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EXHIBIT 10.29
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT is entered into as of
the 17th day of November, 1998 by and between TANDY BRANDS ACCESSORIES, INC., a
Delaware corporation ("Borrower"), and NATIONSBANK, N.A., a national banking
association ("Lender").
WITNESSETH:
WHEREAS, Borrower has requested that Lender provide Borrower with a
$10,000,000.00 revolving credit facility (the "Revolving Credit Loan") and a
$15,000,000.00 term loan (the "Term Loan") to fund general corporate purposes
and working capital needs.
WHEREAS, Lender is willing to provide such facilities to Borrower upon
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITION OF TERMS
1.1 Definitions. As used in this Agreement, all exhibits and schedules
hereto and in any note, certificate, report, or other Loan Documents made or
delivered pursuant to this Agreement, the following terms shall have the
respective meanings assigned to them in this Section I or in the Section or
recital referred to below:
"Acquisition Capital Expenditures" means for any period, the
aggregate expenditures, costs, financings (which shall include Capitalized
Lease financings or transactions including such leases), cash expended and stock
issued in connection with the acquisition of a business or the assets of a
business, i.e., the total "purchase price" of such acquisition which shall be
supported by appraisals, accounting practices, sales contracts or other evidence
generally utilized in reflected in the Borrower's financial statements.
"Adjusted Eurodollar Rate" means, with respect to any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16th of
1%) equal to the quotient of (a) the Eurodollar Rate with respect to such
Interest Period, divided by (b) the remainder of 1.00 minus the Eurodollar
Reserve Requirement in effect on such date.
"Advance" means (a) the disbursement by Lender of a sum or sums lent
to Borrower pursuant to this Agreement, (b) the conversion of a Borrowing from
one type of Borrowing to another type of Borrowing pursuant to Section 2.14, and
(c) the continuation of a Eurodollar Borrowing to a new Interest Period pursuant
to Section 2.14.
"Advance Date" has the meaning set forth in Section 2.3.
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"Affiliate" of any Person means any other Person directly or
indirectly, controlling, controlled by, or under common control with, such
Person.
"Agreement" means this Revolving Credit and Term Loan Agreement,
including the schedules and exhibits hereto, as the same may be modified,
amended, renewed, or extended from time to time.
"Applicable Margin" means, at the time of determination thereof, the
interest margin over the Prime Rate, the Adjusted Eurodollar Rate or the Quoted
Rate, as the case may be, as follows:
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Revolving Credit Term Loan
Commitment Commitment
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Eurodollar Prime Rate Quoted Rate Eurodollar
Borrowings Borrowings Borrowings Borrowings
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.75% 0% .75% 1.0%
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"Borrowing" means a Eurodollar Borrowing, a Prime Rate Borrowing or a
Quoted Rate Borrowing.
"Business Day" means (a) for all purposes, any day other than a
Saturday, Sunday, or day on which national banks are authorized to be closed
under the laws of the State of Texas, and (b) for purposes of any Eurodollar
Borrowing, a day that satisfies the requirements of clause (a) and is a day when
commercial banks are open for domestic or international business in London.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures and costs of the Borrower (whether paid in cash or accrued as
liabilities during that period and including that portion of Capitalized Leases
of the Borrower) during such period that, in conformity with GAAP, are required
to be included in or classified as property, plant or equipment or another
similar fixed asset account reflected on the balance sheet of the Borrower.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof, as
determined in accordance with GAAP.
"Cash Interest Expense" means, for Borrower and its Subsidiaries for
any period, total interest expense in respect of Indebtedness actually paid or
that is payable during such period, including, without limitation, all
commissions, discounts, and other fees and charges with respect to letters of
credit, but excluding interest expense not payable in cash, all as determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated and rulings issued thereunder.
"Collateral Documents" means all guaranty agreements executed or
delivered to secure the repayment of the Obligation or any part thereof.
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"Consolidated Adjusted Net Income" means consolidated net earnings
(after income taxes) of Borrower and its Subsidiaries, but excluding (a)
extraordinary gains, (b) gains due to sales or write-up of assets, (c) earnings
of any Person newly acquired, if earned prior to acquisition, or (d) gains due
to acquisitions of any securities of Borrower or any of its Subsidiaries.
"Contract Rate" means (a) with respect to a Prime Rate Borrowing, the
Prime Rate plus the Applicable Margin, (b) with respect to a Eurodollar
Borrowing, the Adjusted Eurodollar Rate plus the Applicable Margin, and (c) with
respect to a Quoted Rate Borrowing, the Quoted Rate plus the Applicable Margin.
"Current Liabilities" means current liabilities determined in
accordance with Generally Accepted Accounting Principals.
"Current Maturities of Long-Term Debt" means, as of any date, the
aggregate amount of all regularly scheduled principal payments on all
outstanding Indebtedness of Borrower and Subsidiaries that are due and payable
within twelve (12) months following such date.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization,
or similar laws from time to time in effect affecting the rights of creditors
generally.
"Dividends" in respect of any corporation, means (a) cash
distributions or other distributions on, or in respect of, any class of capital
stock of such corporation, except for distributions made solely in shares of
stock of the same class, and (b) other payments or transfers made in respect of
the redemption, repurchase, or acquisition of such stock.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"Environmental Laws" means any Legal Requirements pertaining to air,
emissions, water discharge, noise emissions, solid or liquid waste disposal,
hazardous waste or materials, industrial hygiene, or other environmental,
health, or safety matters or conditions on, under or about real property or any
portion thereof, and similar laws of any Governmental Authority having
jurisdiction over real property as such Legal Requirements may be amended or
supplemented from time to time, and regulations promulgated and rulings issued
pursuant to such laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations thereunder.
"ERISA Affiliate" means any Subsidiary or trade or business (whether
or not incorporated) which is a member of a group of which Borrower is a member
and which is under common control with Borrower within the meaning of Section
414 of the Code.
"Eurodollar Borrowing" means any portion of the principal of the Notes
with respect to which the interest rate is calculated by reference to the
Adjusted Eurodollar Rate for a particular Interest Period.
"Eurodollar Rate" means, for any Eurodollar Rate Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Dow Jones Markets Page 3750 (or any
successor page) as the London interbank offered rate for deposits in Dollars at
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approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period. If
for any reason such rate is not available, then the term "Eurodollar Rate" shall
mean, for any Eurodollar Rate Borrowing for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, then the applicable rate shall be the arithmetic mean
of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Eurodollar Reserve Requirement" means, on any day, that percentage
(expressed as a decimal fraction) that 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 maximum reserve requirements
(including, without limitation, basic, supplemental, marginal, and emergency
reserves) under Regulation D with respect to "Eurocurrency liabilities" as
currently defined in Regulation D, or under any similar or successor regulation
with respect to Eurocurrency liabilities or Eurocurrency funding. Each
determination by Lender of the Eurodollar Reserve Requirement shall, in the
absence of manifest error, be conclusive and binding.
"Event of Default" has the meaning set forth in Section 8.1
"Fixed Charges" means, for any period for Borrower and its
Subsidiaries, the sum of (a) Cash Interest Expense, (b) scheduled principal
payments of Indebtedness for borrowed money, (c) Capital Expenditures excluding
Acquisition Capital Expenditures, (d) cash Dividends, (e) treasury stock
repurchased and (f) cash tax expenses.
"Funding Loss" has the meaning set forth in Section 2.16(e).
"GAAP" means those generally accepted accounting principles and
practices, applied on a consistent basis, which are recognized as such by the
American Institute of Certified Public Accountants acting through its Accounting
Principles Board and the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances as of the
date in question.
"Governmental Authority" means, with respect to any Person, any
government (or any political subdivision or jurisdiction thereof), court,
bureau, agency, or other governmental authority having jurisdiction over such
Person or any of its business, operations, or properties.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.
"Guarantors" means TBAC Investment Trust, TBAC Management Company,
Ltd. and each of the Subsidiaries of Borrower except H.A. Sheldon Canada, Ltd.
"Guaranty" of any Person means any contract or understanding of such
Person pursuant to which such Person guarantees, or in effect guarantees, any
Indebtedness of any other Person (the "Primary Obligor") in any manner, whether
directly or indirectly, including agreements to assure the holder of the
Indebtedness of the Primary Obligor against loss in respect thereof; except,
that "Guaranty" shall not include endorsements, in the ordinary course of
business, of negotiable instruments or documents for deposit or collection.
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"Hazardous Material" means any hazardous, toxic, or dangerous waste,
substance, or material defined as such in or for the purpose of any
Environmental Law.
"Hedge Agreement" means any agreement between Borrower and Lender or
any affiliate of Lender now existing or hereafter entered into, which provides
for an interest rate or commodity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross-currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's exposure to fluctuations in interest
rates, currency valuations or commodity prices.
"Indebtedness" means, with respect to any Person, all indebtedness,
obligations, and liabilities of such Person, including without limitation (a)
all "liabilities" which would be reflected on a balance sheet of such Person,
(b) all obligations of such Person in respect of any Guaranty, letter of credit,
or bankers' acceptance, (c) all obligations of such Person in respect of any
lease, which in conformity with GAAP, is required to be capitalized for balance
sheet purposes, (d) all obligations, indebtedness, and liabilities secured by
any lien or any security interest on any property or assets of such Person, and
(e) any obligation to redeem or repurchase any of such Person's capital stock,
warrants, or stock equivalents.
"Intangible Assets" of any Person means those assets of such Person
which are (a) deferred assets, other than prepaid insurance and prepaid taxes,
(b) patents, copyrights, trademarks, tradenames, franchises, goodwill,
experimental expenses, and other similar assets which would be classified as
intangible assets on a balance sheet of such Person, (c) unamortized debt
discount and expense, and (d) assets located, and notes and receivables due from
obligors domiciled, outside of the United States of America.
"Interest Period" means, with respect to a Eurodollar Borrowing, a
period commencing:
(a) on the Advance Date thereof; or
(b) on the conversion date pertaining to such Eurodollar Borrowing,
if such Eurodollar Borrowing is made pursuant to a conversion as described in
Section 2.14; or
(c) on the last day of the preceding Interest Period in the case of a
rollover to a successive Interest Period;
and ending 1, 2, 3, or 6 months thereafter, as Borrower shall elect in
accordance with Section 2.13 or Section 2.14, provided that:
(i) any Interest Period that would otherwise end on a day which is not
a Business Day shall be extended to the next succeeding Business Day, unless
such Business Day falls in another calendar month in which case such Interest
Period shall end on the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month or at the end of such Interest Period) shall, subject to
clause (i) above, end on the last Business Day of a calendar month; and
(iii) if the Interest Period for any Eurodollar Borrowing would
otherwise end after the final maturity date of the Loans, then such Interest
Period shall end on the final maturity date of the Loans.
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"Investment" in any Person means any investment, whether by means of
share purchase, loan, advance, extension of credit, capital contribution, or
otherwise, in or to such Person, the Guaranty of any Indebtedness of such
Person, or the subordination of any claim against such Person to other
Indebtedness of such Person.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multi-national, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty as in effect on the date in question.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness, whether
arising by agreement or under any statute or law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Collateral
Documents, the Hedge Agreement and any agreements, documents (and with respect
to this Agreement, and such other agreements and documents, any renewals,
extensions, amendments, or supplements thereto), or certificates at any time
executed or delivered pursuant to the terms of this Agreement.
"Loans" means the Revolving Credit Loan and the Term Loan, and "Loan"
means either one of the Loans.
"Material Adverse Effect" means any material adverse changes in, or
effect upon, (a) the validity, performance, or enforceability of any Loan
Documents, (b) the financial condition or business operations of Borrower and
its Subsidiaries taken as a whole, or (c) the ability of Borrower to fulfill its
obligations under the Loan Documents.
"Maximum Rate" means the highest non-usurious rate of interest (if
any) permitted from day-to-day by applicable law. Lender hereby notifies and
discloses to Borrower that, for purposes of TEXAS FINANCE CODE as it may from
time to time be amended, the "applicable rate ceiling" shall be the "weekly
ceiling" from time to time in effect as limited by Section 303 of the Texas
Finance Code; provided, however, that to the extent permitted by applicable law,
Lender reserves the right to change the "applicable rate ceiling" from time to
time by further notice and disclosure to Borrower.
"Net Cash Flow" means, for Borrower and its Subsidiaries for any
period, (a) Consolidated Adjusted Net Income, minus (b) all non-cash items
increasing Consolidated Adjusted Net Income in accordance with GAAP, plus (c)
all non-cash items reducing Consolidated Adjusted Net Income in accordance with
GAAP, minus (d) all regularly scheduled payments on all outstanding Indebtedness
of Borrower and its Subsidiaries during such period.
"Notes" means the Revolving Credit Note and the Term Note, and "Note"
means either one of the Notes.
"Notice of Borrowing" means a notice in the form of Exhibit A attached
hereto.
"Obligation" means all present and future indebtedness, obligations,
and liabilities, and all renewals and extensions thereof, or any part thereof,
now or hereafter owed to Lender by Borrower, pursuant to any of the Loan
Documents, and all renewals and extensions thereof (including, but not limited
to, all obligations to Lender under letters of credit), together with all
interest accruing thereon and costs, expenses, and attorneys' fees incurred in
the enforcement or collection thereof.
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"Obligors" means Borrower and each of the Guarantors, and "Obligor"
means any one of the Obligors.
"Other Taxes" has the meaning set forth in Section 2.17.
"Person" includes an individual, corporation, joint venture, general
or limited partnership, trust, unincorporated organization, or government, or
any agency or political subdivision thereof.
"Prime Rate" means the variable rate of interest established from
time to time by Lender as its general reference rate of interest (which rate of
interest may not be the lowest rate charged by Lender on similar loans). Each
change in the Prime Rate shall become effective without prior notice to Borrower
automatically as of the opening of business on the date of such change in the
Prime Rate.
"Prime Rate Borrowing" means a borrowing bearing interest with
reference to the Prime Rate.
"Permitted Liens" means (a) Inchoate liens for taxes, assessments or
governmental charges or levies not yet due or liens for taxes, assessments or
governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP, (b) Liens in respect to property or assets of the Borrower or any of its
subsidiaries imposed by law, which were incurred in the ordinary course of
business, and do not secure mechanics' liens and other similar liens arising in
the ordinary course of business, and which do not in the aggregate materially
detract from the value of the Borrower's or such subsidiary's property or assets
or materially impair the use thereof in the operation of the business of the
Borrower or such subsidiary, or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of property or assets subject to any such lien, (c) Liens in
existence on the date of this Agreement, plus renewals and extensions of such
liens to the extent that the aggregate principal amount of the indebtedness, if
any, secured by such liens is not increased from the amount outstanding at the
time of any such renewal or extension, and any such renewals or extensions do
not encumber any additional assets or properties of the Borrower or any of its
subsidiaries, (d) Leases or subleases granted to other persons not materially
interfering with the conduct of the business of the Borrower and its
subsidiaries taken as a whole, (e) Liens placed on equipment or machinery used
in the ordinary course of business of Borrower or any of its subsidiaries, or on
real property of the Borrower or any of its subsidiaries, in each case at the
time of acquisition thereof by the Borrower or any such subsidiary or within
sixty days thereafter to secure indebtedness incurred to pay all or a portion
of the purchase price thereof, provided that the lien encumbering the equipment,
machinery or real property so acquired does not encumber any other asset of the
Borrower or such subsidiary, (f) Easements, right-of-way restrictions,
encroachments and other similar charges or encumbrances and minor title
deficiencies in each case not securing indebtedness and not materially
interfering with the conduct of the business of the Borrower or any of its
subsidiaries, (g) Statutory and common law landlord's liens under leases to
which the Borrower or any of its subsidiaries is a party, (h) Liens resulting
from pledges or deposits to secure payments of workmen's compensation,
unemployment insurance or other social security programs or securing the
performance of surety and bid and performance bonds, tenders, leases and other
obligations of similar nature, in each case incurred in the ordinary course of
business (exclusive of obligations in respect to the payment for borrowed
money) and (i) Liens in existence on the date of this Agreement relating to
Amity/Rolf, Inc.
"Plan" means an employee benefit plan or other plan maintained by
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code, as
amended.
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"Potential Default" means the occurrence of any event which, with the
passage of time or the giving of notice, or both, could become an Event of
Default.
"Principal Debt" means, as of any date, the sum of the outstanding
principal balance of all outstanding Borrowings hereunder as of such date.
"Quoted Rate" shall mean a rate of interest per annum agreed upon by
Lender and Borrower on or prior to the first day of the Interest Period for
which such rate shall be in effect.
"Quoted Rate Borrowing" means a borrowing bearing interest at the
Quoted Rate.
"Receivables" means all present and future (a) accounts, receivables,
contract rights, chattel paper, documents, tax refunds, or payments of, or owned
by, Borrower or its Subsidiaries, (b) insurance proceeds, patent rights, license
rights, rights to refunds or indemnification, and other general intangibles of
every kind or nature of, or owned by, Borrower or its Subsidiaries, and (c) all
forms of obligations whatsoever owing to Borrower or its Subsidiaries together
with all instruments and all documents of title representing any of the
foregoing and all right, title, and interest in, and all securities and
guaranties with respect to, each Receivable.
"Revolving Credit Commitment" means $10,000,000.00, as the same may
be decreased by Borrower pursuant to Section 2.1, or terminated by Lender
pursuant to Section 8.2.
"Revolving Credit Loan" is defined in the recitals hereof.
"Revolving Credit Note" means that certain Revolving Credit Promissory
Note dated of even date herewith, executed by Borrower, as Maker, and payable to
the order of Lender, as Payee, in the original principal amount of
$10,000,000.00, together with any renewals, extensions, or modifications
thereof.
"Solvent" means, as to a Person, that (a) the aggregate fair market
value of its assets exceeds its liabilities, (b) it has sufficient cash flow to
enable it to pay its Liabilities as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
"Subsidiary" means any corporation of which more than fifty percent
(50%) (in number of votes) of the issued and outstanding securities having
ordinary voting power for the election of at least a majority of the directors
is owned or controlled, directly or indirectly, by Borrower, any Subsidiary, or
any combination thereof.
"Taxes" has the meaning set forth in Section 2.17.
"Term Loan" is defined in the recitals hereof.
"Term Note" means that certain Promissory Note dated of even date
herewith, executed by Borrower, as Maker, and payable to the order of Lender, as
Payee, in the original principal amount of $15,000,000.00, together with any
renewals, extensions, or modifications thereof.
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"Termination Date" means (a) for the Revolving Credit Loan, the
earliest of (i) May 14, 2000, (ii) the date that Lender's commitment to fund
Advances hereunder is terminated pursuant to Section 8.2, or (iii) the date that
Lender's commitment to fund Advances hereunder is reduced to zero pursuant to
Section 2.1, and (b) for the Term Loan, November 17, 2003.
"Total Funded Indebtedness" means, as of any date, the sum of the
following (without duplication): (i) all Indebtedness of Borrower as of such
date, other than consolidated Current Liabilities, (ii) all Indebtedness which
would be classified as "funded indebtedness" or "long-term indebtedness" on a
consolidated balance sheet of Borrower prepared as of such date in accordance
with GAAP, (iii) all Indebtedness, whether secured or unsecured, of Borrower
having a final maturity (or which is renewable or extendible at the option of
the Obligor for a period ending more than one year after the date of creation
thereof), notwithstanding the fact that payments made by the Obligor less than
one year after the date of creation thereof and notwithstanding the fact that
any amount thereof is at the time included also in consolidated Current
Liabilities of such Obligor, (iv) all Indebtedness of Borrower outstanding under
a revolving credit or similar agreement providing for borrowings (and renewals
and extensions thereof) over a period of more than one year, notwithstanding
the fact that any such Indebtedness is created within one year of the expiration
of such agreement.
"Unused Commitment" means, as of any date, (a) the Revolving Credit
Commitment, minus (b) the Principal Debt of the Revolving Credit Note.
1.2 Accounting Terms. As used in this Agreement, in the Notes, and in
any certificate, report, or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.1, and accounting terms
partly defined in Section 1.1 to the extent not defined, shall have, as of any
date, the respective meanings given to them under GAAP and all references to
balance sheets or other financial statements means such statements, prepared in
accordance with GAAP as of such date.
1.3 Rules of Construction. When used in this Agreement: (a) "or" is not
exclusive; (b) a reference to a law includes any amendment or modification to
such law; (c) a reference to a Person includes its permitted successors and
permitted assigns; (d) except as provided otherwise, all references to the
singular shall include the plural, and vice versa; (e) except as provided in
this Agreement, a reference to an agreement, instrument, or document shall
include such agreement, instrument, or document as the same maybe amended,
modified, or supplemented from time to time in accordance with its terms and as
permitted by the Loan Documents; (f) all references to Sections, Schedules, or
Exhibits shall be to Sections, Schedules, or Exhibits of this Agreement, unless
otherwise indicated; (g) all Exhibits to this Agreement shall be incorporated
into this Agreement; (h) the words "include," "includes," and "including" shall
be deemed to be followed by the phrase "without limitation"; and (i) except as
otherwise provided herein, in the computation of time from a specified date to a
later specified date, tile word "from" means "from and including" and words "to"
and "until" each mean "to but excluding."
SECTION 2
THE REVOLVING CREDIT LOAN; TERM LOAN
2.1 The Revolving Credit Loan and Revolving Credit Commitment. Subject
to the terms and conditions of this Agreement, Lender agrees to extend to
Borrower, from the date hereof through the Termination Date, a revolving line of
credit which shall not exceed $10,000,000 at any one time outstanding (the
"Revolving Credit Commitment"). Within the limits of this Section 2.1, during
such period, Borrower
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may borrow, repay, and reborrow under the Revolving Credit Commitment in
accordance with this Agreement. Borrower shall have the right, upon three (3)
Business Days' prior written notice to Lender, to permanently reduce the
unutilized portion of the Revolving Credit Commitment; provided that any partial
reduction shall be in the minimum amount of $100,000.00 or a greater integral
multiple thereof.
2.2 The Term Loan. Subject to the terms and conditions of this
Agreement, Lender agrees to extend to Borrower, on or about the date hereof, the
Term Loan in an amount not to exceed $15,000,000.00. No portion of the Term Loan
may be repaid and then reborrowed.
2.3 Notice of Borrowing. Borrower may request an Advance under the
Revolving Credit Commitment by submitting to Lender a Notice of Borrowing, which
is irrevocable and binding on Borrower. Each Notice of Borrowing must be
received by Lender no later than noon (Dallas, Texas time) on the third (3rd)
Business Day before the date on which funds are requested (the "Advance Date")
for any Advance that will be a Eurodollar Borrowing or no later than noon
(Dallas, Texas time) on the Advance Date for any Advance that will be a Prime
Rate Borrowing or Quoted Rate Borrowing. Each Advance under the Revolving Credit
Commitment shall be in an amount of $100,000.00 or a greater integral multiple
of $25,000.00. Subject to the terms and conditions in this Agreement, by not
later than 2:00 p.m., Fort Worth, Texas time, on the date specified, Lender
shall make available to Borrower, at Lender's offices in Fort Worth, Texas, the
amount of a requested Advance under the Revolving Credit Commitment in
immediately available funds.
2.4 Commitment Fees.
(a) Unused Fee. Borrower agrees to pay to Lender a commitment fee
equal to one-fourth of one percent (0.25%) per annum on the daily Unused
Commitment. Such commitment fee shall be payable quarterly in arrears on the
last day of each December, March, June and September during the term hereof,
commencing on December 31, 1998, and continuing regularly thereafter so long as
the Revolving Credit Commitment is in effect, and on the Termination Date.
(b) Generally. Borrower acknowledges that the commitment fees payable
hereunder are bona fide commitment fees and are intended as reasonable
compensation to Lender for committing to make funds available to Borrower as
described herein and for no other purposes.
2.5 Revolving Credit Note and Note Payments.
(a) Revolving Credit Note. The Advances made under Section 2.1 by
Lender shall be evidenced by the Revolving Credit Note in form and substance
satisfactory to Lender, which Revolving Credit Note shall be (i) executed by
Borrower, (ii) dated the date hereof, (iii) in the amount of $10,000,000.00, and
(iv) payable to the order of Lender.
(b) Payments.
(1) Interest Payments. Accrued interest on each Eurodollar
Borrowing under the Revolving Credit Loan is due and payable on the
last day of its respective Interest Period. If any Interest Period is
a period greater than three (3) months, then accrued interest shall
also be due and payable on the date ending each three (3) month period
after the commencement of the Interest Period. Accrued interest on
each Prime Rate Borrowing under the Revolving Credit Loan shall be due
and payable on the last day of each calendar quarter during the term
hereof, commencing December 31, 1998, with a final scheduled interest
payment on all Borrowings under the Revolving Credit Loan on
Revolving Credit and Term Loan Agreement 10
11
the Termination Date. Accrued Interest on each Quoted Rate Borrowing under the
Revolving Credit Loan shall be due and payable quarterly.
(2) Principal Payments. The unpaid Principal Debt of the
Revolving Credit Note shall be due and payable on the Termination
Date.
(3) Optional Prepayments. Borrower shall have the right,
from time to time, to prepay the unpaid Principal Debt of the
Revolving Credit Note, in whole or in part, without premium or penalty
(except for any Funding Loss), upon the payment of accrued interest on
the amount prepaid to and including the date of payment; provided,
however, that partial prepayments of the Principal Debt of the
Revolving Credit Note shall be in an amount equal to $ 100,000.00 or a
greater integral multiple of $25,000.00 (or, if less, the unpaid
Principal Debt of the Revolving Credit Note).
2.6 Term Note and Note Payments.
(a) Term Note. The Advance made under Section 2.2 by Lender shall be
evidenced by the Term Note in form and substance satisfactory to Lender, which
Term Note shall be (i) executed by Borrower, (ii) dated the date hereof, (iii)
in the amount of $15,000,000.00, and (iv) be payable to the order of Lender
(b) Payments.
(1) Interest Payments. Accrued interest on each Eurodollar
Borrowing under the Term Loan is due and payable on the last day of
its respective Interest Period. If any Interest Period is a period
greater than three (3) months, then accrued interest shall also be due
and payable on the date ending each three (3) month period after the
commencement of the Interest Period. Accrued interest on each Prime
Rate Borrowing under the Term Loan shall be due and payable on the
last day of each quarter during the term hereof, with a final
scheduled interest payment on all Borrowings under the Term Loan on
the Termination Date.
(2) Principal Payments. The unpaid Principal Debt of the
Term Note shall be due and payable on the Termination Date.
(3) Optional Prepayments. Borrower shall have the right,
from time to time, to prepay the unpaid Principal Debt of the Term
Note, in whole or in part, without premium or penalty, upon the
payment of accrued interest on the amount prepaid to and including the
date of payment; provided, however, that partial prepayments of the
Principal Debt of the Term Note shall be in an amount equal to
$100,000 or a greater integral multiple of $25,000 (or, if less, the
unpaid Principal Debt of the Term Note).
2.7 Manner and Application of Payments. All payments and prepayments
by Borrower on account of principal, interest, and fees hereunder shall be made
in immediately available funds. All such payments shall be made to Lender at its
principal office in Fort Worth, Texas, not later than 12:00 noon, Fort Worth,
Texas time, on the date due and funds received after that hour shall be deemed
to have been received by Lender on the next following Business Day. If any
payment is scheduled to become due and payable on a day which is not a Business
Day, then such payment shall instead become due and payable on the immediately
following Business Day and interest on the principal portion of such payment
shall be payable at the then applicable rate during such extension. All payments
made on the Revolving Credit Note shall be applied first
Revolving Credit and Term Loan Agreement 11
12
to accrued interest and then to principal (in the inverse order of maturity in
the case of prepayments). All payments made on the Term Note shall be applied
first to accrued interest.
2.8 Interest Options. Except where specifically otherwise provided,
Borrowings under the Revolving Credit Loan shall bear interest at an annual
rate equal to the lesser of either (a) the sum of (i) the Prime Rate, (ii) the
Adjusted Eurodollar Rate or (iii) Quoted Rate (in each case as designated or
deemed designated by Borrower), as the case may be, plus (ii) the Applicable
Margin, or (b) the Default Rate. Except where specifically otherwise provided,
Borrowings under the Term Loan shall bear interest at an annual rate equal to
the lesser of either (a) the sum of the Adjusted Eurodollar Rate having an
interest period of three (3) months, plus (ii) the Applicable Margin, or (b) the
Default Rate. In the event that Section 2.16 is liable Borrowings under the Term
Loan shall bear interest at an annual rate equal to the lesser of (a) the
Contract Rate, or (b) the Default Rate. Each change in the Prime Rate and the
Default Rate is effective, without notice to Borrower or any other Person, upon
the effective date of change.
2.9 Quotation of Rates. A responsible officer of Borrower may call
Lender before delivering a Notice of Borrowing, to receive an indication of the
interest rates then in effect, but the indicated rates do not bind Lender or
affect the interest rate that is actually in effect when Borrower delivers its
Notice of Borrowing.
2.10 Default Rate. If permitted by law, all past-due principal of and
accrued interest on the Notes bears interest from maturity (stated or by
acceleration) at the lesser of (a) the Contract Rate plus three percent (3.0%),
or (b) the Maximum Rate, or if there is no Maximum Rate in effect, then at the
Contract Rate plus three percent (3.0%) per annum, until paid, regardless
whether payment is made before or after entry of a judgment.
2.11 Interest Recapture. If the Contract Rate applicable to any
Borrowing exceeds the Maximum Rate, then the interest rate on that Borrowing is
limited to the Maximum Rate, but any subsequent reductions in the Contract Rate
shall not reduce the interest rate thereon below the Maximum Rate until the
total amount of accrued interest equals the amount of interest that would have
accrued if Contract Rate had always been in effect. If at maturity (stated or by
acceleration) the total interest paid or accrued is less than the interest that
would have accrued if the Contract Rates had always been in effect, then, at
that time and to the extent permitted by law, Borrower shall pay an amount equal
to the difference between (a) the lesser of the amount of interest that would
have accrued if the Contract Rates had always been in effect and the amount of
interest that would have accrued if the Maximum Rate had always been in effect,
and (b) the amount of interest actually paid or accrued on the Notes.
2.12 Interest Calculations.
(a) Interest on any Eurodollar Borrowing will be calculated on the
basis of actual number of days (including the first day but excluding the last
day) elapsed but computed as if each calendar year consisted of 360 days (unless
the calculation would result in an interest rate greater than the Maximum Rate,
in which event interest will be calculated on the basis of a year of 365 or 366
days, as the case may be). Interest on any Prime Rate Borrowing or Quoted Rate
Borrowing will be calculated on the basis of actual number of days (including
the first day but excluding the last day) elapsed but computed as if each
calendar year consisted of 365 or 366 days, as the case may be. All interest
rate determinations and calculations by Lender are conclusive and binding absent
manifest error.
(b) The provisions of this Agreement relating to calculation of the
Prime Rate and the Eurodollar Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid under this
Revolving Credit and Term Loan Agreement 12
13
Agreement that are based upon those rates. Lender may fund and maintain its
funding of all or any part of each Borrowing as it selects.
2.13 Selection of Interest Option. On making a Notice of Borrowing
under Section 2.3, Borrower shall advise Lender as to whether the Advance shall
be (a) a Eurodollar Borrowing, in which case Borrower shall specify the
applicable Interest Period therefor, (b) a Prime Rate Borrowing or (c) a Quoted
Rate Borrowing. Notwithstanding anything to the contrary contained herein, no
more than five (5) Interest Periods shall be in effect at any one time with
respect to Eurodollar Borrowings.
2.14 Rollovers and Conversions. Subject to the dollar limits and
denominations of Section 2.1, Borrower may (a) convert a Eurodollar Borrowing
under the Revolving Credit Loan on the last day of the applicable Interest
Period to a Prime Rate Borrowing or a Quoted Rate Borrowing, (b) convert a Prime
Rate Borrowing under the Revolving Credit Loan at any time to a Eurodollar
Borrowing or a Quoted Rate Borrowing, (c) convert a Quoted Rate Borrowing under
the Revolving Credit Loan to a Prime Rate Borrowing or a Eurodollar Borrowing,
and (d) elect a new Interest Period for a Eurodollar Borrowing, by giving a
Notice of Borrowing to Lender no later than 12:00 noon on the third (3rd)
Business Day before the conversion date or the last day of the Interest Period,
as the case may be (for conversion to a Eurodollar Borrowing or election of a
new Interest Period), and no later than 12:00 noon one (1) Business Day before
the last day of the Interest Period (for conversion to an Prime Rate Borrowing).
Absent Borrower's Notice of Borrowing, a Eurodollar Borrowing shall be deemed
converted to a Prime Rate Borrowing effective when the applicable Interest
Period expires. Subject to the provisions of Section 2.16, a Eurodollar
Borrowing under the Term Loan shall convert on the last day of the applicable
Interest Period to another Eurodollar Borrowing having an Interest Period of
three (3) months.
2.15 Booking Borrowings. To the extent permitted by law, Lender may
make, carry, or transfer its Borrowings at, to, or for the account of any of its
branch offices or the office of any of its Affiliates. However, no Affiliate is
entitled to receive any greater payment under Section 2.16(b) than Lender
would have been entitled to receive with respect to those Borrowings. Lender
agrees that it will use its reasonable efforts (consistent with its internal
policies and applicable law) to make, carry, maintain, or transfer its
Borrowings with its Affiliates or branch offices in an effort to eliminate or
reduce to the extent possible the aggregate amounts due to it under Sections
2.16(b) and 2.16(c) if, in its reasonable judgment, such efforts will not be
disadvantageous to it.
2.16 Special Provisions for Eurodollar Borrowings.
(a) Basis Unavailable or Inadequacy of Eurodollar Loan Pricing. If
with respect to an Interest Period for any Eurodollar Borrowing, (a) Lender
determines that, by reason of circumstances affecting the interbank eurodollar
market generally, deposits in Dollars (in the applicable amounts) are not being
offered to or by Lender in the interbank eurodollar market for such Interest
Period, or (b) Lender determines that the Eurodollar Rate as determined by
Lender will not adequately and fairly reflect the cost to Lender of maintaining
or funding the Eurodollar Borrowing for such Interest Period, then Lender shall
forthwith give notice thereof to Borrower, whereupon until Lender notifies
Borrower that the circumstances giving rise to such suspension no longer exist,
(i) the obligation of Lender to make Eurodollar Borrowings shall be suspended
and (ii) Borrower shall either (A) repay in full the then-outstanding principal
amount of the Eurodollar Borrowings, together with accrued interest thereon by
the last day of the then current Interest Period applicable to such Eurodollar
Borrowings, or (B) convert such Eurodollar Borrowings to Prime Borrowings or
Quoted Rate Borrowings on the last day of the then-current Interest Period
applicable to each such Eurodollar Borrowing which shall bear interest at the
Contract Rate for the particular type of Borrowing.
Revolving Credit and Term Loan Agreement 13
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(b) Illegality. If, after the date of this Agreement, the adoption of
any applicable law, rule, or regulation, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) of any such authority, central bank, or
comparable agency shall make it unlawful or impossible for Lender to make,
maintain or fund Eurodollar Borrowings, then Lender shall so notify Borrower.
Before giving any notice pursuant to this Section, Lender shall designate a
different Eurodollar lending office if such designation will avoid the need for
giving such notice and will not be otherwise disadvantageous to any non-trivial
extent to Lender (as determined in good faith by Lender). Upon receipt of such
notice, Borrower shall either (i) repay in full the then outstanding principal
amount of all Eurodollar Borrowings, together with accrued interest thereon, or
(ii) convert each Eurodollar Borrowing to a Prime Rate Borrowing, on either (A)
the last day of the then-current Interest Period applicable to such Eurodollar
Borrowing if Lender may lawfully continue to maintain and fund such Eurodollar
Borrowing to such day or (B) immediately if Lender may not lawfully continue to
fund and maintain such Eurodollar Borrowing to such day, provided that Borrower
shall be liable for any Funding Loss arising pursuant to such conversion.
(e) Increased Costs for Eurodollar Borrowings. If any Governmental
Authority, central bank, or other comparable authority, shall at any time
impose, modify, or deem applicable any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal Reserve System but
excluding any reserve requirement included in the Eurodollar Reserve
Requirement), special deposit, or similar requirement against assets of,
deposits with, or for the account of, or credit extended by, Lender, or shall
impose on Lender (or its Eurodollar lending office) or the interbank eurodollar
market any other condition affecting its Eurodollar Borrowings, the Notes, or
its obligation to make Eurodollar Borrowings; and the result of any of the
foregoing is to increase the cost to Lender of making or maintaining Eurodollar
Borrowings, or to reduce the amount of any sum received or receivable by Lender
under this Agreement, or under the Notes, by an amount deemed by Lender to be
material, then, within five (5) Business Days' after demand by Lender, Borrower
shall pay to Lender such additional amount or amounts as will compensate Lender
for such increased cost or reduction. Lender will promptly notify Borrower of
any event of which it has knowledge, occurring after the date hereof, which will
entitle Lender to compensation pursuant to this Section. No failure by Lender to
immediately demand payment of any additional amounts payable hereunder shall
constitute a waiver of Lender's right to demand payment of such amounts at any
subsequent time. A certificate of Lender claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder, together with a description in reasonable detail of the manner in
which such amounts have been calculated, shall be conclusive in the absence of
manifest error. If Lender demands compensation under this Section, then Borrower
may at any time, upon at least five (5) Business Days' prior notice to such
Lender, either convert such Eurodollar Borrowings to Prime Rate Borrowings in
accordance with the provisions of this Agreement; provided, however, that
Borrower shall be liable for any Funding Loss arising pursuant to such actions.
(d) Effect on Prime Rate Borrowings. If notice has been given pursuant
to Section 2.16(a) or Section 2.16(b) requiring that Eurodollar Borrowings to be
repaid or converted, then unless and until Lender notifies Borrower that the
circumstances giving rise to such repayment no longer apply, all Borrowings
shall be Prime Rate Borrowings or Quoted Rate Borrowings, whichever bears
interest at the lesser rate at the particular time. If Lender notifies Borrower
that the circumstances giving rise to such repayment no longer apply, then
Borrower may thereafter select Borrowings to be Eurodollar Borrowings in
accordance with Section 2.13 and Section 2.14.
(e) Funding Losses. Borrower shall indemnify Lender against any loss
or reasonable expense (such loss or expense is referred to herein as a "Funding
Loss," such term including, but not limited to, any loss
Revolving Credit and Term Loan Agreement 14
15
or reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or reemploying deposits from third parties acquired to effect or
maintain such Borrowing or any part thereof as a Eurodollar Borrowing) which
Lender may sustain or incur as a consequence of (i) any failure by Borrower to
fulfill on the date of any Borrowing hereunder the applicable conditions set
forth in Section 4, (ii) any failure by Borrower to borrow hereunder or to
convert Borrowings hereunder after a Conversion Notice has been given, (iii) any
payment, prepayment, or conversion of a Eurodollar Borrowing required or
permitted by any other provisions of this Agreement, including, without
limitation, payments made due to the acceleration of the maturity of the
Borrowings pursuant to Section 8.2, or otherwise made on a date other than the
last day of the applicable Interest Period, (iv) any default in the payment or
prepayment of the principal amount of any Borrowing or any part thereof or
interest accrued thereon, as and when due and payable (at the due date thereof,
by notice of prepayment or otherwise), or (v) the occurrence of an Event of
Default. The term "Funding Loss" includes, without limitation, an amount equal
to the excess, if any, as determined by Lender of (A) its cost of obtaining the
funds for the Borrowing being paid, prepaid or converted or not borrowed or
converted (based on the Adjusted Eurodollar Rate applicable thereto) for the
period from the date of such payment, prepayment or conversion or failure to
borrow or convert to the last day of the Interest Period for such Borrowing (or,
in the case of a failure to borrow or convert, the Interest Period for the
Borrowing which would have commenced on the date of such failure to borrow or
convert) over (B) the amount of interest (as estimated by Lender) that would be
realized by Lender in reemploying the funds so paid, prepaid or converted or not
borrowed or converted for such period or Interest Period, as the case may be. A
certificate of Lender setting forth any amount or amounts which Lender is
entitled to receive pursuant to this Section 2.16(e), together with a
description in reasonable detail of the manner in which such amounts have been
calculated, shall be delivered to Borrower and shall be conclusive, absent
manifest error. Borrower shall pay to Lender the amount shown as due on any
certificate within five (5) business days after its receipt of the same.
Notwithstanding the foregoing, in no event shall Lender be permitted to receive
any compensation hereunder constituting interest in excess of the Maximum Rate.
Without prejudice to the survival of any other obligations of Borrower
hereunder, the obligations of Borrower under this Section 2.16(e) shall survive
the termination of this Agreement and/or the payment or assignment of the Notes.
2.17 Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto (hereinafter referred to as "Taxes"), excluding
taxes imposed on Lender's income, and franchise taxes imposed on Lender, by the
jurisdiction under the laws of which Lender is organized or is or should be
qualified to do business or any political subdivision thereof and, taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the jurisdiction
of Lender's lending office or any political subdivision thereof. If Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Notes to Lender, then (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.17) Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Loan Documents
or from the execution, delivery, or registration of, or otherwise with respect
to, this Agreement or the other Loan Documents (hereinafter referred to as
"Other Taxes")
Revolving Credit and Term Loan Agreement 15
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(c) Borrower will indemnify Lender for the full amount of Taxes or
Other Taxes (including, without limitation any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.17) paid by Lender or
any liability (including penalties and interest) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within five (5) business
days from the date Lender makes written demand therefor.
(d) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.17 shall survive the payment in full of principal and interest
hereunder and under the other Loan Documents.
SECTION 3
GUARANTIES
3.1 Guaranties. Payment of the Obligation shall be guaranteed by each
of Borrower's Subsidiaries (except foreign Subsidiaries), subject to the
conditions and limitations set forth in the Guaranty Agreement dated of even
date herewith, executed by TBAC Investment Trust, TBAC Management Company, Ltd.
and each of Borrower's Subsidiaries (except foreign Subsidiaries) in favor of
Lender.
SECTION 4
CONDITIONS PRECEDENT
4.1 Initial Advance. The obligation of Lender to make the Term Loan
and the initial Advance under the Revolving Credit Loan is subject to the
conditions precedent that, on or before the date of such Advance, (a) Borrower
shall have paid to Lender (i) all fees to be received by Lender pursuant to this
Agreement or any other Loan Document and (ii) an amount equal to the estimated
costs and out-of-pocket expenses of Lender's counsel incurred in connection with
the preparation, execution, and delivery of the Loan Documents and the
consummation of the transactions contemplated thereby, and (b) Lender shall have
received duly executed copies of each of the documents listed on Exhibit B, each
dated as of the date hereof, and each in form and substance satisfactory to
Lender.
4.2 All Advances. The obligation of Lender to make any Advance under
this Agreement (including the Term Loan and the initial Advance under the
Revolving Credit Loan) shall be subject to the conditions precedent that, as of
the date of such Advance and after giving effect thereto: (a) there exists no
Potential Default or Event of Default; (b) no Material Adverse Effect has
occurred since the date of the financial statements referenced in Section 5.6;
(c) Lender shall have received from Borrower a Notice of Borrowing dated as of
the date of such Advance and all of the statements contained in such Notice of
Borrowing shall be true and correct; and (d) the representations and warranties
contained in each of the Loan Documents shall be true in all material respects
as though made on the date of such Advance except those representations and
warranties that specifically relate to a particular date.
Revolving Credit and Term Loan Agreement 16
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SECTION 5
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans hereunder, Borrower represents and
warrants to Lender that:
5.1 Organization and Good Standing. Each of Borrower and its
Subsidiaries is a corporation duly organized and in good standing under the laws
of the state of its incorporation, is duly qualified as a foreign corporation
and in good standing in all states in which it is doing business, has the
corporate power and authority to own its properties and assets and to transact
the business in which it is engaged in each jurisdiction in which it operates,
and is or will be qualified in those states wherein it proposes to transact
business in the future.
5.2 Authorization and Power. Each Obligor has full power and authority
to execute, deliver, and perform the Loan Documents to be executed by such
Person, all of which has been duly authorized by all proper and necessary
corporate action.
5.3 No Conflicts or Consents. Neither the execution and delivery of
the Loan Documents, nor the consummation of any of the transactions therein
contemplated, nor compliance with the terms and provisions thereof, will
contravene or materially conflict with any Legal Requirement to which any
Obligor is subject, any Governmental Authorization applicable to any Obligor,
any indenture, loan agreement, mortgage, deed of trust, or other agreement or
instrument binding on any Obligor, or any provision of the articles of
incorporation, certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, or other constituent documents of any
Obligor. No consent, approval, authorization, or order of any court,
Governmental Authority, stockholder, or third party is required in connection
with the execution, delivery, or performance by any Obligor of any of the Loan
Documents.
5.4 Enforceable Obligations. The Loan Documents have been duly
executed and delivered by each Obligor and are the legal and binding obligations
each Obligor, enforceable in accordance with their respective terms, except as
limited by Debtor Laws.
5.5 No Liens. Except for the Permitted Liens, all of the properties
and assets of Borrower and its Subsidiaries are free and clear of all Liens and
other adverse claims of any nature, and such Persons have good and marketable
title to such properties and assets.
5.6 Financial Condition. Borrower has delivered to Lender copies of
the financial statements of (a) Borrower and its Subsidiaries as of June 30,
1998, which are true and correct, fairly represent the financial condition of
Obligors, as of such date, and have been prepared in accordance with GAAP; as of
the date hereof, there are no obligations, liabilities, or Indebtedness
(including contingent and indirect liabilities) of any Obligor which are
material and are not reflected in such financial statements; no Material Adverse
Effect has occurred since the date of such financial statements.
5.7 Full Disclosure. There is no fact known to Borrower that Borrower
has not disclosed to Lender which Could reasonably be expected to have a
Material Adverse Effect. No certificate or statement delivered by any Obligor
to Lender in connection with this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary to keep the
statements contained herein or therein from being misleading.
5.8 No Potential Default. No event has occurred and is continuing
which constitutes a Potential Default or an Event of Default.
Revolving Credit and Term Loan Agreement 17
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5.9 Material Agreements. No Obligor is in default in any material
respect under any contract or agreement to which it is a party or by which any
of its properties is bound.
5.10 No Litigation. There are no actions, suits, or legal, equitable,
arbitration, or administrative proceedings pending, or to the knowledge of any
Obligor threatened, against any Obligor that could, if adversely determined,
reasonably be expected to have a Material Adverse Effect.
5.11 Use of Proceeds; Margin Stock. The proceeds of the Loans will be
used by Borrower solely for the purposes specified set forth in the recitals.
None of such proceeds will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulations T, U, or X of the Board of Governors of
the Federal Reserve System or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulations. If
requested by Lender, then Borrower will furnish to Lender a statement in
conformity with the requirements of the Federal Reserve Form U-1 referred to in
said Regulation U to the foregoing effect. No part of the proceeds of the Loans
will be used for any purpose which violates, or is inconsistent with, the
provisions of Regulation X.
5.12 Taxes. All material tax returns required to be filed by each
Obligor in any jurisdiction have been filed and all taxes (including mortgage
recording taxes), assessments, fees, and other governmental charges upon each
Obligor or upon any of its or their properties, income, or franchises have been
paid, except for taxes being contested in good faith by appropriate proceedings
diligently projected and as to which adequate reserves have been established in
accordance with GAAP. To the best of Borrower's knowledge, there is no proposed
tax assessment against any Obligor, and all tax liabilities of each Obligor are
adequately provided for. No income tax liability of any Obligor has been
asserted by the Internal Revenue Service for taxes in excess of those already
paid.
5.13 Principal Office, Etc. The principal office, chief executive
office, and principal place of business of Borrower is at 690 East Lamar, Suite
200, Arlington, Texas 76011.
5.14 Compliance with Law.
(a) Except as disclosed on Schedule 5.14-1: (i) each of Borrower and
its Subsidiaries is in compliance with its respective articles of incorporation,
charter, bylaws, certificate of limited partnership, partnership agreement, and
other constituent documents, and all Legal Requirements which are applicable to
it or to the conduct or operation of its business or the ownership or use of any
of its assets; and (ii) none of Borrower or any of its Subsidiaries has received
any notice or other communication from any Governmental Authority or other
Person of any event or circumstance that could reasonably be expected to
constitute a violation of, or failure to comply with, any Legal Requirement.
(b) Each of Borrower and its Subsidiaries is in material compliance
with all of the terms and requirements of each Governmental Authorization held
by such Person; (ii) none of Borrower or any of its Subsidiaries has received
any notice or other communication from any Governmental Authority or other
Person of any event or circumstance which could reasonably be expected to
constitute a violation of, or failure to comply with, any term or requirement of
any Governmental Authorization, or of any actual or potential revocation,
withdrawal, cancellation, or termination of, or material modification to, any
Governmental Authorization; (iii) all applications required to have been filed
for the renewal of any required Governmental Authorizations have been duly filed
on a timely basis with the appropriate Governmental Authorities, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Authorities; (iv) upon consummation of the
Revolving Credit and Term Loan Agreement 18
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transactions contemplated hereby, Borrower and its Subsidiaries will lawfully
hold all such Governmental Authorizations; and (v) none of the Governmental
Authorizations of Borrower and its Subsidiaries will terminate upon consummation
of the transactions contemplated hereby.
5.15 Subsidiaries. Set forth on Exhibit C hereto is a complete and
accurate list of all Subsidiaries of Borrower as of the date hereof, showing as
of such date (as to each Such Subsidiary) the jurisdiction of its incorporation,
the number of shares of each class of capital stock or partnership interest
outstanding on the date hereof, the owner of the outstanding shares or
partnership interest of each such class owned and the jurisdictions in which
such Subsidiary is qualified to do business as a foreign corporation or
partnership. All of the outstanding capital stock or partnership interest of all
Subsidiaries has been validly issued, is fully paid and nonassessable, and is
owned by Borrower or a Subsidiary free and clear of all Liens.
5.16 Casualties. Neither the business nor the properties of Borrower
or any Subsidiary are affected by any environmental hazard, fire, explosion,
accident, strike, lockout, or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God, or other casualty (whether or not covered by
insurance), which could reasonably be expected to have a Material Adverse
Effect.
5.17 Corporate Name. Borrower, during the preceding five (5) years,
has not used any other corporate name or tradename.
5.18 Leases. Neither Borrower nor any Subsidiary is the lessee of any
real or personal property except as has been described to Lender in writing.
5.19 ERISA. Neither Borrower nor any ERISA Affiliate has any Plans.
5.20 Labor Matters. There are no controversies pending between
Borrower or any Subsidiary and any of their employees which could reasonably be
expected to have a Material Adverse Effect.
5.21 Burdensome Contracts. Neither Borrower nor any Subsidiary is
party to any contract, the breach, violation, or termination of which could
reasonably be expected to result in a Material Adverse Effect.
5.22 Representations and Warranties. Each Notice of Borrowing shall
constitute, without the necessity of specifically containing a written
statement, a representation and warranty by Borrower that no Potential Default
or Event of Default exists and that all representations and warranties contained
in this Section 5 or in any other Loan Document are true and correct in all
material respects on and as of the date the requested Advance is to be made
except those representations and warranties that specifically relate only to a
stated date.
5.23 Survival of Representations and Warranties in all material
respects. All representations and warranties by Borrower herein shall survive
delivery of the Notes and the making of the Loans, and any investigation at any
time made by or on behalf of Lender shall not diminish Lender's right to rely
thereon.
Revolving Credit and Term Loan Agreement 19
20
SECTION 6
AFFIRMATIVE COVENANTS
So long as Lender has any commitment to make Advances hereunder, and
until payment in full of the Obligation, Borrower agrees that (unless Lender
shall otherwise consent in writing):
6.1 Financial Statements, Reports, and Documents. Borrower shall
deliver to Lender each of the following:
(a) Quarterly Statements. As soon as available, and in any event
within forty-five (45) days after the last day of each quarterly fiscal period
of each fiscal year of Borrower, copies of the consolidated balance sheet of
Borrower and its Subsidiaries as of the end of such quarterly fiscal period, and
statements of income, retained earnings, and changes in cash flow of Borrower
and its Subsidiaries for that quarterly fiscal period and for the portion of the
fiscal year ending with such period, all in reasonable detail, and certified by
the chief financial officer of Borrower as being true and correct and as having
been prepared in accordance with GAAP, subject to year-end audit adjustments;
(b) Annual Statements. As soon as available and in any event within
ninety (90) days after the last day of each fiscal year of Borrower, copies of
the consolidated balance sheet of Borrower and its Subsidiaries as of the close
of such fiscal year and statements of income, retained earnings, and changes in
cash flow of Borrower and its Subsidiaries for such fiscal year, all in
reasonable detail and accompanied by an opinion thereon (which shall not be
qualified by reason of any limitation imposed by Borrower) of independent public
accountants of recognized national standing selected by Borrower and
satisfactory to Lender, to the effect that (i) such consolidated financial
statements have been prepared in accordance with GAAP (except for changes in
which such accountants concur), and (ii) the examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, includes such tests of
the accounting records and such other auditing procedures as were considered
necessary under the circumstances;
(c) Other Information. Such other information concerning the
business, properties, or financial condition of any Obligor as Lender shall
reasonably request including audit reports, registration statements, or other
reports or notices provided to shareholders of Borrower.
6.2 Payment of Taxes and Other Liabilities. Borrower shall, and shall
cause each of its Subsidiaries to, pay and discharge (a) all taxes, assessments,
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any property belonging to it, before delinquent, (b) all lawful
claims (including claims for labor, materials and supplies), which, if unpaid,
might give rise to a Lien upon any of its property, and (c) all of its other
Liabilities, except as prohibited under the Loan Documents; provided, however,
that Borrower and each of its Subsidiaries shall not be required to pay any such
tax, assessment, charge, or levy if and so long as the amount, applicability, or
validity thereof shall currently be contested in good faith by appropriate
proceedings and appropriate accruals and cash reserves therefor have been
established in accordance with GAAP.
6.3 Maintenance of Existence and Rights; Conduct of Business. Borrower
shall, and shall cause each of its Subsidiaries to, preserve and maintain its
corporate existence and all of its rights, privileges, and franchises necessary
or desirable in the normal conduct of its business, and conduct its business in
an orderly and efficient manner consistent with good business practices and in
accordance with all material Legal Requirements of any Governmental Authority.
6.4 Notice of Default. Borrower shall furnish to Lender, promptly upon
becoming aware of the existence of any condition or event which constitutes a
Potential Default or an Event of Default, written notice
Revolving Credit and Term Loan Agreement 20
21
specifying the nature and period of existence thereof and the action which
Borrower is taking or proposes to take with respect thereto.
6.5 Other Notices. Borrower shall, and shall cause each of its
Subsidiaries to, promptly notify Lender of (a) any material adverse change in
its financial condition or its business, (b) any default under any material
agreement, contract, or other instrument to which it is a party or by which any
of its properties are bound, or any acceleration of the maturity of any material
Liabilities owing by Borrower or any Subsidiary, (c) any material adverse claim
against or affecting any Obligor or any of its properties, and (d) the
commencement of, and any material determination in, any litigation with any
third party or any proceeding before any Governmental Authority affecting any
Obligor.
6.6 Operations and Properties. Borrower shall, and shall cause each of
its Subsidiaries to, (a) act prudently and in accordance with customary industry
standards in managing and operating its assets and properties, and (b) keep in
good working order and condition, ordinary wear and tear excepted, all of its
assets and properties which are necessary to the conduct of its business.
6.7 Books and Records; Access. Borrower shall give any representative
of Lender access during all business hours to, and permit such representative to
examine, copy, or make excerpts from, any and all books, records, and documents
in the possession of Borrower, and to inspect any of the properties of Borrower.
Borrower shall, and shall cause each of its Subsidiaries to, maintain complete
and accurate books and records of its transactions in accordance with good
accounting practices.
6.8 Compliance with Law. Borrower shall, and shall cause each of its
Subsidiaries to, comply with all applicable Legal Requirements of any
Governmental Authority, a breach of which could reasonably be expected to have a
Material Adverse Effect.
6.9 Insurance. Borrower shall, and shall cause each of its
Subsidiaries to, keep all insurable property, real and personal, adequately
insured at all times in such amounts and against such risks as are customary for
Persons in similar businesses operating in the same vicinity, specifically to
include a policy of hazard, casualty, fire, and extended coverage insurance
covering all assets, business interruption insurance (where feasible), liability
insurance, and worker's compensation insurance, in every case under a policy
with a financially sound and reputable insurance company and with only such
deductibles as are customary.
6.10 Authorizations and Approvals. Borrower shall, and shall cause
each of its Subsidiaries to, promptly obtain, from time to time at its own
expense, all Governmental Authorizations as may be required to enable it to
comply with its obligations hereunder and under the other Loan Documents.
6.11 Further Assurances. Borrower shall, and shall cause each of its
Subsidiaries to, make, execute, and deliver or file, or cause the same to be
done, all such notices, additional agreements or other assurances, and take any
and all such other action, as Lender may, from time to time, deem reasonably
necessary or proper in connection with any of the Loan Documents, or the
obligations of Borrower or any Subsidiary thereunder.
6.12 Indemnity by Borrower. Borrower shall indemnify, defend, and hold
harmless Lender and its directors, officers, agents, attorneys, and employees
(each, an "Indemnitee" and collectively, the "Indemnitees") from and against
any and all loss, liability, obligation, damage, penalty, judgment, claim,
deficiency, and expense (including interest, penalties, attorneys' fees, and
amounts paid in settlement) to which the Indemnitees may become subject arising
out of this Agreement and the other Loan Documents, other than
Revolving Credit and Term Loan Agreement 21
22
those which arise by reason of the gross negligence or willful misconduct of
Lender, BUT SPECIFICALLY INCLUDING ANY LOSS, LIABILITY, OBLIGATION, DAMAGE,
PENALTY, JUDGMENT, CLAIM, DEFICIENCY, OR EXPENSE ARISING OUT OF THE SOLE OR
CONCURRENT NEGLIGENCE OF LENDER. Borrower shall also indemnify, protect, and
hold each Indemnitee harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
proceedings, costs, expenses (including without limitation all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against such Indemnitee, with respect to or as a
direct or indirect result of the violation by Borrower of any Environmental Law,
or with respect to or as a direct or indirect result of Borrower's use,
generation, manufacture, production, storage release, threatened release,
discharge, disposal, or presence of a Hazardous Material on, under, from, or
about real property. The provisions of and undertakings and indemnifications set
forth in this Section 6.12 shall survive the satisfaction and payment of the
Obligation and termination of this Agreement, but only as to losses,
liabilities, obligations, damages, penalties, judgments, claims, deficiencies,
or expenses arising prior to the satisfaction and payment of the Obligation and
termination of this Agreement.
6.13 After-Acquired Subsidiaries. Concurrently upon the formation or
acquisition by Borrower or any Subsidiary of any domestic Subsidiary after the
date hereof (an "After-Acquired Subsidiary"), Borrower shall cause the
After-Acquired Subsidiary to deliver articles of incorporation, bylaws, and
resolutions and such opinions as Lender shall require and to execute a Guaranty
in favor of Lender.
6.14 Year 2000.
(a) Borrower has (i) begun analyzing the operations of Borrower and
its subsidiaries and affiliates that could be adversely affected by failure to
become Year 2000 compliant (that is, that computer applications, imbedded
microchips and other systems will be able to perform date-sensitive functions
prior to and after December 31, 1999) and; (ii) developed a plan for becoming
Year 2000 compliant in a timely manner, the implementation of which is on
schedule in all material respects. Borrower reasonably believes that it will
become Year 2000 compliant for its operations and those of its subsidiaries and
affiliates on a timely basis except to the extent that a failure to do so could
not reasonably be expected to have a material adverse effect upon the financial
condition of Borrower.
(b) Borrower will promptly notify Bank in the event Borrower
determines that any computer application which is material to the operations of
Borrower, its subsidiaries or any of its material vendors or suppliers will not
be fully Year 2000 compliant on a timely basis, except to the extent that such
failure could not reasonably be expected to have a material adverse effect upon
the financial condition of Borrower.
SECTION 7
NEGATIVE COVENANTS
So long as Lender has any commitment to make Advances hereunder, and
until payment in full of the Obligation, Borrower agrees that (unless Lender
shall otherwise consent in writing):
7.1 Negative Pledge. Borrower shall not, and shall not permit any of
its Subsidiaries to, create, incur, permit, or suffer to exist any Lien upon any
of its property or assets, now owned or hereafter acquired, except for Permitted
Liens.
Revolving Credit and Term Loan Agreement 22
23
7.2 Negative Pledge Agreements. Borrower shall not, and shall not
permit any of its domestic Subsidiaries to, enter into any agreement (excluding
this Agreement or any other Loan Documents and the Credit Agreement dated June
30, 1994 between Borrower and Chase Bank of Texas, N.A., as amended) prohibiting
the creation or assumption of any Lien upon any of its property, revenues, or
assets, whether now owned or hereafter acquired, or the ability of any
Subsidiary to make any payments, directly or indirectly, to Borrower by way of
Dividends, advances, repayments of loans, repayments of expenses, accruals, or
otherwise.
7.3 Certain Transactions. Borrower shall not, and shall not permit any
of its Subsidiaries to, enter into any transaction with, or pay any management
fees to, any Affiliate; provided, however, that Borrower and its Subsidiaries
may enter into transactions with Affiliates upon terms not less favorable to
Borrower and its Subsidiaries than would be obtainable at the time in
comparable, arms-length transactions with Persons other than Affiliates.
7.4 Limitation on Sale of Properties. Borrower shall not, and shall
not permit any of its Subsidiaries to (a) sell, assign, exchange, lease, or
otherwise dispose of any of its properties, rights, assets or business, whether
now owned or hereafter acquired, in excess of $500,000 in the aggregate in any
fiscal year outside the ordinary course of its business, or (b) sell, assign, or
discount any Receivable.
7.5 Liquidation, Mergers, Consolidations, and Dispositions of
Substantial Assets. Borrower shall not, and shall not permit any of its
Subsidiaries to, (a) dissolve or liquidate, (b) become a party to any merger or
consolidation unless Borrower or the particular Subsidiary is the surviving
corporation, or (c) sell, transfer, lease, or otherwise dispose of any property
in excess of $500,000 in the aggregate in any fiscal year or assets, except in
the ordinary course of business for fair and adequate consideration.
7.6 Lines of Business; Receivables Policy. Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, engage in
any business other than those in which it is presently engaged, or discontinue
any of its material existing lines of business. Borrower shall not, and shall
not permit any of its Subsidiaries to, make any material change in its credit
and collection policy, which change would materially impair the collectibility
of its Receivables, or rescind, cancel, or modify any Receivable, except in the
ordinary course of business.
7.7 Guaranties. Borrower shall not, and shall not permit any of its
Subsidiaries to, become or be liable in respect of any Guaranty except in favor
of Chase Bank of Texas, N.A. and of NationsBank, N.A.
7.8 Total Funded Indebtedness to EBITDA Ratio. Borrower shall not
permit the ratio of (a) Total Funded Indebtedness as of such date, to (b) EBITDA
for the four (4) fiscal quarters ending on the date of determination, as of the
last day of each fiscal quarter of Borrower and its Subsidiaries to exceed 3.15
to 1.0 as of the last day of each fiscal quarter of Borrower and its
Subsidiaries until and including June 30, 1999 and 3.0 to 1.0 after June 30,
1999.
7.9 Fixed Charges Coverage. Borrower shall not permit the ratio of (a)
the sum of Consolidated Adjusted Net Income, plus federal, state, local, and
foreign income taxes deducted from Consolidated Adjusted Net Income in
accordance with GAAP, plus Fixed Charges, to (b) Fixed Charges, in each case for
Borrower and its Subsidiaries and for the four (4) fiscal quarters ending on the
date of determination, to be less than 1.5 to 1.0.
7.10 ERISA. Neither Borrower nor any ERISA Affiliate will create any
Plan.
Revolving Credit and Term Loan Agreement 23
24
7.11 Fiscal Year. Borrower shall not, and shall not permit any of its
Subsidiaries to, change its fiscal year or method of accounting.
7.12 Loans and Advances To Foreign Subsidiaries. Make or permit to
exist any loans or advances to any foreign Subsidiaries or any guarantees of
obligations of any foreign Subsidiaries in an amount which exceeds (i) with
respect to H.A. Sheldon Canada, Ltd., $2,250,000.00 in the aggregate; and (ii)
with respect to all foreign Subsidiaries (including H.A. Sheldon Canada, Ltd.)
$3,500,000.00 in the aggregate.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default. An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
(a) Borrower shall fail to pay when due the Obligation or any part
thereof and the continuance of such failure for a period of at least five (5)
business days; or
(b) any representation or warranty made under this Agreement, or any
of the other Loan Documents, shall prove to be untrue or inaccurate in any
material respect as of the date on which such representation or warranty is made
or deemed to have been made; or
(e) default shall occur in the performance of any of the covenants or
agreements of any Obligor contained herein or in any of the other Loan Documents
and the continuance thereof for a period of at least thirty (30) days; or
(d) default shall occur in the payment of any material Indebtedness
(other than the Obligation) of any Obligor and such default results in
acceleration of such material Indebtedness or default shall occur in respect of
any note or credit agreement relating to any such material Indebtedness and such
default results in acceleration of such material Indebtedness; or
(e) any of the Loan Documents shall cease to be legal, valid, and
binding agreements enforceable against the Person executing the same in
accordance with its terms, shall be terminated, become or be declared
ineffective or inoperative or cease to provide the respective remedies, powers,
or privileges intended to be provided thereby; or any Obligor shall deny that
such Person has any further liability or obligation under any of the Loan
Documents; or
(f) any Obligor shall (i) apply for or consent to the appointment of a
receiver, trustee, custodian, intervenor, or liquidator of itself or of all or a
substantial part of such Person's assets, (ii) file a voluntary petition in
bankruptcy, admit in writing that such Person is unable to pay such Person's
debts as they become due, or generally not pay such Person's debts as they
become due, (iii) make a general assignment for the benefit of creditors, (iv)
file a petition or answer seeking reorganization of an arrangement with
creditors or to take advantage of any bankruptcy or insolvency laws, (v) file an
answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against such Person in any bankruptcy,
reorganization, or insolvency proceeding, or (vi) take corporate, partnership,
or other action for the purpose of effecting any of the foregoing; or
Revolving Credit and Term Loan Agreement 24
25
(g) an involuntary proceeding shall be commenced against any Obligor
seeking bankruptcy or reorganization of such Person or the appointment of a
receiver, custodian, trustee, liquidator, or other similar official of such
Person, or all or substantially all of such Person's assets, and such proceeding
shall not have been dismissed within sixty (60) days of the filing thereof; or
an order, order for relief, judgment, or decree shall be entered by any court of
competent jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of any Obligor or appointing a receiver,
custodian, trustee, liquidator, or other similar official of such Person, or of
all or substantially all of such Person's assets; or
(h) any final judgment(s) for the payment of money in excess of the
sum of $500,000.00 in the aggregate shall be rendered against any Obligor and
such judgment(s) shall not be satisfied or discharged or bonded at least five
(5) business days prior to the date on which any of such Person's assets could
be lawfully sold to satisfy such judgment.
8.2 Remedies Upon Event of Default. If any Event of Default shall
occur and is continuing, then Lender may, without notice, exercise any one or
more of the following rights and remedies, and any other remedies provided in
any of the Loan Documents, as Lender in its sole discretion may deem necessary
or appropriate: (a) terminate Lender's commitment to lend hereunder; (b) declare
the Obligation or any part thereof to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of intention to
accelerate, or other notice of any kind, all of which Borrower hereby expressly
waives, anything contained herein or in the Notes to the contrary
notwithstanding; (c) reduce any claim to judgment; or (d) without notice of
default or demand, pursue and enforce any of Lender's rights and remedies under
the Loan Documents, or otherwise provided under or pursuant to any applicable
law or agreement; provided, however, that if any Event of Default specified in
Sections 8.1(f) or (g) shall occur, then the Obligation shall thereupon become
due and payable concurrently therewith, and Lender's obligation to lend shall
immediately terminate hereunder, without any further action by Lender and
without presentment, demand, protest, notice of default, notice of acceleration
or of intention to accelerate, or other notice of any kind, all of which
Borrower hereby expressly waives.
8.3 Performance by Lender. If Borrower fails to perform any covenant,
duty, or agreement contained in any of the Loan Documents, then Lender may
perform or attempt to perform such covenant, duty, or agreement on behalf of
Borrower. In such event, Borrower shall, at the request of Lender, promptly pay
any amount expended by Lender in Such performance or attempted performance to
Lender at its principal office in Fort Worth, Texas together with interest
thereon at the lesser of (a) the Contract Rate for Eurodollar Borrowings, plus
three percent or (b) Maximum Rate from the date of such expenditure until paid.
Notwithstanding the foregoing, it is expressly understood that Lender shall
not assume any liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Loan Documents and none of the
covenants or other provisions contained in this Agreement shall, or shall be
deemed to, give Lender the right or power to exercise control over the
management and affairs of Borrower.
SECTION 9
MISCELLANEOUS
9.1 Accounting Reports. All financial reports or projections furnished
by any Person to Lender pursuant to this Agreement shall be prepared in such
form and such detail as shall be satisfactory to Lender, shall be prepared on
the same basis as those prepared by such Person in prior years, and, where
applicable, shall be the same financial reports and projections as those
furnished to such Person's officers and directors.
Revolving Credit and Term Loan Agreement 25
26
9.2 Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender under the Loan
Documents shall be in addition to all other rights provided by law. No
modification or waiver of any provision of any Loan Document, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar, or other instances without such notice or demand.
9.3 Payment of Expenses. Borrower agrees to pay Lender on demand all
costs and expenses of Lender (including, without limitation, the reasonable
attorneys' fees of Lender's counsel) incurred in connection with the
preservation and enforcement of Lender's rights under the Loan Documents, and
all reasonable costs and expenses of Lender (including without limitation the
reasonable fees and expenses of Lender's counsel) in connection with the
negotiation, preparation, execution, delivery, and administration of the Loan
Documents.
9.4 Notices. Any communications required or permitted to be given by
any of the Loan Documents must be (a) in writing and personally delivered or
mailed by prepaid certified or registered mail, or (b) made by facsimile
transmission delivered or transmitted, to the party to whom such notice of
communication is directed, to the address of such party shown opposite its name
on the signature pages hereof. Any such communication shall be deemed to have
been given (whether actually received or not) on the day it is personally
delivered or, if transmitted by facsimile transmission, on the day that such
communication is transmitted as aforesaid subject to telephone confirmation of
receipt; provided, however, that any notice received by Lender after 10:00 a.m.
Fort Worth, Texas time on any day from Borrower pursuant to Section 2.3 (with
respect to a Notice of Borrowing) shall be deemed for the purposes of such
Section to have been given by Borrower on the next Succeeding day, or if mailed,
on the third (3rd) day after it is marked as aforesaid. Any party may change its
address for purposes of this Agreement by giving notice of such change to the
other parties pursuant to this Section 9.4.
9.5 Governing Law. This Agreement has been prepared, is being executed
and delivered, and is intended to be performed in the State of Texas and the
substantive laws of such state and the applicable federal laws of the United
States of America shall govern the validity, construction, enforcement, and
interpretation of this Agreement and all of the other Loan Documents.
9.6 Choice of Forum; Consent to Service of Process and Jurisdiction.
Any suit, action, or proceeding against Borrower with respect to this Agreement,
the Notes, or other Loan Documents, or any judgment entered by any court in
respect thereof, may be brought in the courts of the State of Texas, County of
Dallas, or in the United States courts located in the State of Texas as Lender
in its sole discretion may elect and Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of such courts for the purpose of any such suit,
action, or proceeding. Borrower hereby irrevocably consents to the service of
process in any suit, action, or proceeding in said court by the mailing thereof
by Lender by registered or certified mail, postage prepaid, to Borrower's
address shown opposite its name on the signature pages hereof. Nothing herein or
in any of the other Loan Documents shall affect the right of Lender to serve
process in any other manner permitted by law or shall limit the right of Lender
to bring any action or proceeding against Borrower or with respect to any of its
property in courts in other jurisdiction. Borrower hereby irrevocably waives any
objections which it may now or hereafter have to the laying of venue of any
suit, action, or proceeding arising out of or relating to this Agreement, the
Notes, or any other Loan Documents brought in the courts located in the State of
Texas, County of Dallas, and hereby further irrevocably waives any claim that
any such suit, action, or proceeding
Revolving Credit and Term Loan Agreement 26
27
brought in any such court has been brought in any inconvenient forum. Any action
or proceeding by Borrower against Lender shall be brought only in a court
located in Dallas County, Texas.
9.7 Invalid Provisions. Any provision of any Loan Document held by a
court of competent jurisdiction to be illegal, invalid or unenforceable and
shall not invalidate the remaining provisions of such Loan Document which shall
remain in full force and the effect thereof shall be confined to the provision
held invalid or illegal.
9.8 Maximum Interest Rate. Regardless of any provision contained in
any of the Loan Documents, Lender shall never be entitled to receive, collect,
or apply as interest (whether termed interest herein or deemed to be interest by
operation of law or judicial determination) on the Notes any amount in excess of
interest calculated at the Maximum Rate, and, in the event that the Lender ever
receives, collects, or applies as interest any such excess, then the amount
which would be excessive interest shall be deemed to be a partial prepayment of
principal and treated hereunder as such; and, if the principal amount of the
Obligation is paid in full, then any remaining excess shall forthwith be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds interest calculated at the Maximum Rate, Borrower
and Lender shall, to the maximum extent permitted Lender applicable law: (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate, and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of the Notes; provided that, if
the Notes are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of
existence thereof exceeds interest calculated at the Maximum Rate, then Lender
shall refund to Borrower the amount of such excess or credit the amount of such
excess against the principal amount of the Notes and, in such event, Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging, taking, reserving, or receiving interest in excess of interest
calculated at the Maximum Rate.
9.9 Non-liability of Lender. The relationship between Borrower and
Lender is, and shall at all times remain, solely that of borrower and lender,
and Lender has no fiduciary or other special relationship with Borrower.
9.10 Offset. Borrower hereby grants to Lender the right of offset, to
secure repayment of the Obligation, upon any and all moneys, securities, or
other property of Borrower and the proceeds therefrom, now or hereafter held or
received by or in transit to Lender or its agents, from or for the account of
Borrower or any Guarantor, whether for safe keeping, custody, pledge,
transmission, collection, or otherwise, and also upon any and all deposits
(general or special) and credits of Borrower, and any and all claims of Borrower
against Lender at any time existing.
9.11 Successors and Assigns. The Loan Documents shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors,
assigns, and legal representatives; provided, however, that Borrower may not,
without the prior written consent of Lender, assign any rights, powers, duties,
or obligations thereunder. Lender reserves the right to sell all or a portion of
its interest in the Loans and Lender shall have the right to disclose any
information in its possession regarding any Obligor in connection herewith to
any potential transferee of the Loans or any part thereof.
9.12 Section 346. Borrower and Lender hereby agree that, except for
Section 346.004 thereof, the provisions of Section 346 et seq. of the Texas
Finance Code, as amended (regulating certain revolving credit loans and
revolving tri-party accounts) shall not apply to the Loan Documents.
Revolving Credit and Term Loan Agreement 27
28
9.13 Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Agreement.
9.14 Survival. All representations and warranties made by Borrower
herein shall survive delivery of the Notes and the making, of the Loans.
9.15 Participations. Lender shall have the right to enter into
participation agreements with other banks with respect to the Notes, and grant
participations in the other Loan Documents but such participation shall not
affect the rights and duties of such Lender hereunder vis-a-vis Borrower. Each
actual or proposed participant shall be entitled to receive all information
received by Lender regarding the creditworthiness of Borrower, including,
without limitation, information required to be disclosed to a participant
pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by the
Comptroller of the Currency (whether the actual or proposed participant is
subject to the circular or not).
9.16 No Third Party Beneficiary. The parties do not intend the
benefits of this Agreement to inure to any third party, nor shall any Loan
Document or any course of conduct by any party hereto be construed to make or
render Lender or any of its officers, directors, agents, or employees liable (a)
to any materialman, supplier, contractor, subcontractor, purchaser, or lessee of
any property owned by Borrower, or (b) for debts or claims accruing to any such
Persons against Borrower.
9.17 Capital Adequacy. If, after the date hereof, Lender shall have
determined that either (a) the adoption of any applicable law, rule, regulation,
or guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or (b) compliance by Lender (or any lending office of
Lender) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on Lender's
capital as a consequence of its or Borrower's obligations hereunder to a level
below that which Lender could have achieved but for such adoption, change, or
compliance (taking into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by Lender to be material, then from time to time,
within fifteen (15) days after demand by Lender, Borrower shall pay to Lender
such additional amount or amounts as will adequately compensate Lender for such
reduction. Lender will promptly notify Borrower of any event of which it has
actual knowledge, occurring after the date thereof, which will entitle Lender to
compensation pursuant to this Section 9.17. A certificate of Lender claiming
compensation under this Section 9.17 and setting forth the additional amount or
amounts to be paid to it hereunder, together with the description of the manner
in which such amounts have been calculated, shall be conclusive in the absence
of manifest error. In determining such amount, Lender may use any reasonable
averaging and attribution methods.
9.18 Multiple Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same agreement, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
9.19 Entirety. 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, 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
Revolving Credit and Term Loan Agreement 28
29
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO. THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO
WHICH BORROWER IS A PARTY MAY BE AMENDED OR WAIVED ONLY BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTIES HERETO.
Remainder of Page Intentionally Left Blank.
Signature Page to Follow.
Revolving Credit and Term Loan Agreement 29
30
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
Address for Notice: BORROWER:
690 East Lamar Blvd., Suite 200 TANDY BRANDS ACCESSORIES, INC., a
Arlington, Texas 76011 Delaware corporation, as Borrower
Attn: Stan Ninemire
Telephone No: (817) 548-0090
Telecopy No: (817) 548-1144
By: /s/ STAN NINEMIRE
--------------------------------
Stan Ninemire, Chief Financial
Officer and Senior Vice President
Address for Notice: LENDER:
500 West Seventh Street NATIONSBANK, N.A., a national
Second Floor banking association Lender
Fort Worth, Texas 76102
Attn: Vincent A. Liberio
Telecopy No: (817)390-6452 By: /s/ VINCENT A. LIBERIO,
---------------------------------
Vincent A. Liberio,
Senior Vice President
Revolving Credit and Term Loan Agreement 30
31
EXHIBIT A
NOTICE OF BORROWING
1. Submission Pursuant To Loan Agreement. This Notice of Borrowing is
executed and delivered by Tandy Brands Accessories, Inc. ("Borrower"), to
NationsBank, N.A. ("Lender") pursuant to the Revolving Credit and Term Loan
Agreement dated as of November 17, 1998 between Borrower and the Lender (the
"Agreement"). Any capitalized terms used and not defined herein shall have the
meanings assigned to them in the Agreement.
2. Request For Borrowing. Borrower hereby requests that Lender make an
Advance to Borrower pursuant to the Agreement as follows:
A. Base Rate Borrowing.
(i) Amount of Prime Rate Borrowing:
(Minimum of $100,000.00 or a greater integral multiple
of $25,000.00).
[ ] New Advance
[ ] Rollover/Conversion of Existing Advance
(ii) Date of Borrowing or Rollover/Conversion of Existing
Advance:
B. Eurodollar Borrowing.
(i) Amount of Eurodollar Borrowing:____________________________
(Minimum of $100,000.00, or a greater integral multiple of
$25,000.00).
[ ] New Borrowing
[ ] Rollover/Conversion of Existing Borrowing
(ii) Date of Advance or Rollover/Conversion of Existing
Borrowing:__________________.
(iii) Interest Period:____________ months
(one, two, three, or six months).
C. Quoted Rate Borrowing.
(i) Amount of Quoted Rate Borrowing:___________________________
(Minimum of $100,000.00 or a greater integral multiple of
$25,000.00).
[ ] New Advance
[ ] Rollover/Conversion of Existing Advance
Revolving Credit and Term Loan Agreement 31
32
(ii) Date of Borrowing or Rollover/Conversion of Existing
Advance:
3. Representations, Warranties, and Certifications. Borrower hereby
represents, warrants, and certifies to Lender that, as of the date of the
Advance requested herein:
(a) No Potential Default or Event of Default exists.
(b) The representations and warranties of a continuing nature
contained in the Credit Agreement and each of the other Loan
Documents are true and correct in all material respects,
with the same force and effect as though made on and as of
the date of the Advance except those representations and
warranties that relate only to a particular date.
4. Proceeds of Borrowing. Lender is authorized to deposit the proceeds
of the Advance requested hereby, other than an Advance constituting a rollover
or conversion of an existing Advance, to:
5. Execution Authorized. This Notice of Borrowing is executed on
________, 19_____ by a responsible officer of Borrower. The undersigned, in such
capacity, hereby certifies each and every matter contained herein to be true and
correct.
-------------------------------------
-------------------------------------
of Tandy Brands Accessories, Inc., a
Delaware corporation
Revolving Credit and Term Loan Agreement 32
33
EXHIBIT B
CLOSING DOCUMENTS
1. Credit Agreement.
2. Revolving Credit Note.
3. Term Note.
4. Guaranty executed by each Guarantor and each domestic Subsidiary.
5. Officer's Certificate certifying (a) the truth and accuracy of
that all of the representations and warranties contained in the
Loan Documents, (b) that no event has occurred and is continuing,
or would result from the Advance, which constitutes a Potential
Default or an Event of Default, (c) the resolutions of Borrower
approving the execution, delivery, and performance of the Loan
Documents delivered at closing and the transactions contemplated
therein, duly adopted by Borrower's Board of Directors, (d) the
names of the officers of Borrower authorized to sign each of the
Loan Documents delivered at closing, and (e) a copy of the
Articles of Incorporation of Borrower, and all amendments thereto,
and a copy of the Bylaws of Borrower, and all amendments thereto.
6. Officer's Certificates certifying (a) the truth and accuracy of
that all of the representations and warranties contained in the
Loan Documents, (b) that no event has occurred and is continuing,
or would result from the Advance, which constitutes a Potential
Default or an Event of Default, (c) the resolutions of each of
Subsidiaries approving the execution, delivery, and performance of
the Loan Documents delivered at closing and the transactions
contemplated therein, duly adopted by each of Subsidiaries' Boards
of Directors, (d) the names of the officers of each of Domestic
Subsidiaries authorized to sign each of the Loan Documents
delivered at closing, and (e) copies of the Articles of
Incorporation of each of Subsidiaries, and all amendments thereto,
and copies of the Bylaws of each of Subsidiaries, and all
amendments thereto.
7. Certificates of existence and good standing for Borrower and its
Subsidiaries issued by the state of incorporation.
8. Copies of the Articles of Incorporation of Borrower and its
Subsidiaries, and all amendments thereto, certified by the
Secretary of State of the applicable State of Incorporation.
9. Opinion from Borrower's counsel in form and substance acceptable
to Lender relating to authority and enforceability.
10. Stich other information as may be reasonably required by Lender.
Revolving Credit and Term Loan Agreement 33
34
EXHIBIT C
SUBSIDIARIES - TANDY BRANDS ACCESSORIES, INC.
Name and Address of Subsidiaries State of Organization Percentage Ownership
- -------------------------------- --------------------- --------------------
TBAC - Prince Gardner, Inc. Delaware 100%
TBAC General Management Company Delaware 100%
Amity/Rolfs, Inc. Delaware 100%
Accessory Design Group, Inc. Delaware 100%
Tiger Accessories, Inc. New York 100%
H. A. Sheldon Canada Ltd. Ontario, Canada 100%
TBAC - AIS, Inc. Delaware 100%
TBAC Canterbury, Inc. Delaware 100%
TBAC Investments, Inc. Delaware 100%
TBAC Investment Trust Pennsylvania 100%(1)
TBAC Management Company, Ltd. Delaware 100%(2)
(1) Owned 100% by TBAC Investments, inc.
(2) TBAC General Management Company, General Partner (1%)
Tandy Brands Accessories, Limited Partner (99%)
Revolving Credit and Term Loan Agreement 34
35
TERM NOTE
$15,000,000.00 November 17, 1998
FOR VALUE RECEIVED, the undersigned Tandy Brands Accessories, Inc., a
Delaware corporation (the "Company"), hereby unconditionally promises to pay to
the order of NationsBank, N.A. (the "Bank") the principal sum of fifteen million
dollars ($15,000,000.00) which principal shall be payable as provided in
Sections 2.6 and 2.7 of the Loan Agreement, together with the interest on the
unpaid principal balance until maturity (whether by acceleration or otherwise),
which interest shall be determined at the varying rates per annum, and shall be
payable as provided in Sections 2.6, 2.7, 2.8, 2.12 and 2.14 of the Loan
Agreement. Payments of both principal and interest herein shall be made to
Bank's account at 500 W. Seventh Street, Fort Worth, Texas, in lawful money of
the United States of America and in immediately available funds.
This Note has been executed and delivered pursuant to the terms of
that certain Revolving Credit and Term Loan Agreement (the "Loan Agreement") by
and between Company and NationsBank, N.A., dated as of November 17, 1998, and is
the "Term Note" referred to therein. Reference is hereby made to the Loan
Agreement for a statement of the repayment rights and obligations of Company and
for a statement of the events upon which the maturity of this Note may be
accelerated.
Each capitalized term used herein shall have the same meaning assigned
to it in the Loan Agreement, unless the context hereof otherwise requires or
provides.
Company agrees to pay all costs and expenses of Bank incurred in the
collection of this Note, including but not limited to court costs and reasonable
attorneys' fees and all other costs and expenses described in Section 9.3 of
the Loan Agreement.
Company and each surety, endorser, guarantor and any other party now
or hereafter liable for payment of any sums of money payable on this Note,
jointly and severally waive presentment and demand for payment, protest, notice
of protest and nonpayment, notice of intent to accelerate, notice of
acceleration and all other notices, filing of suit and diligence in collecting
this Note or enforcing any security with respect to same, and agree that their
liability under this Note shall not be affected by any renewal or extension in
the time of payment hereof, or in any indulgences, or by any release,
substitution or change in any security for the payment of this Note, and hereby
consent to any and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions, indulgences, releases or
changes.
Regardless of any provision contained in this Note, the Loan Agreement
or any other document executed or delivered in connection therewith, neither
Bank nor any holder hereof shall be deemed to have contracted for or be entitled
to receive, collect or apply as interest (including any fee, charge or amount
which is not denominated as "interest" but is legally deemed to be interest
under applicable law) on this Note, the Loan Agreement, the Loan Documents or
otherwise, any amount in excess of the Maximum Rate, and, in the event that Bank
or any holder hereof ever receives, collects or applies as interest any such
excess, such amount which would be excessive interest shall
36
be applied to the reduction of the unpaid principal balance of this Note, and,
if the principal balance of this Note is paid in full, any remaining excess
shall forthwith be paid to Company. In determining whether or not the interest
paid or payable under any specific contingency exceeds the Maximum Rate,
Company, Bank and any other holder hereof shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment (other than
payments which are expressly designated as interest payments hereunder) as an
expense or fee rather than as interest, (ii) exclude voluntary prepayments and
the effect thereof, and (iii) amortize, prorate, allocate and spread the total
amount of interest throughout the entire contemplated term of this Note so that
the interest rate is uniform throughout the entire term; provided that, if this
Note is finally paid and performed in full prior to the end of the Rill
contemplated term hereof, and if the interest received for the actual period of
existence thereof exceeds the Maximum Rate, Bank or any holder hereof shall
refund to Company the amount of such excess, or credit the amount of such excess
against the principal amount of this Note and, in such event, neither Bank nor
any other holder shall be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving or receiving interest in excess of
the Maximum Rate.
This Note is being executed and delivered, and is intended to be
performed in the State of Texas. Except to the extent that the laws of the
United States may apply to the terms hereof, the substantive laws of the State
of Texas shall govern the validity, construction, enforcement and interpretation
of this Note.
TANDY BRANDS ACCESSORIES, INC., a
Delaware corporation
By: /s/ STAN NINEMIRE
-----------------------------------
Stan Ninemire, Chief Financial
Officer and Senior Vice President
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37
LOAN AND PAYMENT
TRANSACTION SCHEDULE
attached to and made a part of a Note
dated November 17, 1998, executed by
Tandy Brands Accessories, Inc.
Amount Unpaid Initials
Amount Amount of of Principal of Person
of Amount of Principal Interest Balance Making
Date Advance Principal Repaid Paid of Note Notation
- ---- ------- --------- --------- ------- --------- ---------
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38
REVOLVING CREDIT NOTE
$10,000,000,00 November 17,1998
FOR VALUE RECEIVED, the undersigned Tandy Brands Accessories, Inc., a
Delaware corporation (the "Company"), hereby unconditionally promises to pay to
the order of NationsBank, N.A. (the "Bank") the principal sum of ten million
dollars ($10,000,000.00), or such lesser aggregate amount of Advances as may be
made by Bank pursuant to Bank's Revolving Credit Commitment, which principal
shall be payable as provided in Sections 2.5 and 2.7 of the Loan Agreement,
together with the interest on the unpaid principal balance until maturity
(whether by acceleration or otherwise), which interest shall be determined at
the varying rates per annum, and shall be payable as provided in Sections 2.5,
2.7, 2.8, 2.12 and 2.14 of the Loan Agreement. Payments of both principal and
interest herein shall be made to Bank's account at 500 W. Seventh Street, Fort
Worth, Texas, in lawful money of the United States of America and in immediately
available funds.
This Note has been executed and delivered pursuant to the terms of
that certain Revolving Credit and Term Loan Agreement (the "Loan Agreement") by
and between Company and NationsBank, N.A., dated as of November 17, 1998, and is
the "Revolving Credit Note" referred to therein. Reference is hereby made to the
Loan Agreement for a statement of the repayment rights and obligations of
Company and for a statement of the events upon which the maturity of this Note
may be accelerated.
Each capitalized term used herein shall have the same meaning assigned
to it in the Loan Agreement, unless the context hereof otherwise requires or
provides.
Company agrees to pay all costs and expenses of Bank incurred in the
collection of this Note, including but not limited to court costs and reasonable
attorneys' fees and all other costs and expenses described in Section 9.3 of the
Loan Agreement.
Company and each surety, endorser, guarantor and any other party now
or hereafter liable for payment of any sums of money payable on this Note,
jointly and severally waive presentment and demand for payment, protest, notice
of protest and nonpayment, notice of intent to accelerate, notice of
acceleration and all other notices, filing of suit and diligence in collecting
this Note or enforcing any security with respect to same, and agree that their
liability under this Note shall not be affected by any renewal or extension in
the time of payment hereof, or in any indulgences, or by any release,
substitution or change in any security for the payment of this Note, and hereby
consent to any and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions, indulgences, releases or
changes.
Regardless of any provision contained in this Note, the Loan Agreement
or any other document executed or delivered in connection therewith, neither
Bank nor any holder hereof shall be deemed to have contracted for or be entitled
to receive, collect or apply as interest (including any fee, charge or amount
which is not denominated as "interest" but is legally deemed to be interest
under applicable law) on this Note, the Loan Agreement, the Loan Documents or
otherwise, any amount in excess of the Maximum Rate, and, in the event that Bank
or any holder hereof ever receives, collects or applies as interest any such
excess, such amount which would be excessive interest shall be applied to the
reduction of the unpaid principal balance of this Note, and, if the principal
balance
39
of this Note is paid in full, any remaining excess shall forthwith be paid to
Company. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Rate, Company, Bank and any other
holder hereof shall, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment (other than payments which are expressly
designated as interest payments hereunder) as an expense or fee rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread the total amount of interest throughout
the entire contemplated term of this Note so that the interest rate is uniform
throughout the entire term; provided that, if this Note is finally paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received for the actual period of existence thereof exceeds the
Maximum Rate, Bank or any holder hereof shall refund to Company the amount of
such excess, or credit the amount of such excess against the principal amount of
this Note and, in such event, neither Bank nor any other holder shall be subject
to any penalties provided by any laws for contracting for, charging, taking,
reserving or receiving interest in excess of the Maximum Rate.
This Note is being executed and delivered, and is intended to be
performed in the State of Texas. Except to the extent that the laws of the
United States may apply to the terms hereof, the substantive laws of the State
of Texas shall govern the validity, construction, enforcement and interpretation
of this Note.
TANDY BRANDS ACCESSORIES, INC.,
a Delaware corporation
By: /s/ STAN NINEMIRE
--------------------------------------
Stan Ninemire, Chief Financial Officer
and Senior Vice President
-2-
40
LOAN AND PAYMENT
TRANSACTION SCHEDULE
attached to and made a part of a Note
dated November 17, 1998, executed by
Tandy Brands Accessories, Inc.
Amount Unpaid Initials
Amount Amount of of Principal of Person
of Amount of Principal Interest Balance Making
Date Advance Principal Repaid Paid of Note Notation
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