plus accrued and unpaid
interest on the principal amount so prepaid. In addition, on
the date the Borrower or any Subsidiary makes any prepayments
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pursuant to Section 4.3(g) which are applied to the Swing
Loan Advances, the Tranche A Advances or the Letter of Credit
Disbursements, the Tranche A Commitments shall automatically
be reduced by the amount of such prepayments so applied.
ARTICLE III
Letters of Credit
Section 3.1 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, the Issuing Bank agrees to issue one or more
standby Letters of Credit for the account of the Borrower
from time to time from the date hereof to but excluding the
Termination Date; provided, however, that the outstanding
Letter of Credit Liabilities shall not at any time exceed the
lesser of (i) One Million Dollars ($1,000,000.00), and (ii)
an amount equal to (A) the lesser of (1) the Tranche A
Commitments and (2) the Borrowing Base, minus (B) the sum of
the outstanding Tranche A Advances. Each Letter of Credit
shall have an expiration date not beyond the earlier of (a)
one year from the date of issuance of such Letter of Credit
or (b) the Termination Date, shall be payable in Dollars,
must support a transaction that is entered into in the
ordinary course of the Borrower's business, must be
satisfactory in form and substance to the Issuing Bank, and
shall be issued pursuant to such documents and instruments
(including, without limitation, the Issuing Bank's standard
application for issuance of letters of credit as then in
effect) as the Issuing Bank may require. No Letter of Credit
shall require any payment by the Issuing Bank to the
beneficiary thereunder pursuant to a drawing prior to the
third Business Day following presentment of a draft and any
related documents to the Issuing Bank.
(b) By the issuance of each Letter of Credit and
without any further action on the part of the Issuing Bank or
any of the Lenders in respect thereof, the Issuing Bank
hereby grants to each Lender and each Lender hereby agrees to
acquire from the Issuing Bank a participation in each Letter
of Credit and the related Letter of Credit Liabilities,
effective upon the issuance thereof without recourse or
warranty, equal to such Lender's pro rata share (based on the
Tranche A Commitments) of such Letter of Credit and Letter of
Credit Liabilities. In furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to
the Issuing Bank, as and when required by Section 3.4, such
Lender's pro rata share of each Letter of Credit
Disbursement. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this Section
3.1(b) in respect of each Letter of Credit is absolute and
unconditional and shall not be affected by any circumstance
whatsoever,
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including without limitation the occurrence and continuance
of any Default, and that each such payment shall be made
without any offset, abatement, withholding, or reduction
whatsoever. This agreement to grant and acquire
participations is an agreement between the Issuing Bank and
the Lenders, and neither the Borrower nor any beneficiary of
a Letter of Credit shall be entitled to rely thereon. The
Borrower agrees that each Lender purchasing a participation
from the Issuing Bank pursuant to this Section 3.1(b) may
exercise all its rights to payment against the Borrower
including the right of setoff, with respect to such
participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
(c) The Issuing Bank agrees with each Lender that it
shall transfer to such Lender, without any offset, abatement,
withholding, or reduction whatsoever, such Lender's
proportionate share of any payment of a reimbursement
obligation of the Borrower with respect to a Letter of Credit
Disbursement, including interest payments made to the Issuing
Bank on such Letter of Credit Disbursement, based on the
proportion that the payment made by such Lender to the
Issuing Bank in respect of the principal amount of such
Letter of Credit Disbursement bears to the outstanding
principal amount of such Letter of Credit Disbursement.
(d) Schedule 1.1(b) contains a description of all
letters of credit which were issued pursuant to the Existing
Credit Agreement and which are to remain outstanding under
this Agreement. Each of the Existing LCs shall constitute a
Letter of Credit for all purposes of this Agreement and
shall, for purposes of this Agreement, be deemed issued on
the date hereof.
Section 3.2 Procedure for Issuing Letters of Credit. Each Letter of
Credit shall be issued on at least three (3) Business Days prior notice from
the Borrower to the Issuing Bank by means of a Letter of Credit Request Form
describing the transaction proposed to be supported thereby and specifying (a)
the date on which such Letter of Credit is to be issued (which shall be a
Business Day) and the face amount thereof, (b) the name and address of the
beneficiary, (c) whether such Letter of Credit shall permit a single drawing or
multiple drawings, (d) the conditions permitting the drawing or drawings
thereunder, (e) whether the draft thereunder shall be a sight or time draft
and, if the latter, the date when the draft shall be payable, (f) the form of
the draft and any other documents required to be presented at the time of any
drawing (such notice to set forth the exact wording of such documents or to
attach copies thereof), and (g) the expiration date of such Letter of Credit.
Upon fulfillment of the applicable conditions precedent in Article VI, the
Issuing Bank shall make the applicable Letter of Credit available to the
Borrower or, if so requested by the Borrower, to the beneficiary of the Letter
of Credit.
Section 3.3 Presentment and Reimbursement. (a) Promptly upon receipt
of any documents purporting to represent a demand for payment under a Letter of
Credit, the Issuing Bank shall give notice to the Borrower of the receipt
thereof, which notice may be telephonic. If
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the Issuing Bank shall have determined that a demand for payment under a Letter
of Credit appears on its face to be in conformity with the terms and conditions
of such Letter of Credit, the Issuing Bank shall give notice to the Borrower,
which notice may be telephonic, of the receipt and amount of such drawing and
the date on which payment thereon will be made. If the Borrower shall not have
discharged in full by 8:00 A.M., San Francisco, California time on the date of
such payment, its obligation to reimburse the Issuing Bank in the amount of
such drawing under such Letter of Credit, then the amount of such drawing for
which the Issuing Bank shall not have been reimbursed by the Borrower shall be
paid by the Borrower to the Issuing Bank or, to the extent the Issuing Bank
shall have received payments with respect to such drawing from the Lenders, to
the Issuing Bank for the account of the Lenders, within three (3) Business Days
after the date of such drawing (but in any event before the Termination Date),
together with interest on such amount at the Default Rate from the date of
payment by the Issuing Bank to the beneficiary under the Letter of Credit (each
such payment made after 8:00 A.M., San Francisco, California time on such due
date to be deemed to be made on the next succeeding Business Day). The
obligations of the Borrower under this Section 3.3 shall be unconditional,
absolute, and irrevocable in all respects.
Section 3.4 Payment. If the Issuing Bank shall pay any draft
presented under a Letter of Credit issued by it and if the Borrower shall not
have discharged in full its reimbursement obligation by 8:00 A.M., San
Francisco, California time on the date of such Letter of Credit Disbursement,
then the Issuing Bank shall as promptly as practicable give telephonic (which
shall be promptly confirmed in writing) or facsimile notice to each Lender of
the date of such payment and the amount of such payment and each Lender shall
pay to the Issuing Bank, in immediately available funds, not later than 1:00
P.M., San Francisco, California time on the date of such payment (or, if
Issuing Bank shall notify the Lenders of such payment after 9:00 A.M., San
Francisco, California time, then not later than 10:00 A.M., San Francisco,
California time on the next succeeding Business Day), an amount equal to such
Lender's pro rata share of such drawing; provided that, if any Lender shall for
any reason fail to pay the Issuing Bank its pro rata share of the drawing on
the date of such payment, the Issuing Bank shall itself fund such Lender's pro
rata share while retaining the right to proceed against such Lender for
reimbursement therefor. In the event that the Issuing Bank shall fund a
Lender's pro rata share of a drawing, the amount so funded shall bear interest
at a rate per annum equal to the Federal Funds Rate and shall be payable by
such Lender when it reimburses the Issuing Bank for funding its pro rata part
(with interest to accrue from and including the date of such funding to and
excluding the date of reimbursement). In the event that a Lender, after notice,
pays its pro rata share of a drawing hereunder and such payment is not required
to fund a Letter of Credit Disbursement, the Issuing Bank shall return such
payment to the Lender with interest calculated at a rate per annum equal to the
Federal Funds Rate (with interest to accrue from and including the date of such
funding to and excluding the date of return). The obligation of each Lender to
pay to the Issuing Bank such Lender's pro rata part of any drawing under a
Letter of Credit shall be absolute and unconditional under any and all
circumstances (including without limitation the passage of the Termination
Date), and such obligations shall be several and not joint.
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Section 3.5 Letter of Credit Fee. The Borrower shall pay to the
Agent, for the account of the Lenders, a nonrefundable letter of credit fee
payable on the date each Letter of Credit is issued and on each quarterly
anniversary date thereof in an amount equal to two percent (2%) per annum
multiplied by the undrawn amount of such Letter of Credit, based on a 360 day
year and the actual number of days in the stated term of such Letter of Credit.
In addition, the Borrower shall pay to the Issuing Bank, solely for its own
account as issuer of Letters of Credit, nonrefundable fronting, amendment,
transfer, negotiation and other fees as determined in accordance with the
Issuing Bank's current fee policy, a copy of which has been provided to the
Borrower.
Section 3.6 Obligations Absolute. The obligations of the Borrower
under this Agreement and the other Loan Documents (including without limitation
the obligation of the Borrower to reimburse the Issuing Bank for draws under
any Letter of Credit) shall be absolute, unconditional, and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement and
the other Loan Documents under all circumstances whatsoever, including without
limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of
Credit or any other Loan Document;
(b) Any amendment or waiver of or any consent to departure
from any Loan Document;
(c) The existence of any claim, set-off, counterclaim,
defense or other rights which the Borrower, any Obligated Party, or
any other Person may have at any time against any beneficiary of any
Letter of Credit, the Issuing Bank, any Lender, the Agent, or any
other Person, whether in connection with this Agreement or any other
Loan Document or any unrelated transaction;
(d) Any statement, draft, or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid, or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) Payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or other document which does not
comply with the terms of such Letter of Credit; or
(f) Any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
Section 3.7 Limitation of Liability. The Borrower assumes all risks
of the acts or omissions of any beneficiary of any Letter of Credit with
respect to its use of such Letter of Credit. Neither the Issuing Bank, the
Lenders, the Agent, nor any of their officers or directors shall have any
responsibility or liability to the Borrower or any other Person for: (a) the
failure of
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any draft to bear any reference or adequate reference to any Letter of Credit,
or the failure of any documents to accompany any draft at negotiation, or the
failure of any Person to surrender or to take up any Letter of Credit or to
send documents apart from drafts as required by the terms of any Letter of
Credit, or the failure of any Person to note the amount of any instrument on
any Letter of Credit, each of which requirements, if contained in any Letter of
Credit itself, it is agreed may be waived by the Issuing Bank, (b) errors,
omissions, interruptions, or delays in transmission or delivery of any
messages, (c) the validity, sufficiency, or genuineness of any draft or other
document, or any endorsement(s) thereon, even if any such draft, document or
endorsement should in fact prove to be in any and all respects invalid,
insufficient, fraudulent, or forged or any statement therein is untrue or
inaccurate in any respect, (d) the payment by the Issuing Bank to the
beneficiary of any Letter of Credit against presentation of any draft or other
document that does not comply with the terms of the Letter of Credit, or (e)
any other circumstance whatsoever in making or failing to make any payment
under a Letter of Credit. The Borrower shall have a claim against the Issuing
Bank, and the Issuing Bank shall be liable to the Borrower, to the extent of
any direct, but not consequential, damages suffered by the Borrower which the
Borrower proves in a final nonappealable judgment were caused by (i) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit complied with the terms thereof
or (ii) the Issuing Bank's willful failure to pay under any Letter of Credit
after presentation to it of documents strictly complying with the terms and
conditions of such Letter of Credit. The Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
ARTICLE IV
Payments
Section 4.1 Method of Payment. Except as provided in Article III, all
payments of principal, interest, and other amounts to be made by the Borrower
under this Agreement and the other Loan Documents shall be made to the Agent at
the Payment Office for the account of each Lender's Applicable Lending Office
in Dollars and in immediately available funds by credit to Account Number
4518-151436, without setoff, deduction, or counterclaim, not later than 11:00
A.M., San Francisco, California time on the date on which such payment shall
become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower
shall, at the time of making each such payment, specify to the Agent the sums
payable by the Borrower under this Agreement and the other Loan Documents to
which such payment is to be applied (and in the event that the Borrower fails
to so specify, or if an Event of Default has occurred and is continuing, the
Agent may apply such payment to the Obligations in such order and manner as it
may elect in its sole discretion, subject to Section 4.4 hereof). Each payment
received by the Agent under this Agreement or any other Loan Document for the
account of a Lender shall be paid by the Agent to such Lender, in immediately
available funds, for the account of such Lender's Applicable Lending Office
within one (1) Business Day following receipt thereof. Whenever any payment
under this Agreement
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or any other Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of the
payment of interest and the Commitment Fee, as the case may be.
Section 4.2 Voluntary Prepayment. The Borrower may, upon at least one
(1) Business Days prior notice to the Agent (except for Swing Loan Advances),
voluntarily prepay the Advances in whole at any time or from time to time in
part without premium or penalty but with accrued interest to the date of
prepayment on the amount so prepaid, provided that each partial prepayment
shall be in the principal amount of One Million Dollars ($1,000,000) or an
integral multiple thereof. All notices under this Section shall be irrevocable
and shall be given not later than 9:00 A.M. San Francisco, California, time on
the day which is not less than the number of Business Days specified above for
such notice.
Section 4.3 Mandatory Prepayments.
(a) If at any time the amount equal to the sum of (i) the
outstanding principal amount of all Tranche A Advances and the Swing
Loan Advances, plus (ii) the Letter of Credit Liabilities exceeds the
lesser of (A) the aggregate amount of the Tranche A Commitments and
(B) the Borrowing Base, the Borrower shall promptly prepay first the
outstanding Swing Loan Advances, then the Letter of Credit
Disbursement for which the Issuing Bank has not been reimbursed by the
Borrower, and then Tranche A Advances by the amount of the excess or,
if no Swing Loan Advances, Letter of Credit Disbursements or Tranche A
Advances are outstanding, the Borrower shall immediately pledge to the
Agent cash or Cash Equivalent Investments (subject to no other Liens)
in an amount equal to the excess as security for the Obligations. Any
such mandatory prepayments shall be applied first to Swing Loan
Advances, then to Letter of Credit Disbursements for which the Issuing
Bank has not been reimbursed by the Borrower, then to Tranche A
Advances, and then to the remaining Letter of Credit Liabilities. Any
prepayments hereunder shall be accompanied with accrued and unpaid
interest on the amount prepaid to the date of prepayment.
(b) After any reduction in the Tranche A Commitments which
occurs as a result of an event described in Section 2.13, the Borrower
shall promptly prepay the outstanding Tranche A Advances by the amount
which the sum of the outstanding principal amount of the Tranche A
Advances and the Swing Loan plus the Letter of Credit Liabilities
exceeds the aggregate amount of the Tranche A Commitments, as reduced.
Any prepayments hereunder shall be accompanied with accrued and unpaid
interest on the amount prepaid to the date of prepayment.
(c) Upon the issuance, sale or other disposition of any
shares of equity securities (or any securities convertible or
exchangeable for any such shares, or any rights, warrants, or options
to subscribe for or purchase any such shares), by the
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Borrower or any Subsidiary, the Borrower shall promptly prepay the
Advances by an amount equal to 100% of the Net Proceeds of any such
issuances. Any such mandatory prepayments shall be applied first to
the Tranche C Loan, then to the Tranche B Loan, then to the Swing Loan
Advances, then to Letter of Credit Disbursements for which the Issuing
Bank has not been reimbursed by the Borrower, then to Tranche A
Advances, and then to the remaining Letter of Credit Liabilities. Any
prepayments hereunder shall be accompanied with accrued and unpaid
interest on the amount prepaid to the date of prepayment and any
partial prepayments thereof shall be applied to the principal
installments due in the inverse order of maturity.
(d) If at any time the Eligible Total Inventory Amount
advanced exceeds fifty percent (50%) of the aggregate amount of all
Tranche A Advances, Swing Loan Advances and Letter of Credit
Liabilities at any time outstanding, the Borrower shall promptly
prepay the outstanding Tranche A Advances by the amount of the excess
or, if no Tranche A Advances are outstanding, the Borrower shall
immediately pledge to the Agent cash or Cash Equivalent Investments
(subject to no Liens) in an amount equal to the excess as security for
the Obligations. Any such mandatory prepayments shall be applied first
to Swing Loan Advances, then to Letter of Credit Disbursements for
which the Issuing Bank has not been reimbursed by the Borrower, then
to Tranche A Advances, and then to the remaining Letter of Credit
Liabilities. Any prepayments hereunder shall be accompanied with
accrued and unpaid interest on the amount prepaid to the date of
prepayment.
(e) Upon (i) the sale, sale/lease back, liquidation or other
disposition of any Real Property by the Borrower or any Subsidiary,
(ii) the receipt by the Borrower or any Subsidiary of any federal or
state income tax refunds, (iii) the collection of notes receivable by
the Borrower or any Subsidiary, (iv) the sale or other disposition of
certain store locations (including sales of Real Property and
operating business, but excluding liquidating sales of Inventory and
pawn loans and Pay-Day Advance Loans of the Borrower or any
Subsidiary) by the Borrower or any Subsidiary permitted by Section
9.8(e), or the sale, transfer or other disposition of the Borrower's
or any Subsidiary's stock or other equity interest in Albemarle & Bond
Holdings PLC, the Borrower shall promptly prepay the Advances by an
amount equal to the Net Proceeds of any such sales or dispositions,
the amount of such tax refund or the amount of such collection or
notes, as applicable. Any such mandatory prepayments shall be applied
first to the Tranche B Loan, then to the Tranche C Loan, then to the
Swing Loan Advances, then to Letter of Credit Disbursements for which
the Issuing Bank has not been reimbursed by the Borrower, then to
Tranche A Advances, and then to the remaining Letter of Credit
Liabilities. Any prepayments hereunder shall be accompanied with
accrued and unpaid interest on the amount prepaid to the date of
prepayment.
(f) The Borrower shall promptly prepay the Tranche B Loans by
an amount sufficient to reduce the outstanding principal amount of the
Tranche B Loan to the
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following amounts: (i) on or before March 31, 2001, equal to or less
than $20,500,000; (ii) on or before June 30, 2001, equal to or less
than $18,500,000; and (iii) on or before September 30, 2001, equal to
or less than $9,500,000. Any prepayments hereunder shall be
accompanied with accrued and unpaid interest on the amount prepaid to
the date of prepayment.
(g) The Borrower shall promptly prepay the Tranche C Loan by
an amount equal to or greater than $525,000 ("Tranche C Payment
Amount") on January 3, 2001, April 3, 2001, July 3, 2001, and October
3, 2001. In addition, the Borrower shall promptly prepay the Tranche C
Loan on February 2, 2001, May 3, 2001, August 2, 2001 and November 16,
2001 in an amount equal to the Excess Cash Flow Amount, minus the
Tranche C Payment Amount paid during such current fiscal quarter. Any
such mandatory prepayments shall be applied first to the Tranche C
Loan, then to the Tranche B Loan, then to the Swing Loan Advances,
then to Letter of Credit Disbursements for which the Issuing Bank has
not been reimbursed by the Borrower, then to Tranche A Advances, and
then to the remaining Letter of Credit Liabilities. Any prepayments
hereunder shall be accompanied with accrued and unpaid interest on the
amount prepaid to the date of prepayment and any partial prepayments
thereof shall be applied to the principal installments due in the
inverse order of maturity.
Section 4.4 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Tranche A Advance shall be made by the Lenders under
Section 2.1, the Tranche B Loan shall be made by the Lenders under Section 2.2,
the Tranche C Loan shall be made by the Lenders under Section 2.3, each payment
of the Commitment Fee under Section 2.11 and each payment of the Letter of
Credit fee under Section 3.5 (except as provided therein) shall be made for the
account of the Lenders, and each termination or reduction of the Tranche A
Commitments under Section 2.13 shall be applied to the Tranche A Commitments of
the Lenders, pro rata according to the respective Tranche A Commitments; (b)
each payment and prepayment of principal of or interest on Advances by the
Borrower or any Obligated Party of a particular Loan shall be made to the Agent
for the account of the Lenders holding Advances of such Loan pro rata in
accordance with the respective unpaid principal amounts of such Advances of
such Loan held by such Lenders; (c) any and all other monies received by the
Agent from any source other than pursuant to any of clauses (a) through (b)
hereinabove (including, without limitation, from the Borrower or any Guarantor)
to be applied first against the Primary Obligations shall be for the pro rata
benefit and account of the Lenders based upon each Lender's aggregate
outstanding Advances and LC Participations and SL Participations to the
aggregate outstanding Advances and LC Participations and SL Participations of
all Lenders and then against the Secondary Obligations shall be for the pro
rata benefit and account of the Lenders based upon their respective unpaid
amounts of the Secondary Obligations; and (d) the Lenders shall purchase from
the Issuing Bank and the Swing Lender pursuant to Section 3.1 and Section 2.9
respectively, participations in the Letters of Credit and the related Letter of
Credit Liabilities and the Swing Loans respectively, pro rata in accordance
with their Tranche A Commitments.
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Section 4.5 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Lender or the Borrower (the "Payor") prior to the date
on which such Lender is to make payment to the Agent hereunder or the Borrower
is to make a payment to the Agent for the account of one or more of the
Lenders, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does
not intend to make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Agent, (a) the recipient of such payment shall, on
demand, pay to the Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to (i) if recovered from a Lender, at the Federal Funds Rate
for such period and (ii) if recovered from the Borrower, the rate of interest
applicable to the respective Loan, as determined pursuant to Section 2.6 and
(b) Agent shall be entitled to offset against any and all sums to be paid to
such recipient, the amount calculated in accordance with the foregoing clause
(a).
Section 4.6 Withholding Taxes. All payments by the Borrower of
principal of and interest on the Advances and in reimbursement of draws under
any Letter of Credit and of all fees and other amounts payable under any Loan
Document are payable without deduction for or on account of any present or
future taxes, duties or other charges levied or imposed by the United States of
America or by the government of any jurisdiction outside the United States of
America or by any political subdivision or taxing authority of or in any of the
foregoing through withholding or deduction with respect to any such payments.
If any such taxes, duties or other charges are so levied or imposed, the
Borrower will pay additional interest or will make additional payments in such
amounts so that every net payment of principal of and interest on the Advances
and of all other amounts payable by it under any Loan Document, after
withholding or deduction for or on account of any such present or future taxes,
duties or other charges, will not be less than the amount provided for herein
or therein, provided that the Borrower shall have no obligation to pay such
additional amounts to any Lender to the extent that such taxes, duties, or
other charges are levied or imposed by reason of the failure of such Lender to
comply with the provisions of Section 4.7. The Borrower shall furnish promptly
to the Agent for distribution to each affected Lender, as the case may be,
official receipts evidencing any such withholding or reduction.
Section 4.7 Withholding Tax Exemption. Each Lender that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, certifying
in either case that such Lender is entitled to receive payments from the
Borrower under any Loan Document without deduction or withholding of any United
States federal income taxes. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to the Borrower and the Agent two additional
copies of such form (or a successor form) on or before the date such form
expires or becomes obsolete or after the
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occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Lender is entitled to receive payments from the Borrower under any Loan
Document without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower and the Agent that it is not
capable of receiving such payments without any deduction or withholding of
United States federal income tax.
Section 4.8 Computation of Interest. Interest on the Advances and all
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the
first day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be.
Section 4.9 Proceeds of Collateral and Collections under the Guaranty.
(a) Proceeds. Except as otherwise permitted by Section 6.3, any proceeds
received by the Agent from the sale or other liquidation of the Collateral and
from collections under the Guaranty shall first be applied as payment of the
accrued and unpaid fees of the Agent hereunder and then to all other unpaid or
unreimbused Obligations (including reasonable attorneys' fees and expenses)
owing to the Agent in its capacity as Agent only. Any amount of such proceeds
remaining after the applications described in the preceding sentence shall be
distributed:
(i) first, to the Lenders, pro rata, in accordance with the
respective unpaid amounts of the Primary Obligations (including in
such Primary Obligations for purposes of this calculation all Letter
of Credit Liabilities) until all Primary Obligations are paid in full
and provided that each lender's pro rata portion of such proceeds
applicable to Letter of Credit Liabilities shall be held by the Agent
(and not disbursed to the Lenders) as collateral for the Letter of
Credit Liabilities relating thereto; and
(ii) then to the Lenders, pro rata, in accordance with the
respective unpaid amounts of the Secondary Obligations.
After all Primary Obligations are paid in full, and all Letter of
Credit Liabilities have terminated or are otherwise satisfied, all
remaining portions of the proceeds of the Collateral then held by the
Agent or such Lender as collateral for the Letter of Credit
Liabilities shall be distributed to the Lenders, pro rata, in
accordance with their respective unpaid amounts of the Secondary
Obligations.
(b) Noncash Proceeds. Notwithstanding anything to the contrary contained
herein, if the Agent shall ever acquire any Collateral through foreclosure or
by a conveyance in lieu of foreclosure or by retaining any of the Collateral in
satisfaction of all or part of the Obligations or if any proceeds of Collateral
received by the Agent to be distributed and shared pursuant to this Section 4.9
are in a form other than immediately available funds, the Agent shall not be
required to remit any share thereof under the terms hereof and the Lenders
shall only be entitled to their undivided interests in the Collateral or
noncash proceeds as determined hereby. The Lenders shall receive the
application portions (in accordance with Section 4.9(a)) of any immediately
available funds consisting of proceeds
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from such Collateral or proceeds of such noncash proceeds so acquired only if
any when paid in connection with the subsequent disposition thereof. While any
Collateral or other property to be shared pursuant to this Section 4.9 is held
by the Agent pursuant to this clause (b), the Agent shall hold such Collateral
or other property for the benefit of the Lenders and all matters relating to
the management, operation, further disposition or any other aspect of such
Collateral or other property shall be resolved by the agreement of the Required
Lenders.
(c) Return of Proceeds. If at any time payment, in whole or in part, of any
amount distributed by the Agent hereunder is rescinded or must otherwise be
restored or returned by the Agent as a preference, fraudulent conveyance, or
otherwise under any bankruptcy, insolvency or similar law, then each Person
receiving any portion of such amount agrees, upon demand, to return the portion
of such amount it has received to the Agent.
ARTICLE V
Capital Adequacy
Section 5.1 Capital Adequacy. If after the date hereof, any Lender
shall have determined that the adoption or implementation of any applicable
law, rule, or regulation regarding capital adequacy (including, without
limitation, any law, rule, or regulation implementing the Basle Accord), or any
change therein, or any change in the interpretation or administration thereof
by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or compliance by such Lender (or its
parent) with any guideline, request, or directive regarding capital adequacy
(whether or not having the force of law) of any central bank or other
Governmental Authority (including, without limitation, any guideline or other
requirement implementing the Basle Accord), has or would have the effect of
reducing the rate of return on such Lender's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which such Lender (or its parent) could have
achieved but for such adoption, implementation, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time, within
ten (10) Business Days after demand by such Lender (with a copy to the Agent),
the Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender (or its parent) for such reduction. A certificate of
such Lender claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive,
provided that the determination thereof is made on a reasonable basis. In
determining such amount or amounts, such Lender may use any reasonable
averaging and attribution methods.
Section 5.2 Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified, or deemed
applicable any tax, reserve, special deposit, or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder or the Issuing Bank's commitment to issue Letters of Credit
hereunder, and the result shall be to increase the cost to the Issuing Bank of
issuing or maintaining any Letter of Credit or its commitment to issue Letters
of Credit hereunder or reduce any amount receivable by the Issuing Bank
hereunder in respect of any Letter of Credit (which increase in cost, or
reduction in amount receivable, shall be the result of the Issuing Bank's
reasonable allocation of the aggregate of such increases or reductions
resulting from such event), then, upon demand by the Issuing Bank, the Borrower
agrees to pay the Issuing Bank, from time to time as specified by the Issuing
Bank, such additional amounts as shall be sufficient to compensate the Issuing
Bank for such increased costs or reductions in amount. A statement as to such
increased costs or reductions in amount incurred by the Issuing Bank, submitted
by the Issuing Bank to the Borrower, shall be conclusive as to the amount
thereof, provided that the determination thereof is made on a reasonable basis.
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ARTICLE VI
Conditions Precedent
Section 6.1 Initial Extension of Credit. The obligation of each
Lender to make its initial Advance and of the Issuing Bank to issue the initial
Letter of Credit, is subject to the condition precedent that the Agent shall
have received on or before the day of such Advance or Letter of Credit all of
the following, each dated (unless otherwise indicated) the date hereof, in form
and substance satisfactory to the Agent:
(a) Resolutions. Resolutions of the Board of Directors of the
Borrower and each Guarantor certified by its Secretary or an Assistant
Secretary which authorize the execution, delivery, and performance of
the Loan Documents to which it is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of the Borrower
and each Guarantor certifying the names of each of its officers
authorized to sign the Loan Documents to which it is or is to be a
party (including the certificates contemplated herein) together with
specimen signatures of such officers;
(c) Articles of Incorporation. A certificate certified by the
Secretary or an Assistant Secretary of the Borrower and each Guarantor
certifying that the articles or certificate of incorporation of the
Borrower and each Guarantor have not been amended or modified since
December 10, 1998 and are still in full force and effect;
(d) Bylaws. A certificate certified by the Secretary or an
Assistant Secretary of the Borrower and each Guarantor certifying that
the bylaws of the Borrower and each Guarantor have not been amended or
modified since December 10, 1998 and are still in full force and
effect;
(e) Existence and Good Standing. A certificate certified by
the Secretary or an Assistant Secretary of the Borrower and each
Guarantor certifying as to its existence and good standing in the
state of its organization and its qualification to do business and its
good standing in each state where the Borrower and each Guarantor is
required to qualify to do business and where failure to so qualify
could reasonably be expected to have a Material Adverse Effect;
(f) Notes. The Notes executed by the Borrower;
(g) Guaranty. A Guaranty executed by each Guarantor;
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(h) Contribution and Indemnification Agreement. A
Contribution and Indemnification Agreement executed by the Borrower
and the Guarantors;
(i) First Amendment to Borrower Security Agreement. A First
Amendment to Borrower Security Agreement executed by the Borrower;
(j) First Amendment to Subsidiary Security Agreement. A First
Amendment to Subsidiary Security Agreement executed by Texas EZPAWN
L.P. and Texas EZPAWN Management, Inc.;
(k) Amendments to deed of trust or mortgage. The amendments
to deed of trust or mortgage executed by certain Guarantors.
(l) Promissory Notes of Directors and Employees. The original
promissory notes executed by former and current employees and
directors of the Borrower and payable to the order of the Borrower or
any Subsidiary, duly endorsed to the Agent;
(m) Tax Refund. All documents deemed necessary by the Agent
or its counsel to provide for payment of all tax refunds payable to
the Borrower or any Subsidiary directly to the Agent, all executed by
the Borrower and its Subsidiaries;
(n) Financial Statements. A copy of the annual unaudited
financial statements of the Borrower and its Subsidiaries for the
Fiscal Year ending September 30, 2000 containing, on a consolidated
basis, balance sheets and statements of income, retained earnings, and
cash flow as at the end of such Fiscal Year and for the 12-month
period then ended, in each case setting forth in comparative form the
figures for the preceding Fiscal Year, all in reasonable detail
certified by the chief financial officer of the Borrower to have been
prepared in accordance with GAAP and to fairly and accurately present
(subject to year-end audit adjustments) the financial condition and
results of operations of the Borrower and the Subsidiaries, on a
consolidated basis, at the date and for the periods indicated therein;
(o) Opinion of Counsel. A favorable opinion of legal counsel
to the Borrower and each Guarantor satisfactory to the Agent, as to
such matters as the Agent or the Required Lenders may reasonably
request; and
(p) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including attorneys' fees) referred to in Section 13.1, to
the extent incurred, shall have been paid in full by the Borrower.
Section 6.2 All Extensions of Credit. The obligation of each Lender
to make any Advance and of the Issuing Bank to issue any Letter of Credit
(including the initial Advance and the initial Letter of Credit) is subject to
the following additional conditions precedent:
(a) Advance Request Form, Telephonic Request, or Letter of
Credit Request Form. The Agent in respect of Tranche A Advances, the
Tranche B Loan and the Tranche C Loan, the Swing Lender in respect of
Swing Loan Advances, and the Issuing Bank in respect of Letters of
Credit shall have received, in accordance with Section 2.7,
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2.9 or 3.2, as the case may be, an Advance Request Form, a telephonic
request, or Letter of Credit Request Form, as applicable, executed by
an authorized officer of the Borrower;
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing, or would result from
such Advance or Letter of Credit, except for the Specified Defaults;
(c) Representations and Warranties. All of the
representations and warranties contained in Article VII hereof and in
the other Loan Documents shall be true and correct in all material
respects on and as of the date of such Advance or issuance of Letter
of Credit with the same force and effect as if such representations
and warranties had been made on and as of such date except to the
extent such representations and warranties speak to a specific date;
(d) No Material Adverse Effect. Neither any Material Adverse
Effect or any material adverse change in the financial or capital
markets shall have occurred since the date of the most recent
financial statements delivered to the Agent and the Lenders pursuant
to Section 8.1 hereof; and
(e) Additional Documentation. The Agent shall have received
such additional approvals, opinions, or documents as the Agent or its
legal counsel, Winstead Sechrest & Minick P.C., may reasonably
request.
Section 6.3 Release of Funds. Upon satisfaction of the conditions
described in Sections 6.1 and 6.2 or as otherwise waived by the Agent and the
Lenders, the Agent shall instruct Winstead Sechrest & Minick P.C. to release to
the Borrower the amounts held in the Winstead Sechrest & Minick P.C. IOLTA
trust account received from the closing of store operations of the Borrower or
a Subsidiary and representing proceeds of Collateral.
ARTICLE VII
Representations and Warranties
To induce the Agent, the Issuing Bank, and the Lenders to enter into
this Agreement, the Borrower represents and warrants to the Agent, the Issuing
Bank, and the Lenders that:
Section 7.1 Existence. The Borrower and each Subsidiary (a) is a
corporation (or other entity as set forth on Schedule 7.14) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation or organization; (b) has all requisite power and authority to
own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business in all jurisdictions in which
the nature of its business makes such qualification necessary and where failure
to so qualify would have a Material Adverse Effect. The Borrower and each
Guarantor have the power and authority to
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execute, deliver, and perform its obligations under the Loan Documents to which
it is or may become a party.
Section 7.2 Financial Statements. The Borrower has delivered to the
Agent audited consolidated financial statements of the Borrower and its
Subsidiaries as at and for the fiscal year ended September 30, 1999, and
unaudited consolidated financial statements of the Borrower and its
Subsidiaries for the 12-month period ended September 30, 2000. Such financial
statements are true and correct, have been prepared in accordance with GAAP,
and fairly and accurately present, on a consolidated basis, the financial
condition of the Borrower and its Subsidiaries as of the respective dates
indicated therein and the results of operations for the respective periods
indicated therein. As of the date hereof, neither the Borrower nor any of its
Subsidiaries has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments except as referred to or reflected in such
financial statements, and there has been no Material Adverse Effect since the
effective date of the most recent financial statements referred to in this
Section.
Section 7.3 Action; No Breach. The execution, delivery, and
performance by the Borrower and each Guarantor of the Loan Documents to which
it is or may become a party, and compliance with the terms and provisions
hereof and thereof have been duly authorized by all requisite action on the
part of the Borrower and each Guarantor and do not and will not (a) violate or
conflict with, or result in a breach of, or require any consent, other than
such consents which have been obtained and copies of which have been provided
to the Agent, under (i) the articles of incorporation or bylaws or the
applicable organizational documents of the Borrower or any Guarantor, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree
of any Governmental Authority or arbitrator, including without limitation, the
provisions of the Texas Pawn Shop Act (Chapter 371 of the Texas Finance Code)
and the consumer loan provisions of the Texas Finance Code, or (iii) any
agreement or instrument to which the Borrower or any of the Guarantors is a
party or by which any of them or any of their property is bound or subject, or
(b) constitute a default under any such agreement or instrument, or result in
the creation or imposition of any Lien upon any of the revenues or assets of
the Borrower or any Guarantor.
Section 7.4 Operation of Business. The Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and each of its Subsidiaries are not in
violation of any valid rights of others with respect to any of the forgoing
except where such violation individually or in combination with all other such
violations could not reasonably be expected to have a Material Adverse Effect.
Section 7.5 Litigation and Judgments. There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary, that could, if
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adversely determined, reasonably be expected to have a Material Adverse Effect.
As of the date hereof, there are no outstanding judgments against the Borrower
or any Subsidiary, except for those certain default judgments in an aggregate
amount not exceeding $15,000 outstanding on the date hereof. 1.1
Section 7.6 Rights in Properties; Liens. The Borrower and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in Section 7.2, and none of the properties, assets, or
leasehold interests of the Borrower or any Subsidiary is subject to any Lien,
except as permitted by Section 9.2.
Section 7.7 Enforceability. The Loan Documents to which the Borrower
or a Guarantor is a party, when delivered, shall constitute the legal, valid,
and binding obligations of the Borrower or such Guarantor, as applicable,
enforceable against the Borrower or such Guarantor, as applicable, in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
Section 7.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower
of this Agreement and by the Borrower or any Guarantor of the other Loan
Documents to which the Borrower or such Guarantor, as applicable, is or may
become a party or for the validity or enforceability thereof.
Section 7.9 Debt. The Borrower and the Subsidiaries have no Debt,
except as permitted by Section 9.1.
Section 7.10 Taxes. The Borrower and each Subsidiary have filed all
tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable other than those being
contested in good faith by appropriate proceedings diligently pursued for which
adequate reserves have been established. The Borrower knows of no pending
investigation of the Borrower or any Subsidiary by any taxing authority or of
any pending but unassessed tax liability of the Borrower or any Subsidiary.
Section 7.11 Use of Proceeds; Margin Securities. Neither the Borrower
nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations T, U, or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
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Section 7.12 ERISA. As of the date hereof, the Borrower, each
Subsidiary, each ERISA Affiliate, and each Plan are in compliance in all
material respects with all applicable provisions of ERISA and the Code except
for events of noncompliance that will not have a Material Adverse Effect.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. No notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan. The Borrower and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans, and no "accumulated funding deficiency" (for which an
excise tax is due or would be due in the absence of a waiver) as defined in
Section 412 of the Code or Section 302(a)(2) of ERISA, whichever may apply, has
been incurred with respect to any Plan, whether or not waived. The present
value of all vested benefits under each Plan do not exceed the fair market
value of all Plan assets allocable to such benefits, determined on a
termination basis as of the most recent valuation date of the Plan and in
accordance with ERISA. Neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA. Neither the Borrower nor any
ERISA Affiliate is subject to any lien imposed under Section 412(n) of the Code
or Section 302(f) or 4068 of ERISA, whichever may apply, with respect to any
Plan. Neither the Borrower nor any ERISA Affiliate is required to provide
security to a Plan under Section 401(a)(29) of the Code.
Section 7.13 Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Borrower in writing to the Agent or any Lender
(including, without limitation, all information contained in the Loan
Documents) for purposes of or in connection with this Agreement, the other Loan
Documents or any transaction contemplated herein or therein is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of the Borrower to the Agent or any Lender, will be true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.
Section 7.14 Subsidiaries. As of the date hereof, the Borrower has no
Subsidiaries other than those listed on Schedule 7.14 hereto, and Schedule 7.14
(a) sets forth the type of each Subsidiary listed thereon, (b) sets forth the
jurisdiction of incorporation or organization of each Subsidiary, and the
percentage of the Borrower's ownership of the outstanding voting stock or other
ownership interests of each Subsidiary. All of the outstanding capital stock of
each corporate Subsidiary has been validly issued, is fully paid, and is
nonassessable. There are no outstanding subscriptions, options, warrants,
calls, or rights to acquire, and no outstanding securities or instruments
convertible into, capital stock of any Subsidiary except as listed on Schedule
7.14.
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Section 7.15 Agreements. Neither the Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary is in default in any material respect in the
performance, observance, or fulfillment of any of the obligations, covenants,
or conditions contained in any agreement or instrument material to its business
to which it is a party other than defaults which could not reasonably be
expected to have a Material Adverse Effect.
Section 7.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation of any law, rule, regulation, order, or decree of
any Governmental Authority or arbitrator, including without limitation, the
provisions of the Texas Pawn Shop Act (Chapter 371 of the Texas Finance Code),
the consumer loan provisions of the Texas Finance Code and provisions of the
Brady Law and other laws, rules and regulations related to the regulation of
firearms, other than violations which could not reasonably be expected to have
a Material Adverse Effect.
Section 7.17 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.18 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company"' or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 7.19 Environmental Matters. Except for those matters which
will not have a Material Adverse Effect:
(a) The Borrower, each Subsidiary, and all of their
respective properties, assets, and operations are in full compliance
with all Environmental Laws. The Borrower is not aware of, nor has the
Borrower received notice of, any past, present, or future conditions,
events, activities, practices, or incidents which may interfere with
or prevent the compliance or continued compliance of the Borrower and
the Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in good
standing and the Borrower and its Subsidiaries are in compliance with
all of the terms and conditions of such permits;
(c) No Hazardous Materials exist on, about, or within or have
been used, generated, stored, transported, disposed of on, or Released
from any of the properties or assets of the Borrower or any
Subsidiary. The use which the Borrower and the Subsidiaries make and
intend to make of their respective properties and assets will not
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result in the use, generation, storage, transportation, accumulation,
disposal, or Release of any Hazardous Material on, in, or from any of
their properties or assets except in compliance with Environmental
Laws;
(d) Neither the Borrower nor any of its Subsidiaries nor any
of their respective currently or previously owned or leased properties
or operations is subject to any outstanding or, to the best of its
knowledge, threatened order from or agreement with any Governmental
Authority or other Person or subject to any judicial or docketed
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations
of the Borrower or any of its Subsidiaries that could reasonably be
expected to give rise to any Environmental Liabilities;
(f) Neither the Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
regulations thereunder or any comparable provision of state law. The
Borrower and its Subsidiaries are in compliance with all applicable
financial responsibility requirements of all Environmental Laws;
(g) Neither the Borrower nor any of its Subsidiaries has
filed or failed to file any notice required under applicable
Environmental Law reporting a Release; and
(h) No Lien arising under any Environmental Law has attached
to any property or revenues of the Borrower or its Subsidiaries.
ARTICLE VIII
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Lender has any Commitment hereunder, or
the Issuing Bank has any obligation to issue Letters of Credit hereunder, the
Borrower will perform and observe the following positive covenants:
Section 8.1 Reporting Requirements. The Borrower will furnish to the
Agent, the Issuing Bank, and each Lender:
(a) Annual Audited Financial Statements. As soon as
available, and in any event within one hundred twenty (120) days after
the end of each Fiscal Year of the Borrower and the Subsidiaries,
beginning with the Fiscal Year ending September 30, 2000, (i) a copy
of the annual audited financial statements of the Borrower and the
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Subsidiaries for such Fiscal Year containing, on a consolidated basis,
balance sheets and statements of income, retained earnings, and cash
flow as at the end of such Fiscal Year and for the 12-month period
then ended, in each case setting forth in comparative form the figures
for the preceding Fiscal Year, all in reasonable detail and audited
and certified by Ernst & Young, or other independent certified public
accountants of recognized standing acceptable to the Agent, to the
effect that such report has been prepared in accordance with GAAP; and
(ii) a certificate of such independent certified public accountants to
the Agent and the Lenders (A) stating that in the course of their
audit they have not become aware of any Default or Event of Default or
specifying any Defaults or Events of Default of which they are aware,
and (B) stating that nothing came to their attention that the
calculations set forth in the officer's certificate delivered
simultaneously therewith, as of the date of the balance sheet, were
not prepared in accordance with the audited financial statements;
(b) Annual Unaudited Financial Statements. As soon as
available, and in any event within forty-five (45) days after the end
of each Fiscal Year of the Borrower and the Subsidiaries, beginning
with the Fiscal Year ending September 30, 2001, a copy of the annual
unaudited financial statements of the Borrower and the Subsidiaries
for such Fiscal Year containing, on a consolidated basis, balance
sheets and statements of income, retained earnings, and cash flow as
at the end of such Fiscal Year and for the 12-month period then ended,
in each case setting forth in comparative form the figures for the
preceding Fiscal Year, all in reasonable detail certified by the chief
financial officer of the Borrower to have been prepared in accordance
with GAAP and to fairly and accurately present (subject to year-end
audit adjustments) the financial condition and results of operations
of the Borrower and the Subsidiaries, on a consolidated basis, at the
date and for the periods indicated therein, all in form and substance
satisfactory to the Agent and the Lenders;
(c) Quarterly Financial Statements. As soon as available and
in any event within fifty (50) days after the end of each Fiscal
Quarter in each Fiscal Year of the Borrower, a copy of an unaudited
financial report of the Borrower and the Subsidiaries as of the end of
such Fiscal Quarter and for the portion of the Fiscal Year then ended,
containing, on a consolidated basis, balance sheets and statements of
income, retained earnings, and cash flow in each case setting forth in
comparative form the figures for the corresponding period of the
preceding Fiscal Year, all in reasonable detail certified by the chief
financial officer of the Borrower to have been prepared in accordance
with GAAP and to fairly and accurately present (subject to year-end
audit adjustments) the financial condition and results of operations
of the Borrower and the Subsidiaries, on a consolidated basis, at the
date and for the periods indicated therein;
(d) Quarterly and Monthly Certificate. As soon as available,
and in any event within fifty (50) days after the end of each Fiscal
Quarter of each Fiscal Year of the Borrower and within twenty (20)
days after the end of each calendar month, a certificate
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of the chief financial officer of the Borrower (i) stating that to the
best of such officer's knowledge, no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that is proposed to
be taken with respect thereto, and (ii) showing in reasonable detail
the most recent Fiscal Quarter calculations or calendar month
calculations, as applicable, demonstrating compliance with Article X,
and accompanied by a certificate executed by the Borrower representing
that attached thereto is a current (as of the date thereof) list of
existing store locations owned or leased by Borrower and each
Guarantor;
(e) Monthly Financial Statements. As soon as available and in
any event within twenty (20) days after the end of each calendar
month, a copy of an unaudited financial report of the Borrower and the
Subsidiaries as of the end of such month and for the portion of the
Fiscal Year then ended, containing, on a consolidated basis, balance
sheets and statements of income, retained earnings, and cash flow in
each case setting forth in comparative form the figures for the
corresponding period of the preceding Fiscal Year, all in reasonable
detail certified by the chief financial officer of the Borrower to
have been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the
financial condition and results of operations of the Borrower and the
Subsidiaries, on a consolidated basis, at the date and for the periods
indicated therein, all in form and substance satisfactory to the Agent
and the Lenders;
(f) Projections. As soon as available and in any event not
later than thirty (30) days prior to the end of each Fiscal Year,
projections of consolidated financial statements of the Borrower and
its Subsidiaries for the upcoming Fiscal Year;
(g) Weekly Borrowing Base Report. As soon as available, and in
any event by each Monday of each week, a borrowing base report as of
the preceding Tuesday in the form of Exhibit F attached hereto.
Additionally, upon the request for any Tranche A Advance, any Swing
Loan Advance or the issuance of any Letter of Credit, a current
borrowing base report required to be delivered pursuant to the
immediately preceding sentence;
(h) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to the Borrower
or any Subsidiary by independent certified public accountants with
respect to the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any
Subsidiary;
(i) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting the Borrower or any
Subsidiary which, if determined adversely to the Borrower or such
Subsidiary, could reasonably be expected to have a Material Adverse
Effect;
(j) Notice of Default. As soon as possible and in any event
within ten (10) days after the Borrower knows of the occurrence of
each Default, a written notice setting
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forth the details of such Default and the action that the Borrower has
taken and proposes to take with respect thereto;
(k) ERISA Reports. Promptly after the filing or receipt
thereof, copies of all reports, including annual reports, and notices
which the Borrower or any ERISA Affiliate files with or receives from
the PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within five (5) days after the Borrower or
any ERISA Affiliate knows or has reason to know that any Reportable
Event (as to which the thirty day notice requirement to the PBGC has
not been waived) or Prohibited Transaction has occurred with respect
to any Plan or that the PBGC or the Borrower or any Subsidiary or any
ERISA Affiliate has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, a certificate of the chief
financial officer of the Borrower setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the
action that the Borrower proposes to take with respect thereto;
(l) Notice of Material Adverse Effect. As soon as possible
and in any event within ten (10) days after the Borrower knows of the
occurrence thereof, written notice of any matter that could reasonably
be expected to have a Material Adverse Effect;
(m) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by
the Borrower or any Subsidiary to its stockholders generally and one
copy of each regular, periodic or special report, registration
statement, or prospectus filed by the Borrower or any Subsidiary with
any securities exchange or the Securities and Exchange Commission or
any successor agency; and
(n) General Information. Promptly, such other information
concerning the Borrower or any Subsidiary as the Agent or any Lender
may from time to time reasonably request.
Section 8.3 Maintenance of Existence; Conduct of Business. The
Borrower will preserve and maintain, and will cause each Subsidiary to preserve
and maintain, its corporate (or partnership) existence and all of its leases,
privileges, licenses, permits, franchises, qualifications, and rights that are
necessary or desirable in the ordinary conduct of its business. The Borrower
will conduct, and will cause each Subsidiary to conduct, its business in an
orderly and efficient manner in accordance with good business practices
customary in the industry in which the Borrower and the Subsidiaries are
engaged.
Section 8.3 Maintenance of Properties. The Borrower will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition (ordinary
wear and tear excepted).
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Section 8.4 Taxes and Claims. The Borrower will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither the
Borrower nor any Subsidiary shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good faith
by appropriate proceedings diligently pursued, and for which adequate reserves
have been established.
Section 8.5 Insurance. The Borrower will maintain, and will cause
each of the Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies in such amounts and covering such risks as is
usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower and the
Subsidiaries operate, provided that in any event the Borrower will maintain and
cause each Subsidiary to maintain workmen's compensation insurance, property
insurance, comprehensive general liability insurance, reasonably satisfactory
to the Agent.
Section 8.6 Inspection Rights; Audits. At any reasonable time and
from time to time, the Borrower will permit, and will cause each Subsidiary to
permit, representatives of the Agent and each Lender to examine, copy, and make
extracts from its books and records, to visit and inspect its properties, and
to discuss its business, operations, and financial condition with its officers,
employees, and independent certified public accountants. In addition, the
Borrower will permit, and will cause each Subsidiary to permit, quarterly
audits of the personal property of the Borrower and the Subsidiaries by
auditors selected by the Agent. The Borrower shall reimburse the Agent for the
reasonable costs and expenses expended by the Agent in connection with such
audits. Audit fees and expenses shall be payable on the third day of the month
following the date of issuance by the Agent of a request for payment thereof to
the Borrower.
Section 8.7 Keeping Books and Records. The Borrower will maintain,
and will cause each Subsidiary to maintain, proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.
Section 8.8 Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply, in all respects with all applicable laws,
rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator, including without limitation, the provisions of the Texas Pawn Shop
Act (Chapter 371 of the Texas Finance Code), the consumer loan provisions of
the Texas Finance Code and the provisions of the Brady Law and other laws,
rules and regulations related to the regulation of firearms, other than such
non-compliance which could not reasonably be expected to have a Material
Adverse Effect.
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Section 8.9 Compliance with Agreements. The Borrower will comply, and
will cause each Subsidiary to comply, in all respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business other than such non-compliance which could not reasonably be expected
to have a Material Adverse Effect.
Section 8.10 Further Assurances. The Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be reasonably requested by the Agent to
carry out the provisions and purposes of this Agreement and the other Loan
Documents. Without limiting the foregoing, upon the creation or acquisition of
any Subsidiary or a new store by a new Subsidiary or by an existing Subsidiary
in a new state, the Borrower shall (a) provide written notice of such event to
the Agent within five (5) Business Days following the date the Borrower has
knowledge thereof, and (b) cause each such domestic Subsidiary to execute and
deliver a Guaranty, a Contribution and Indemnification Agreement, a Subsidiary
Security Agreement, a Subsidiary Pledge Agreement, Real Property Security
Documents and Uniform Commercial Code financing statements and such other
documents required by Section 8.13 of the Existing Credit Agreement, each in
form and substance satisfactory to the Agent, within thirty (30) calendar days
following the date the Borrower has knowledge thereof. If any Subsidiary is
created or acquired after the date hereof, the Borrower shall execute and
deliver to the Agent (a) an amendment to this Agreement to amend Schedule 7.14
to this Agreement (which only needs the signature of the Agent to be effective
if the only change is the addition of the new Subsidiary and (b) any other
documents which would have otherwise been required to be delivered to the Agent
and the Lenders if such Subsidiary had been a Subsidiary as of March 31, 2000.
Section 8.11 ERISA. The Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements of ERISA, if applicable, so as not to give rise to any
liability thereunder which could reasonably be expected to have a Material
Adverse Effect.
Section 8.12 [Intentionally Deleted].
Section 8.13 Post-Closing Items; Real Property Security Documents.
The Borrower agrees that it shall, and shall cause each Significant Subsidiary,
to deliver to the Agent, with respect to each parcel of the Real Property, a
lender's title insurance policy (together with any required endorsements
thereto) issued by a title insurer selected by the Borrower and reasonably
satisfactory to the Agent in an amount equal to the fair market value of the
underlying property as determined by the appraisal completed pursuant to
Section 8.13 of the Existing Credit Agreement, as soon as available but in any
event on or before (a) March 1, 2001 with respect to each parcel of Real
Property for which the only outstanding item required for issuance of such
title insurance policy on January 15, 2001 is receipt by such title insurer of
the recording information for the amendment to deed of trust or mortgage
described in Section 6.1(k), and (b) January 15, 2001 with respect to all other
parcels of Real Property.
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ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Lender has any Commitment hereunder or
the Issuing Bank has any obligation to issue Letters of Credit hereunder, the
Borrower will perform and observe the following negative covenants:
Section 9.1 Debt. The Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any Debt, except:
(a) Debt to the Lenders and the Issuing Bank pursuant to the
Loan Documents; and
(b) Debt listed on Schedule 9.1.
Section 9.2 Limitation on Liens. The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of its property, assets,
or revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on Schedule 9.2 hereto and Liens in favor
of the Agent for the benefit of the Lenders;
(b) Liens for taxes, assessments, or other governmental
charges which are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(c) Liens of mechanics, materialmen, warehousemen, carriers,
or other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business;
(d) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs
or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, contracts (other than for payment of Debt), or
leases made in the ordinary course of business;
(e) Purchase money Liens securing Permitted Debt described in
Section 9.1(b); provided that, the Debt secured by any such Lien
encumbers only the asset so purchased;
(f) Liens securing Permitted Debt described in Section
9.1(c); provided that, the Debt secured by any such Lien encumbers
only the Real Property refinanced by such Permitted Debt;
(g) Liens on the Indemnity Account in favor of County Bank of
Rehoboth Delaware; provided however, the amount held in the Indemnity
Account will not at any time exceed the lesser of (i) $300,000 or (ii)
the greater of $50,000 or 120% of County Bank of Rehoboth Beach,
Delaware's interest in all outstanding Pay-Day Advance Loans
implemented
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with Texas EZPAWN, L.P.; provided further, however, that the Borrower
shall not contribute, deposit, or pay to either this Indemnity Account
or the Litigation Fund Account an aggregate amount in excess of
$650,000 cumulatively for all periods of time during the term of this
Agreement;
(h) Liens on the Litigation Fund Account in favor of County
Bank of Rehoboth Beach, Delaware; provided however, the amount held in
the Litigation Fund Account will not at any time exceed $4,000;
provided further, however, that the Borrower shall not contribute,
deposit, or pay to either this Litigation Fund Account or the
Indemnity Account an aggregate amount in excess of $650,000
cumulatively for all periods of time during the term of this
Agreement; and
(i) Financing statements filed in connection with operating
lease transactions for computers.
Neither the Borrower nor any Subsidiary shall enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or
assumption of any Lien upon its properties or assets whether now owned or
hereafter acquired; provided that in connection with the creation of purchase
money Liens permitted hereby, the Borrower or the Subsidiary may agree that it
will not permit any other Liens to encumber the assets subject to such purchase
money Lien. Further, the Borrower will not and will not permit any Subsidiaries
directly or indirectly to create or otherwise cause or suffer to exist to
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary to: (i) pay dividends or make any other distribution
on any of such Subsidiaries' capital stock owned by the Borrower or any
Subsidiary of the Borrower; (ii) subject to subordination provisions pay any
Debt owed to the Borrower or any other Subsidiary; (iii) make loans or advances
to the Borrower or any other Subsidiary; or (iv) transfer any of its properties
or assets to the Borrower or any other Subsidiary not restricted hereby.
Section 9.3 Mergers, Etc. Except as otherwise permitted by Section
9.8(d), the Borrower will not, and will not permit any Subsidiary to become a
party to a merger or consolidation, or to purchase or otherwise acquire all or
a substantial part of the business or assets of any Person or any shares or
other equity interest of any Person (whether or not certificated), or wind-up,
dissolve, or liquidate itself; provided that, (i) a domestic Subsidiary may
wind-up, dissolve or liquidate if no Default exists or would result therefrom
and its assets are transferred to the Borrower or another domestic Subsidiary;
(ii) a foreign Subsidiary may wind-up, dissolve or liquidate if no Default
exists or would result therefrom; (iii) any Subsidiary may merge with and into
the Borrower if the Borrower is the surviving entity and no Default exists or
would result therefrom; (iv) any Subsidiary may merge with and into any other
domestic Subsidiary if the domestic Subsidiary is the surviving entity, no
Default exists or would result therefrom and Section 8.10 is complied with; (v)
any foreign Subsidiary may merge with any other foreign Subsidiary if no
Default exists or would result therefrom; and (vi) the Borrower or a Subsidiary
may make investments permitted under Section 9.5 hereof.
Section 9.4 Restricted Payments. The Borrower will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or permit any of its
Subsidiaries to purchase or otherwise acquire any capital stock of the Borrower
or another Subsidiary, or set apart any money for a sinking or other analogous
fund for
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any dividend or other distribution on its capital stock or for any redemption,
purchase, retirement, or other acquisition of any of its capital stock.
Section 9.5 Investments. Other than pawn loans and Pay-Day Advance
Loans extended in the ordinary course of business, the Borrower will not make,
and will not permit any Subsidiary to make, any advance, loan, extension of
credit, or capital contribution to or investment in, or purchase to own, or
permit any Subsidiary to purchase or own, any stock, bonds, notes, debentures,
or other securities of any Person, except:
(a) loans and investments listed on Schedule 9.5; and
(b) any loans and investments not covered in the previous
section of this Section 9.5 not to exceed One Million Dollars
($1,000,000) in the aggregate.
Section 9.6 Limitation on Issuance of Capital Stock. The Borrower
will not permit any of its Subsidiaries to, at any time issue, sell, assign, or
otherwise dispose of (a) any of its capital stock (or any equivalent interest
therein), (b) any securities exchangeable for or convertible into or carrying
any rights to acquire any of its capital stock (or any equivalent interest
therein), or (c) any option, warrant, or other right to acquire any of its
capital stock (or any equivalent interest therein).
Section 9.7 Transactions With Affiliates. The Borrower will not enter
into, and will not permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary.
Section 9.8 Disposition of Assets. The Borrower will not sell, lease,
assign, transfer, or otherwise dispose (collectively "Dispositions") of any of
its assets, or permit any Subsidiary to do so with any of its assets, except
for (a) Dispositions of Inventory in the ordinary course of business, (b)
Dispositions to a Guarantor as to which Agent has in its possession an executed
Guaranty, (c) Dispositions in addition to those described in clauses (a) and
(b) above, for which the Borrower and the Subsidiaries have received fair
consideration, (d) Dispositions whereby one or more existing store locations of
the Borrower or a Subsidiary are transferred to one or more unaffiliated third
parties and existing store locations of one or more unaffiliated third parties
are transferred to the Borrower or a Subsidiary, such Dispositions to be
satisfactory to the Lenders, and (e) Dispositions which result in the sale and
leaseback of Real Property so long as (i) the sale price of such Real Property
is in an amount equal to or greater than 95% of the appraisal value of such
Real Property (such appraisals to be satisfactory in form and substance to the
Lenders) and (ii) the cash Net Proceeds of such Disposition are promptly paid
to the Agent in accordance with Section 4.3 and are in an amount equal to or
greater than 90% of the appraisal value of such Real
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Property (such appraisals to be satisfactory in form and substance to the
Lenders), or as otherwise permitted with the Lenders' consent.
Section 9.9 Nature of Business. The Borrower will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged on the date hereof. Without in any way limiting the
foregoing, such businesses shall include, but not be limited to, the following:
check-cashing, money wires, Pay-Day Advance Loans (hereinafter defined),
jewelry sales and other financial services incidental to the foregoing. The
Borrower will not, and will not permit any Subsidiary to, open new pawnshop
stores except as otherwise permitted by Section 9.8(d). As used herein, the
term "Pay-Day Advance Loans" means loans which are anticipated to be repaid by
the proceeds of post-dated checks or through an ACH debit from the account of
the borrower of the Pay-Day Advance Loan.
Section 9.10 Environmental Protection. The Borrower will not, and
will not permit any of its Subsidiaries to, (a) use (or permit any tenant to
use) any of their respective properties or assets for the handling, processing,
storage, transportation, or disposal of any Hazardous Material, (b) generate
any Hazardous Material, (c) conduct any activity that is likely to cause a
Release or threatened Release of any Hazardous Material, or (d) otherwise
conduct any activity or use any of their respective properties or assets in any
manner that is likely to violate any Environmental Law or create any
Environmental Liabilities for which the Borrower or any of its Subsidiaries
would be responsible.
Section 9.11 Accounting. The Borrower will not, and will not permit
any of its Subsidiaries to, change its Fiscal Year or make any change in
accounting treatment or reporting practices, except as permitted by GAAP and
disclosed to the Agent.
Section 9.12 Prepayment of Debt. The Borrower will not, and will not
permit any Subsidiary to, prepay any Debt except the Obligations.
Section 9.13 Pay-Day Advance Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, purchase participations or any other
interests in any Pay-Day Advance Loans originated by a Person other than the
Borrower or any Subsidiary.
ARTICLE X
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Lender has any Commitment hereunder or
the Issuing Bank has any obligation to issue Letters of Credit hereunder, the
Borrower will perform and observe the following financial covenants:
Section 10.1 Consolidated Net Worth. Beginning with the calendar
month ending September 30, 2000, the Borrower will at all times maintain
Consolidated Net Worth in an amount not less than (a) One Hundred Million
Dollars ($100,000,000), plus (b) an amount equal
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to one hundred percent (100%) of Consolidated Net Income (not less than zero
dollars [$0.00]) for all periods subsequent to the calendar month ending October
31, 2000, plus (c) an amount equal to one hundred percent (100%) of the Net
Proceeds of all equity offerings (including conversions of debt securities into
common stock) of the Borrower subsequent to October 31, 2000.
Section 10.2 Leverage Ratio. The Borrower will at all times maintain
a Leverage Ratio of not greater than the Leverage Ratio of the Borrower as
calculated as of September 30, 2000.
Section 10.3 Capital Expenditures. The Borrower will not permit the
aggregate amount of Capital Expenditures (excluding any exchanges of store
locations permitted pursuant to Section 9.8(d)) of the Borrower and the
Subsidiaries to exceed Five Million Dollars ($5,000,000) during any Fiscal
Year.
Section 10.4 Inventory Turnover. The Borrower on a consolidated basis
will at all times maintain an Inventory Turnover of not less than 1.75.
Section 10.5 Fixed Charge Coverage Ratio. The Borrower will at all
times maintain a Fixed Charge Coverage Ratio of not less than the Fixed Charge
Coverage Ratio of the Borrower as calculated as of September 30, 2000.
Section 10.6 EBITDA. The Borrower will maintain an EBITDA (calculated
at the end of each Fiscal Quarter) of not less than (a) $5,000,000 for the
Fiscal Quarter ending December 31, 2000 (the "First Quarter"), (b) $10,000,000
for the period beginning as of the First Quarter through and including the
Fiscal Quarter ending March 31, 2001, (c) $14,500,000 for the period beginning
as of the First Quarter through and including the Fiscal Quarter ending June
30, 2001 and (d) $19,500,000 for the period beginning as of the First Quarter
through and including each Fiscal Quarter thereafter.
ARTICLE XI
Default
Section 11.1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) The Borrower shall fail to pay when due the Obligations
or any part thereof.
(b) Any representation or warranty made or deemed made by the
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with
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this Agreement shall be false, misleading, or erroneous in any
material respect when made or deemed to have been made.
(c) The Borrower shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in Section 8.1,
Section 8.13, Article IX, or Article X of this Agreement; or the
Borrower or any Obligated Party shall fail to perform, observe, or
comply with any other covenant, agreement, or term contained in this
Agreement or any other Loan Document (other than covenants to pay the
Obligations) and such failure shall continue for a period of fifteen
(15) days.
(d) The Borrower, any Subsidiary, or any Obligated Party
shall commence a voluntary proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it or shall
make a general assignment for the benefit of creditors or shall
generally fail to pay its debts as they become due or shall take any
corporate action to authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against the
Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official for it or a substantial part of
its property, and such involuntary proceeding shall remain undismissed
and unstayed for a period of thirty (30) days.
(f) The Borrower, any Subsidiary, or any Obligated Party
shall fail to discharge within a period of forty-five (45) days after
the commencement thereof any attachment, sequestration, or similar
proceeding or proceedings involving an aggregate amount in excess of
Two Hundred Fifty Thousand Dollars ($250,000.00) against any of its
assets or properties.
(g) A final judgment or judgments for the payment of money in
excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in the
aggregate shall be rendered by a court or courts against the Borrower,
any of its Subsidiaries, or any Obligated Party and the same shall not
be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within forty-five
(45) days from the date of entry thereof and the Borrower or the
relevant Subsidiary or Obligated Party shall not, within said period
of forty-five (45) days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.
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(h) The Borrower, any Subsidiary, or any Obligated Party
shall fail to pay when due any principal of or interest on any
Material Debt (hereinafter defined) (other than the Obligations), or
the maturity of any such Debt shall have been accelerated, or any such
Debt shall have been required to be prepaid prior to the stated
maturity thereof, or any event shall have occurred that permits any
holder or holders of such Debt or any Person acting on behalf of such
holder or holders to accelerate the maturity thereof or require any
such prepayment. For purposes of this clause (h), the term "Material
Debt" means Debt owed by the Borrower or any Subsidiary the principal
amount of which exceeds Two Hundred Fifty Thousand Dollars ($250,000).
(i) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the Borrower, any Subsidiary, any Obligated Party or any of their
respective shareholders, or the Borrower or any Obligated Party shall
deny that it has any further liability or obligation under any of the
Loan Documents.
(j) Any of the following events shall occur or exist with
respect to the Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required
Banks subject the Borrower to any tax, penalty, or other liability to
a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably
be expected to exceed Two Hundred Fifty Thousand Dollars
($250,000.00).
(k) Any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act acquires after the date hereof
"beneficial ownership" (within the meaning of Section 13(d) of the
Exchange Act) in excess of thirty-three percent (33%) of the total
voting power of all classes of capital stock then outstanding of the
Borrower entitled (without regard to the occurrence of any
contingency) to vote in elections of directors of the Borrower.
(l) The Borrower or any of its Subsidiaries, or any of their
properties, revenues, or assets, shall become the subject of an order
of forfeiture, seizure, or divestiture (whether under RICO or
otherwise) and the same shall not have been
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discharged (or provisions shall not be made for such discharge) within
thirty (30) days from the date of entry thereof.
(m) Any Material Adverse Effect shall occur.
Section 11.2 Remedies.
(a) If any Event of Default shall occur and be continuing,
the Agent may (and if directed by Required Lenders, shall) do any one
or more of the following:
i. Acceleration. Declare all outstanding principal
of and accrued and unpaid interest on the Notes, all
outstanding Letter of Credit Disbursements, and all other
obligations of the Borrower under the Loan Documents
immediately due and payable, and the same shall thereupon
become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, protest, or other formalities
of any kind, all of which are hereby expressly waived by the
Borrower.
ii. Termination of Commitments. Terminate the
Commitments and the obligation of the Issuing Bank to issue
Letters of Credit without notice to the Borrower.
iii. Judgment. Reduce any claim to judgment.
iv. Foreclosure. Foreclose or otherwise enforce any
Lien granted to the Agent for the benefit of itself and the
Lenders to secure payment and performance of the Obligations
in accordance with the terms of the Loan Documents.
v. Rights. Exercise any and all rights and remedies
afforded by the laws of the State of Texas or any other
jurisdiction, by any of the Loan Documents, by equity, or
otherwise.
Provided, however, that upon the occurrence of an Event of Default
under subsection (d) or (e) of Section 11.1, the Commitments of all of
the Lenders and the obligation of the Issuing Bank to issue Letters of
Credit shall automatically terminate, and the outstanding principal of
and accrued and unpaid interest on the Notes and all other obligations
of the Borrower under the Loan Documents shall thereupon become
immediately due and payable without notice, demand, presentment,
notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(b) If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time
to time, without notice to the Borrower (any such notice being hereby
expressly waived by the Borrower), to set off and apply
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any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by
such Lender to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, such Lender's Note, or any
other Loan Document, irrespective of whether or not the Agent or such
Lender shall have made any demand under this Agreement or such
Lender's Note or such other Loan Document and although such
obligations may be unmatured. Each Lender agrees promptly to notify
the Borrower (with a copy to the Agent and to each Lender) after any
such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application.
The rights and remedies of each Lender hereunder are in addition to
other rights and remedies (including, without limitation, other rights
of setoff) which such Lender may have.
Section 11.3 Cash Collateral. If an Event of Default shall have
occurred and be continuing the Borrower shall, if requested by the Agent or
Required Lenders, pledge to the Agent as security for the Obligations an amount
in immediately available funds equal to the then outstanding Letter of Credit
Liabilities, such funds to be held in a cash collateral account at the Agent
without any right of withdrawal by the Borrower.
Section 11.4 Performance by the Agent. If the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Lenders, perform or
attempt to perform such covenant or agreement on behalf of the Borrower. In
such event, the Borrower shall, at the request of the Agent, promptly pay any
amount reasonably expended by the Agent or the Lenders in connection with such
performance or attempted performance to the Agent at the Principal Office,
together with interest thereon at the Default Rate from and including the date
of such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent
nor any Lender shall have any liability or responsibility for the performance
of any obligation of the Borrower under this Agreement or any of the other Loan
Documents.
ARTICLE XII
The Agent
Section 12.1 Appointment, Powers and Immunities. In order to expedite
the various transactions contemplated by this agreement, the Lenders and the
Issuing Bank hereby irrevocably appoint and authorize Wells Fargo Bank Texas,
National Association to act as their Agent hereunder and under each of the
other Loan Documents. Wells Fargo Bank Texas, National Association consents to
such appointment and agrees to perform the duties of the Agent as specified
herein. The Lenders and the Issuing Bank authorize and direct the Agent to take
such action in their name and on their behalf under the terms and provisions of
the Loan Documents and to exercise such rights and powers thereunder as are
specifically delegated to or required of the Agent for the Lenders and/or the
Issuing Bank, together with such rights and
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powers as are reasonably incidental thereto. The Agent is hereby expressly
authorized to act as the Agent on behalf of itself, the other Lenders and the
Issuing Bank:
(a) To receive on behalf of each of the Lenders and the
Issuing Bank any payment of principal, interest, fees (except for the
annual agent fee described in Section 2.11(a)) or other amounts paid
pursuant to this Agreement and the Notes and to distribute to each
Lender and/or the Issuing Bank its share of all payments so received
as provided in this Agreement;
(b) To receive all documents and items to be furnished under
the Loan Documents;
(c) To act as nominee for and on behalf of the Lenders and
the Issuing Bank in and under the Loan Documents;
(d) To arrange for the means whereby the Advances are to be
made available to the Borrower;
(e) To distribute to the Lenders and the Issuing Bank
information, requests, notices, payments, prepayments, documents and
other items received from the Borrower, the other Obligated Parties,
and other Persons;
(f) To execute and deliver to the Borrower, the other
Obligated Parties, and other Persons, all requests, demands,
approvals, notices, and consents received from the Lenders and the
Issuing Bank;
(g) To the extent permitted by the Loan Documents, to
exercise on behalf of each Lender and the Issuing Bank all rights and
remedies of Lenders and the Issuing Bank upon the occurrence of any
Event of Default;
(h) To serve as liaison between the Lenders, the Issuing Bank
and the Borrower with respect to future negotiations, amendments and
waivers of the terms of this Agreement and transmittal of copies of
such amendments and waivers for signature to each Lender and the
Issuing Bank;
(i) To receive signed copies of this Agreement, future
amendments hereto, waivers of any terms hereof, and related documents
comprising the Loan Documents, and provide appropriate signed or
reproduction copies thereof to each Lender, the Issuing Bank and the
Borrower;
(j) To forward to each Lender and the Issuing Bank copies of
all Loan Documents and opinions furnished to Agent under this
Agreement or any of the other Loan Documents;
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(k) To receive notices of Defaults, copies of which shall be
forwarded to all Lenders and the Issuing Bank, and any waivers of
Defaults under this Agreement and forward copies thereof to all
Lenders and the Issuing Bank;
(l) To advise each Lender and the Issuing Bank of all notices
received or furnished by Agent hereunder;
(m) To take such other actions as may be requested by
Required Lenders; and
(n) To accept, execute, and deliver any and all security
documents as the secured party.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable to the Lenders for any action
taken or omitted to be taken by any of them hereunder or otherwise in
connection with this Agreement or any of the other Loan Documents except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, the Agent (i) may treat the payee of any
Note as the holder thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
the Agent; (ii) shall have no duties or responsibilities except those expressly
set forth in this Agreement and the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Document be a trustee or fiduciary
for any Lender or the Issuing Bank; (iii) shall not be required to initiate any
litigation or collection proceedings hereunder or under any other Loan Document
except to the extent requested by Required Lenders; (iv) shall not be
responsible to the Lenders or the Issuing Bank for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, enforceability, or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder; (v) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; and (vi) shall incur no liability under or in respect
of any Loan Document by acting upon any notice, consent, certificate, or other
instrument or writing believed by it to be genuine and signed or sent by the
proper party or parties. As to any matters not expressly provided for by this
Agreement, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by
Required Lenders, and such instructions of Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or any other Loan Document or applicable law.
Section 12.2 Rights of Agent as a Lender. With respect to its
Commitment, the Advances made by it and the Notes issued to it, Wells Fargo
Bank Texas, National Association in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, and
generally engage in any kind of business with the Borrower, any of its
Subsidiaries, any other Obligated Party, and any other Person who may do
business
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with or own securities of the Borrower, any Subsidiary, or any other Obligated
Party, all as if it were not acting as the Agent and without any duty to
account therefor to the Lenders.
Section 12.3 Sharing of Payments, Etc. If any Lender shall obtain any
payment of any principal of or interest on any Advance made by it under this
Agreement or payment of any other obligation under the Loan Documents then owed
by the Borrower or any other Obligated Party to such Lender, whether voluntary,
involuntary, through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, or otherwise, in excess of its pro rata share
(calculated (i) pursuant to Section 3.5 in respect of letter of credit fees,
and (ii) for all other of the Primary Obligations on the basis of the unpaid
principal of and interest on the Tranche A Loan, the Tranche B Loan, the
Tranche C Loan, the Swing Loan, LC Participations and SL Participations held by
it), such Lender shall promptly purchase from the other Lenders participations
in the Primary Obligations owed to them hereunder in such amounts, and make
such other adjustments from time to time as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of the other
Lenders in accordance with its pro rata portion thereof. To such end, all of
the Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if all or any portion of such excess
payment is thereafter rescinded or must otherwise be restored. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any Lender so purchasing a participation in the Advances and LC
Participations made by the other Lenders may exercise all rights of set-off,
banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Advances to,
or Letter of Credit Disbursements for the account of, the Borrower in the
amount of such participation. Nothing contained herein shall require any Lender
to exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.
Section 12.4 Indemnification. THE LENDERS HEREBY AGREE TO INDEMNIFY
THE AGENT AND THE ISSUING BANK FROM AND HOLD THE AGENT AND THE ISSUING BANK
HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER SECTIONS 13.1 AND 13.2,
BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SECTIONS 13.1 AND
13.2), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS, ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES),
AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST THE AGENT AND THE ISSUING BANK IN ANY WAY
RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY THE AGENT AND THE ISSUING BANK UNDER OR IN RESPECT OF
ANY OF THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT NO LENDER SHALL BE LIABLE
FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S OR THE
ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
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LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH LENDER AGREES TO REIMBURSE
THE AGENT AND THE ISSUING BANK PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE
(CALCULATED ON THE BASIS OF THE COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY THE AGENT AND THE
ISSUING BANK IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT
OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE
AGENT OR THE ISSUING BANK IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 12.5 Independent Credit Decisions. Each Lender agrees that it
has independently and without reliance on the Agent, the Issuing Bank or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent, the Issuing Bank or any other Lender, and based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Loan Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower or any
Obligated Party of this Agreement or any other Loan Document or to inspect the
properties or books of the Borrower or any Obligated Party. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders and the Issuing Bank by the Agent hereunder or under the other
Loan Documents, neither the Agent nor the Issuing Bank shall have any duty or
responsibility to provide any Lender with any credit or other financial
information concerning the affairs, financial condition or business of the
Borrower or any Obligated Party (or any of their Affiliates) which may come
into the possession of the Agent, the Issuing Bank or any of their Affiliates.
Section 12.6 Several Commitments. The Commitments and other
obligations of the Lenders under this Agreement are several. The default by any
Lender in making an Advance in accordance with its Commitment shall not relieve
the other Lenders of their obligations under this Agreement. In the event of
any default by any Lender in making any Advance, each nondefaulting bank shall
be obligated to make its Advance but shall not be obligated to advance the
amount which the defaulting Lender was required to advance hereunder. In no
event shall any Lender be required to advance an amount or amounts which shall
in the aggregate exceed such Lender's Commitment. No Lender shall be
responsible for any act or omission of any other Lender.
Section 12.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders, the Issuing Bank and the Borrower
and the Agent may be removed at any time with or without cause by Required
Lenders. Upon any such resignation or removal, the Required
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Lenders will have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty (30) days after the retiring Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders and the Issuing Bank,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or any State thereof and having combined
capital and surplus of at least One Hundred Million Dollars ($100,000,000).
Upon the acceptance of its appointment as successor Agent, such successor Agent
shall thereupon succeed to and become vested with all rights, powers,
privileges, immunities, and duties of the resigning or removed Agent, and the
resigning or removed Agent shall be discharged from its duties and obligations
under this Agreement and the other Loan Documents. After any Agent's
resignation or removal as Agent, the provisions of this Article XII shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was the Agent. After the retiring Agent's
resignation or removal hereunder as Agent, each reference herein to a place of
giving of notice or delivery to the Agent shall be deemed to refer to the
principal office of the successor Agent as it may specify to each party hereto.
In the event that the Agent, for the benefit of itself and the
Lenders, elects or is required to proceed with a foreclosure or other
enforcement of any Lien granted to the Agent for the benefit of itself and the
Lenders, the Agent may, without in any manner limiting its available remedies,
and at the request of the Required Lenders shall, submit a bid for all Lenders
(including itself) in the form of a credit against the Obligations, and the
Agent or its designee, in the event that the Agent or its designee is the
successful bidder at any such foreclosure sale, shall accept title, for the
benefit of itself and the Lenders, to the Collateral sold at such foreclosure
sale. The Collateral purchased at any such sale held shall be owned by the
Agent, or its designee, for the benefit of the Lenders. All monies received or
collected by the Agent in respect of the Collateral in connection with a
foreclosure sale, or any other disposition of the Collateral, shall be paid to
the Lenders pro-rata consistent with Section 4.4 hereof.
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ARTICLE XIII
Miscellaneous
Section 13.1 Expenses. The Borrower hereby agrees to pay on demand:
(a) all reasonable costs and expenses of the Agent, the Issuing Bank and the
Lenders in connection with the preparation, negotiation, execution, and
delivery of this Agreement and the other Loan Documents and any and all
amendments, modifications, renewals, extensions, and supplements thereof and
thereto, including, without limitation, the reasonable fees and expenses of
legal counsel for the Agent, the Issuing Bank and the Lenders (including the
allocated cost of internal counsel of the Agent, the Issuing Bank or any
Lender), (b) all costs and expenses of the Agent, the Issuing Bank and the
Lenders in connection with any Default and the enforcement of this Agreement or
any other Loan Document, including, without limitation, the fees and expenses
of legal counsel for the Agent, the Issuing Bank and the Lenders, (c) all
transfer, stamp, documentary, or other similar taxes, assessments, or charges
levied by any Governmental Authority in respect of this Agreement or any of the
other Loan Documents, (d) all costs, expenses, assessments, and other charges
incurred in connection with any filing, registration, recording, or perfection
of any security interest or Lien, if any, contemplated by this Agreement or any
other Loan Document, and (e) all other costs and expenses incurred by the Agent
and the Issuing Bank in connection with this Agreement or any other Loan
Document, including without limitation all reasonable costs and expenses
associated with appraisals, environmental reports and any other collateral
reviews performed in connection with this Agreement, any other Loan Document or
the transactions contemplated therein.
Section 13.2 INDEMNIFICATION. THE BORROWER HEREBY AGREES TO INDEMNIFY
THE AGENT, THE ISSUING BANK AND EACH LENDER AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT
WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (a) THE NEGOTIATION,
EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE
LOAN DOCUMENTS, (b) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS,
(c) ANY BREACH BY THE BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR
OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (d) THE PRESENCE,
RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS
MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR
ASSETS OF THE BORROWER OR ANY SUBSIDIARY, (e) THE USE OR PROPOSED USE OF ANY
LETTER OF CREDIT, (f) ANY AND ALL TAXES, LEVIES, DEDUCTIONS, AND CHARGES
IMPOSED ON THE ISSUING
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BANK OR ANY OF THE ISSUING BANK'S CORRESPONDENTS IN RESPECT OF ANY LETTER OF
CREDIT, OR (g) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING RELATING TO ANY OF THE FOREGOING AND ANY LEGAL PROCEEDING RELATING
TO ANY COURT ORDER, INJUNCTION OR OTHER PROCESS OR DECREE RESTRAINING OR
SEEKING TO RESTRAIN THE ISSUING BANK FROM PAYING ANY AMOUNT UNDER ANY LETTER OF
CREDIT. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO
BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH
PERSON; PROVIDED HOWEVER, NO PERSON SHALL BE INDEMNIFIED HEREUNDER FOR ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 13.3 Limitation of Liability. None of the Agent, the Issuing
Bank, any Lender, or any Affiliate, officer, director, employee, attorney, or
agent thereof shall have any liability with respect to, and the Borrower hereby
waives, releases, and agrees not to sue any of them upon, any claim for any
special, indirect, incidental, or consequential damages suffered or incurred by
the Borrower in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents, including
without limitation, any damages suffered or incurred by the Borrower in
connection with Swing Loan Advances made by telephonic notice pursuant to
Section 2.9(a) hereto, except for such Person's gross negligence or willful
misconduct.
Section 13.4 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Agent, the Issuing
Bank and the Lenders shall have the right to act exclusively in the interest of
the Agent, the Issuing Bank and the Lenders and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to the Borrower or any of the Borrower's shareholders
or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between the
Borrower and each of the Issuing Bank and the Lenders is solely that of debtor
and creditor, and neither the Agent, the Issuing Bank nor any Lender has any
fiduciary or other special relationship with the Borrower, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and any of the Issuing Bank and the Lenders
to be other than that of debtor and creditor.
Section 13.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may
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prove to be inadequate relief to the Agent, the Issuing Bank and the Lenders.
The Borrower therefore agrees that the Agent, the Issuing Bank and the Lenders,
if the Agent, the Issuing Bank or the Lenders so request, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent, the Issuing Bank or any Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The rights and remedies provided for in this
Agreement and the other Loan Documents are cumulative and not exclusive of any
rights and remedies provided by law.
Section 13.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Agent,
the Issuing Bank and all of the Lenders. Any Lender may sell
participations to one or more banks or other institutions in or to all
or a portion of its rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Advances owing to it and the LC
Participations held by it); provided, however, that (i) such Lender's
obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitments) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
Borrower for the performance of such obligations, (iii) such Lender
shall remain the holder of its Note and LC Participations for all
purposes of this Agreement, (iv) the Borrower shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan
Documents, and (v) such Lender shall not sell a participation that
conveys to the participant the right to vote or give or withhold
consents under this Agreement or any other Loan Document, other than
the right to vote upon or consent to (A) any increase of such Lender's
Commitments, (B) any reduction of the principal amount of, or interest
to be paid on, the Advances and LC Participations of such Lender, (C)
any reduction of any commitment fee or other amount payable to such
Lender under any Loan Document, or (D) any postponement of any date
for the payment of any amount payable in respect of the Advances or LC
Participations of such Lender.
(b) The Borrower and each of the Issuing Bank and the Lenders
agree that any Lender (the "Assigning Lender") may at any time assign
to one or more Eligible Assignees all, or a proportionate part of all,
of its rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, its Commitments and Advances
and LC Participations) (each an "Assignee"); provided,
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however, that (i) each such assignment shall be of a consistent, and
not a varying, percentage of all of the Assigning Lender's rights and
obligations under this Agreement and the other Loan Documents, (ii)
except in the case of an assignment of all of a Lender's rights and
obligations under this Agreement and the other Loan Documents, the
amount of the Commitments of the Assigning Lender being assigned
pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than Five Million Dollars ($5,000,000.00), and (iii) the
parties to each such assignment shall execute and deliver to the Agent
for its acceptance and recording in the Register (as defined below),
an Assignment and Acceptance, together with the Note subject to such
assignment, and a processing and recordation fee of Three Thousand
Dollars ($3,000.00). Upon such execution, delivery, acceptance, and
recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, or, if so specified in
such Assignment and Acceptance, the date of acceptance thereof by the
Agent, (x) the assignee thereunder shall be a party hereto as a
"Lender" and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and under the Loan
Documents and (y) the Assigning Lender shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an Assigning Lender's rights and obligations
under the Loan Documents, such Assigning Lender shall cease to be a
party thereto).
(c) By executing and delivering an Assignment and Acceptance,
the Assigning Lender and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such Assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or
representations made in or in connection with the Loan Documents or
the execution, legality, validity, and enforceability, genuineness,
sufficiency, or value of the Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such Assigning Lender makes
no representation or warranty and assures no responsibility with
respect to the financial condition of the Borrower or any Obligated
Party or the performance or observance by the Borrower or any
Obligated Party of its obligations under the Loan Documents; (iii)
such assignee confirms that it has received a copy of the other Loan
Documents, together with copies of the financial statements referred
to in Section 7.2 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, the Issuing Bank or
any Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this
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Agreement and the other Loan Documents; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and
exercise such powers under the Loan Documents are as delegated to the
Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed
by it as a Lender.
(d) The Agent shall maintain at its Principal Office a copy
of each Assignment and Acceptance delivered to and accepted by it and
a register for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amount of the Advances
owing to, and LC Participations held by, each Lender from time to time
(the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Agent, the Issuing Bank and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all
purposes under the Loan Documents. The Register shall be available for
inspection by the Borrower, any Lender or the Issuing Bank at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and assignee representing that it is an
Eligible Assignee, together with any Note subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit E hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after its receipt of
such notice, the Borrower, at its expense, shall execute and deliver
to the Agent in exchange for the surrendered Note a new Note to the
order of such Eligible Assignee in an amount equal to the Commitments
assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment, a new Note to the order of
the assigning Lender in an amount equal to the Commitments retained by
it hereunder (each such promissory note shall constitute a "Note" for
purposes of the Loan Documents). Such new Notes shall be in an
aggregate principal amount of the surrendered Note, shall be dated the
effective date of such Assignment and Acceptance, and shall otherwise
be in substantially the form of Exhibit A-1 hereto.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower or its
Subsidiaries furnished to such Lender by or on behalf of the Borrower
or its Subsidiaries.
Section 13.9 Survival. All representations and warranties made in
this Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection
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with this Agreement shall survive the execution and delivery of this Agreement
and the other Loan Documents, and no investigation by the Agent, the Issuing
Bank or any Lender or any closing shall affect the representations and
warranties or the right of the Agent, the Issuing Bank or any Lender to rely
upon them. Without prejudice to the survival of any other obligation of the
Borrower hereunder, the obligations of the Borrower under Article V and
Sections 13.1 and 13.2 shall survive repayment of the Notes and termination of
the Commitments and the Letters of Credit.
Section 13.10 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, the Notes, or any other Loan Document to which the Borrower
or any Obligated Party is a party, nor any consent to any departure by the
Borrower or Obligated Party therefrom, shall in any event be effective unless
the same shall be agreed or consented to by Required Lenders and the Borrower
or the Obligated Party, as applicable, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver, or consent shall, unless in writing
and signed by all of the Lenders and the Borrower, do any of the following: (a)
increase Commitments of the Lenders or subject the Lenders to any additional
obligations; (b) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder; (c) postpone any date fixed for any payment
of principal of, or interest on, the Notes or Letter of Credit Disbursements or
any fees or other amounts payable hereunder; (d) waive any of the conditions
specified in Article VI; (e) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes or Letter of Credit Liabilities
or the number of Lenders which shall be required for the Lenders or any of them
to take any action under this Agreement; (f) change any provision contained in
this Section 13.10; (g) release the Borrower from any of its obligations under
this Agreement or the other Loan Documents or release any Guarantor from its
obligations under its Guaranty; and (h) release any Collateral securing the
Obligations except in accordance with and as contemplated by the Loan
Documents. Notwithstanding anything to the contrary contained in this Section,
no amendment, waiver, or consent shall be made (a) with respect to Article XII
hereof without the prior written consent of the Agent, (b) with respect to
Section 2.9 hereof without the prior written consent of the Swing Lender, or
(c) with respect to Article III hereof without the prior written consent of the
Issuing Bank.
Section 13.11 Maximum Interest Rate. No provision of this Agreement
or of any other Loan Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors, successors, or
assigns of the Borrower shall be obligated to pay the excess amount of such
interest or any other excess sum paid for the use, forbearance, or detention of
sums loaned pursuant hereto. In the event any Lender ever receives, collects,
or applies as interest any such sum, such amount which would be in excess of
the maximum amount permitted by applicable law shall be applied as a payment
and reduction of the principal of the indebtedness evidenced by the Notes and
the LC Participations; and, if the principal of the
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Notes and the LC Participations has been paid in full, any remaining excess
shall forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, the Borrower and each Lender
shall, to the extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by the Notes and LC Participations so that interest for the entire term does
not exceed the Maximum Rate.
Section 13.12 Notices. Except as provided in Section 2.9, all notices
and other communications provided for in this Agreement and the other Loan
Documents to which the Borrower is a party shall be given or made by telex,
telegraph, telecopy, cable, or in writing and telexed, telecopied, telegraphed,
cabled, mailed by certified mail return receipt requested, or delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof, or, as to any party at such other address as shall be
designated by such party in a notice to each other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telex or telecopy, subject to telephone confirmation of receipt, or delivered
to the telegraph or cable office, subject to telephone confirmation of receipt,
or when personally delivered or, in the case of a mailed notice, when duly
deposited in the mails, in each case given or addressed as aforesaid; provided,
however, notices to the Agent pursuant to Article II and to the Issuing Bank
pursuant to Article III shall not be effective until received by the Agent or
the Issuing Bank, as applicable.
Section 13.13 Governing Law; Venue; Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. This
Agreement has been entered into in Travis County, Texas, and it shall be
performable for all purposes in Travis County, Texas. Subject to Section 13.14
of this Agreement, any action or proceeding against the Borrower under or in
connection with any of the Loan Documents may be brought in any state or
federal court in Travis County, Texas. The Borrower hereby irrevocably (a)
submits to the nonexclusive jurisdiction of such courts, and (b) waives any
objection it may now or hereafter have as to the venue of any such action or
proceeding brought in any such court or that any such court is an inconvenient
forum. The Borrower agrees that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 13.12.
Nothing herein or in any of the other Loan Documents shall affect the right of
the Agent, the Issuing Bank or any Lender to serve process in any other manner
permitted by law or shall limit the right of the Agent, the Issuing Bank or any
Lender to bring any action or proceeding against the Borrower or with respect
to any of its property in courts in other jurisdictions. Subject to Section
13.14 of this Agreement, any action or proceeding by the Borrower against the
Agent, the Issuing Bank or any Lender shall be brought only in a court located
in Travis County, Texas.
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Section 13.14 Binding Arbitration.
(a) Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in
clause (e) below) in accordance with the terms of this Agreement. A
"Dispute" shall mean any action, dispute, claim or controversy of any
kind, whether in contract or tort, statutory or common law, legal or
equitable, now existing or hereafter arising under or in connection
with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities,
transactions or obligations of any kind related directly or indirectly
to any of the Loan Documents, including without limitation, any of the
foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any
party may by summary proceedings bring an action in court to compel
arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear
all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such
other administrator as the parties shall mutually agree upon in
accordance with the AAA Commercial Arbitration Rules. All Disputes
submitted to arbitration shall be resolved in accordance with the
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the
Loan Documents. The arbitration shall be conducted at a location in
Texas selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms
and procedures set forth herein shall control. All statutes of
limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to
matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained herein
shall be deemed to be a waiver by any party that is a bank of the
protections afforded to it under 12 U.S.C. Section 91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to
exercise self-help remedies such as setoff, foreclosure against or
sale of any real or personal property collateral or security, or to
obtain provisional or ancillary remedies, including without limitation
injunctive relief, sequestration, attachment, garnishment or the
appointment of a receiver, from a court of competent jurisdiction
before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right
of any party to compel arbitration hereunder.
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(d) Arbitrator Qualifications and Powers Awards. Arbitrators
must be active members of the Texas State Bar with expertise in the
substantive laws applicable to the subject matter of the Dispute.
Arbitrators are empowered to resolve Disputes by summary rulings in
response to motions filed prior to the final arbitration hearing.
Arbitrators (i) shall resolve all Disputes in accordance with the
substantive law of the state of Texas, (ii) may grant any remedy or
relief that a court of the state of Texas could order or grant within
the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery
of all costs and fees, to impose sanctions and to take such other
actions as they deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Texas Rules of
Civil Procedure or other applicable law. Any Dispute in which the
amount in controversy is $5,000,000 or less shall be decided by a
single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By
submission to a single arbitrator, each party expressly waives any
right or claim to recover more than $5,000,000. Any Dispute in which
the amount in controversy exceeds $5,000,000 shall be decided by
majority vote of a panel of three arbitrators; provided however, that
all three arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to the
contrary, in any arbitration in which the amount in controversy
exceeds $25,000,000, the arbitrators shall be required to make
specific, written findings of fact and conclusions of law. In such
arbitrations (i) the arbitrators shall not have the power to make any
award which is not supported by substantial evidence or which is based
on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and
the conclusions of law are not erroneous under the substantive law of
the state of Texas, and (iii) the parties shall have in addition to
the grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of (A)
whether the findings of fact rendered by the arbitrators are supported
by substantial evidence, and (B) whether the conclusions of law are
erroneous under the substantive law of the state of Texas. Judgment
confirming an award in such a proceeding may be entered only if a
court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of
Texas.
(f) Miscellaneous. To the maximum extent practicable, the
AAA, the arbitrators and the parties shall take all action required to
conclude any arbitration proceedings within 180 days of the filing of
the Dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party required in
the ordinary course of its business, by applicable law or regulations,
or to the extent necessary to exercise any judicial review rights set
forth herein. If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the arbitration
provisions most
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directly related to the Loan Documents or the subject matter of the
Dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the Loan Documents or
any relationship between the parties.
Section 13.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.16 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.18 Non-Application of Chapter 346 of Texas Credit Finance
Code. The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Agreement or any of
the other Loan Documents or to the transactions contemplated hereby.
Section 13.19 Construction. The Borrower, the Agent, the Issuing Bank
and each Lender acknowledges that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review this
Agreement and the other Loan Documents with its legal counsel and that this
Agreement and the other Loan Documents shall be construed as if jointly drafted
by the parties hereto.
Section 13.20 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
Section 13.21 Confidentiality. The Agent and each Lender (each, a
"Lending Party") agrees to keep confidential any information furnished or made
available to it by the Borrower pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Lending Party other than as a result of
a disclosure by any
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Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
1.1
1.2 Section WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT, THE ISSUING BANK, OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
Section 13.22 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES HERETO AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 13.24 Limited Waiver. By execution of this Agreement, the
Required Lenders hereby waive the Specified Defaults and any Event of Default
which arose under the Existing Credit Agreement solely by reason of (a) the
execution of the Pay-Day Advance Loan Documents by the Borrower or any
Subsidiary and (b) modifications to those certain promissory notes described in
Section 6.1(l), such modifications to have been consummated on or before the
date hereof. Except as otherwise specifically provided for in this Section
13.24, nothing contained herein shall be construed as a waiver by the Lenders
of any covenant or provision of the Agreement, the other Loan Documents or of
any other contract or instrument among the Borrower, the Agent, the Issuing
Bank and the Lenders or any of them, and the failure of the Lenders at any time
or times hereafter to require strict compliance by the Borrower of any
provision thereof shall not waive, affect or diminish any right of Lenders to
thereafter demand strict compliance therewith. The Lenders hereby reserve all
rights granted under the Agreement, the other Loan Documents and any other
contract or instrument among the Borrower, the Agent, the Issuing Bank and the
Lenders, or any of them.
Section 13.25 Amendment and Restatement; Release. This Agreement
amends and restates in its entirety the Existing Credit Agreement. The
execution of this Agreement and the other Loan Documents executed in connection
herewith does not extinguish the indebtedness outstanding in connection with
the Existing Credit Agreement nor does it constitute a novation with respect to
such indebtedness. THE BORROWER REPRESENTS AND WARRANTS THAT AS OF THE DATE
HEREOF THERE ARE NO CLAIMS OR OFFSETS AGAINST OR
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DEFENSES OR COUNTERCLAIMS TO ITS OR ANY OBLIGATED PARTIES' OBLIGATIONS UNDER THE
EXISTING CREDIT AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE DOCUMENTATION
RELATING TO THE DEPOSIT AND CASH MANAGEMENT SERVICES. TO INDUCE THE AGENT, THE
ISSUING BANK AND THE LENDERS TO ENTER INTO THIS AGREEMENT, THE BORROWER AND, BY
THE EXECUTION OF THE LOAN DOCUMENTS TO WHICH IT IS A PARTY, EACH OBLIGATED PARTY
WAIVES ANY AND ALL CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR
UNKNOWN, ARISING PRIOR TO THE DATE HEREOF AND HEREBY RELEASES THE AGENT, THE
LENDERS, THE ISSUING BANK AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS AND ATTORNEYS (COLLECTIVELY, THE "RELEASED PARTIES") FROM ANY AND ALL
OBLIGATIONS, INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION OR
DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH THE
BORROWER OR ANY OBLIGATED PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE
AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF OR FROM OR IN
CONNECTION WITH THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY DOCUMENTATION
RELATING TO THE DEPOSIT AND CASH MANAGEMENT SERVICES OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
EZCORP, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Address for Notices:
1901 Capital Parkway
Austin, TX 78746
Fax No.: (512) 314-3402
Telephone No.: (512) 329-5233
Attention: Dan Tonissen
Chief Financial Officer
AGENT:
WELLS FARGO BANK TEXAS, NATIONAL
ASSOCIATION
By:
---------------------------------
Larry Clayton
Vice President
Address for Notices:
Loan Adjustment Group MAC S4101-072
100 West Washington, 7th Floor
Phoenix, AZ 85003
Fax No.: (602) 378-1148
Telephone No.: (602) 378-7633
Attention: Larry Clayton
Address for Operational Notices:
Wholesale Loan Services
201 Third Street, 8th Floor
San Francisco, CA 94103
Fax No.: (415) 512-9048
Telephone No.: (415) 477-5227
Attention: Consultant
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with a copy to:
Winstead, Sechrest & Minick, P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Fax No.: (214) 745-5390
Telephone No.: (214) 745-5265
Attention: T. Randall Matthews
ISSUING BANK:
WELLS FARGO BANK TEXAS, NATIONAL
ASSOCIATION
By:
--------------------------------------
Larry Clayton
Vice President
Address for Notices:
Loan Adjustment Group MAC S4101-072
100 West Washington, 7th Floor
Phoenix, AZ 85003
Fax No.: (602) 378-1148
Telephone No.: (602) 378-7633
Attention: Larry Clayton
LENDERS:
WELLS FARGO BANK TEXAS, NATIONAL
ASSOCIATION
By:
--------------------------------------
Larry Clayton
Vice President
Address for Notices and Applicable Lending
Office:
Loan Adjustment Group MAC S4101-072
100 West Washington, 7th Floor
Phoenix, AZ 85003
Fax No.: (602) 378-1148
Telephone No.: (602) 378-7633
Attention: Larry Clayton
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BANK ONE, TEXAS, NATIONAL ASSOCIATION
By:
--------------------------------------
Carl F. Shafer
Vice President
Address for Notices and Applicable Lending
Office:
P.O. Box 655415
Dallas, TX 75265-5414
Fax No.: (214) 290-2740
Telephone No.: (214) 290-7490
Attn: Carl F. Shafer
and
1717 Main Street, 4th Floor
Dallas, TX 75201
Fax No.: (214) 290-2740
Telephone No.: (214) 290-7490
Attn: Carl F. Shafer
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GUARANTY FEDERAL BANK, F.S.B.
By:
--------------------------------------
Chris Harkrider
Vice President
Address for Notices and Applicable Lending
Office:
301 Congress Avenue, Suite 1500
Austin, TX 78701
Fax No.: (512) 320-1041
Telephone No.: (512) 320-1205
Attn: Chris Harkrider
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COMERICA BANK-TEXAS
By:
---------------------------------------
Joe T. Gaydos
Vice President
Address for Notices and Applicable Lending
Office:
1508 West Mockingbird Lane
Dallas, TX 75235
Fax No.: (214) 589-4724
Telephone No.: (214) 589-4707
Attn: Joe T. Gaydos
Mail Code 6510
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CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By:
--------------------------------------
Bruce A. Shilcutt
Title:
--------------------------------
Address for Notices and Applicable Lending
Office:
P.O. Box 2558
Houston, TX 77252-8074
Fax No.: (713) 216-2092
Telephone No.: (713) 216-5162
Attn: Bruce A. Shilcutt
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Guarantors hereby consent and agree to this Agreement and agree that
each Guaranty shall remain in full force and effect and shall continue to (i)
guarantee the Guaranteed Indebtedness (as defined in such Guaranty), and (ii)
be the legal, valid and binding obligation of Guarantors and enforceable
against Guarantors and collateral in accordance with their respective terms. In
addition, Guarantors hereby agree that each Subsidiary Security Agreement, each
Subsidiary Pledge Agreement, each Contribution and Indemnification Agreement
and each Real Property Security Document shall remain in full force and effect
and shall continue to (i) secure the Obligations (as defined in the Loan
Documents other than the Real Property Security Documents) and Debt (as defined
in the Real Property Security Documents), and (ii) be the legal, valid and
binding obligation of Guarantors and enforceable against Guarantors and
collateral in accordance with their respective terms.
GUARANTORS:
EZPAWN ALABAMA, INC.
EZPAWN ARKANSAS, INC.
EZPAWN COLORADO, INC.
EZPAWN FLORIDA, INC.
EZPAWN GEORGIA, INC.
EZPAWN HOLDINGS, INC.
EZPAWN INDIANA, INC.
EZPAWN LOUISIANA, INC.
EZPAWN NEVADA, INC.
EZPAWN NORTH CAROLINA, INC.
EZPAWN OKLAHOMA, INC.
EZPAWN TENNESSEE, INC.
TEXAS EZPAWN MANAGEMENT, INC.
EZ CAR SALES, INC.
EZPAWN CONSTRUCTION, INC.
EZPAWN KANSAS, INC.
EZPAWN KENTUCKY, INC.
EZPAWN MISSOURI, INC.
EZPAWN SOUTH CAROLINA, INC.
EZCORP INTERNATIONAL, INC.
EZ MONEY NORTH CAROLINA, INC.
By:
------------------------------
Daniel N. Tonissen
Senior Vice President
TEXAS EZPAWN L.P.
By: Texas EZPAWN Management, Inc.,
its sole general partner
By:
---------------------------
Daniel N. Tonissen
Senior Vice President
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT SECTION
- ------- ---------------------- -------
A-1 Form of Master Credit Note 1.1, 2.4, 6.1(f)
A-2 Form of Swing Note 1.1, 2.9, 6.1(f)
B-1 Advance Request Form 1.1, 2.7, 6.2(a)
B-2 Letter of Credit Request Form 1.1, 3.2, 6.2(a)
C Form of Guaranty 1.1, 6.1(g)
D Form of Assignment and Acceptance 1.1, 13.8
E Contribution and Indemnification Agreement 1.1, 6.1(h)
F Form of Borrowing Base Report 8.1(g)
INDEX TO SCHEDULES
SCHEDULE DESCRIPTION OF SCHEDULE SECTION
- -------- ----------------------- -------
1.1(a) Commitments 1.1
1.1(b) Existing LCs 1.1
1.1(c) Pay-Day Advance Loan Documents 1.1
7.14 List of Subsidiaries 7.14
9.1 Existing Debt 7.9, 9.1
9.2 Existing Liens 9.2(a)
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