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EXHIBIT 4.13
First Amendment to Credit Agreement dated as of March 31, 2001
among Elcor Corporation, Bank One, N.A., as Documentation Agent,
First Union National Bank, as Syndication Agent,
and Bank of America, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer.
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FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment"),
dated as of March 31, 2001, is entered into among ELCOR CORPORATION a Delaware
corporation (the "Borrower"), the lenders listed on the signature pages hereof
(the "Lenders"), BANK ONE, N.A., as Documentation Agent, FIRST UNION NATIONAL
BANK, as Syndication Agent, and BANK OF AMERICA, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer.
BACKGROUND
A. The Borrower, the Lenders, the Documentation Agent, the Syndication
Agent, the Administrative Agent, the Swing Line lender and the L/C Issuer are
parties to that certain Credit Agreement, dated as of November 30, 2000 (the
"Credit Agreement"). The terms defined in the Credit Agreement and not otherwise
defined herein shall be used herein as defined in the Credit Agreement.
B. The Borrower has requested certain amendment to the Credit
Agreement.
C. The Lenders, the Documentation Agent, the Syndication Agent, the
Administrative Agent, the Swing Line Lender and the L/C Issuer hereby agree to
amend the Credit Agreement, subject to the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Borrower, the
Lenders and the Administrative Agent covenant and agree as follows:
1. AMENDMENTS.
(a) The definition of "Applicable Rate" set forth in Section 1.01 of
the Credit Agreement is hereby amended to read as follows:
"Applicable Rate" means the following percentages per annum:
PRICING EURODOLLAR RATE
LEVEL LEVERAGE RATIO COMMITMENT FEE LETTERS OF CREDIT BASE RATE
------- ---------------- ---------------- ------------------- -----------
VII Greater than or equal to 0.500 2.500 0.625
3.50 to 1
VI Greater than or equal to 0.375 2.125 0.500
3.00 to 1 but less than
3.50 to 1
V Greater than or equal to 0.350 1.625 0.125
2.50 to 1 but less than
3.00 to 1
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PRICING EURODOLLAR RATE
LEVEL LEVERAGE RATIO COMMITMENT FEE LETTERS OF CREDIT BASE RATE
------- ---------------- ---------------- ------------------- -----------
IV Greater than or equal to 0.250 1.125 0.000
2.00 to 1 but less than
2.50 to 1
III Greater than or equal to 0.225 0.875 0.000
1.50 to 1 but less than
2.00 to 1
II Greater than or equal to 0.200 0.750 0.000
1.00 to 1 but less than
1.50 to 1
I Less than 1.00 to 1 0.150 0.625 0.000
The Applicable Rate shall be adjusted on each Adjustment Date
as tested by using the Leverage Ratio set forth on the Compliance
Certificate on each Adjustment Date. If the financial statements
required pursuant to Section 6.01 and the related Compliance
Certificate required pursuant to Section 6.02(b) are not received by
the Administrative Agent by the date required, the Applicable Rate
shall be determined using Pricing Level VII until such time as such
financial statements and Compliance Certificate are received.
Notwithstanding the foregoing, the Applicable Rate in effect from and
after April 1, 2001 through the date in which another Pricing Level
would otherwise be in effect based on the quarterly financial
statements of the Borrower most recently received after April 1, 2001
shall be Level VII.
(b) Section 1.01 of the Credit Agreement is hereby amended by
adding the defined term "Fixed Charge Coverage Ratio" thereto to read as
follows:
"Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (a) the remainder of (i) Consolidated
EBITDA for the period of four consecutive fiscal quarters ending on
such date, minus (ii) Cash Taxes for the period of four consecutive
fiscal quarters ending on such date, minus (iii) the lesser of (A)
depreciation and amortization expense of the Borrower and its
Subsidiaries deducted in determining Consolidated Net Income for the
period of four consecutive fiscal quarters ending on such date and (B)
capital expenditures of the Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters ending on such date to (b)
the sum of (i) Consolidated Interest Charges for the period of four
consecutive fiscal quarters ending on such date, plus (ii) principal
payments of Indebtedness of the Borrower and its Subsidiaries required
to be paid during the period of four consecutive fiscal quarters ending
on such date. For purposes of calculating the Fixed Charge Coverage
Ratio (i) for periods through and including March 31, 2001, capital
expenditures of the Borrower and its Subsidiaries for such periods
shall be deemed to be equal to depreciation and amortization of the
Borrower and its Subsidiaries for such periods and (ii) for each period
from and including April 1, 2001 and thereafter, capital expenditures
of the Borrower and its Subsidiaries shall not include capitalized
interest of the Borrower and its Subsidiaries for such period.
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(c) The definition of "Loan Documents" set forth in Section 1.01 of the
Credit Agreement is hereby amended to read as follows:
"Loan Documents" means this Agreement, the Notes, each Fee
Letter, any Swap Contract entered into with any Lender or any Affiliate
of any Lender, each Guaranty, each Request for Credit Extension, each
Compliance Certificate, each Collateral Document, and any other
agreement executed, delivered or performable by any Loan Party in
connection herewith or as security for the Obligations.
(d) Section 1.01 of the Credit Agreement is hereby amended by adding
the following defined terms thereto in proper alphabetical order:
"Cash Taxes" means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the cash portion of taxes, based
on or measured by income, used or included in the determination of
Consolidated Net Income for such period.
"Collateral" means all accounts and inventory of the Borrower
and its Subsidiaries other than Chromium Corporation.
"Collateral Document" means the Security Agreement and any
document related thereto.
"Collateral Release Event" means the receipt by the
Administrative Agent of two consecutive Compliance Certificates
delivered pursuant to Section 6.02(b) certifying that the Leverage
Ratio for the periods covered by each such Compliance Certificate is
less than 3.00 to 1.
"Collateral Trigger Event" means, prior to the Collateral
Release Event, the occurrence of any of the following events: (a)
Leverage Ratio is greater than 3.75 to 1 at June 30, 2001; (b) Leverage
Ratio is greater than 3.50 to 1 at September 30, 2001; (c) Leverage
Ratio is greater than 3.25 to 1 at December 31, 2001; (d) Leverage
Ratio is greater than 3.25 to 1 at March 31, 2002; or (e) an Event of
Default shall have occurred and be continuing.
"Security Agreement" means the Security Agreement executed by
the Loan Parties (other than Chromium Corporation) covering the
Collateral, substantially in the form of Exhibit H.
(e) The definition of "Interest Coverage Ratio" set forth in Section
1.01 of the Credit Agreement is hereby deleted.
(f) Section 7.05 of the Credit Agreement is hereby amended to read as
follows:
7.05 RESTRICTED PAYMENTS. Declare or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent
or otherwise) to do so; provided that, after giving effect to any
proposed Restricted Payment, no Default or Event of
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Default shall have occurred or be continuing, the Borrower may make
Restricted Payments during the term of this Agreement not to exceed the
sum of (i) $15,000,000 plus (or minus in the case of a cumulative
deficit), (ii) 35% of cumulative Consolidated Net Income (100% in the
case of a deficit) for the period commencing July 1, 2000 and ending on
the date such proposed Restricted Payment is to be made, plus (iii)
without duplication, the amount of cash received by the Borrower as a
result of the sale or disposition of Capital Stock of the Borrower
acquired in a Treasury Stock Purchase; provided, further, however,
notwithstanding anything above to the contrary, neither the Borrower
nor any Subsidiary shall make or incur any obligation (contingent or
otherwise) to make a Treasury Stock Purchase (other than Treasury Stock
Purchases to fund ESOP contributions of the Borrower on behalf of
officers and employees of the Borrower and its Subsidiaries not to
exceed 2-1/2% of aggregate compensation expense of such officers and
employees) unless immediately prior to and after giving effect to any
such proposed Treasury Stock Purchase the Leverage Ratio is less than
3.00 to 1.
(g) Section 7.12(b) of the Credit Agreement is hereby amended to read
as follows:
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio to be less than (a) 1.25 to 1 as of the end of any
fiscal quarter occurring during the period from and including March 31,
2001 through and including September 30, 2001, (b) 1.50 to 1 at
December 31, 2001 or March 31, 2002, or (c) 1.75 to 1 at the end of any
fiscal quarter thereafter.
(h) Section 7.12(c) of the Credit Agreement is hereby amended to read
as follows:
(c) Capitalization Ratio. Permit the Capitalization Ratio to
be greater than (a) 0.45 to 1 at the end of any fiscal quarter ending
June 30, September 30 or December 31 of any fiscal year or (b) 0.50 to
1 at the end of any fiscal quarter ending March 31 of any fiscal year.
(i) Section 8.01 of the Credit Agreement is hereby amended by (i)
deleting "." at the end of clause (k) thereof and inserting "; or" in lieu
thereof and (ii) adding a new clause (l) thereto to read as follows:
(l) Collateral Documents. Any Collateral Document shall for
any reason (other than as expressly provided or permitted pursuant to
the terms thereof) cease to create a valid and perfected first priority
Lien in any Collateral prior to a Collateral Release Event.
(j) Exhibit E to the Credit Agreement is hereby amended to be in the
form of Exhibit E to this First Amendment.
(k) Exhibit H is hereby added to the Credit Agreement in the form of
Exhibit H hereto.
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2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, Company represents and warrants that, as of the
date hereof and after giving effect to the waiver contemplated by the foregoing
Section 2:
(a) the representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct on and as of the
date hereof as made on and as of such date;
(b) no event has occurred and is continuing which constitutes a Default
or an Event of Default;
(c) the Borrower has full power and authority to execute and deliver
this First Amendment and the Collateral Documents, this First Amendment and the
Collateral Documents have been duly executed and delivered by the Borrower, and
this First Amendment and the Credit Agreement, as amended hereby, constitute,
and the Collateral Documents, upon the occurrence of a Collateral Trigger Event,
will constitute, the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, except as enforceability
may be limited by applicable debtor relief laws and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law) and except as rights to indemnity may be limited by federal or state
securities laws; and
(d) no authorization, approval, consent, or other action by, notice to,
or filing with, any governmental authority or other Person (including the
consent of the Board of Directors of the Borrower) is required for the
execution, delivery or performance by Company of this First Amendment and the
Collateral Documents.
3. CONDITIONS TO EFFECTIVENESS. This First Amendment shall be effective
upon satisfaction or completion of the following:
(a) The Administrative Agent shall have received counterparts of this
First Amendment executed by the Required Lenders;
(b) The Administrative Agent shall have received counterparts of this
First Amendment executed by the Borrower and acknowledged by each Guarantor;
(c) The Administrative Agent shall have received the Collateral
Documents executed by the parties thereto, to be held by the Administrative
Agent and not filed or recorded until and unless a Collateral Trigger Event
shall have occurred and be continuing;
(d) For the account of each Lender who executed and delivered to the
Administrative Agent a consent to this Amendment by April 6, 2001, the
Administrative Agent shall have received an amendment fee in an amount equal to
the product of (i) 0.15% and (b) such Lender's Commitment; and
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(e) The Administrative Agent shall have received, in form and substance
satisfactory to the Administrative Agent and its counsel, such other documents,
certificates and instruments as the Administrative Agent shall require.
4. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", or words of like import
shall mean and be a reference to the Credit Agreement, as affected and amended
hereby.
(b) The Credit Agreement, as amended by the amendments referred to
above, shall remain in full force and effect and is hereby ratified and
confirmed.
5. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
costs and expenses of the Administrative Agent in connection with the
preparation, reproduction, execution and delivery of this First Amendment and
the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent with respect thereto).
6. GUARANTOR'S ACKNOWLEDGMENT. By signing below, each Guarantor (a)
acknowledges, consents and agrees to the execution, delivery and performance by
the Borrower of this First Amendment, (b) acknowledges and agrees that its
obligations in respect of its Guaranty (i) are not released, diminished, waived,
modified, impaired or affected in any manner by this First Amendment or any of
the provisions contemplated herein, (c) ratifies and confirms its obligations
under its Guaranty, and (d) acknowledges and agrees that it has no claims or
offsets against, or defenses or counterclaims to, its Guaranty.
7. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which when taken together shall constitute but one and
the same instrument.
8. GOVERNING LAW; BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
applicable to agreements made and to be performed entirely within such state,
provided that each party shall retain all rights arising under federal law, and
shall be binding upon the parties hereto and their respective successors and
assigns.
9. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of this
First Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL
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AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this First Amendment is executed as of the date
first set forth above.
ELCOR CORPORATION
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
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BANK OF AMERICA, N.A., as Administrative
Agent
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
BANK OF AMERICA, N.A., as a Lender, L/C
Issuer and Swing Line Lender
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
BANK ONE, N.A., as a Lender and
Documentation Agent
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
FIRST UNION NATIONAL BANK, N.A., as a
Lender and Syndication Agent
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
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THE BANK OF TOKYO-MITSUBISHI, LTD., as a
Lender
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
THE FROST NATIONAL BANK, as a Lender
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
COMERICA BANK-TEXAS, as a Lender
By:
--------------------------------------
Name:
-------------------------------
Title:
-----------------------------
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ACKNOWLEDGED AND AGREED TO:
ELK CORPORATION OF DALLAS
ELK CORPORATION OF TEXAS
ELK CORPORATION OF aMERICA
ELK CORPORATION OF ARKANSAS
ELK CORPORATION OF ALABAMA
By:
-----------------------------
Name:
------------------------
Title:
------------------------
OEL, LTD.
CHROMIUM CORPORATION
By:
-----------------------------
Name:
------------------------
Title:
------------------------
NELPA, INC.
By:
-----------------------------
Name:
------------------------
Title:
------------------------
ELCOR SERVICE LIMITED PARTNERSHIP
By: ELCOR MANAGEMENT CORPORATION,
Its General Partner
By:
-----------------------------
Name:
------------------------
Title:
------------------------
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ELCOR MANAGEMENT CORPORATION
By:
-----------------------------
Name:
------------------------
Title:
------------------------
CYBERSHIELD OF GEORGIA, INC.
CYBERSHIELD, INC.
CYBERSHIELD INTERNATIONAL, INC.
CYBERSHIELD OF TEXAS, INC.
(formerly known as Chromium Corporation)
By:
-----------------------------
Name:
------------------------
Title:
------------------------
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EXHIBIT H
================================================================================
SECURITY AGREEMENT
Among
The Grantors Named Herein
as Grantors
and
BANK OF AMERICA, N.A.
as Administrative Agent
March 31, 2001
(but only effective as provided herein)
================================================================================
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TABLE OF CONTENTS
Section Page
------- ----
ARTICLE 1 Grant ..............................................................2
Section 1.1 Assignment and Grant of Security........................2
Section 1.2 Collateral Trigger Event................................2
Section 1.3 Description of Obligations..............................3
Section 1.4 Grantor Remains Liable..................................3
Section 1.5 Delivery of Instruments.................................4
ARTICLE 2 Representations and Warranties......................................4
Section 2.1 Representations and Warranties..........................4
ARTICLE 3 Covenants ..........................................................5
Section 3.1 Further Assurances......................................5
Section 3.2 Inventory...............................................6
Section 3.3 Insurance...............................................6
Section 3.4 Place of Perfection; Records; Collection of
Receivables, Chattel Paper and Instruments..............7
Section 3.5 Transfers and Other Liens...............................8
Section 3.6 The Administrative Agent Appointed Attorney-in-Fact.....8
ARTICLE 4 Rights and Powers of the Administrative Agent.......................9
Section 4.1 The Administrative Agent May Perform....................9
Section 4.2 The Administrative Agent's Duties.......................9
Section 4.3 Remedies................................................9
Section 4.4 INDEMNITY AND EXPENSES.................................10
ARTICLE 5 Miscellaneous......................................................11
Section 5.1 Cumulative Rights......................................11
Section 5.2 Modifications; Amendments; Etc.........................11
Section 5.3 Continuing Security Interest...........................11
Section 5.4 GOVERNING LAW; TERMS...................................12
Section 5.5 WAIVER OF JURY TRIAL...................................12
Section 5.6 The Administrative Agent's Right to Use Agents.........12
Section 5.7 Waivers of Rights Inhibiting Enforcement...............12
Section 5.8 Notices and Deliveries.................................12
Section 5.9 Successors and Assigns.................................12
Section 5.10 Loan Document..........................................12
Section 5.11 Consent to Jurisdiction; Waiver of Immunities..........12
Section 5.12 Severability...........................................13
Section 5.13 Obligations Not Affected...............................13
Section 5.14 Counterparts...........................................13
Section 5.15 ENTIRE AGREEMENT.......................................13
SIGNATURES.........................................................S-1
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SCHEDULES
Schedule 1 Inventory Locations
Schedule 2 Predecessor Names
Schedule 3 Restricted Accounts
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of March 31, 2001 (but
only effective as provided in Section 1.2 hereof), made among each of the
signatories party hereto (collectively, the "Grantors" and each a "Grantor"),
and Bank of America, N.A., a national banking association, in its capacity as
administrative agent (the "Administrative Agent") for itself and each lender a
party to the Credit Agreement defined below (the "Lenders") and each Affiliate
(as defined in the Credit Agreement) of each Lender that has entered into a Swap
Contract (as defined in the Credit Agreement) with any Grantor provided that
such Lender was a Lender at the time such Swap Contract was entered into (each
singularly, a "Secured Party", and collectively, the "Secured Parties").
BACKGROUND
(1) Elcor Corporation, a Delaware corporation (the "Borrower"), the
Administrative Agent, and the Lenders entered into that certain Credit
Agreement, dated as of November 30, 2000 (as amended, modified, supplemented or
restated from time to time, the "Credit Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings giving to them
in the Credit Agreement.
(2) It is the intention of the parties hereto that, subject to Section
1.2 hereof, this Agreement create a first priority security interest in certain
property of the Grantors securing the payment of the obligations set forth in
Section 1.3 hereof, subject only to Permitted Liens.
(3) It is a condition precedent to the obligation of the Lenders to
enter into a First Amendment to Credit Agreement that the Grantors shall have
executed and delivered this Agreement to the Administrative Agent.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Grantors hereby agree with the Administrative Agent
for its benefit and the ratable benefit of the other Secured Parties, as
hereinafter set forth.
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ARTICLE 1
Grant
Section 1.1 Assignment and Grant of Security. Subject to Section 1.2
hereof, each Grantor hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the other Secured Parties, a security interest in,
the entire right, title and interest of such Grantor, in and to the following
assets of such Grantor, whether now owned or hereafter acquired ("Collateral"):
(a) all inventory in all of its forms, wherever located, now or
hereafter existing, including, but not limited to, (i) all raw materials and
work in process therefor, finished goods thereof, and materials used or consumed
in the manufacture or production thereof, (ii) goods in which such Grantor has
an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which such Grantor has an interest or
right as consignee but only to the extent of such Grantor's interest therein),
and (iii) goods which are returned to or repossessed by such Grantor, and all
accessions thereto and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "Inventory");
(b) all accounts, contract rights, documents, instruments, chattel
paper, deposit accounts, tax refunds (including, without limitation, all federal
and state income tax refunds and benefits of net operating loss carry forwards)
and other obligations of any kind owing to such Grantor, now or hereafter
existing, arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights now or hereafter existing in and to all
security agreements, leases, and other contracts securing or otherwise relating
to any such accounts, contract rights, documents, instruments, deposit accounts,
or obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments, deposit accounts, and obligations being the
"Receivables");
(c) all right, title and interest of such Grantor in, to and under each
contract and other agreement relating to the lease, sale or other disposition of
Collateral;
(d) all rights, claims and benefits of such Grantor against any Person
arising out of, relating to or in connection with Collateral purchased by such
Grantor, including, without limitation, any such rights, claims or benefits
against any Person storing or transporting such Collateral; and
(e) all accessions to, substitutions for and replacements, proceeds and
products of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property of the types described in this
Section 1.1) and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Administrative Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral and (ii) cash.
Section 1.2 Collateral Trigger Event. Notwithstanding anything in this
Agreement or in any other Loan Document to the contrary, this Agreement and all
of the terms, covenants and
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provisions contained herein, including but not limited to the security interest
in the Collateral granted pursuant to Section 1.1 hereof, shall not be effective
for any reason until and unless a Collateral Trigger Event should occur. Upon
the occurrence of a Collateral Trigger Event, if any, this Agreement, and all of
the terms, covenants and provisions contained herein, including but not limited
to the security interest in the Collateral granted pursuant to Section 1.1
hereof, shall become immediately effective for all purposes without any action
by any Grantor, the Administrative Agent, any Lender or any other Persons. Prior
to the occurrence of a Collateral Trigger Event, the Administrative Agent shall
hold this Agreement and related Collateral Documents, including UCC financing
statements, and shall not release, record, transfer or assign such documents.
Should a Collateral Release Event occur, the Administrative Agent shall deliver
this Agreement and related Collateral Documents, including UCC financing
statements to the Borrower, and execute such other documents and take such other
action as the Borrower may reasonably request related thereto in order to
release the security interest granted pursuant to this Agreement.
Section 1.3 Description of Obligations. Subject to Section 1.2 hereof,
this Agreement creates an enforceable security interest in the Collateral,
subject only to Liens permitted pursuant to Section 7.01 of the Credit Agreement
("Permitted Liens"), securing the payment and performance of any and all
obligations now or hereafter existing of the Grantors under the Credit Agreement
and the other Loan Documents, including any extensions, modifications,
substitutions, amendments and renewals thereof, whether for principal, interest,
fees, premium, expenses, reimbursement obligations, indemnification or otherwise
(all such obligations of the Grantors being the "Obligations"). Without limiting
the generality of the foregoing, but subject to Section 1.2 hereof, this
Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by the Grantors to the Administrative Agent or any
other Secured Party under any Loan Document, but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding under any Debtor Relief Law involving any
Grantor (including all such amounts which would become due or would be secured
but for the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding of any Grantor under any Debtor
Relief Law). With respect to each Grantor other than the Borrower,
notwithstanding anything herein to the contrary, in any action or proceeding
involving any state corporate law, or any state or federal bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally after the Collateral Trigger Event if the Liens granted by any such
Grantor herein shall be held void, invalid or unenforceable, or subordinated to
the liens or claims of any other creditors, on account of the amount of the
Obligations secured by such Liens, then, the amount of the Obligations secured
by such Liens shall, without any action by such Grantor, the Administrative
Agent, any other Secured Party or any other Persons, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
Section 1.4 Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Grantors shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Administrative Agent of
any of the rights hereunder shall not release any Grantor from any of its duties
or obligations
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under the contracts and agreements included in the Collateral, and (c) neither
the Administrative Agent nor any other Secured Party shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Administrative Agent or any other
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
Section 1.5 Delivery of Instruments. After the occurrence of a
Collateral Trigger Event, all instruments representing or evidencing the
Collateral shall be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to the Administrative
Agent.
ARTICLE 2
Representations and Warranties
Section 2.1 Representations and Warranties. Each Grantor represents and
warrants to the Administrative Agent and each other Secured Party, with respect
to itself and the Collateral, as follows:
(a) All of the Inventory pledged by such Grantor hereunder are located
at the places specified on Schedule 1 hereto (as supplemented from time to time
by such Grantor by written notice to the Administrative Agent as permitted
herein) or in transit to a place specified on Schedule 1 hereto (as supplemented
from time to time by such Grantor by written notice to Administrative Agent as
permitted herein) or in transit for sale to a third-party purchaser that upon
such sale will become the obligor under a Receivable or promptly pay for such
Inventory. The chief place of business and chief executive office of such
Grantor and the office where such Grantor keeps all of its records concerning
the Receivables, are located at the place specified on Schedule 1 hereto.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by it free and clear of any Lien, except for Permitted Liens. No
effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction covering all or
any part of the Collateral is on file in any recording office, except such as
may have been filed (i) in favor of the Administrative Agent relating to this
Agreement and (ii) in respect of other Permitted Liens. Such Grantor (including
any corporate or partnership predecessor) has not existed or operated under any
name other than as stated on Schedule 2 since the date three years preceding the
date of this Agreement.
(c) Upon the occurrence of a Collateral Trigger Event, this Agreement
and the pledge of the Collateral pursuant hereto, together with the filing of
financing statements containing the description of the Collateral in the
jurisdictions set forth on Schedule 1 which will be made immediately following
the date of the Collateral Trigger Event, will create a valid and perfected
first priority security interest in the Collateral in which a security interest
can be perfected by
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filing a UCC financing statement (subject to Permitted Liens), securing the
payment of the Obligations; provided that additional actions may be required
with respect to the perfection of proceeds of the Collateral; and further
provided that the Administrative Agent retains physical possession of any
Collateral, the possession of which is required for perfection.
(d) No Necessary Authorization is required (i) for the pledge by such
Grantor of the Collateral pledged by it hereunder, for the grant by such Grantor
of the security interest granted hereby or for the execution, delivery or
performance of this Agreement by such Grantor, (ii) for the perfection or
maintenance of the pledge, assignment and security interest created hereby
(including the first priority nature (subject to Permitted Liens) of such
pledge, assignment and security interest as provided herein) (except for the
filing of financing and continuation statements under the UCC) or (iii) for the
exercise by the Administrative Agent of the rights provided for in this
Agreement (except as otherwise required by law, including pursuant to Section
4.3 of this Agreement).
(e) No dispute, right of setoff, counterclaim or defense exists with
respect to any material portion of the Collateral.
(f) All Inventory produced in the United States of America has been
produced in substantial compliance with the Fair Labor Standards Act, except to
the extent that such failure could not have a Material Adverse Effect.
ARTICLE 3
COVENANTS
Section 3.1 Further Assurances.
(a) Each Grantor agrees that from time to time after the Collateral
Trigger Event, at the expense of such Grantor, such Grantor will promptly
execute and deliver all further instruments and documents (including supplements
to all schedules), and take all further action, that may be necessary, and that
the Administrative Agent may reasonably request, in order to perfect and protect
any pledge, assignment or security interest granted or purported to be granted
hereby, and the priority thereof, or to enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, upon reasonable
written request by the Administrative Agent after the Collateral Trigger Event,
such Grantor will: (i) mark conspicuously each chattel paper or instrument with
the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN
PURSUANT TO A SECURITY AGREEMENT DATED AS OF MARCH 31, 2001 (AS
THE SAME HAS BEEN AND MAY HEREAFTER BE AMENDED, MODIFIED OR
RESTATED) MADE BY GRANTOR IN FAVOR OF BANK OF AMERICA, N.A., AS
ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE SECURED PARTIES NAMED
THEREIN.
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or such other legend, in form and substance reasonably satisfactory to and as
specified by the Administrative Agent, indicating that such chattel paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by an instrument or be chattel
paper, deliver and pledge to the Administrative Agent hereunder each such
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Administrative Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary, or as the Administrative Agent may
reasonably request, in order to perfect and preserve the pledge, assignment and
security interest granted or purported to be granted hereby.
(b) In addition to such other information as shall be specifically
provided for herein, after the Collateral Trigger Event, the Grantors will
furnish to the Administrative Agent from time to time statements and schedules
further identifying and describing the Collateral and such other lists,
documents, reports, and product, service and sales documents in connection with
the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail. In connection with its enforcement of the security interest,
the Administrative Agent may use such information or transfer it to any Assignee
permitted under the Credit Agreement for such Assignee's use.
(c) Each Grantor hereby authorizes the Administrative Agent to file,
after the Collateral Trigger Event, one or more continuation statements and
during the continuance of an Event of Default, financing statements, relating to
all or any part of the Collateral without the signature of such Grantor where
permitted by Applicable Law. A photocopy or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by Applicable Law.
Section 3.2 Inventory. No Grantor shall keep the Inventory pledged by
it hereunder (other than Inventory sold in the ordinary course of business, and
(ii) Inventory in transit in the ordinary course of business) after the
Collateral Trigger Event in any location other than the places specified in
Schedule 1 unless no later than 30 days prior to removal from any such location
such Grantor has delivered to the Administrative Agent a financing statement for
such Inventory kept by such Grantor at such other location or such other
documentation in the reasonable opinion of the Administrative Agent which is
necessary to properly perfect or maintain the perfection of the security
interest granted herein in such Collateral.
Section 3.3 Insurance. Each Grantor shall, at its own expense, maintain
insurance with respect to the Collateral in accordance with the terms set forth
in Section 5.10 of the Credit Agreement. Each Grantor hereby grants the
Administrative Agent a security interest, to be effective upon the occurrence of
a Collateral Trigger Event, in any refunds of unearned premiums in connection
with any cancellation, adjustment or termination of any policy of insurance
required by the Administrative Agent and in all proceeds of such insurance and
hereby appoints the Administrative Agent its attorney-in-fact (exercisable from
and after the occurrence of an Event of Default which is continuing) to endorse
any check or draft that may be payable to such Grantor in order to collect such
refunds or proceeds. After the occurrence of a Collateral Trigger Event,
proceeds of insurance shall be applied as follows: first, to reimburse the
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Administrative Agent for all costs and out-of-pocket expenses, if any, including
reasonable attorneys' fees, incurred in connection with the collection of such
proceeds; second, if an Event of Default has not occurred and is continuing or
the amount of proceeds in respect of any one loss or damage does not exceed
$200,000, the proceeds shall be used by the Grantor; and third, if an Event of
Default has occurred and is continuing, the proceeds shall, at the
Administrative Agent's reasonable direction, be used to repair or replace the
Collateral or applied to the Obligations as provided in the Credit Agreement.
Section 3.4 Place of Perfection; Records; Collection of Receivables,
Chattel Paper and Instruments.
(a) After the occurrence of a Collateral Trigger Event, each Grantor
shall keep its chief place of business and chief executive office and the office
where it keeps its records concerning the Receivables, and the originals of all
chattel paper and instruments, at the location therefor specified on Schedule 1,
in each case which may be changed upon written notice to the Administrative
Agent at least 30 days prior to such change. Each Grantor will hold and preserve
such records and chattel paper and instruments and will permit representatives
of the Administrative Agent at any time during normal business hours and after
reasonable notice to inspect and make abstracts from and copies of such records
and chattel paper and Instruments.
(b) Except as otherwise provided in this Section 3.4(b), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Receivables, chattel paper and instruments. In connection
with such collections after the occurrence of a Collateral Trigger Event, such
Grantor may take (and, during the continuance of an Event of Default at the
Administrative Agent's direction, shall take) such action as such Grantor or,
during the continuance of an Event of Default, the Administrative Agent, may
deem necessary to enforce collection of the Receivables, chattel paper and
instruments; provided, however, that the Administrative Agent shall have the
right (during the continuance of an Event of Default) to notify the account
debtors or obligors under any Receivables, chattel paper and instruments of the
assignment of such Receivables, chattel paper and instruments to the
Administrative Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Administrative Agent and, upon such notification at the expense of such
Grantor, to enforce collection of any such Receivables, chattel paper and
instruments, and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done or as
the Administrative Agent deems necessary. After the occurrence of a Collateral
Trigger Event and during the continuance of an Event of Default, all amounts and
proceeds (including Instruments) received by such Grantor in respect of the
Receivables, chattel paper and instruments shall be received in trust for the
benefit of the Administrative Agent hereunder, shall be segregated from other
funds of such Grantor and, after receipt of written notice from the
Administrative Agent, shall be forthwith paid over to the Administrative Agent
in the same form as so received (with any necessary endorsement) to be applied
as provided in the Credit Agreement. After the occurrence of a Collateral
Trigger Event and during the continuation of an Event of Default, such Grantor
shall not adjust, settle or compromise the amount or payment of any Receivable,
chattel paper or instrument, release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon, in each case, other
than those made in
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the ordinary course of business or otherwise permitted under the Credit
Agreement. To the extent that the Administrative Agent has so notified any
account debtor or obligor under any Receivables, chattel paper or instruments a
Collateral Release Event has occurred, the Administrative Agent shall promptly
notify such account holder or obligor of such fact.
Section 3.5 Transfers and Other Liens. No Grantor shall (a) sell,
assign (by operation of Applicable Law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except as permitted
under the Credit Agreement, or (b) create or permit to exist any Lien upon any
of the Collateral, except Permitted Liens.
Section 3.6 The Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact (exercisable only after the occurrence of a Collateral Trigger
Event and during the continuance of an Event of Default), with full authority in
the place and stead of such Grantor and in the name of such Grantor or otherwise
to take any action and to execute any instrument (in accordance with this
Agreement, including without limitation, Section 4.2 hereof) which the
Administrative Agent may deem reasonably necessary to accomplish the purposes of
this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by such
Grantor in accordance with Section 3.3,
(b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquaintance and receipts for moneys due or to become due under or in
connection with the Collateral,
(c) to receive, indorse, and collect any drafts or other Instruments,
documents and Chattel Paper in connection with clauses (a) or (b) above, and
(d) to file any claims or take any action or institute any proceedings
which the Administrative Agent may deem reasonably necessary for the collection
of any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Collateral or the rights of the Administrative Agent with
respect to any of the Collateral. EACH GRANTOR HEREBY IRREVOCABLY APPOINTS THE
ADMINISTRATIVE AGENT SUCH GRANTOR'S ATTORNEY-IN-FACT (EXERCISABLE ONLY AFTER THE
OCCURRENCE OF A COLLATERAL TRIGGER EVENT AND DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT) TO PERFORM ALL OBLIGATIONS OF SUCH GRANTOR UNDER THIS AGREEMENT. THE
POWER OF ATTORNEY HEREIN GRANTED ARE COUPLED WITH AN INTEREST AND ARE
IRREVOCABLE PRIOR TO THE EARLIER OF (i) THE COLLATERAL RELEASE EVENT OR (ii) THE
PAYMENT OF ALL OBLIGATIONS IN FULL AFTER THE MATURITY DATE.
This appointment as attorney-in-fact and this proxy shall terminate
upon the termination of this Agreement pursuant to Section 5.3 hereof.
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ARTICLE 4
Rights and Powers of the Administrative Agent
Section 4.1 The Administrative Agent May Perform. If any Grantor fails
to perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the reasonable documented
out-of-pocket expenses of the Administrative Agent incurred in connection
therewith shall be payable by such Grantor under Section 4.4.
Section 4.2 The Administrative Agent's Duties. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the duty to exercise reasonable care in respect of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Administrative Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Administrative Agent has or is deemed to have knowledge of such matters, or
as to the taking of any necessary steps to preserve rights against prior
parties. The Administrative Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the
Administrative Agent accords its own property. Except as provided in this
Section 4.2 and except to the extent of any gross negligence or willful
misconduct of the Administrative Agent or the other Secured Parties, the
Administrative Agent shall not have any duty or liability to protect or preserve
any Collateral or to preserve rights pertaining thereto. Nothing contained in
this Agreement shall be construed as requiring or obligating the Administrative
Agent, and the Administrative Agent shall not be required or obligated, to (i)
present or file any claim or notice or take any action, with respect to any
Collateral or in connection therewith or (ii) notify any Grantor of any decline
in the value of any Collateral.
Section 4.3 Remedies. If after a Collateral Trigger Event any Event of
Default shall have occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC at that time (to the extent not prohibited by Applicable Law whether or
not the UCC applies to the affected Collateral), and also may (i) require any
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of the Administrative Agent forthwith, assemble all or part of the
Collateral which is capable of being assembled as directed by the Administrative
Agent and make it available to the Administrative Agent at a place to be
designated by the Administrative Agent which is reasonably convenient to both
parties or (ii) without notice, except as specified below, sell the Collateral
or any portion thereof in one or more parcels at public or private sale, at any
of the Administrative Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Agent may
reasonably deem commercially reasonable, and otherwise in compliance with the
UCC, including, but not limited to, Section 9.504 thereof.
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Each Grantor agrees that, to the extent notice of sale shall be required by
Applicable Law, ten days' written notice to such Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification, provided that ten days' written notice does
not violate any Applicable Law. The Administrative Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
To the extent not prohibited by Applicable law, the Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent upon any
sale of, collection of, or other realization upon, all or any part of the
Collateral shall be applied in accordance with the Credit Agreement.
(c) All payments received by such Grantor under or in connection with
any Collateral shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of such Grantor and, after receipt
of written notice from the Administrative Agent, shall be forthwith paid over to
the Administrative Agent in the same form as so received (with any necessary
endorsement).
(d)
(i) Each Grantor will maintain the accounts listed as restricted
and blocked accounts on Schedule 3 (the "Restricted Accounts") with
the Administrative Agent, in the name of such Grantor, but such
Restricted Accounts shall be under the sole control and dominion of
the Administrative Agent.
(ii) It shall be a term and condition of each Restricted Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to such Restricted Account (other than the Credit
Agreement), that no amount (including interest and other proceeds of
the cash and other property in the Restricted Account) shall be paid
or released to or for the account of, or withdrawn by or for the
account of, such Grantor or any other Person from such Restricted
Account.
(iii) At the request of the Administrative Agent, such Grantor
will promptly instruct each account debtor in respect of Receivables
arising from any sale of Inventory in the ordinary course of business
to make payment to the Restricted Accounts.
Each Grantor understands and acknowledges that the Administrative Agent may and
permits the Administrative Agent to remove amounts from the Restricted Accounts
from time to time and use the amounts to reduce the Obligations in accordance
with the terms of the Credit Agreement.
Section 4.4 INDEMNITY AND EXPENSES. THE GRANTORS JOINTLY AND SEVERALLY
AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH OTHER SECURED PARTY FROM
AND AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OR RESULTING FROM THIS AGREEMENT (INCLUDING, WITHOUT
LIMITATION, ENFORCEMENT OF THIS AGREEMENT), TO THE EXTENT THE BORROWER IS
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REQUIRED TO DO SO UNDER SECTION 10.05 OF THE CREDIT AGREEMENT. THE FOREGOING
INDEMNITY SHALL APPLY TO THE NEGLIGENCE OF THE INDEMNITEE (BUT NOT THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF INDEMNITEE).
ARTICLE 5
Miscellaneous
Section 5.1 Cumulative Rights. All rights of the Administrative Agent
and each other Secured Party under the Loan Documents are cumulative of each
other and of every other right which the Administrative Agent and each other
Secured Party may otherwise have at law or in equity or under any other contract
or other writing for the enforcement of the security interest herein or the
collection of the Obligations. The exercise of one or more rights shall not
prejudice or impair the concurrent or subsequent exercise of other rights.
Section 5.2 Modifications; Amendments; Etc. No amendment or waiver of
any provision of this Agreement, and no consent to any departure by any Grantor
here from, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent (and such Grantor, in case of amendment),
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 5.3 Continuing Security Interest. From and after the Collateral
Trigger Event, this Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the earlier of
(i) the Collateral Release Event or (ii) the payment of all Obligations in full
after the Maturity Date (except to the extent that the release of any Collateral
is otherwise permitted pursuant to the terms of the Loan Documents), (b) be
binding upon each Grantor, its successors and assigns, and (c) inure to the
benefit of, and be enforceable by, the Administrative Agent and its successors,
transferee and assigns. Upon any such termination, the Administrative Agent
will, at such Grantor's expense, execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
Each Grantor agrees that to the extent that the Administrative Agent or any
other Secured Party receives any payment or benefit and such payment or benefit,
or any part thereof, is subsequently invalidated, declared to be fraudulent or
preferential, set aside or is required to be repaid to a trustee, receiver, or
any other party under any Debtor Relief Law, then to the extent of such payment
or benefit, the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment or benefit had
not been made and, further, any such repayment by the Administrative Agent or
any other Secured Party, to the extent that the Administrative Agent or any
other Secured Party did not directly receive a corresponding cash payment, shall
be added to and be additional Obligations payable upon demand by the
Administrative Agent or any other Secured Party and secured hereby, and, if the
lien and security interest hereof shall have been released, such lien and
security interest shall be reinstated with the same effect and priority as on
the date of execution hereof all as if no release of such lien or security
interest had ever occurred, to the extent not prohibited by Applicable Law.
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Section 5.4 GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW) AND THE APPLICABLE FEDERAL LAWS OF THE UNITED
STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
Section 5.5 WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT, THE SECURED
PARTIES AND EACH GRANTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.6 The Administrative Agent's Right to Use Agents. The
Administrative Agent may exercise its rights under this Agreement through an
agent or other designee (so long as the Administrative Agent provides each
Grantor with the name of such agent or other designee and such Person's scope of
authority).
Section 5.7 Waivers of Rights Inhibiting Enforcement. To the extent not
prohibited by Applicable Law, each Grantor waives all rights of redemption,
appraisal, valuation or to the marshaling of assets.
Section 5.8 Notices and Deliveries.
(a) Manner of Delivery. All notices and other communications provided
for hereunder shall be effectuated in the manner provided for in Section 10.02
of the Credit Agreement, and to the extent that a notice or communication is
sent to a Grantor other than the Borrower, said notice shall be addressed to
such Grantor, in care of the Borrower.
Section 5.9 Successors and Assigns. All of the provisions of this
Agreement shall be binding and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; provided, however, no Grantor
may assign its liabilities and obligations under this Agreement without the
prior written consent of all Secured Parties.
Section 5.10 Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
Section 5.11 Consent to Jurisdiction; Waiver of Immunities.
(a) Each Grantor and the Administrative Agent each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal or State
courts sitting in Dallas, Texas in any action or proceeding arising out of or
relating to this Agreement, and each Grantor
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and the Administrative Agent each hereby irrevocably waives any objection it may
now or hereafter have as to the venue of any such suit, action or proceeding
brought in such court or that such court is an inconvenient forum.
(b) Nothing in this section shall limit the right of any Grantor, the
Administrative Agent or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 5.12 Severability. Any provision of this Agreement which is for
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability, without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 5.13 Obligations Not Affected. To the fullest extent permitted
by Applicable Law, the obligations of each Grantor under this Agreement shall
remain in full force and effect without regard to, and shall not be impaired or
affected by:
(a) any amendment, modification, addition or supplement to any other
Loan Document, any instrument delivered in connection therewith, or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Administrative Agent
or any other Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty, any collateral or the Collateral or
any part thereof provided pursuant to, this Agreement or any other Loan
Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement or any other Loan Document or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Grantor, any other
Person, whether or not such Grantor shall have notice or knowledge of any of the
foregoing.
Section 5.14 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 5.15 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
GRANTORS:
ELCOR CORPORATION
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
ELK CORPORATION OF DALLAS
ELK CORPORATION OF TEXAS
ELK CORPORATION OF AMERICA
ELK CORPORATION OF ARKANSAS
ELK CORPORATION OF ALABAMA
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
OEL, LTD.
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
32
NELPA, INC..
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
ELCOR SERVICE LIMITED PARTNERSHIP
By: ELCOR MANAGEMENT CORPORATION,
its General Partner
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
ELCOR MANAGEMENT CORPORATION
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
33
CYBERSHIELD OF GEORGIA, INC.
CYBERSHIELD, INC.
CYBERSHIELD INTERNATIONAL, INC.
CYBERSHIELD OF TEXAS, INC.
(formerly known as Chromium Corporation)
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
34
Schedule 1
Inventory Locations
Chief Place of Business, Chief Executive Office and
Location of Books and Records
*To Be Provided by Grantors*
35
Schedule 2
Predecessor Names
*To Be Provided by Grantors*
36
Schedule 3
Restricted Accounts
*To Be Provided by Grantors upon Occurrence of Event of Default*
37
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date:_____________
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of
____________, 2000 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the "Agreement;" the terms defined
therein being used herein as therein defined), among Elcor Corporation (the
"Borrower"), the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.
The undersigned Responsible Officer hereby certifies as of the date
hereof that he/she is the of the Borrower, and that, as such, he/she is
authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:
[Use following for fiscal YEAR-END financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.
[Use following for fiscal QUARTER-END financial statements]
1. Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of the
Borrower ended as of the above date. Such financial statements fairly present
the financial condition, results of operations and cash flows of the Borrower
and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of
footnotes.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by the attached financial
statements.
3. A review of the activities of the Borrower during such fiscal period
has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Borrower performed and
observed all its Obligations under the Loan Documents, and
[SELECT ONE:]
Exhibit E
38
[TO THE BEST KNOWLEDGE OF THE UNDERSIGNED DURING SUCH FISCAL PERIOD,
THE BORROWER PERFORMED AND OBSERVED EACH COVENANT AND CONDITION OF THE LOAN
DOCUMENTS APPLICABLE TO IT.]
- --OR--
[THE FOLLOWING COVENANTS OR CONDITIONS HAVE NOT BEEN PERFORMED OR
OBSERVED AND THE FOLLOWING IS A LIST OF EACH SUCH DEFAULT OR EVENT OF DEFAULT
AND ITS NATURE AND STATUS:]
4. The financial covenant analyses and information set forth on
Schedule 2 attached hereto are true and accurate on and as of the date of this
Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of , .
------------------------ ---------------
ELCOR CORPORATION
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Exhibit E
39
For the Quarter/Year ended ___________________("Statement Date")
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
I. LEVERAGE RATIO - FOR DETERMINATION OF APPLICABLE RATE
A. Consolidated EBITDA for four consecutive fiscal quarters
ending on above date ("Subject Period"):
1. Consolidated Adjusted Net Income for Subject Period: $
---------
2. Consolidated Interest Expense for Subject Period: $
---------
3. Provision for income taxes for Subject Period: $
---------
4. Depreciation expenses and Amortization expenses for
intangibles for Subject Period: $
---------
5. Trailing 4 fiscal quarters of Consolidated EBITDA of
assets acquired during Subject Period: $
---------
6. Trailing 4 fiscal quarters of Consolidated EBITDA of
assets disposed of during Subject Period: $
---------
7. Consolidated EBITDA (Lines I.A 1+2+3+4+5+6): $
---------
B. Consolidated Funded Indebtedness at Statement Date: $
---------
C. Leverage Ratio (Line I.A.7 / Line I.B.): $
---------
II. SECTION 7.05 - RESTRICTED PAYMENTS.
A. Base: $15,000,000
B. 35% of cumulative Consolidated Net Income (100% in case of a
deficit) commencing July 1, 2000: $
----------
C. Amounts received from sale or disposition of Capital Stock
acquired in a Treasury Stock Purchase: $
----------
D. Amount Available for Restricted Payments (Lines II.A.+ (or
minus if a deficit) II.B. + II.C.): $
----------
E. Restricted Payments made during term of Agreement: $
----------
F. Excess Available for Restricted Payments (Line II.D. - II.E.):$
----------
III. SECTION 7.12(a) - CONSOLIDATED NET WORTH.
A. Actual Consolidated Net Worth at Statement Date: $
---------
Exhibit E
40
B. 65% of Consolidated Net Income for each fiscal quarter ending
after June 30, 2000 (no reduction for losses): $
---------
C. 100% of increases in Shareholders' Equity after date of
Agreement from issuance and sale of capital stock (including
from conversion of debt securities, but excluding treasury
stock): $
---------
D. Minimum required Consolidated Net Worth (Lines III.B + III.C
plus ($135,000,000): $
---------
E. Excess (deficient) for covenant compliance (Line III.A -
III.D): $
---------
IV. SECTION 7.13(b) - FIXED CHARGE COVERAGE RATIO.
A. Consolidated EBITDA for four consecutive fiscal quarters
ending on above date ("Subject Period") (Line I.A.7 above): $
---------
B. Cash Taxes of Borrower and its Subsidiaries for Subject
Period: $
---------
C. Depreciation and amortization expense of the Borrower and its
Subsidiaries deducted in determining Consolidated Net Income
for Subject Period: $
---------
D. Capital expenditures of the Borrower and its Subsidiaries for
Subject Period (from and including 4/1/01 and thereafter does
not include capitalized interest of Borrower and its
Subsidiaries for such period): $
---------
E. Consolidated Interest Charges for Subject Period: $
---------
F. Principal payments of Indebtedness of the Borrower and its
Subsidiaries required to be paid during Subject Period: $
---------
G. Fixed Charge Coverage Ratio (Lines IV.A. - IV.B. - [lesser
of IV.C. or IV.D.]) / (Lines IV.E. + IV.F.): _____ to 1
Minimum required:
MINIMUM FIXED CHARGE
FISCAL QUARTERS ENDING COVERAGE RATIO
------------------------ --------------------
From and including 3/31/01 through and 1.25 to 1
including 9/30/01
12/31/01 or 3/31/02 1.50 to 1
each fiscal quarter thereafter 1.75 to 1
Exhibit E
41
V. SECTION 7.13(c) - CAPITALIZATION RATIO.
A. Consolidated Funded Indebtedness at Statement Date: $
--------
B. Capitalization: $
--------
1. Consolidated Funded Indebtedness at Statement Date: $
--------
2. Consolidated Net Worth (Line III.A. above): $
--------
3. Capitalization (Lines V.B.1+2): $
--------
C. Capitalization Ratio (Line V.A) / (Line V.B.3): _____ to 1
Maximum allowed:
MAXIMUM
CAPITALIZATION
FISCAL QUARTERS ENDING RATIO
------------------------ --------------
6/30, 9/30 or 12/31 of any fiscal year 0.45 to 1
3/31 of any fiscal year 0.50 to 1
Exhibit E