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EXHIBIT 10.1
SECOND
AMENDED AND RESTATED
FINANCING AGREEMENT
BY AND AMONG
ENCORE WIRE CORPORATION
AS BORROWER,
NATIONSBANK OF TEXAS, N.A.
AS AGENT,
AND
NATIONSBANK OF TEXAS, N.A.
AND
BANK OF AMERICA, TEXAS, N.A.
AS LENDERS
EFFECTIVE AS OF JUNE 9, 1997
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. REVOLVING CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Repayment and Line Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Mandatory Interim Principal Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Purpose and Use of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7 Borrowing Base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Unused Line Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.9 Reduction of Credit Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Continuing Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 Cross Collateralization; Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.1 Applicable Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.2 Election of LIBOR Rate Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1.3 Interest Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1.4 Payment of Consequential Loss Upon Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1.5 Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1.6 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV. PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Non-Receipt of Funds by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 Withholding Taxes. (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Withholding Tax Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Items to be Delivered by Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Loans Under Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Corporate Name; Trade Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Chief Executive Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Corporate Power and Authority; Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 No Conflicting Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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6.6 Share Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 Location of Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Receivables, Inventory Free and Clear. . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.13 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.15 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.16 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.17 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.18 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.19 Employee Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.20 Employee Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.22 Representations and Warranties Cumulative. . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Books and Records; Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3.1 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3.2 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Annual Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Interim Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.8 Borrowing Base Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.9 Aging Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.10 Budget Updates and Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 29
7.11 Notification of Contingent Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.12 Notification of Material Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.13 Notification Regarding Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.14 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.15 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.16 Compliance with Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.17 Fees, Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.18 Subordination Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.19 Change of Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.20 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.21 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.22 No Liens; Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.24 Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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7.25 Dissolution, Liquidation, Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.26 Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.27 Limitation on Contingent Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.28 Change in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.29 Change in Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.30 Dividends, Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.31 Redemptions and Acquisition of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.32 Bonuses, Consulting Fees to Shareholders and Directors. . . . . . . . . . . . . . . . . . 35
7.33 Loans to Officers, Directors, Shareholder and Others. . . . . . . . . . . . . . . . . . . 35
7.34 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.35 Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.36 Limitation on Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.37 Key Man Life Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.38 Covenants Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII. EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 Refusal of Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3 Enforcement Costs; Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 38
9.4 Waiver of Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.5 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.6 Performance by Agent and/or Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.7 Non-waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.8 Application of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Appointment, Powers and Immunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Rights of Agent as a Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.4 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.5 Independent Credit Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.6 Several Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.7 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.1 Effective Date; Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.3 Use of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.4 Lender's Records; Account Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.6 Non-applicability of Chapter 15 of Texas Credit Code . . . . . . . . . . . . . . . . . . . 43
11.7 Judgement Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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11.8 INTEREST LIMITATION 43
11.9 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.10 Continuing Rights of Agent and Lenders in respect of Obligations . . . . . . . . . . . . . 46
11.11 Fees, Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.12 Acceptance and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.13 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.14 Express Waivers in respect of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.15 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.16 Copies Valid as Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.17 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.18 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.19 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.20 EWC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.21 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.22 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.23 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.24 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.25 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.26 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.27 Prior Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.28 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.29 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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SECOND
AMENDED AND RESTATED
FINANCING AGREEMENT
This Second Amended and Restated Financing Agreement dated effective
June 9, 1997 is executed and entered into by and among ENCORE WIRE CORPORATION,
a corporation organized under the laws of the State of Delaware ("Borrower"),
NATIONSBANK OF TEXAS, N.A., a national banking association, and BANK OF
AMERICA, TEXAS, N.A., a national banking association, in their individual
capacities as "Lenders" (as such term is defined herein), and NATIONSBANK OF
TEXAS, N.A., a national banking association, as agent for itself and the other
Lenders (in such capacity, together with its successors in such capacity, the
"Agent"). Agent in its individual capacity as a lender and Borrower previously
executed and entered into (a) that certain Financing and Security Agreement
dated effective as of December 31, 1993 (the "12/31/93 Financing and Security
Agreement"), (b) that certain Amended and Restated Financing Agreement dated
effective June 15, 1994 (the "6/15/94 Financing Agreement"), and (c) seven
separate amendments to the 6/15/94 Financing Agreement (the "Amendments")
(collectively, the 12/31/93 Financing and Security Agreement, the 6/15/94
Financing Agreement and the Amendments are referred to as the "Prior Financing
Agreements"). Borrower, Agent and the Lenders have agreed to amend and restate
such Prior Financing Agreements according to the terms and provisions as set
forth hereinbelow. Therefore, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, together with the mutual benefits
provided herein, Borrower, Agent and the Lenders hereby agree that the Prior
Financing Agreements are hereby amended in their entirety and restated as
follows:
ARTICLE I. DEFINITIONS
The following definitions shall apply throughout this Agreement:
1.1 "Adjusted LIBOR Rate" shall have the meaning defined in
paragraph 3.1.7.
1.2 "Affiliate" includes any Person (i) that directly or
indirectly controls or is controlled by Borrower (including without limitation
all Subsidiaries), or is under common control with Borrower, or (ii) that
directly or indirectly owns or holds five percent (5%) or more of any class of
Voting Stock of Borrower or (iii) five percent (5%) or more of the Voting Stock
of which is directly or indirectly owned or held by Borrower or (iii) that is an
officer, director or shareholder of Borrower.
1.3 "Affiliate Subordination Agreement" means a subordination
agreement respecting officers, directors, shareholders or Affiliates of Borrower
as prescribed by paragraph 7.18.
1.4 "Agent" means as specified in the introductory paragraph of
this Agreement.
1.5 "Agreement" means this Financing Agreement and all exhibits
and addenda, and any extension, amendment or modification thereof.
1.6 "Applicable Margin" shall have the meaning prescribed in
paragraph 3.1.6.
1.7 "Assessment Rate" shall have the meaning defined in
paragraph 3.1.6.
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1.8 "Assignee" means as specified in paragraph 11.9(b).
1.9 "Assigning Lender" means as specified in paragraph
11.9(b).
1.10 "Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and its Assignee and accepted by Agent
pursuant to paragraph 11.9(e), in substantially the form of Exhibit 1.10
hereto.
1.11 "Availability" at any time means (i) the lesser of the
Borrowing Base or the Revolving Credit Limit, minus (ii) the aggregate principal
amount owing under the Facility minus (iii) the Letter of Credit Liabilities.
1.12 "Bank of America" means BANK OF AMERICA, TEXAS, N.A., a
national banking association, in its individual capacity as a Lender.
1.13 "Borrower" means ENCORE WIRE CORPORATION, a corporation
organized under the laws of the State of Delaware, whose chief executive office
is located at 1410 Millwood Road, P.O. Box 1149, McKinney, Texas 75069-0545.
1.14 "Borrowing Base" means the amount determined from time to
time pursuant to paragraph 7.8 which is equal to eighty-five percent (85%) of
the net amount of Eligible Accounts plus (ii) sixty-five percent (65%) of the
net amount of Eligible Inventory.
1.15 "Borrowing Base Report" means a Borrowing Base Report
prescribed by paragraph 7.8.
1.16 "Business Day" means any calendar day except Saturday,
Sunday and those legal public holidays specified in 5 U.S.C. Section 6103(a), as
may be amended from time to time.
1.17 "Capital Expenditures" shall have the meaning prescribed in
paragraph 7.21(b).
1.18 "Code" means the Uniform Commercial Code in effect in the
State of Texas.
1.19 "Contract Term" means the period beginning on the effective
date specified in the preamble of this Agreement and continuing through May 31,
2000.
1.20 "Commitment" means, as to any Lender, the obligation of such
Lender to make or continue Loans and incur or participate in Letter of Credit
Liabilities 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 the signature pages hereto under the heading "Commitment" or, if
such Lender is a party to an Assignment and Acceptance, the amount of the
"Commitment" set forth in the most recent Assignment and Acceptance of such
Lender, as the same may be reduced or terminated pursuant to paragraph 2.9 or
9.2, and "Commitments" means such obligations of all Lenders. As of the
execution of this Agreement, the aggregate principal amount of the Commitments
is $55,000,000.
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1.21 "Commitment Percentage" means, as to any Lender, the
percentage equivalent of a fraction, the numerator of which is the amount of
the outstanding Commitment of such Lender (or, if such Commitment has
terminated or expired, the outstanding principal amount of the Loans and Letter
of Credit Liabilities of such Lender) and the denominator of which is the
aggregate amount of the outstanding Commitments of all Lenders (or, if such
Commitments have terminated or expired, the aggregate outstanding principal
amount of the Loans and Letter of Credit Liabilities of all Lenders), as
adjusted from time to time in accordance with paragraph 11.9.
1.22 "Default" means an Event of Default or the occurrence
of an event or condition which with notice or lapse of time or both would
become an Event of Default.
1.23 "Dollars" and "$" means lawful money of the United States of
America.
1.24 "EBITDA" shall have the meaning prescribed in
paragraph 7.21(b).
1.25 "Effective Date" means the effective date specified
in the preamble of this Agreement.
1.26 "Eligible Accounts" means the net amount of the accounts of
Borrower which meet each of the following criteria: (a) payment terms are
within Borrower's ordinary course of business, and the account is aged less than
one hundred twenty (120) days from the date of invoice and arose in the ordinary
course of business from the bona fide sale of Inventory under an enforceable
agreement, and such Inventory has been fully delivered thereunder; (b) the title
of Borrower to the account is absolute and is not subject to any assignment,
claim, lien or security interest; (c) the full amount shown on the books of
Borrower and on the invoice evidencing the account, and on the Borrowing Base
Report delivered to Agent, is owing to Borrower, and no partial payment has been
made thereon, except as otherwise may be shown on such invoice and disclosed to
Agent; (d) the account is not subject to any dispute, claim of reduction,
counterclaim, set-off, recoupment or any claim for credits, allowances or
adjustments by the account debtor, except for customary discounts allowed for
prompt payment as may be noted on the invoice evidencing such account, or as has
been disclosed to and approved by Agent; (e) the account is not an account that
Agent in its sole discretion determines to be an unacceptable credit risk at the
time of such determination; (f) the account debtor has not rejected, returned or
refused to accept any Inventory relating to the transaction from which the
account arose; (g) the account does not arise out of a contract or purchase
order that, by its terms, forbids assignment, conditions assignment on consent
by the account debtor or otherwise purports to make an assignment thereof
conditional, void or unenforceable; (h) Borrower has not received any notice and
has no knowledge of the dissolution or termination of existence of any corporate
account debtor, or the insolvency, business failure or the filing of a petition
in bankruptcy by or against any account debtor. Notwithstanding the foregoing,
the total amount at any time includable in Eligible Accounts with respect to any
account debtor shall not exceed an amount equal to ten percent (10.0%) of the
aggregate amount of all of Borrower's accounts which otherwise meet all criteria
for being Eligible Accounts (including those of such account debtor). Eligible
Accounts shall not include any of the following: "contra accounts;" accounts
subject to credit memos or accounts in connection with "C.O.D." sales, "bill and
hold" sales, guaranteed sales, consignment sales or other special billing
arrangements; amounts, if any, excludable in respect of returned inventory;
amounts owing by any Affiliate; all amounts owing by any account debtor with
respect to which more than twenty five percent (25.0%) of its aggregate amount
of accounts owing to Borrower is aged one
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hundred twenty (120) or more days from the date of invoice; all amounts owing
by the United States or any state or local government (unless otherwise
expressly agreed by Agent); amounts owing by any account debtor whose principal
place of business is located outside the United States.
1.27 "Eligible Assignee" means (a) any Affiliate of a Lender or
(b) any commercial bank, savings and loan association, savings bank, finance
company, insurance company, pension fund, mutual fund or other financial
institution having combined capital and surplus of at least $100,000,000
(whether a corporation, partnership or other entity) acceptable to Agent;
provided however, so long as no Default exists, any such entity described in (b)
must also be approved by Borrower, which approval may not be unreasonably
withheld.
1.28 "Eligible Inventory" means copper raw material inventory and
finished goods inventory which is wire and cable inventory but unless otherwise
agreed by Agent, does not in any event include (a) Inventory which is subject to
any security interest, lien, encumbrance or claim by any Person, (b) Inventory
acquired by Borrower other than in the ordinary course of business, and (c)
Inventory which is damaged or obsolete or which otherwise is not in good
saleable condition. Eligible Inventory shall be valued at the lesser of its
cost or current market value, in a manner acceptable to Agent.
1.29 "Environmental Damages" means all costs, judgments, good
faith settlements, claims, damages, losses, penalties, fines, liabilities,
encumbrances, liens, costs, and expenses, of whatever kind or nature, contingent
or otherwise, matured or unmatured, foreseeable or unforeseeable, and any
attorneys' fees costs and expenses in connection therewith, which are incurred
at any time as a result of the handling of Hazardous Materials, or the existence
of conditions giving rise to a violation of Environmental Requirements resulting
from Borrower's activities, including without limitation (i) all costs incurred
in connection with the investigation or remediation of Hazardous Materials or
violations of Environmental Requirements which are necessary to comply with any
Environmental Requirements, including, fees incurred for the services of
attorneys, consultants, contractors, experts and laboratories, and all other
costs incurred in the preparation of any feasibility studies or reports or the
performance of any cleanup, remediation, removal, response, abatement,
containment, closure, restoration or monitoring work, (ii) damages for personal
injury, injury to property or natural resources occurring on or off of affected
real property, consequential damages, the cost of demolition and rebuilding of
any improvements on real property, and interest and penalties, and (iii)
liability to any third party or governmental agency to reimburse, indemnify or
provide contribution to such person or agency.
1.30 "Environmental Requirements" means all legislative,
regulatory, administrative and common law requirements relating to the
protection of human health and safety or the environment, including, without
limitation, applicable present and future statutes, regulations, rules,
ordinances, codes, licenses, permits, judgments, orders, judicial opinions,
approvals, authorizations, concessions, franchises, and similar items issued or
promulgated by governmental agencies, departments, commissions, boards, bureaus,
or instrumentalities of the United States, any state or any political
subdivisions.
1.31 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with all regulations issued pursuant thereto.
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1.32 "ERISA Affiliate" means any Person which, together with
Borrower, would be treated as a single employer under Section 4001 of ERISA or
Section 414 of the IRC.
1.33 "Eurodollar Business Day" shall have the meaning defined in
paragraph 3.1.6.
1.34 "Event of Default" shall have the meaning defined in
paragraph 8.1.
1.35 "EWC" means EWC Corporation, a Nevada corporation and wholly
owned Subsidiary of Borrower.
1.36 "EWC Equipment Loans" means loans made by Borrower to EWC
and used by EWC for the purpose of financing the acquisition of equipment which
is leased by EWC to Borrower pursuant to lease arrangements satisfactory to
Borrower and Lender.
1.37 "Facility" means the revolving credit facility established
by this Agreement.
1.38 "Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest one-sixteenth of one percent
(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 which would be charged
to the Reference Lender on such day on such transactions as determined by Agent.
1.39 "Fiscal Quarter" means any of the following periods of three
calendar months: (i) January through March, (ii) April through June, (iii) July
through September or (iv) October through December, respectively.
1.40 "Fixed Charge Ratio" shall have the meaning prescribed in
paragraph 7.21(b).
1.41 "Funded Debt" shall have the meaning prescribed in paragraph
7.21(b).
1.42 "Governmental Authority" means any nation or government, any
state, provincial or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.43 "Guaranty" means the guaranty agreement executed by EWC as
provided in paragraph 2.12.
1.44 "GAAP" means generally accepted accounting principles as
promulgated by the American Institute of Certified Public Accountants,
consistently applied). The requirement that such principles be
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consistently applied means that the accounting principles applied in a current
period are comparable in all material respects to those applied in a preceding
period.
1.45 "Hazardous Materials" means any chemical substances,
pollutants, contaminants, materials, or wastes, or combinations thereof,
whether solid, liquid or gaseous in nature the presence of which requires or
may require investigation or remediation under any federal, state or local
statute, regulations, ordinance, order, action, policy or common law or which
poses or threatens to pose a hazard to the health or safety of persons on or
about real property affected by Borrower's activities, including without
limitation, material (i) which is or becomes defined as "hazardous waste,"
"hazardous substance," "pollutant or contaminant" under any Environmental
Requirements, including without limitation, the Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. section 9601 et seq.) or the
Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) or (ii)
which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs), asbestos, urea formaldehyde from insulation,
or radon gas.
1.46 "Indemnified Claims" means any and all claims, demands,
actions, causes of action, judgments, obligations, liabilities, losses, damages
and consequential damages, penalties, fines, costs, fees, expenses and
disbursements (including without limitation, fees and expenses of attorneys and
other professional consultants and experts in connection with investigation or
defense) of every kind, known or unknown, existing or hereafter arising,
foreseeable or unforeseeable, which may be imposed upon, threatened or asserted
against, or incurred or paid by, any Indemnified Person at any time and from
time to time, because of, resulting from, in connection with, or arising out of
any transaction, act, omission, event or circumstance, in any way connected with
the Facility or the Loan Documents (including enforcement of Agent's and/or
Lenders' rights thereunder or defense of Agent's and/or Lenders' actions
thereunder), including but not limited to economic loss, property damage,
personal injury or death in connection with, or occurring on or in the vicinity
of, any property owned by Borrower through any cause whatsoever, any act
performed or omitted to be performed under any Loan Documents, any breach by
Borrower of any representation, warranty, covenant, agreement or condition
contained in any Loan Documents or any Event of Default as defined in this
Agreement. Indemnified Claims includes, without limitation, Environmental
Damages. "Indemnified Claims" does not include any claims arising from fraud,
gross negligence or willful misconduct of an Indemnified Person.
1.47 "Indemnified Persons" collectively means Agent, each
Lender and their officers, directors, shareholders, employees, agents,
attorneys and representatives, and any Person owned or controlled by, or which
owns or controls or is under common control or is otherwise affiliated with,
Agent or each Lender.
1.48 "Interest Period" shall have the meaning defined in paragraph
3.1.6.
1.49 "Inventory" means all of Borrower's inventory now or
hereafter owned or acquired, including raw materials, work in process, finished
goods and all other goods held for sale or lease, wherever located.
"Inventory" also includes returned inventory.
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1.50 "Issuing Bank" means NationsBank or such other Lender which
is a commercial bank as Borrower and NationsBank may mutually designate from
time to time which agrees to be the issuer of such Letter of Credit.
1.51 "IRC" means the Internal Revenue Code of 1986, as amended,
and regulations promulgated thereunder.
1.52 "Lender" and "Lenders" means each of NationsBank and Bank of
America, in their individual capacities as the original lenders to Borrower
hereunder, and each other lending institution which may from time to time
become a party hereto or any successor or assignee of any thereof.
1.53 "Lender's Consequential Loss" shall have the meaning defined
in paragraph 3.1.6.
1.54 "LIBOR Based Rate" shall have the meaning defined in
paragraph 3.1.6.
1.55 "LIBOR Based Loan" means any loan under the Facility which
is the subject of a LIBOR Rate Option.
1.56 "LIBOR Rate Option" shall have the meaning defined in
paragraph 3.1.6.
1.57 "Letter of Credit" means any standby letter of credit issued
by the Issuing Bank for the account of Borrower pursuant to this Agreement.
1.58 "Letter of Credit Agreement" means, with respect to each
Letter of Credit to be issued by the Issuing Bank therefor, the letter of credit
application and reimbursement agreement which such Issuing Bank requires to be
executed by Borrower in connection with the issuance of such Letter of Credit.
1.59 "Letter of Credit Liabilities" means, at any time, the
aggregate undrawn face amount of all outstanding Letters of Credit and all
unreimbursed drawings under Letters of Credit.
1.60 "Loan Documents" means this Agreement, the Revolving Notes,
the Letter of Credit Agreements and any other documents or agreements executed
in connection therewith, and also includes any and all renewals, extensions,
modifications or amendments of any of the foregoing.
1.61 "Loan Party" means (a) Borrower, (b) EWC, and (c) any other
Person who is or becomes a party to any agreement, document or instrument that
guarantees or secures payment or performance of the Obligations or any part
thereof.
1.62 "Loans" means as specified in paragraph 2.1, and "Loan"
means any of such Loans.
1.63 "London Interbank Offered Rate" shall have the meaning
defined in paragraph 3.1.6.
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1.64 "Material Adverse Effect" means (i) a materially adverse
effect on the business, assets, operations, prospects or condition, financial or
otherwise, of Borrower or EWC, or (ii) material impairment of the ability of
Borrower or EWC to perform any obligations under the Loan Documents.
1.65 "Maximum Rate" means the greater of (i) the "monthly
ceiling" as referred to and in effect from time to time under the provisions of
Tex. Rev. Civ. Stat. Ann. art. 5069-1.04(c), as amended, or (ii) the maximum
rate of interest permitted from day to day by any other applicable state or
federal law.
1.66 "NationsBank" means NATIONSBANK OF TEXAS, N.A., a national
banking association, in its individual capacity as a Lender.
1.67 "Obligations" means (i) all obligations and indebtedness now
or hereafter owing by Borrower under this Agreement, or otherwise arising in
connection with this Agreement or any of the other Loan Documents, including
without limitation, all loan repayment obligations, accrued interest and fees,
costs and expenses as provided by this Agreement or any of the other Loan
Documents, and any other amounts from time to time owing by Borrower to Agent or
any Lender in connection therewith; (ii) any and all other indebtedness and
obligations of every kind and character now or hereafter owing by Borrower to
Agent or any Lender, whether direct or indirect, primary or secondary, joint,
several, or joint and several, fixed or contingent, including indebtedness and
obligations, if any, which may be assigned to or acquired by Agent or any
Lender; and (iii) any and all renewals and extensions of the foregoing, or any
part thereof.
1.68 "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
1.69 "Permitted Encumbrances" shall mean any liens arising by
statute for taxes not yet due and payable and, subject to paragraph 8.1, any of
the following so long as the validity or amount thereof is being contested in
good faith and by appropriate and lawful proceedings diligently conducted,
reserve or other appropriate provision (if any) required by GAAP shall have been
made, levy and execution thereon shall have been stayed and continue to be
stayed, and provided that any of such encumbrances do not in the aggregate
materially detract from the value of Borrower's property, or materially impair
the use thereof in the operation of its business: claims and liens for taxes
due and payable; claims and liens upon, and defects of title to, personal
property, including any attachment of personal property or other legal process
prior to adjudication of a dispute on the merits; claims and liens of mechanics,
materialmen, warehousemen, carriers, landlords, or other like liens; and adverse
judgments on appeal.
1.70 "Person" means any individual, corporation, joint venture,
general or limited partnership, trust, unincorporated organization or
governmental entity or agency.
1.71 "Plan" means any (i) any "employee benefit plan," as defined
in Section 3(3) of ERISA, established or maintained by Borrower or any ERISA
Affiliate now or during any of the preceding six years, and (ii) any other plan
established or maintained now or during any of the preceding six years by
Borrower or any ERISA Affiliate for its employees which is covered by Title IV
of ERISA or is subject to the minimum funding standards under Section 412 of the
IRC.
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1.72 "Prime Based Loan" shall have the meaning defined in
paragraph 3.1.6.
1.73 "Prime Based Rate" shall have the meaning defined in
paragraph 3.1.6.
1.74 "Prime Rate" shall have the meaning defined in
paragraph 3.1.6.
1.75 "Principal Office" means the principal office of Agent in
Dallas, Texas, presently located at 901 Main Street, 7th Floor, Dallas, Texas
75202.
1.76 "Prohibited Transaction" means any transaction described in
Section 406 of ERISA which is not exempt under Section 408 of ERISA and any
transaction described in Section 4975(c) of the IRC which is not exempt under
Section 4974(c)(2) or Section 4975(d) of the IRC, or by the transitional rules
of Section 414(c) and Section 2003(c) of ERISA.
1.77 "Receivables" means all present and future accounts, chattel
paper, contract rights, documents, instruments, deposit accounts, and general
intangibles now or hereafter owned, held, or acquired by Borrower and includes,
without limitation, all of the following: all of Borrower's accounts
receivable, including all rights to payment for goods sold or leased or for
services rendered, whether or not earned by performance (and in any case where
an account arises from the sale of goods, the interest of Borrower in such
goods); lease receivables; license receivables; notes receivable; all other
rights to receive payments of money from any Person; documents of title;
warehouse receipts; Borrower's right, title and interest under equipment
leases; Borrower's rights under any service, lease rental, consulting or
similar agreements; trademarks, trade names and service marks; rights or claims
under contracts; all tax refunds or claims for tax refunds; books of account,
customer lists and other records relating in any way to any of the foregoing.
1.78 "Reference Lender" means NationsBank.
1.79 "Reimbursement Obligation" means the obligation of Borrower
to reimburse the Issuing Bank for any drawing under a Letter of Credit.
1.80 "Reportable Event" means (i) any transaction described in
Section 406 of ERISA or the regulations thereunder for which the 30-day notice
is not waived by said regulations, (ii) a withdrawal from a plan described in
Section 4063 or 4064 of ERISA, or (iii) a cessation of operations described in
Section 4062(f) of ERISA.
1.81 "Required Lenders" means, at any date of determination,
Lenders having in the aggregate at least 66 2/3% (in Dollar amount) of the
aggregate amount of the outstanding Commitments (or, if such Commitments have
terminated or expired, the aggregate outstanding principal amount of the Loans
and the aggregate Letter of Credit Liabilities).
1.82 "Reserve Requirement" shall have the meaning defined in
paragraph 3.1.6.
1.83 "Revolving Credit Limit" means the amount of (i) Fifty-Five
Million Dollars ($55,000,000.00) for the period commencing on the date hereof
through and including June 30, 1999 and
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(ii) Fifty Million Dollars ($50,000,000) for the period commencing on July 1,
1999 until the last day of the Contract Term.
1.84 "Revolving Notes" means the promissory notes executed by
Borrower payable to the order of a Lender evidencing loans under the Facility,
as provided in paragraph 2.1 and in the form attached hereto as Exhibit 1.84,
and includes any and all renewals, extensions, amendments or modifications
thereof.
1.85 "Subsidiaries" at any time means all subsidiary corporations
of Borrower that would be appropriate for inclusion in either consolidating or
consolidated financial statements of Borrower determined according to GAAP, and
"Subsidiary" means any of such corporations.
1.86 "Tranche" shall have the meaning defined in paragraph 3.1.6.
1.87 "Voting Stock" means sufficient shares of Borrower (however
designated) having ordinary voting power for the election of a majority of the
members of its board of directors (not including shares having such power only
in the event of a contingency).
General terms. Unless expressly provided otherwise, any term which is
defined by the Code shall have the same meaning, wherever used in this
Agreement, as is prescribed by the Code.
ARTICLE II. REVOLVING CREDIT FACILITY
2.1 Loans. Subject to and on the terms and conditions provided
in this Agreement, each Lender hereby approves a revolving credit facility and
severally agrees to make one or more loans to Borrower from time to time during
the Contract Term in the aggregate amount up to such Lender's Commitment
Percentage times the Availability. Borrower may borrow and repay amounts from
time to time under the Facility, subject in all respects to the terms of this
Agreement. Loans from time to time made by Lenders to Borrower under the
Facility, and all accrued interest thereon, shall be payable as provided in
this Agreement and additionally evidenced by the Revolving Notes. Such loans
are referred to herein individually as a "Loan" and collectively as the
"Loans."
2.2 Interest. The unpaid principal from day to day outstanding
under the Facility shall bear interest as provided in Article III.
2.3 Repayment and Line Termination. Borrower shall make all
payments with respect to the Loans to Agent for the account of the Lenders
pursuant to the terms of payment as provided in Article IV. All unpaid
principal and accrued interest under the Facility shall be payable as follows:
Accrued interest shall be payable as provided in paragraph 3.1.3.; subject to
Lender's rights under Article IX, all unpaid principal borrowed under the
Facility and all unpaid accrued interest thereon, and all other amounts payable
hereunder relative to the Facility, shall be due and payable to Agent and/or
Lenders in full, and the Facility shall terminate, on the last day of the
Contract Term. To the extent that any accrued interest is not timely paid when
due, Agent may at its option (but with no obligation to do so), debit the
amount thereof to, and collect same from, any account maintained by Borrower
with Agent, or add such amount to the unpaid principal due by Borrower under
the Facility.
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2.4 Mandatory Interim Principal Payments. If at any time, from
time to time, the aggregate unpaid principal amount outstanding under the
Facility exceeds the Availability, Borrower shall make an immediate payment of
principal under the Facility in an amount not less than the amount of such
excess. All such amounts, if any, payable by Borrower shall be deemed to be
payable on demand, and may be offset by Lenders against any amount owing by
Lenders to Borrower, without prior notice to Borrower.
2.5 Borrowing Procedure. Borrower shall give Agent written
notice of each borrowing hereunder. Not later than 1:00 p.m. (Dallas, Texas
time) on the date specified for each borrowing hereunder (which may be on the
same day as Agent's receipt of the written notice of borrowing with respect to
Base Rate Loans and which shall be at least three (3) days after Agent's
receipt of the written notice of borrowing with respect to LIBOR Based Loans),
each Lender will make available the amount of the Loan to be made by it on such
date to Agent, at the Principal Office, in immediately available funds, for the
account of Borrower. The amount so received by Agent shall, subject to the
terms and conditions of this Agreement, be made available to Borrower by wire
transfer of immediately available funds to an account designated by Borrower no
later than 2:00 p.m. (Dallas, Texas time) on such day.
2.6 Purpose and Use of Funds. All amounts borrowed under the
Facility shall be used by Borrower for working capital purposes or for the
acquisition of equipment, in the ordinary course of Borrower's business.
2.7 Borrowing Base. Any request for a Loan under the Facility
which, if funded, would result in an aggregate amount outstanding under the
Facility in excess of the Availability may be declined by Agent in its sole
discretion without prior notice to Borrower.
2.8 Unused Line Fee. Subject in all respects to the provisions
of paragraph 11.8, in order to compensate Agent for costs and expenses
associated with administration of the Facility, Borrower agrees to pay to Agent
a fee in an amount equal to (i) one-quarter of one percent (0.25%) per annum if
the ratio of Funded Debt to EBITDA is equal to or less than 2.75 to 1 or (ii)
three-eighths of one percent (0.375%) if the ratio of Funded Debt to EBITDA is
greater than 2.75 to 1, of the unused portion of the Facility (calculated on a
daily basis for the applicable quarterly period or portion hereof), which shall
be payable quarterly in arrears on the first day of each April, July, October
and January during the term thereof and on the date of termination of the
Facility.
2.9 Reduction of Credit Limit. Borrower may reduce the amount
of the Revolving Credit Limit by any integral multiple of $1,000,000.00,
effective not earlier than the expiration of five (5) Business Days prior
written notice to Agent; provided, that Borrower may not execute a reduction of
the Revolving Credit Limit more than one time during any Fiscal Quarter, and
provided further, that the Revolving Credit Limit may not be increased
following any such reduction.
2.10 Letters of Credit. (a) The Facility may be utilized by
Borrower to support the issuance of Letters of Credit for the account of
Borrower, subject to the Availability, up to the maximum aggregate unfunded
face amount at any time outstanding of $5,000,000.00. The maximum term of any
such Letter of Credit shall be one (1) year, and no Letter of Credit shall be
issued with an expiration date which is later than ninety (90) days after
expiration of the Contract Term. Each such Letter of Credit
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shall be supported by a duly executed application and reimbursement agreement
in form satisfactory to the Issuing Bank and shall be subject to payment to
Agent for the account of the Lenders (based upon their respective Commitment
Percentages) of an annual fee as provided therein, in an amount equal to one
percent (1.0%) per annum (pro-rated for periods of less than one year) of the
unfunded face amount thereof.
(b) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment or other drawing under such Letter of Credit, the
Issuing Bank shall promptly notify Borrower and each Lender as to the amount to
be paid as a result of such demand or drawing and the respective payment date.
If at any time the Issuing Bank shall make a payment to a beneficiary of a
Letter of Credit pursuant to a drawing under such Letter of Credit, each Lender
will pay to the Issuing Bank, immediately upon the Issuing Bank's demand at any
time commencing after such payment until reimbursement therefor in full by
Borrower, an amount equal to such Lender's Commitment Percentage of such
payment, together with interest on such amount for each day from the date of
such payment to the date of payment by such Lender of such amount at a rate of
interest per annum equal to the Federal Funds Rate.
(c) At Borrower's option, Borrower (i) may promptly notify the
Issuing Bank and the Agent after its receipt of notification from the Issuing
Bank that a drawing has been made under a Letter of Credit that it desires to
treat all amounts drawn under such Letter of Credit as a Loan, in which case
such drawn amounts shall be subject to all terms and provisions hereof relating
to Loans, or (ii) shall immediately reimburse the Issuing Bank for any amounts
paid by the Issuing Bank upon any drawing under any Letter of Credit, without
presentment, demand, protest or other formalities of any kind. If Borrower
elects to reimburse the Issuing Bank as provided in (ii) above, the Issuing
Bank will pay to each Lender such Lender's Commitment Percentage of all amounts
received from or on behalf of Borrower for application in payment, in whole or
in part, of the Reimbursement Obligation in respect of any Letter of Credit,
but only to the extent such Lender has made payment to the Issuing Bank in
respect of such Letter of Credit pursuant to subsection (b) above. Outstanding
Reimbursement Obligations shall bear interest at the Applicable Rate and such
interest shall be payable on demand.
2.11 Continuing Representations. Except as may have been
otherwise disclosed to Agent in writing, each request for a Loan under the
Facility shall constitute a continuing representation that no event or
condition that would be the subject of a required notice under paragraph 7.11
or paragraph 7.12 is in existence as of such time.
2.12 Cross Collateralization; Guaranty. The Lenders have
determined that Loans to Borrower under the Facility are conditioned upon
additional credit support from EWC . Because of the inter-relationship between
Borrower and EWC and their respective operations, EWC has determined
(independently from considerations relative to any credit now or otherwise
available to EWC from any Lender) that providing such additional credit support
is within its corporate purpose, will be of direct and indirect benefit to EWC
and is in its best interest. Accordingly, EWC shall execute and deliver for
the benefit of Agent and the Lenders a guaranty agreement pursuant to which EWC
shall guarantee to Agent and the Lenders the prompt payment and performance of
all Obligations (such guaranty agreement to be in form and substance
satisfactory to Agent). EWC hereby acknowledges that its agreement to the
provisions of this paragraph is in consideration of the availability of loans
to Borrower under this
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Agreement and is not required by the Lenders or Agent as a condition to the
availability of any credit to EWC under this Agreement or otherwise.
ARTICLE III. INTEREST
3.1 Interest. The unpaid principal from day to day outstanding
under the Facility shall bear interest as follows:
3.1.1 Applicable Rate.
(a) Subject to any election by Borrower in respect
of the LIBOR Based Rate under paragraph 3.1.1(b), the unpaid
principal from day to day outstanding under the Facility shall
bear interest at the lesser of (i) the Prime Based Rate or
(ii) the Maximum Rate, provided, however that, subject to the
provisions of paragraph 11.8, in the event that the Prime
Based Rate shall exceed the Maximum Rate at any time and
thereafter the Prime Based Rate shall be less than the Maximum
Rate, the rate of interest applicable hereunder shall remain
at the Maximum Rate until the aggregate accrued interest to
date under the Facility equals the amount that would have
accrued had the Prime Based Rate at all times remained in
effect.
(b) Subject to limitation by the Maximum Rate and
the terms and provisions of this Agreement, and in lieu of the
rate otherwise applicable under paragraph 3.1.1(a), Borrower
shall have the option to elect the LIBOR Based Rate as being
applicable during any Interest Period to any Tranche of the
Facility, provided, that any such Tranche shall be in the
minimum amount of $500,000.00, and no more than six (6)
separate Tranches may exist in the aggregate at any one time.
(c) Upon written notification to Borrower at any
time when any Event of Default exists, the Applicable Rate
otherwise applicable hereunder shall automatically increase by
an additional five percent (5.0%) per annum, beginning on the
effective date specified in such written notice (which shall
be on or after the date on which any such Event of Default
shall have first occurred) and continuing thereafter for so
long as any such Event of Default remains uncured or until
Lender may agree otherwise, provided, that all past due
principal and all past due accrued interest under the Facility
shall automatically accrue interest at the Maximum Rate.
3.1.2 Election of LIBOR Rate Option. Borrower may
elect a LIBOR Rate Option at any time by written notice of election,
in form satisfactory to Agent, delivered to Agent no later than 1:00
p.m. Dallas, Texas time on the second Eurodollar Business Day prior to
the beginning of the Interest Period to which such LIBOR Rate Option
shall be applicable, therein stating (i) the LIBOR Rate Option
elected, (ii) the Interest Period selected, and the date such Interest
Period is to begin, and (iii) the principal amount of the Tranche to
be subject to such LIBOR Rate Option (which shall be at least
$500,000.00). Any such written notice of election shall be
irrevocable by Borrower. Any unpaid principal under the Facility with
respect to which no
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timely election of an LIBOR Rate Option is made shall automatically be
deemed to be subject to, and shall accrue interest at, the Prime Based
Rate as provided by paragraph 3.1.1(a).
3.1.3 Interest Payment Dates. Accrued interest under
the Facility shall be payable as follows: (a) accrued interest on
Prime Based Loans shall be payable quarterly on the first day of each
calendar quarter, and (b) accrued interest on any LIBOR Based Loan
shall be payable on the last day of the Interest Period applicable
thereto.
3.1.4 Payment of Consequential Loss Upon Prepayment.
Prepayments of principal under the Facility shall be applied first in
reduction of unpaid principal under the Prime Based Loan, and
thereafter to any LIBOR Based Loan, as designated by Borrower
(subject, however to paragraph 9.8). Any and all prepayments applied
to any LIBOR Based Loan shall be subject to payment by Borrower to
each Lender of such Lender's Consequential Loss, if any, which shall
be payable to such Lender at the time of such prepayment. Each
Lender's calculation of the amount, if any, of Lender's Consequential
Loss in respect of any principal prepayment shall be conclusive in the
absence of manifest error.
3.1.5 Limitation. With respect to any LIBOR Rate Option
elected by Borrower, if (a) a Lender determines that deposits in
Dollars, in applicable amounts, are not being offered to such Lender,
or other major United States banks of comparable size to such Lender,
in the London interbank Eurodollar market for the applicable Interest
Period, or (b) a Lender determines that the LIBOR Based Rate will not
adequately and fairly reflect the cost to such Lender of maintaining
or funding the applicable portion of the Facility relative to such
LIBOR Rate Option for such Interest Period, then at such Lender's
option, such Lender may give notice to Borrower and thereby (i)
suspend Borrower's option to elect a LIBOR Rate Option, pending any
subsequent reinstatement in such Lender's discretion, and (ii) if the
circumstances described in clause (a) or (b) are the result of any
change after the date hereof in any law, rule or regulation, then with
respect to any LIBOR Rate Option then applicable to any portion of the
Facility, require such portion be converted to bear interest according
to the Contract Rate as provided in paragraph 3.1.1(a) or, if such
conversion is unlawful, shall be repaid in full (in which event any
amounts payable under paragraph 3.1.4 shall also be paid at such
time).
3.1.6 Definitions. The following terms shall be defined
as herein provided:
"Adjusted LIBOR Rate" shall mean a rate per
annum which is the London Interbank Offered Rate
(determined and fixed for the duration of any
Interest Period) as adjusted by Agent for the Reserve
Requirement. Determination of the Adjusted LIBOR
Rate shall be made by Agent in its discretion and
shall be binding and conclusive in the absence of
manifest error.
"Applicable Margin" means the per annum
percentages, applicable in the case of Prime Based
Loans and LIBOR Based Loans, respectively, under the
specified conditions, as follows:
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=================================================================================================================
FUNDED DEBT APPLICABLE MARGIN APPLICABLE MARGIN
to for for
EBITDA PRIME BASED LOANS LIBOR BASED LOANS
=================================================================================================================
Less than 2.00 to 1.0 Prime minus one percent per Three-quarters of one percent per
annum(1.00%) annum(.75%)
- -----------------------------------------------------------------------------------------------------------------
Equal to or greater than 2.00 to Prime minus one percent per annum Seven-eighths of one percent per
1.0 and less than 2.75 to 1.0 (1.00%) annum (0.875%)
- -----------------------------------------------------------------------------------------------------------------
Equal to or greater than 2.75 to Prime minus one percent per annum One and one-eighth percent per
1.0 (1.00%) annum (1.125%)
=================================================================================================================
The Applicable Margin shall be measured and
determined according to the quarterly consolidated
financial statements delivered to Agent under
paragraph 7.6. Any adjustment in the Applicable
Margin after the Effective Date shall be deemed
effective as of the first day following the end of
the Fiscal Quarter for which an evaluation of
conditions is made.
"Assessment Rate" means, at any time, the
rate (rounded upwards, if necessary, to the nearest
1/16 of 1%) then charged by the Federal Deposit
Insurance Corporation (or any successor) to a Lender
for deposit insurance for dollar time deposits with
such Lender at its principal office, as determined by
such Lender.
"Eurodollar Business Day" means any Business
Day on which dealings in United States Dollars are
conducted in the London interbank market.
"Interest Period" means in the case of a
LIBOR Based Loan, the period commencing on the first
effective Eurodollar Business Day of a LIBOR Rate
Option and ending one, two or three months
thereafter, as designated by Borrower at the time of
electing such LIBOR Rate Option, provided that (i) if
any Interest Period would otherwise end on a day
which is not a Eurodollar Business Day, then such
Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless to do so
would extend such Interest Period into a subsequent
calendar month, in which event such Interest Period
shall end on the next preceding Eurodollar Business
Day, and (ii) any Interest Period that begins on the
last day of a calendar month, or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Interest Period,
shall end on the last Eurodollar Business Day of the
last calendar month of such Interest Period, and
provided further, that no Interest Period may end on
a day which is after the expiration of the Contract
Term.
"Lender's Consequential Loss" with respect to
any prepayment applied to a LIBOR Based Loan, means
any loss or expense incurred by a Lender as a result
of any such prepayment including, without limitation,
an amount equal to
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(i) the amount of interest such Lender would have
earned in respect of the amount of such principal
prepaid for the remaining period until the date such
amount would have matured, determined as of the date
of any such prepayment, less (ii) the amount of
interest, if any, such Lender is able to obtain by
reloaning or reinvesting such amount for a period of
time equal or reasonably equivalent to the remaining
period until such date of maturity, determined as of
the date of any such prepayment, plus (iii) any
expense or penalty incurred by such Lender on
reinvesting such principal amount.
"LIBOR Based Rate" means the Adjusted LIBOR
Rate plus the Applicable Margin.
"LIBOR Rate Option" means any election by
Borrower, in accordance with paragraph 3.1.2, to have
any Tranche bear interest at the LIBOR Based Rate.
"London Interbank Offered Rate" shall mean,
with respect to each Interest Period, the rate per
annum (determined and fixed for the duration of such
Interest Period) determined by Agent to be the per
annum rate at which dollar deposits (in amounts
comparable to the principal amount to be subject to
the LIBOR Based Rate and for a period of time equal
or comparable to the such Interest Period) in
immediately available funds are offered (at
approximately 9:00 a.m. Dallas, Texas time) two
Eurodollar Business Days prior to the first day of
such Interest Period by leading banks selected by
Agent in the London Interbank Eurodollar market for
delivery on the first day of such Interest Period.
"Prime Based Loan" means that portion of the
amount at any time outstanding under the Facility
which accrues interest at the Prime Based Rate.
"Prime Based Rate" means, on any day, a
floating annual rate of interest calculated on the
basis of actual days elapsed but computed as if each
year consists of 360 days, equal to the sum of the
Prime Rate effective as of the first day of the
calendar month in which such day falls plus the
Applicable Margin.
"Prime Rate" means the rate of interest which
is announced from time to time by the Reference
Lender as its prime rate of interest. It is
acknowledged that the Prime Rate may not be the
lowest or most favorable interest rate at any time
charged by the Reference Lender.
"Reserve Requirement" shall mean, on any day,
that percentage which is in effect on such day, as
provided by the Board of Governors of the Federal
Reserve System (or any successor governmental body)
applied for determining the reserve requirements
(including without limitation, basic, supplemental,
marginal and emergency reserves) under Regulation D
(12 C.F.R. Part 24), or any successor or other law
or regulation relating to reserve requirements
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applicable to a Lender with respect to Eurocurrency
liabilities or Eurocurrency funding, in the case of
LIBOR Based Loans.
"Tranche" means any portion of the Facility
the principal amount of which is subject to a LIBOR
Rate Option designated as provided by paragraph
3.1.2, provided that no Tranche may exist with
respect to any principal amount less than
$500,000.00.
ARTICLE IV. PAYMENT
4.1 Method of Payment. All payments of principal, interest,
fees and other amounts to be made by Borrower under this Agreement and the other
Loan Documents shall be made to Agent at the Principal Office for the account of
each Lender in Dollars and in immediately available funds, without setoff,
deduction or counterclaim, not later than 1:00 p.m. (Dallas, Texas time) on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). Borrower shall, at the time of making each such payment, specify
to Agent the sums payable by Borrower under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that Borrower
fails to so specify, or if an Event of Default has occurred and is continuing,
Agent may apply such payment to the Obligations in such order and manner as
Agent may elect, subject to paragraph 4.2). Upon the occurrence and during the
continuation of an Event of Default, all funds of Borrower or any Guarantor in
the possession of Agent or any Lender, may be applied by Agent to the
Obligations in such order and manner as Agent may elect, subject to paragraph
4.2. Each payment received by Agent under this Agreement or any other Loan
Document for the account of a Lender shall be paid promptly to such Lender, in
immediately available funds, for the account of such Lender. Whenever any
payment under this Agreement or any other Loan Document shall be stated to be
due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
4.2 Pro Rata Treatment. Except to the extent otherwise provided
in this Agreement: (a) each Loan shall be made by the Lenders under paragraph
2.1, each payment of commitment fees under paragraph 2.7 shall be made for the
account of the Lenders, and each termination or reduction of the Commitments
under paragraph 2.8 shall be applied to the Commitments of the Lenders, pro rata
according to the respective unused Commitments; (b) the making, conversion and
continuation of Loans of a particular type shall be made pro rata among the
Lenders holding Loans of such type according to the amounts of their respective
Commitments; (c) each payment and prepayment by Borrower of principal of or
interest on Loans of a particular type shall be made to Agent for the account of
the Lenders holding Loans of such type pro rata in accordance with the
respective unpaid principal amounts of such Loans held by such Lenders; (d)
Interest Periods for Loans of a particular type shall be allocated among the
Lenders holding Loans of such type pro rata according to the respective
principal amounts held by such Lenders; and (e) the Lenders (other than the
Issuing Bank) shall purchase participations in the Letters of Credit pro rata in
accordance with their Commitment Percentages.
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4.3 Sharing of Payments, Etc. If a Lender shall obtain payment
of any principal of or interest on any of the Obligations due to such Lender
hereunder through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Lenders participations in the Obligations held by the other Lenders in
such amounts, and make such adjustments from time to time, as shall be equitable
to the end that all of the Lenders shall share pro rata in accordance with the
unpaid principal and interest on the Obligations then due to each of them. 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. Each
of Borrower and each other Loan Party agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender so purchasing a
participation in the Obligations by the other Lenders may exercise all rights of
setoff, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Obligations 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, liability or obligation of Borrower or any other Loan
Party.
4.4 Non-Receipt of Funds by Agent. Unless Agent shall have been
notified by a Lender or Borrower (the "Payor") prior to the date on which such
Lender is to make payment to Agent of the proceeds of a Loan to be made by it
hereunder or Borrower is to make a payment to 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 Agent, 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 Agent, the recipient of such payment shall, on demand, pay
to 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 Agent until the date Agent recovers such amount at a rate per annum equal to
the Federal Funds Rate for such period.
4.5 Withholding Taxes. (a) All payments by Borrower of
principal of and interest on the Loans and the Letter of Credit Liabilities and
of all fees and other amounts payable under the Loan Documents shall be made
free and clear of, and without deduction by reason of, any present or future
taxes, levies, duties, imposts, assessments or other charges levied or imposed
by any Governmental Authority (other than taxes on the overall net income of any
Lender). If any such taxes, levies, duties, imposts, assessments or other
charges are so levied or imposed, Borrower will (i) make additional payments in
such amounts so that every net payment of principal of and interest on the Loans
and the Letter of Credit Liabilities and of all other amounts payable by it
under the Loan Documents, after withholding or deduction for or on account of
any such present or future taxes, levies, duties, imposts, assessments or other
charges (including any tax imposed on or measured by net income of a Lender
attributable to payments made to or on behalf of a Lender pursuant to this
paragraph 4.5 and any penalties or interest attributable to such payments), will
not be less than the amount provided for herein or therein absent such
withholding or deduction (provided that Borrower shall not have any obligation
to pay such additional amounts to any Lender to the extent that such taxes,
levies, duties, imposts, assessments or other charges are levied or imposed by
reason of the failure of such Lender to comply with the provisions of paragraph
4.6), (ii) make such withholding or deduction and (iii) remit the full
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amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law. Without limiting the generality of the
foregoing, Borrower will, upon written request of any Lender, reimburse each
such Lender for the amount of (A) such taxes, levies, duties, imports,
assessments or other charges so levied or imposed by any Governmental Authority
and paid by such Lender as a result of payments made by Borrower under or with
respect to the Loans other than such taxes, levies, duties, imports,
assessments and other charges previously withheld or deducted by Borrower which
have previously resulted in the payment of the required additional amount to
such Lender, and (B) such taxes, levies, duties, assessments and other charges
so levied or imposed with respect to any Lender reimbursement under the
foregoing clause (A), so that the net amount received by such Lender (net of
payments made under or with respect to the Loans and the Letter of Credit
Liabilities) after such reimbursement will not be less than the net amount such
Lender would have received if such taxes, levies, duties, assessments and other
charges on such reimbursement had not been levied or imposed. Borrower shall
furnish promptly to Agent for distribution to each affected Lender, as the case
may be, upon request of such Lender, official receipts evidencing any such
payment, withholding or reduction.
(b) Borrower will indemnify Agent and each Lender (without
duplication) against, and reimburse Agent and each Lender for, all present and
future taxes, levies, duties, imposts, assessments or other charges (including
interest and penalties) levied or collected (whether or not legally or
correctly imposed, assessed, levied or collected), excluding, however, any
taxes imposed on the overall net income of Agent or such Lender or any lending
office of Agent or such Lender by any jurisdiction in which Agent or such
Lender or any such lending office is located, on or in respect of this
Agreement, any of the Loan Documents or the Obligations or any portion thereof
(the "reimbursable taxes"). Any such indemnification shall be on an after-tax
basis, taking into account any such reimbursable taxes imposed on the amounts
paid as indemnity.
(c) Without prejudice to the survival of any other term or
provision of this Agreement, the obligations of Borrower under this paragraph
4.5 shall survive the payment of the Loans and the other Obligations and
termination of the Commitments.
4.6 Withholding Tax Exemption. Each Lender that is not
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Effective Date or the date upon
which it becomes a party to this Agreement and if it is legally able to do so,
deliver to Borrower and Agent two duly completed copies of U.S. Internal Revenue
Service Form 1001, 4224 or W-8, as appropriate, certifying in any case that such
Lender is entitled to receive payments from Borrower under any Loan Document
without deduction or withholding of any U.S. federal income taxes. Each Lender
which so delivers a Form 1001, 4224 or W-8 further undertakes to deliver to
Borrower and 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 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 Borrower or Agent, in each case certifying that such Lender is
entitled to receive payments from Borrower under any Loan Document without
deduction or withholding of any U.S. 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
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with respect to it and such Lender advises Borrower and Agent that it is not
capable of receiving such payments without any deduction or withholding of U.S.
federal income tax.
ARTICLE V. CONDITIONS
5.1 Items to be Delivered by Borrower. Prior to or
simultaneously with execution and delivery hereof, Borrower shall deliver, or
cause to be delivered, to Agent the following items:
(a) Articles of Incorporation and Certificate of
Existence. A copy of the articles of incorporation, and all
amendments thereto, of Borrower and EWC, accompanied by the
certificate of the appropriate official of their respective states of
incorporation bearing a date no more than ten (10) days prior to the
date hereof, to the effect that such copies, respectively, are correct
and complete and that Borrower and EWC, as the case may be, each is a
corporation duly incorporated and validly existing in such state, and
certified by the corporate secretary of Borrower and EWC, as the case
may be, dated the date hereof, as being correct and complete as of the
date hereof.
(b) Good Standing. Certification by the appropriate
official of the state of incorporation of Borrower and EWC bearing a
date no more than ten (10) days prior to the date hereof, to the
effect that Borrower and EWC, as the case may be, each is in good
standing with respect to payment of franchise and similar taxes, and
certification by the Comptroller of Public Accounts of the state of
Texas bearing a date no more than thirty (30) days prior to the date
hereof confirming that Borrower and EWC each is duly qualified to
transact business in the State of Texas. Borrower represents that to
the extent required by applicable law, Borrower and EWC each is
qualified or licensed to transact business in all jurisdictions in
which operates or conducts business.
(c) By-Laws. A copy of the bylaws, and all amendments
thereto, of Borrower and EWC, respectively, accompanied by
certificates from their respective corporate secretary, dated the date
hereof, to the effect that such copy is correct and complete as of the
date hereof.
(d) Incumbency. Certification of incumbency of all
officers of Borrower and EWC, respectively, executed by the president
or vice president and by the corporate secretary, as of the effective
date hereof, certifying the name and signature of each such officer.
(e) Resolutions. A copy of corporate resolutions of
Borrower and EWC, respectively, approving this Agreement, authorizing
the transactions contemplated hereby, and authorizing and directing a
named officer or officers to sign and deliver all Loan Documents to be
executed, duly adopted by the board of directors, accompanied by the
certificate of the corporate secretary, dated the date hereof, that
such copy is a true and complete copy of resolutions duly adopted by
the board of directors, and that such resolutions have not been
amended, modified, or revoked in any respect and are in full force and
effect as of the date hereof. Such resolutions shall be in form and
substance satisfactory to Agent, and in the case of EWC, shall include
a bona fide finding by its board of directors that execution, delivery
and performance of this Agreement is expected to directly and
indirectly benefit EWC.
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(f) Second Amended and Restated Financing Agreement.
This Agreement, duly executed.
(g) Revolving Notes. The Revolving Notes to be delivered
to all Lenders, duly executed.
(h) Guaranty. The Guaranty, duly executed by EWC.
(i) Insurance. Evidence of insurance in compliance with
the requirements of paragraph 7.23.
(j) Affiliate Subordination Agreements. All Affiliate
Subordination Agreements, if any, required by Agent under paragraph 7.18.
(k) Opinion of Borrower's Counsel. An opinion of counsel
for Borrower, in form and substance satisfactory to Agent.
(l) Other Documents. Such other items as Agent may
reasonably request in order to perfect or protect its interests and rights
under the Loan Documents.
5.2 Loans Under Facility. As a condition to each Loan under the
Facility, each of the following requirements must be satisfied in Agent's
discretion: (a) Borrower shall be current with respect to the delivery of
Borrowing Base Reports and all items as required under paragraph 5.1, and the
Borrowing Base must be confirmed by Agent, (b) the amount of Loans requested
does not exceed the Availability as of the date of such Loans, (c) all
representations and warranties contained in Article VI shall be true, correct
and complete in all material respects except as supplemented pursuant to
paragraph 7.12, and (d) no Event of Default shall have occurred and be
continuing, or shall result from such Loans, and no other event or condition
which is reasonably expected to result in a Material Adverse Effect or would be
the subject of a required notice under paragraph 7.13 shall be in existence.
Any request for Loans under the Facility at a time when any of the foregoing
requirements is not satisfied may be declined by Agent without prior notice.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
6.1 Corporate Name; Trade Names. Borrower is conducting,
transacting, and carrying on its business under its corporate name as
designated in paragraph 1.10, and under the name "Encore Wire," and is not
engaged in business under any other name.
6.2 Chief Executive Office. Borrower's chief executive office
is located at the address specified for Borrower in paragraph 1.12.
6.3 Corporate Existence. Borrower is a corporation, duly
incorporated, validly existing, and in good standing under the laws of the
State of Delaware, and is duly qualified or licensed to transact business in
all jurisdictions the laws of which require it to be so qualified or licensed.
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6.4 Corporate Power and Authority; Validity. Borrower possesses
all requisite power and authority to own, lease and operate its properties and
to carry on its business and to execute, deliver, and comply with the Loan
Documents. Each of the Loan Documents has been duly authorized by all
necessary corporate action and has been duly executed and delivered by
Borrower, and evidences valid and binding obligations enforceable in accordance
with its respective terms.
6.5 No Conflicting Agreements. Borrower represents that the
execution, delivery and performance of the Loan Documents will not violate its
articles of incorporation or bylaws, nor constitute a default under, or result
in a breach of, any contract, agreement, or other instrument to which it is a
party or which is applicable to its property.
6.6 Share Ownership. Each of Borrower's outstanding shares has
been duly and validly issued and is fully paid and nonassessable. There are no
subscriptions, options to purchase, conversion or exchange rights, warrants or
other agreements, claims or commitments of any nature obligating Borrower to
issue, transfer, deliver or sell additional shares of its capital stock, other
than as previously disclosed to Agent in writing.
6.7 Subsidiaries. Exhibit 6.7 is a true and correct copy of the
following with respect to each of the Subsidiaries: (i) jurisdiction of
incorporation, (ii) number of shares of stock of each class authorized, (iii)
the number of shares of each class of stock outstanding and (iv) the number,
and the percentage, of each such class of outstanding shares owned by Borrower
or any other Subsidiary. Each Subsidiary is a corporation organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now conducted
and proposed to be conducted. All outstanding shares of stock of each
Subsidiary have been validly issued and are fully paid and non-assessable, and
all shares owned by Borrower are free and clear of any lien, pledge, security
interest or other encumbrance.
6.8 Location of Books and Records. Borrower represents and
warrants to Agent that all of its books and records are located at Borrower's
chief executive office designated in paragraph 1.12, and at such other
locations, if any, as are specified in Exhibit 6.8. Exhibit 6.8 correctly
identifies the locations where all Inventory will be maintained. Borrower
agrees that it will promptly notify Agent if it maintains such books and
records at any location other than its chief executive office and those listed
in Exhibit 6.8, and will provide Agent, upon request, with a report of the
location of its Inventory, which report shall be delivered to Agent within
fifteen (15) days after such request.
6.9 Receivables, Inventory Free and Clear. Borrower represents
to Agent that no security interests, liens or other encumbrances exist with
respect to any of the Receivables or Inventory, except for Permitted
Encumbrances.
6.10 Financial Statements. Borrower has delivered to Agent
financial statements respecting its financial condition and operations for
Agent's review and reliance in connection with approving the Facility. All of
such financial statements were prepared in accordance with GAAP, and are
correct and complete, and fairly present the financial condition of Borrower on
the respective dates thereof and the results of its operations for the
respective periods then ended. There has been no material adverse change
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in the business, properties or financial condition of Borrower since the dates
of such financial statements, respectively.
6.11 Litigation. Other than as disclosed to Agent in Exhibit
6.11, Borrower represents that it is not a party to any pending lawsuits or
proceedings before or by any state or federal court or governmental agency or
instrumentality, and is not aware of any threatened or potential lawsuits,
proceedings, claims, or investigations. The items, if any, disclosed in
Exhibit 6.11, in the event of any unfavorable or adverse determination, will
not result in or cause a Material Adverse Effect.
6.12 Compliance with Laws. Borrower represents that it is not in
violation of any laws, regulations and orders in any respect which will result
in or cause, or reasonably would be expected to result in or cause, a Material
Adverse Effect.
6.13 Judgments. There are no outstanding or unpaid judgments
against Borrower.
6.14 Taxes. Except as set forth in Exhibit 6.14, all tax returns
or filings required to be filed by Borrower have been filed and all taxes
imposed upon Borrower which are due and payable have been paid.
6.15 Title to Property. Borrower has good and marketable title
to all property reflected in the financial statements previously delivered to
Agent or purported to have been acquired since such date, except property sold
or otherwise disposed of subsequent to such date in the ordinary course of
business. Borrower possesses all patents, patent rights, licenses, trademarks,
trademark rights, trade names, trade name rights, and copyrights which are
required to conduct its business as now conducted without any known
infringement or conflict by or against the rights of any Person.
6.16 Consents. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution,
delivery and performance of the Loan Documents. Borrower has all required
governmental permits and licenses, if any, on account of its operations and
activities and is in full compliance with the terms and conditions thereof, and
all such permits and licenses are in full force and effect.
6.17 Full Disclosure. Borrower has disclosed to Agent all
material facts known to Borrower concerning its financial condition and
business operations. All information furnished by Borrower to Agent was true
and complete at the time of delivery thereof to Agent, and there has been no
material change in any such information except as may have been disclosed by
Borrower to Agent in writing. There is no fact known to Borrower which would
be reasonably expected to result in a Material Adverse Effect during the term
of this Agreement.
6.18 Solvency. As of, and immediately following the effective
date of this Agreement: (i) the fair saleable value of all assets of Borrower
exceeds the amount of all of Borrower's existing debts and liabilities
(including contingent liabilities), (ii) the assets of Borrower do not
constitute an unreasonably small capital for the operation of Borrower's
business as now conducted and as intended to be conducted, taking into account
all known or projected capital requirements for such operations, (iii)
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Borrower does not intend to incur debts beyond its ability to pay as they
mature, and (iv) Borrower's cash flow is sufficient to pay all existing debts
and liabilities as they become due.
6.19 Employee Relations. Borrower is not aware of any
contemplated, threatened or pending strike, work stoppage or other labor
dispute involving its employees or the employees of any Affiliate.
6.20 Employee Benefit Plan. Neither Borrower nor any of its
ERISA Affiliates, nor any Plan, is in material violation in form or in
operation of any provision of ERISA or any other applicable state or federal
law, including the requirements of the IRC. No Prohibited Transaction or
Reportable Event has occurred with respect to any Plan which reasonably would
be expected to result in a Material Adverse Effect. No notice of intent to
terminate a Plan under Title IV of ERISA has been filed within the 24-month
period preceding the date hereof, nor has any Plan been terminated under
Section 4041(c) of ERISA since September 2, 1974. The PBGC has not instituted
proceedings to terminate or appoint a trustee to administer a Plan, and no
event has occurred and no condition exists which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan. Neither Borrower nor any ERISA Affiliate has incurred
or expects to incur any withdrawal liability to any multiemployer plan within
the meaning of Section 3(37) or Section 3001(a)(3) of ERISA or Section 414 of
the IRC. Neither Borrower nor any ERISA Affiliate has any obligation to
provide medical benefits or coverage to any former employee other than as
required under Section 4980B of the IRC or Part 6 of Title I of ERISA. Each
Employee Benefit Plan subject to Section 4980B of the IRC has satisfied the
applicable requirements of Section 4980B of the IRC. Each Plan meets the
minimum funding requirements of IRC Section 412 and no waiver from the minimum
funding requirements has been applied for or approved pursuant to Section
412(d) of the IRC. The reporting and disclosure requirements of each Plan have
been timely and completely satisfied. Neither Borrower, any ERISA Affiliate
nor any fiduciary of any Plan has engaged in conduct that would be a breach of
any duty under Part 4, Subtitle B, Title I of ERISA. There are no actions,
suits or claims pending (other than routine claims for benefits) or, to the
knowledge of Borrower or any ERISA Affiliate, threatened against, or with
respect to, any Plan or its assets, if any. Each Plan which is a "welfare
benefit plan," as described in Section 3(1) of ERISA, may be unilaterally
amended or terminated in its entirety without liability except as to benefits
accrued prior to such amendment. Termination of employment of any employee of
Borrower or any ERISA Affiliate would not result in payments which, in the
aggregate, would result in imposition of the sanctions imposed under Section
280G or Section 4999 of the IRC.
6.21 Environmental Matters. Except as set forth in the
environmental site assessment previously delivered to Agent pursuant to
paragraph 5.1(o) of the 12/31/93 Financing and Security Agreement, Borrower
represents and warrants to Agent that to the best of Borrower's knowledge: (a)
all of Borrower's activities and conduct of business related to the use and
handling of Hazardous Materials, comply and have at all times complied in all
material respects with all Environmental Requirements; (b) neither Borrower nor
any prior owner of the Collateral (as defined in the 12/31/93 Financing and
Security Agreement) has received notice or other communication concerning any
alleged violation of Environmental Requirements, whether or not corrected to
the satisfaction of the appropriate authority, or notice or other communication
concerning alleged liability for Environmental Damages, and there exists no
writ, injunction, decree, order, judgment or lien, nor any lawsuit, claim,
proceeding citation, directive, summons or investigation, pending or
threatened, relating to the ownership, use, maintenance or operation of
Borrower's business or any associated real property, by any Person, or from
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alleged violation of Environmental Requirements; (c) Borrower has all permits
and licenses required to be issued to it by any governmental authority on
account of any or all of its activities, and is in compliance in all material
respects with the terms and conditions of all such permits and licenses. No
change in the facts or circumstances reported or assumed in the application for
or granting of any such permits or licenses exists, and such permits and
licenses are in full force and effect.
6.22 Representations and Warranties Cumulative. The
representations and warranties contained in this Article VI are in addition to
all other representations and warranties provided in the Loan Documents.
ARTICLE VII. COVENANTS
Throughout the Contract Term and until payment and performance in full
of the Obligations, Borrower agrees as follows (unless otherwise allowed by
prior written consent of Agent):
7.1 Compliance Certificate. Within forty-five (45) days
following the end of each fiscal quarter, Borrower shall deliver to Agent a
certificate signed by the president or chief financial officer of Borrower
certifying to Agent that no event or condition that would be the subject of a
required notice under paragraph 7.12 or paragraph 7.13 is in existence as of
the date of such certificate. Such certificate shall be deemed to be a
continuing representation and warranty pending any subsequent certification or
notification by Borrower respecting its compliance or non-compliance with this
Agreement, and Borrower acknowledges that Agent shall rely upon the same in
making loans under the Facility.
7.2 Authority. Immediately following any effective change
thereof (and at such other times, from time to time, at the request of Agent)
Borrower shall certify to Agent the names and signatures of all Persons
authorized to execute and deliver Borrowing Base Reports to Agent and any other
documentation contemplated by or relating to any of the Loan Documents.
7.3 Books and Records; Inspection.
7.3.1 Books and Records. Borrower shall keep and
maintain proper, complete and consistent books of record and account
respecting Borrower's affairs and financial condition in accordance
with GAAP.
7.3.2 Inspection. Agent shall have the right without
hindrance or delay to conduct field examinations to inspect, audit and
copy Borrower's books, records, journals, correspondence and other
records and data relating to Borrower's business and its properties.
During normal business hours, Agent is authorized to discuss
Borrower's affairs with any Person, including without limitation
employees of Borrower, as Agent may deem necessary in relation to
Borrower's financial condition or Agent's rights under the Loan
Documents. To the extent not prohibited under the terms of Borrower's
agreement with any credit reporting service, bureau or similar
service, Agent shall have full access to all records available to
Borrower from such credit reporting service, bureau or similar service
and shall have the right to examine and make copies of any such
records. Agent may exhibit a copy of this Agreement to such service
and such
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service shall be entitled to rely on the provisions hereof in
providing access to Agent as provided herein.
7.4 Corporate Existence. Borrower shall preserve and maintain
its corporate existence, good standing and authority to transact business in
all jurisdictions where necessary for the proper conduct of its business, and
shall maintain all of its properties, rights, privileges and franchises
necessary or desirable in the normal conduct of its business.
7.5 Annual Financial Statements. Borrower shall deliver to
Agent, as soon as practicable after the end of each fiscal year, and in any
event within one hundred forty-five (145) days thereafter, its unqualified
audited consolidated and consolidating balance sheet as of the end of such
fiscal year, and its audited consolidated and consolidating statement of income
and retained earnings and consolidated and consolidating statements of cash
flow, in reasonable detail, prepared in accordance with GAAP and certified by
an independent certified public accounting firm acceptable to Agent as fairly
presenting Borrower's financial condition and results of operations. Such
financial statements shall be accompanied by a copy of the report to management
delivered to Borrower by such accountants and also by a statement signed by
Borrower's president or chief financial officer representing to Agent that such
financial statements are true and complete and fairly present Borrower's
financial condition and results of operation, and that no event or condition
that would be the subject of a required notice under paragraph 7.12 or
paragraph 7.13 is in existence as of the date of delivery of such statements.
7.6 Interim Financial Statements. Borrower shall deliver to
Agent, as soon as practicable after the end of each Fiscal Quarter and in any
event within forty-five (45) days thereafter, a consolidated and consolidating
balance sheet as of the end of such quarter, and consolidated and consolidating
income statement for such quarter and for the period from the beginning of the
current fiscal year to the end of such quarter, in reasonable detail and
prepared in accordance with GAAP. Such financial statements shall be
accompanied by a statement signed by Borrower's president or chief financial
officer representing to Agent that such financial statements are true and
complete and fairly present Borrower's financial condition and results of
operations, and that no event or condition that would be the subject of a
required notice under paragraph 7.12 or paragraph 7.13 is in existence as of
the date of delivery of such statements.
7.7 SEC Filings. Borrower shall deliver to Agent a correct and
complete copy of (i) each Form 10-K Report filed with the Securities and
Exchange Commission, which shall be delivered to Agent as soon as possible upon
filing thereof and in any event within one hundred forty-five (145) days after
the end of each fiscal year of Borrower, (ii) each Form 10-Q Report filed with
the Securities and Exchange Commission, which shall be delivered to Agent as
soon as possible upon filing thereof and in any event within forty-five (45)
days after the end of each fiscal quarter of Borrower and (iii) each other
filing from time to time made with the Securities and Exchange Commission,
which shall be delivered to Agent as soon as possible upon filing thereof.
7.8 Borrowing Base Reports. On or before the thirtieth (30th)
day of each calendar quarter, and at such other times as Agent may request,
Borrower shall execute and deliver to Agent, in form satisfactory to Agent and
Borrower, a Borrowing Base Report setting forth a certification of Eligible
Accounts and Eligible Inventory as of the last day of the preceding calendar
quarter and such other date
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as may be specified in such other Borrowing Base reports Borrower may deliver
to Agent, and calculation of the Borrowing Base. Each Borrowing Base Report
shall include a reconciliation of the calculation of the Borrowing Base as
certified in the most recent Borrowing Base Report delivered to Agent, and be
accompanied by such documents and supporting information relating to Eligible
Accounts and Eligible Inventory as Agent may request. Borrower shall maintain,
and shall furnish to Agent at Agent's request, such supporting documents or
copies as Agent may require including, but not limited to: a schedule of
Eligible Accounts created, and Eligible Inventory purchased and received, since
the previous Borrowing Base Report delivered to Agent; copies of invoices and
supporting delivery or service records in connection therewith; a schedule of
collections received; copies of credit memos or other advices of credit or
reductions against amounts previously billed; and such other reports as Agent
may request from time to time. If any of such records or reports are prepared
by an accounting service or other agent, Borrower hereby authorizes such
service or agent to deliver such records, reports and related documents to
Agent. Agent may exhibit a copy of this Agreement to any such service or agent
and such service or agent shall be entitled to rely on the provisions hereof in
providing such documentation to Agent. Each Borrowing Base Report shall bear a
signed statement by an authorized officer of Borrower certifying the accuracy
and completeness of all information included therein and shall incorporate
therein by reference, as if fully set forth therein, all the terms and
provisions hereof. The execution and delivery of a Borrowing Base Report shall
in each instance constitute an agreement, representation and warranty by
Borrower to Agent that: Borrower is the sole owner of Receivables and
Inventory included therein free from any lien, security interest or
encumbrance; each account included therein is in existence, unconditional and
valid, and arose from a bona fide outright sale of Inventory by Borrower, in
the ordinary course of business, for liquidated amounts as set forth in the
Borrowing Base Report, and such Inventory has been delivered or provided to the
respective account debtors; no account included therein arose in connection
with a contract or assignment which purports to make an assignment or security
interest therein void or conditions such assignment or security interest on
consent of the account debtor; no account is subject to any sale, assignment,
claim or security interest of any character and Borrower will not make any sale
or other assignment thereof or create any other security interest therein; no
account is subject to any claim for credit, deduction, allowance, extension or
adjustment, defense, dispute, setoff or counterclaim, except for discounts for
early payment and volume purchases and credits for returns of merchandise, as
allowed by Borrower in the ordinary course of business as previously disclosed
to Agent and with respect to early payment discounts, as reflected on the face
of the invoice evidencing such account; all Inventory reflected in such
Borrowing Base Report is held for sale in the ordinary course of Borrower's
business, and no such Inventory is located at any location in breach of the
requirements of this Agreement and no negotiable documents have been issued in
respect of any such Inventory; no Inventory reflected in such Borrowing Base
Report is returned Inventory subject to the restrictions of paragraph 7.22
unless otherwise disclosed to Agent in writing.
7.9 Aging Reports. Contemporaneously with delivery of each
Borrowing Base Report, and in any event within thirty (30) days after the end
of each calendar quarter, Borrower shall furnish to Agent an analysis of
amounts owing on all accounts included within the Receivables, showing an aging
as follows: (i) those aged 60 days or less from date of invoice, (ii) those
aged over 60 days, but less than 91 days, from date of invoice, (ii) those aged
over 90 days, but less than 121 days, from date of invoice, and (iii) those
aged over 120 days from date of invoice. Such analysis shall include a listing
of the name and complete address of each account debtor and such other
information as Agent may request.
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7.10 Budget Updates and Additional Information. In addition to
information and items otherwise specifically required by the Loan Documents,
Borrower shall furnish to Agent within 30 days after the last day of each
calendar quarter quarterly reports setting forth expenditures made by Borrower
for the prior quarter against the projected quarterly amounts of expenditures
for such quarter for each line item appearing in the Budget (as such term is
defined in paragraph 7.21(b) and all such other information, documentation or
projections respecting its business affairs, assets, and liabilities as Agent
may reasonably request.
7.11 Notification of Contingent Liabilities. Promptly upon
receiving notice or otherwise becoming aware thereof, Borrower shall notify
Agent of any pending or threatened lawsuit, claim, action, liability,
investigation or proceeding that would be treated as a contingent liability
under GAAP and is in an amount in excess of $100,000.00.
7.12 Notification of Material Changes. Borrower will notify
Agent in writing at least thirty (30) days prior to the occurrence of any of
the following: (i) change of Borrower's name, (ii) change of Borrower's
address or principal place of business, (iii) change of the location of
Borrower's books and records, (iv) the opening of any new place of business or
the closing of any existing place of business (excluding any such places of
business that result solely from arrangements made by Borrower with its sales
representatives) in the ordinary course of business, or (v) use of any trade
name, fictitious name or other assumed name. Borrower shall promptly notify
Agent of any change in any other material fact or circumstance represented or
warranted in any of the Loan Documents.
7.13 Notification Regarding Default. Borrower shall immediately
notify Agent in writing upon becoming aware of the existence of any condition
or event which constitutes an Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default,
therein specifying the nature and period of existence thereof and what action
Borrower is taking or proposes to take with respect to such condition or event.
Borrower shall immediately notify Agent in writing if it knows, or reasonably
expects, that an Event of Default will occur, therein specifying the nature of
the anticipated Event of Default. Without limiting the foregoing, Borrower will
also immediately notify Agent of any of the following: (i) Borrower's board of
directors has authorized the filing by Borrower of a petition in bankruptcy,
(ii) Borrower is aware that any covenant under this Agreement has been
breached, or reasonably expects that any such covenant will be breached, (iii)
Borrower is aware that any account debtor obligated on any Receivables is in
bankruptcy (provided, that no such notice shall be required with respect to any
such account debtor (a) from whom the aggregate account balance owing to
Borrower is less than ten percent (10%) of the total aggregate amount of
Borrower's accounts and (b) to whom Borrower's aggregate sales during the
preceding twelve (12) calendar months was less than ten percent (10%) of the
total aggregate of all of Borrower's sales during such period), and (iv)
repossession or attempted repossession by any Person of any Inventory.
7.14 Payment of Taxes. Borrower shall promptly pay, or cause to
be paid, when due, any and all taxes except such taxes as may be contested in
good faith by appropriate proceedings, provided, that adequate reserves shall
be maintained as are appropriate according to GAAP. At Agent's request pending
resolution of any such contest and prior to the delinquency of such tax,
Borrower shall furnish to Agent a cash reserve in the amount of the tax,
together with a reasonable additional sum to pay all projected costs, interest
and penalties in connection therewith, conditioned that such tax, together with
applicable
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interest, cost, and penalties, if any, be timely paid to the extent required
upon resolution of such contest. Borrower agrees that it shall immediately
notify Agent of the initiation of any such contest and advise Agent from time
to time of the status thereof. Borrower shall promptly pay any amounts
adjudged to be due pursuant to any such contest, with all costs, penalties, and
interest thereon, before such judgment becomes final or any writ or order is
issued under which Borrower's property, or any portion thereof, may become
subject to any lien or encumbrance.
7.15 Compliance with Laws. Borrower shall comply with all
applicable laws, regulations and orders applicable to it or its property, a
violation of which would reasonably be expected to result in a Material Adverse
Effect. At Agent's request, Borrower will provide Agent with evidence of
Borrower's compliance with Environmental Requirements.
7.16 Compliance with Agreements. Borrower shall comply in all
material respects with all agreements, indentures, mortgages, or documents
binding upon Borrower or affecting its property or business.
7.17 Fees, Costs and Expenses. Borrower agrees to promptly pay
upon demand all costs, fees and expenses as provided in paragraph 11.11.
7.18 Subordination Agreements. At Agent's request, all present
and future obligations due by Borrower to Affiliates (excluding ordinary course
items such as travel and expense reimbursements and other similar ordinary
course items determined by agreement) shall be subordinate in right of payment
and claim to the Obligations, pursuant to definitive subordination agreements
executed by Borrower and such Affiliates in form satisfactory to Agent.
7.19 Change of Fiscal Year. Borrower shall notify Agent at least
ninety (90) days prior to the effective date of any change in its fiscal year.
7.20 Employee Benefit Plans. Borrower shall timely deliver the
following to Agent: (a) a copy of any notice of noncompliance received from the
PBGC under Section 4041(b)(2)(c), within three (3) days after receipt of such
notice; (b) a copy of any notice received by Borrower or any ERISA Affiliate,
or the administrator of any Plan, that the PBGC has instituted proceedings to
terminate such Plan or to appoint a trustee to administer such Plan, promptly
upon receipt and in no event more than three (3) days after the receipt of such
notice; (c) a copy of any notice received by Borrower or any ERISA Affiliate
concerning the imposition of any withdrawal liability under Section 4202 of
ERISA, within ten (10) days after receipt thereof by Borrower or such ERISA
Affiliate; (d) a copy of any notification of intention to impose or assert
withdrawal liability under ERISA against Borrower or any ERISA Affiliate,
promptly upon receipt thereof and in any event within three (days) of receipt
thereof; and (e) a copy of any notice from the Internal Revenue Service
regarding revocation or investigation of possible revocation of the qualified
status of any Plan under the IRC, promptly upon receipt thereof and in any
event within three (3) days after receipt thereof. If requested by Agent,
Borrower shall timely deliver the following to Agent: (f) a copy of all
materials required to be filed with the PGBC with respect to any Reportable
Event, within ten (10) days after the earlier of the filing or the occurrence
thereof; (g) a copy of any notice sent by Borrower to participants of a Plan of
Borrower's intent to terminate such Plan, no later than the date such notice is
required to be provided to participants under Section 4041(a)(2) of ERISA;
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(h) a copy of each annual and other report with respect to each Plan or any
trustee created thereunder, promptly after the filing thereof with the United
States Secretary of Labor or the PBGC; and (i) such additional information
concerning any of Borrower's Employee Benefit Plans as may be requested by
Agent. Borrower shall make prompt payment of all contributions required under
all Plans to the extent required to meet the minimum funding standard set forth
in ERISA with respect to such Plans, but shall reduce contributions or benefits
if and to the extent necessary to avoid an Event of Default hereunder to the
extent such reduction is not prohibited by applicable provisions of ERISA.
7.21 Financial Covenants.
(a) Borrower agrees that the following financial
covenants must be maintained as set forth herein. Borrower's
compliance shall be measured as of the end of each Fiscal Quarter,
unless the context provides otherwise.
1. Fixed Charge Ratio. Fixed Charge Ratio shall
not at any time be less than 2.5 to 1.
2. Funded Debt to EBITDA. Funded Debt to EBITDA
shall not at any time be more than 3.0 to
1.0.
3. Capital Expenditures. Capital Expenditures
shall not exceed in any fiscal year the sum
of (i) $5,000,000.00, (ii) expenditures made
pursuant to the line item designated "Other
Equipment" in the Budget, but only up to an
aggregate amount of $4,000,000.00, and (iii)
the expenditures provided in the Budget for
construction of the Rod Mill and Distribution
Center for such fiscal year. Capital
Expenditures for the Rod Mill and
Distribution Center (A) may not exceed
$23,500,000.00 in the aggregate for the
entire project and (B) may not exceed
$1,000,000.00 above the amount provided in
the Budget for any single line item which is
included in the construction costs for the
Rod Mill and Distribution Center.
(b) For purposes of measuring the financial covenants
under this paragraph, the following definitions shall apply, each
determined on a consolidated basis for Borrower and the Subsidiaries
according to GAAP:
1. "Budget" means the budget attached hereto as
Exhibit 7.21(b)(1).
2. "Capital Expenditures" means all expenditures
which are classified as capital expenditures
according to GAAP.
3 "EBITDA" means an amount equal to the sum of
the following, determined for the preceding
four (4) completed Fiscal Quarters: (i)
income before provision for income taxes plus
(ii) all interest charges paid or accrued
plus (iii) depreciation and amortization.
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4. "Fixed Charge Ratio" means the ratio of the
following, determined for the preceding four
(4) Fiscal Quarters: (a) the sum of income
before provision for income taxes plus Lease
Expense plus Interest Expense, (b) divided by
the sum of Lease Expense plus Interest
Expense.
As used herein "Lease Expense" means all
operating lease expenses and "Interest
Expense" means all interest charges paid or
accrued, excluding capitalized interest, if
any.
5. "Funded Debt" at any time means an amount
equal to the aggregate principal amount
outstanding at such time under the Facility.
6. "Rod Mill and Distribution Center" means the
rod mill and distribution center to be
constructed by Borrower, the costs of which
are set forth in the Budget.
7.22 No Liens; Inventory. (i) Borrower covenants and agrees that
it will not grant, or suffer to exist, any security interest, lien or other
encumbrance on any of its assets other than liens with respect to indebtedness
permitted by paragraph 7.26 (c) and (d) and Permitted Encumbrances and (ii) all
such assets shall at all times be and remain free and clear of security
interests, liens or other encumbrances other than Permitted Encumbrances.
Borrower represents and warrants to Agent that all Inventory shall be held for
sale in the ordinary course of Borrower's business, and is and will be fit for
such purpose. Borrower will keep the Inventory in good and marketable
condition, at its own expense. All sales of Inventory shall be in accordance
with applicable law. Borrower will maintain a perpetual inventory system for
finished goods at all times. Borrower will conduct a physical count of the
Inventory at least once per calendar year and at Agent's request shall promptly
supply Agent with a copy of such count. No negotiable documents have been
issued in respect of any Inventory, and none shall be issued without prior
written notice to Agent. No Inventory is held by Borrower on consignment or
approval, or on a sale or return, bill-and-hold, guaranteed sale, repurchase or
similar basis and, no Inventory has been sold or delivered to any Person on
consignment or approval, or on a sale or return, bill-and-hold, guaranteed
sale, repurchase or similar basis. Borrower will not acquire or accept any
Inventory on consignment or approval, or on a sale or return, bill-and-hold,
guaranteed sale, repurchase or similar basis without the prior written consent
of Agent and Borrower will not sell any Inventory on consignment or approval,
or on a sale or return, bill-and-hold, guaranteed sale, repurchase or similar
basis without the prior written consent of Agent, provided that, this shall not
preclude Borrower from holding at Borrower's facilities raw materials and other
goods owned by suppliers and other third parties (separately identified and
segregated from the Inventory), in exchange for such consideration as Borrower
deems to be adequate. Unless Agent agrees otherwise, all returned Inventory
shall be segregated from all other Inventory, and shall not be reported as
Eligible Inventory, unless and until Borrower demonstrates to Agent's
satisfaction that such returned Inventory is in saleable condition and meets
all criteria for Eligible Inventory. Unless otherwise agreed by Agent, the
amount of Borrower's accounts relating to all returned Inventory shall be
deemed excluded from Eligible Accounts. Except for sales in the ordinary
course of business, Borrower will not deliver possession or control of any
Inventory held at Borrower's chief executive office to any Person without
Agent's prior written consent. At Agent's request, Borrower will cause the
landlord to execute and deliver to Agent a landlord's waiver with respect to
any leased locations where
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any Inventory will be located, thereby waiving any right to claim a landlord's
lien therein. Borrower shall immediately notify Agent upon receipt of any
notice from any Person claiming past due rent, fees or other charges in respect
of any Inventory.
7.23 Insurance. Borrower shall keep and maintain adequate
insurance with respect to its business and property, written by insurers
acceptable to Agent (or, as to workers' compensation or similar insurance,
self-insurance authorized by the jurisdiction in which it operates). Such
insurance shall be with respect to loss, damages, and liability of amounts not
less than reasonably requested by Agent, and shall include, at minimum,
extended coverage insurance, insurance against business interruption, insurance
for workers compensation, and insurance for general premises liability, fire,
theft, burglary, pilferage, loss in transit, casualty and all risk. Borrower
will make timely payment of all premiums required to maintain such insurance in
force. Borrower shall deliver copies of each insurance policy to Agent upon
request. If Borrower fails to procure such insurance or to pay the premiums
therefor when due, Agent shall have the right (but with no obligation) to make
such payment, which amount Borrower shall pay to Agent on demand or, at Agent's
option (but with no obligation to do so) Agent may add such amount to the
unpaid principal due by Borrower under the Facility, in which event such amount
will be deemed paid and the aggregate amount thereof shall be treated as a loan
under the Facility.
7.24 Sale of Assets. Borrower will not sell or dispose of any
assets other than the sale of Inventory, or disposal or replacement of
equipment, in the ordinary course of business.
7.25 Dissolution, Liquidation, Merger. Borrower shall not
dissolve or liquidate, or become a party to any merger or consolidation with
any Person.
7.26 Limitation on Indebtedness. Borrower will not be obligated,
directly or indirectly, for borrowed money or otherwise under any promissory
note, bond, indenture or similar instrument, other than (a) in favor of Agent
and the Lenders hereunder, (b) trade indebtedness incurred in the normal and
ordinary course of Borrower's business and not more than ninety (90) days past
due, and (c) (i) indebtedness of Borrower under capitalized leases and (ii)
purchase money indebtedness in connection with the purchase of equipment, if
the payments required in respect of such capitalized leases and purchase money
indebtedness do not exceed $100,000.00 in the aggregate during any 12-month
period.
7.27 Limitation on Contingent Liabilities. Borrower will not be
directly or indirectly liable in connection with the obligations of any Person,
whether by guarantee, surety, endorsement (other than endorsement of negotiable
instruments for collection in the ordinary course of business), agreement to
purchase or repurchase, agreement to make investments, agreement to provide
funds or maintain working capital, or any agreement to assure a creditor
against loss, other than (a) those in favor of Agent and the Lenders hereunder,
and (b) indemnities by Borrower of liabilities of directors and officers
pursuant to provisions contained in Borrower's articles of incorporation or
bylaws or otherwise permitted by applicable law and other contractual
indemnities (such as contractual indemnifications in favor of customers)
typically entered into in the normal course of business or in the course of the
issuance and sale of securities.
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7.28 Change in Business. Borrower shall not discontinue, or make
any material change in, its business as currently established, or enter any new
or different line of business not directly related to Borrower's existing line
of business.
7.29 Change in Management. There will be no change of the
personnel performing the functions of Borrower's Chairman of the Board and
President and Chief Executive Officer as such positions are presently
constituted.
7.30 Dividends, Distributions. Borrower will not declare, pay or
issue any dividends or other distributions in respect of its capital stock
(other than distributions declared or paid wholly in shares of capital stock),
or distribute, reserve, secure or otherwise make or commit distributions in
respect of its capital stock.
7.31 Redemptions and Acquisition of Shares. Borrower will not
make any payment on account of the purchase, redemption or other acquisition or
retirement of any shares of capital stock, provided, that notwithstanding the
foregoing, for so long as no Event of Default shall have occurred and be
continuing, and no other event or condition which is reasonably expected to
result in a Material Adverse Effect or would be the subject of a required
notice under paragraph 7.13 is in existence, Borrower shall not be prohibited
from repurchasing shares to be held as treasury shares, provided further that
(i) the aggregate number of such shares purchased shall not exceed 271,500 and
the aggregate purchase price paid by Borrower for all such shares shall not
exceed the maximum amount of $3,991,410.00, and (ii) no Event of Default shall
result from, or exist immediately following, any such repurchase.
7.32 Bonuses, Consulting Fees to Shareholders and Directors.
Borrower will not declare or pay any bonus compensation, or pay any consulting
fees, to any Affiliates in the aggregate for any calendar year in excess of ten
percent (10%) of the prior year's after-tax income; provided however, in
addition to such ten percent (10%), Borrower may pay $55,000.00 in each of
January, 1998 and January, 1999 for employee bonuses for the year 1996.
7.33 Loans to Officers, Directors, Shareholder and Others.
Except for usual and customary extensions of credit to customers of Borrower
made in the ordinary course of its business, Borrower will not make any loans
or advances to or for the benefit of (i) any officer, director or shareholder,
other than usual expense allowances for employees in the ordinary course of
business, or (ii) any officer, director, shareholder or other person or entity
in excess of an aggregate amount of $200,000 at any one time outstanding.
7.34 Transactions with Affiliates. Other than EWC Equipment
Loans, Borrower will not make any loans, advances or extensions of credit to or
for the benefit of any Affiliate. Borrower will not make any payment on any
obligation owing to any Affiliate (excluding reasonable expense reimbursements
in the ordinary course of business) unless specifically allowed under any
Affiliate Subordination Agreement or otherwise allowed by Agent. Borrower will
not enter into any transaction with an Affiliate except in the ordinary course
of business on terms no less favorable to Borrower, nor more favorable to such
Affiliate, than would be obtainable in a comparable arm's length transaction
with a Person who is not an Affiliate. Borrower will not enter into any
transaction with an Affiliate unless such transaction is specifically approved
by Borrower's board of directors as being an arm's length transaction on terms
no
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less favorable to Borrower, nor more favorable to such Affiliate, than would be
obtainable in a comparable arm's length transaction with a Person who is not an
Affiliate.
7.35 Acquisitions. Borrower shall not purchase or otherwise
acquire assets from any Person outside the ordinary course of business of
Borrower, except for purchases or acquisitions of equipment in an aggregate
amount which when added to all other capital expenditures for such year do not
exceed $5,000,000.00 in any calendar year.
7.36 Limitation on Investments. Borrower shall not invest in or
otherwise purchase or acquire the securities of any Person, except for ordinary
course investments in securities of the United States and certificates of
deposit issued by commercial banks organized in the United States which have
assets in excess of $1,000,000,000.
7.37 Key Man Life Insurance. Borrower shall keep and maintain
"key man" life insurance on the life of Vincent Rego, the Chairman and Chief
Executive Officer of Borrower, in an amount not less than $2,000,000.00 (the
"Key Man Life Insurance"). The Key Man Life Insurance shall be written by
financially responsible companies selected by Borrower and having an A.M. Best
rating of "A-" or better and being in a financial size category of XI or
larger, or by other companies acceptable to Agent. The Key Man Life Insurance
policy shall provide that it will not be canceled or reduced, or allowed to
lapse without renewal. Borrower will advise Agent promptly of any policy
cancellation, reduction or amendment relating to the Key Man Life Insurance.
7.38 Covenants Cumulative. The covenants contained in this
Article VII are in addition to all other covenants provided in the Loan
Documents.
ARTICLE VIII. EVENT OF DEFAULT
8.1 Event of Default. Each of the following shall constitute an
Event of Default under this Agreement:
(a) The failure to pay the outstanding principal, accrued
interest, fees or other sums constituting a part of the Obligations,
or any part thereof, when due in accordance with the terms of the Loan
Documents;
(b) Any violation, breach or default of any covenant,
agreement or other obligation under this Agreement (not otherwise
covered by paragraph 8.1(a)) or any of the Loan Documents and, in the
case of any such violation, breach or default under paragraphs 7.1,
7.2, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.14, 7.17, 7.20 or 7.21, the
same is not cured within ten (10) days after the occurrence thereof,
and in the case of any such violation, breach or default under
paragraphs 7.3.1, 7.4, 7.5, 7.12, 7.15, 7.16, 7.18 or 7.19, the same
is not remedied within thirty (30) days after the occurrence thereof.
(c) Any representation or warranty made by Borrower in
the Loan Documents was false in any material respect at the time when
made;
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(d) The filing of any petition or proceeding by or
against Borrower under the United States Bankruptcy Code, as amended
from time to time, or any other applicable state or federal law
relating to bankruptcy reorganization or other relief for debtors, or
the appointment of a conservator, receiver, trustee, or liquidator of
all or a substantial part of the assets of Borrower;
(e) The use of any funds borrowed from any Lender under
this Agreement for any purpose other than as provided in this
Agreement;
(f) Borrower fails to have discharged within a period of
thirty (30) days of filing of commencement of any attachment,
sequestration, garnishment, execution or other action against or with
respect to any of Borrower's property if the outcome, pendency or
effect thereof is reasonably expected to result in or cause a Material
Adverse Effect;
(g) Any breach or default in the payment or performance
of any material obligation, or any defined event of default, under the
terms, provisions or conditions of any contract or instrument pursuant
to which Borrower has incurred any indebtedness or obligation or other
liability to any Person, the effect of which is to have caused, or to
create an enforceable right to cause, indebtedness in a principal
amount in excess of $100,000.00 to be declared to be due and payable
prior to stated maturity;
(h) Borrower fails to have discharged within a period of
thirty (30) days after the signing or entry of any judgment against
Borrower in an amount equal to or exceeding $500,000.00;
(i) The dissolution or liquidation of Borrower, or the
taking of any action by the board of directors or shareholders of
Borrower to dissolve or liquidate;
(j) A Reportable Event or Prohibited Transaction with
respect to a Plan which could, in the opinion of Agent, result in a
Material Adverse Effect;
(k) The filing of a notice of intent to terminate a Plan
under a distress termination as described in section 4041(c) of ERISA
which could, in the opinion of Agent, result in a Material Adverse
Effect;
(l) The receipt of a notice by the plan administrator of
Borrower that the PBGC has instituted proceedings to terminate a Plan
or appoint a trustee to administer a Plan;
(m) The withdrawal by Borrower or any ERISA Affiliate
from a multiemployer plan as defined in Section 3(37) or Section
4001(a)(3) of ERISA or Section 414 of the IRC if such action could, in
the opinion of Agent, result in a Material Adverse Effect.
(n) The revocation by the Internal Revenue Service of the
qualified status of any Employee Benefit Plan if such action could, in
the opinion of Agent, result in a Material Adverse Effect.
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(o) Any qualification by a certified public accountant
relative to any annual audited financial statement delivered to Agent
under paragraph 7.5 of this Agreement that is not acceptable to Agent,
in its discretion.
(p) Notification by EWC of revocation of its Guaranty, or
repudiation by EWC of its obligations thereunder or under this
Agreement.
ARTICLE IX. REMEDIES
9.1 Refusal of Funding. No Lender shall have any obligation to
make any Loan (i) at any time when any applicable condition for funding
prescribed under this Agreement has not been fulfilled to Agent's satisfaction,
(ii) at any time when any Event of Default is in existence, or when any Default
exists, (iii) if Agent or any Lender has received any notice under paragraph
7.13 or has knowledge of any event or condition which would be the subject of
any notice required thereunder, or (iv) if Borrower has repudiated or made any
anticipatory breach of any of its obligations under this Agreement; and any
Loan requested by Borrower at any such time may be declined by all or any of
the Lenders, in whole or in part, in such Lender's sole discretion without
prior notice.
9.2 Remedies. Should an Event of Default occur at any time,
Agent may at its option, and shall if directed by all the Required Lenders,
terminate the Commitments upon written notice to Borrower and/or declare the
entire outstanding principal amount and unpaid accrued interest of any part of
the Obligations to be immediately due and payable and, in addition, may
exercise and avail itself of any and all other remedies as may be available
under the Loan Documents or as otherwise may be available according to law.
9.3 Enforcement Costs; Application of Proceeds. Borrower shall
pay to Agent and to the Lenders on demand any and all expenses, including legal
expenses, reasonable attorneys' fees, court costs, collection costs, and
traveling expenses, incurred or paid by Agent or such Lenders in protecting or
enforcing any of its or their rights hereunder. Until reimbursed or otherwise
paid, Agent and the Lenders are hereby authorized to add all such expenses to
the principal amount of the Obligations.
9.4 Waiver of Notices. Except as otherwise expressly provided
in this Agreement, Borrower expressly waives presentment,
demand, notice of intention to accelerate, notice of acceleration, protest and
any other notices of any kind with respect to the Obligations.
9.5 Setoff. Borrower irrevocably authorizes Agent and each
Lender to charge any account of Borrower maintained with Agent or any Lender
with such amount as may be necessary from time to time to pay any Obligations.
Borrower agrees that Agent and each Lender shall have a contractual right to
setoff any and all deposits or other sums at any time credited by or due from
Agent or any such Lender to Borrower against any part of the Obligations. Such
right of setoff may be exercised at any time by Agent and/or any Lender without
prior notice, irrespective of whether an Event of Default exists or whether
Agent or any such Lender has accelerated the Obligations. Upon the
occurrence of an Event of Default and for so long as the same shall remain in
existence and not cured or waived, each of Agent and any Lender shall be
entitled in its discretion to hold any such deposits or other sums pending
acceleration of the Obligations.
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9.6 Performance by Agent and/or Lenders. Should Borrower fail
to perform any covenant, duty, or agreement required by the Loan Documents,
Agent and/or any Lender may, at its sole option and election, perform or
attempt to perform same on behalf of Borrower at Borrower's cost and expense,
provided that neither Agent not any such Lender shall have an obligation or
duty to take any such action. Borrower agrees to reimburse Agent and/or the
Lenders for such costs and expenses on demand.
9.7 Non-waiver. Forbearance or indulgence by Agent and Lenders
of any Event of Default or any other event or condition which is or would be
the subject of a required notice under paragraph 7.13, at any time from time to
time, shall not be deemed a waiver of any rights of Agent and Lenders under the
Loan Documents. The acceptance by Agent and/or Lender at any time and from
time to time of any partial payment of the Obligations shall not be deemed to
be a waiver of any Event of Default then existing. No delay or omission by
Agent and/or Lenders in exercising any right or remedy shall impair such right
or remedy, or be construed as a waiver thereof, nor shall any single or partial
exercise of any such rights or remedies preclude other or further exercise
thereof. Neither Agent nor any Lender shall not be required or obligated to
file suit or otherwise pursue any other Person for enforcement or collection of
any of the Obligations.
9.8 Application of Payments. During the existence of any Event
of Default, all payments received by Agent shall be applied to the Obligations
in Agent's discretion (but in a manner consistent with its obligations to the
Lenders), and Agent shall have the right to adjust or reapply in another manner
any such payments and proceeds as Lender may determine in its discretion.
ARTICLE X. AGENT
10.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated
to Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Neither Agent nor
any of its Affiliates, officers, directors, employees, attorneys or agents
shall be liable 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, Agent
(a) may treat the payee of any Revolving Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Agent, (b) 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, (c) shall not be
required to initiate any litigation or collection proceedings hereunder or
under any other Loan Document except to the extent requested by the Required
Lenders, (d) shall not be responsible to the Lenders 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, (e) may consult with
legal counsel, 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
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faith by it in accordance with the advice of such counsel, accountants or
experts, and (f) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing reasonably 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, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders; provided, however, that Agent shall not be required to take any action
which exposes Agent to liability or which is contrary to this Agreement or any
other Loan Document or applicable law.
10.2 Rights of Agent as a Lender. With respect to its
Commitment, the Loans made by it and the Revolving Note issued to it,
NationsBank (and any successor acting as Agent) 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 Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include
Agent in its individual capacity. 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, own
securities of, and generally engage in any kind of banking, trust or other
business with, the Loan Parties or any of their Affiliates and any other Person
who may do business with or own securities of the Loan Parties or any of their
Affiliates, all as if it were not acting as Agent and without any duty to
account therefor to the Lenders.
10.3 Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on the Loans or of commitment fees) unless Agent has received
notice from a Lender or Borrower specifying such Default and stating that such
notice is a "notice of default". In the event that Agent receives such a
notice of the occurrence of a Default, Agent shall give prompt notice thereof
to the Lenders (and shall give each Lender prompt notice of each such
non-payment). Agent shall (subject to paragraph 10.1) take such action with
respect to such Default as shall be directed by the Required Lenders, provided
that unless and until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall seem advisable and in the best
interest of the Lenders.
10.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY
AGENT FROM AND HOLD AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER
PARAGRAPH 11.5, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE LOAN PARTIES UNDER
PARAGRAPH 11.5), RATABLY IN ACCORDANCE WITH ITS PRO RATA SHARE (CALCULATED ON
THE BASIS OF ITS COMMITMENT PERCENTAGE), ANY AND ALL LIABILITIES (INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY
BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE
TAKEN BY AGENT 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
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CAUSED BY AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION
OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT AGENT SHALL
BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF AGENT (EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). WITHOUT LIMITING ANY OTHER
PROVISION OF THIS PARAGRAPH 10.4, EACH LENDER AGREES TO REIMBURSE AGENT
PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF ITS
COMMITMENT PERCENTAGE) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING
ATTORNEYS' FEES) INCURRED BY AGENT 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 AGENT OR ANY LENDER IS NOT PROMPTLY REIMBURSED FOR SUCH
EXPENSES BY BORROWER.
10.5 Independent Credit Decisions. Each Lender agrees that it
has independently and without reliance on Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and its Subsidiaries and the other Loan Parties and
its own decision to enter into this Agreement and that it will, independently
and without reliance upon Agent 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. Agent shall not be required to
keep itself informed as to the performance or observance by any Loan Party of
this Agreement or any other Loan Document or to inspect the properties or books
of any Loan Party. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder or under the other Loan Documents, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other financial
information concerning the affairs, financial condition or business of any Loan
Party (or any of their Affiliates) which may come into the possession of Agent
or any of its Affiliates.
10.6 Several Commitments. The Commitments and other obligations
of the Lenders under this Agreement are several. The default by any Lender in
making a Loan 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 Loan, each nondefaulting Lender shall be obligated
to make its Loan 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 with respect to any of the
Loans which would in the aggregate exceed such Lender's Commitment with respect
to such Loans. No Lender shall be responsible for any act or omission of any
other Lender.
10.7 Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, Agent may resign at any time by giving
notice thereof to the Lenders and Borrower.
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Upon any such resignation, the Required Lenders will have the right to appoint
another Lender as a successor Agent; provided however, so long as no Default
exists, any such successor Agent must also be approved by Borrower, which
approval may not be unreasonably withheld. 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, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a commercial bank organized under the laws of
the U.S. or any state thereof or of a foreign country if acting through its
U.S. branch and having combined capital and surplus of at least $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 Agent, and the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any Agent's resignation as Agent, the
provisions of this Article X shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was Agent.
Each Agent (including each successor Agent) agrees that, so long as it is
acting as Agent under this Agreement, it shall be a Lender under this
Agreement.
ARTICLE XI. MISCELLANEOUS
11.1 Effective Date; Termination. This Agreement shall become
effective upon acceptance by Agent and each Lender, as of the effective date
specified in the preamble of this Agreement and shall continue in effect until
expiration of the Contract Term. The Facility and all Commitments hereunder
may be terminated by Agent or by the Required Lenders upon written notice to
Borrower at any time when an Event of Default is in existence. Notwithstanding
any termination or notice of termination, the Obligations and all rights and
remedies of Agent and the Lenders hereunder with respect thereto shall remain
in full force and effect until the Obligations have been paid in full.
11.2 Notices. Any consent, approval, notice, request, or demand
from one party to another must be made in writing to be effective, and shall be
deemed to have been given on the third Business Day after its deposit in the
United States mail, postage prepaid and properly addressed, by certified or
registered mail, return receipt requested, or on the Business Day on which it
is actually delivered by messenger delivery, telecopy or other electronic
transmission, whichever is earlier. The address of each party for the purposes
hereof is as set forth on the signature page for such party.
11.3 Use of Loan Proceeds. No portion of the proceeds of any
loans under the Facility shall be used to purchase or carry any "margin stock"
as defined under Regulation "U" of the Board of Governors of the Federal
Reserve System, or to repay or refinance any debt previously incurred by
Borrower for such purpose.
11.4 Lender's Records; Account Statements. Agent's records in
respect of Loans advanced, accrued interest, payments received and applied and
other matters in respect of calculation of the amount of the Obligations shall
be deemed conclusive absent demonstration of error. All statements of account
rendered by Agent to Borrower relating to principal, accrued interest or costs
owing by Borrower under this Agreement shall be presumed to be correct and
accurate unless, within thirty (30) days after receipt thereof, Borrower shall
notify Agent in writing of any claimed error therein.
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11.5 Indemnity. Borrower hereby indemnifies and agrees to hold
harmless and defend all Indemnified Persons from and against any and all
Indemnified Claims (which include, without limitation, claims arising from the
ordinary negligence of the Indemnified Persons). Upon notification and demand,
Borrower agrees to provide defense of any Indemnified Claim and pay all costs
and expenses of counsel selected by any Indemnified Person (and reasonably
acceptable to Borrower) in respect thereof. Neither Borrower nor any
Indemnified Person against whom any Indemnified Claim may be asserted shall
settle or compromise any such Indemnified Claim without the prior written
consent of the other, and the obligations of such Indemnified Person, if any,
pursuant to any such settlement or compromise shall be deemed included within
the Indemnified Claims. The indemnification provided for in this paragraph
shall survive any termination of this Agreement and shall continue for the
benefit of all Indemnified Persons. Failure of an Indemnified Person to notify
Borrower of an Indemnified Claim shall not relieve Borrower of its indemnity
obligations hereunder, except to the extent that Borrower demonstrates that
defense of such Indemnified Claim has been prejudiced thereby.
11.6 Non-applicability of Chapter 15 of Texas Credit Code.
Chapter 15 of the Texas Credit Code shall not be applicable to this Agreement
or the Facility.
11.7 Judgement Interest. It is agreed that any judgement entered
by a court in favor of Lender against Borrower for payment of the Obligations,
or any part thereof, shall provide for post-judgement interest on the amount
thereof at a rate equal to the Maximum Rate.
11.8 INTEREST LIMITATION. IN NO CONTINGENCY OR EVENT WHATSOEVER
SHALL THE AMOUNT OF INTEREST UNDER THE LOAN DOCUMENTS PAID BY ANY LOAN PARTY,
RECEIVED BY AGENT OR ANY LENDER, AGREED TO BE PAID BY ANY LOAN PARTY, OR
REQUESTED OR DEMANDED TO BE PAID BY AGENT OR ANY LENDER, EXCEED THE MAXIMUM
RATE. IN THE EVENT ANY SUCH SUMS PAID TO AGENT OR ANY LENDER BY ANY LOAN PARTY
WOULD EXCEED THE MAXIMUM RATE, AGENT OR SUCH LENDER, AS APPLICABLE, SHALL
AUTOMATICALLY APPLY SUCH EXCESS TO ANY UNPAID PRINCIPAL OR, IF THE AMOUNT OF
SUCH EXCESS EXCEEDS SAID UNPAID PRINCIPAL, SUCH EXCESS SHALL BE PAID TO SUCH
LOAN PARTY. ALL SUMS PAID, OR AGREED TO BE PAID, BY ANY LOAN PARTY WHICH ARE
OR HEREAFTER MAY BE CONSTRUED TO BE COMPENSATION FOR THE USE, FORBEARANCE, OR
DETENTION OF MONEY SHALL BE AMORTIZED, PRORATED, SPREAD AND ALLOCATED IN
RESPECT OF THE OBLIGATIONS THROUGHOUT THE FULL CONTRACT TERM UNTIL THE
OBLIGATIONS ARE PAID IN FULL. NOTWITHSTANDING ANY PROVISIONS CONTAINED IN THE
LOAN DOCUMENTS, OR IN ANY NOTES OR OTHER RELATED DOCUMENTS EXECUTED PURSUANT
HERETO, NEITHER AGENT NOR ANY LENDER SHALL EVER BE ENTITLED TO RECEIVE, COLLECT
OR APPLY AS INTEREST ANY AMOUNT IN EXCESS OF THE MAXIMUM RATE AND, IN THE EVENT
AGENT OR ANY LENDER EVER RECEIVES, COLLECTS, OR APPLIES ANY AMOUNT THAT
OTHERWISE WOULD BE IN EXCESS OF THE MAXIMUM RATE, SUCH AMOUNT SHALL
AUTOMATICALLY BE DEEMED TO BE APPLIED IN REDUCTION OF THE UNPAID PRINCIPAL
BALANCE OF THE OBLIGATIONS AND, IF SUCH PRINCIPAL BALANCE IS PAID IN FULL, ANY
REMAINING EXCESS SHALL FORTHWITH BE PAID TO THE LOAN PARTY WHICH MADE SUCH
EXCESS PAYMENT. IN DETERMINING WHETHER OR NOT THE INTEREST PAID OR PAYABLE
UNDER ANY SPECIFIC CONTINGENCY EXCEEDS THE MAXIMUM RATE, EACH LOAN PARTY, AGENT
AND EACH LENDER SHALL, TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW,
(I) CHARACTERIZE ANY NON-PRINCIPAL PAYMENT AS A STANDBY FEE, COMMITMENT FEE,
PREPAYMENT CHARGE, DELINQUENCY CHARGE OR REIMBURSEMENT FOR A THIRD-PARTY
EXPENSE RATHER THAN AS INTEREST, (II) EXCLUDE VOLUNTARY PREPAYMENTS AND THE
EFFECT THEREOF, AND (III) AMORTIZE, PRORATE, ALLOCATE AND SPREAD IN EQUAL PARTS
THROUGHOUT THE ENTIRE PERIOD DURING WHICH THE INDEBTEDNESS WAS OUTSTANDING THE
TOTAL AMOUNT OF INTEREST AT ANY TIME CONTRACTED FOR, CHARGED OR RECEIVED.
NOTHING
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HEREIN CONTAINED SHALL BE CONSTRUED OR SO OPERATE AS TO REQUIRE ANY LOAN PARTY
TO PAY ANY INTEREST, FEES, COSTS, OR CHARGES GREATER THAN IS PERMITTED BY
APPLICABLE LAW. SUBJECT TO THE FOREGOING, EACH LOAN PARTY HEREBY AGREES THAT
THE ACTUAL EFFECTIVE RATE OF INTEREST FROM TIME TO TIME EXISTING WITH RESPECT
TO LOANS MADE BY ANY LENDER TO BORROWER, INCLUDING ALL AMOUNTS AGREED TO BY
BORROWER OR CHARGED OR RECEIVED BY ANY LENDER, WHICH MAY BE DEEMED TO BE
INTEREST UNDER APPLICABLE LAW, SHALL BE DEEMED TO BE A RATE WHICH IS AGREED TO
AND STIPULATED BY THE LOAN PARTIES, AGENT AND SUCH LENDERS IN ACCORDANCE WITH
APPLICABLE LAW.
11.9 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. Neither
Borrower nor any other Loan Party may assign or transfer any of its rights or
obligations under this Agreement or any other Loan Document without the prior
written consent of Agent and all of the Lenders. Any Lender may sell
participations in 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 Commitment and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitment) shall remain unchanged, (ii)
such Lender shall remain solely responsible to Borrower for the performance of
such obligations, (iii) such Lender shall remain the holder of its Revolving
Note for all purposes of this Agreement, and (iv) the Loan Parties 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.
(b) Each of the Loan Parties and each of 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 Commitment and Loans) (each an "Assignee"); provided,
however, that (i) each such assignment may be of a varying percentage of the
Assigning Lender's rights and obligations under this Agreement and the other
Loan Documents and may relate to some but not all of such rights and/or
obligations, (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 Commitment and Loans 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 the
lesser of (A) an amount equal to $10,000,000 calculated based upon the
Commitment assigned (or, if such Commitment has terminated or expired, the
aggregate outstanding principal amount of the Loans and the Letter of Credit
Liabilities assigned), or (B) an amount equal to ten percent (10%) of the
aggregate Commitments (or, if such Commitments have terminated or expired, the
aggregate outstanding principal amount of the Loans and the Letter of Credit
Liabilities), and (iii) the parties to each such assignment shall execute and
deliver to Agent for its acceptance and recording in the Register (as defined
below), an Assignment and Acceptance, together with the Revolving Note subject
to such assignment, and a processing and recordation fee of $2,500. 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 such other date
as may be approved by Agent, (1) 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
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obligations of a Lender hereunder and under the Loan Documents, and (2) the
Assigning Lender thereunder 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 a Lender's rights and obligations
under the Loan Documents, such Lender shall cease to be a party thereto,
provided that such Lender's rights under paragraph 3.1.4, paragraph 11.5 and
paragraph 11.11 accrued through the date of assignment shall continue).
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder 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, 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 assumes no responsibility with respect to the
financial condition or results of operations of any Loan Party or the
performance or observance by any Loan 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 and
other information referred to in paragraphs 7.4, 7.5 and 7.6 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 Agent or such Assigning
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 Agreement and the other Loan Documents; (v) such Assignee
confirms that it is an Eligible Assignee; (vi) such Assignee appoints and
authorizes Agent to take such action as agent on its behalf and exercise such
powers under the Loan Documents as are delegated to 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) 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 Commitment
of, and principal amount of the Loans owing to, 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 Loan Parties, Agent 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 any Loan Party or any Lender 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 the Revolving Note subject to such assignment, Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit 1.10 hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, and (iii) give prompt
written notice thereof to Borrower. Within five (5) Business Days after its
receipt of such notice, Borrower, at Assignor's expense, shall execute and
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deliver to Agent in exchange for each surrendered Revolving Note evidencing the
Loans, a new Revolving Note evidencing such Loans payable to the order of such
Eligible Assignee in an amount equal to such Loans assigned to it and, if the
Assigning Lender has retained any Loans, a new Revolving Note evidencing each
such Loans payable to the order of the Assigning Lender in the amount of such
Loans retained by it (each such promissory note shall constitute a "Revolving
Note" for purposes of the Loan Documents). Such new Revolving Notes shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of Exhibit 1.84 hereto.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
paragraph 11.9, disclose to the Assignee or participant or proposed Assignee or
participant any information relating to Borrower or any of its Subsidiaries or
any other Loan Party furnished to such Lender by or on behalf of Borrower or
any of its Subsidiaries or any other Loan Party; provided that each such actual
or proposed Assignee or participant shall agree in writing to be bound by the
provisions of paragraph 11.29.
(g) Any Lender may assign and pledge the Revolving Note held by it
to any Federal Reserve Bank or the U.S. Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve System and/or
Federal Reserve Bank; provided, however, that any payment made by Borrower for
the benefit of such assigning and/or pledging Lender in accordance with the
terms of the Loan Documents shall satisfy Borrower's obligations under the Loan
Documents in respect thereof to the extent of such payment. No such assignment
and/or pledge shall release the assigning and/or pledging Lender from its
obligations hereunder.
11.10 Continuing Rights of Agent and Lenders in respect of
Obligations. In the event any amount from time to time applied in reduction of
the Obligations is subsequently set aside, avoided, declared invalid or
recovered by Borrower, or any taxing authority or any trustee or in bankruptcy,
or in the event Agent or any Lender is otherwise required to refund or repay
any such amount pursuant to any applicable law, then the Obligations shall
automatically be deemed to be revived and increased to the extent of such
amount as if such amount had not been so applied.
11.11 Fees, Costs and Expenses. Borrower agrees to pay all costs
and expenses (a) incurred by Agent in connection with the Loan Documents,
including without limitation: (i) negotiation, preparation and closing of the
Loan Documents, including reasonable attorneys fees and disbursements, search
fees, filing and recording fees and environmental assessment report fees and
title policy premiums, (ii) ongoing administration of the Loan Documents,
including without limitation, fees and costs incurred in consultation with
attorneys, accountants or appraisers or in connection with any factual
investigation, and (iii) negotiation, preparation and closing of any amendment,
waiver or consent relating to the Loan Documents, including attorneys fees and
disbursements, search fees, filing and recording fees, and (b) incurred by
Agent and each Lender in enforcing any provision of the Loan Documents,
collecting the Obligations, exercising any rights or remedies or pursuing or
defending any claim arising out of, or in any way relating to the Loan
Documents, including in each case, without limitation, fees and costs of
attorneys, experts or other consultants retained by Agent and each Lender in
connection therewith and any other fees pursuant to paragraph 9.3. All fees,
costs and expenses for which Borrower is obligated under the Loan Documents
shall be payable to Agent and each such Lender on demand. At such
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Lender's option, the amount of such fees, costs and expenses may be deducted
from the proceeds of any Loan hereunder or added to the unpaid principal due by
Borrower under the Facility, in which event such fees, costs and expenses will
be deemed paid and the amount thereof shall be treated as a Loan under the
Facility.
11.12 Acceptance and Performance. This Agreement shall become
effective only upon acceptance by Agent at its offices in Dallas, Dallas
County, Texas. The Obligations are payable at Agent's offices in Dallas,
Dallas County, Texas. Borrower and Agent each agrees that Dallas County, Texas
shall be the exclusive venue for litigation of any dispute or claim arising
under or relating to the Loan Documents, and that such county is a convenient
forum in which to decide any such dispute. Borrower and Agent each consents to
the personal jurisdiction of the state and federal courts located in Dallas
County, Texas for the litigation of any such dispute or claim.
11.13 Obligations. Neither Agent's nor any Lender's rights in
respect of the Obligations shall be impaired by reason that the amount thereof
at any time exceeds any stated maximum or other limitation provided herein.
11.14 Express Waivers in respect of Guaranty. In connection with
the matters provided in paragraph 2.12, EWC agrees as follows:
(a) EWC hereby waives: (1) notice of acceptance of this
Agreement; (2) notice of any loans or other financial accommodations
made or extended under the Loan Documents or the creation or existence
of any Obligations; (3) notice of the amount of the Obligations,
subject, however, to EWC's right to make inquiry of Agent or any
Lender to ascertain the amount of the Obligations at any reasonable
time; (4) notice of any adverse change in the financial condition of
Borrower or of any other fact that might increase EWC's risk under
this Agreement; (5) notice of presentment for payment, demand,
protest, and notice thereof as to any promissory notes or other
instruments among the Loan Documents; and (7) all other notices
(except if such notice is specifically required to be given to EWC
hereunder or under any of the Loan Documents to which it is a party)
and demands to which EWC might otherwise be entitled.
(b) EWC hereby waives the right by statute or otherwise
to require Agent or any Lender to institute suit against Borrower or
to exhaust any rights and remedies which Agent or any Lender has or
may have against Borrower. EWC further waives any defense arising by
reason of any disability or other defense of Borrower (other than the
defense that the Obligations shall have been fully and finally
performed and indefeasibly paid) or by reason of the cessation from
any cause whatsoever of the liability of Borrower in respect thereof.
(c) EWC hereby waives and agrees not to assert against
Agent or any Lender: (1) any defense (legal or equitable), set-off,
counterclaim, or claim which EWC may now or at any time hereafter have
against Borrower or any other party liable to Agent or any Lender; (2)
any defense, set-off, counterclaim, or claim of any kind or nature
available to any other party liable to Agent or any Lender, arising
directly or indirectly from any present or future defect in the
sufficiency, validity, or enforceability of the Obligations or any
security therefor; (3) any right or defense arising by reason of any
claim or defense based upon an election of remedies by Agent
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or any Lender under any applicable law; (4) the benefit of any statute
of limitations affecting Borrower's liability hereunder.
(d) In addition to the foregoing waivers, EWC hereby
waives outright and absolutely, any right of subrogation EWC has or
may have against Borrower with respect to the Obligations. In
addition, EWC hereby waives any right to proceed against Borrower, now
or hereafter, for contribution, indemnity, reimbursement, and any
other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or implied
contract or by operation of law, which it may now have or hereafter
have against Borrower with respect to the Obligations. EWC also
hereby waives any rights to recourse to or with respect to any assets
of Borrower. EWC agrees that in light of the immediately foregoing
waivers, the execution of this Agreement shall not be deemed to make
EWC a "creditor" of Borrower for purposes of Sections 547 and 550 of
the Bankruptcy Code.
(e) EWC consents and agrees that, without notice to or by
EWC and without affecting or impairing the obligations of EWC
hereunder, Agent and any Lender may, by action or inaction: (a)
compromise, settle, extend the duration or the time for the payment
of, or discharge the performance of, or may refuse to or otherwise not
enforce the Loan Documents; (b) release all or any one or more parties
to any one or more of the Loan Documents or grant other indulgences to
Borrower in respect thereof; (c) amend or modify in any manner and at
any time (or from time to time) any of the Loan Documents; or (d)
release or substitute any other guarantor, if any, of the Obligations,
or enforce, exchange, release, or waive any security for the
Obligations or any other guaranty of the Obligations, or any portion
thereof.
(f) Agent and each Lender shall have the right to seek
recourse against EWC to the fullest extent provided for herein, and no
election by Agent or any such Lender to proceed in one form or action
or proceeding, or against any party, or on any obligation, shall
constitute a waiver of Agent's or such Lender's right to proceed in
any other form of action or proceeding or against other parties unless
Agent or such Lender has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no
action or proceeding by Agent or any Lender under any document or
instrument evidencing the Obligations shall serve to diminish the
liability of EWC under this Agreement except to the extent that Agent
or such Lender finally and unconditionally shall have realized
indefeasible payment by such action or proceeding.
(g) EWC represents and warrants to Agent and each Lender
that it is currently informed of the financial condition of Borrower
and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. EWC
further represents and warrants to Agent and each Lender that it has
read and understands the terms and conditions of the Loan Documents.
EWC hereby covenants that it will continue to keep informed of the
financial condition of Borrower and of all other circumstances which
bear upon the risk of nonpayment or nonperformance of the Obligations.
11.15 WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO
PARTY HERETO SHALL REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION
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BETWEEN OR AMONG THEM CONCERNING THE LOAN DOCUMENTS OR ANY CLAIMS OR
TRANSACTIONS IN CONNECTION THEREWITH, IN EITHER A STATE OR FEDERAL COURT, THE
RIGHT TO TRIAL BY JURY BEING EXPRESSLY WAIVED BY ALL PARTIES HERETO. AGENT,
EACH LENDER AND BORROWER ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH FULL
KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED
HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
11.16 Copies Valid as Financing Statements. A carbon,
photographic or other reproduction, including photocopy, telecopy or electronic
transmission, of this Agreement or any financing statement shall be sufficient
as a financing statement.
11.17 GOVERNING LAW. THIS AGREEMENT, AND ALL DOCUMENTS AND
INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS, PROVIDED, THAT TO THE EXTENT
FEDERAL LAW WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY THE
LAWS OF THE STATE OF TEXAS, THEN WITH RESPECT TO THE PROVISIONS OF ANY LAW
WHICH PURPORT TO LIMIT THE AMOUNT OF INTEREST THAT MAY BE CONTRACTED FOR,
CHARGED OR RECEIVED IN CONNECTION WITH ANY OF THE OBLIGATIONS, SUCH FEDERAL LAW
SHALL APPLY.
11.18 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, TERM SHEETS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
11.19 Amendments. No amendment or waiver of any provision of this
Agreement, the Revolving Notes or any other Loan Document to which any Loan
Party is a party, nor any consent to any departure by such Loan Party
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Required Lenders and the applicable Loan Party or Loan
Parties in writing, and each such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders and the applicable Loan Party or Loan Parties, do
any of the following: (a) increase the Commitments of the Lenders or subject
the Lenders to any additional obligations; (b) reduce the principal of, or
interest on, the Loans or any fees or other amounts payable hereunder; (c)
postpone any date fixed for any payment (including, without limitation, any
mandatory prepayment) of principal of, or interest on, the Loans or any fees or
other amounts payable hereunder; (d) waive any of the conditions precedent
specified in Article V; (e) change the Commitment Percentages or the aggregate
unpaid principal amount of the Loans or the number or interests of the Lenders
which shall be required for the Lenders or any of them to take any action under
this Agreement; or (f) except as expressly authorized by this Agreement,
release any guaranty of all or any portion of the Obligations; and provided
further, however, that no amendment, waiver or consent relating to Article X
shall require the agreement of any Loan Party. Notwithstanding anything to the
contrary contained in this paragraph
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11.19, no amendment, waiver or consent shall be made with respect to Article X
hereof without the prior written consent of Agent.
11.20 EWC. EWC joins in execution of this Agreement for the
purposes provided in paragraph 2.12 and paragraph 11.14, and all purposes
incident thereto under this Agreement.
11.21 Accounting Terms. Except as otherwise specifically provided
herein, all accounting and financial terms used herein, and the compliance with
each financial covenant contained herein, shall be determined in accordance
with GAAP.
11.22 Exhibits. All exhibits referenced herein, and attached
hereto, are incorporated in this Agreement and made a part hereof for all
purposes.
11.23 Cumulative Rights. All rights and remedies of Agent and the
Lenders under the Loan Documents are cumulative, and are in addition to rights
and remedies available to Agent and the Lenders by law. Such rights and
remedies may be exercised concurrently or successively, at such times as Agent
and the Lenders may determine in their discretion. Borrower waives any right
to require marshalling.
11.24 Severability. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future laws
effective during the Contract Term, such provisions shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part of this Agreement. In
such case, the remaining provisions of the Agreement shall remain in full force
and effect and shall not be effected thereby.
11.25 Multiple Counterparts. This Agreement may be executed
simultaneously in one or more multiple originals, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Agreement.
11.26 Survival. All covenants, agreements, representations, and
warranties made by Borrower herein shall survive the execution, delivery, and
closing of this Agreement, and all documents executed in connection herewith,
and shall not be affected by any investigation made by any party.
11.27 Prior Agreements. This Agreement is executed in amendment
and restatement of (and supersedes) the Prior Financing Agreements (defined in
the preamble of this Agreement). In this connection (i) all Obligations under
the Prior Financing Agreements hereby are renewed and continued in full force
and effect as evidenced by the Revolving Note and as otherwise provided by this
Agreement Lender's rights under the "Guaranty" defined in the 12/31/93
Financing and Security Agreement rights are continued in full force and effect
as provided in the Guaranty, and in this connection, EWC acknowledges and
consents to all provisions of this Agreement.
11.28 ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM
BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL
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ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL
ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES"
SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL
CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
THE CITY OF BORROWER'S DOMICILE AT TIME OF THIS AGREEMENT'S EXECUTION
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE.
ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE
DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATIONS OF RIGHTS. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED
IN THIS AGREEMENT; OR (2) BE A WAIVER BY AGENT OR ANY LENDER OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF AGENT OR ANY LENDER
HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF OR THE
APPOINTMENT OF A RECEIVER. AGENT AND THE LENDERS MAY EXERCISE SUCH
SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY
OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. AT
AGENT'S OPTION, FORECLOSURE UNDER A DEED OF TRUST OR MORTGAGE MAY BE
ACCOMPLISHED BY ANY OF THE FOLLOWING: THE EXERCISE OF A POWER OF SALE
UNDER THE DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL SALE UNDER THE
DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL FORECLOSURE. NEITHER THIS
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF
AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT
IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR
CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
49
55
11.29 Confidentiality. Confidentiality. Agent and each Lender
agrees to exercise its best efforts to keep any information delivered or made
available by any Loan Party to it, confidential from anyone other than Persons
employed or retained by such Lender who are or are expected to become engaged
in evaluating, approving, structuring or administering the Loans; provided that
nothing herein shall prevent any Lender from disclosing such information (a) to
any other Lender, (b) to any Person if reasonably incidental to the
administration of the Loans, (c) upon the order of any court or administrative
agency, (d) upon the request or demand of any regulatory agency or authority
having jurisdiction over such Lender, (e) which has been publicly disclosed,
(f) to the extent reasonably required in connection with the exercise of any
right or remedy under the Loan Documents, (g) to such Lender's legal counsel,
independent auditors and affiliates, and (h) to any actual or proposed
participant or Assignee of all or part of its rights hereunder, so long as such
actual or proposed participant or Assignee agrees in writing to be bound by the
provisions of this paragraph 11.29.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
50
56
EXECUTED effective as of the 9th day of June, 1997.
BORROWER:
ENCORE WIRE CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
1410 Millwood Road, P.0. Box 1149
McKinney, Texas 75069-0545
Telecopy: 972-562-4744
Telephone: 972-562-9473
Attention: Mr. Scott Weaver
Vice President- Finance
GUARANTOR:
EWC LEASING CORP.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
1410 Millwood Road, P.0. Box 1149
McKinney, Texas 75069-0545
Telecopy: 972-562-4744
Telephone: 972-562-9473
Attention: Mr. Scott Weaver
Vice President- Finance
51
57
AGENT:
NATIONSBANK OF TEXAS, N.A., AS AGENT
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
NationsBank of Texas, N.A.
901 Main Street, 7th floor
Dallas, Texas 75202
Telecopy: 214-508-3140
Telephone: 214-508-0311
Attention: Todd Burns
Assistant Vice President
LENDERS:
NATIONSBANK OF TEXAS, N.A.
Commitment: $35,000,000 By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
NationsBank of Texas, N.A.
901 Main Street, 7th Floor
Dallas, Texas 75202
Telecopy: 214-508-3140
Telephone: 214-508-0311
Attention: Todd Burns
Assistant Vice President
52
58
BANK OF AMERICA, TEXAS, N.A.
Commitment: $20,000,000 By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
Bank of America of Texas, N.A.
1925 West John Carpenter Freeway
Irving, Texas 75063
Telecopy: 972-444-5181
Telephone: 972-444-7167
Attention: Donald P. Hellman
Vice President
53
59
EXHIBIT 1.10 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Form of Assignment and Acceptance
60
EXHIBIT 1.84 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Form of Revolving Note
61
EXHIBIT 6.7 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Subsidiary Information
EWC Leasing Corp.
-----------------
(i) a Nevada corporation
(ii) 1,000 shares of $.01 par value common stock authorized
(iii) 600 shares of $.01 par value common stock is outstanding
(iv) Borrower owns 100% of all issued and outstanding common stock which is 600 shares
62
EXHIBIT 6.8 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Locations
1410 Millwood Road
McKinney, Texas 75069-0545
ALL CONSIGNMENT LOCATIONS AS OF MAY 28, 1997 ARE AS FOLLOWS:
LOCATION LANDLORD
J&M Electric Sales Data Protection INC.
Tammy Gerrard c/o Bywatter Company
3315 Maggie Blvd., Suite 200 600 Courtland, Suite 550
Orlando, FL 32811 Orlando, FL 32804
Phone: 407-649-4737 Phone: 407-660-1200
Fax: 407-649-4893
Gorin-Hopper-McCoy 870 Corporation
Richard P O Box 830
6349 Peachtree Street Norcross, GA 30091
Norcross, GA 30092 Contact: Chuck Hopper
Phone: 404-432-6015
Fax: 404-432-6705
Power Corp Clarence Smitherman
Barry P O Box 4794
200 Power Corp Drive Chattanooga, TN 37405
Chattanooga, TN 37405
Phone: 615-266-1167
Fax: 615-265-2704
Gemco Sales Jack Lype
Pam 5680 Villahaven Drive
3150 Smallman Street Pittsburgh, PA 15236
Pittsburgh, PA 15201 Phone: 412-835-1873
Phone: 412-562-9300
Fax: 412-562-9028
63
Damin Sales Mid Jersey Associates
Rosanna 70 Chestnut Ridge Road
P O Box 377 Montvale, NJ 07647
28 Brunswick Avenue Tony Denis
Edison, NJ 08818-0377 Phone: 201-478-6200
Phone: 908-985-8866
Fax: 908-985-5521
Block & Associates Block & Associatres
Dennis 12171 Coyle
12171 Coyle Detroit, MI 48227
Detroit, MI 48227 Phone: 313-837-8710
Phone: 313-837-8710 Fax: 313-837-5934
Fax: 313-837-5934
Interwest Electric Sales
Bruce
2500 S. 2300 West, Ste. 27A
Salt Lake, UT 84119
Phone: 801-974-9744
Fax: 801-974-9790
L P Chick Co. LPC Corporation
Greg 512 Brookview Road
P O Box 19021 Louisville, KY 40207
1110 Industrial Blvd. Mr. Lewis P. Chick
Louisville, KY 40259 Phone: 502-896-1827
Phone: 502-964-8181
Fax: 502-964-8196
Healty-Mattos, INC. Mattos Associates
Joe 23898 Foley Street
23898 Foley Street Hayward, CA 94545
Hayward, CA 94545
Phone: 510-785-5940
Fax: 510-785-5947
64
EXHIBIT 6.11 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Pending Litigation
1. Pedro Romaro Mancera
Borrower received a letter dated April 17, 1997 indicating that Pedro
Romaro Mancera, a former employee of Borrower, has retained legal
counsel in connection with a Wrongful Termination of Employment claim
and/or an Americans With Disabilities Act Claim. As of the date
hereof, there is no pending litigation regarding such potential
claims. Borrower intends to vigorously defend any such claims.
2. Hosseininejad Electric Company v. Spag's Supply, Inc. and Encore Wire
Corporation, Civil Action No. 9662CV1965, filed November 5, 1996,
District Court, Worcester Division, Commonwealth of Massachusetts.
Plaintiff claims that it purchased defective wire from Spag's Supply,
Inc. that was manufactured by Encore Wire Corporation. Plaintiff
seeks $2,000.00 in damages plus costs, interest, and attorneys' fees.
Borrower intends to vigorously defend such claim. Borrower cannot at
this time evaluate the likelihood of an unfavorable outcome or
estimate the range of potential loss, if any.
65
EXHIBIT 6.14 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Tax Returns or Filings
None
66
EXHIBIT 7.21 TO
SECOND AMENDED AND RESTATED FINANCING AGREEMENT
BY AND BETWEEN
ENCORE WIRE CORPORATION
AND
NATIONSBANK OF TEXAS, N.A.
Budget