EXHIBIT 10.10
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$110,000,000
CREDIT AGREEMENT
AMONG
XXXXXXXX MANUFACTURING COMPANY, INC.
CERTAIN LENDERS NAMED HEREIN
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT
NATIONSBANC CAPITAL MARKETS, INC., AS ARRANGER
AND
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES
CORPORATION, AS ARRANGER
September 19, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
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Section 1.1 Defined Terms............................................ 1
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Section 1.2 Amendments and Renewals.................................. 27
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Section 1.3 Construction............................................. 27
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ARTICLE 2
Advances
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Section 2.1 The Advances............................................. 27
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Section 2.2 Manner of Borrowing and Disbursement..................... 28
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Section 2.3 Interest................................................. 31
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Section 2.4 Fees..................................................... 33
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Section 2.5 Prepayments.............................................. 33
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Section 2.6 Reduction of Revolving Credit Commitment................. 35
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Section 2.7 Non-Receipt of Funds by the Administrative Agent......... 36
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Section 2.8 Payment of Principal of Advances......................... 36
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Section 2.9 Reimbursement............................................ 38
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Section 2.10 Manner of Payment........................................ 39
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Section 2.11 LIBOR Lending Offices.................................... 40
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Section 2.12 Sharing of Payments...................................... 40
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Section 2.13 Calculation of LIBOR Rate................................ 41
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Section 2.14 Taxes.................................................... 41
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Section 2.15 Letters of Credit........................................ 44
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ARTICLE 3
Conditions Precedent
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Section 3.1 Conditions Precedent to the Initial Advances and the
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Initial Letters of Credit............................... 50
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Section 3.2 Conditions Precedent to All Advances and Letters of
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Credit.................................................. 53
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Section 3.3 Conditions Precedent to Conversions and Continuations.... 54
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ARTICLE 4
Representations and Warranties
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Section 4.1 Representations and Warranties........................... 55
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Section 4.2 Survival of Representations and Warranties, etc.......... 62
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ARTICLE 5
General Covenants
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Section 5.1 Preservation of Existence and Similar Matters............ 63
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Section 5.2 Business; Compliance with Applicable Law................. 63
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Section 5.3 Maintenance of Properties................................ 63
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Section 5.4 Accounting Methods and Financial Records................. 63
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Section 5.5 Insurance................................................ 63
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Section 5.6 Payment of Taxes and Claims.............................. 64
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Section 5.7 Visits and Inspections................................... 64
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Section 5.8 Use of Proceeds.......................................... 64
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Section 5.9 Indemnity................................................ 64
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Section 5.10 Environmental Law Compliance............................. 66
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Section 5.11 Further Assurances....................................... 67
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Section 5.12 Subsidiaries............................................. 67
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ARTICLE 6
Information Covenants
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Section 6.1 Monthly Financial Statements and Information............. 68
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Section 6.2 Quarterly Financial Statements and Information........... 68
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Section 6.3 Annual Financial Statements and Information;
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Certificate of No Default............................... 68
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Section 6.4 Compliance Certificate................................... 69
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Section 6.5 Copies of Other Reports and Notices...................... 69
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Section 6.6 Notice of Litigation, Default and Other Matters.......... 70
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Section 6.7 ERISA Reporting Requirements............................. 70
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ARTICLE 7
Negative Covenants
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Section 7.1 Indebtedness............................................. 72
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Section 7.2 Liens.................................................... 73
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Section 7.3 Investments.............................................. 73
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Section 7.4 Liquidation, Merger...................................... 74
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ii
Section 7.5 Sales of Assets.......................................... 74
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Section 7.6 Acquisitions............................................. 75
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Section 7.7 Capital Expenditures..................................... 75
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Section 7.8 Restricted Payments...................................... 75
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Section 7.9 Affiliate Transactions................................... 76
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Section 7.10 Compliance with ERISA.................................... 76
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Section 7.11 Maximum Leverage Ratio................................... 76
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Section 7.12 Minimum Fixed Charge Coverage Ratio...................... 77
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Section 7.13 Interest Coverage Ratio.................................. 77
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Section 7.14 Sale or Discount of Receivables.......................... 77
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Section 7.15 Business................................................. 77
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Section 7.16 Fiscal Year.............................................. 77
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Section 7.17 Amendment of Organizational Documents.................... 77
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Section 7.18 Amendments and Waivers of Subordinated Debt.............. 78
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ARTICLE 8
Default
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Section 8.1 Events of Default........................................ 78
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Section 8.2 Remedies................................................. 81
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ARTICLE 9
Changes in Circumstances
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Section 9.1 LIBOR Basis Determination Inadequate..................... 82
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Section 9.2 Illegality............................................... 82
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Section 9.3 Increased Costs.......................................... 83
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Section 9.4 Effect On Base Rate Advances............................. 84
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Section 9.5 Capital Adequacy......................................... 84
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Section 9.6 Replacement Lender....................................... 85
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ARTICLE 10
Agreement Among Lenders
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Section 10.1 Agreement Among Lenders.................................. 85
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Section 10.2 Lender Credit Decision................................... 88
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Section 10.3 Benefits of Article...................................... 88
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ARTICLE 11
Miscellaneous
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Section 11.1 Notices.................................................. 89
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Section 11.2 Expenses................................................. 90
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Section 11.3 Waivers.................................................. 90
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Section 11.4 Calculation by the Lenders Conclusive and Binding........ 91
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Section 11.5 Set-Off.................................................. 91
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Section 11.6 Assignment............................................... 91
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Section 11.7 Counterparts............................................. 93
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Section 11.8 Severability............................................. 93
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Section 11.9 Interest and Charges..................................... 93
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Section 11.10 Headings................................................. 94
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Section 11.11 Amendment and Waiver..................................... 94
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Section 11.12 Exception to Covenants................................... 95
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Section 11.13 No Liability of Issuing Bank............................. 95
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Section 11.14 Confidentiality.......................................... 95
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Section 11.15 No Novation.............................................. 96
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Section 11.16 Governing Law............................................ 96
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Section 11.17 Waiver of Jury Trial..................................... 96
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Section 11.18 Entire Agreement......................................... 96
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iv
Schedules and Exhibits
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Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Qualification and Good Standing
Schedule 8: Labor Relations
Schedule 9: EBIT Special Adjustments
Exhibit A: Revolving Credit Note
Exhibit B: Facility A Term Loan Note
Exhibit C: Facility B Term Loan Note
Exhibit D: General Security Agreement
Exhibit E: Intellectual Property Security Agreement and Assignment
Exhibit F: Compliance Certificate
Exhibit G: Assignment Agreement
Exhibit H: Subsidiary Guaranty
Exhibit I: Notice of Borrowing
Exhibit J-1: Leasehold Deed of Trust
Exhibit J-2: Fee Simple Deed of Trust
Exhibit K: Landlord's Waiver
Exhibit L: Swing Line Note
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is dated as of September 19, 1997, among XXXXXXXX
MANUFACTURING COMPANY, INC., a Texas corporation (the "Borrower"), the Lenders
from time to time party hereto, and NATIONSBANK OF TEXAS, N.A., a national
banking association, as administrative agent for the Lenders.
BACKGROUND
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The Lenders have been requested to provide the Borrower funds to (a)
consummate the Dogloo Transaction (as hereinafter defined) (b) refinance a
portion of the existing debt of the Borrower and Dogloo (as hereinafter
defined), including, but not limited to, the debt of the Borrower outstanding
pursuant to the terms of that certain Credit Agreement, dated as of July 1,
1997, among the Borrower, the lenders party thereto, and NationsBank of Texas,
N.A., as the Administrative Agent (the "Existing Credit Agreement") and the
Bridge Notes (as hereinafter defined), (c) pay certain fees and expenses related
to the Dogloo Transaction, and (d) finance the ongoing working capital and
general corporate requirements of the Borrower and its Subsidiaries (as
hereinafter defined). The Lenders have agreed to provide such financing,
subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained herein,
and other good and valuable consideration hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
Definitions
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Section 1.1 Defined Terms. For purposes of this Agreement:
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"Account" has the meaning assigned to such term in the UCC.
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"Acquisition" means any transaction pursuant to which the Borrower or any
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of its Subsidiaries, (a) whether by means of a capital contribution or purchase
or other acquisition of stock or other securities or other equity participation
or interest, (i) acquires more than 50% of the equity interest in any Person
pursuant to a solicitation by the Borrower or such Subsidiary of tenders of
equity securities of such Person, or through one or more negotiated block,
market, private or other transactions, or a combination of any of the foregoing,
or (ii) makes any corporation a Subsidiary of the Borrower or such Subsidiary,
or causes any corporation, other than a Subsidiary of the Borrower or such
Subsidiary, to be merged into the Borrower or such Subsidiary (or agrees to be
merged into any other corporation other than a wholly-owned Subsidiary
(excluding directors' qualifying shares) of the Borrower or
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such Subsidiary), or (b) purchases all or substantially all of the business or
assets of any Person or of any operating division of any Person.
"Acquisition Consideration" means the consideration given by the Borrower
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or any of its Subsidiaries for an Acquisition, including but not limited to the
fair market value of any cash, property, stock or services given and the amount
of any Indebtedness assumed or incurred by the Borrower or any Subsidiary of the
Borrower in connection with such Acquisition.
"Administrative Agent" means NationsBank of Texas, N.A., a national banking
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association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
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"Administrative Agent Fee Letter" has the meaning specified in Section
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2.4(b) hereof.
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"Advance" means any amount advanced by the Lenders to the Borrower pursuant
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to Article 2 hereof on the occasion of any borrowing.
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"Affiliate" means, as applied to any Person, any other Person that,
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directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, such Person.
"Agreement" means this Credit Agreement, as amended, modified, supplemented
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or restated from time to time.
"Agreement Date" means the date of this Agreement.
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"Applicable Base Rate Margin" means the following per annum percentages,
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applicable in the following situations:
Facility A Term Facility B
Loan Advances and Term Loan
Applicability Revolving Advances Advances
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(a) Initial Pricing Period 0.750% 1.250%
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(b) Subsequent Pricing Period
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(1) The Leverage Ratio is greater than or 0.750% 1.250%
equal to 4.50 to 1
(2) The Leverage Ratio is less than 4.50 to 0.500% 1.000%
1 but greater than or equal to 3.50 to 1
(3) The Leverage Ratio is less than 3.50 to 1 0.000% 0.500%
2
During the Subsequent Pricing Period, the Applicable Base Rate Margin payable by
the Borrower on the Base Rate Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above, on a
quarterly basis according to the performance of the Borrower as tested by using
the Leverage Ratio calculated as of the end of each fiscal quarter; provided,
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that each adjustment in the Base Rate Basis as a result of a change in the
Applicable Base Rate Margin shall be effective with respect to Base Rate
Advances (i) made following receipt by the Administrative Agent of the financial
statements required to be delivered pursuant to Section 6.2 or 6.3 hereof, as
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applicable, for each such fiscal quarter, and the corresponding Compliance
Certificate required pursuant to Section 6.4 hereof, on the date of making such
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Base Rate Advance and (ii) outstanding on the date of receipt of such financial
statements and Compliance Certificate referred to in clause (i) immediately
preceding, on the date which is two Business Days following the date of receipt
of such financial statements and Compliance Certificate. If such financial
statements and Compliance Certificate are not received by the Administrative
Agent by the date required, the Applicable Base Rate Margin shall be determined
as if the Leverage Ratio is greater than 4.50 to 1 until such time as such
financial statements and Compliance Certificate are received.
"Applicable Environmental Laws" means applicable laws pertaining to health
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or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA").
"Applicable Law" means (a) in respect of any Person, all provisions of
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constitutions, statutes, rules, regulations and final orders of governmental
bodies or regulatory agencies applicable to such Person and its properties,
including, without limiting the foregoing, all orders and decrees of all
Tribunals in proceedings or actions to which the Person in question is a party,
and (b) in respect of contracts relating to interest or finance charges that are
made or performed in the State of Texas, "Applicable Law" shall mean the laws of
the United States of America, including without limitation 12 USC (S)(S) 85 and
86, as amended from time to time, and any other statute of the United States of
America now or at any time hereafter prescribing the maximum rates of interest
on loans and extensions of credit, and the laws of the State of Texas.
"Applicable LIBOR Rate Margin" means the following per annum percentages,
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applicable in the following situations:
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Facility A Term
Loan Advances and Facility B Term
Applicability Revolving Advances Loan Advances
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(a) Initial Pricing Period 2.250% 2.750%
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(b) Subsequent Pricing Period
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(1) The Leverage Ratio is greater 2.250% 2.750%
than or equal to 4.50 to 1
(2) The Leverage Ratio is less than 2.000% 2.500%
4.50 to 1 but greater than or
equal to 3.50 to 1
(3) The Leverage Ratio is less than 1.500% 2.000%
3.50 to 1
During the Subsequent Pricing Period, the Applicable LIBOR Rate Margin payable
by the Borrower on the LIBOR Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above, on a
quarterly basis according to the performance of the Borrower as tested by using
the Leverage Ratio calculated as of the end of each fiscal quarter; provided,
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that each adjustment in the LIBOR Basis as a result of a change in the
Applicable LIBOR Rate Margin shall be effective with respect to LIBOR Advances
(i) made following receipt by the Administrative Agent of the financial
statements required to be delivered pursuant to Section 6.2 or 6.3 hereof, as
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applicable, for each such fiscal quarter, and the corresponding Compliance
Certificate required pursuant to Section 6.4 hereof, on the date of making such
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LIBOR Advance and (ii) outstanding on the date of receipt of such financial
statements and Compliance Certificate referred to in clause (i) immediately
preceding, on the date which is two Business Days following the date of receipt
of such financial statements and Compliance Certificate. If such financial
statements and Compliance Certificate are not received by the Administrative
Agent by the date required, the Applicable LIBOR Rate Margin shall be determined
as if the Leverage Ratio is greater than 4.50 to 1 until such time as such
financial statements and Compliance Certificate are received.
"Applicable Specified Percentage" means the Revolving Credit Specified
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Percentage, the Facility A Term Loan Specified Percentage, the Facility B Term
Loan Specified Percentage or the Total Specified Percentage, as applicable in
the context used.
"Assignees" means any assignee of a Lender pursuant to an Assignment
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Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
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"Assignment Agreement" has the meaning specified in Section 11.6 hereof.
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"Authorized Signatory" means such senior personnel of the Borrower or the
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Parent as may be duly authorized and designated in writing by the Borrower or
the Parent to execute
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documents, agreements and instruments on behalf of the Borrower or the Parent,
and to request Advances and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
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Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal to
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the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on such
day plus (iii) the Applicable Base Rate Margin or (b) the sum of (i) the Prime
Rate on such day plus (ii) the Applicable Base Rate Margin. The Base Rate Basis
shall be adjusted automatically without notice as of the opening of business on
the effective date of each change in the Prime Rate or Federal Funds Rate, as
applicable, to account for such change.
"Basle Accord" means the proposals for risk-based capital framework
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described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital Management
and Capital Standards" dated July 1988, as amended, modified, and supplemented
and in effect from time to time or any replacement thereof.
"Borrowing Base" means, at the time in question, an amount equal to the sum
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of (a) 80% of Eligible Accounts plus (b) 50% of Eligible Inventory.
"Bridge Notes" means those certain senior subordinated increasing rate
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notes of the Borrower issued by the Borrower in connection with the Xxxxxxxx
Transaction in an aggregate principal amount of $32,500,000.00.
"Business Day" means a day on which commercial banks are open (a) for the
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transaction of business in Dallas, Texas, and (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
U.S. Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
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Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the cost of the item) computed in accordance with GAAP,
consistently applied; provided, however, notwithstanding the foregoing, Capital
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Expenditures shall not include any such expenditures to the extent that they are
made in conjunction with an Acquisition and are included as Acquisition
Consideration. For the purpose of this definition, the purchase price of
equipment which is acquired concurrently or in conjunction with the trade-in of
existing equipment owned by the Borrower or any of its Subsidiaries or with
insurance proceeds shall be included in Capital Expenditures only to the extent
of the gross amount of such purchase price less the credit granted by the seller
of such equipment being traded in at such time or the amount of such proceeds,
as the case may be, and the purchase price of equipment which is acquired in
connection with the sale or other disposition of capital assets which have been
replaced or superseded shall be included in Capital Expenditures only to the
extent of the
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gross amount of such purchase price less any cash received from such sale or
other disposition.
"Capitalized Lease Obligations" means that portion of any obligation of the
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Borrower or any Subsidiary of the Borrower as lessee under a lease which at the
time would be required to be capitalized on a balance sheet of the Borrower or
such Subsidiary prepared in accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and each
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Subsidiary of the Borrower (a) cash, (b) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) entered into with any financial institution
meeting the qualifications specified in clause (c) above, (e) commercial paper
issued by any Lender or the parent corporation of any Lender, and commercial
paper rated A-1 or the equivalent thereof by Standard & Poor's Ratings Group, a
Division of XxXxxx-Xxxx, Inc., a New York corporation, or P-1 or the equivalent
thereof by Xxxxx'x Investors Service, Inc., and in each case maturing within six
months after the date of acquisition, and (f) a readily redeemable "money market
mutual fund" advised by a bank described in clause (iii) hereof, or an
investment advisor registered under Section 203 of the Investment Advisors Act
of 1940, that has and maintains an investment policy limiting its investments
primarily to instruments of the types described in clauses (a) through (e)
hereof and having on the date of such Investment total assets of at least
$200,000,000.00.
"Change of Control" means the occurrence of any of the following events
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after the Agreement Date: (a) any Person or any Persons acting together which
would constitute a "group" (a "Group") for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision thereto, other than the Specified Investors, shall
beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
51% of the aggregate Voting Power of the Borrower; (b) during any period of
twenty-four consecutive months, individuals who at the beginning of such period
constituted the Board of Directors of the Borrower (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Borrower was approved by a vote of a
majority of the directors of the Borrower then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Borrower then in office; (c)(i) prior
to the occurrence of a public offering of the Borrower's common stock, the
Specified Investors shall fail to own at least 50% of the aggregate Voting Power
of the Borrower or (ii) from and after the occurrence of a public offering of
the Borrower's common stock, the Specified Investors shall fail to own
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at least 30% of the aggregate Voting Power of the Borrower; or (d) any "Change
of Control", "Change in Control" or similar event or circumstance, however
defined or designated, under any agreement or document governing any
Institutional Debt.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means any collateral hereafter granted by any Person to the
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Administrative Agent for the benefit of the Lenders to secure the Obligations.
"Collateral Document" means any document under which Collateral is granted
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and any document related thereto.
"Commitments" means, collectively, the Revolving Credit Commitment, the
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Facility A Term Loan Commitment and the Facility B Term Loan Commitment, as
reduced from time to time in the case of the Revolving Credit Commitment
pursuant to Section 2.6 hereof.
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"Compliance Certificate" means a certificate, signed by an Authorized
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Signatory, in substantially the form of Exhibit F, appropriately completed.
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"Control" or "Controlled By" or "Under Common Control" means possession,
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directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or
otherwise); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 10% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation
shall be conclusively presumed to control such corporation, except that Xxxxxxxx
X. Xxxxxxxx, Xx. shall not be deemed to control the Borrower by reason of such
voting power so long as he is the beneficial owner, directly or indirectly, of
no more than 15% of such voting power.
"Controlled Group" means as of the applicable date, as to any Person not an
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individual, all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group.
"Creditor" means a creditor of the Borrower or any Subsidiary of the
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Borrower and shall not include any Affiliate of any such creditor.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
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bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
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"Deed of Trust" means any leasehold or fee simple Deed of Trust or
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Mortgage, as applicable, relating to the real property and improvements leased
and owned by the Borrower and each Domestic Subsidiary of the Borrower, in
substantially the form set forth in Exhibit J-1 and Exhibit J-2.
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"Default" means an Event of Default and/or any of the events specified in
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Section 8.1, regardless of whether there shall have occurred any passage of time
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or giving of notice that would be necessary in order to constitute such event an
Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
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respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or (ii)
the Base Rate Basis then in effect plus 2.00% or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis then
in effect plus 2.00%.
"Determining Lenders" means, on any date of determination, any combination
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of Lenders whose Total Specified Percentages result in exposure to such Lenders
equal to more than 50% of the sum of (a) the sum of (i) all outstanding
Revolving Credit Advances on such date, plus (ii) the Unused Portion on such
date, plus (b) all outstanding Facility A Term Loan Advances on such date, plus
(c) all outstanding Facility B Term Loan Advances on such date.
"Dividend" means, as to any Person, (a) any declaration or payment of any
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dividend (other than a stock dividend) on, or the making of any distribution on
account of, any Equity Interests of such Person and (b) any purchase,
redemption, or other acquisition or retirement for value of any Equity Interests
of such Person.
"Dogloo" means Dogloo, Inc., a California corporation.
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"Dogloo Merger" means the merger of Dogloo with and into the Borrower
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through the exchange of Equity Interests of the Borrower for all outstanding
Equity Interests of Dogloo, with the Borrower being the surviving corporation.
"Dogloo Transaction" means, collectively, (a) the Dogloo Merger, (b) the
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issuance by the Borrower of the Senior Subordinated Notes, (c) the Dogloo
Transaction Restricted Payments, and (c) the refinancing of all existing
Indebtedness of Dogloo and the Borrower, including but limited to all
Indebtedness in respect of the Existing Credit Agreement and the Bridge Notes.
"Dogloo Transaction Documents" means all agreements, documents and
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instruments executed in connection with or related to the Dogloo Transaction.
"Dogloo Transaction Restricted Payments" means (a) the redemption of Common
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Stock of the Borrower for an aggregate amount not to exceed $11,000,000, (b) the
redemption of Series A Preferred Stock of the Borrower for an aggregate amount
not to exceed $7,000,000 plus accrued dividends thereon, (c) the redemption of
Series B Preferred
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Stock of the Borrower for an aggregate amount not to exceed $12,652,000 plus
accrued dividends thereon, (d) the redemption of Series C Preferred Stock of the
Borrower for an aggregate amount not to exceed $3,474,000 plus accrued dividends
thereon, (e) the payment of accrued dividends on Series C Preferred Stock of the
Borrower that are not redeemed in connection with the Xxxxxxxx Transaction not
to exceed $1,576,000, (f) payments to certain shareholders (including option
holders) and employees of Dogloo in connection with the Dogloo Transaction not
to exceed $730,000 in aggregate amount, and (g) payments to Westar Capital of a
transaction advisory fee incurred in connection with the 1995 Dogloo
recapitalization not to exceed $450,000.
"Dollar" or "$" means the lawful currency of the United States of America.
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"Domestic Subsidiary" means any Subsidiary of the Borrower other than a
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Foreign Subsidiary.
"Xxxxxxxx Transaction" has the meaning given to such term in the Existing
--------------------
Credit Agreement.
"Xxxxxxxx Transaction Documents" has the meaning given to such term in the
------------------------------
Existing Credit Agreement.
"EBIT" means, for any period, determined in accordance with GAAP on a
----
consolidated basis for the Borrower and its Subsidiaries, the sum of (a) Pretax
Net Income (excluding therefrom, to the extent included in determining Pretax
Net Income, any items of extraordinary gain, including net gains on the sale of
assets other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense (including
interest expense pursuant to Capitalized Lease Obligations), plus (c) EBIT
Special Adjustments.
"EBIT Special Adjustments" means an amount equal to the sum of (a)
------------------------
management fees in favor of Westar Capital recorded as a one-time charge in
August, 1997, up to a maximum of $450,000, plus (b) relocation costs relating to
the integration of the Borrower and Dogloo, up to a maximum of $825,000, plus
(c) transaction fees and expenses related to the Xxxxxxxx Transaction and the
Dogloo Transaction, plus (d) those items set forth on Schedule 9 hereto to the
----------
extent they are required to be expensed rather than capitalized, plus (e)
excluding any management fees referred to in clause (a) above, any excess of
management fees in favor of Westar Capital L.L.C. accrued during any period over
such fees paid in such period, minus (f) excluding any management fees referred
to in clause (a) above, any excess of management fees in favor of Westar Capital
L.L.C. paid during any period over such fees accrued during such period; but
excluding any component of the foregoing not deducted in calculating Pretax Net
Income.
9
"EBITDA" means, for any period, determined in accordance with GAAP on a
------
consolidated basis for the Borrower and its Subsidiaries, the sum of (a) EBIT
plus (b) depreciation, amortization and other non-cash charges (to the extent
included in determining EBIT).
"Eligible Accounts" means at the time of any determination thereof, each
-----------------
Account as to which the following requirements have been fulfilled to the
reasonable satisfaction of the Administrative Agent:
(a) The Borrower or any Subsidiary of the Borrower has lawful and
absolute title to such Account;
(b) Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account (the "account debtor") for goods
or services delivered or rendered to such Person;
(c) If such Account and other Accounts are owed by a Creditor of the
Borrower or any Subsidiary of the Borrower, the amount of all such Accounts
included as Eligible Accounts shall be the amount by which all such
Accounts exceeds the aggregate accounts payable owed by the Borrower or
such Subsidiary to such Creditor;
(d) There has been excluded from such Account any portion that is
subject to any asserted dispute, offset, discount, counterclaim or other
claim or defense on the part of the account debtor or to any asserted claim
on the part of the account debtor denying liability under such Account;
(e) The Borrower or any Subsidiary of the Borrower has full and
unqualified right to assign and grant a security interest in such Account
to Administrative Agent as security for the Obligations;
(f) Such Account is evidenced by an invoice rendered to the account
debtor (and is not evidenced by chattel paper, promissory note or other
instrument payable to the Borrower or any Subsidiary of the Borrower) and
is not the result of a conditional sales contract or agreement;
(g) Such Account has not been due and payable for more than 90 days
from the invoice date; provided, that no Accounts from an account debtor
shall constitute Eligible Accounts if 15% or more of the aggregate dollar
amount of all Accounts (excluding the Kmart Receivable) owed to the
Borrower or any Subsidiary of the Borrower by such account debtor have been
due and payable for 90 days or more from their respective invoice dates
unless the payments of such Accounts are insured in a manner satisfactory
to the Administrative Agent;
10
(h) No account debtor in respect of such Account is (i) primarily
conducting business in and organized under the laws of any jurisdiction
located outside the United States of America or Canada unless the payments
of such Accounts are (A) insured in a manner satisfactory to the
Administrative Agent or (B) supported in full by an irrevocable letter of
credit, (ii) the subject of a proceeding under any Debtor Relief Laws or
(iii) a Tribunal;
(i) No account debtor in respect of such Account is (i) an Affiliate
of the Borrower or any Subsidiary or (ii) an employee of the Borrower or
any Subsidiary of the Borrower; and
(j) Such Account is (i) subject to a fully perfected first priority
security interest in favor of Administrative Agent pursuant to the Loan
Documents, prior to the rights of, and enforceable as such against, any
other Person (including holders of a purchase money security interest) and
(ii) not subject to any Lien in favor of any other Person other than
Permitted Collateral Liens.
"Eligible Assignee" means (a) any Lender; (b) a commercial bank organized
-----------------
under the laws of the United States, or any state thereof, and having total
assets in excess of $1,000,000,000; (c) a savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, having total assets in excess of $500,000,000, and not in receivership
or conservatorship; (d) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is described in this clause; and (e) the central bank of any
country which is a member of the Organization for Economic Cooperation and
Development; (f) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial loans
in the ordinary course of its business and having a combined capital and surplus
or total assets of at least $100,000,000, (g) any other entity (other than a
natural person) that is an "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) which extends credit or buys loans as one of
its businesses, and (h) any other entity approved by both the Borrower and the
Administrative Agent, provided that, no Affiliate of the Borrower shall qualify
as an Eligible Assignee.
"Eligible Inventory" means, at the time of any determination thereof, each
------------------
item of Inventory (excluding 50% of work-in-process inventory, obsolete
Inventory, Inventory on consignment and Inventory used for demonstrations and
display) valued at the lower of cost or market value (allocated on a first-in,
first-out basis), as to which the following requirements have been fulfilled to
the reasonable satisfaction of the Administrative Agent:
(a) Borrower or any Subsidiary has lawful and absolute title to such
Inventory;
11
(b) Such Inventory is not defective or unmerchantable goods;
(c) Such Inventory is located in the United States of America in a
facility owned by the Borrower or, if leased, for which the Administrative
Agent has received a Landlord's Waiver;
(d) Such Inventory is (a) subject to a fully perfected first priority
security interest in favor of Administrative Agent pursuant to the Loan
Documents, prior to the rights of, and enforceable as such against, any
other Person (including holders of a purchase money security interest) and
(b) not subject to any Lien in favor of any other Person other than
Permitted Collateral Liens; and
(e) The sale of such Inventory by Administrative Agent (or its
successors or assigns) upon an Event of Default is not subject to any
Necessary Authorization restriction or limitation.
"Enterprise" means Enterprise Partners III, L.P., a Delaware limited
----------
partnership, and its Affiliates party to the Xxxxxxxx Transaction Documents as
"Buyers", or any other Affiliate thereof acceptable to the Determining Lenders.
"Equity" means shares of capital stock or partnership, profits, capital or
------
member interest, or options, warrants or any other right to subscribe for or
otherwise acquire capital stock or a partnership, profits, capital or member
interest, of the Borrower or any Subsidiary of the Borrower.
"Equity Interest" means, as to any Person, the equity interests in such
---------------
Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, and each class of partnership interest
(including, without limitation, general, limited and preference units) in any
Person that is a partnership, and each class of member interest in any Person
that is a limited liability company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries, (a)
-----------
a Reportable Event (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC pursuant to regulations issued under Section 4043
of ERISA), (b) the withdrawal of any such Person or any member of its Controlled
Group from a Plan subject to Title IV of ERISA during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate under Section 4041(c) of ERISA, (d)
the institution of proceedings to terminate a Plan by the PBGC, (e) the failure
to make required contributions which could result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or the
12
imposition of any liability under Title IV of ERISA other than PBGC premiums due
but not delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1,
---------------- -----------
provided that any requirement for notice or lapse of time has been satisfied.
"Excess Cash Flow" means, with respect to the Borrower and its Subsidiaries
----------------
on a consolidated basis, the remainder of (i) Net Operating Cash Flow, minus
(ii) the cash portion of any Acquisition Consideration, minus (iii) voluntary
prepayments of Indebtedness which cannot be reborrowed, in each case for the
four fiscal quarters immediately preceding the date of calculation.
"Excluded Matters" has the meaning specified in Section 5.9(a) hereof.
---------------- --------------
"Facility A Term Loan Advance" means an Advance made pursuant to Section
---------------------------- -------
2.1(b) hereof.
------
"Facility A Term Loan Commitment" means $45,000,000 as terminated pursuant
-------------------------------
to Section 2.1(b) hereof.
--------------
"Facility A Term Loan Maturity Date" means September 30, 2003, or the
----------------------------------
earlier date of acceleration of the Facility A Term Loan Advances pursuant to
Section 8.2 hereof.
-----------
"Facility A Term Loan Notes" means the promissory notes of the Borrower
--------------------------
evidencing Facility A Term Loan Advances hereunder, substantially in the form of
Exhibit B hereto, together with any extension, renewal or amendment thereof, or
---------
substitution therefor.
"Facility A Term Loan Specified Percentage" means, as to any Lender, the
-----------------------------------------
percentage indicated beside its name on the signature pages hereof as its
Facility A Term Loan Specified Percentage, or as adjusted or specified in any
amendment to this Agreement or in any Assignment Agreement.
"Facility B Term Loan Advance" means an Advance made pursuant to Section
---------------------------- -------
2.1(c) hereof.
------
"Facility B Term Loan Commitment" means $37,500,000 as terminated pursuant
-------------------------------
to Section 2.1(c) hereof.
--------------
"Facility B Term Loan Maturity Date" means September 30, 2004, or the
----------------------------------
earlier date of acceleration of the Facility B Term Loan Advances pursuant to
Section 8.2 hereof.
-----------
"Facility B Term Loan Notes" means the promissory notes of the Borrower
--------------------------
evidencing Facility B Term Loan Advances hereunder, substantially in the form of
Exhibit C hereto, together with any extension, renewal or amendment thereof, or
---------
substitution therefor.
13
"Facility B Term Loan Specified Percentage" means, as to any Lender, the
-----------------------------------------
percentage indicated beside its name on the signature pages hereof as its
Facility B Term Loan Specified Percentage, or as adjusted or specified in any
amendment to this Agreement or in any Assignment Agreement.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
------------------
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fixed Charges" means, for any date of calculation, calculated for Borrower
-------------
and its Subsidiaries on a consolidated basis, the sum of, without duplication,
(a) scheduled principal payments in respect of Indebtedness, plus (b) cash
interest expense (including interest expense pursuant to Capitalized Lease
Obligations).
"Fixed Charge Coverage Ratio" means the ratio of Pretax Cash Flow to Fixed
---------------------------
Charges, calculated (a) for December 31, 1997, from the day after the Agreement
Date to December 31, 1997, (b) for March 31, 1998, from the day after the
Agreement Date to March 31, 1998, (c) for June 30, 1998, from the day after the
Agreement Date to June 30, 1998, and (d) for each fiscal quarter thereafter, for
the four consecutive fiscal quarters ending on the date of calculation.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
------------------
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a
----
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles applied in a current period are comparable in all
material respects to those applied in a preceding period.
"General Security Agreement" means a security agreement relating to all
--------------------------
personal property assets of the Borrower and its Domestic Subsidiaries,
substantially in the form of Exhibit D hereto, as amended, modified, renewed,
---------
supplemented or restated from time to time.
"Guarantor" means each direct and indirect Subsidiary of the Borrower,
---------
other than any Foreign Subsidiary.
14
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
-------- ----------
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit and (b) an agreement, direct or
indirect, contingent or otherwise, to maintain the net worth, working capital,
earnings or other financial performance of another Person; provided, however,
Guaranty does not mean (y) the endorsement of instruments for collection or
deposit in the ordinary course of business and (z) customary indemnities given
in connection with asset sales in the ordinary course of business.
"Highest Lawful Rate" means at the particular time in question the maximum
-------------------
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower.
"Indebtedness" means, with respect to any Person, without duplication, (a)
------------
all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable in the
ordinary course of business), (e) all obligations secured by any Lien on any
property or asset owned by such Person, whether or not the obligation secured
thereby shall have been assumed, (f) to the extent not otherwise included, all
Capitalized Lease Obligations of such Person, all obligations in respect of
letters of credit, bankers' acceptances and similar instruments, and all
obligations under Interest Hedge Agreements, (g) all preferred stock issued by
such Person and required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date, and (h) any Guaranty
of such Person of any obligation of another Person constituting obligations of a
type set forth above.
"Indemnified Matters" has the meaning specified in Section 5.9(a) hereof.
------------------- --------------
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
----------- --------------
"Initial Pricing Period" means the period from and including the Agreement
----------------------
Date to and including the Rate Adjustment Date.
"Institutional Debt" means unsecured Indebtedness for borrowed money which
------------------
may be raised by the Borrower after the Agreement Date in the private placement
or public debt markets, and shall include Subordinated Debt issued after the
Agreement Date. For the
15
avoidance of doubt, the Bridge Notes and the Senior Subordinated Notes are not
Institutional Debt for purposes hereof.
"Intellectual Property Security Agreement" means the security agreement and
----------------------------------------
assignment relating to all intellectual property of the Borrower and its
Domestic Subsidiaries substantially in the form of Exhibit E hereto, as amended,
---------
modified, renewed, supplemented or restated from time to time.
"Interest Coverage Ratio" means the ratio of (a) EBITDA to (b) interest
-----------------------
expense of the Borrower and its Subsidiaries (including interest expense
pursuant to Capitalized Lease Obligations), calculated (a) for December 31,
1997, from the day after the Agreement Date to December 31, 1997, (b) for March
31, 1998, from the day after the Agreement Date to March 31, 1998, (c) for June
30, 1998, from the day after the Agreement Date to June 30, 1998, and (d) for
each fiscal quarter thereafter, for the four consecutive fiscal quarters
immediately ending on the date of calculation.
"Interest Hedge Agreements" means any and all agreements, devices or
-------------------------
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap, swap or
collar protection agreements, and forward rate currency or interest rate
options, as the same may be amended or modified and in effect from time to time,
and any and all cancellations, buy backs, reversals, terminations or assignments
of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR Advance
---------------
is made and ending one, two, three or six months thereafter (as the Borrower
shall select); provided, however, that all of the foregoing provisions are
-------- -------
subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless, with respect to a LIBOR Advance, the
result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(ii) any Interest Period with respect to a LIBOR Advance 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 at the end of
such Interest Period) shall end on the last Business Day of a calendar
month;
(iii) the Borrower may not select any Interest Period which ends
after the date of a scheduled principal payment on the Advances unless,
after giving effect to such selection, the aggregate unpaid principal
amount of the LIBOR Advances for which Interest Periods end after such
scheduled principal payment shall be equal to or
16
less than the principal amount to which the Advances or Term Loan
Commitments are required to be reduced after such scheduled principal
payment is made;
(iv) the Borrower may not select any Interest Period in respect of
LIBOR Advances having an aggregate amount less than $1,000,000; and
(v) there shall be outstanding at any one time no more than eight
Interest Periods in the aggregate.
"Investment" means any acquisition of all or substantially all assets of
----------
any Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than loans or advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution to, or
investment in any other Person, including without limitation the purchase of
accounts receivable of any other Person that are not current assets or do not
arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A., a national banking
------------
association, in its capacity as issuer of the Letters of Credit.
"Kmart Receivable" means amounts owed to the Borrower in respect of that
----------------
certain Consignment Agreement, dated July 12, 1993, between Kmart Corporation
and the Borrower.
"Landlord's Waiver" has the meaning specified in Section 3.1(m) hereof.
----------------- --------------
"Law" means any statute, law, ordinance, regulation, rule, order, writ,
---
injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
------
hereof so long as such financial institution maintains a portion of the
Commitments or is owed any part of the Obligations (including the Administrative
Agent in its individual capacity), and each Assignee that hereafter becomes a
party hereto pursuant to Section 11.6 hereof, subject to the limitations set
------------
forth therein.
"L/C Related Documents" has the meaning specified in Section 2.15(e)
--------------------- ---------------
hereof.
"Letter of Credit" has the meaning specified in Section 2.15(a) hereof.
---------------- ---------------
"Letter of Credit Agreement" has the meaning specified in Section 2.15(b)
-------------------------- ---------------
hereof.
"Letter of Credit Facility" has the meaning specified in Section 2.15(a)
------------------------- ---------------
hereof.
17
"Leverage Ratio" means, for any date of calculation, the ratio of Total
--------------
Debt as of the date of determination to EBITDA calculated for the four
consecutive fiscal quarters immediately preceding the date of calculation;
provided, however, notwithstanding the above, for purposes of determination of
-------- -------
the Leverage Ratio (a) at December 31, 1997, the EBITDA component thereof shall
be equal to the product of (i) EBITDA for the immediately preceding two fiscal
quarters multiplied by (ii) 2.00, (b) at March 31, 1998, the EBITDA component
thereof shall be equal to the product of (i) EBITDA for the immediately
preceding three fiscal quarters multiplied by (ii) 1.33, and (c) the EBITDA
component thereof shall also be calculated as if the Dogloo Merger had occurred
effective July 1, 1997. For purpose of calculation of the Leverage Ratio only,
with respect to assets not owned at all times during the four fiscal quarters
immediately preceding the date of calculation of EBITDA, there shall be (i)
included in EBITDA the proforma EBITDA of any assets acquired during any such
four fiscal quarters for the twelve months preceding the date of calculation and
(ii) excluded from EBITDA the EBITDA of any assets disposed of during any of
such fiscal quarters for the twelve months preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be made as
-------------
a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
-----------
"LIBOR Basis" means a simple per annum interest rate equal to the lesser of
-----------
(a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable LIBOR Rate Margin. The LIBOR Basis shall, with respect to LIBOR
Advances subject to reserve or deposit requirements, be subject to premiums for
such reserve or deposit requirements assessed by each Lender to the extent
incurred by such Lender, which are payable by the Borrower directly to each
Lender. Once determined, the LIBOR Basis shall remain unchanged during the
applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
--------------------
designated as its LIBOR Lending Office on Schedule 1 attached hereto, and such
----------
other office of the Lender or any of its Affiliates hereafter designated by
notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period therefor,
----------
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR Rate" shall mean, for any LIBOR Advance 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 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, the applicable rate shall be
the arithmetic mean of all such rates.
18
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other similar
encumbrance of any kind in respect of such property, whether or not xxxxxx,
vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
----------
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement or
other instrument.
"Loan Documents" means this Agreement, the Notes, the Security Agreements,
--------------
the Deeds of Trust, any other Collateral Document, any Subsidiary Guaranty, the
L/C Related Documents, the Underwriting Fee Letter, the Administrative Agent Fee
Letter, any Interest Hedge Agreements entered into with any Lender, and any
other document or agreement executed or delivered from time to time by the
Borrower, any Subsidiary of the Borrower or any other Person in connection
herewith or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that (a)
-----------------------
could reasonably be expected to be material and adverse to the business,
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, or (b) in any manner whatsoever does or could
reasonably be expected to materially and adversely affect (i) the validity or
enforceability of any Loan Document, (ii) the ability of the Borrower and its
Subsidiaries taken as a whole to perform their respective Obligations under the
Loan Documents, or (iii) the rights and remedies of the Lenders or the
Administrative Agent under any of the Loan Documents.
"Multiemployer Plan" means, as to any Person, at any time, a "multiemployer
------------------
plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person
or any member of its Controlled Group is making, or is obligated to make
contributions or has made, or been obligated to make, contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
-----------
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
-----------------------
consent, approval or authorization from, or any filing or registration with, any
Tribunal or any Person necessary or appropriate to enable the Borrower or any
Subsidiary of the Borrower to maintain and operate its business and properties.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
-----------------
other disposition of any asset by any Person, the amount of cash received by
such Person in connection with such transaction (including cash proceeds of any
property received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly
19
attributable to such transaction or to the asset that is the subject thereof:
(i) reasonable brokerage commissions, legal fees, finder's fees, financial
advisory fees, accounting fees, underwriting fees, investment banking fees and
other similar commissions and fees, and expenses, in each case, to the extent
paid or payable by such Person; (ii) filing, recording or registration fees or
charges or similar fees or charges paid by such Person; (iii) taxes paid or
payable by such Person or any shareholder, partner or member of such Person to
governmental taxing authorities as a result of such sale or other disposition;
and (iv) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness that is secured by a Lien on the asset in
question and that is required to be repaid under the terms thereof as a result
of such asset sale.
"Net Income" means net earnings (or deficit) after taxes of the Borrower
----------
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Net Operating Cash Flow" means, for any period, determined in accordance
-----------------------
with GAAP on a consolidated basis for the Borrower and its Subsidiaries the
remainder of (i)(a) Net Income, plus (b) depreciation, amortization and other
non-cash charges (to the extent included in determining Net Income), plus (c)
net losses on sale of assets and non-cash write down of assets (to the extent
included in determining Net Income), minus (ii) Capital Expenditures, minus
(iii) scheduled principal payments on Indebtedness, minus (iv) net gains on sale
of assets (to the extent included in determining Net Income).
"Notes" means, collectively, the Revolving Credit Notes, the Facility A
-----
Term Loan Notes, the Facility B Term Loan Notes and the Swing Line Note.
"Notice of Borrowing" has the meaning specified in Section 2.2(a) hereof.
------------------- --------------
"Notice of Issuance" has the meaning specified in Section 2.15(b) hereof.
------------------ ---------------
"Obligations" means (a) all obligations of any nature (whether matured or
-----------
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any other Obligor to any Lender or the Administrative Agent under
any of the Loan Documents as they may be amended from time to time, and (b) all
obligations of the Borrower or any other Obligor for losses, damages, expenses
or any other liabilities of any kind that any Lender may suffer by reason of a
breach by the Borrower or any other Obligor of any obligation, covenant or
undertaking with respect to any Loan Document payable by the Borrower or any
other Obligor under any Loan Document.
"Obligor" means the Borrower and each Guarantor.
-------
"Operating Lease" means any operating lease, as defined in the Financial
---------------
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"Participant" has the meaning specified in Section 11.6(c) hereof.
----------- ---------------
20
"Participation" has the meaning specified in Section 11.6(c) hereof.
------------- ---------------
"Payment Date" means the last day of the Interest Period for any LIBOR
------------
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Collateral Liens" means Liens described in clauses (b), (c) and
--------------------------
(d) of the definition of "Permitted Liens" herein.
"Permitted Liens" means, as applied to any Person:
---------------
(a) Any Lien in favor of the Lenders to secure the Obligations hereunder;
(b) Liens for taxes, assessments, governmental charges, levies or claims
that are not yet delinquent or that are being diligently contested in good faith
by appropriate proceedings in accordance with Section 5.6 hereof and for which
-----------
adequate reserves shall have been set aside on such Person's books, but only so
long as no foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and materialmen
and other similar Liens incurred in the ordinary course of business for sums not
yet due or being contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
(d) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or similar
legislation;
(e) Easements, right-of-way, restrictions and other similar encumbrances on
the use of real property which do not interfere in any material respect with the
ordinary conduct of the business of such Person;
(f) Liens created to secure the purchase price of assets acquired (or
existing on property at the time such property is acquired) by such Person or
created to secure Indebtedness permitted by Section 7.1(c) or 7.1(h) hereof,
-------------- ------
which is incurred solely for the purpose of financing the acquisition of such
assets and incurred at the time of acquisition or which exists against such
assets at the time of acquisition thereof, so long as each such Lien shall at
all times be confined solely to the asset or assets so acquired (and proceeds
thereof), and refinancings thereof so long as any such Lien remains solely on
the asset or assets acquired (and the proceeds thereof) and the amount of
Indebtedness related thereto is not increased;
(g) Any Liens which are described on Schedule 2 hereto, and Liens resulting
----------
from the refinancing of the related Indebtedness, provided that the Indebtedness
secured thereby shall not be increased and the Liens shall not cover additional
assets of the Borrower;
21
(h) Liens arising from filing Uniform Commercial Code financing statements
for precautionary purposes relating solely to true leases of personal property
permitted by this Agreement under which the Borrower or any of its Subsidiaries
is a lessee;
(i) Any zoning or similar law or right reserved to or vested in any
Tribunal to control or regulate the use of any real property;
(j) Any other title or survey exception with respect to real property
assets disclosed by any preliminary title report, title commitment report,
survey or other search of title provided to the Administrative Agent in
accordance with this Agreement unless disapproved by the Administrative Agent
prior to the Agreement Date;
(k) Liens incurred or deposits made to secure the performance of bids,
tenders, leases, trade contracts (other than for Indebtedness), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(l) Any leases or subleases currently in effect, entered into in the
ordinary course of business or entered into in compliance with the Loan
Documents;
(m) Liens created by such Person to secure Indebtedness permitted to be
incurred by such Person pursuant to Section 7.1(l) hereof, so long as such Lien
--------------
shall at no time extend to any Collateral; and
(n) Any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (f), (g), (h) and (m) hereof.
"Person" means an individual, corporation, partnership, limited liability
------
company, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
(including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pretax Cash Flow" means, for any date of calculation, calculated for the
----------------
Borrower and its Subsidiaries on a consolidated basis, an amount equal to the
sum of (a) EBITDA, minus (b) Capital Expenditures. For purposes of the
calculation of Pretax Cash Flow only, any Capital Expenditures during the period
from the Agreement Date through September 30, 1998 which exceed in aggregate
amount 5% of cumulative net revenues of the Borrower and its Subsidiaries during
such period shall be excluded in all periods from Capital Expenditures.
"Pretax Net Income" means net profit (or loss) before taxes of the Borrower
-----------------
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
22
"Prime Rate" means, at any time, the prime interest rate announced or
----------
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
--------------
December, beginning December 31, 1997.
"Rate Adjustment Date" means the date which is two Business Days following
--------------------
the date that the Lenders receive the financial statements for the fiscal
quarter ending June 30, 1998, required to be delivered pursuant to Section 6.3
-----------
hereof.
"Reference Lender" means NationsBank; provided that if NationsBank's
----------------
Commitments shall terminate and it shall have no Advances and Letters of Credit
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
Administrative Agent (after consultation with Borrower) shall, with notice to
Borrower and Lenders, designate another Lender as the Reference Lender.
"Reimbursement Obligations" means, in respect of any Letter of Credit as at
-------------------------
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such Letter of Credit not theretofore reimbursed by
the Borrower.
"Related Person" means (a) any Affiliate of the Parent, (b) any individual
--------------
or entity who directly or indirectly holds 5% or more of any class of Equity
Interests of the Parent, (c) any relative of such individual by blood, marriage
or adoption not more remote than first cousin and (d) any officer or director of
the Parent.
"Release Date" means the date on which the Notes have been paid, all other
------------
Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(c) of ERISA.
----------------
"Responsible Officer" means, of any Person, the President, chief operating
-------------------
officer, chief executive officer, chief financial officer, treasurer or any
other executive officer of such Person.
"Restricted Payments" means, collectively, (a) Dividends, (b) any (i)
-------------------
payment or prepayment of principal, premium or penalty on any Institutional Debt
of the Borrower or any Subsidiary of the Borrower or any defeasance, redemption,
purchase, repurchase or other acquisition or retirement for value, in whole or
in part, of any Institutional Debt (including, without limitation, the setting
aside of assets or the deposit of funds therefor),
23
(ii) prepayment of interest on any Institutional Debt, and (c) any payment of
any management, advisory or similar fees to the Specified Investors.
"Revolving Commitment Fee" has the meaning specified in Section 2.4(a)
------------------------ --------------
hereof.
"Revolving Commitment Maturity Date" means September 30, 2003, or the
----------------------------------
earlier date of termination in whole of the Revolving Credit Commitment pursuant
to Section 2.6 or 8.2 hereof.
----------- ---
"Revolving Credit Advance" means an Advance made pursuant to Section 2.1(a)
------------------------ --------------
hereof.
"Revolving Credit Commitment" means $27,500,000 as reduced pursuant to
---------------------------
Section 2.6.
-----------
"Revolving Credit Notes" means the promissory notes of Borrower evidencing
----------------------
Revolving Credit Advances hereunder, substantially in the form of Exhibit A
---------
hereto, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"Revolving Credit Specified Percentage" means, as to any Lender, the
-------------------------------------
percentage indicated beside its name on the signature pages hereof as its
Revolving Credit Specified Percentage, or as adjusted or specified in any
amendment to this Agreement or in any Assignment Agreement.
"Rights" means rights, remedies, powers and privileges.
------
"Security Agreements" mean the General Security Agreements and the
-------------------
Intellectual Property Security Agreements.
"Senior Subordinated Notes" means those certain senior subordinated notes
-------------------------
of the Borrower due 2007 to be issued by the Borrower in connection with the
Dogloo Transaction not to exceed $85,000,000, which shall be subordinated to the
Obligations on the terms set forth in the Indenture of Trust dated as of
September 19, 1997 by and between the Borrower and First Trust National
Association, as trustee.
"Solvent" means, with respect to any Person, that as of the date of
-------
determination, (a) the fair saleable value of the assets of such Person is
greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person, and (c) such Person does not have
unreasonably small capital with which to carry on its business. In computing
the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
24
reasonably be expected to become an actual or matured liability discounted to
present value at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx, P.C.,
---------------
or such other legal counsel as the Administrative Agent may select.
"Specified Investors" means Westar Capital L.L.C., HBI Financial, Inc.,
-------------------
Enterprise and any of their respective Affiliates and, in the event that any
Specified Investor distributes any of the equity interests of Company to its
partners or other equity holders, such equity holders, and including, in the
case of an individual, the estate or any heir of such individual or any trust
established by such individual for estate planning purposes.
"Subordinated Debt" means any Indebtedness of the Borrower or any
-----------------
Subsidiary of the Borrower having maturities and terms, and which is
subordinated to payment of the Obligations in a manner, approved in writing by
the Administrative Agent and the Determining Lenders, with only such changes or
amendments as are not prohibited by Section 7.18 hereof; provided, however, any
------------
supplemental issuance with respect to the Senior Subordinated Notes which is on
the same terms as the Senior Subordinated Notes shall be deemed to be approved
by the Administrative Agent and the Determining Lenders.
"Subsequent Pricing Period" means the period from and including the date
-------------------------
which is the first day following the end of the Initial Pricing Period to and
including the Release Date.
"Subsidiary" of any Person means any corporation, partnership, joint
----------
venture, trust or estate or other Person of which (or in which) more than 50%
of:
(a) the outstanding capital stock having voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership or joint
venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
-------------------
Exhibit H hereto, executed by each direct and indirect Subsidiary of the
---------
Borrower other than any Subsidiary which is a Foreign Subsidiary, as amended,
supplemented, modified, renewed or otherwise restated from time to time.
25
"Swing Line Advance" means an Advance made pursuant to Section 2.1(d)
------------------ --------------
hereof.
"Swing Line Bank" means NationsBank of Texas, N.A. and any successor
---------------
thereto appointed in accordance with Section 10.1(b) hereof.
---------------
"Swing Line Facility" has the meaning specified in Section 2.1(d) hereof.
------------------- --------------
"Swing Line Note" means the Swing Line Note of the Borrower payable to the
---------------
order of the Swing Line Bank, substantially in the form of Exhibit L hereto,
---------
together with any extension, renewal or amendment thereof or substitution
therefor.
"Taxes" has the meaning specified in Section 2.14 hereof.
----- ------------
"Term Loan Advance" means a Facility A Term Loan Advance or a Facility B
-----------------
Term Loan Advance.
"Term Loan Commitments" means, collectively, the Facility A Term Loan
---------------------
Commitment and the Facility B Term Loan Commitment.
"Total Debt" means, as of any date of determination, determined for the
----------
Borrower and its Subsidiaries on a consolidated basis, to the extent that the
following would appear as a liability upon the consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with GAAP: (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) non-contingent obligations to pay the deferred
purchase price of property or services other than trade payables incurred in the
ordinary course of business, and (iv) Capitalized Lease Obligations.
"Total Specified Percentage" means, as to any Lender, the percentage
--------------------------
indicated beside its name on the signature pages hereof as its Total Specified
Percentage, or (a) as adjusted or specified in any amendment to this Agreement
or in any Assignment Agreement or (b) as adjusted as a result of an adjustment
in the Facility B Term Loan Specified Percentage.
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
--------
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental or other regulatory or
public body or authority.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
---
time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Underwriting Fee Letter" means that certain letter, dated August 20, 1997,
-----------------------
from NationsBank of Texas, N.A., NationsBanc Capital Markets, Inc., DLJ Capital
Funding, Inc. and Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation to
Enterprise providing an underwriting fee with respect to the Commitments.
26
"Unused Portion" means an amount equal to the result of (i) the Revolving
--------------
Credit Commitment minus (ii) the sum of (A) the outstanding Revolving Credit
Advances plus (B) outstanding Reimbursement Obligations in respect of the
Letters of Credit.
"Voting Power" means, with respect to any Person, the power ordinarily
------------
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions).
Section 1.2 Amendments and Renewals. Each definition of an agreement in
-----------------------
this Article 1 shall include such agreement as amended to date, and as amended
---------
or renewed from time to time in accordance with its terms, but only with the
prior written consent of the Determining Lenders or all the Lenders as required
pursuant to Section 11.11 hereof.
-------------
Section 1.3 Construction. The terms defined in this Article 1 (except as
------------
otherwise expressly provided in this Agreement) for all purposes shall have the
meanings set forth in Section 1.1 hereof, and the singular shall include the
-----------
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Borrower and its Subsidiaries, unless otherwise expressly stated herein.
ARTICLE 2
Advances
--------
Section 2.1 The Advances.
------------
(a) Revolving Credit Advances. Each Lender severally agrees, upon the
-------------------------
terms and subject to the conditions of this Agreement, to make Revolving Credit
Advances to the Borrower from time to time in an aggregate amount not to exceed
its Revolving Credit Specified Percentage of the Revolving Credit Commitment
less its Revolving Credit Specified Percentage of the aggregate amount of all
(i) Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing) and (ii) Swing Line Advances then outstanding, for the
purposes set forth in Section 5.8 hereof. Subject to Section 2.9 hereof,
----------- -----------
Revolving Credit Advances may be repaid and then reborrowed. Notwithstanding
any provision in any Loan Document to the contrary, in no event shall (a) the
sum of the principal amount of all outstanding (i) Revolving Credit Advances,
(ii) Reimbursement Obligations and (iii) Swing Line Advances exceed (b) the
lesser of (i) the Revolving Credit Commitment and (ii) the Borrowing Base.
(b) Facility A Term Loan Advances. Each Lender severally agrees, upon the
-----------------------------
terms and subject to the conditions of this Agreement, to make a Facility A Term
Loan Advance to the Borrower on the Agreement Date in an amount not to exceed
its Facility A Term Loan Specified Percentage of the Facility A Term Loan
Commitment for the purposes set forth in Section 5.8 hereof. Notwithstanding
-----------
any provision in any Loan Document to the
27
contrary, in no event shall the principal amount of all outstanding Facility A
Term Loan Advances exceed the Facility A Term Loan Commitment. Immediately upon
the making of the Facility A Term Loan Advances, the Facility A Term Loan
Commitment shall be automatically terminated. Facility A Term Loan Advances may
not be repaid and then reborrowed.
(c) Facility B Term Loan Advances. Each Lender severally agrees, upon the
-----------------------------
terms and subject to the conditions of this Agreement, to make a Facility B Term
Loan Advance to the Borrower on the Agreement Date in an amount not to exceed
its Facility B Term Loan Specified Percentage of the Facility B Term Loan
Commitment for the purposes set forth in Section 5.8 hereof. Notwithstanding
-----------
any provision in any Loan Document to the contrary, in no event shall the
principal amount of all outstanding Facility B Term Loan Advances exceed the
Facility B Term Loan Commitment. Immediately upon the making of the Facility B
Term Loan Advances, the Facility B Commitment shall be automatically terminated.
Facility B Advances may not be repaid and then reborrowed.
(d) Swing Line Advances. The Borrower may request the Swing Line Bank to
-------------------
make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, advances ("Swing Line Advances") to the Borrower from
time to time on any Business Day during the period from the Agreement Date to
the Revolving Commitment Maturity Date in an aggregate amount not to exceed at
any time outstanding the lesser of (a) $5,000,000 and (b) an amount equal to the
lesser of the Revolving Credit Commitment and the Borrowing Base minus (i) the
aggregate principal amount of Revolving Credit Advances then outstanding and
(ii) the aggregate amount of all Reimbursement Obligations then outstanding (the
"Swing Line Facility"). Each Swing Line Advance shall be in an amount not less
than $100,000. Within the limits of the Swing Line Facility and subject to the
terms hereof, Swing Line Advances may be repaid and then reborrowed.
(e) Any Advance, other than a Swing Line Advance, shall, at the option of
the Borrower as provided in Section 2.2 hereof (and, in the case of LIBOR
-----------
Advances, subject to the provisions of Article 9 hereof), be made as a Base Rate
---------
Advance or a LIBOR Advance; provided that there shall not be outstanding, at any
one time, more than eight LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) Base Rate Advances. In the case of Base Rate Advances (other than
------------------
Swing Line Advances), the Borrower, through an Authorized Signatory, shall give
the Administrative Agent prior to 10:00 a.m., Dallas, Texas time, on the date of
any proposed Base Rate Advance irrevocable written notice, or irrevocable
telephonic notice followed immediately by written notice, in substantially the
form of Exhibit I hereto (a "Notice of Borrowing") (provided, however, that the
---------
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), of its intention to borrow a Base Rate Advance
hereunder. Such notice of borrowing shall specify the requested funding date,
28
which shall be a Business Day, and the amount of the proposed aggregate Base
Rate Advances to be made by Lenders.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower, through
--------------
an Authorized Signatory, shall give the Administrative Agent at least three
Business Days' irrevocable written notice, or irrevocable telephonic notice
followed immediately by written notice (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given) pursuant to a Notice of Borrowing, of its intention to borrow a
LIBOR Advance hereunder. Notice shall be given to the Administrative Agent
prior to 10:00 a.m., Dallas, Texas time, in order for such Business Day to count
toward the minimum number of Business Days required. LIBOR Advances shall in
all cases be subject to Article 9 hereof. For LIBOR Advances, the notice of
---------
borrowing shall specify the requested funding date, which shall be a Business
Day, the amount of the proposed aggregate LIBOR Advances to be made by Lenders
and the Interest Period selected by the Borrower, provided that no such Interest
Period shall extend past the Revolving Commitment Maturity Date, the Facility A
Term Loan Maturity Date or the Facility B Term Loan Maturity Date, as
appropriate, or prohibit or impair the Borrower's ability to comply with Section
-------
2.5 or 2.8 hereof.
--- ---
(c) Swing Line Advances. In the case of Swing Line Advances, the Borrower,
-------------------
through an Authorized Signatory, shall give the Swing Line Bank and the
Administrative Agent prior to 12:00 noon, Dallas, Texas time, on the date of any
proposed Swing Line Advance irrevocable telephonic notice (provided, however,
(i) the Borrower shall deliver written notice at least once a week confirming
the telephonic notices given by the Borrower with respect to Swing Line Advances
during the immediately preceding week and (ii) that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), of its intention to borrow or reborrow a Swing Line Advance. Such
notice of borrowing shall specify (i) the requested funding date, which shall be
a Business Day, (ii) the amount of the proposed Swing Line Advance and (iii) the
maturity date of the proposed Swing Line Advance (which maturity date shall be
no later than the seventh day after the requested date of such Swing Line
Advance).
(d) Continuation/Conversion. Subject to Sections 2.1 and 2.9 hereof, the
----------------------- ------------ ---
Borrower shall have the option (i) to convert at any time all or any part of the
outstanding Base Rate Advances to LIBOR Advances and all or any part of the
outstanding LIBOR Advances to Base Rate Advances or (ii) upon expiration of any
Interest Period applicable to a LIBOR Advance, to continue all or any portion of
such LIBOR Advance equal to $1,000,000 and integral multiples of $500,000 in
excess of that amount as a LIBOR Advance and the succeeding Interest Period(s)
of such continued LIBOR Advance shall commence on the last day of the Interest
Period of the LIBOR Advance to be continued; provided, however, (a) LIBOR
Advances may only be converted into Base Rate Advances on the expiration date of
the Interest Period applicable thereto and (b) notwithstanding anything in this
Agreement to the contrary, no outstanding Advance may be continued as, or
converted into, a LIBOR Advance when any Default or Event of Default has
occurred and is continuing. At least three Business Days prior to a proposed
conversion/continuation date, the Borrower, through
29
an Authorized Signatory, shall give the Administrative Agent irrevocable written
notice, or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Borrower's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Advance to be converted/continued, (iii) in the case of a conversion to, or
a continuation of, a LIBOR Advance, the requested Interest Period, and (iv) in
the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default has
occurred and is continuing. If the Borrower shall fail to give any notice in
accordance with this Section 2.2(d), the Borrower shall be deemed irrevocably to
--------------
have requested that such LIBOR Advance be converted to a Base Rate Advance in
the same principal amount. Notice shall be given to the Administrative Agent
prior to 10:00 a.m., Dallas, Texas time, in order for such Business Day to count
toward the minimum number of Business Days required.
(e) Minimum Amount. The aggregate amount of Base Rate Advances (other than
--------------
Swing Line Advances) to be made by the Lenders on any day shall be in a
principal amount which is at least $1,000,000 and which is an integral multiple
of $100,000; provided, however, that such amount may equal the unused amount of
the applicable Commitment. The aggregate amount of LIBOR Advances having the
same Interest Period and to be made by the Lenders on any day shall be in a
principal amount which is at least $1,000,000 and which is an integral multiple
of $500,000.
(f) Notice and Disbursement. The Administrative Agent shall promptly
-----------------------
notify the Lenders of each notice (other than with respect to a Swing Line
Advance) received from the Borrower pursuant to this Section. Each Lender
shall, not later than 2:00 p.m., Dallas, Texas time, on the date of any Advance,
deliver to the Administrative Agent, at its address set forth herein, such
Lender's Specified Percentage of such Advance in immediately available funds in
accordance with the Administrative Agent's instructions. Prior to 2:30 p.m.,
Dallas, Texas time, on the date of any Advance hereunder, the Administrative
Agent shall, subject to satisfaction of the conditions set forth in Article 3,
---------
disburse the amounts made available to the Administrative Agent by the Lenders
by (i) transferring such amounts by wire transfer pursuant to the Borrower's
instructions, or (ii) in the absence of such instructions, crediting such
amounts to the account of the Borrower maintained with the Administrative Agent.
All Revolving Credit Advances shall be made by each Lender according to its
Revolving Credit Specified Percentage. All Facility A Term Loan Advances shall
be made by each Lender in accordance with its Facility A Term Loan Specified
Percentage. All Facility B Term Loan Advances shall be made by each Lender in
accordance with its Facility B Term Loan Specified Percentage. Upon the request
of any Lender, the Administrative Agent shall notify such Lender of the
aggregate principal amount of Swing Line Advances outstanding at such time.
(g) The Swing Line Bank shall, not later than 2:30 p.m., Dallas, Texas
time, on the date of any Swing Line Advance, deliver to the Administrative Agent
at its address set forth herein, the amount of such Swing Line Advance in
immediately available funds in accordance with the Administrative Agent's
instructions. Prior to 3:00 p.m., Dallas, Texas
30
time, on the date of any Swing Line Advance, the Administrative Agent shall,
subject to the conditions set forth in Article 3, disburse the amount made
---------
available to the Administrative Agent by the Swing Line Bank by (i) transferring
such amounts by wire transfer pursuant to the Borrower's instruction or (ii) in
the absence of such instructions, crediting such amounts to the account of the
Borrower maintained with the Administrative Agent. Forthwith upon demand by the
Swing Line Bank at any time, including after a Default or Event of Default, and
in any event upon the making of the direction specified by Section 8.2 to
-----------
authorize the Administrative Agent to declare the Advances due and payable
pursuant to the provisions of Section 8.2, each Lender, including the Swing Line
-----------
Bank, notwithstanding the failure of the Borrower at such time to satisfy each
condition specified in Article 3, shall make by 12:00 noon (Dallas, Texas time)
---------
on the first Business Day following receipt by such Lender of notice from the
Swing Line Bank, a Revolving Credit Advance which is a Base Rate Advance in an
amount equal to the product of (i) the Revolving Credit Specified Percentage of
such Lender times (ii) the aggregate outstanding principal amount of the Swing
Line Advances. The proceeds of such Revolving Credit Advances shall be applied
by the Administrative Agent to repay the outstanding Swing Line Advance.
Section 2.3 Interest.
--------
(a) On Base Rate Advances.
---------------------
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of the Base Rate Advances outstanding from time to time,
until such Base Rate Advances are due (whether at maturity, by reason of
acceleration, by scheduled reduction, or otherwise) and repaid at a simple
interest rate per annum equal to the Base Rate Basis for the Base Rate
Advances as in effect from time to time. If at any time the Base Rate
Basis would exceed the Highest Lawful Rate, interest payable on the Base
Rate Advances shall be limited to the Highest Lawful Rate, but the Base
Rate Basis shall not thereafter be reduced below the Highest Lawful Rate
until the total amount of interest accrued on the Base Rate Advances equals
the amount of interest that would have accrued if the Base Rate Basis had
been in effect at all times.
(ii) Interest on the Base Rate Advances shall be computed on the basis
of a year of 365 or 366 days, as appropriate, for the actual number of days
elapsed, and shall be payable in arrears on each Quarterly Date and on the
Revolving Commitment Maturity Date, the Facility A Term Loan Maturity Date
or the Facility B Term Loan Maturity Date, as appropriate.
(b) On LIBOR Advances.
-----------------
(i) The Borrower shall pay interest on the unpaid principal amount of
each LIBOR Advance, from the date such Advance is made until it is due
(whether at maturity, by reason of acceleration, by scheduled reduction, or
otherwise) and repaid, at a rate per annum equal to the LIBOR Basis for
such LIBOR Advance. The Administrative Agent, whose determination shall be
controlling in the absence of
31
demonstrable error, shall determine the LIBOR Basis on the second Business
Day prior to the applicable funding, conversion or continuation date and
shall notify the Borrower and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR Advance
------------
shall be computed on the basis of a 360-day year for the actual number of
days elapsed, and shall be payable in arrears on the applicable Payment
Date and on the Revolving Commitment Maturity Date, the Facility A Term
Loan Maturity Date or the Facility B Term Loan Maturity Date, as
appropriate; provided, however, that if the Interest Period for such LIBOR
Advance exceeds three months, interest shall also be due and payable in
arrears on each three-month anniversary of the commencement of such
Interest Period during such Interest Period.
(c) On Swing Line Advances.
----------------------
(i) The Borrower shall pay interest on the outstanding principal
amount of such Swing Line Advance, from the date of such Swing Line Advance
is made until it is due (whether at maturity, by reason of acceleration or
otherwise) and repaid, at a simple interest rate per annum equal to the sum
of (A) the Base Rate Basis in effect from time to time minus (B) 0.50%, but
in no event higher than the Highest Lawful Rate.
(ii) Interest on each Swing Line Advance shall be computed on the
basis of a year of 365 or 366 days, as applicable, for the number of days
actually elapsed, and shall be payable in arrears on the maturity date of
each Swing Line Advance and on the Revolving Commitment Maturity Date.
(d) Interest After an Event of Default. (i) After an Event of Default
----------------------------------
(other than an Event of Default specified in Section 8.1(f) or (g) hereof) and
-------------- ---
during any continuance thereof, at the option of the Determining Lenders, and
(ii) after an Event of Default specified in Section 8.1(f) or (g) hereof and
-------------- ---
during any continuance thereof, automatically and without any action by the
Administrative Agent or any Lender, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on the
earlier of demand or the Revolving Commitment Maturity Date, the Facility A Term
Loan Maturity Date or the Facility B Term Loan Maturity Date, as appropriate,
and shall accrue until the earlier of (i) waiver or cure of the applicable Event
of Default, (ii) agreement by the Determining Lenders to rescind the charging of
interest at the Default Rate, or (iii) payment in full of the Obligations. The
Lenders shall not be required to accelerate the maturity of the Advances, to
exercise any other rights or remedies under the Loan Documents, or to give
notice to the Borrower of the decision to charge interest at the Default Rate.
Section 2.4 Fees.
----
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the Borrower
------------------------ ------------
agrees to pay to the Administrative Agent, for the account of the Lenders
according to their
32
Revolving Credit Specified Percentages, a commitment fee of 0.50% per annum (or
0.375% per annum during any period during the Subsequent Pricing Period that the
Applicable Base Rate Margin for Revolving Credit Advances is zero) on the daily
average Unused Portion during the period commencing on the Agreement Date and
ending on the Revolving Credit Maturity Date. Such fee shall be (i) payable in
arrears on each Quarterly Date and on the Revolving Credit Maturity Date, (ii)
fully earned when due and, subject to Section 11.9 hereof, nonrefundable when
------------
paid and (iii) subject to Section 11.9 hereof, computed on the basis of a 360-
------------
day year for the actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to pay
---------- ------------
to the Administrative Agent, for the account of (i) the Administrative Agent,
the fees on the dates and in the amounts specified in the letter agreement (the
"Administrative Agent Fee Letter"), dated as of the Agreement Date, between the
Borrower and the Administrative Agent, and (ii) NationsBank of Texas, N.A. and
DLJ Capital Funding, Inc. the fees specified in the Underwriting Fee Letter on
the Agreement Date.
Section 2.5 Prepayments.
-----------
(a) Voluntary LIBOR Advance Prepayments. Upon three Business Days' prior
-----------------------------------
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Agent, LIBOR Advances may be voluntarily prepaid
but only so long as the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
-----------
irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction of the
--------------------
Revolving Credit Commitment, the Borrower shall prepay applicable outstanding
Revolving Credit Advances in an amount necessary to reduce the sum of
outstanding Revolving Credit Advances and Reimbursement Obligations to an amount
less than or equal to the Revolving Credit Commitment as so reduced. To the
extent required by the immediately preceding sentence, the Borrower shall first
prepay all Base Rate Advances and shall thereafter prepay LIBOR Advances. To
the extent that any prepayment requires that a LIBOR Advance be repaid on a date
other than the last day of its Interest Period, the Borrower shall reimburse
each Lender in accordance with Section 2.9 hereof. To the extent that
-----------
outstanding Revolving Credit Advances exceed the Revolving Credit Commitment
after any reduction thereof, the Borrower shall repay any such excess amount and
all accrued interest attributable to such excess Revolving Credit Advances on
the date of such reduction. To the extent that at any time the aggregate
principal amount of Revolving Credit Advances and Reimbursement Obligations
outstanding hereunder exceed the Borrowing Base then in effect, the Borrower
shall immediately repay Revolving Credit Advances in an amount equal to such
excess.
(c) Prepayments from Sales of Assets. Concurrently with the receipt of Net
--------------------------------
Cash Proceeds from the sale or disposition by the Borrower or any Subsidiary of
the Borrower of any assets, including any Equity Interests of any such
Subsidiary (other than sales or dispositions of assets (i) expressly permitted
pursuant to clauses (a) through (c) of Section 7.5 hereof or (ii) the aggregate
-----------
amount of Net Cash Proceeds of which during any fiscal year do
33
not exceed $1,000,000), the Borrower shall prepay Facility A Term Loan Advances
and Facility B Term Loan Advances in an amount equal to the lesser of (a) the
amount of such Net Cash Proceeds or (b) an amount, if any, which would result in
the Leverage Ratio being less than 3.00 to 1 after such prepayment. Each such
prepayment shall be applied pro rata to all of the unpaid scheduled installment
--------
payments of the Facility A Term Loans and the Facility B Term Loans, in each
case pro rata based upon the respective principal amounts of such installment
--------
payments then unpaid.
(d) Prepayments from Excess Cash Flow. Commencing on October 31, 1998 and
---------------------------------
on each October 31 thereafter, the Borrower shall prepay the Facility A Term
Loan Advances and the Facility B Term Loan Advances in an amount equal to the
lesser of (a) 50% of Excess Cash Flow, if any, for the fiscal year ending
immediately preceding each such October 31 (or in the case of the fiscal year
ending June 30, 1998, for the period from the Agreement Date to such fiscal
year-end) or (b) an amount, if any, which would result in the Leverage Ratio
being less than 3.00 to 1 after such prepayment. Each such prepayment shall be
applied pro rata to all of the unpaid scheduled installment payments of the
--------
Facility A Term Loan Advances and the Facility B Term Loan Advances, in each
case pro rata based upon the respective principal amounts of such installment
--------
payments then unpaid.
(e) Prepayment from Sales of Equity. Concurrently with receipt of Net Cash
-------------------------------
Proceeds from the sale or disposition by the Borrower to any Person of any
Equity after the Agreement Date (other than (i) such sales or dispositions the
aggregate amount of the Net Cash Proceeds of which during any fiscal year do not
exceed $1,000,000 or (ii) sales or dispositions of Equity of the Borrower to the
Specified Investors and to other shareholders of the Borrower as of the
Agreement Date that are concurrently applied to consummate an Acquisition
permitted by this Agreement), the Borrower shall prepay the Facility A Term Loan
Advances and the Facility B Term Loan Advances in an amount equal to the lesser
of (a) 50% of such Net Cash Proceeds or (b) an amount, if any, which would
result in the Leverage Ratio being less than 3.00 to 1 after such prepayment.
Each such prepayment of the Facility A Term Loan Advances and the Facility B
Term Loan Advances shall be applied pro rata to all of the unpaid scheduled
--------
installment payments of the Facility A Term Loan Advances and the Facility B
Term Loan Advances, in each case pro rata based upon the respective principal
--------
amounts of such installment payments then unpaid.
(f) Prepayment from Issuance of Institutional Debt. Concurrently with the
----------------------------------------------
receipt of Net Cash Proceeds from the issuance of Institutional Debt by the
Borrower or any Subsidiary of the Borrower, the Borrower shall prepay the
Facility A Term Loan Advances and the Facility B Term Loan Advances in an amount
equal to the lesser of (a) 100% of such Net Cash Proceeds (or 50% of such Net
Cash Proceeds if such Institutional Debt is Subordinated Debt and the remaining
50% of such Net Cash Proceeds is concurrently applied to consummate an
Acquisition permitted by this Agreement) or (b) an amount, if any, which would
result in the Leverage Ratio being less than 3.00 to 1 after such prepayment.
Each such prepayment of the Facility A Term Loan Advances and the Facility B
Term Loan Advances shall be applied pro rata to all of the unpaid scheduled
--------
installment payments of the
34
Facility A Term Loan Advances and the Facility B Term Loan Advances, in each
case pro rata based upon the respective principal amounts of such installment
--------
payments then unpaid.
(g) Prepayments in Respect of the Xxxxxxxx Transaction Restricted Payments.
----------------------------------------------------------------------
On the date which is 180 days after the Agreement Date, the Borrower shall
prepay the Facility A Term Loan Advances and the Facility B Term Loan Advances
in an amount equal to the amount of the Xxxxxxxx Transaction Restricted Payments
that have not been made by such date. Each such prepayment of the Facility A
Term Loan Advances and the Facility B Term Loan Advances shall be applied pro
---
rata to all of the unpaid scheduled installment payments of the Facility A Term
----
Loan Advances and the Facility B Term Loan Advances, in each case pro rata based
--------
upon the respective principal amounts of such installment payments then unpaid.
(h) Payments, Generally. Any prepayment of any Advance shall be
-------------------
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial payment of a Base Rate Advance shall be in a principal amount
which is at least $1,000,000 and which is an integral multiple of $100,000. Any
voluntary partial payment of a LIBOR Advance shall be in a principal amount
which is at least $1,000,000 and which is an integral multiple of $500,000, and
to the extent that any prepayment of a LIBOR Advance is made on a date other
than the last day of its Interest Period, the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof. Any voluntary prepayment of any
-----------
Term Loan Advance shall be applied pro rata to all of the unpaid scheduled
--------
installment payments of the Facility A Term Loan Advances and the Facility B
Term Loan Advances, in each case pro rata based upon the respective principal
--------
amount of such installment payment then unpaid.
Section 2.6 Reduction of Revolving Credit Commitment.
----------------------------------------
(a) Voluntary Reduction. The Borrower shall have the right, upon not less
-------------------
than 5 Business Days' notice by an Authorized Signatory to the Administrative
Agent (if telephonic, to be confirmed by telex or in writing on or before the
date of reduction or termination), which shall promptly notify the Lenders, to
terminate or reduce the Revolving Credit Commitment. Each partial termination
shall be in an aggregate amount which is at least $1,000,000 and which is an
integral multiple thereof, and no voluntary reduction in the Revolving Credit
Commitment shall cause any LIBOR Advance to be repaid prior to the last day of
its Interest Period unless the Borrower shall reimburse each Lender in
accordance with Section 2.9 hereof.
-----------
(b) Mandatory Reduction. On the Revolving Commitment Maturity Date, the
-------------------
Revolving Credit Commitment shall be automatically reduced to zero.
(c) General Requirements. Upon any reduction of the Revolving Credit
--------------------
Commitment pursuant to this Section, the Borrower shall immediately make a
repayment of Revolving Credit Advances in accordance with Section 2.5(b) hereof.
--------------
The Borrower shall reimburse each Lender in connection with any such payment in
accordance with Section 2.9 hereof to the extent applicable. The Borrower shall
-----------
not have any right to rescind any
35
termination or reduction. Once reduced, the Revolving Credit Commitment may not
be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have been notified by a Lender prior to the date of
any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Agent, the Administrative Agent may assume that such Lender has
made such proceeds available to the Administrative Agent on such date, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon in
respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Agent receives such amount from (a) the Lender, at a per annum
rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal
Funds Rate, or (b) the Borrower, at the per annum rate applicable at the time to
such Advance. No Lender shall be liable for any other Lender's failure to fund
an Advance hereunder.
Section 2.8 Payment of Principal of Advances.
--------------------------------
(a) Revolving Credit Advances. To the extent not otherwise required to be
-------------------------
paid earlier as provided herein, the principal amount of the Revolving Credit
Advances shall be due and payable on the Revolving Commitment Maturity Date.
(b) Facility A Term Loan Advances. To the extent not otherwise required to
-----------------------------
be paid earlier as provided herein, the principal amount of the Facility A Term
Loan Advances shall be repaid on each Quarterly Date and on the Facility A Term
Loan Maturity Date in such amounts as set forth next to each such date below:
Amount of Reduction of Facility A
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
December 31, 1998 $1,250,000
March 31, 1999 $1,250,000
June 30, 1999 $1,250,000
September 30, 1999 $1,250,000
December 31, 1999 $2,250,000
March 31, 2000 $2,250,000
June 30, 2000 $2,250,000
36
September 30, 2000 $2,250,000
December 31, 2000 $2,250,000
March 31, 2001 $2,250,000
June 30, 2001 $2,250,000
September 30, 2001 $2,250,000
December 31, 2001 $2,750,000
March 31, 2002 $2,750,000
June 30, 2002 $2,750,000
September 30, 2002 $2,750,000
December 31, 2002 $2,750,000
March 31, 2003 $2,750,000
June 30, 2003 $2,750,000
September 30, 2003 $2,750,000
or such other amount of Facility A
Term Loan Advances then outstanding
(c) Facility B Term Loan Advances. To the extent not otherwise required to
-----------------------------
be paid earlier as provided herein, the principal amount of the Facility B Term
Loan Advances shall be repaid on each Quarterly Date and on the Facility B Term
Loan Maturity Date in such amounts as set forth next to each such date below:
Amount of Reduction of Facility B
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
December 31, 1997 $93,750
March 31, 1998 $93,750
June 30, 1998 $93,750
September 30, 1998 $93,750
December 31, 1998 $93,750
March 31, 1999 $93,750
June 30, 1999 $93,750
September 30, 1999 $93,750
December 31, 1999 $93,750
37
February 29, 2000 $ 93,750
June 30, 2000 $ 93,750
September 30, 2000 $ 93,750
December 31, 2000 $ 93,750
March 31, 2001 $ 93,750
June 30, 2001 $ 93,750
September 30, 2001 $ 93,750
December 31, 2001 $ 93,750
March 31, 2002 $ 93,750
June 30, 2002 $ 93,750
September 30, 2002 $ 93,750
December 31, 2002 $ 93,750
March 31, 2003 $ 93,750
June 30, 2003 $ 93,750
September 30, 2003 $ 93,750
December 31, 2003 $8,812,500
March 31, 2004 $8,812,500
June 30, 2004 $8,812,500
September 30, 2004 $8,812,500
or such other amount of Facility B
Term Loan Advances then outstanding
(d) Swing Line Advances. To the extent not otherwise required to be paid
-------------------
earlier as provided herein, the outstanding principal amount of each Swing Line
Advance shall be due and payable on its maturity date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur any
-------------
losses or reasonable out-of-pocket expenses in connection with (a) failure by
the Borrower to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
-----------
the Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), (b) any prepayment for any reason of
any LIBOR Advance in whole or in part (including, but not limited to, a
prepayment pursuant to Section 9.3(b) hereof) on other than the last day of an
--------------
Interest Period applicable to such LIBOR Advance, (c) any prepayment of any of
its LIBOR Advances that is not made on any date specified in a notice of
prepayment given by the
38
Borrower or (d) the selling by such Lender (provided that such Lender was a
Lender on the Agreement Date) of its rights and obligations under this Agreement
to an Eligible Assignee within 180 days after the Agreement Date, the Borrower
agrees to pay to any such Lender, within 30 days after demand by such Lender, an
amount sufficient to compensate such Lender for all such losses (excluding loss
of anticipated profits) and out-of-pocket expenses, subject to Section 11.9
------------
hereof. A certificate as to any amounts payable to any Lender under this
Section 2.9 submitted to the Borrower by such Lender shall certify that such
-----------
amounts were actually incurred by such Lender and shall show in reasonable
detail an accounting of the amount payable and the calculations used to
determine in good faith such amount and shall be conclusive absent demonstrable
error.
Section 2.10 Manner of Payment.
-----------------
(a) Each payment (including prepayments) by the Borrower of the principal
of or interest on the Advances, fees, and any other amount owed under this
Agreement or any other Loan Document shall be made not later than 12:00 noon
(Dallas, Texas time) on the date specified for payment under this Agreement to
the Administrative Agent at the Administrative Agent's office, in lawful money
of the United States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Document shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day, unless, with respect to a
payment due in respect of a LIBOR Advance, such Business Day falls in another
calendar month, in which case payment shall be made on the preceding Business
Day. Any extension of time shall in such case be included in computing interest
and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees and all other
amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) Notwithstanding anything in this Agreement to the contrary, all
payments received by the Administrative Agent pursuant to the Loan Documents
(other than from other Lenders) shall be applied as follows:
(i) Prior to (A) the occurrence and continuance of an Event of
Default and (B) the delivery by the Determining Lenders of the notice to
the Administrative Agent referred to in Section 2.10(d)(ii)(B) below, the
----------------------
Administrative Agent shall apply all such payments as between the Revolving
Credit Advances, the Facility A Term Loan Advances and the Facility B Term
Loan Advances to the applicable Advances in accordance with the Applicable
Specified Percentages.
(ii) If (A) there exists an Event of Default that has occurred and is
continuing and (B) the Determining Lenders shall have delivered notice to
the Administrative Agent to apply such payments as provided in this Section
-------
2.10(d)(ii),
-----------
39
the Administrative Agent shall apply all such payments to reduce the
Revolving Credit Advances, the Swing Line Advances, the Facility A Term
Loan Advances and the Facility B Term Loan Advances in accordance with each
Lender's Total Specified Percentage.
(iii) At all times prior to the Lenders making a Revolving Credit
Advance pursuant to Section 2.2(g), the Administrative Agent shall
--------------
distribute all payments in respect of the Swing Line Advances to the Swing
Line Bank. At such time, if any, that the Lenders make a Revolving Credit
Advance pursuant to Section 2.2(g), the Administrative Agent shall
--------------
distribute all payments in respect of the Swing Line Advances to the
Revolving Credit Advances in accordance with the Revolving Credit Specified
Percentages.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
---------------------
Office is set forth opposite its name in Schedule 1 attached hereto. Each
----------
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate of such Lender as such Lender's
LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to such
LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is made
by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose
----------- ---
of complying with Applicable Law). Increased costs for expenses resulting from
a change in law occurring subsequent to any such designation or transfer shall
be deemed not to result solely from such designation or transfer.
Section 2.12 Sharing of Payments. If any Lender shall obtain a payment
-------------------
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Sections
--------
2.4(b), 2.14, 2.15(d), 9.3 or 9.5 or in respect of Swing Line Advances) in
---- ------- --- ---
excess of its share of payments made by the Borrower according to (a) before the
Lenders have delivered the notice to the Administrative Agent referred to in
Section 2.10(d)(ii)(B) above, its Applicable Specified Percentage, and (b) after
----------------------
the occurrence and during the continuance of an Event of Default and provided
that the Determining Lenders have delivered the notice to the Administrative
Agent referred to in Schedule 2.10(d)(ii)(B) above, its Total Specified
-----------------------
Percentage, then in each case, such Lender shall purchase from each other Lender
such participation in the Advances made by such other Lender as shall be
necessary to cause such purchasing Lender to share a ratable portion of the
excess payment with each other Lender (based on its Applicable Specified
Percentage so long as there does not exist an Event of Default, and based on its
Total Specified Percentage if there exists an Event of Default); provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section, to the fullest extent permitted by law, may
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
40
Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement
-------------------------
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
Section 2.14 Taxes.
-----
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.10, free and clear of and without deduction for any
------------
and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding, in the case
---------
of each Lender and the Administrative Agent, (i) taxes imposed on, based upon or
measured by its overall net income, net worth or capital, and franchise taxes,
doing business taxes or minimum taxes imposed on it, by the jurisdiction under
the laws of which such Lender or the Administrative Agent (as the case may be)
is organized or in which it has its applicable lending office or any political
subdivision thereof; (ii) taxes imposed by reason of failure by the Lender or
the Administrative Agent to comply with the requirements of paragraph (e) of
this Section 2.14; and (iii) in the case of any Lender, any taxes in the nature
------------
of transfer, stamp, recording or documentary taxes resulting from a transfer
(other than as a result of foreclosure) by such Lender of all or any portion of
its interest in this Agreement, the Notes or any other Loan Documents (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by Law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder to any Lender or the Administrative Agent, to the extent not
prohibited by Applicable Law, (x) the sum payable shall be increased as may be
necessary so that after making all required deductions for Taxes (including
deductions applicable to additional sums payable under this Section 2.14) such
------------
Lender or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (y) the
Borrower shall make such deductions and (z) the Borrower shall pay the full
amount of Taxes deducted to the relevant taxation authority or other authority
in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than taxes described in clause (iii) of the first sentence
of Section 2.14(a)) that arise from any payment made hereunder or from the
---------------
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.14) paid by such Lender or the Administrative Agent (as the case may
------------
be) and all liabilities (including penalties, additions to tax, interest and
reasonable expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted, other
41
than penalties, additions to tax, interest and expenses which are finally
judicially determined by a court of competent jurisdiction to have arisen as a
result of gross negligence or wilful misconduct on the part of such Lender or
the Administrative Agent. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof. For purposes of this Section 2.14
------------
the terms "United States" and "United States Person" shall have the meanings set
forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Agreement Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 11.6 after the
------------
Agreement Date, the date upon which such Lender becomes a party hereto) and
at such times as necessary in the reasonable determination of the Borrower,
deliver to the Borrower through the Administrative Agent, with a copy to
the Administrative Agent:
(A) if any lending office is located in the United States, two (2)
accurate and complete signed originals of Internal Revenue
Service Form 4224 or any successor form thereto ("Form 4224"),
(B) if any lending office is located outside the United States, two
(2) accurate and complete signed originals of Internal Revenue
Service Form 1001 or any successor form thereto ("Form 1001"),
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or other
amounts payable at such lending office or lending offices under this
Agreement or any other Loan Document free from deduction or withholding of
United States federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter, but only to the extent the forms
previously delivered by it hereunder are not effective with respect to such
changed or additional lending office or lending offices, deliver to the
Borrower through the Administrative Agent, with a copy to the
Administrative Agent, in replacement for the forms previously delivered by
it hereunder:
(A) if such changed or additional lending office is located in the
United States, two (2) accurate and complete signed originals of
Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of Form
1001,
42
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or other
amounts payable at such changed or additional lending office under this
Agreement or any other Loan Document free from deduction of withholding of
United States federal income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in clause
(ii) above) requiring a change in the most recent Form 4224 or Form 1001
previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Borrower through the Administrative Agent, with a
copy to the Administrative Agent, two (2) accurate and complete original
signed copies of Form 4224 or Form 1001, in each case establishing that
such Lender is on the date of delivery thereof entitled to receive payments
of principal, interest, fees, or other amounts payable under this Agreement
or any other Loan Document free from deduction or withholding of United
States federal income tax, in replacement for the forms previously
delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to that
effect, deliver to the Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes;
(v) it shall notify the Borrower promptly after any event (including
an amendment to or a change in any applicable law or regulation or in the
written interpretation thereof by any regulatory authority or any judicial
authority or by ruling applicable to such Lender of any governmental
authority charged with the interpretation or administration of any law)
shall occur that results in such Lender no longer being capable of
receiving payments under this Agreement without any deduction or
withholding of United States federal income tax; and
(vi) if such Lender is not a "bank" or other person described in
Section 881(c)(3) of the Code and cannot deliver either Form 4224 or Form
1001, a statement that such Lender is not a "bank" under Section
881(c)(3)(A) of the Code and two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly completed and duly
executed by such Lender.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of the Obligations.
------------
(g) Each Lender (and the Administrative Agent with respect to payments to
the Administrative Agent for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver or by virtue of the location of any
Lender's lending office), (ii) it will use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its
43
lending office, if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Lender, be disadvantageous to
such Lender, and (iii) otherwise cooperate with the Borrower (in a manner that
is not disadvantageous to such Lender in its sole discretion) to minimize
amounts payable by the Borrower under this Section 2.14; provided, however, no
------------ -------- -------
Lender nor the Administrative Agent shall be obligated by reason of this Section
-------
2.14(g) to (a) disclose any information regarding its tax affairs or tax
-------
computations or reorder its tax or other affairs or tax or other planning or (b)
contest the payment of any Taxes or Other Taxes. Subject to the foregoing, to
the extent the Borrower pays sums pursuant to this Section 2.14 and the Lender
------------
or the Administrative Agent receives a refund of any or all of such sums, the
party receiving such refund shall promptly pay over all such refunded sums to
the Borrower, provided that no Default or Event of Default is in existence at
such time. At such time, if any, that such Default or Event of Default is cured
or waived, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts described
in this Section 2.14 to any Lender, the Borrower may designate a financial
------------
institution reasonably acceptable to the Administrative Agent to replace such
Lender by purchasing for cash and receiving an assignment of such Lender's pro
rata share of the Commitments and the Rights of such Lender under the Loan
Documents without recourse to or warranty by, or expense to, such Lender, for a
purchase price equal to the outstanding amounts owed to such Lender (including
such additional amounts owing to such Lender pursuant to this Section 2.14).
------------
Upon execution of an Assignment Agreement, such other financial institution
shall be deemed to be a "Lender" for all purposes of this Agreement as set forth
in Section 11.6 hereof.
------------
Section 2.15 Letters of Credit.
-----------------
(a) The Letter of Credit Facility. The Borrower may request the Issuing
-----------------------------
Bank, on the terms and conditions hereinafter set forth, to issue, and the
Issuing Bank shall, if so requested, issue, letters of credit (the "Letters of
Credit") for the account of the Borrower from time to time on any Business Day
from the date of the initial Advance until the Revolving Commitment Maturity
Date in an aggregate maximum amount (assuming compliance with all conditions to
drawing) not to exceed, at any time outstanding, the lesser of (i) $5,000,000
(the "Letter of Credit Facility") and (ii) an amount equal to the lesser of the
Revolving Credit Commitment and the Borrowing Base minus the aggregate principal
-----
amount of Revolving Credit Advances and Swing Line Advances then outstanding.
No Letter of Credit shall have an expiration date (including all rights of
renewal) later than the earlier of (i) the Revolving Commitment Maturity Date or
(ii) one year after the date of issuance thereof. Immediately upon the issuance
of each Letter of Credit, the Issuing Bank shall be deemed to have sold and
transferred to each Lender, and each Lender shall be deemed to have purchased
and received from the Issuing Bank, in each case irrevocably and without any
further action by any party, an undivided interest and participation in such
Letter of Credit, each drawing thereunder and the obligations of the Borrower
under this Agreement
44
in respect thereof in an amount equal to the product of (x) such Lender's
Revolving Credit Specified Percentage times (y) the maximum amount available to
be drawn under such Letter of Credit (assuming compliance with all conditions to
drawing). Within the limits of the Letter of Credit Facility, and subject to
the limits referred to above, the Borrower may request the issuance of Letters
of Credit under this Section 2.15(a), repay any Revolving Credit Advances
---------------
resulting from drawings thereunder pursuant to Section 2.15(c) and request the
---------------
issuance of additional Letters of Credit under this Section 2.15(a).
---------------
(b) Request for Issuance. Each Letter of Credit shall be issued upon
--------------------
notice, given not later than 1:00 p.m. (Dallas, Texas time) on the fourth
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and conditions
not inconsistent with this Agreement (a "Letter of Credit Agreement"), provided
--------
that if any such terms and conditions are inconsistent with this Agreement, this
Agreement shall control. Each such notice of issuance of a Letter of Credit by
the Borrower (a "Notice of Issuance") shall be by telecopier, specifying
therein, in the case of a Letter of Credit, the requested (i) date of such
issuance (which shall be a Business Day), (ii) maximum amount of such Letter of
Credit, (iii) expiration date of such Letter of Credit, (iv) name and address of
the beneficiary of such Letter of Credit, and (v) form of such Letter of Credit
and specifying such other information as shall be required pursuant to the
relevant Letter of Credit Agreement. If the requested terms of such Letter of
Credit are acceptable to the Issuing Bank in its reasonable discretion, the
Issuing Bank will, upon fulfillment of the applicable conditions set forth in
Article 3 hereof, make such Letter of Credit available to the Borrower at its
---------
office referred to in Section 11.1 or as otherwise agreed with the Borrower in
------------
connection with such issuance.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
-------------------------
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Revolving Credit Advance, which
shall bear interest at the Base Rate Basis, in the amount of such draft (but
without any requirement for compliance with the conditions set forth in Article
-------
3 hereof). In the event that a drawing under any Letter of Credit is not
-
reimbursed by the Borrower by 12:00 noon (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Agent and each other Lender. Each such Lender shall, on the
first Business Day following such notification, make a Revolving Credit Advance,
which shall bear interest at the Base Rate Basis, and shall be used to repay the
applicable portion of the Issuing Bank's Advance with respect to such Letter of
Credit, in an amount equal to the amount of its participation in such drawing
for application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 3 hereof) and
---------
shall make available to the Administrative Agent for the account of the Issuing
Bank, by deposit at the Administrative Agent's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to make available to
the Administrative Agent
45
for the account of the Issuing Bank the amount of such Advance, the Issuing Bank
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If, (i) any change after the Agreement Date in any
---------------
Law or in the interpretation thereof by any Tribunal charged with the
administration thereof or (ii) compliance by a Lender with any Law or any
guideline or requirement from any central bank or Tribunal (whether or not
having the force of law) adopted or promulgated after the Agreement Date
(including any implementation of the Basle Accord or similar guideline or
requirement adopted, promulgated or becoming effective after the Agreement Date)
shall either (A) impose, modify or deem applicable any reserve, special deposit
or similar requirement against letters of credit or guarantees issued by, or
assets held by, or deposits in or for the account of, the Issuing Bank or any
Lender or any corporation controlling the Issuing Bank or any Lender or (B)
impose on the Issuing Bank or any Lender or any corporation controlling the
Issuing Bank or any Lender any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in the preceding
clause (A) or (B) shall be to increase the cost to the Issuing Bank or any
corporation controlling the Issuing Bank of issuing or maintaining any Letter of
Credit or to any Lender or any corporation controlling such Lender of purchasing
any participation therein or making any Advance pursuant to Section 2.15(c),
---------------
then, within 10 days after demand by the Issuing Bank or such Lender, the
Borrower shall, subject to Section 11.9 hereof, pay to the Issuing Bank or such
------------
Lender, from time to time as specified by the Issuing Bank or such Lender,
additional amounts that shall be sufficient to compensate the Issuing Bank or
such Lender or any corporation controlling such Lender for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
by the Issuing Bank or such Lender, shall certify that such increased costs were
actually incurred by the Issuing Bank or such Lender and shall show in
reasonable detail an accounting of the amount payable and the calculation used
to determine in good faith such amount and shall be conclusive absent
demonstrable error. In determining such amount, the Issuing Bank or such Lender
may use any reasonable averaging or attribution method. Nothing in this Section
-------
2.15(d) shall provide the Borrower or any Subsidiary of the Borrower the right
-------
to inspect the records, files or books of the Issuing Bank or any Lender. If
the Borrower becomes obligated to pay additional amounts described in this
Section 2.15(d) to any Lender, the Borrower may designate a financial
---------------
institution reasonably acceptable to the Administrative Agent to replace such
Lender by purchasing for cash and receiving an assignment of such Lender's pro
rata share of the Commitments and the Rights of such Lender under the Loan
Documents without recourse to or warranty by, or expenses to, such Lender, for a
purchase price equal to the outstanding amounts owing to such Lender (including
such additional amounts owing to such Lender pursuant to this Section 2.15(d)).
---------------
Upon execution of an Assignment Agreement, such other financial institution
shall be deemed to be a "Lender" for all purposes of this Agreement as set forth
in Section 11.6 hereof. The obligations of the Borrower under this Section
------------ -------
2.15(d) shall survive termination of this Agreement. The Issuing Bank or any
-------
Lender claiming any additional compensation under this Section 2.15(d) shall use
---------------
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such
46
additional compensation which may thereafter accrue and which efforts would not,
in the reasonable judgment of the Issuing Bank or such Lender, be otherwise
disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under this
--------------------
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Advance pursuant to Section 2.15(c) shall be unconditional and
---------------
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement, any
other Loan Document, any Letter of Credit Agreement, any Letter of Credit
or any other agreement or instrument relating thereto (collectively, the
"L/C Related Documents");
(ii) (A) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower in respect
of the Letters of Credit or any Revolving Credit Advance pursuant to
Section 2.15(c) or (B) any other amendment or waiver of or any consent to
---------------
departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit, except for any payment made upon the Issuing
Bank's gross negligence or wilful misconduct;
(vi) any exchange, release or non-perfection of any Collateral, or
any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the Obligations of the Borrower in respect of
the Letters of Credit or any Revolving Credit Advance pursuant to Section
-------
2.15(c); or
-------
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance
47
that might otherwise constitute a defense available to, or a discharge of,
the Borrower or a guarantor, other than the Issuing's Bank gross negligence
or wilful misconduct.
(f) Compensation for Letters of Credit.
----------------------------------
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower shall
---------- ------------
pay to the Administrative Agent for the account of the Lenders according to
their Revolving Credit Specified Percentages, a per annum fee (which shall
be payable quarterly in arrears on each Quarterly Date and on the Revolving
Commitment Maturity Date) equal to the product of the Applicable LIBOR Rate
Margin in effect from time to time for Revolving Advances multiplied by the
average daily amount available for drawing under all outstanding Letters of
Credit. Subject to Section 11.9 hereof, such fee shall be computed on the
------------
basis of a 360-day year for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the Borrower
------------ ------------
shall pay to the Administrative Agent for the account of the Issuing Bank a
per annum fronting fee (which shall be payable quarterly in arrears on each
Quarterly Date and on the Revolving Commitment Maturity Date) in an amount
equal to the product of (a) 0.25% times (b) the average daily amount
available for drawing under all outstanding Letters of Credit. Subject to
Section 11.9 hereof, such fee shall be computed on the basis of a 360-day
------------
year for the actual number of days elapsed.
(iii) Administrative Fee. Subject to Section 11.9 hereof, the
------------------ ------------
Borrower shall pay, with respect to each amendment, renewal or transfer of
each Letter of Credit and each drawing made thereunder, reasonable
documentary and processing charges in accordance with the Issuing Bank's
standard schedule for such charges in effect at the time of such amendment,
renewal, transfer or drawing, as the case may be.
(g) L/C Cash Collateral Account.
---------------------------
(i) Upon the occurrence of an Event of Default and demand by the
Administrative Agent pursuant to Section 8.2(c) (except in the case of an
--------------
Event of Default specified in Section 8.1(f) or (g) hereof, without any
-------------- ---
demand or taking of any other action by the Administrative Agent or any
Lender), the Borrower will promptly pay to the Administrative Agent in
immediately available funds an amount equal to the maximum amount then
available to be drawn under the Letters of Credit then outstanding. Any
amounts so received by the Administrative Agent shall be deposited by the
Administrative Agent in a deposit account maintained by the Issuing Bank
(the "L/C Cash Collateral Account").
(ii) As security for the payment of all Reimbursement Obligations and
for any other Obligations, the Borrower hereby grants, conveys, assigns,
pledges, sets over and transfers to the Administrative Agent (for the
benefit of the Issuing Bank and Lenders), and creates in the Administrative
Agent's favor (for the benefit of the Issuing Bank and Lenders) a Lien in,
all money, instruments and securities at any
48
time held in or acquired in connection with the L/C Cash Collateral
Account, together with all proceeds thereof. The L/C Cash Collateral
Account shall be under the sole dominion and control of the Administrative
Agent and the Borrower shall have no right to withdraw or to cause the
Administrative Agent to withdraw any funds deposited in the L/C Cash
Collateral Account. At any time and from time to time, upon the
Administrative Agent's request, the Borrower promptly shall execute and
deliver any and all such further instruments and documents, including UCC
financing statements, as may be necessary, appropriate or desirable in the
Administrative Agent's judgment to obtain the full benefits (including
perfection and priority) of the security interest created or intended to be
created by this paragraph (ii) and of the rights and powers herein granted.
The Borrower shall not create or suffer to exist any Lien on any amounts or
investments held in the L/C Cash Collateral Account other than the Lien
granted under this paragraph (ii).
(iii) The Administrative Agent shall (A) apply any funds in the L/C
Cash Collateral Account on account of Reimbursement Obligations when the
same become due and payable, (B) after the Revolving Commitment Maturity
Date, apply any proceeds remaining in the L/C Cash Collateral Account first
-----
to pay any unpaid Obligations then outstanding hereunder and then to refund
----
any remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar month, may
direct the Administrative Agent to invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds exceeds
any relevant minimum investment requirement) in (A) Cash and Cash
Equivalents or direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof and (B) one or more other types of investments permitted by the
Determining Lenders, in each case with such maturities as the Borrower,
with the consent of the Determining Lenders, may specify, pending
application of such funds on account of Reimbursement Obligations or on
account of other Obligations, as the case may be. In the absence of any
such direction from the Borrower, the Administrative Agent shall invest the
funds held in the L/C Cash Collateral Account (so long as the aggregate
amount of such funds exceeds any relevant minimum investment requirement)
in one or more types of investments with the consent of the Determining
Lenders with such maturities as the Borrower, with the consent of the
Determining Lenders, may specify, pending application of such funds on
account of Reimbursement Obligations or on account of other Obligations, as
the case may be. All such investments shall be made in the Administrative
Agent's name for the account of the Lenders, subject to the ownership
interest therein of the Borrower. The Borrower recognizes that any losses
or taxes with respect to such investments shall be borne solely by the
Borrower, and the Borrower agrees to hold the Administrative Agent and the
Lenders harmless from any and all such losses and taxes, except to the
extent that such losses or taxes are finally judicially determined by a
court of competent jurisdiction to be the result of gross negligence or
wilful misconduct of the Administrative Agent. Administrative Agent may
liquidate any
49
investment held in the L/C Cash Collateral Account in order to apply the
proceeds of such investment on account of the Reimbursement Obligations as
provided in Section 2.15(g)(iii) hereof (or on account of any other
--------------------
Obligation then due and payable, as the case may be) without regard to
whether such investment has matured and without liability for any penalty
or other fee incurred (with respect to which the Borrower hereby agrees to
reimburse the Administrative Agent) as a result of such application.
(v) After the establishment of the L/C Cash Collateral Account
pursuant to Section 2.15(g)(i) hereof, the Borrower shall pay to the
------------------
Administrative Agent the fees customarily charged by the Issuing Bank with
respect to the maintenance of accounts similar to the L/C Cash Collateral
Account.
(vi) At such time as no Event of Default is in existence, the
Administrative Agent shall return any amount remaining in the L/C Cash
Collateral Account to the Borrower.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to the Initial Advances and the Initial
------------------------------------------------------------
Letters of Credit. The obligation of each Lender to make the initial Advance
-----------------
and the obligation of the Issuing Bank to issue the initial Letter of Credit is
subject to (i) receipt by the Administrative Agent of the following items which
are to be delivered, in form and substance satisfactory to each Lender, with a
copy (except for the Notes and this Agreement) for each Lender, and (ii)
satisfaction of the following conditions which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the accuracy of its
representations and warranties in the Loan Documents, certifying, in the case of
any such Obligor, that no Default or Event of Default has occurred, and
including a certificate of incumbency with respect to each Authorized Signatory,
and including (i) a copy of the articles or certificate of incorporation or
other organizational documents of such Obligor, certified to be true, complete
and correct by the secretary of state of its state of organization, (ii) a copy
of a certificate of good standing and a certificate of existence for its state
of organization and, in the case of any such Obligor, each state in which it is
qualified to do business, (iii) a copy of such Obligor's bylaws, partnership
agreement or similar document, certified to be true, complete and correct by its
secretary or general partner, as the case may be, and (iv) a copy of corporate
or similar resolutions authorizing the execution, delivery and performance of
the Loan Documents to be executed by such Obligor;
(b) a duly executed Revolving Credit Note, Facility A Term Loan Note and
Facility B Term Loan Note payable to the order of each Lender and in an amount
for each Lender equal to its Specified Percentage of each Commitment,
respectively;
50
(c) UCC searches in appropriate jurisdictions where Collateral is located;
(d) opinions of counsel to each Obligor addressed to the Lenders and in
form and substance satisfactory to the Lenders, dated the Agreement Date, and
covering certain of the matters set forth in Sections 4.1(a), (b), (c), (h),
--------------- --- --- ---
(m), (n) and (p) and such other matters incident to the transactions
--- --- ---
contemplated hereby as the Administrative Agent or Special Counsel may
reasonably request;
(e) reimbursement for the Administrative Agent for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered through
the date hereof, to the extent invoiced one Business Day prior to the Agreement
Date;
(f) evidence that all proceedings of each Obligor taken in connection with
the transactions contemplated by this Agreement and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Administrative
Agent and Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which the Administrative Agent or Special Counsel
may reasonably request in connection with such transactions;
(g) any fees or any expenses required to be paid pursuant to the
Administrative Agent Fee Letter and the Underwriting Fee Letter;
(h) duly executed and completed Security Agreements, dated as of the
Agreement Date, granting a Lien, in all Collateral covered thereby, together
with related financing statements, certificates of title with respect to motor
vehicles having a fair market value in excess of $15,000, stock powers, stock
certificates evidencing ownership of (i) 100% of the issued and outstanding
Equity Interests of each Domestic Subsidiary and (ii) 65% of the issued and
outstanding Equity Interests of each Foreign Subsidiary, and insurance
certificates listing Administrative Agent as loss payee and additional insured
and otherwise in a form required by the Collateral Documents.
(i) simultaneously with the making of the initial Advance, executed UCC-3
Termination Statements to be filed in appropriate jurisdictions to terminate all
Liens against assets of Dogloo, the Borrower and its Subsidiaries other than
Permitted Liens (or written agreements from each holder of such Liens to
promptly execute such Termination Statements);
(j) all Dogloo Transaction Documents, which shall be in substance and form
satisfactory to the Administrative Agent and Special Counsel;
(k) consummation of the Dogloo Transaction shall simultaneously occur on
terms and conditions set forth in the Dogloo Transaction Documents satisfactory
to the Administrative Agent and Special Counsel;
51
(l) Deeds of Trust executed by the Borrower and dated as of the Agreement
Date, together with surveys and title insurance policies or commitments in form
and substance satisfactory to the Administrative Agent and Special Counsel;
(m) Landlord's Agreements executed by each lessor with respect to leased
properties on which Collateral is located in substantially the form set out on
Exhibit K ("Landlord's Waiver");
---------
(n) evidence satisfactory to the Administrative Agent that (i) the Xxxxxxxx
Transaction shall have been consummated (or shall be consummated simultaneously
with the initial Advance hereunder), and (ii) the Borrower shall have received
at least $85,000,000 in gross proceeds from the sale of the Senior Subordinated
Notes;
(o) a pro forma balance sheet of the Borrower and its Subsidiaries taking
into account the Dogloo Transaction and reflecting estimated purchase price
accounting and such other information relating to the Dogloo Transaction as the
Administrative Agent may require;
(p) after giving effect to the Dogloo Transaction, there shall have
occurred no material adverse change in the business, assets, operations,
prospects or condition (financial or otherwise) of the Borrower and Dogloo,
taken as a whole, since June 30, 1997;
(q) a solvency opinion (taking into account the Dogloo Transaction and the
incurrence of the Indebtedness related thereto) with respect to the Borrower and
its Subsidiaries delivered by Houlihan, Lokey, Xxxxxx & Xxxxx Financial
Advisors, Inc. or other financial advisor acceptable to the Lenders, in form and
substance satisfactory to the Administrative Agent;
(r) the Administrative Agent and Special Counsel shall be satisfied with
the form and substance of all real property leases of Dogloo;
(s) the Administrative Agent shall be satisfied with the form and substance
of all environmental, and other collateral reports and examinations on the
Collateral to the provided by Dogloo or to be performed by the Lenders;
(t) all Indebtedness of the Borrower under the Bridge Notes and the
Existing Credit Agreement shall have been (or shall be consummated
simultaneously with the initial Advance hereunder) refinanced in full pursuant
to the terms hereof, and all obligations of the Borrower under the Bridge Notes
and the Existing Credit Agreement, except for those that expressly survive
termination thereof, shall terminate; and
(u) in form and substance reasonably satisfactory to the Administrative
Agent and Special Counsel, such other documents, instruments and certificates as
the Administrative Agent or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation, evidence of
the status, organization or
52
authority of the Borrower or any Subsidiary of the Borrower, and the
enforceability of the Obligations.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
----------------------------------------------------------
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue each Letter of
Credit (including the initial Letter of Credit) is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Advance or issuance:
(a) With respect to each Advance and each issuance of a Letter of Credit,
all of the representations and warranties of the Borrower under this Agreement,
which, pursuant to Section 4.2 hereof, are made at and as of the time of each
-----------
such Advance or issuance, shall be true and correct, both before and after
giving effect to the application of the proceeds of the Advance or Letter of
Credit, except as otherwise expressly provided in said Section 4.2 hereof.
-----------
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency delivered in the Borrower's loan certificate pursuant
to Section 3.1(a) or as subsequently modified and reflected in a certificate of
--------------
incumbency delivered to the Administrative Agent. The Lenders may, without
waiving this condition, consider it fulfilled and a representation by the
Borrower made to such effect if no written notice to the contrary, dated on or
before the date of such Advance or Letter of Credit, is received by the
Administrative Agent from the Borrower prior to the making of such Advance or
issuance of such Letter of Credit;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances and Letters of Credit, after giving effect to
such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall purport
to enjoin or restrain any Lender or the Issuing Bank from making any Advance or
issuing any Letter of Credit;
(f) There shall be no Litigation pending against, or, to the Borrower's
current actual knowledge, threatened against the Borrower or any of its
Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Subsidiaries, or any of their respective properties, in
any court or before any arbitrator of any kind or before or by any governmental
body which could reasonably be expected to have a Material Adverse Effect;
(g) There shall have occurred no material adverse change in the business,
assets, condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries (including the assets acquired and liabilities of
the Spectrum acquired in the Xxxxxxxx
53
Transaction), taken as a whole, since June 30, 1997 (but after giving effect to
the Xxxxxxxx Transaction and the Dogloo Transaction); and
(h) In the event that after giving effect to the making of such Advances or
the issuance of such Letters of Credit, the aggregate amount of Advances
outstanding plus Reimbursement Obligations outstanding exceeds $100,000,000, the
----
following statements shall be true and correct and the Borrower shall be deemed
to represent and warrant as of such date as follows:
(i) such requested Advances or Letters of Credit are permitted
"Indebtedness" (as such term is defined in the Indenture with respect to
the Senior Subordinated Notes (the "Senior Subordinated Notes Indenture"));
(ii) upon the making of each requested Advance or the issuance of
each requested Letter of Credit, no Event of Default (as defined in the
Senior Subordinated Notes Indenture) shall have occurred and be continuing
at the time of, or would occur after giving effect on a pro forma basis to,
such increase of "Indebtedness"; and
(iii) all Advances and Reimbursement Obligations under this Agreement
are "Senior Debt" as defined in the Senior Subordinated Notes Indenture.
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Sections 2.2(g) and 2.15(c) shall be
--------------- -------
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, (i) the occurrence of any Default or Event of
Default, unless the Administrative Agent or the Issuing Bank, as the case may
be, had actual knowledge of such Default or Event of Default prior to the making
of the Swing Line Advance or Letter of Credit, as the case may be, related to
such Revolving Credit Advance, (ii) the failure of the Borrower to satisfy any
condition set forth in this Section 3.2, or (iii) any other circumstance,
-----------
happening or event whatsoever, except that the conditions precedent set forth in
Sections 3.1 and 3.2 with respect to the Swing Line Advance or the Letter of
------------ ---
Credit for which such Revolving Credit Advance is made pursuant to Section
-------
2.2(g) or 2.15(c) shall have been satisfied in full at the time of the making of
------ -------
such Swing Line Advance or the issuance of such Letter of Credit.
Section 3.3 Conditions Precedent to Conversions and Continuations. The
-----------------------------------------------------
obligation of the Lenders to convert any existing Base Rate Advance into a LIBOR
Advance or to continue any existing LIBOR Advance is subject to the condition
precedent that on the date of such conversion or continuation no Default or
Event of Default shall have occurred and be continuing or would result from the
making of such conversion or continuation. The acceptance of the benefits of
each such conversion and continuation shall constitute a representation and
warranty by the Borrower to each of the Lenders that no Default or Event of
Default shall have occurred and be continuing or would result from the making of
such conversion or continuation.
54
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby
------------------------------
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date, the
----------------------------------
respective jurisdiction of organization or incorporation and percentage
ownership of the Borrower and by the Borrower of the Subsidiaries listed on
Schedule 4 are true and correct, after giving effect to the Dogloo Transaction.
----------
As of the Agreement Date and after giving effect to the Dogloo Transaction,
Schedule 4 is a complete and accurate listing, showing with respect to the
----------
Borrower and each Subsidiary of the Borrower (a) its mailing address, which is
its principal place of business, (b) the classes of its Equity Interests and the
number of amount of its Equity Interests authorized and outstanding, (c) each
record and beneficial owner of its outstanding Equity Interests of the Borrower
in excess of 5%, and (d) except as set forth in the Second Amended and Restated
Securityholders Agreement (a copy of which has been received by the
Administrative Agent and Special Counsel), all outstanding options, rights,
rights of conversion, redemption, purchase or repurchase, rights of first
refusal and similar rights relating to the Equity Interests. All of the
outstanding Equity Interests of the Borrower and each Subsidiary of the Borrower
is validly issued, fully paid and non-assessable. Each of the Borrower and its
Subsidiaries is a corporation or other legal Person duly organized, validly
existing and in good standing under the laws of its state of incorporation or
organization. Each of the Borrower and its Subsidiaries has the legal power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted. Each of the Borrower and its Subsidiaries
is authorized to do business, duly qualified and in good standing in the
jurisdiction as set forth in Schedule 7 and no qualification or authorization is
----------
necessary in any other jurisdictions in which the character of its properties or
the nature of its business requires such qualification or authorization, except
where the failure to be so qualified or authorized could not reasonably be
expected to have a Material Adverse Effect.
(b) Authorization. The Borrower has legal power and has taken all
-------------
necessary legal action to authorize it to borrow and request Letters of Credit
hereunder. Each of the Borrower and its Subsidiaries has legal power and has
taken all necessary legal action to execute, deliver and perform the Loan
Documents to which it is party in accordance with the terms thereof, and to
consummate the transactions contemplated thereby. Each Loan Document has been
duly executed and delivered by the Borrower or the Subsidiary of the Borrower
executing it. Each of the Loan Documents to which the Borrower or any of its
Subsidiaries is a party is a legal, valid and binding obligation of the Borrower
or such Subsidiary, as applicable, enforceable in accordance with its terms,
subject, to enforcement of remedies, to the following qualifications: (i)
equitable principles generally, and (ii) Debtor Relief Laws (insofar as any such
law relates to the bankruptcy, insolvency or similar event of the Borrower or
any Subsidiary of the Borrower).
55
(c) Compliance with Other Loan Documents and Contemplated Transactions.
------------------------------------------------------------------
The execution, delivery and performance by the Borrower and its Subsidiaries of
the Loan Documents to which they are respectively a party, and the consummation
of the transactions contemplated thereby, do not and will not (i) require any
consent or approval necessary on or prior to the Agreement Date not already
obtained, except to the extent that the failure to obtain such consent or
approval could not reasonably be expected to have a Material Adverse Effect,
(ii) violate any Applicable Law, (iii) conflict with, result in a breach of, or
constitute a default under the certificate of incorporation or by-laws or other
applicable organizational documents of the Borrower or any Subsidiary of the
Borrower, (iv) conflict with, result in a breach of, or constitute a default
under any Necessary Authorization, indenture, agreement or other instrument, to
which the Borrower or any Subsidiary of the Borrower is a party or by which they
or their respective properties may be bound, the effect of which could
reasonably be expected to have a Material Adverse Effect, or (v) result in or
require the creation or imposition of any Lien (other than Liens in favor of the
Lenders to secure the Obligations hereunder) upon or with respect to any
property now owned or hereafter acquired by the Borrower or any Subsidiary of
the Borrower.
(d) Business. The Borrower and its Subsidiaries are engaged primarily in
--------
the business of the manufacture and distribution of pet supplies and products,
sporting goods and similar and related businesses, including the businesses
engaged in by the Borrower and Dogloo immediately preceding the Agreement Date,
and activities directly related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly obtained,
--------------
and are in full force and effect without any known conflict with the rights of
others and free from any unduly burdensome restrictions, unless the failure to
obtain or have in effect such Necessary Authorizations could not reasonably be
expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries are and will continue to be in compliance with all provisions
thereof, except to the extent that any such failure to comply could not
reasonably be expected to have a Material Adverse Effect. No circumstance
exists which could reasonably be expected to impair the utility of the Necessary
Authorization or the right to renew such Necessary Authorization the effect of
which could reasonably be expected to have a Material Adverse Effect. No
Necessary Authorization is the subject of any pending or, to the best of the
Borrower's knowledge, threatened challenge, suspension, cancellation or
revocation, the effect of which could reasonably be expected to have a Material
Adverse Effect.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance in all respects with all Applicable Laws, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
(g) Title to Properties. The Borrower and its Subsidiaries have good title
-------------------
to, or a valid leasehold or subleasehold interest in, all of their material
assets. None of their assets are subject to any Liens, except Permitted Liens.
No financing statement or other Lien filing (except relating to Permitted Liens)
is on file in any state or jurisdiction that names the Borrower or any of its
Subsidiaries as debtor or covers (or purports to cover) any assets of
56
the Borrower or any of its Subsidiaries, except for Indebtedness with respect to
which the requirements of Section 3.1(i) hereof have been satisfied. The
--------------
Borrower and its Subsidiaries have not signed any such financing statement or
filing, nor any security agreement authorizing any Person to file any such
financing statement or filing (except relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 3 hereto, as of the
---------- ----------
Agreement Date, there is no Litigation pending against, or, to the Borrower's
current actual knowledge, threatened against the Borrower or any of its
Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Subsidiaries, or any of their respective properties, in
any court or before any arbitrator of any kind or before or by any governmental
body in which the amount claimed in an aggregate amount (excluding liabilities
for which credit worthy insurance companies have acknowledged coverage) exceeds
$100,000.
(i) Taxes. All federal, state and other tax returns of the Borrower and
-----
its Subsidiaries required by law to be filed have been duly filed, or extensions
have been timely filed, and all Taxes shown to be due and payable on such
returns, have been paid, unless the same are being diligently contested in
accordance with Section 5.6 hereof. The charges, accruals and reserves on the
-----------
books of the Borrower and its Subsidiaries in respect of their Taxes are, in the
reasonable judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities.
------------------------------------------
(i) The Borrower has heretofore delivered to Lenders the audited
combined balance sheets of the Borrower and Spectrum as at June 30, 1997,
and the related statements of earnings and changes in shareholders' equity
(deficit) and statement of cash flows for the twelve-month period then
ended and audited balance sheet of Dogloo as at December 31, 1996 and the
related statements of earnings and changes in shareholders' equity
(deficit) and statement of cash flows for the twelve-month period then
ended (the "Financial Statements"). The Financial Statements were prepared
in conformity with GAAP (other than as set forth in the respective audit
reports attached thereto) and fairly present, in all material respects, the
financial position of the Borrower and Spectrum and Dogloo, respectively,
as at the date thereof and the combined results of operations and cash
flows for the period covered thereby.
(ii) The projected financial statements of the Borrower (including
Dogloo) and its Subsidiaries delivered to the Lenders prior to or on the
Agreement Date are based on good faith estimates and assumptions made by
the management of the Borrower and believed to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the
projected results.
57
(iii) The financial statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant to Section 6.1, 6.2 and 6.3 hereof fairly
----------- --- ---
present in all material respects their respective financial condition and
their respective results of operations as of the dates and for the periods
shown, all in accordance with GAAP, subject to normal year-end adjustments.
The latest of such financial statements reflects all material liabilities,
direct and contingent, of the Borrower and each Subsidiary of the Borrower
that are required to be disclosed in accordance with GAAP.
(k) No Adverse Change. Since the date of the last financial statements
-----------------
delivered to the Lenders pursuant to Section 6.1, 6.2 or 6.3 hereof, no event or
----------- --- ---
circumstance has occurred or arisen which is reasonably likely to have a
Material Adverse Effect.
(l) ERISA. As of the Agreement Date, none of the Borrower or its
-----
Controlled Group maintains or contributes to any Plan (other than a
Multiemployer Plan) subject to Title IV of ERISA. Each such Plan (other than
any Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and any other applicable Law, except
to the extent that failure to so comply would not reasonably be expected to have
a Material Adverse Effect. With respect to each Plan (other than any
Multiemployer Plan) of the Borrower and each member of its Controlled Group, all
reports required under ERISA or any other Applicable Law to be filed with any
Tribunal, the failure of which to file could reasonably be expected to result in
liability of the Borrower or any member of its Controlled Group in excess of
$150,000, have been duly filed. All such reports are true and correct in all
material respects as of the date given. No Plan of the Borrower or any member
of its Controlled Group has been terminated under Section 4041(c) of ERISA nor
has any accumulated funding deficiency (as defined in Section 412(a) of the
Code) been incurred (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the Internal Revenue Service been
received or requested the result of which could reasonably be expected to have a
Material Adverse Effect. None of the Borrower or any member of its Controlled
Group has failed to make any contribution or pay any amount due or owing as
required under the terms of any such Plan, or by Section 412 of the Code or
Section 302 of ERISA by the due date under Section 412 of the Code and Section
302 of ERISA, the result of which could reasonably be expected to have a
Material Adverse Effect. There has been no ERISA Event or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Plan or its related trust of the Borrower or any member of its Controlled Group
since the effective date of ERISA, the result of which could reasonably be
expected to have a Material Adverse Effect. The present value of the benefit
liabilities, as defined in Title IV of ERISA, of each Plan subject to Title IV
of ERISA (other than a Multiemployer Plan) of the Borrower and each member of
its Controlled Group does not exceed by more than $150,000 the present value of
the assets of each such Plan as of the most recent valuation date using each
such Plan's actuarial assumptions at such date. There are no pending, or to the
Borrower's knowledge threatened, claims, lawsuits or actions (other than routine
claims for benefits in the ordinary course) asserted or instituted against, and
neither the Borrower nor any member of its Controlled Group has knowledge of any
threatened litigation or claims against, the assets of any Plan or
58
its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan, the result of which could reasonably be expected to have
a Material Adverse Effect. None of the Borrower or, to the Borrower's
knowledge, any member of its Controlled Group has engaged in any prohibited
transactions, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, in connection with any Plan the result of which could reasonably be
expected to have a Material Adverse Effect. None of the Borrower or any member
of its Controlled Group has withdrawn from any Multiemployer Plan, nor has
incurred or reasonably expects to incur (A) any liability under Title IV of
ERISA (other than premiums due under Section 4007 of ERISA to the PBGC), (B) any
withdrawal liability (and no event has occurred which with the giving of notice
under Section 4219 of ERISA would result in such liability) under Section 4201
of ERISA as a result of a complete or partial withdrawal (within the meaning of
Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability
under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section
4042 of ERISA, the result of which could reasonably be expected to have a
Material Adverse Effect. None of the Borrower, any member of its Controlled
Group, or any organization to which the Borrower or any member of its Controlled
Group is a successor or parent corporation within the meaning of ERISA Section
4069(b), has engaged in a transaction within the meaning of ERISA Section 4069,
the result of which could reasonably be expected to have a Material Adverse
Effect. None of the Borrower or any member of its Controlled Group maintains or
has established any Plan (other than a Multiemployer Plan) which is a welfare
benefit plan within the meaning of Section 3(1) of ERISA and which provides for
continuing benefits or coverage for any participant or any beneficiary of any
participant after such participant's termination of employment, except as may be
required by any Applicable Law, the result of which could reasonably be expected
to have a Material Adverse Effect. Each of Borrower and its Controlled Group
which maintains a Plan which is a welfare benefit plan within the meaning of
Section 3(1) of ERISA has complied in all material respects with any applicable
notice and continuation requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations thereunder. None of
the Borrower or any member of its Controlled Group maintains or has established
a multiemployer welfare benefit arrangement within the meaning of Section
3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is not engaged
-----------------------------------------
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock within the
meaning of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, and no part of the proceeds of the Advances or Letters of Credit
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock in any manner which
might cause the borrowing of any Advances or the application of any proceeds
thereof to violate Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System.
(n) Required Consents. The Borrower and its Subsidiaries are not required
-----------------
to obtain any material Necessary Authorization on or prior to the Agreement Date
that has not already been obtained from, or effect any material filing or
registration that has not already
59
been effected with, any Tribunal in connection with the execution and delivery
of this Agreement or any other Loan Document, or the performance thereof, in
accordance with their respective terms, including any borrowings hereunder,
except for the filing of financing statements (and other similar notices) and
other Collateral Documents containing a description of the Collateral with
certain Tribunals, including the United States Patent and Trademark Office.
(o) Absence of Default. The Borrower and its Subsidiaries are in
------------------
compliance in all material respects with all of the provisions of their
certificate of incorporation, by-laws and other organizational documents, and no
event has occurred or failed to occur, which has not been remedied or waived,
the occurrence or non-occurrence of which constitutes, or which with the passage
of time or giving of notice or both would constitute, (i) an Event of Default or
(ii) a default by the Borrower or any of its Subsidiaries under any indenture,
agreement or other instrument, or any judgment, decree or order to which the
Borrower or any of its Subsidiaries or by which they or any of their respective
properties is bound, the result of which with respect to any default set forth
in clause (ii) could reasonably be expected to have a Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940. Neither the entering into or performance by the
Borrower of this Agreement nor the issuance of the Notes violates any provision
of such act or requires any consent, approval, or authorization of, or
registration with, the Securities and Exchange Commission or any other Tribunal
pursuant to any provisions of such act.
(q) Environmental Matters. The Borrower does not have any current actual
---------------------
knowledge that any substance deemed hazardous by any Applicable Environmental
Law, has been placed (i) on any real property fee title to which is now owned by
the Borrower or any of its Subsidiaries or (ii) by Borrower or any of its
Subsidiaries on any real property leased by the Borrower or any of its
Subsidiaries, in either case in a manner which does not comply with Applicable
Environmental Laws, except to the extent that the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. The Borrower and its
Subsidiaries are not in violation of or subject to any existing, pending or, to
the best of the Borrower's knowledge, threatened investigation or inquiry by any
Tribunal or to any remedial obligations under any Applicable Environmental Laws,
the effect of which could reasonably be expected to have a Material Adverse
Effect. The Borrower and its Subsidiaries have not failed to obtain any
permits, licenses or similar authorizations other than certificates of occupancy
and building permits and other authorizations that have been obtained to
construct, occupy, operate or use any buildings, improvements, fixtures, and
equipment forming a part of any real property owned or leased by the Borrower or
any Subsidiary of the Borrower by reason of any Applicable Environmental Laws,
except to the extent that the failure to so obtain could not reasonably be
expected to have a Material Adverse Effect. The Borrower has no current actual
knowledge, that any hazardous substances or solid wastes have been disposed of
or otherwise released (i) on or to the real
60
property fee title to which is owned by the Borrower or any of its Subsidiaries
or (ii) by Borrower or any of its Subsidiaries on or to any real property leased
by Borrower or any of its Subsidiaries, all within the meaning of the Applicable
Environmental Laws, the effect of which could reasonably be expected to have a
Material Adverse Effect.
(r) Certain Fees. Except for fees and expenses incurred in connection with
------------
the Dogloo Transaction and the Xxxxxxxx Transaction, no broker's, finder's or
other fee or commission will be payable by the Borrower (other than to the
Lenders hereunder) with respect to the making of the Commitments or the Advances
hereunder. The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender from and against any claims, demand,
liability, proceedings, costs or expenses asserted with respect to or arising in
connection with any such fees or commissions, including those related to the
Dogloo Transaction and the Xxxxxxxx Transaction.
(s) Patents, Etc. The Borrower and its Subsidiaries have collectively
------------
obtained or applied for or licensed or otherwise obtained the right to use all
patents, trademarks, service marks, trade names, copyrights, and other rights,
free from Liens (except Permitted Liens), that are necessary for the operation
of their business as presently conducted and as proposed to be conducted, except
to the extent that the failure to so obtain, apply, license or obtain the right
to use could not reasonably be expected to have a Material Adverse Effect.
Nothing has come to the current actual knowledge of the Borrower or any of its
Subsidiaries to the effect that (i) any process, method, part or other material
presently contemplated to be employed by the Borrower or any Subsidiary of the
Borrower infringes any valid and enforceable patent, trademark, service xxxx,
trade name, copyright, license or other right owned by any other Person, or (ii)
there is pending or overtly threatened any claim or litigation against or
affecting the Borrower or any Subsidiary of the Borrower contesting its right to
sell or use any such process, method, part or other material, which could
reasonably be expected to have a Material Adverse Effect.
(t) Disclosure. All factual information furnished by the Borrower or any
----------
of its Subsidiaries in writing to the Administrative Agent or any Lender in
connection with this Agreement or the other Loan Documents is, and all other
such factual information hereafter furnished by or on behalf of the Borrower or
any of its Subsidiaries in writing to the Administrative Agent or any Lender
will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading at such time in
light of the circumstances under which such information was provided. There is
no fact known to the Borrower and not known to the public generally that could
reasonably be expected to have a Material Adverse Effect, which has not been set
forth in this Agreement or in the documents, certificates and statements
furnished to the Lenders by or on behalf of the Borrower prior to the date
hereof in connection with the transaction contemplated hereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
--------
consolidated basis are, Solvent.
61
(v) Labor Relations. Except as provided on Schedule 8, neither the
--------------- ----------
Borrower nor any Subsidiary is a party to a collective bargaining agreement or
similar agreement, and the Borrower and each Subsidiary is in compliance in all
material respects with all Laws respecting employment and employment practices,
terms and conditions of employment, wages and hours and other laws related to
the employment of its employees, except where the failure to comply could not
reasonably be expected to result in a Material Adverse Effect, and there are no
arrears in the payment of wages, withholding or social security taxes,
unemployment insurance premiums or other similar obligations of the Borrower or
any Subsidiary or for which the Borrower or any Subsidiary may be responsible
other than in the ordinary course of business, except for such unpaid or
unwithheld arrears which could not reasonably be expected to result in a
Material Adverse Effect. There is no strike, work stoppage or labor dispute
with any union or group of employees pending or overtly threatened involving
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect.
(w) Common Enterprise. The Borrower and its Subsidiaries are engaged in
-----------------
the businesses set forth in Section 4.1(d) hereof. These operations require
--------------
financing on a basis such that the credit supplied can be made available from
time to time to the Borrower and various of the Subsidiaries, as required for
the continued successful operation of the Borrower and its Subsidiaries as a
whole. The Borrower and its Subsidiaries expect to derive benefit (and the
boards of directors of the Borrower and its Subsidiaries have determined that
the Borrower and the Subsidiaries may reasonably be expected to derive benefit),
directly or indirectly, from the credit extended by Lenders hereunder, both in
their separate capacities and as members of the group of companies, since the
successful operation and condition of the Borrower and its Subsidiaries is
dependent on the continued successful performance of the functions of the group
as a whole.
Section 4.2 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and the date of issuance of each Letter of
Credit, and each shall be true and correct in all material respects when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) previously waived in writing by the Determining Lenders with respect
to any particular factual circumstance or permitted by the terms of this
Agreement or (c) such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects on and as of such date. All such
representations and warranties shall survive, and not be waived by, the
execution hereof by any Lender, any investigation or inquiry by any Lender, or
by the making of any Advance or the issuance of any Letter of Credit under this
Agreement.
62
ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
---------------------------------------------
shall, and shall cause each Subsidiary of the Borrower to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof, preserve
-----------
and maintain, or timely obtain and thereafter preserve and maintain, its
existence, rights, franchises, licenses, authorizations, consents, privileges
and all other Necessary Authorizations from any Tribunal, the loss of which
could reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof, qualify
-----------
and remain qualified and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification or authorization, unless the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
----------------------------------------
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all respects with the requirements of
--------------
all Applicable Law, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
-------------------------
cause each Subsidiary of the Borrower to, maintain or cause to be maintained all
its properties (whether owned or held under lease) in adequate operating
condition and repair for purposes of their current use with due regard to the
age thereof, taken as a whole, subject to ordinary wear and tear, and from time
to time make or cause to be made all appropriate (in the reasonable judgment of
the Borrower) repairs, renewals, replacements, additions, betterments and
improvements thereto in accordance with past practice, except where the failure
to so maintain, repair, renew, replace or improve could not reasonably be
expected to have a Material Adverse Effect.
Section 5.4 Accounting Methods and Financial Records. The Borrower shall,
----------------------------------------
and shall cause each Subsidiary of the Borrower to, maintain a system of
accounting established and administered in accordance with GAAP, keep adequate
records and books of account in which complete entries will be made and all
transactions reflected in accordance with GAAP, and keep accurate and complete
records of its respective assets.
Section 5.5 Insurance. The Borrower shall, and shall cause each
---------
Subsidiary of the Borrower to, maintain insurance from responsible companies in
such amounts and against such risks as shall be customary and usual in the
industry for companies of similar size and
63
capability. Each insurance policy shall (a) provide for at least 30 days' prior
notice to the Administrative Agent of any proposed termination or cancellation
of such policy, whether on account of default or otherwise and (b) otherwise
contain the requirements for insurance set forth in the Security Agreements.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
---------------------------
cause each Subsidiary of the Borrower to, pay and discharge all material taxes
to which they are subject prior to the date on which penalties attach thereto,
and all lawful material claims for labor, materials and supplies which, if
unpaid, might by Law become a Lien upon any of its properties; except that no
such tax or claim need be paid which is being diligently contested in good faith
by appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as any Lien related thereto is
a Permitted Lien. The Borrower shall, and shall cause each Subsidiary of the
Borrower to, timely file all information returns (or extensions of such filing
deadlines) required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
----------------------
each Subsidiary of the Borrower to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after reasonable notice by
the Administrative Agent or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries as often as the Administrative Agent or any
Lender shall reasonably deem advisable, (b) review, inspect and make extracts
from and copies of the Borrower's and each such Subsidiary's books and records,
and (c) discuss with the Borrower's and each such Subsidiary's directors,
officers, employees and auditors its business, assets, liabilities, financial
positions, results of operations and business prospects, provided that such
--------
representatives of the Administrative Agent or any Lender shall keep
confidential all information obtained pursuant to this Section 5.7 to the extent
-----------
required by Section 11.14. The Borrower shall pay the reasonable out-of-pocket
-------------
expenses related to inspections and reviews performed (a) at any time by the
Administrative Agent and (b) after the occurrence and during the continuance of
an Event of Default by each Lender. Except after the occurrence and during the
continuance of an Event of Default, all such visits and inspections shall be
conducted during normal business hours. Following the occurrence and during the
continuance of an Event of Default, such visits and inspections shall be
conducted at any time requested by the Administrative Agent or any Lender
without any requirement for reasonable notice.
Section 5.8 Use of Proceeds. The proceeds of the Advances shall be used
---------------
by the Borrower to (a) to consummate the Dogloo Transaction and pay certain
outstanding Indebtedness of the Borrower and Dogloo, (b) pay certain fees and
expenses related to the Dogloo Transaction, and (c) finance the ongoing working
capital and general corporate requirements of the Borrower and its Subsidiaries.
SECTION 5.9 INDEMNITY.
---------
(A) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE
ADMINISTRATIVE AGENT, EACH LENDER, EACH
64
OF THEIR RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH
AFFILIATES') OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND CONSULTANTS
(INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE
SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH
HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS, REASONABLE OUT-OF-POCKET EXPENSES
AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH
INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY
THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER
DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR
LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON
CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR
FUTURE OPERATIONS OF THE BORROWER OR ANY SUBSIDIARY OF THE BORROWER OR THEIR
RESPECTIVE PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE
ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF THE
BORROWER), RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION
RELATING THERETO, INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN
PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER
(OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE
ADMINISTRATIVE AGENT OR ANY LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED
USE OF THE PROCEEDS OF THE ADVANCES OR LETTERS OF CREDIT HEREUNDER, OR IN
CONNECTION WITH ANY INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT
EXCLUDING (i) ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION, (ii) ANY CLAIM OR LIABILITY
THAT ARISES AS THE DIRECT RESULT OF THE OPERATION OF THE PROPERTY OF THE
BORROWER OR ANY SUBSIDIARY OF THE BORROWER BY ANY OF THE LENDERS AFTER TAKING
POSSESSION THEREOF BY FORECLOSURE OR BY TRANSFER IN LIEU OF FORECLOSURE
(PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT RELATE TO ANY CONDITION EXISTING
ON SUCH PROPERTY PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), AND
(iii) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR BY ANY SHAREHOLDERS
OF A LENDER
65
AGAINST A LENDER OR ITS MANAGEMENT (COLLECTIVELY, EXCEPT FOR THE MATTERS
REFERRED TO CLAUSES (i), (ii) OR (iii) ABOVE, "INDEMNIFIED MATTERS", AND THE
MATTERS REFERRED TO IN CLAUSES (i), (ii) OR (iii) ABOVE, COLLECTIVELY, "EXCLUDED
MATTERS"). TO THE EXTENT THAT ANY INDEMNIFIED MATTER INVOLVES ONE OR MORE
INDEMNITEES, SUCH INDEMNITEES SHALL USE THE SAME LEGAL COUNSEL UNLESS ANY
INDEMNITEE IN ITS REASONABLE DISCRETION DETERMINES THAT CONFLICTS EXIST OR MAY
ARISE IN CONNECTION WITH SUCH REPRESENTATION.
(B) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST,
REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE OUT-OF-POCKET LEGAL AND OTHER
ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY INVESTIGATION
AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER; PROVIDED
THAT SUCH INDEMNITEE SHALL PROVIDE ADEQUATE DOCUMENTATION OF SUCH EXPENSES;
PROVIDED, FURTHER, THAT IF AN INDEMNITEE IS REIMBURSED HEREUNDER FOR SUCH
AMOUNT, THE AMOUNT SO PAID SHALL BE REFUNDED TO THE BORROWER IF AND TO THE
EXTENT IT IS FINALLY JUDICIALLY DETERMINED THAT THE INDEMNIFIED MATTER IN
QUESTION WAS AN EXCLUDED MATTER. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION
OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE
BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO
EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY
SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The use which the Borrower or
----------------------------
any Subsidiary of the Borrower intends to make of any real property which is
owned or leased by it will not result in the disposal or other release of any
hazardous substance or solid waste on or to such real property which is in
violation of Applicable Environmental Laws, the effect of which could reasonably
be expected to have a Material Adverse Effect. As used herein, the terms
"hazardous substance" and "release" as used in this Section shall have the
meanings specified in CERCLA (as defined in the definition of Applicable
Environmental Laws), and the terms "solid waste" and "disposal" shall have the
meanings specified in RCRA (as defined in the definition of Applicable
Environmental Laws); provided, however, that if CERCLA or RCRA is amended so as
to broaden or lessen the meaning of any term defined thereby, such broader or
lesser meaning shall apply subsequent to the effective date of such amendment;
and provided further, to the extent that any other law applicable to the
Borrower, any Subsidiary or any of their properties establishes a meaning for
"hazardous
66
substance," "release," "solid waste," or "disposal" which is broader or lesser
than that specified in either CERCLA or RCRA, such broader or lesser meaning
shall apply.
Section 5.11 Further Assurances. At any time or from time to time upon
------------------
request by the Administrative Agent, the Borrower or any Subsidiary of the
Borrower shall execute and deliver such further documents and do such other acts
and things as the Administrative Agent may reasonably request in order to effect
fully the purposes of this Agreement and the other Loan Documents and to provide
for payment of the Obligations in accordance with the terms of this Agreement
and the other Loan Documents. Without limiting the generality of the foregoing,
the Borrower agrees to (a) update and deliver to the Administrative Agent
Schedule 4 hereto (with respect to the identities, jurisdictions of
----------
incorporation and ownership of the Borrower's Subsidiaries) at the time of
delivery of the financial statements set forth in Sections 6.1 and 6.2 hereof if
------------ ---
the information provided therein is not complete and correct, (b) update and
deliver to the Administrative Agent Schedule 1 to the Security Agreements
----------
promptly upon discovery if the information provided therein is not complete and
correct, and (c) execute and deliver to the Administrative Agent deeds of trust
or mortgages, as appropriate, in substantially the form of Exhibit J-1 and J-2
----------- ---
hereto with respect to any real property hereafter acquired by the Borrower, as
applicable, together with title insurance thereon in an amount reasonably
satisfactory to the Administrative Agent, and such board resolutions, officer's
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request with respect thereto; provided
this Section 5.11(c) shall not apply to any leasehold interests unless requested
---------------
by the Determining Lenders or any leasehold interest for sales or representative
office space only.
Section 5.12 Subsidiaries. At any time that any Person becomes a Domestic
------------
Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty of the
Obligations and Collateral Documents granting a first priority Lien in all
assets of such Subsidiary required by the Determining Lenders to be pledged,
except, to the extent applicable, for Permitted Liens to secure the Obligations,
(b) 100% of such Subsidiary's Equity Interests shall be pledged to secure the
Obligations and (c) the Lenders shall receive such board resolutions, officer's
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the actions
described in clauses (a) and (b) above. At any time that any Person becomes a
Foreign Subsidiary, (a) 65% of such Subsidiary's Equity Interests shall be
pledged to secure the Obligations and (b) the Lenders shall receive such board
resolutions, officers' certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with the action described in clause (a) above.
67
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
each Lender:
Section 6.1 Monthly Financial Statements and Information. Within 30 days
--------------------------------------------
after the end of each fiscal month (or during the first year following the
Agreement Date, within 45 days after the end of each fiscal month) of each
fiscal year (other than the end of a fiscal month which coincides with the end
of a fiscal quarter), the consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income for such fiscal month and for the elapsed portion of the
year ended with the last day of such fiscal month, consolidated statements of
cash flow for the elapsed portion of the year ended with the last day of such
fiscal month, and a consolidating statement of year-to-date EBITDA, all of which
shall be certified by the president or chief financial officer or other officer
of the Borrower acceptable to the Administrative Agent, to, in his or her
opinion acting solely in his or her capacity as an officer of the Borrower,
present fairly in all material respects, in accordance with GAAP (except for the
absence of footnotes), the financial position and results of operations of the
Borrower and its Subsidiaries as at the end of and for such fiscal month, and
for the elapsed portion of the year ended with the last day of such fiscal
month, subject only to normal year-end adjustments.
Section 6.2 Quarterly Financial Statements and Information. Within 45
----------------------------------------------
after the end of each fiscal quarter of each fiscal year (other than the end of
a fiscal quarter which coincides with the end of a fiscal year), the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such fiscal quarter and the related consolidated statements of income for
such fiscal quarter and for the elapsed portion of the year ended with the last
day of such fiscal quarter, and consolidated statements of cash flow for the
elapsed portion of the year ended with the last day of such fiscal quarter, all
of which shall be certified by the president or chief financial officer or other
officer of the Borrower acceptable to the Administrative Agent, to, in his or
her opinion acting solely in his or her capacity as an officer of the Borrower,
present fairly in all material respects, in accordance with GAAP (except for the
absence of footnotes), the financial position and results of operations of the
Borrower and its Subsidiaries as at the end of and for such fiscal quarter, and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
Section 6.3 Annual Financial Statements and Information; Certificate of No
--------------------------------------------------------------
Default.
-------
(a) Within 120 days after the end of each fiscal year, a copy of (i) the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements
68
of earnings and consolidated statements of changes in shareholders' equity, and
statements of cash flow as of and through the end of such fiscal year, all of
which are prepared in accordance with GAAP, and certified by independent
certified public accountants reasonably acceptable to the Lenders (provided,
however, any big six public accounting firm shall be acceptable to the Lenders),
whose opinion shall be in scope and substance in accordance with generally
accepted auditing standards and shall be unqualified as to scope of audit and
going concern.
(b) Simultaneously with the delivery of the statements required by this
Section 6.3, a letter from the Borrower's public accountants stating to the
-----------
effect that during their audit of such financial statements nothing has come to
their attention that would result in a Default or Event of Default under this
Agreement, recognizing, however, that the scope and purpose of their audit was
not to determine compliance with the terms of this Agreement or whether a
Default or Event of Default has otherwise occurred.
(c) As soon as available, but in any event within 90 days following the end
of each fiscal year, a copy of the annual consolidated operating budget of the
Borrower and its Subsidiaries for the succeeding fiscal year.
Section 6.4 Compliance Certificate. At the time financial statements are
----------------------
furnished pursuant to Sections 6.1, 6.2 and 6.3 hereof, the Compliance
------------ --- ---
Certificate, completed as provided therein.
Section 6.5 Copies of Other Reports and Notices.
-----------------------------------
(a) Promptly upon their becoming available, a copy of (i) all material
final reports or letters submitted to the Borrower or any Subsidiary of the
Borrower by accountants in connection with any annual, interim or special audit,
including without limitation any final report prepared in connection with the
annual audit referred to in Section 6.2 hereof, and any other comment letter
-----------
submitted to management in connection with any such audit, (ii) each regular,
periodic or other report and any registration statement (other than statements
on Form S-8) or prospectus (or material written communication in respect of any
thereof) filed by the Borrower or any Subsidiary of the Borrower with any
securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iii) all press releases concerning material financial
aspects of the Borrower or any Subsidiary of the Borrower;
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of indebtedness or other security of the Borrower or any
Subsidiary of the Borrower in excess of $300,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder or (ii) any event, circumstance or
condition which could reasonably be expected to be classified as a Material
Adverse Effect, a written notice specifying the details thereof (or the nature
of any claimed default or event of default) and what action is being taken or is
proposed to be taken with respect thereto;
69
(c) Promptly upon becoming aware that any party to any Capitalized Lease
Obligations in excess of $200,000 or Operating Lease in which the annual rentals
thereunder exceed $50,000, has given notice or taken any action with respect to
a breach, failure to perform, claimed default or event of default thereunder, a
written notice specifying the details thereof (or the nature of any claimed
default or event of default) and what action is being taken or is proposed to be
taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and copies
of any notices received from any Tribunal relating to any order, ruling, law,
information or policy that relates to a breach of or noncompliance with any Law,
and could reasonably be expected to result in the payment of money by the
Borrower or any Subsidiary of the Borrower in an amount of $100,000 or more in
the aggregate, or otherwise have a Material Adverse Effect, or result in the
loss or suspension of any Necessary Authorization where such loss could
reasonably be expected to have a Material Adverse Effect; and
(e) From time to time and promptly upon each request, such material data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Borrower and its Subsidiaries, as the
Administrative Agent or any Lender may reasonably request.
Section 6.6 Notice of Litigation, Default and Other Matters. Prompt
-----------------------------------------------
notice of the following events after the Borrower has knowledge or notice
thereof:
(a) The commencement of all Litigation and investigations by or before any
Tribunal, and all actions and proceedings in any court or before any arbitrator
involving claims for damages (including punitive damages) in excess of $100,000
(after deducting the amount with respect to which creditworthy insurance
companies have acknowledged coverage), against or in any other way relating
directly to the Borrower, any Subsidiary of the Borrower, or any of their
respective properties or businesses; and
(b) Promptly upon the happening of any condition or event of which the
Borrower has current actual knowledge which constitutes a Default, a written
notice specifying the nature and period of existence thereof and what action is
being taken or is proposed to be taken with respect thereto.
Section 6.7 ERISA Reporting Requirements.
----------------------------
(a) Promptly and in any event (i) within 30 days after the Borrower or any
member of its Controlled Group has current actual knowledge that any ERISA Event
described in clause (a) of the definition of ERISA Event or any event described
in Section 4063(a) of ERISA with respect to any Plan of the Borrower or any
member of its Controlled Group has occurred, and (ii) within 10 days after the
Borrower or any member of its Controlled Group has current actual knowledge that
any other ERISA Event with respect to any Plan of the Borrower or any member of
its Controlled Group has occurred or a
70
request for a minimum funding waiver under Section 412 of the Code has been made
with respect to any Plan of the Borrower or any member of its Controlled Group,
a written notice describing such event and describing what action is being taken
or is proposed to be taken with respect thereto, together with a copy of any
notice of such event that is given to the PBGC;
(b) Promptly and in any event within ten Business Days after receipt
thereof by the Borrower or any member of its Controlled Group from the PBGC,
copies of each notice received by the Borrower or any member of its Controlled
Group of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing thereof by
the Borrower or any member of its Controlled Group with the United States
Department of Labor or the Internal Revenue Service, copies of each annual
report (including Schedule B thereto, if applicable) with respect to each Plan
subject to Title IV of ERISA of which Borrower or any member of its Controlled
Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Borrower or such member of its Controlled Group setting
forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the benefits
provided under any existing Plan which is not a Multiemployer Plan, or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which the Borrower or any member of its Controlled Group was not previously
contributing, which could reasonably be expected in any such case to result in
an additional material liability to the Borrower;
(f) Notification within three Business Days after the Borrower or any
member of its Controlled Group knows that the Borrower or any such member of its
Controlled Group has filed or intends to file a notice of intent to terminate
any Plan under a distress termination within the meaning of Section 4041(c) of
ERISA and a copy of such notice; and
(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, except those which, in the
aggregate, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.
71
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit
------------
any Subsidiary of the Borrower to, create, assume, incur or otherwise become or
remain obligated in respect of, or permit to be outstanding, or suffer to exist
any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the ordinary
course of business;
(c) Indebtedness, including in respect of Capitalized Lease Obligations,
incurred to purchase, or to finance the purchase of, assets which constitute
property, plant and equipment, not to exceed, together with Indebtedness
permitted pursuant to clauses (h) and (m) of this Section 7.1, $10,000,000 in
-----------
aggregate principal amount outstanding;
(d) Institutional Debt; provided that (i) the Net Cash Proceeds of such
Institutional Debt are applied in accordance with Section 2.5(f) hereof to the
--------------
extent required therein and (ii) the scheduled principal payments of all
Indebtedness of the Borrower and its Subsidiaries immediately after the issuance
thereof is not greater in amount during any year in which the Obligations are
scheduled to be outstanding or earlier in amortization than immediately
preceding the issuance thereof.
(e) Interest hedging obligations under Interest Hedge Agreements entered
into with any Lender;
(f) Indebtedness existing on the Agreement Date which is described on
Schedule 6 hereto, including renewals, replacements and refinancings (but no
----------
increases) thereof;
(g) Indebtedness in respect of endorsement of negotiable instruments in the
ordinary course of business;
(h) Indebtedness assumed in connection with Acquisitions permitted under
Section 7.6 not to exceed, together with Indebtedness permitted pursuant to
-----------
clauses (c) and (m) of this Section 7.1, $10,000,000 in aggregate principal
-----------
amount outstanding;
(i) Indebtedness owing to the Borrower or any Domestic Subsidiary by the
Borrower or any Subsidiary of the Borrower, which Indebtedness is subordinated
to the
72
Obligations and evidenced by an entry on the financial records of the Borrower
and any such Subsidiary of the Borrower;
(j) Guaranties by Subsidiaries of the Borrower of Indebtedness of the
Borrower or other Domestic Subsidiaries of the Borrower, to the extent such
underlying Indebtedness is permitted hereunder;
(k) Indebtedness in respect of the Senior Subordinated Notes;
(l) Indebtedness of Foreign Subsidiaries not to exceed $10,000,000 in
aggregate principal amount outstanding; and
(m) Other Indebtedness not to exceed, together with Indebtedness permitted
pursuant to clauses (c) and (h) of this Section 7.1, $10,000,000 in aggregate
-----------
principal amount outstanding;
provided, however, that no Indebtedness otherwise permitted pursuant to clauses
-------- -------
(c), (d), (h), (j), (l) and (m) above may be incurred if, immediately before or
after giving effect to the incurrence thereof, any Event of Default shall have
occurred and be continuing.
Section 7.2 Liens. The Borrower shall not, and shall not permit any
-----
Subsidiary of Borrower to, create, assume, incur, permit or suffer to exist,
directly or indirectly, any Lien on any of its assets, whether now owned or
hereafter acquired, except Permitted Liens. The Borrower shall not, and shall
not permit any Subsidiary to, agree with any other Person that it shall not
create, assume, incur, permit or suffer to exist or to be created, assumed,
incurred or permitted to exist, directly or indirectly, any Lien on any of its
assets other than in respect of Indebtedness permitted by Sections 7.1(c) and
---------------
(h), provided that such agreement relates only to the assets purchased or
---
acquired.
Section 7.3 Investments. The Borrower shall not, and shall not permit any
-----------
Subsidiary of Borrower to, make any Investment, except that the Borrower and any
Subsidiary of the Borrower may purchase or otherwise acquire and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable that arise in the ordinary course of business and
are payable on standard terms;
(c) Investments in existence on the Agreement Date which are described on
Schedule 5 hereto;
----------
(d) Investments which are Acquisitions permitted pursuant to Section 7.6
-----------
hereof;
(e) Investments in the form of Interest Hedge Agreements permitted by
Section 7.1(e) hereof;
--------------
73
(f) Investments in, and expenditures in respect of Acquisitions of,
Subsidiaries which are not Domestic Subsidiaries by the Borrower in an aggregate
amount after the Agreement Date not to exceed (calculated immediately prior to
the date of each such Investment or Acquisition) $10,000,000 at any time
outstanding;
(g) Investments in Domestic Subsidiaries of the Borrower (i) which have
executed a Subsidiary Guaranty and Collateral Documents granting a first
priority Lien in all assets of such Subsidiary required by the Determining
Lenders to be pledged, except for Permitted Liens to secure the Obligations,
(ii) 100% of whose Equity Interests shall be pledged to secure the Obligations
and (iii) which have delivered to the Lenders such board resolutions, officer's
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request;
(h) Investments consisting of non-cash consideration received in connection
with a sale of assets permitted by Section 7.5 not to exceed $5,000,000 in
-----------
aggregate amount outstanding at any time;
(i) Investments arising from transactions by the Borrower or any of its
Subsidiaries with customers or suppliers in the ordinary course of business,
including endorsements of negotiable instruments, debt obligations and other
investments received in connection with the bankruptcy or reorganization of
customers and suppliers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers; and
(j) Other Investments not to exceed $2,500,000 in aggregate amount
outstanding at any time;
provided, however, that no Investment otherwise permitted by clauses (d), (f),
-------- -------
(h) and (j) above shall be permitted to be made if, immediately before or after
giving effect thereto, any Event of Default shall have occurred and be
continuing.
Section 7.4 Liquidation, Merger. The Borrower shall not, and shall not
-------------------
permit any Subsidiary of Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or dissolution)
or otherwise wind up, except that (i) a Subsidiary of the Borrower may liquidate
or dissolve into the Borrower or a Subsidiary of the Borrower which is an
Obligor and (ii) a Subsidiary of the Borrower which is not an Obligor may
liquidate or dissolve into the Borrower or a Subsidiary of the Borrower; or
(b) enter into any merger or consolidation unless (i) with respect to a
merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, or if the merger or consolidation involves a Subsidiary
of the Borrower which is an Obligor and not the Borrower, such Subsidiary shall
be the surviving corporation, (ii) such transaction shall not be utilized to
circumvent compliance with any term or provision herein and (iii) no Default or
Event of Default shall then be in existence or occur as a result of such
transaction.
74
Section 7.5 Sales of Assets. The Borrower shall not, and shall not permit
---------------
any Subsidiary of the Borrower to, sell, transfer or otherwise dispose of, any
of its assets except (a) inventory in the ordinary course of business, (b)
obsolete or worn-out assets, (c) asset sales in which the Net Cash Proceeds from
the disposition thereof (to the extent not applied pursuant to clause (d)
immediately following) are reinvested, within 150 days before or after such
disposition, in productive tangible assets used in the business of the Borrower
and its Subsidiaries, and provided that the aggregate amount of Net Cash
Proceeds outstanding and pending reinvestment pursuant to this clause (c) shall
not exceed $5,000,000 at any time, and (d) asset sales the Net Cash Proceeds of
which are applied in accordance with Section 2.5(c) hereof to the extent
--------------
required therein.
Section 7.6 Acquisitions. The Borrower shall not, and shall not permit
------------
any Subsidiary of Borrower to, make any Acquisitions; provided, however, if (a)
immediately prior to and after giving effect to the proposed Acquisition there
shall not exist a Default or Event of Default and (b) immediately after giving
effect to the proposed transaction the Unused Portion shall be no less than
$5,000,000, the Borrower or any Subsidiary of the Borrower may make Acquisitions
so long as (i) such Acquisition shall not be opposed by the board of the
directors of the Person being acquired, (ii) Lenders shall have received written
notice at least 15 Business Days prior to the date of such Acquisition, (iii)
the Administrative Agent shall have received at least 10 Business Days prior to
the date of such Acquisition a Compliance Certificate setting forth the covenant
calculations both immediately prior to and after giving effect to the proposed
Acquisition, (iv) the assets, property or business acquired shall be in the
business described in Section 4.1(d) hereof and the Administrative Agent for the
--------------
benefit of the Lenders shall have a first priority Lien in substantially all of
such assets (or, if less than substantially all of such assets, such assets
required by the Determining Lenders to be pledged), except for Permitted Liens,
(v) if such Acquisition results in a Domestic Subsidiary, (A) such Subsidiary
shall execute a Subsidiary Guaranty of the Obligations and Collateral Documents
granting a first priority Lien in substantially all of such assets (or, if less
than substantially all of such assets, all assets required by the Determining
Lenders to be pledged), except for Permitted Liens to secure the Obligations,
(B) 100% of such Subsidiary's Equity Interests shall be pledged to secure the
Obligations and (C) the Administrative Agent on behalf of the Lenders shall have
received such board resolutions, officer's certificates and opinions of counsel
as the Administrative Agent shall reasonably request in connection with the
actions described in clauses (A) and (B) above, and (vi) if such Acquisition
results in a Foreign Subsidiary, (A) 65% of such Subsidiary's Equity Interests
shall be pledged to secure the Obligations and (B) the Administrative Agent on
behalf of the Lenders shall have received such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with clause (A) immediately preceding.
Section 7.7 Capital Expenditures. The Borrower shall not, and shall not
--------------------
permit any Subsidiary of the Borrower to, make or commit to make any Capital
Expenditures after the Agreement Date in an aggregate amount in excess of an
amount equal to the sum of (a) $15,000,000 plus (b) 5% of cumulative net
revenues of the Borrower and its Subsidiaries from and after the Agreement Date.
75
Section 7.8 Restricted Payments. The Borrower shall not, and shall not
-------------------
permit any Subsidiary of the Borrower to, directly or indirectly declare, pay or
make any Restricted Payments except (a) Dividends payable by a Subsidiary to the
Borrower, (b) purchases, redemptions, retirements or acquisitions of shares of
capital stock of the Borrower, or options or warrants to purchase shares of such
capital stock, held by officers, directors or employees of the Borrower or any
of its Subsidiaries pursuant to a compensation plan or arrangement in connection
with the death, disability or termination of employment of any such officer,
director or employee in all such cases taken as a whole for aggregate cash
payments not in excess of $2,500,000, (c) payments for the purpose of and in an
amount equal to the amount required to redeem or repurchase Equity Interests of
the Company from certain stockholders of the Company as required pursuant to the
Second Amended and Restated Securityholders Agreement in an aggregate amount not
to exceed $250,000, (d) the Dogloo Transaction Restricted Payments, (e)
additional redemptions of capital stock of the Borrower not to exceed $2,400,000
in aggregate principal amount, and (f) advisory fees to the Specified Investors
not to exceed an aggregate amount of $600,000 for each fiscal year; provided,
however, the Borrower shall not pay or make any Restricted Payments permitted by
this Section 7.8 unless there shall exist no Default or Event of Default prior
-----------
to or after giving effect to any such proposed Restricted Payment.
Section 7.9 Affiliate Transactions. Except for the payments permitted
----------------------
under Section 7.8, the Borrower shall not, and shall not permit any Subsidiary
-----------
of the Borrower to, at any time engage in any transaction with an Affiliate
(other than the Borrower or any Subsidiary of the Borrower) on terms materially
less advantageous to the Borrower or such Subsidiary than would be the case if
such transaction had been effected with a non-Affiliate. The Borrower shall
not, and shall not permit any Subsidiary of Borrower to, in any event incur or
suffer to exist any Indebtedness or Guaranty in favor of any Affiliate, unless
such Affiliate shall subordinate the payment and performance thereof to the
Obligations on terms, conditions and documentation satisfactory to the
Determining Lenders.
Section 7.10 Compliance with ERISA. The Borrower shall not, and shall not
---------------------
permit any Subsidiary of the Borrower to, directly or indirectly, or permit any
member of its Controlled Group to directly or indirectly, (a) terminate any Plan
so as likely to result in liability to the Borrower or any member of its
Controlled Group taken as a whole which could reasonably be expected to have a
Material Adverse Effect, (b) permit to exist any ERISA Event, or any other event
or condition with respect to a Plan which could reasonably be expected to have a
Material Adverse Effect, (c) make a complete or partial withdrawal (within the
meaning of Section 4201 of ERISA) from any Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect on the Borrower or any
member of its Controlled Group taken as a whole, or (d) enter into any new Plan
or modify any existing Plan so as to increase its obligations thereunder which
could reasonably be expected to have a Material Adverse Effect.
Section 7.11 Maximum Leverage Ratio. At the end of each fiscal quarter
----------------------
occurring during the periods indicated below, the Borrower shall not permit the
Leverage Ratio to be greater than the ratio set forth below opposite the period
in which such fiscal quarter occurs:
76
Period Ratio
------ -----
From and including December 31, 1997 to and including 5.75 to 1
September 30, 1998
From and including December 31, 1998 to but not 5.50 to 1
including June 30, 1999
From and including June 30, 1999 to but not including 4.75 to 1
June 30, 2000
From and including June 30, 2000 to but not including 4.25 to 1
June 30, 2001
From and including June 30, 2001 and thereafter 3.75 to 1
Section 7.12 Minimum Fixed Charge Coverage Ratio. At the end of each
-----------------------------------
fiscal quarter occurring during this Agreement commencing with December 31,
1997, the Borrower shall not permit the Fixed Charge Coverage Ratio to be less
than 1.10 to 1.
Section 7.13 Interest Coverage Ratio. At the end of each fiscal quarter
-----------------------
occurring during the periods indicated below, the Borrower shall not permit the
Interest Coverage Ratio to be less than the ratio set forth below opposite the
period in which such fiscal quarter occurs:
Period Ratio
------ -----
From and including December 31, 1997 to but not including 1.75 to 1
December 31, 1998
From and including December 31, 1998 to but not including 2.00 to 1
June 30, 2000
From and including June 30, 2000 and thereafter 2.50 to 1
Section 7.14 Sale or Discount of Receivables. The Borrower shall not, and
-------------------------------
shall not permit any Subsidiary of the Borrower to, directly or indirectly,
sell, with or without recourse, for discount or otherwise, any notes or accounts
receivable other than in the ordinary course of business consistent with such
practices of the Borrower prior to the Agreement Date.
Section 7.15 Business. Neither the Borrower nor any Subsidiary of the
--------
Borrower shall conduct any business other than the business described in Section
-------
4.1(d) hereof.
------
Section 7.16 Fiscal Year. Neither the Borrower nor any Subsidiary of the
-----------
Borrower shall change its fiscal year from June 30.
77
Section 7.17 Amendment of Organizational Documents. The Borrower shall
-------------------------------------
not, and shall not permit any Subsidiary of the Borrower to, amend its articles
of incorporation, bylaws or other applicable organizational documents in any
manner that could reasonably be expected to (a) result in a Material Adverse
Effect or (b) impair or adversely affect the Rights of the Administrative Agent
or any Lender under any Loan Documents or in respect of any Collateral, it being
understood that the re-incorporation of the Borrower as a Delaware corporation
will be permitted under this Section 7.17.
------------
Section 7.18 Amendments and Waivers of Subordinated Debt. The Borrower
-------------------------------------------
shall not, and shall not permit any Subsidiary to, change or amend (or take any
action or fail to take any action the result of which is an effective amendment
or change) or accept any waiver or consent with respect to, any document,
instrument or agreement relating to any Subordinated Debt that would result in
(a) an increase in the principal, interest, overdue interest, fees or other
amounts payable under the Subordinated Debt, (b) an acceleration in any date
fixed for payment or prepayment of principal, interest, fees or other amounts
payable under the Subordinated Debt (including, without limitation, as a result
of any redemption), (c) a reduction in any percentage of holders of the
Subordinated Debt required under the terms of the Subordinated Debt to take (or
refrain from taking) any action under the Subordinated Debt, (d) a change in any
covenant under the Subordinated Debt making such covenant more restrictive, (e)
a change in any default or event of default (however designated) under the
Subordinated Debt which makes such default or event of default more restrictive,
(f) a change in the definition of "Change of Control" or "Change in Control" or
similar event or circumstance, however defined or designated, as provided in the
Subordinated Debt which would result in such definition being more restrictive
than such definition in this Agreement, (g) a change in any of the subordination
provisions of the Subordinated Debt, (h) a change in any covenant, term or
provision in the Subordinated Debt which would result in such term or provision
being more restrictive than the terms of this Agreement and the other Loan
Documents or (i) a change in any term or provision of the Subordinated Debt that
could have, in any material respect, an adverse effect on the interest of the
Lenders.
ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or non-
governmental body:
(a) Any representation or warranty made under any Loan Document shall prove
to have been incorrect or misleading in any material respect when made;
78
(b) The Borrower shall fail to pay any (i) principal under any Note when
due; or (ii) interest under any Note or any fees payable hereunder or any other
costs, fees, expenses or other amounts payable hereunder or under any other Loan
Document within the earlier of (A) three Business Days after the date due or (B)
one Business Day after written notice thereof from the Administrative Agent;
(c) The Borrower or any Subsidiary shall default in the performance or
observance of any agreement or covenant contained Section 5.1(a) hereof or in
--------------
Article 7 (other than Section 7.10) hereof;
--------- ------------
(d) Any Obligor or any Subsidiary of the Borrower shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
-----------
default shall not be cured within a period of thirty days after the earlier of
notice from the Administrative Agent thereof or actual notice thereof by a
Responsible Officer of any Obligor or such Subsidiary;
(e) Any Obligor or any Subsidiary of the Borrower shall default in the
performance or observance of any agreement or covenant in any of the Loan
Documents (other than this Agreement) and such default shall not be cured within
a period of thirty days after the earlier of notice from the Administrative
Agent thereof or actual notice thereof by a Responsible Officer of any Obligor
or such Subsidiary;
(f) There shall be commenced an involuntary proceeding or an involuntary
petition shall be filed in a court having competent jurisdiction seeking (i)
relief in respect of any Obligor or any Subsidiary of the Borrower, or a
substantial part of the property or the assets of such Obligor or Subsidiary of
the Borrower, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal, state or foreign bankruptcy
law or other similar law, (ii) the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or similar official of any Obligor or
any Subsidiary of the Borrower, or of any substantial part of their respective
properties, or (iii) the winding-up or liquidation of the affairs of any Obligor
or any Subsidiary of the Borrower, and any such proceeding or petition shall
continue unstayed and in effect for a period of forty-five consecutive days;
(g) Any Obligor or any Subsidiary of the Borrower shall (i) file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal,
state or foreign bankruptcy law or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of any Obligor or any
Subsidiary of the Borrower or of substantially all of its properties, (iii) file
an answer admitting the material allegations filed against it in any such
proceeding, (iv) make a general assignment for the benefit of creditors, (v)
become unable, admit in writing its inability, or fail generally, to pay its
debts as they become due, or (vi) any Obligor or any Subsidiary of the Borrower
shall take any corporate action in furtherance of any such action;
79
(h) A final judgment or judgments shall be entered by any court against any
Obligor or any Subsidiary of the Borrower for the payment of money which exceeds
$200,000 in the aggregate, or a warrant of attachment or execution or similar
process shall be issued or levied against property of any Obligor which,
together with all other such property of the Borrower and its Subsidiaries
subject to other such process, exceeds in value $200,000 in the aggregate, and
if such judgment or award is not insured or, within 30 days after the entry,
issue or levy thereof, such judgment, warrant or process shall not have been
paid or discharged or stayed pending appeal, or if, after the expiration of any
such stay, such judgment, warrant or process shall not have been paid or
discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other party-in-
interest or disqualified person (other than any Lender) shall engage in
transactions which in the aggregate would reasonably be expected to result in a
direct or indirect liability to the Borrower or any member of its Controlled
Group under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the
Borrower or any member of its Controlled Group shall incur any accumulated
funding deficiency, as defined in Section 412 of the Code, or request a funding
waiver from the Internal Revenue Service for contributions; (iii) the Borrower
or any member of its Controlled Group shall incur any withdrawal liability as a
result of a complete or partial withdrawal within the meaning of Section 4203 or
4205 of ERISA, or any other liability with respect to a Plan, unless the amount
of such liability has been funded within the Plan or pursuant to one or more
insurance contracts; (iv) the Borrower or any member of its Controlled Group
shall fail to make a required contribution by the due date under Section 412 of
the Code or Section 302 of ERISA which would result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA; (v) the Borrower, any
member of its Controlled Group or any Plan sponsor shall notify the PBGC of an
intent to terminate, or the PBGC shall institute proceedings to terminate, or
the PBGC shall institute proceedings to terminate, any Plan subject to Title IV
of ERISA; (vi) a Reportable Event shall occur with respect to a Plan subject to
Title IV of ERISA, and within 15 days after the reporting of such Reportable
Event to the Administrative Agent, the Administrative Agent shall have notified
the Borrower in writing that the Determining Lenders have made a determination
that, on the basis of such Reportable Event, there are reasonable grounds for
the termination of such Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan
and as a result thereof an Event of Default shall have occurred hereunder; (vii)
a trustee shall be appointed by a court of competent jurisdiction to administer
any Plan or the assets thereof; or (viii) any ERISA Event with respect to a Plan
subject to Title IV of ERISA shall have occurred, and 30 days thereafter (A)
such ERISA Event, other than such event described in clause (f) of the
definition of ERISA Event herein, (if correctable) shall not have been corrected
and (B) the then present value of such Plan's benefit liabilities, as defined in
Title IV of ERISA, shall exceed the then current value of assets accumulated in
such Plan; provided, however, that the events listed in subsections (i) -(viii)
-------- -------
above shall constitute Events of Default only if the maximum aggregate liability
which the Borrower or any member of its Controlled Group has a reasonable
likelihood of incurring under the applicable provisions of ERISA resulting from
an event or events exceeds $300,000;
80
(j) Any Obligor or any Subsidiary of the Borrower shall default in the
payment of any Indebtedness in an aggregate amount of $1,000,000 or more beyond
any grace period provided with respect thereto, or any other event or condition
shall exist under any agreement or instrument under which such Indebtedness is
created or evidenced beyond any applicable grace period, if the effect of such
event or condition is to permit or cause the holder of such Indebtedness (or a
trustee on behalf of any such holder) to (i) cause such Indebtedness to become
due or prepaid prior to its date of maturity or (ii) require the any Obligor or
any Subsidiary of the Borrower to purchase, prepay or redeem such Indebtedness;
(k) Any real property lease where the Borrower or any Subsidiary of the
Borrower is the lessee shall terminate or cease to be effective, and termination
or cessation thereof, together with all other real property leases, if any,
which have been terminated or cease to be effective, could reasonably be
expected to have a Material Adverse Effect; provided, however, that termination
or cessation of a real property lease shall not constitute an Event of Default
if another real property lease reasonably satisfactory to the Determining
Lenders is contemporaneously substituted therefor;
(l) Any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any party to it (other than the
Administrative Agent or any Lender) other than in accordance with its terms, or
any such party (other than the Administrative Agent or any Lender) shall so
assert in writing;
(m) Any Collateral Document shall for any reason cease to create a valid
and perfected first priority Lien in any Collateral subject thereto, other than
as expressly provided or permitted in such Collateral Document or in this
Agreement; or
(n) A Change of Control shall occur.
Section 8.2 Remedies. If an Event of Default shall have occurred and
--------
shall be continuing:
(a) With the exception of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, the Administrative Agent may at its election (provided that the
---
Administrative Agent has not previously received notice to the contrary from the
Determining Lenders), and shall upon the direction of the Determining Lenders,
terminate the Commitments and/or declare the principal of and interest on the
Advances and all Obligations and other amounts owed under the Loan Documents to
be forthwith due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived, except for notices expressly
set forth in the Loan Documents.
(b) Upon the occurrence of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, such principal, interest and other amounts shall thereupon and
---
concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the Administrative Agent, any
Lender or any holders of the Notes and without
81
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in the Loan Documents to the contrary
notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the Administrative
Agent may at its election, and shall upon the direction of the Determining
Lenders shall, demand upon the Borrower to, and forthwith upon such demand (but
in the case of an Event of Default specified in Section 8.1(f) or (g) hereof,
-------------- ---
without any demand or taking of any other action by the Administrative Agent or
any Lender), the Borrower shall, pay to the Administrative Agent in same day
funds at the office of the Administrative Agent for deposit in the L/C Cash
Collateral Account, an amount equal to the maximum amount available to be drawn
under the Letters of Credit then outstanding.
(d) The Administrative Agent and the Lenders may exercise all of the Rights
granted to them under the Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Agent and the Lenders hereunder shall
be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
------------------------
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to any
------------------------------------
proposed LIBOR Advance for any Interest Period, (i) any Lender determines that
deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the Determining
Lenders determine that the LIBOR Rate for such proposed LIBOR Advance does not
adequately cover the cost to such Lender of making and maintaining such proposed
LIBOR Advance for such Interest Period, such Lender or Determining Lenders, as
the case may be, shall forthwith give notice thereof to the Borrower, whereupon
until such Lender or Determining Lenders, as the case may be, notify the
Borrower that the circumstances giving rise to such situation no longer exist,
the obligation of such Lender to make LIBOR Advances shall be suspended;
provided, however, such Lender or the Determining Lenders, as the case may be,
-------- -------
shall promptly notify the Borrower if the circumstances giving rise to such
situation no longer exist.
Section 9.2 Illegality. If after the Agreement Date any change in
----------
applicable law, rule or regulation, or adoption thereof, or any change in any
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its LIBOR Lending Office) 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 such Lender (or its LIBOR Lending Office) to make, maintain or
fund its LIBOR Advances, such Lender shall so notify the Borrower and the
Administrative Agent. Before giving any notice to the Borrower pursuant to this
Section, the notifying Lender shall designate a different
82
LIBOR Lending Office or other lending office if such designation will avoid the
need for giving such notice and will not, in the sole judgment of the Lender, be
materially disadvantageous to the Lender. Upon receipt of such notice,
notwithstanding anything contained in Article 2 hereof, the Borrower shall repay
---------
in full the then outstanding principal amount of each LIBOR Advance owing to the
notifying Lender, together with accrued interest thereon and any reimbursement
required under Section 2.9 hereof, on either (a) the last day of the Interest
-----------
Period applicable to such Advance, if the Lender may lawfully continue to
maintain and fund such Advance to such day, or (b) immediately, if the Lender
may not lawfully continue to fund and maintain such Advance to such day or if
the Borrower so elects. Concurrently with repaying each affected LIBOR Advance
owing to such Lender if the Borrower does not terminate this Agreement,
notwithstanding anything contained in Article 2 hereof, the Borrower may,
---------
without any requirement to satisfy the conditions precedent set forth in Section
-------
3.1, 3.2 or 3.3, borrow a Base Rate Advance from such Lender, and such Lender
--- --- ---
shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
repayment.
Section 9.3 Increased Costs.
---------------
(a) If after the Agreement Date any change in or adoption of any law, rule
or regulation, 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 any Lender (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any Tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in (A) the rate of tax on the
overall net income, net worth or capital of the Lender and franchise taxes,
doing business taxes or minimum taxes imposed upon such Lender and (B)
withholding taxes of any Tribunal other than the United States of America
or any state thereof); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the London interbank market any other condition affecting its
LIBOR Advances or its obligation to make such Advances (but excluding any
reserves or deposits that are included in the calculation of LIBOR Basis);
83
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 30 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 11.9 hereof. The
------------
affected Lender will as soon as practicable notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
LIBOR Lending Office or other lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of the affected Lender made in good faith, be
disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder shall
certify that such amounts or costs were actually incurred by such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be conclusive
absent demonstrable error. In determining such amount, a Lender may use any
reasonable averaging and attribution methods. Nothing in this Section 9.3 shall
-----------
provide the Borrower or any Subsidiary of the Borrower the right to inspect the
records, files or books of any Lender. If a Lender demands compensation under
this Section, the Borrower may at any time, upon at least five Business Days'
prior notice to the Lender, after reimbursement to the Lender by the Borrower in
accordance with this Section of all costs incurred, prepay in full the then
outstanding LIBOR Advances of the Lender, together with accrued interest thereon
to the date of prepayment, along with any reimbursement required under Section
-------
2.9 hereof. Concurrently with prepaying such LIBOR Advances, the Borrower may,
---
without any requirement to satisfy the conditions precedent set forth in Section
-------
3.1, 3.2 or 3.3, borrow a Base Rate Advance from the Lender, and the Lender
--- --- ---
shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been given
----------------------------
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender
----------- --- ---
to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or
prepaid, then, unless and until the Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender as LIBOR Advances shall be made instead
as Base Rate Advances.
Section 9.5 Capital Adequacy. If (a) the introduction of or any change in
----------------
or in the interpretation of any law, rule or regulation after the Agreement Date
or (b) compliance by a Lender with any Law or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) adopted or promulgated after the Agreement Date (including any
implementation of the Basle Accord or similar guideline or requirement adopted,
promulgated or becoming effective after the Agreement Date) affects
84
or would affect the amount of capital required or expected to be maintained by a
Lender or any corporation controlling such Lender, and such Lender determines
that the amount of such capital is increased by or based upon the existence of
such Lender's commitment or Advances hereunder and other commitments or advances
of such Lender of this type, then, within 10 days after demand by such Lender,
subject to Section 11.9, the Borrower shall immediately pay to such Lender, from
------------
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender with respect to such circumstances, to the extent that
such Lender reasonably determines in good faith such increase in capital to be
allocable to the existence of such Lender's Commitments hereunder. A
certificate as to any additional amounts payable to any Lender under this
Section 9.5 submitted to the Borrower by such Lender shall certify that such
-----------
amounts were actually incurred by such Lender or corporation controlling such
Lender and shall show in reasonable detail an accounting of the amount payable
and the calculations used to determine in good faith such amount and shall be
conclusive absent demonstrable error. In determining such amount, such Lender
or a corporation controlling such Lender may use any reasonable averaging and
attribution methods. Notwithstanding the foregoing, nothing in this Section 9.5
-----------
shall provide the Borrower or any Subsidiary of the Borrower the right to
inspect the records, files or books of any Lender or any corporation controlling
such Lender.
Section 9.6 Replacement Lender. If the Borrower becomes obligated to pay
------------------
additional amounts to any Lender described in Section 9.2, 9.3 or 9.5, the
----------- --- ---
Borrower may designate a financial institution reasonably acceptable to the
Administrative Agent to replace such Lender by purchasing for cash and receiving
an assignment of such Lender's pro rata share of such Lender's Commitment and
the Rights of such Lender under the Loan Documents without recourse to or
warranty by, or expense to, such Lender, for a purchase price equal to the
outstanding amounts owing to such Lender (including such additional amounts
owing to such Lender pursuant to Section 9.3 or 9.5). Upon execution of an
----------- ---
Assignment Agreement, such other financial institution shall be deemed to be a
"Lender" for all purposes of this Agreement as set forth in Section 11.6 hereof.
------------
ARTICLE 10
Agreement Among Lenders
-----------------------
Section 10.1 Agreement Among Lenders. The Lenders agree among themselves
-----------------------
that:
(a) Administrative Agent. Each Lender hereby appoints the Administrative
--------------------
Agent as its nominee in its name and on its behalf, to receive all documents and
items to be furnished hereunder; to act as nominee for and on behalf of all
Lenders under the Loan Documents; to, except as otherwise expressly set forth
herein, take such action as may be requested by the Determining Lenders,
provided that, (i) unless and until the Administrative Agent shall have received
such requests, the Administrative Agent may take such administrative action, or
refrain from taking such administrative action, as it may deem
85
advisable and in the best interests of the Lenders, and (ii) the Administrative
Agent shall not be required to take any action that exposes the Administrative
Agent to personal liability or that is contrary to any Loan Document or
Applicable Law; to arrange the means whereby the proceeds of the Advances of the
Lenders are to be made available to the Borrower; to distribute promptly to each
Lender information, requests and documents received from the Borrower, and each
payment (in like funds received) with respect to any of such Lender's Advances,
or the ratable amount of fees or other amounts; and to deliver to the Borrower
requests, demands, approvals and consents received from the Lenders.
Administrative Agent agrees to promptly distribute to each Lender, at such
Lender's address set forth below information, requests, documents and payments
received from the Borrower. The Administrative Agent shall have no trustee or
other fiduciary relationship in respect of any Lender by reason of this
Agreement or any other Loan Document. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Administrative Agent are mechanical and administrative in
nature.
(b) Replacement of Administrative Agent. Should the Administrative Agent
-----------------------------------
or any successor Administrative Agent ever cease to be a Lender hereunder, or
should the Administrative Agent or any successor Administrative Agent ever
resign as Administrative Agent, or should the Administrative Agent or any
successor Administrative Agent ever be removed with cause or without cause by
the action of all Lenders (other than the Administrative Agent), then the Lender
appointed by the other Lenders (with the consent of the Borrower, which consent
shall not be unreasonably withheld) shall forthwith become the Administrative
Agent, and the Borrower and the Lenders shall execute such documents as any
Lender may reasonably request to reflect such change at no cost to the Borrower.
If the Administrative Agent also then serves in the capacity of the Swing Line
Bank or the Issuing Bank, such resignation or removal shall constitute
resignation or removal of the Swing Line Bank and the Issuing Bank and the
successor Administrative Agent shall serve in the capacity of the Swing Line
Bank and the Issuing Bank. Any resignation or removal of the Administrative
Agent or any successor Administrative Agent shall become effective upon the
appointment by the Lenders of a successor Administrative Agent; provided,
however, if no successor Administrative Agent shall have been so appointed and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Lenders' removal
of the retiring Administrative Agent, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent, which
shall be a commercial bank organized under the Laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents, provided that if the retiring or removed Administrative
Agent is unable to appoint a successor Administrative Agent, the Administrative
Agent shall, after the expiration of a 60 day period from the date of notice, be
relieved of all obligations as Administrative Agent hereunder. Notwithstanding
any
86
Administrative Agent's resignation or removal hereunder, the provisions of this
Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its Total
--------
Specified Percentage, of any reasonable expenses paid by the Administrative
Agent directly and solely in connection with any of the Loan Documents if
Administrative Agent does not receive reimbursement therefor from other sources
within 60 days after the date incurred. Any amount so paid by the Lenders to
the Administrative Agent shall be returned by the Administrative Agent pro rata
to each paying Lender to the extent later paid by the Borrower or any other
Person on the Borrower's behalf to the Administrative Agent.
(d) Delegation of Duties. The Administrative Agent may execute any of its
--------------------
duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent and its
--------------------------------
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected by the Administrative Agent. The Administrative Agent may, in
its reasonable judgment, deem and treat the payee of any Note as the owner
thereof for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
----------------------------------------------
Administrative Agent nor any of its officers, directors, employees, attorneys or
agents shall be liable for any action taken or omitted to be taken by it or them
hereunder in good faith and believed by it or them to be within the discretion
or power conferred to it or them by the Loan Documents or be responsible for the
consequences of any error of judgment, except for its or their own gross
negligence or wilful misconduct. Except as aforesaid, the Administrative Agent
shall be under no duty to enforce any rights with respect to any of the
Advances, or any security therefor. The Administrative Agent shall not be
compelled to do any act hereunder or to take any action towards the execution or
enforcement of the powers hereby created or to prosecute or defend any suit in
respect hereof, unless indemnified to its reasonable satisfaction against loss,
cost, liability and expense. The Administrative Agent shall not be responsible
in any manner to any Lender for the effectiveness, enforceability, genuineness,
validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS
87
HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA ACCORDING TO ITS TOTAL SPECIFIED
PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES AND/OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED
AGAINST, OR INCURRED BY THE ADMINISTRATIVE AGENT (IN SUCH CAPACITY) IN ANY WAY
WITH RESPECT TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE
ADMINISTRATIVE AGENT UNDER THE LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF
THE ADMINISTRATIVE AGENT), EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED
BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM GROSS NEGLIGENCE OR WILFUL
MISCONDUCT BY THE ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN THIS SECTION
-------
10.1(f) SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
-------
(g) Liability Among Lenders. No Lender shall incur any liability (other
-----------------------
than the sharing of expenses and other matters specifically set forth herein and
in the other Loan Documents) to any other Lender, except for acts or omissions
in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
----------------
Advances made by it and the Notes issued to it, the Administrative Agent shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Affiliates, and any Person who may do business
with or own securities of the Borrower or any of its Affiliates, all as if the
Administrative Agent were not the Administrative Agent hereunder and without any
duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that it
----------------------
has, independently and without reliance upon the Administrative Agent or any
other Lender and based upon the financial statements referred to in Sections
--------
4.1(j), 6.1, and 6.2 hereof, and such other documents and information as it has
------ --- ---
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender and based
upon such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents. Each Lender also acknowledges that
its decision to fund the initial Advances shall constitute evidence to the
Administrative Agent that such Lender has deemed all of the conditions set forth
in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this Article
-------------------
shall inure to the benefit of any Person other than Lenders and, with respect to
Section 10.1(b), the Borrower; consequently, no such other Person shall be
---------------
entitled to rely upon, or to raise as a
88
defense, in any manner whatsoever, the failure of the Administrative Agent or
any Lender to comply with such provisions.
ARTICLE 11
Miscellaneous
-------------
Section 11.1 Notices.
-------
(a) All notices and other communications under this Agreement shall be in
writing (except in those cases where giving notice by telephone is expressly
permitted) and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received), or three days after deposit
in the mail, designated as certified mail, return receipt requested, postage-
prepaid, or one day after being entrusted to a reputable commercial overnight
delivery service, addressed to the party to which such notice is directed at its
address determined as provided in this Section. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, at:
0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Westar Capital L.L.C.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 00
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) If to the Administrative Agent, at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
89
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances hereunder, including without
limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses, including reasonable attorneys'
fees, of the Administrative Agent in connection with the transactions
contemplated in this Agreement and the other Loan Documents and the preparation,
negotiation, execution and delivery of any waiver, amendment or consent by the
Administrative Agent relating to this Agreement or the other Loan Documents; and
(c) all reasonable out-of-pocket costs, expenses and attorneys' fees of the
Administrative Agent and each Lender incurred for enforcement, collection,
restructuring, refinancing and "work-out", or otherwise incurred in obtaining
performance under the Loan Documents, which in each case shall include without
limitation reasonable fees and expenses of consultants, counsel for the
Administrative Agent and any Lender.
Section 11.3 Waivers. The rights and remedies of the Lenders under this
-------
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Agent or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance. In the event that any Lender decides to
fund an Advance at a time when the Borrower is not in strict compliance with the
terms of this Agreement, such decision by such Lender shall not be deemed to
constitute an undertaking by the Lender to fund any further requests for
Advances or preclude the Lenders from exercising any rights available under the
Loan Documents or at law or equity. Any waiver or indulgence granted by the
Lenders shall not constitute a modification of this Agreement, except to the
extent expressly provided in such waiver or indulgence, or constitute a course
of dealing by the Lenders at variance with the terms of the Agreement such as to
require further notice by the Lenders of the Lenders' intent to require strict
adherence to the terms of the Agreement in the future. Any such actions shall
not in any way affect the ability of the Administrative Agent or the Lenders, in
their discretion, to exercise any rights available to them under this Agreement
or under any other agreement, whether or not the Administrative Agent or any of
the Lenders are a party thereto, relating to the Borrower.
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Section 11.4 Calculation by the Lenders Conclusive and Binding. Any
-------------------------------------------------
mathematical calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement shall be controlling,
absent demonstrable error.
Section 11.5 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of an Event of Default, each Lender and
any subsequent holder of any Note, and any assignee of any Note is hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower or any other Person, any such notice being hereby expressly waived,
to set-off, appropriate and apply any deposits (general or special (except trust
and escrow accounts), time or demand, including without limitation Indebtedness
evidenced by certificates of deposit, in each case whether matured or unmatured)
and any other Indebtedness at any time held or owing by such Lender or holder to
or for the credit or the account of the Borrower, against and on account of the
Obligations and other liabilities of the Borrower to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holder shall have declared the principal
of and interest on the Advances and other amounts due hereunder to be due and
payable as permitted by Section 8.2. Any sums obtained by any Lender or by any
-----------
assignee or subsequent holder of any Note shall be subject to pro rata treatment
of all Obligations and other liabilities hereunder in accordance with each
Lender's Total Specified Percentage.
Section 11.6 Assignment.
----------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation in its
interest in this Agreement, its Notes or its Advances, except as hereinafter set
forth.
(c) Each Lender may sell participations to one or more banks or other
entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and the Note or
Notes held by it) (the "Participations"); provided, however, that (i) such
-------- -------
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, (v) no Participant under any such Participation shall have any right
to approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would (A) reduce or postpone any date fixed
for payment of
91
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder (excluding any mandatory prepayment pursuant to Section 2.5(c), (d),
-------------- ---
(e) or (f) hereof), (B) increase the commitment of any Participant or (C)
--- ---
release any Collateral or security for the Obligations, except pursuant to the
Loan Documents, in each case to the extent subject to such Participation, and
(vi) no Participation shall be in an amount of Commitments less than $2,000,000.
Notwithstanding the foregoing, the Borrower agrees that Participants shall be
entitled to the benefits of Article 9 hereof as though they were Lenders and the
---------
Lenders may, subject to Section 11.14 hereof, provide copies of all financial
-------------
information received from the Borrower to such Participants.
(d) Each Lender may assign to one or more Eligible Assignees its rights and
obligations under this Agreement and the other Loan Documents; provided,
--------
however, that (i) each such assignment shall be subject to the prior written
-------
consent of the Administrative Agent and Borrower, which consents shall not be
unreasonably withheld (provided, however, notwithstanding anything herein to the
-------- -------
contrary, no consent of the Borrower is required for any assignment during any
time that an Event of Default has occurred and is continuing), (ii) no such
assignment shall be in an amount of Commitments less than $5,000,000, unless the
Commitments of a Lender are less than $5,000,000, in which case such assignment
may be in the aggregate amount of such Lender's Commitments, (iii) the
applicable Lender, Administrative Agent and Eligible Assignee shall execute and
deliver to the Administrative Agent an Assignment and Acceptance Agreement (an
"Assignment Agreement") in substantially the form of Exhibit F hereto, together
---------
with the Notes subject to such assignment and (iv) the Eligible Assignee
executing the Assignment, shall deliver to the Administrative Agent a processing
fee of $3,500. Upon such execution, delivery and acceptance from and after the
effective date specified in each Assignment, which effective date shall be at
least three Business Days after the execution thereof, (A) the Eligible Assignee
thereunder shall be party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment, have the rights
and obligations of a Lender hereunder and (B) the applicable Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment, relinquish such rights and be released from such
obligations under this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary, (i) any
Lender may assign and pledge all or any portion of its Advances and Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank and (ii)
any Lender that is a fund may at any time assign or pledge all or any portion of
its rights under this Agreement to secure such Lender's indebtedness; provided,
however, that no such assignment under this clause (e) shall release the
assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender and an
Eligible Assignee, and any Note or Notes subject to such assignment, the
Borrower shall, subject to the Borrower's rights under Section 11.6(d), within
---------------
five Business Days after its receipt of such Assignment Agreement execute and
deliver to the Administrative Agent in exchange for the surrendered Notes new
Notes to the order of such Eligible Assignee in an
92
amount equal to the portion of the Advances and Commitments assigned to it
pursuant to such Assignment Agreement and new Notes to the order of the assignor
Lender in an amount equal to the portion of the Advances and Commitments
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Notes, shall
be dated the effective date of such Assignment Agreement and shall otherwise be
in substantially the form of Exhibit A, B or C hereto, as applicable.
--------- - -
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.6, disclose to
------------
the Eligible Assignee or Participant or proposed Eligible Assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower, provided such Person agrees in writing to
handle such information in accordance with the standards set forth in Section
-------
11.14 hereof.
-----
(h) Except as specifically set forth in this Section 11.6, nothing in this
------------
Agreement or any other Loan Documents, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary, no
------------
Eligible Assignee or Participant (nor the assigning or participating Lender)
shall be entitled to receive (whether individually or collectively) any greater
payment under Section 2.14 or Section 9.3 or Section 9.5 than such assigning or
------------ ----------- -----------
participating Lender would have been entitled to receive with respect to the
interest assigned or participated to such Eligible Assignee or Participant.
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Severability. Any provision of this Agreement or any other
------------
Loan Document which is for any reason prohibited or found or held invalid or
unenforceable by any court or governmental agency shall be ineffective to the
extent of such prohibition or invalidity or unenforceability without
invalidating the remaining provisions hereof or thereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any parties
--------------------
to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Highest Lawful
Amount. If any Lender or participant ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and if
principal is
93
paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrower and the Lenders
shall, to the maximum extent permitted under Applicable Law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations 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 the Highest Lawful Rate, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and, in
such event, the Lenders shall not be subject to any penalties provided by any
laws for contracting for, charging or receiving interest in excess of the
Highest Lawful Rate. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
--------
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement may
--------------------
not be amended, modified or waived except by the written agreement of the
Borrower and the Determining Lenders; provided, however, that no such amendment,
modification or waiver shall be made (a) without the consent of all Lenders, if
it would (i) increase the Applicable Specified Percentage or commitment of any
Lender, or (ii) extend or postpone the date of maturity of, extend the due date
for any payment of principal or interest on, reduce the amount of any
installment of principal or interest on, or reduce the rate of interest on, any
Advance, the Reimbursement Obligations or other amount owing under any Loan
Documents to which such Lender is entitled (excluding any mandatory prepayment
pursuant to Section 2.5(c), (d), (e) or (f) hereof), or (iii) release any
-------------- --- --- ---
guaranty of the Obligations or all or substantially all of the Collateral
(except, in any case, pursuant to this Agreement or the other Loan Documents),
or (iv) reduce the fees payable hereunder to which such Lender is entitled, or
(v) revise this Section 11.11, or (vi) waive the date for payment of any
-------------
principal, interest or fees hereunder or (vii) amend the definition of
"Determining Lenders", "Total Specified Percentage", "Revolving Credit Specified
Percentage", "Facility A Term Loan Specified Percentage" or "Facility B Term
Loan Specified Percentage"; (b) without the consent of the Administrative Agent,
if it, would alter the rights, duties or obligations of the Administrative
Agent; (c) without the consent of the Issuing Bank, if it would alter the
rights, duties or obligations of the Issuing Bank; or (d) without the consent of
the Swing Line Bank, if it would alter the rights, duties or obligations of the
Swing Line Bank. Notwithstanding anything in this Agreement to the contrary, no
amendment, waiver or consent that changes the allocations of payments between
the Facility A Term Loan Advances and the Facility B Term Loan Advances may be
without the express written consent of the following: Lenders holding more than
50% of all outstanding Facility A Term Loan Advances and the Lenders holding at
least 50% of all outstanding Facility B Term
94
Loan Advances. Neither this Agreement nor any term hereof may be amended
orally, nor may any provision hereof be waived orally but only by an instrument
in writing signed by the Administrative Agent and, in the case of an amendment,
by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
----------------------
Subsidiary of the Borrower shall be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained herein or which is within the permissible limits of any of
the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all
----------------------------
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that the Borrower shall have a claim against the Issuing Bank, and the
------
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that a court of competent
jurisdiction finally judicially determines were caused by (i) the Issuing Bank's
wilful misconduct or gross negligence or (ii) the Issuing Bank's wilful failure
to make lawful payment under a Letter of Credit after the presentation to it of
a draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, the
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
Section 11.14 Confidentiality. Each Lender and the Administrative Agent
---------------
agrees (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to use reasonable efforts to keep confidential,
in accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices, any non-
public information supplied to it by the Borrower or any of its Affiliates
pursuant to this Agreement, provided that nothing herein shall limit the
disclosure of any such information (a) to the extent required by statute, rule,
regulation or judicial process, (b) to counsel for any Lender or the
Administrative Agent, (c) to bank examiners, auditors or accountants of any
Lender, (d) to the Administrative Agent or any other Lender or any Affiliate
thereof, (e) in connection with any Litigation to which any one or more of
Lenders is a party, (f) to the extent necessary in connection with the exercise
of any remedy under this Agreement or any other Loan Document, or (g) to any
Eligible Assignee or Participant (or prospective Eligible Assignee or
Participant) or to any direct or indirect
95
contractual counterparties in swap agreements or to the professional advisors of
such swap counterparties so long as such Eligible Assignee or Participant (or
prospective Eligible Assignee or Participant) or direct or indirect contractual
counterparties in swap agreements or such swap counterparties' professional
advisors agrees to handle such information in accordance with the provisions of
this Section 11.14.
-------------
Section 11.15 No Novation. This Agreement is a refinancing of the
-----------
Existing Credit Agreement, and not a novation of the "Obligations" (as defined
in the Existing Credit Agreement). All terms and provisions of this Agreement
supersede in their entirety the Existing Credit Agreement. All Liens covering
the Collateral, or any part thereof, under the collateral documents executed in
connection with the Existing Credit Agreement shall remain valid, binding and
enforceable Liens against the Persons which granted such Liens.
SECTION 11.16 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED
STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS COUNTY, TEXAS,
AND THE BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER
LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS,
JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING
ANY OTHER JURISDICTION, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
EACH AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS,
SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS AND HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS
PROPERTY TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT,
ACTION, PROCEEDING OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
SECTION 11.17 WAIVER OF JURY TRIAL. EACH OF THE PARENT, THE BORROWER, THE
--------------------
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
----------------
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
REGARDING THE SUBJECT MATTER
96
HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
==========================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
==========================================
97
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWER: XXXXXXXX MANUFACTURING
COMPANY, INC.
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxxxx
Vice President and Chief Financial
Officer
98
ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By: /s/ XXXXXX X. XXXXXXX, XX.
------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Attorney-In-Fact
LENDERS: NATIONSBANK OF TEXAS, N.A., as a Lender,
Swing Line Bank and Issuing Bank
Revolving Credit Specified
Percentage: 17.931034473%
Facility A Term Loan Specified By: /s/ XXXXXX X. XXXXXXX, XX.
Percentage: 17.931034489% ------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Facility B Term Loan Specified Attorney-In-Fact
Percentage: 46.000000000%
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx.
Total Specified Percentage:
30.909090909%
99
DLJ CAPITAL FUNDING, INC.
Revolving Credit Specified
Percentage: 16.551724145%
Facility A Term Loan Specified By: _______________________________
Percentage: 16.551724133% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 0.0000000000%
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Total Specified Percentage:
10.909090909%
100
COMERICA BANK-TEXAS
Revolving Credit Specified
Percentage: 13.793103455%
Facility A Term Loan Specified By: _______________________________
Percentage: 13.793103444% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 0.000000000%
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Total Specified Percentage:
9.090909091%
101
MARINE MIDLAND BANK
Revolving Credit Specified
Percentage: 13.793103455%
Facility A Term Loan Specified By: _______________________________
Percentage: 13.793103444% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 0.000000000%
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Total Specified Percentage:
9.090909091%
102
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
Revolving Credit Specified
Percentage: 13.793103455%
Facility A Term Loan Specified By: _______________________________
Percentage: 13.793103444% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 0.000000000%
0000 Xxxxx XxXxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Total Specified Percentage:
9.090909091%
103
CREDITANSTALT
Revolving Credit Specified
Percentage: 10.344827600%
Facility A Term Loan Specified By: _______________________________
Percentage: 10.344827578% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 6.666666667%
Total Specified Percentage: By: _______________________________
9.090909091% Name:__________________________
Title:_________________________
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
104
FLEET CAPITAL CORPORATION
Revolving Credit Specified
Percentage: 13.793103455%
Facility A Term Loan Specified By: _______________________________
Percentage: 13.793103444% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 0.000000000%
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Total Specified Percentage:
9.090909091%
105
PRIME INCOME TRUST
Revolving Credit Specified
Percentage: 0.000000000%
Facility A Term Loan Specified By: _______________________________
Percentage: 0.000000000% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 18.666666667%
c/o Xxxx Xxxxxx InterCapital, Inc.
Two World Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Total Specified Percentage:
6.363636364%
106
KZH-SOLEIL CORPORATION
Revolving Credit Specified
Percentage: 0.000000000%
Facility A Term Loan Specified By: _______________________________
Percentage: 0.000000000% Name:__________________________
Title:_________________________
Facility B Term Loan Specified
Percentage: 18.666666667%
x/x Xxx Xxxxx Xxxxxxxxx Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Total Specified Percentage:
6.363636364%
107
SCHEDULE 1
----------
LIBOR LENDING OFFICES
NATIONSBANK OF TEXAS, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
DLJ CAPITAL FUNDING, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
COMERICA BANK-TEXAS
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
MARINE MIDLAND BANK
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
IMPERIAL BANK, A CALIFORNIA BANKING CORPORATION
0000 Xxxxx XxXxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
CREDITANSTALT
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
FLEET CAPITAL CORPORATION
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
108
PRIME INCOME TRUST
c/o Xxxx Xxxxxx InterCapital, Inc.
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
KZH-SOLEIL CORPORATION
x/x Xxx Xxxxx Xxxxxxxxx Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
109
SCHEDULE 2
----------
EXISTING LIENS
PROPERTY SUBJECT AMOUNT OF
TO LIEN LIENHOLDER DEBT SECURED MATURITY DATE
------- ---------- ------------ -------------
110
SCHEDULE 3
----------
EXISTING LITIGATION
111
SCHEDULE 4
----------
SUBSIDIARIES
State of
Incorporation Percentage
Name or Organization of Ownership Owner
---- --------------- ------------ -----
112
SCHEDULE 5
----------
EXISTING INVESTMENTS
113
SCHEDULE 6
----------
EXISTING INDEBTEDNESS
114
SCHEDULE 7
----------
AUTHORIZATION, QUALIFICATION AND GOOD STANDING
115
SCHEDULE 8
----------
LABOR RELATIONS
116
SCHEDULE 9
----------
EBIT SPECIAL ADJUSTMENTS
The following One Time Transaction Items that were also included under
"Consolidation Savings and One-Time Costs" on page 12 of the financial model
included in the Bank Information Memorandum.
One-Time Transactions
---------------------
Sale of Ind facility
Carrying cost 660,000
Equipment moving & rigging 1,500,000
Carrying cost of Corona facility 510,000
Bonuses for achieving savings 3,488,000
Terminated employee incentive cost 2,514,000
Relocation costs 825,000
MIS implementation 2,000,000
Outfitting new building at Xxxxxxxx 4,000,000
Racking DMC Warehouse 960,000
117
SCHEDULE 2
----------
Existing Liens
--------------
===============================================================================
FINANCING STATEMENT
NO. (JURISDICTION)
AND FILING DATE DEBTOR SECURED PARTY
-------------------------------------------------------------------------------
95-00113323 Xxxxxxxx Manufacturing Xxxxxx'x Material
(Texas) Company, Inc. Handling, Inc.
June 8, 1995 3900 Xxxxxxxx St. 000 Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000 Parkway
Xxxxxxxxx, XX 00000
Assignee: Toyota
Motor Credit Corporation
X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
95-00125972 Xxxxxxxx Manufacturing Xxxxxx'x Material
(Texas) Company, Inc. Handling, Inc.
June 26, 0000 Xxxxxxxx Xx. 000 Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx, XX 00000 Parkway
Xxxxxxxxx, XX 00000
Assignee: Toyota
Motor Credit Corporation
X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
95-00217985 Xxxxxxxx Manufacturing Xxxxxx'x Material
(Texas) Company, Inc. Handling, Inc.
November 9, 0000 Xxxxxxxx Xx. 000 Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx, XX 00000 Parkway
Xxxxxxxxx, XX 00000
Assignee: Toyota
Motor Credit Corporation
X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
95-00234882 Xxxxxxxx Manufacturing Xxxxxx'x Material
(Texas) Company, Inc. Handling, Inc.
December 8, 0000 Xxxxxxxx Xx. 000 Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx, XX 00000 Parkway
Xxxxxxxxx, XX 00000
Assignee: Toyota
Motor Credit Corporation
X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
96-00005576 Xxxxxxxx Manufacturing Xxxxxx'x Material
(Texas) Company, Inc. Handling, Inc.
January 1, 0000 Xxxxxxxx Xx. 000 Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx, XX 00000 Parkway
Xxxxxxxxx, XX 00000
Assignee: Toyota
Motor Credit Corporation
X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
===============================================================================
FINANCING STATEMENT
NO. (JURISDICTION)
AND FILING DATE DEBTOR SECURED PARTY
-------------------------------------------------------------------------------
96-00016193 Xxxxxxxx Manufacturing Xxxxxx'x Material
(Texas) Company, Inc. Handling, Inc.
January 25, 1996 4209 Xxxxxxxx St. 000 Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000 Parkway
Xxxxxxxxx, XX 00000
Assignee: Toyota
Motor Credit Corporation
X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
96-00038309 Xxxxxxxx Manufacturing Advanced Image Systems
(Texas) Company, Inc. 0000 Xxxxxxx Xx.
February 26, 1996 0000 Xxxxxxxx Xx. Xxxxxx, XX 00000
Xxxxxxxxx, XX 00000
-------------------------------------------------------------------------------
F194000132 (Tarrant Xxxxxxxx Manufacturing S I T Inc.
County, Texas) Company, Inc. 000 Xxxxx Xx.
December 12, 1994 0000 Xxxxx Xxxx Xxxxxx, XX 00000
Xxxxxxxxx, XX 00000
-------------------------------------------------------------------------------
96-00013711 Xxxxxxxx Manufacturing S I T Inc.
(Texas) Company, Inc. 000 Xxxxx Xx.
January, 22, 1996 0000 Xxxxxxxx Xx. Xxxxxx, XX 00000
Xxxxxxxxx, XX 00000
-------------------------------------------------------------------------------
97-00102377 Xxxxxxxx Manufacturing Sanwa Leasing
(Texas) Company, Inc. Corporation
May 16, 1997 0000 Xxxxx Xxxx X.X. Xxx 0000
Xxxxxxxxx, XX 00000 Xxxx, XX 00000
-------------------------------------------------------------------------------
93-00246955 Xxxxxxxx Manufacturing S I T Inc.
(Texas) Company, Inc. 000 Xxxxx Xx.
December 30, 1993 0000 Xxxxxxxx Xx. Xxxxxx, XX 00000
Xxxxxxxxx, XX 00000
-------------------------------------------------------------------------------
94-037040 Xxxxxxxx Manufacturing Advanced Image Systems
(Texas) Company, Inc. 0000 Xxxxxxxx Xxxx
February 28, 1994 0000 Xxxxxxxx Xx. XX, Xxxxx 000
Xxxxxxxxx, XX 00000 Xxxxx Xxxxxx, XX 00000
-------------------------------------------------------------------------------
97179119 Spectrum Polymers, Ltd. Toyota Motor Credit
(Texas) Corporation
August 27, 1997 X.X. Xxx 0000
Xxxxxxxx, XX 00000
-------------------------------------------------------------------------------
97-00014194 Xxxxxxxx Manufacturing Sanwa Leasing
(Texas) Company, Inc. Corporation
January 27, 1997 0000 Xxxxx Xxxx X.X. Xxx 0000
Xxxxxxxxx, XX 00000 Xxxx, XX 00000
-------------------------------------------------------------------------------
93110420 Dogloo, Inc. Crown Credit Company
(California) 0000 Xxx Xxxxxxxx Xxxx 00 Xxxxx Xxxxxxxxxx
June 1, 0000 Xxxxxx, XX 00000 Xxxxxx
Xxx Xxxxxx, XX 00000
-------------------------------------------------------------------------------
93149046 Dogloo, Inc. Associates Leasing
(California) 0000 Xxx Xxxxxxxx Xxxx Inc.
July 22, 1993 Xxxxxx, XX 00000 X.X. Xxx 0000
Xxxxxxx Xxxxx, XX
00000
-------------------------------------------------------------------------------
9431860209 Dogloo, Inc. Leverage Leasing
(California) 0000 Xxx Xxxxxxxx Xxxx Company
October 21, 1994 Xxxxxx, XX 00000 0000 X. 00xx Xx.
Xxxxx, XX 00000
-------------------------------------------------------------------------------
Schedule 2-2
===============================================================================
FINANCING STATEMENT
NO. (JURISDICTION)
AND FILING DATE DEBTOR SECURED PARTY
-------------------------------------------------------------------------------
9435460186 Dogloo, Inc. Associates Commercial
(California) 0000 Xxx Xxxxxxxx Xxxx Corp.
December 2, 1994 Xxxxxx, XX 00000 X.X. Xxx 0000
Xxxxxxx Xxxxx, XX 00000
-------------------------------------------------------------------------------
9508261146 Dogloo, Inc. Winthrop Resources
(California) 0000 Xxx Xxxxxxxx Xxxx Corporation
March 23, 1995 Xxxxxx, XX 00000 1015 Opus Center
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Assignee: Norwest
Equipment Finance,
Inc.
Xxxxxxxxx Xxxxxxxx,
Xxxxx 000
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------
9522860893 Dogloo, Inc. Winthrop Resources
(California) 0000 Xxx Xxxxxxxx Xxxx Corporation
August 14, 1995 Xxxxxx, XX 00000 1015 Opus Center
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Assignee: Norwest
Equipment Finance,
Inc.
Xxxxxxxxx Xxxxxxxx,
Xxxxx 000
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------
9629260790 Dogloo, Inc. AT&T Credit
(California) 0000 Xxx Xxxxxxxx Xxxx Corporation
October 18, 1996 Xxxxxx, XX 00000 0 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
------------------------------------------------------------------------------
009321 Dogloo, Inc. OKI Systems, Inc.
(Xxxxxx 0000 Xxx Xxxxxxxx Xxxx 4665 Interstate Dr.
County, IN) Xxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
November 7, 1996
-----------------------------------------------------------------------------
002273 Dogloo, Inc. OKI Systems, Inc.
(Xxxxxx 0000 Xxx Xxxxxxxx Xxxx 4665 Interstate Dr.
County, IN) Xxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
March 20, 1996
-----------------------------------------------------------------------------
2089773 Dogloo, Inc. OKI Systems, Inc.
(Indiana) 0000 Xxx Xxxxxxxx Xxxx 0000 Xxxxxxxxxx Xx.
November 21, 1996 Xxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------
2045311 Dogloo, Inc. OKI Systems, Inc.
(Indiana) 0000 Xxx Xxxxxxxx Xxxx 0000 Xxxxxxxxxx Xx.
April 2, 1996 Xxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------
201635 Dogloo, Inc. EMCO Enterprises
(Indiana) 0000 Xxx Xxxxxxxx Xxxx Xxx Xxxxxx, XX
July 27, 1995 Xxxxxx, XX 00000
------------------------------------------------------------------------------
2085342 Dogloo, Inc. AT&T Credit
(Indiana) 0000 Xxx Xxxxxxxx Xxxx Corporation
October 28, 1996 Xxxxxx, XX 00000 0 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
==============================================================================
Schedule 2-3
SCHEDULE 3
----------
Existing Litigation
-------------------
1. Xxxxxxxx Manufacturing Company, Inc. v. London Industries, Inc. (cause no.
141-660339-96) (No. 4: 96-CV-737-A) U.S. Dist. Ct. N.D. Texas, Ft. Worth
Division (Borrower is plaintiff):
This case was settled and $150,000 has been received by Borrower. A copy
of the signed settlement papers is being requested from Borrower's counsel
and will be forwarded to Administrative Agent as soon as available.
2. Current litigation by former Spectrum employee Xxxxxx Xxxxxx:
Xxxxxx Xxxxxx and Xxxxxxxxx Xxxxxx x. Xxxxxxxx Manufacturing Company, Inc.
and Spectrum Polymers, Ltd., pending in the 17th Judicial District Court of
Tarrant County, Texas, Cause No. 00-000000-00. Filed in September 1995.
Plaintiff Xxxxxx Xxxxxx is claiming he injured his back while lifting heavy
equipment while at work at Spectrum. Attorneys for Borrower and Plaintiff
have exchanged written discovery, but no depositions have been taken.
Plaintiff is presently demanding the sum of $300,000 to settle the claim.
The claim was originally set for trial in March 1997, but has been
continued at Plaintiff's request. The case is still pending.
3. Pending litigation by Xxxxxx Xxxxxxx (on-the-job injury):
Pending in County Court at Law No. 2 in Tarrant County, Texas, cause no.
00-00000-0. Plaintiff Boatang claims that he was injured in a fight with
another person (Xxxx Xxxxx) at the plant and is suing Borrower for
negligent hiring and failure to supervise. Other than filing the suit,
Plaintiff has done nothing in this matter. The court will set a trial date
in September 1997, which is tentatively scheduled for sometime in November
1997. Plaintiff is demanding $35,000. Xxxx Xxxxx was a temporary employee
sent to Borrower by a temporary agency, Personnel Connection.
4. Pending Litigation by Xxxxx Xxxx (on-the job injury):
Pending in County Court of Tarrant County, Texas, cause no. 00-00000-0.
Plaintiff, a former employee of Borrower, alleges that she fell and injured
herself in July 1995 and that such injury was caused by Borrower's
negligence. Plaintiff further alleges that Borrower operated its tuggers
in an unsafe manner and caused her to have an accident earlier in that same
month of July. Suit was filed in July 1997 and the case is currently in
the discovery phase. No specific amount of damages has been claimed to
date.
5. Pending litigation by Xxxxxx Xxx (sexual harassment/discrimination):
Pending in U.S. Dist. Ct., N.D. Texas, Dallas Division, No. 3:97-CV-1217-T.
Plaintiff, a former employee of Borrower who left Borrower in April 1996,
alleges she was sexually harassed while employed by Borrower. Plaintiff
filed a $100,000 claim with the EEOC, which "dropped" the case and issued a
"right to xxx" letter. The pending case was filed on August 14, 1997 and
is scheduled to go to trial in October 1998. No specific amount damages
has been claimed to date in the pending litigation.
6. Borrower has received letters from attorneys representing the following
former employees of Borrower presenting the following claims:
a. Xxxxx Xxx (on-the-job injury):
Former employee of Borrower who left Borrower in June 1996. Xx. Xxx
alleges that in April
Schedule 2-1
1997 she injured her back when another employee tripped and partially
fell on her, landing on her as she was picking up something. Xx. Xxx
claims that Borrower was responsible for causing this alleged
accident. Borrower received a letter from Xx. Xxx'x attorney, Xxx
Xxxxx of Xxxxx, Xxxxxx & Xxxxxx, on July 3, 1996, and Borrower's
counsel, on behalf of Borrower, responded with a letter on July 9,
1996. No amount was requested and there has been no further
communication with Xx. Xxxxx. On June 9, 1997, Borrower received a
letter from another attorney, Xxxxxxxxx Xxxxxxx, P.C., stating that he
is now representing Xx. Xxx.
b. Xxxx Xxxxxx (on-the-job injury):
Current employee of Borrower who claims to have injured herself while
lifting heavy boxes at work. Borrower has offered to transfer Xx.
Xxxxxx to another position with Borrower where she would not be
required to lift heavy objects. Xx. Xxxxxx is currently considering
Borrower's offer.
c. Xxxxxx X. Zammoron (on-the-job injury):
Former employee of Borrower who claims he injured his back on his
third day of work at Borrower's facilities. Mr. Zammoron, through his
attorneys, is demanding a $25,000 settlement.
7. Dogloo has received letters from Xxxxxx and Xxxxx Xxxxxxx (and the Baillie
Corporation) alleging patent infringement by Dogloo in connection with its
test marketing of a cat litter containment system. Dogloo was originally
contacted by the Baillies with an offer to sell certain intellectual
property rights held by the Baillies in a similar system. After
consultation with Dogloo's patent counsel (Xxxxx, Xxxxxx & Xxxxxxxx),
Dogloo manufactured and test marketed 1,000 litter containment systems of
its own design. The product did not perform well in the test markets and
Dogloo decided not to proceed with its development. A representative of the
Baillies has sent a letter to Dogloo seeking $100,000 in damages and
threatening litigation if such amounts are not paid. Dogloo has refused to
pay any amount and has not heard from the Baillies or their representative
for several weeks. No suit has been filed.
8. Dogloo has received letters from Xxxxxx X. Xxxx, an attorney representing a
Xx. Xxxxxxxx, alleging patent infringement on the part of Dogloo in
connection with Dogloo's development of a gravity feeding and watering
system. Dogloo had been previously contacted by Xx. Xxxxxxxx with an offer
by him to sell certain intellectual property rights in a gravity watering
system. The watering system offered by Xx. Xxxxxxxx has a patent-protected
diaphragm valve which prohibits backflow of water into the water storage
compartment. After negotiations with Xx. Xxxxxxxx were unsuccessful (and
in consultation Dogloo's patent counsel Xxxxx, Xxxxxx & Montague), Dogloo
developed and marketed a gravity feeding and watering system which does not
contain the diaphragm valve. On September 16, 1997, Xx. Xxxxxxxx filed
suit against Dogloo in the United States District Court for the District of
Arizona (Case No. CIV97-1920PCT EHC), alleging design patent infringement,
breach of contract, trade secret violations and unfair competition.
9. Orchard's Hardware, which sells some of Dogloo's products, has recently
made a demand to Dogloo for $10,482.00, which represents attorneys' fees,
costs and settlement funds paid to a customer of Orchard's who was injured
when one of Dogloo's products fell on the customer while shopping at
Orchard's. Orchard's claims that Dogloo was obligated to have insurance in
place to cover any injuries caused by its products, but failed to do so.
Dogloo's attorneys are negotiating with Orchard's regarding the dispute and
no complaint has yet been filed.
Schedule 3-2
SCHEDULE 4
----------
Subsidiaries
------------
None.
Schedule 4-1
SCHEDULE 5
----------
Existing Investments
--------------------
None.
Schedule 5-1
SCHEDULE 6
----------
Existing Indebtedness
---------------------
None.
Schedule 6-1
SCHEDULE 7
----------
Jurisdictions of Qualification
------------------------------
and Good Standing
-----------------
1. Texas
2. California
3. Indiana
Schedule 7-1
SCHEDULE 8
----------
Labor Relations
---------------
None.
Schedule 8-1
SCHEDULE 1
----------
Equipment and Inventory Locations
---------------------------------
0000 Xxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Accessory Wire Products
0000 X. Xxxxxxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx 00000
American Mold & Engineer Co.
0000 Xxxxxxxx Xxxxxx X.
Xxxxxxx, Xxxxxxxxx 00000
Building A
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Building B
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Building C
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Building D
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Building E
0000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Building F
0000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Building G
000 X. Xxxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Xxxxxx Industries
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Casco South
0000 X. 00xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Xxxxx Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Como Products
0000 Xxxxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Decatur Plastic Products
X.X. Xxx 000
0000 Xxxxx Xxxxx Xxx 0
Xxxxx Xxxxxx, Xxxxxxx 00000
Excel Tool, Inc.
0000 0xx Xxx. Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxx Building
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
Metal Building
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Metro Plastic Technologies, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Peyco Building
1708, 0000 X. Xxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Spectrum
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Xxxxxx Plastics Inc.
0000 X Xxxxxx
Xxxxxx, Xxxx 00000
Willamette Industries Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Jurisdictions Where Collateral Located
--------------------------------------
1. Texas
2. Oklahoma
3. California
4. Indiana
5. Minnesota
6. Wisconsin
7. Iowa
Chief Place of Business, Chief Executive Office and
---------------------------------------------------
Location of Books and Records
-----------------------------
Building A (accounts receivable records)
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Building B
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
Building E (chief executive office)
0000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Building F
0000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Spectrum
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
0000 Xxx Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Schedule 1-3
Lease and Lease Recording Information
-------------------------------------
1. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X. and
Xxxx Xxxxxxx Xxxxxxxx, as landlord, and Borrower, as tenant, with respect
to certain real property known as 0000 Xxxxxxx, Xxxxxxxxx, Xxxxx, as more
particularly described as Building A in Exhibit A to the Leasehold Deed of
Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing (the "DEED OF TRUST") and attached hereto.
2. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X.
Xxxxxxxx, as landlord, and Borrower, as tenant, with respect to certain
real property known as 0000 Xxxxxxx, Xxxxxxxxx, Xxxxx, as more particularly
described as Building B in Exhibit A to the Deed of Trust and attached
hereto.
3. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X.
Xxxxxxxx, as landlord, and Borrower, as tenant, with respect to certain
real property known as 0000 Xxxxxxx, Xxxxxxxxx, Xxxxx, as more particularly
described as Building C in Exhibit A to the Deed of Trust and attached
hereto.
4. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X. and
Xxxx Xxxxxxx Xxxxxxxx, as landlord, and Borrower, as tenant, with respect
to certain real property known as 0000 Xxxxxxx, Xxxxxxxxx, Xxxxx, as more
particularly described as Building D in Exhibit A to the Deed of Trust and
attached hereto.
5. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X. and
Xxxx Xxxxxxx Xxxxxxxx, as landlord, and Borrower, as tenant, with respect
to certain real property known as 0000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxx, as
more particularly described as Building E in Exhibit A to the Deed of Trust
and attached hereto.
6. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X. and
Xxxx Xxxxxxx Xxxxxxxx, as landlord, and Borrower, as tenant, with respect
to certain real property known as 0000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxx, as
more particularly described as Building F in Exhibit A to the Deed of Trust
and attached hereto.
7. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X. and
Xxxx Xxxxxxx Xxxxxxxx, as landlord, and Borrower, as tenant, with respect
to certain real property known as 0000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxx, as
more particularly described as F Parking in Exhibit A to the Deed of Trust
and attached hereto.
8. Industrial Real Estate dated July 1, 1997 between Marybe Investments, Ltd.,
as landlord, and Borrower, as tenant, with respect to certain real property
known as 000 Xxxxxxxx,
Xxxxxxxxx, Xxxxx, as more particularly described as Building G in Exhibit A
to the Deed of Trust and attached hereto.
9. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X.
Xxxxxxxx, as landlord, and Borrower, as tenant, with respect to certain
real property known as 0000 Xxxxxxx, Xxxxxxxxx, Xxxxx, as more particularly
described as Building J in Exhibit A to the Deed of Trust and attached
hereto.
10. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X.
Xxxxxxxx, as landlord, and Borrower, as tenant, with respect to certain
real property known as 720 and 000 Xxxx X-00, Xxxxxxxxx, Xxxxx, as more
particularly described as I-20 Parking in Exhibit A to the Deed of Trust
and attached hereto.
11. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X. and
Xxxx Xxxxxxx Xxxxxxxx, as landlord, and Borrower, as tenant, with respect
to certain real property known as 000 Xxxxxxx, Xxxxxxxxx, Xxxxx, as more
particularly described as Spectrum in Exhibit A to the Deed of Trust and
attached hereto.
Schedule 1-4
12. Industrial Real Estate Lease dated July 1, 1997 between Xxxxxxxx X.
Xxxxxxxx, as landlord, and Borrower, as tenant, with respect to certain
real property known as 1708 and 0000 Xxxxx Xxxxx Xxxxx, Xxxxxxxxx, Xxxxx,
as more particularly described as Peyco Drive in Exhibit A to the Deed of
Trust and attached hereto.
13. Commercial-Industrial Lease Agreement, dated December 4, 1996, between Col.
Met. Properties, Inc., as landlord, and Borrower, as tenant, with respect
to certain property known as 0000 Xxxxx Xxxxx, Xxxxxxxxx, Xxxxx, as more
particularly described as Xxxxx Building in Exhibit A to the Deed of Trust
and attached hereto.
14. Lease Agreement for the property located at 0000 Xxx Xxxxxxxx Xxxx, Xxxxxx,
XX 00000, dated December 1, 1996 between Patrician Associates, Inc., a
general partnership, also known as "Old Temescal Road Partnership," as
landlord, and Dogloo, Inc. as tenant. The Agreement expires November 30,
1999. Monthly rent for the first year is $23,809.95. Monthly rent for the
second year is $24,625.78. Monthly rent for the third year is $25,495.61.
15. Lease Agreement for the property located at 000 Xxxxx Xxxxxxx,
Xxxxxxxxxxxx, XX 00000, dated January 1, 1997 between Belmont Warehousing
Complex, Inc. as landlord, and Dogloo, Inc. as tenant. The Agreement
expires December 31, 1998. Monthly rent is 23.437.50.
Schedule 1-5
SCHEDULE 2
----------
Trade Names
-----------
1. Xxxxxxxx
2. Petmate
3. Woodstream (license)
4. Dogloo
Schedule 2-1
SCHEDULE 3
----------
Restricted Accounts
-------------------
[TO COME]
Schedule 3-1
SCHEDULE 4
----------
Rolling Stock
-------------
Vehicle Year Serial Number
------- ---- -------------
Mach 3 Ton Van Truck 1988 XX0XX00X0XX000000
International Tractor Truck 1993 0XXXXX0X0XX000000
Schedule 4-1
ANNEX A-1
---------
Patents
-------
==================================================================
NATURE OF ISSUE COUNTRY
INTEREST DESCRIPTION PATENT NUMBER DATE OF
ISSUE
------------------------------------------------------------------
owner Portable Pet Des. 308,429 6/05/90 USA
Carrier
------------------------------------------------------------------
owner Portable Pet Des. 312,333 11/21/90 USA
Kennel
------------------------------------------------------------------
owner Portable Pet Des. 314,251 1/29/91 USA
Kennel
------------------------------------------------------------------
owner Pet Kennel Des. 364,712 11/28/95 USA
------------------------------------------------------------------
owner Vented Pet Des. 367,732 3/5/96 USA
Kennel
------------------------------------------------------------------
owner Kennel Door Des. 351,688 10/18/94 USA
------------------------------------------------------------------
owner Combined Des. 367,734 3/5/96 USA
Kennel Door
and Latch
------------------------------------------------------------------
owner Handle Des. 368,636 4/9/96 USA
------------------------------------------------------------------
owner Latching 4,930,819 5/5/90 USA
Mechanism
------------------------------------------------------------------
owner Latching 5,016,926 5/21/91 USA
Mechanism
------------------------------------------------------------------
owner Kennel Latch 5,071,176 12/10/91 USA
------------------------------------------------------------------
owner Kennel Hull 5,462,015 10/31/95 USA
Latch
------------------------------------------------------------------
owner Kennel Door 5,499,850 3/19/96 USA
Latch
------------------------------------------------------------------
owner Pet House Des. 349,980 8/23/94 USA
------------------------------------------------------------------
owner Doghouse Des. 360,709 7/25/95 USA
------------------------------------------------------------------
owner Xxxxx Dog Des. 366,736 1/30/96 USA
House
------------------------------------------------------------------
owner Pet Feeder Des. 330,098 10/6/92 USA
------------------------------------------------------------------
owner Pet Feeder Des. 350,841 9/20/94 USA
------------------------------------------------------------------
owner Pet Feeder Des. 351,689 10/18/94 USA
------------------------------------------------------------------
owner Pet Feeder Des. 364,942 12/05/95 USA
------------------------------------------------------------------
owner Combined Des. 367,735 3/5/96 USA
Feeder and
Waterer
------------------------------------------------------------------
owner Pet Dish Des. 313,486 1/1/91 USA
------------------------------------------------------------------
owner Pet Dish Des. 313,487 1/1/91 USA
------------------------------------------------------------------
owner Pet Dish Des. 313,488 1/1/91 USA
------------------------------------------------------------------
owner Pet Dish Des. 313,489 1/1/91 USA
------------------------------------------------------------------
owner Pet Dish Des. 341,449 11/16/93 USA
------------------------------------------------------------------
Annex A-1-1
==================================================================
NATURE OF DESCRIPTION PATENT NUMBER ISSUE COUNTRY
INTEREST DATE OF
ISSUE
------------------------------------------------------------------
owner Toy for 4,722,299 2/2/88 USA
Entertaining
a Cat
------------------------------------------------------------------
owner Toy for 335,553 5/11/93 USA
Entertaining
a Cat
------------------------------------------------------------------
owner Toy for 335,554 5/11/93 USA
Entertaining
a Cat
------------------------------------------------------------------
owner Feline 353,029 11/29/94 USA
Domicile
------------------------------------------------------------------
owner Feline 355,057 1/31/95 USA
Scratching
Post
------------------------------------------------------------------
owner Feline Des. 361,876 8/29/95 USA
Scratching
Post
------------------------------------------------------------------
owner Litter Scoop Des. 347,497 5/31/94 USA
------------------------------------------------------------------
owner Cat Litter Des. 300,965 5/2/89 USA
Box
------------------------------------------------------------------
owner Cat Litter Des. 300,966 5/2/89 USA
Box
------------------------------------------------------------------
owner Cat Litter Des. 300,967 5/2/89 USA
Box
------------------------------------------------------------------
owner Cat Litter Des. 300,968 5/2/89 USA
Box
------------------------------------------------------------------
owner Feline Des. 361,175 8/8/95 USA
Litter Pan
------------------------------------------------------------------
licensee Hand Reel 4,143,746 3/13/79 USA
------------------------------------------------------------------
owner Cord Storage Des. 314,910 2/26/91 USA
Reel
------------------------------------------------------------------
owner Chair Des. 362,556 9/26/95 USA
------------------------------------------------------------------
owner Chair Des. 361,902 9/5/95 USA
------------------------------------------------------------------
owner Chair Des. 361,903 9/5/95 USA
------------------------------------------------------------------
owner Armchair Des. 360,537 7/25/95 USA
------------------------------------------------------------------
owner Table Des. 369,702 5/14/96 USA
------------------------------------------------------------------
owner Table Des. 367,976 3/19/96 USA
------------------------------------------------------------------
owner Table Des. 367,787 3/12/96 USA
------------------------------------------------------------------
owner Decorative Des. 361,853 8/29/95 USA
Lawn Edging
------------------------------------------------------------------
owner Fence Unit Des. 359,130 6/6/95 USA
------------------------------------------------------------------
owner Firearm Des. 367,380 2/27/96 USA
Storage
Cabinet
------------------------------------------------------------------
Annex A-1-2
==================================================================
NATURE OF DESCRIPTION PATENT NUMBER ISSUE COUNTRY
INTEREST DATE OF
ISSUE
------------------------------------------------------------------
owner Bow Case Des. 358,254 5/16/95 USA
------------------------------------------------------------------
owner Storage Case Des. 300,583 4/11/89 USA
------------------------------------------------------------------
owner Handle Des. 289,970 5/26/87 USA
------------------------------------------------------------------
owner Tackle Box Des. 246,071 10/11/77 USA
----------------------------------------------- ------------------
owner Tackle Box Des. 352,393 11/15/94 USA
------------------------------------------------------------------
owner Bow Case Des. 358,254 5/16/95 USA
------------------------------------------------------------------
owner Tackle Box 4,139,096 2/13/79 USA
Improvement
------------------------------------------------------------------
owner Container 4,245,422 1/20/81 USA
Including
Pull-Out
Stacking
Tray
Structure
------------------------------------------------------------------
owner Latch 4,023,840 5/17/77 USA
Assembly
------------------------------------------------------------------
owner Detachable 4,344,646 8/17/82 USA
Latch
------------------------------------------------------------------
owner Separable 4,576,307 3/18/86 USA
Elements
Held
Together by
a Sliding
Latch
------------------------------------------------------------------
owner Hand-Held 4,862,636 9/5/89 USA
Trotline
Holder
------------------------------------------------------------------
owner Tackle Box 5,169,018 12/8/92 USA
with Lid-
Latching
Handle
------------------------------------------------------------------
owner Wall 5,350,150 9/27/94 USA
Mounting
Bracket for
Carrying
Case
------------------------------------------------------------------
owner Case for a Des. 278,189 4/2/85 USA
Gun or the
Like
------------------------------------------------------------------
owner Gun Case Des. 320,113 9/24/91 USA
------------------------------------------------------------------
owner Rifle Case Des. 336,984 7/6/93 USA
------------------------------------------------------------------
owner Gun Case Des. 347,322 5/31/94 USA
------------------------------------------------------------------
owner Rifle Case Des. 358,255 5/16/95 USA
------------------------------------------------------------------
owner Golf Bag Des. 349,402 8/9/94 USA
Case
------------------------------------------------------------------
owner Camera Case Des. 335,764 5/25/93 USA
------------------------------------------------------------------
owner Camera Case Des. 335,765 5/25/93 USA
------------------------------------------------------------------
Annex A-1-3
==================================================================
NATURE OF DESCRIPTION PATENT NUMBER ISSUE COUNTRY
INTEREST DATE OF
ISSUE
------------------------------------------------------------------
owner Storage Case Des. 353,048 12/6/94 USA
------------------------------------------------------------------
owner Combination Des. 286,333 10/21/86 USA
Food &
Waterer Pet
Feed
------------------------------------------------------------------
owner Pet Waterer Des. 350,842 9/20/94 USA
------------------------------------------------------------------
owner Pelletized 4,513,688 4/30/85 USA
Material
Feeder
------------------------------------------------------------------
owner Pelletized 4,651,679 3/24/87 USA
Material
Feeder &
Waterer
------------------------------------------------------------------
owner Hand-Held Des. 312,294 11/20/90 USA
Trotline
Holder
------------------------------------------------------------------
owner Hanging Des. 377, 863 2/11/97 USA
Storage Case
------------------------------------------------------------------
owner Tackle Box 5,176,281 1/5/93 USA
with Lid-
Latching
Handle
------------------------------------------------------------------
owner Chair 78068 3/7/96 Canada
------------------------------------------------------------------
owner Chair 78069 3/7/96 Canada
------------------------------------------------------------------
owner Armchair 78070 3/7/96 Canada
------------------------------------------------------------------
owner Table 76209 4/20/95 Canada
------------------------------------------------------------------
owner Container 1,152,034 8/16/83 Canada
Including
Pull-Out
Stacking
Tray
Structure
------------------------------------------------------------------
owner Detachable 1,147,299 5/31/83 Canada
Latch
------------------------------------------------------------------
owner Canadian 61,892 10/25/88 Canada
Industrial
Design
Patent
------------------------------------------------------------------
owner Utility 4,962,729 10/16/90 USA
Patent
------------------------------------------------------------------
owner DINGHYLOO Des. 338,284 8/10/93 USA
------------------------------------------------------------------
owner Utility 5,136,981 8/11/92 USA
Patent Form
Fitted
Bedding
------------------------------------------------------------------
owner CAT TEE PEE Des. 326,740 6/2/92 USA
------------------------------------------------------------------
owner CAT TEE PEE Des. 328,162 7/21/92 USA
------------------------------------------------------------------
owner DOG TEE PEE Des. 327,341 6/23/92 USA
------------------------------------------------------------------
owner DOG TEE PEE Des. 327,340 6/23/92 USA
------------------------------------------------------------------
owner AUTOLOO Des. 348,248 4/19/94 USA
------------------------------------------------------------------
==================================================================
NATURE OF DESCRIPTION PATENT NUMBER ISSUE COUNTRY
INTEREST DATE OF
ISSUE
------------------------------------------------------------------
owner INNOVATOR Des. 374,510 10/8/96 USA
------------------------------------------------------------------
owner FURRARRI 29/017,619 3/5/96 USA
------------------------------------------------------------------
owner ANIMAL 4,470,371 9/11/84 USA
WATERING
MEANS
------------------------------------------------------------------
owner PET WATERING Des. 335,197 4/27/93 USA
DISH
------------------------------------------------------------------
owner PET WATERING Des. 278,371 4/9/85 USA
DISH OR
SIMILAR
ARTICLE
------------------------------------------------------------------
owner Tackle Box 5,205,429 4/27/93 USA
with Sliding
Trays
------------------------------------------------------------------
owner Tackle Bow 5,226,553 7/13/93 USA
with Lid-
latching
Handle and
Removable
Carrying
Case
==================================================================
Annex X-0-0
XXXXX X-0
---------
Patent Applications
-------------------
==================================================================
COUNTRY
NATURE OF FILING OF
INTEREST DESCRIPTION SERIAL NUMBER DATE FILING
------------------------------------------------------------------
owner Container 08/662,883 6/13/96 USA
Having
Injection
Molded
Gasket
------------------------------------------------------------------
owner Portable 08/692,811 7/30/96 USA
Kennel and
Method of
Construction
------------------------------------------------------------------
owner AUTOMATIC 08/415,258 3/6/97 USA
WATERING
DISH Xx. Xxx
Drop
------------------------------------------------------------------
owner PCT PCT/US96/04174 4/3/98 USA
AUTOMATIC
WATERING
DISH
Xx. Xxx Drop
------------------------------------------------------------------
owner Container 80/662,883 USA
Having
Injection
Molded
Gasket
------------------------------------------------------------------
owner Portable 08/692,811 USA
Kennel &
Method of
Construction
------------------------------------------------------------------
owner Animal 08/547,058 USA
Shelter
Formed in
the Shape of
a Natural
Object
------------------------------------------------------------------
owner Vari Dlx 7-119374 Japan
Latch
------------------------------------------------------------------
owner Vari Dlx 7-119375 Japan
Hull
=================================================================
Annex X-0-0
XXXXX X-0
---------
Registered Trademarks
---------------------
=============================================================================================================
NATURE OF REGISTERED REGISTRATION INT'L CLASS GOODS OR REGISTRATION COUNTRY OF
INTEREST TRADEMARK NUMBER COVERED SERVICES DATE REGISTRATION
-------------------------------------------------------------------------------------------------------------
owner AGGRESSOR 2076360 13 goods 7/1/97 USA
-------------------------------------------------------------------------------------------------------------
owner AGGRESSOR 474319 n/a goods 4/8/97 Canada
-------------------------------------------------------------------------------------------------------------
owner "A STRONG 4009632 21 goods 6/6/97 Japan
CASE . . ."
-------------------------------------------------------------------------------------------------------------
owner ATV FIELD CASE GUN 2025952 13 goods 12/24/96 USA
GUARD & DESIGN
-------------------------------------------------------------------------------------------------------------
owner BALL A BOUT 2031072 28 goods 1/14/97 USA
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXXX 2027842 19 goods 12/31/96 USA
-------------------------------------------------------------------------------------------------------------
owner BAT 'N BOBBLE 2046677 28 goods 3/18/97 USA
-------------------------------------------------------------------------------------------------------------
owner BOW GUARD 1537489 28 goods 5/2/89 USA
-------------------------------------------------------------------------------------------------------------
owner CABIN KENNEL 1315778 18 goods 1/22/85 USA
(stylized)
-------------------------------------------------------------------------------------------------------------
owner CAMERA GUARD 1779511 9 goods 6/29/93 USA
-------------------------------------------------------------------------------------------------------------
owner CAT A BALL 2019928 28 goods 11/26/96 USA
-------------------------------------------------------------------------------------------------------------
owner CAT TRACK 1675566 28 goods 2/11/92 USA
-------------------------------------------------------------------------------------------------------------
owner CAT TRACK 347131 n/a goods 10/28/96 Canada
-------------------------------------------------------------------------------------------------------------
owner CAT TRACK 3156783 28 goods 5/31/96 Japan
-------------------------------------------------------------------------------------------------------------
owner CONNECT-A-PLUG 1744084 9 goods 12/29/92 USA
-------------------------------------------------------------------------------------------------------------
owner CORDSTAND 1638758 20 goods 3/19/91 USA
-------------------------------------------------------------------------------------------------------------
owner CORDWHEEL 1410942 9 goods 9/23/86 USA
-------------------------------------------------------------------------------------------------------------
owner CORDWHEEL 2026841 9 goods 12/31/96 USA
-------------------------------------------------------------------------------------------------------------
owner CORDWRAP 1529425 9 goods 3/14/89 USA
-------------------------------------------------------------------------------------------------------------
owner COURTYARD DESIGN 2016720 20 goods 11/19/96 USA
-------------------------------------------------------------------------------------------------------------
owner CRAZY CIRCLE 1678128 28 goods 3/03/92 USA
-------------------------------------------------------------------------------------------------------------
owner DINNERMATE 1671468 21 goods 1/07/92 USA
-------------------------------------------------------------------------------------------------------------
owner DOGWOOD 2044773 19 goods 3/11/97 USA
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX & DESIGN 2076979 9, 13, 16 goods 7/08/97 USA
18, 20, 21,
28
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX & DESIGN 4009633 21 goods 6/6/97 Japan
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX & DESIGN 4009634 21 goods 6/6/97 Japan
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX & DESIGN 3223868 20 goods 11/29/96 Japan
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX (design) 3300794 28 goods 5/2/97 Japan
-------------------------------------------------------------------------------------------------------------
=============================================================================================================
NATURE OF REGISTERED REGISTRATION INT'L CLASS GOODS OR REGISTRATION COUNTRY OF
INTEREST TRADEMARK NUMBER COVERED SERVICES DATE REGISTRATION
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX & DESIGN 2065514 20 goods 5/27/97 USA
(Resin Furniture)
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX, A STRONG 2019221 13, 28 goods 11/26/96 USA
CASE FOR QUALITY &
DESIGN
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX, A STRONG 3258359 28 goods 2/24/97 Japan
CASE FOR QUALITY
(design)
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX, A STRONG 3223867 20 goods 11/29/96 Japan
CASE FOR QUALITY &
DESIGN
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX, A STRONG 330790 0- 21 goods 5/16/97 Japan
CASE FOR QUALITY & 3300794
DESIGN
-------------------------------------------------------------------------------------------------------------
owner XXXXXXXX BARNHOME 2057815 19 goods 4/29/97 USA
-------------------------------------------------------------------------------------------------------------
owner FIELD LOCKER 1962851 13, 28 goods 3/19/96 USA
-------------------------------------------------------------------------------------------------------------
owner FISHERKID 1289211 28 goods 8/7/84 USA
-------------------------------------------------------------------------------------------------------------
owner GOLF GUARD 1891771 28 goods 4/25/95 USA
-------------------------------------------------------------------------------------------------------------
owner GOLF GUARD 457660 n/a goods 5/24/96 Canada
-------------------------------------------------------------------------------------------------------------
owner GUN GUARD 1026167 13 goods 12/2/75 USA
-------------------------------------------------------------------------------------------------------------
owner HANG-N-HIDE 2046835 13 goods 3/18/97 USA
-------------------------------------------------------------------------------------------------------------
owner HOT LIDS (block 1755359 20 goods 3/2/93 USA
form)
-------------------------------------------------------------------------------------------------------------
owner JUNIOR PAL 454512 n/a goods 2/23/96 Canada
FISHERKID KIT
-------------------------------------------------------------------------------------------------------------
owner KENNEL CAB 1318126 18 goods 2/5/85 USA
(stylized)
-------------------------------------------------------------------------------------------------------------
owner LID-LOCKER 1604799 28 goods 7/3/90 USA
-------------------------------------------------------------------------------------------------------------
owner LITEWRAP 1590915 20 goods 4/10/90 USA
-------------------------------------------------------------------------------------------------------------
owner OLD PAL 981545 22, 32 goods 4/2/74 USA
-------------------------------------------------------------------------------------------------------------
owner OLD PAL 798497 22 goods 11/9/65 USA
-------------------------------------------------------------------------------------------------------------
owner OLD PAL 162562 n/a goods 5/2/69 Canada
-------------------------------------------------------------------------------------------------------------
owner OLD PAL 244265 n/a goods 5/2/80 Canada
-------------------------------------------------------------------------------------------------------------
owner PET DOME 1967703 18, 19 goods 4/16/96 USA
-------------------------------------------------------------------------------------------------------------
owner PET ESCORT 2042064 18 goods 3/4/97 USA
-------------------------------------------------------------------------------------------------------------
owner PET XXXXXX 1305901 18 goods 11/20/84 USA
(stylized)
-------------------------------------------------------------------------------------------------------------
owner PET TAXI 1346155 18 goods 7/2/85 USA
(stylized)
-------------------------------------------------------------------------------------------------------------
owner PET-MATE 1371337 21 goods 11/19/85 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE 409575 n/a goods 3/12/93 Canada
-------------------------------------------------------------------------------------------------------------
owner PETMATE 2042829 16, 19, 20, goods 3/11/97 USA
21, 28
-------------------------------------------------------------------------------------------------------------
owner PETMATE (logo) 2042828 16, 19, 20, goods 3/11/97 USA
21, 28
-------------------------------------------------------------------------------------------------------------
Annex B-1-2
=============================================================================================================
NATURE OF REGISTERED REGISTRATION INT'L CLASS GOODS OR REGISTRATION COUNTRY OF
INTEREST TRADEMARK NUMBER COVERED SERVICES DATE REGISTRATION
-------------------------------------------------------------------------------------------------------------
owner PETMATE & DESIGN 1638366 16 goods 3/19/91 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE & DESIGN 1629183 18 goods 12/25/90 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE & DESIGN 1629184 18 goods 12/25/90 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE & DESIGN 1629207 20 goods 12/25/90 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE & DESIGN 1629214 21 goods 12/25/90 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE PETBARN 2067510 18, 19 goods 6/3/97 USA
-------------------------------------------------------------------------------------------------------------
owner PETMATE PETDOME 1967703 18, 19 goods 4/16/96 USA
-------------------------------------------------------------------------------------------------------------
owner PRODUCT 1987755 28 goods 7/16/96 USA
CONFIGURATION
(Small Cat Circle)
-------------------------------------------------------------------------------------------------------------
owner PRODUCT 1987756 28 goods 7/16/96 USA
CONFIGURATION
(Large Cat Circle)
-------------------------------------------------------------------------------------------------------------
owner SEAL-TIGHT 1838387 9 goods 5/31/94 USA
-------------------------------------------------------------------------------------------------------------
owner SKY KENNEL 950176 3 goods 1/9/73 USA
(stylized)
-------------------------------------------------------------------------------------------------------------
owner SLEEPY HOLLOW 2022604 20 goods 12/10/96 USA
-------------------------------------------------------------------------------------------------------------
owner TACKLE BOX (logo) 1155738 28 goods 5/26/81 USA
-------------------------------------------------------------------------------------------------------------
owner TACKLE-LOCKER 2085908 28 goods 8/5/97 USA
-------------------------------------------------------------------------------------------------------------
owner TIP 'N TOTTER 2048354 28 goods 3/25/97 USA
-------------------------------------------------------------------------------------------------------------
owner TROTLINE 1512200 28 goods 11/8/88 USA
-------------------------------------------------------------------------------------------------------------
owner VARI KENNEL 1585672 18 goods 3/6/90 USA
-------------------------------------------------------------------------------------------------------------
owner DOGLOO 1,526,929 Principal goods 2/28/89 USA
-------------------------------------------------------------------------------------------------------------
owner DOGLOO 1,631,630 20 goods 1/15/91 USA
-------------------------------------------------------------------------------------------------------------
owner PET SHELTER MAT 1,637,628 20 goods 3/12/91 USA
-------------------------------------------------------------------------------------------------------------
owner SNUGGLYLOO 1,730,342 20 goods 11/3/92 USA
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE DLX 1,781,449 20 goods 7/13/93 USA
-------------------------------------------------------------------------------------------------------------
owner DOG TEE PEE 1,781,450 20 goods 7/13/93 USA
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE 1,685,060 20 goods 11/19/91 USA
-------------------------------------------------------------------------------------------------------------
owner DOG TEE PEE 1,685,059 20 goods 11/19/91 USA
-------------------------------------------------------------------------------------------------------------
owner XXXX HAUZ 1,791,632 19 goods 9/7/93 USA
-------------------------------------------------------------------------------------------------------------
owner DINGHYLOO 1,713,721 20 goods 9/8/92 USA
-------------------------------------------------------------------------------------------------------------
owner DINGHYLOO 1,736,621 20 goods 12/1/92 USA
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE 1,781,451 20 goods 7/13/93 USA
-------------------------------------------------------------------------------------------------------------
owner DOG TEE PEE DLX 1,781,452 20 goods 7/13/93 USA
-------------------------------------------------------------------------------------------------------------
owner INNOVATORS IN PET 1,789,413 19, 20 goods 8/24/93 USA
COMFORT
-------------------------------------------------------------------------------------------------------------
owner AUTOLOO 1,764,544 20 goods 4/13/93 USA
-------------------------------------------------------------------------------------------------------------
Annex B-1-3
=============================================================================================================
NATURE OF REGISTERED REGISTRATION INT'L CLASS GOODS OR REGISTRATION COUNTRY OF
INTEREST TRADEMARK NUMBER COVERED SERVICES DATE REGISTRATION
-------------------------------------------------------------------------------------------------------------
owner DOG KABIN 1,824,411 19 goods 3/1/94 USA
-------------------------------------------------------------------------------------------------------------
owner FURRARI 1,842,378 18 goods 8/28/94 USA
-------------------------------------------------------------------------------------------------------------
owner INNOVATOR 1,873,300 21 goods 1/10/95 USA
-------------------------------------------------------------------------------------------------------------
owner BA XX XXX 1,832,234 20 goods 4/19/94 USA
-------------------------------------------------------------------------------------------------------------
owner WOOLY WOOLY 1,858,175 20 goods 10/11/94 USA
-------------------------------------------------------------------------------------------------------------
owner BARNEY 2,012,169 20 goods 10/29/96 USA
-------------------------------------------------------------------------------------------------------------
owner BRIK HAUZ 1,904,998 19 goods 7/11/95 USA
-------------------------------------------------------------------------------------------------------------
owner BLUES 1,845,627 20 goods 7/19/94 USA
-------------------------------------------------------------------------------------------------------------
owner CHEW LOO 1,922,233 28 goods 9/26/95 USA
-------------------------------------------------------------------------------------------------------------
owner CAT-A-TRAIL 1,877,658 20 goods 2/7/95 USA
-------------------------------------------------------------------------------------------------------------
owner DOGLOO TMA456, 571 goods 4/19/96 Canada
App#
751, 658
-------------------------------------------------------------------------------------------------------------
owner DOGLOO II 2,074,208 20 goods 6/24/97 USA
-------------------------------------------------------------------------------------------------------------
owner DOGLOO III 2,034,161 20 goods 1/28/97 USA
(INDIGO)
-------------------------------------------------------------------------------------------------------------
owner INDIGO 2,058,702 19 goods 5/6/97 USA
-------------------------------------------------------------------------------------------------------------
owner BAUX'R 1,993,366 19 goods 8/13/96 USA
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE T-11,168 3 goods 10/2/91 USA
GEORGIA ST. TM
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE T-11,154 32 goods 10/2/91 USA
GEORGIA ST. TM
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE T-11,155 32 goods 10/2/91 USA
GEORGIA ST. TM
-------------------------------------------------------------------------------------------------------------
owner CAT TEE PEE T-11,153 3 goods 10/2/91 USA
GEORGIA ST. TM
-------------------------------------------------------------------------------------------------------------
owner DOGLOO 284,298 20, 21 goods 7/16/97 Uruguay
================================================================================================================
Annex X-0-0
XXXXX X-0
---------
Trademark Applications
----------------------
=============================================================================================================================
NATURE OF TRADEMARK APPLICATION RELATES TO SERIAL NO. INT' L GOODS OR DATE OF COUNTRY OF
INTEREST FOLLOWING TRADEMARK NO. CLASS SERVICES APPLICATION APPLICATION
COVERED
-----------------------------------------------------------------------------------------------------------------------------
owner CABIN KENNEL (STYLIZED 99059/93 18 goods Japan
-----------------------------------------------------------------------------------------------------------------------------
owner CAT TRACK 99062/93 28 goods 00/0/00 Xxxxx
-----------------------------------------------------------------------------------------------------------------------------
owner XXXXXXXX 75/032730 9, 10, 13, goods 12/14/95 USA
16, 20, 21
-----------------------------------------------------------------------------------------------------------------------------
owner XXXXXXXX 708921 9, 13, 16, goods 5/20/96 Australia
20, 21, 28
-----------------------------------------------------------------------------------------------------------------------------
owner XXX-XXX 00/000000 00, 00, 00 goods 5/22/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner XXX-XXX 000000 x/x goods 11/22/96 Canada
-----------------------------------------------------------------------------------------------------------------------------
owner GUN GUARD & DESIGN 74/619548 13 goods USA
-----------------------------------------------------------------------------------------------------------------------------
owner HOMESTEAD 75/165529 20 goods 9/11/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner MFS 75/079590 28 goods 3/27/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner MFS 829650 n/a goods 11/20/96 Canada
-----------------------------------------------------------------------------------------------------------------------------
owner PET CAB 75/105974 20 goods 5/16/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner PET TAXI (stylized) 99063/93 18 goods 9/29/93 Japan
-----------------------------------------------------------------------------------------------------------------------------
owner PET-MATE 99065/93 21 goods 9/29/93 Japan
-----------------------------------------------------------------------------------------------------------------------------
owner PETMATE 702179 20, 21 goods 2/9/96 Australia
-----------------------------------------------------------------------------------------------------------------------------
owner PRO GUARD 75/272076 28 goods 4/9/97 USA
-----------------------------------------------------------------------------------------------------------------------------
owner SPECTRUM POLYMERS 75/167005 1, 42 goods 9/13/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner S & DESIGN 75/222601 42 goods 12/20/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner SPECTRACOOL 75/287318 1 goods 5/6/97 USA
-----------------------------------------------------------------------------------------------------------------------------
owner SPECTRAGLIDE 75/287324 1 goods 5/6/97 USA
-----------------------------------------------------------------------------------------------------------------------------
owner VARI KENNEL 99061/93 18 goods 9/29/93 Japan
-----------------------------------------------------------------------------------------------------------------------------
owner WOODSTONE MANOR 75/165511 19 goods 9/11/96 USA
-----------------------------------------------------------------------------------------------------------------------------
owner PETPOURRI 74/506,766 20, 5 goods 3/29/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner INNOVATOR 74/463,798 18 goods 11/29/93 USA
-----------------------------------------------------------------------------------------------------------------------------
owner FURRARI 74/463,797 18 goods 11/29/93 USA
-----------------------------------------------------------------------------------------------------------------------------
owner FURRELLI 74/523,368 18 goods 4/26/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner FURRINI 74/517,522 18 goods 4/26/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner PETLOO 74/576,155 19, 20, 21 goods 9/20/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner CATLOO 75/976,232 19, 20, 21 goods 9/20/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner BIRDLOO 74,570,864 19, 21, 28 goods 9/7/94 USA
-----------------------------------------------------------------------------------------------------------------------------
Annex B-2-1
=============================================================================================================================
NATURE OF TRADEMARK APPLICATION RELATES TO SERIAL NO. INT' L GOODS OR DATE OF COUNTRY OF
INTEREST FOLLOWING TRADEMARK NO. CLASS SERVICES APPLICATION APPLICATION
COVERED
-----------------------------------------------------------------------------------------------------------------------------
owner KIDLOO 74,570,790 28 goods 9/7/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner CAPE COD 74,580,496 20 goods 9/3/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner AVIATOR 74,589,063 18 goods 10/21/94 USA
-----------------------------------------------------------------------------------------------------------------------------
owner LEBISTRO 75,242,288 31 goods 2/14/97 USA
-----------------------------------------------------------------------------------------------------------------------------
owner AN ACTIVE IMAGINATION 75/252,166 18, 20, 25, goods 3/4/97 USA
28
-----------------------------------------------------------------------------------------------------------------------------
owner DESIGN LOTO STYLIZED IGLOO 75/252,226 20, 21 goods 3/4/97 USA
-----------------------------------------------------------------------------------------------------------------------------
owner DOGLOO 338,288 20, 21 goods 7/23/96 Chile
-----------------------------------------------------------------------------------------------------------------------------
owner DOGLOO COD/INK/ 20 goods 2/19/97 Argentina
2070.975
-----------------------------------------------------------------------------------------------------------------------------
owner European Comm. TMM Appl. Pending 9, 18, 20, goods 5/20/97 EU
STYLIZED LOGO IGLOO SHAPED 21, 28
-----------------------------------------------------------------------------------------------------------------------------
owner DOGLOO Pending goods Brazil
-----------------------------------------------------------------------------------------------------------------------------
owner DOGLOO Pending goods Japan
-----------------------------------------------------------------------------------------------------------------------------
owner CANADIAN TM APPL STYLIZED Pending goods Canada
LOGO IGLOO SHAPED
=============================================================================================================================
EXHIBIT A
REVOLVING CREDIT NOTE
---------------------
Dallas, Texas $__________________ September 19, 1997
XXXXXXXX MANUFACTURING COMPANY, INC., a Texas corporation (the
"Borrower"), for value received, promises to pay to the order of
_________________________________________ ("Lender"), at the principal office of
NationsBank of Texas, N.A., in lawful money of the United States of America, the
principal sum of ____________________________________________________________
($_____________), or such lesser sum as shall be due and payable from time to
time hereunder, as hereinafter provided. All terms used but not defined herein
shall have the meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Revolving
Credit Advances under this Revolving Credit Note (the "Note") from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Revolving Credit Advances
under a Credit Agreement, dated as of September 19, 1997, among the Borrower,
NationsBank of Texas, N.A., as Administrative Agent, and the lenders parties
thereto (as amended, restated, supplemented, renewed, extended or otherwise
modified from time to time, "Credit Agreement"), to which reference is made for
a statement of the rights and obligations of the Lender and the duties and
obligations of the Borrower in relation thereto; but neither this reference to
the Credit Agreement nor any provision thereof shall affect or impair the
absolute and unconditional obligation of the Borrower to pay the principal sum
of and interest on this Note when due.
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF AMERICA. THE
BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH THIS NOTE
AND THE OTHER LOAN DOCUMENTS.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL
A-1
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
A-2
EXHIBIT B
FACILITY A TERM LOAN NOTE
-------------------------
Dallas, Texas $ ______________________ September 19, 1997
XXXXXXXX MANUFACTURING COMPANY, INC., a Texas corporation (the
"Borrower"), for value received, promises to pay to the order of
_____________________________________ ("Lender"), at the principal office of
NationsBank of Texas, N.A., in lawful money of the United States of America, the
principal sum of ____________________________________________________________
___________________________ ($______________), or such lesser sum as shall be
due and payable from time to time hereunder, as hereinafter provided. All terms
used but not defined herein shall have the meanings set forth in the Credit
Agreement described below.
Principal of and interest on the unpaid principal balance of Facility A
Term Loan Advances under this Facility A Term Loan Note from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Facility A Term Loan Note is issued pursuant to and evidences Facility
A Term Loan Advances under a Credit Agreement, dated as of September 19, 1997,
among the Borrower, NationsBank of Texas, N.A., as Administrative Agent, and the
lenders parties thereto (as amended, restated, supplemented, renewed, extended
or otherwise modified from time to time, "Credit Agreement"), to which reference
is made for a statement of the rights and obligations of the Lender and the
duties and obligations of the Borrower in relation thereto; but neither this
reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrower to pay the
principal sum of and interest on this Facility A Term Loan Note when due.
THIS FACILITY A TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF
AMERICA. THE BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED
IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH
THIS FACILITY A TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS.
THIS FACILITY A TERM LOAN NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
B-1
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
B-2
EXHIBIT C
FACILITY B TERM LOAN NOTE
-------------------------
Dallas, Texas $ ______________________ September 19, 1997
XXXXXXXX MANUFACTURING COMPANY, INC., a Texas corporation (the "Borrower"),
for value received, promises to pay to the order of _________________________
("Lender"), at the principal office of NationsBank of Texas, N.A., in lawful
money of the United States of America, the principal sum of _________________
____________________________________________________________ ($______________),
or such lesser sum as shall be due and payable from time to time hereunder, as
hereinafter provided. All terms used but not defined herein shall have the
meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Facility B
Term Loan Advances under this Facility B Term Loan Note from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Facility B Term Loan Note is issued pursuant to and evidences Facility
B Term Loan Advances under a Credit Agreement, dated as of September 19, 1997,
among the Borrower, NationsBank of Texas, N.A., as Administrative Agent, and the
lenders parties thereto (as amended, restated, supplemented, renewed, extended
or otherwise modified from time to time, "Credit Agreement"), to which reference
is made for a statement of the rights and obligations of the Lender and the
duties and obligations of the Borrower in relation thereto; but neither this
reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrower to pay the
principal sum of and interest on this Facility B Term Loan Note when due.
THIS FACILITY B TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF
AMERICA. THE BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED
IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH
THIS FACILITY B TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS.
THIS FACILITY B TERM LOAN NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
C-1
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
C-2
EXHIBIT D
SECURITY AGREEMENT
Between
XXXXXXXX MANUFACTURING COMPANY, INC.
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
September 19, 1997
D-1
TABLE OF CONTENTS
-----------------
Page
----
X. XXXXX
-----
1.1. Assignment and Grant of Security......................... 1
1.2. Description of Obligations............................... 4
1.3. Debtor Remains Liable.................................... 5
1.4. Delivery of Security and Instrument Collateral........... 5
II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1. Representations and Warranties........................... 5
III. COVENANTS
---------
3.1. Further Assurances....................................... 7
3.2. Equipment, Fixtures and Inventory........................ 8
3.3. Insurance................................................ 9
3.4. Place of Perfection; Records; Collection of
Receivables, Chattel Paper and Instruments............... 10
3.5. Transfers and Other Liens................................ 11
3.6. Rights to Dividends and Distributions.................... 11
3.7. Right of Administrative Agent to Notify Issuers.......... 12
3.8. Administrative Agent Appointed Attorney-in-Fact.......... 12
IV. RIGHTS AND POWERS OF Administrative Agent
-----------------------------------------
4.1. Administrative Agent May Perform......................... 13
4.2. Administrative Agent's Duties............................ 13
4.3. Remedies................................................. 13
4.4. Further Approvals Required............................... 16
4.5. Indemnity and Expenses................................... 16
V. MISCELLANEOUS
-------------
5.1. Cumulative Rights........................................ 17
5.2. Modifications; Amendments; Etc........................... 17
5.3. Continuing Security Interest............................. 17
5.4. GOVERNING LAW; TERMS..................................... 17
5.5. WAIVER OF JURY TRIAL..................................... 18
5.6. Administrative Agent's Right to Use Agents............... 18
5.7. No Interference, Compensation or Expense................. 18
5.8. Waivers of Rights Inhibiting Enforcement................. 18
5.9. Notices and Deliveries................................... 18
(a) Manner of Delivery.................................. 18
(b) Addresses........................................... 19
(c) Effectiveness....................................... 19
5.10. Successors and Assigns................................... 20
5.11. Loan Document............................................ 20
5.12. Consent to Jurisdiction; Waiver of Immunities............ 20
D-2
5.13. Severability............................................. 20
5.14. Obligations Not Affected................................. 20
5.15. Counterparts............................................. 21
5.16. No Novation.............................................. 21
-----------
5.17. ENTIRE AGREEMENT......................................... 21
D-3
SCHEDULES:
Schedule 1 - Equipment, and Inventory Locations
Schedule 2 - Trade Names
Schedule 3 - Restricted Accounts
Schedule 4 - Rolling Stock
D-4
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of September 19, 1997, made
by Xxxxxxxx Manufacturing Company, Inc., a Texas corporation ("Debtor"), in
favor of NationsBank of Texas, N.A., a national banking association, as
Administrative Agent ("Administrative Agent") for itself and each other lender a
party to the Credit Agreement described below (singly, a "Secured Party", and
collectively, the "Secured Parties").
BACKGROUND:
----------
(1) Debtor, Administrative Agent and Secured Parties entered into the
Credit Agreement dated as of September 19, 1997 (as the same may hereafter be
supplemented, amended, modified and restated from time to time, being the
"Credit Agreement"; the terms defined therein and not otherwise defined herein
being used herein as therein defined).
(2) It is the intention of the parties hereto that this Agreement create a
first priority security interest securing the payment of the obligations set
forth in Section 1.2 hereof, subject only to Permitted Liens as provided in the
-----------
Loan Documents.
(3) It is a condition precedent to the obligation of the Secured Parties to
make the Advances, and issue, or participate in the issuance of, Letters of
Credit under the Credit Agreement that Debtor shall have executed and delivered
this Agreement.
AGREEMENT.
---------
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce Secured Parties to make the Advances
and issue, or participate in the issuance of, Letters of Credit under the Credit
Agreement, Debtor hereby agrees with Administrative Agent for its benefit and
the ratable benefit of Secured Parties, as hereinafter set forth.
X. XXXXX
-----
1.a. Assignment and Grant of Security. Debtor hereby assigns, pledges,
hypothecates and transfers to Administrative Agent, for its benefit and the
ratable benefit of Secured Parties, and hereby grants to Administrative Agent,
for its benefit and the ratable benefit of Secured Parties, a security interest
in, the entire right, title and interest of Debtor, in and to the following
assets of Debtor, whether now owned or hereafter acquired ("Collateral"):
D-5
(a) all writings which evidence both a monetary obligation and a security
interest in or a lease of specific goods ("Chattel Paper");
(b) all documents, warehouse receipts, bills of lading, including, without
limitation, documents of title (as defined in the UCC) or other receipts
covering, evidencing or representing collateral ("Documents");
(c) all equipment (as defined in the UCC), and (whether or not included in
such definition) all vehicles, tractors, trailers, rolling stock, machinery,
chattels, tools, parts, furniture, furnishings, and supplies, of every nature,
wherever located, all additions, accessories and improvements thereto and
substitutions therefor and all accessories, parts and equipment which may be
attached to or which are necessary for the operation and use of such personal
property, whether or not the same shall be deemed to be affixed to real
property, together with all accessions thereto, and all rights under or arising
out of present or future contracts relating to the foregoing, excluding,
however, any such Equipment or other property which is financed with
Indebtedness permitted to be incurred pursuant to Sections 7.1(c) and 7.1(h) of
the Credit Agreement ("Equipment");
(d) all equipment, fixtures and articles of personal property now or
hereafter attached to or used in or about any building or buildings now erected
or hereafter to be erected on any real property now or hereafter owned or leased
by Debtor (the "Property"), which are necessary to the complete and comfortable
use and occupancy of such building or buildings for the purposes for which they
were or are to be erected; all materials to be delivered to the Property and
used or to be used in connection with the construction of any building to be
constructed on the Property, including, but not limited to, all masonry, siding,
roof shingles, flooring, doors, windows, tile, shutters, stoves, ovens, awnings,
screens, cabinets, shades, blinds, carpets, draperies, furniture, furnishings,
plumbing, heating, air conditioning, lighting, ventilating, refrigerating,
cooking, laundry and incinerating equipment and all fixtures and appurtenances
thereto, and such other goods and chattels and personal property as are ever
used or furnished in operating such buildings or the activities conducted
therein, and all building materials and equipment now or hereafter delivered to
the Property and intended to be installed thereon ("Fixtures");
(e) all general intangibles (as defined in the UCC), and (whether or not
included in such definition) all contract rights; all trade secrets, inventions,
processes, production methods, proprietary information and know-how; and all
licenses or other agreements granted to Debtor with respect to any of the
foregoing (excluding, however, any such licenses or agreements which prohibit
the assignment thereof or the granting of a security interest therein or are
otherwise terminated or rendered void as a result
D-6
thereof); all information, advertising lists, customer lists, identification of
suppliers, data, plans, blueprints, specifications, designs, drawings, recorded
knowledge, surveys, engineering reports, test reports, manuals, materials
standards, processing standards, performance standards, telephone numbers and
telephone listings, catalogs, books, records, computer and automatic machinery
software and programs, and the like pertaining to operations by or the business
of Debtor; all field accounting information and all media in which or on which
any of the information or knowledge or data or records may be recorded or stored
and all computer programs used for the compilation or printout of such
information, knowledge, records or data; all licenses, consents, permits,
variances, certifications and approvals of all Tribunals now or hereafter held
by Debtor pertaining to operations or business now or hereafter conducted; all
rights to receive return of deposits and trust payments; all rights to payment
under letters of credit and similar agreements; and all causes of action,
rights, claims and warranties now or hereafter owned or acquired by Debtor
("General Intangibles");
(f) all instruments and letters of credit (each as defined in the UCC, and
(whether or not included in such definitions) all promissory notes, drafts,
bills of exchange and trade acceptances ("Instruments");
(g) all inventory in all of its forms, wherever located, now or hereafter
existing, including, but not limited to, (i) all raw materials and work in
process therefor, finished goods thereof, and materials used or consumed in the
manufacture or production thereof, (ii) goods in which Debtor has an interest in
mass or a joint or other interest or right of any kind (including, without
limitation, goods in which Debtor has an interest or right as consignee but only
to the extent of Debtor's interest therein), and (iii) goods which are returned
to or repossessed by Debtor, and all accessions thereto and products thereof and
documents therefor (any and all such inventory, accessions, products and
documents being the "Inventory");
(h) all accounts, contract rights, chattel paper, documents, instruments,
deposit accounts, general intangibles, tax refunds (including, without
limitation, all federal and state income tax refunds and benefits of net
operating loss carry forwards) and other obligations of any kind owing to
Debtor, now or hereafter existing, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of services, and all
rights now or hereafter existing in and to all security agreements, leases, and
other contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, documents, instruments, deposit accounts, general
intangibles or obligations (any and all such accounts, contract rights, chattel
paper, documents, instruments, deposit accounts, general intangibles and
obligations being the "Receivables");
D-7
(i) all agreements with each manufacturer, vendor, sales agent, sales
representative and each other Person pursuant to which Debtor receives,
maintains, sells, leases or otherwise disposes of Inventory, including all
agreements permitting the use of each such Person's name, logo, trademarks,
tradenames and advertising ("Vendor Agreements");
(j) all right, title and interest of Debtor in, to and under each contract
and other agreement relating to the lease, sale or other disposition of
Collateral;
(k) all rights, claims and benefits of Debtor against any Person arising
out of, relating to or in connection with Collateral purchased by Debtor,
including, without limitation, any such rights, claims or benefits against any
Person storing or transporting such Collateral;
(l) the balance of every deposit account of Debtor under control of
Administrative Agent and each other Secured Party and each of their respective
Affiliates and any other claim of Debtor against Administrative Agent and each
other Secured Party, now or hereafter existing, liquidated or unliquidated, and
all money, instruments, securities, documents, chattel paper, credits, claims,
demands, income, and any other property, rights and interests of Debtor which at
any time shall come into the possession or custody or under the control of
Administrative Agent or any Secured Party or any of its agents, affiliates or
correspondents, for any purpose, and the proceeds of any thereof (Administrative
Agent and each other Secured Party shall be deemed to have possession of any of
the Collateral in transit to or set apart for it or any of its agents,
affiliates or correspondents).
(m) 100% of the issued and outstanding capital stock of each Domestic
Subsidiary of Debtor, together with all Dividends, cash, proceeds, profits,
instruments, distributions and other property from time to time distributed in
respect thereof, and any subscription rights or warrants to acquire any interest
in such Subsidiary;
(n) 65% of the issued and outstanding capital stock of each Foreign
Subsidiary of Debtor, together with all Dividends, cash, proceeds, profits,
instruments, distributions and other property from time to time distributed in
respect thereof and any subscription rights or warrants to acquire any interest
in such Subsidiary;
(o) all insurance policies and bonds and claims and payments under any
Collateral;
(p) all property similar to the above hereafter acquired by Debtor; and
D-8
(q) all accessions to, substitutions for and replacements, proceeds and
products of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property of the types described in this
Section 1.1) and, to the extent not otherwise included, all (i) payments under
-----------
insurance (whether or not Administrative Agent is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and (ii) cash.
1.b. Description of Obligations. This Agreement creates a first priority
security interest in the Collateral, subject only to Permitted Liens as provided
in the Loan Documents, to secure the payment and performance of any and all
obligations now or hereafter existing of Debtor, each other Obligor and any
other Person under the Credit Agreement and the other Loan Documents, including
any extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, fees, premium, expenses, reimbursement
obligations, indemnification or otherwise (all such obligations of Debtor, each
other Obligor and each other Person being the "Obligations"). Without limiting
the generality of the foregoing, this Agreement secures the payment of all
amounts which constitute part of the Obligations and would be owed by Debtor,
each other Obligor and any other Person to Administrative Agent or any Secured
Party under any Loan Document, but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding under any Debtor Relief Law involving Debtor, any other Obligor or
any other Person (including all such amounts which would become due or would be
secured but for the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding of Debtor, any other Obligor
or any other Person under any Debtor Relief Law). Notwithstanding anything
herein to the contrary, the Obligations secured hereby shall be limited to an
aggregate amount which is equal to the largest amount that would not render the
Lien granted herein subject to avoidance under Section 548 of the Bankruptcy
Code or any applicable provisions of comparable state law.
1.c. Debtor Remains Liable. Anything herein to the contrary
notwithstanding, (a) Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Administrative Agent of any
of the rights hereunder shall not release Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) neither Administrative Agent nor any Secured Party shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Administrative Agent or any Secured Party be
obligated to perform any of the obligations or duties of Debtor thereunder or to
take
D-9
any action to collect or enforce any claim for payment assigned hereunder.
1.d. Delivery of Security and Instrument Collateral. All certificates
(except certificates of title with respect to motor vehicles shall only be
required to be delivered upon request of Administrative Agent) or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of Administrative Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
Administrative Agent. Administrative Agent shall have the right, as provided in
Section 3.6, after the occurrence, and during the continuance, of an Event of
-----------
Default, but without any requirement for prior written notice to Debtor, to
transfer to or to register in the name of Administrative Agent or any of its
nominees any or all of such Collateral. In addition, Administrative Agent shall
have the right at any time after the occurrence, and during the continuance, of
an Event of Default to exchange certificates or instruments representing or
evidencing Collateral for certificates or instruments of smaller or larger
denominations. Except as provided in Section 3.8(d), Debtor maintains the
--------------
voting rights in the Securities Collateral (as defined below) which was granted
in the Securities Collateral pursuant to Section 1.1(m) and (n).
-------------- ---
II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.a. Representations and Warranties. Debtor represents and warrants to
Administrative Agent and each Secured Party, with respect to itself and the
Collateral, as follows:
(a) All of the Equipment, Fixtures and Inventory pledged by Debtor
hereunder are located at the places specified on Schedule 1 hereto (as
----------
supplemented from time to time by Debtor by written notice to Administrative
Agent) or in transit to a place specified on Schedule 1 hereto (as supplemented
----------
from time to time by Debtor by written notice to Administrative Agent) or in
transit for sale to a third-party purchaser that upon such sale will become the
obligor under a Receivable or promptly pay for such Equipment, Fixtures and
Inventory. The chief place of business and chief executive office of Debtor and
the office where Debtor keeps all of its records concerning the Receivables, are
located at the place specified on Schedule 1 hereto. Schedule 1 is a complete
---------- ----------
and correct list of, as to any leased property on which any Collateral is
located, the lease or other agreement (and all amendments thereto) pursuant to
which Debtor has use of such property (complete and correct copies of which have
been provided to Administrative Agent), the lessor pursuant to such agreement,
the recording information for such agreement, the description of such property
sufficient for recording and the name of the record owner of such property. All
Chattel Paper, promissory notes or other
D-10
instruments evidencing the Receivables (excluding checks) have been delivered
and pledged to Administrative Agent duly endorsed and accompanied by such duly
executed instruments of transfer or assignment as are necessary for such pledge,
to be held as pledged collateral. All Equipment of Debtor consisting of
vehicles, tractors, trailers and other rolling stock with a net book value of
$15,000 or more are identified on Schedule 4.
----------
(b) Debtor is the legal and beneficial owner of the Collateral pledged by
it free and clear of any Lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement and
permitted pursuant to Section 7.2 of the Credit Agreement and any other Lien
-----------
permitted by the Credit Agreement. No effective financing statement or other
similar document used to perfect and preserve a security interest under the laws
of any jurisdiction covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of Administrative
Agent relating to this Agreement and with respect to any Lien permitted by the
Credit Agreement. As of the date hereof, Debtor has the trade names set forth
on Schedule 2 (and no others). To the best of Debtor's knowledge, Debtor
----------
(including any corporate or partnership predecessor) has not existed or operated
under any name other than as stated on Schedule 2 since the date three years
----------
preceding the date of this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant hereto,
together with the filing of financing statements containing the description of
the Collateral in the jurisdictions set forth on Schedule 1, which will be made
----------
immediately following the date of closing, creates a valid and perfected first
priority security interest in the Collateral in which a security interest can be
perfected by filing a UCC financing statement, securing the payment of the
Obligations; provided that additional actions may be required with respect to
--------
the perfection of proceeds of the Collateral; further provided that Secured
------- --------
Party retains physical possession of any Collateral, the possession of which is
required for perfection.
(d) No consent of any Person and no authorization, approval or other action
by, and no notice to or filing with, any Tribunal is required (i) for the pledge
by Debtor of the Collateral pledged by it hereunder, for the grant by Debtor of
the security interest granted hereby or for the execution, delivery or
performance of this Agreement by Debtor, (ii) for the perfection or maintenance
of the pledge, assignment and security interest created hereby (including the
first priority nature of such pledge, assignment and security interest as
provided herein) (except for the filing of financing and continuation statements
under the UCC, fixture filings and filings with the United States Patent and
Trademark Office) or (iii) for the exercise by Administrative Agent of the
rights provided for in this Agreement (except for consents of landlords pursuant
to the Landlords' Waivers and as otherwise
D-11
required by law, including pursuant to Section 4.4 of this Agreement).
-----------
(e) None of the Collateral described in Sections 1.1(m) and 1.1(n)
--------------- ------
("Securities Collateral") is subject to any unpaid capital call or dispute, any
buy-sell, voting trust, transfer restriction, preferential right to purchase or
similar agreement or any option, warrant, put or call or similar agreement
except to the extent permitted by the Credit Agreement. All of the Securities
Collateral are duly authorized, validly issued and non-assessable and were not
issued in violation of the Rights of any Person.
(f) All Inventory produced in the United States of America has been
produced in substantial compliance with the Fair Labor Standards Act.
III. COVENANTS
---------
3.a. Further Assurances. (a) Debtor agrees that where any agreement
existing as of the date hereof or hereafter to which Debtor is a party contains
any restriction that could reasonably be expected to prohibit Debtor from
granting any security interest under this Agreement, Debtor will use its best
efforts to obtain the necessary consent to or waiver of such restriction from
any Person so as to enable Debtor to effectively grant to Administrative Agent
such security interest under this Agreement.
(b) Debtor agrees that from time to time, at the expense of Debtor, Debtor
will promptly execute and deliver all further instruments and documents
(including supplements to all schedules), and take all further action, that may
be necessary or desirable, and that Administrative Agent may reasonably request,
in order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby, and the priority thereof, or to
enable Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, upon reasonable written request by Administrative Agent, Debtor
will: (i) xxxx conspicuously each Chattel Paper included in Receivables, and,
at the reasonable request of Administrative Agent, each of its records
pertaining to the Collateral with the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO A
SECURITY AGREEMENT DATED SEPTEMBER 19, 1997 (AS THE SAME HAS BEEN AND MAY
HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY XXXXXXXX MANUFACTURING
COMPANY, INC. IN FAVOR OF NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE
AGENT FOR CERTAIN LENDERS, AND PURSUANT TO A CREDIT AGREEMENT DATED AS OF
SEPTEMBER 19, 1997 (AS THE SAME HAS BEEN AND MAY HEREAFTER BE AMENDED,
MODIFIED OR RESTATED)
D-12
or such other legend, in form and substance reasonably satisfactory to and as
specified by Administrative Agent, indicating that such Chattel Paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or other
instrument or be Chattel Paper, deliver and pledge to Administrative Agent
hereunder such note, instrument or Chattel Paper duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to Administrative Agent; and (iii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as
Administrative Agent may reasonably request, in order to perfect and preserve
the pledge, assignment and security interest granted or purported to be granted
hereby.
(c) In addition to such other information as shall be specifically provided
for herein, Debtor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
lists, documents, reports, and product, service and sales documents in
connection with the Collateral as Secured Party may reasonably request, all in
reasonable detail. In connection with its enforcement of the security interest,
Administrative Agent may use such information or transfer it to any assignee
permitted hereunder for such assignee's use.
(d) Debtor hereby authorizes Administrative Agent to file one or more
financing or continuation statements relating to all or any part of the
Collateral without the signature of Debtor where permitted by law provided
Administrative Agent shall give reasonably prompt notice of any such filings to
Debtor. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(e) Debtor will not, and will not permit any Person to, materially revise,
modify, amend or restate the articles of incorporation of any corporation the
stock or other interest in which is Collateral or the partnership, joint venture
or other organizational document of any partnership or joint venture any
interest in which is Collateral or terminate, cancel or dissolve any such
Person, except as permitted under the Credit Agreement.
3.b. Equipment, Fixtures and Inventory.
(a) Debtor shall not keep the Equipment, Fixtures and Inventory pledged by
it hereunder (other than Inventory sold in the ordinary course of business) in
any location other than the places specified in Schedule 1 unless the Debtor has
----------
delivered to Administrative Agent a financing statement for such Equipment,
Fixtures and Inventory kept by Debtor at such location or such other
documentation in the opinion of Administrative Agent which is
D-13
necessary to properly perfect or maintain the perfection of the security
interest granted herein in such Collateral.
(b) Debtor shall cause the Equipment and Fixtures pledged by it hereunder
that are necessary for Debtor's business to be maintained and preserved in the
same condition, repair and working order as when purchased, ordinary wear and
tear excepted in accordance with Debtor's past practices, and shall forthwith,
or in the case of any material loss or damage to any of the Equipment or
Fixtures as quickly as practicable after the occurrence thereof, make or cause
to be made all reasonable repairs, replacements, and other improvements in
connection therewith which are necessary or desirable to such end. Debtor shall
promptly furnish to Administrative Agent a statement respecting any loss or
damage which singly or in the aggregate equals or exceeds $150,000 for any
fiscal year to any of the Equipment pledged by it hereunder. Debtor shall
promptly furnish to Administrative Agent a statement respecting any loss or
damage which singly or in the aggregate equals or exceeds $150,000 for any
fiscal year to any of the Inventory pledged by it hereunder.
(c) Debtor shall comply with all requirements of the Fair Labor Standards
Act.
3.c. Insurance. Debtor shall, at its own expense, maintain insurance with
respect to the Collateral in accordance with the terms set forth in Section 5.5
-----------
of the Credit Agreement. Debtor further covenants and agrees to keep the
Collateral which is Inventory, Equipment, Fixtures and other tangible personal
property insured in such amounts, against such risks and with such insurers as
is consistent with customary industry practice, provided that none of such
insurance shall be in amounts less than the greater of (i) the replacement value
and (ii) the original cost of the covered property (less any deduction standard
in the industry for such type of property), subject in the case of any property
damage insurance to normal and customary rights granted in the ordinary course
of business to (A) any landlord (with respect to the property covered by any
lease), (B) in the case of any equipment financing, to any equipment lessor or
lender (with respect to the equipment covered thereby), or (C) mortgagees of any
real property. All such policies of insurance shall be written for the benefit
of Administrative Agent and Debtor, as their interests may appear, and shall
provide for at least thirty days' prior written notice of cancellation or change
of coverage to Administrative Agent. Debtor shall promptly furnish to
Administrative Agent evidence of such insurance in form and content satisfactory
to Administrative Agent. If Debtor fails to maintain the insurance it is
required to maintain with respect to the Collateral in accordance with this
Section 3.3, upon notice to Debtor, Administrative Agent may at its own option
-----------
obtain insurance on only Administrative Agent's interest in such Collateral, any
premium thereby paid by Administrative Agent to become part of the Obligations,
bear interest prior to the existence of an Event of Default, at the then
applicable Base Rate
D-14
Basis, and during the existence of an Event of Default, at the Default Rate. In
the event Administrative Agent maintains such substitute insurance, the
additional premium for such insurance shall be due on demand and payable by
Debtor to Administrative Agent in accordance with any notice delivered to Debtor
by Administrative Agent. Debtor hereby grants Administrative Agent a security
interest in any refunds of unearned premiums in connection with any
cancellation, adjustment or termination of any policy of insurance required by
Administrative Agent and in all proceeds of such insurance and hereby appoints
Administrative Agent its attorney-in-fact (exercisable from and after the
occurrence of an Event of Default which is continuing) to endorse any check or
draft that may be payable to Debtor in order to collect such refunds or
proceeds. Proceeds of insurance shall be applied as follows: first, to
-----
reimburse Administrative Agent for all costs and expenses, if any, including
reasonable attorneys' fees, incurred in connection with the collection of such
proceeds; second, if an Event of Default has not occurred and is continuing or
------
the amount of proceeds in respect of any one loss or damage does not exceed
$750,000, the proceeds shall be used to repair or replace the Collateral and
Debtor shall provide Administrative Agent with evidence satisfactory to
Administrative Agent of such use; and third, if an Event of Default has occurred
-----
and is continuing or the proceeds in respect of any one loss or damage is equal
to or greater than $750,000, the proceeds shall, at Administrative Agent's
direction, be used to repair or replace the Collateral or applied to the
Obligations as provided in the Credit Agreement.
3.d. Place of Perfection; Records; Collection of Receivables, Chattel Paper
and Instruments.
(a) Debtor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Receivables, and
the originals of all Chattel Paper and Instruments, at the location therefor
specified in Section 2.1(a), in each case which may be changed upon written
--------------
notice to the Administrative Agent at least 30 days prior to such change.
Debtor will hold and preserve such records and Chattel Paper and Instruments and
will permit representatives of Administrative Agent at any time during normal
business hours and after reasonable notice to inspect and make abstracts from
and copies of such records and Chattel Paper and Instruments.
(b) Except as otherwise provided in this Section 3.4(b), Debtor shall
--------------
continue to collect, at its own expense, all amounts due or to become due Debtor
under the Receivables, Chattel Paper and Instruments. In connection with such
collections, Debtor may take (and, upon the occurrence and during the
continuance of an Event of Default at Administrative Agent's direction, shall
take) such action as Debtor or, after the occurrence and during the continuance
of an Event of Default, Administrative Agent, may deem necessary or advisable to
enforce collection of the Receivables, Chattel Paper and Instruments; provided,
--------
however, that
-------
D-15
Administrative Agent shall have the right (upon an Event of Default which has
occurred and is continuing and upon notice to Debtor) to notify the account
debtors or obligors under any Receivables, Chattel Paper and Instruments of the
assignment of such Receivables, Chattel Paper and Instruments to Administrative
Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to Debtor thereunder directly to Administrative
Agent and, upon such notification at the expense of Debtor, to enforce
collection of any such Receivables, Chattel Paper and Instruments, and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Debtor might have done or as Administrative Agent
deems appropriate. Upon the occurrence and during the continuance of an Event
of Default, all amounts and proceeds (including Instruments) received by Debtor
in respect of the Receivables, Chattel Paper and Instruments shall be received
in trust for the benefit of Administrative Agent hereunder, shall be segregated
from other funds of Debtor and, after receipt of notice from Administrative
Agent, shall be forthwith paid over to Administrative Agent in the same form as
so received (with any necessary indorsement) to be applied as provided in the
Credit Agreement. Upon the occurrence and during the continuation of an Event
of Default, Debtor shall not adjust, settle or compromise the amount or payment
of any Receivable, Chattel Paper or Instrument, release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon other
than those made in the ordinary course of business.
3.e. Transfers and Other Liens. Debtor shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except as permitted under the Credit
Agreement, or (ii) create or permit to exist any Lien, security interest, option
or other charge or encumbrance upon or with respect to any of the Collateral,
except for the security interest under this Agreement (and except as provided
for in the Credit Agreement).
3.f. Rights to Dividends and Distributions. With respect to any
certificates, bonds, or other instruments or securities constituting a part of
the Collateral, Administrative Agent shall have authority during the continuance
of an Event of Default, either to have the same registered in Administrative
Agent's name or in the name of a nominee, and, with or without such
registration, upon such notification to demand of the issuer thereof, and to
receive and receipt for, any and all Dividends (including any stock or similar
dividend or distribution) payable in respect thereof, whether they be ordinary
or extraordinary. If Debtor shall become entitled to receive or shall receive
any interest in or certificate (including, without limitation, any interest in
or certificate representing a Dividend or a distribution in connection with any
reclassification, increase, or reduction of capital, or issued in connection
with any reorganization), or any option or rights arising from or relating
D-16
to any of the Collateral that is evidenced by a certificate or other instrument
or security, whether as an addition to, in substitution of, as a conversion of,
or in exchange for any of the Collateral, or otherwise, Debtor agrees to accept
the same as Administrative Agent's agent and to hold the same in trust on behalf
of and for the benefit of Administrative Agent, and to deliver the same
immediately to Administrative Agent in the exact form received, with appropriate
undated stock or similar powers, duly executed in blank, to be held by
Administrative Agent, subject to the terms hereof, as Collateral. Unless an
Event of Default is in existence, Debtor shall be entitled to receive all cash
Dividends paid in respect of any of the Collateral (subject to the restrictions
of any other Loan Document). Upon the occurrence and during the continuance of
an Event of Default, Administrative Agent shall be entitled to all Dividends,
and to any sums paid upon or in respect of any Collateral, and to any additional
securities issued in respect of the Securities Collateral, upon the liquidation,
dissolution, or reorganization of the issuer thereof, all of which shall be paid
to Administrative Agent to be held by it as additional collateral security for
the Obligations and application to the Obligations at the discretion of
Administrative Agent. All Dividends paid or distributed in respect of the
Collateral which are received by Debtor in violation of this Agreement shall,
until paid or delivered to Administrative Agent, be held by Debtor in trust as
additional Collateral for the Obligations.
3.g. Right of Administrative Agent to Notify Issuers. At any time during
the continuance of an Event of Default, Administrative Agent may notify issuers
of the Securities Collateral to make payments of all Dividends directly to
Administrative Agent and Administrative Agent may take control of all proceeds
of any Securities Collateral. Until Administrative Agent elects to exercise
such rights, during the continuance of an Event of Default, Debtor, as agent of
Administrative Agent, shall collect and segregate all Dividends and other
amounts paid or distributed with respect to the Securities Collateral. To the
extent that Administrative Agent has notified any issuer of Securities
Collateral of an Event of Default and such Event of Default is cured or
otherwise waived, Administrative Agent shall promptly notify such issuer of such
fact.
3.h. Administrative Agent Appointed Attorney-in-Fact. Debtor hereby
irrevocably appoints Administrative Agent Debtor's attorney-in-fact (exercisable
from and after the occurrence of an Event of Default which is continuing), with
full authority in the place and stead of Debtor and in the name of Debtor or
otherwise to take any action and to execute any instrument which Administrative
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to Administrative
Agent in accordance with Section 3.3,
-----------
D-17
(b) to ask for, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral,
(c) to receive, indorse, and collect any drafts or other Instruments,
documents and Chattel Paper, in connection with clauses (a) or (b) above, and
(d) to file any claims or take any action or institute any proceedings
which Administrative Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Collateral or the rights of Administrative Agent with respect
to any of the Collateral. DEBTOR HEREBY IRREVOCABLY GRANTS TO ADMINISTRATIVE
AGENT DEBTOR'S PROXY (EXERCISABLE FROM AND AFTER THE OCCURRENCE OF AN EVENT OF
DEFAULT WHICH IS CONTINUING) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS
ADMINISTRATIVE AGENT DEBTOR'S ATTORNEY-IN-FACT (EXERCISABLE FROM AND AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING) TO PERFORM ALL
OBLIGATIONS OF DEBTOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF ADMINISTRATIVE
AGENT'S RIGHTS HEREUNDER. THE PROXY AND EACH POWER OF ATTORNEY HEREIN GRANTED
ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL
OF THE OBLIGATIONS.
Secured Party shall not exercise any powers granted pursuant to this
appointment as attorney-in-fact at any time that Debtor is fully performing its
obligations hereunder. This appointment as attorney-in-fact shall terminate
upon the termination of this Agreement pursuant to Section 5.3 hereof.
-----------
IV. RIGHTS AND POWERS OF Administrative Agent
-----------------------------------------
4.a. Administrative Agent May Perform. If Debtor fails to perform any
agreement contained herein, Administrative Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Administrative
Agent incurred in connection therewith shall be payable by Debtor under Section
-------
4.5.
----
4.b. Administrative Agent's Duties. The powers conferred on Administrative
Agent hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the duty to
exercise reasonable care in respect of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Administrative Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Administrative Agent has or
is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against prior parties. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if
D-18
such Collateral is accorded treatment substantially equal to that which
Administrative Agent accords its own property, except to the extent of any gross
negligence or willful misconduct of the Administrative Agent. Except as
provided in this Section 4.2, Administrative Agent shall not have any duty or
-----------
liability to protect or preserve any Collateral or to preserve rights pertaining
thereto. Nothing contained in this Agreement shall be construed as requiring or
obligating Administrative Agent, and Administrative Agent shall not be required
or obligated, to (i) present or file any claim or notice or take any action,
with respect to any Collateral or in connection therewith or (ii) notify Debtor
of any decline in the value of any Collateral.
4.c. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) Administrative Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in the State of Texas at that time (the "UCC")
(whether or not the UCC applies to the affected Collateral), and also may (i)
require Debtor to, and Debtor hereby agrees that it will at its expense and upon
request of Administrative Agent forthwith, assemble all or part of the
Collateral which is capable of being assembled as directed by Administrative
Agent and make it available to Administrative Agent at a place to be designated
by Administrative Agent which is reasonably convenient to both parties or (ii)
without notice, except as specified below, sell the Collateral or any portion
thereof in one or more parcels at public or private sale, at any of
Administrative Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as Administrative Agent may deem
commercially reasonable. Debtor agrees that, to the extent notice of sale shall
be required by law, ten days' written notice to Debtor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Administrative Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Administrative Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(b) All cash proceeds received by Administrative Agent upon any sale of,
collection of, or other realization upon, all or any part of the Collateral
shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and expenses
-----
incurred in connection with the sale of, collection of or other realization
upon Collateral, including reasonable attorneys' fees and disbursements;
D-19
Second: To the payment of the Obligations as provided in the Credit
------
Agreement and in such order and in such manner consistent with Applicable
Laws as Administrative Agent in its discretion shall decide (with Debtor
remaining liable for any deficiency); and
Third: To the extent of the balance (if any) of such proceeds, to Debtor
-----
or other Person legally entitled thereto.
(c) All payments received by Debtor under or in connection with any
Collateral shall be received in trust for the benefit of Administrative Agent,
shall be segregated from other funds of Debtor and shall be forthwith paid over
to Administrative Agent in the same form as so received (with any necessary
indorsement).
(d) Because of the Securities Act of 1933, as amended ("Securities Act"),
and other laws, including without limitation state "blue sky" laws, or
contractual restrictions or agreements, there may be legal restrictions or
limitations affecting Administrative Agent in any attempts to dispose of the
Collateral and the enforcement of its rights hereunder. For these reasons,
Administrative Agent is hereby authorized by Debtor, but not obligated, during
the continuance of any Event of Default, to sell or otherwise dispose of any of
the Collateral at private sale, subject to an investment letter, or in any other
manner which will not require the Collateral, or any part thereof, to be
registered in accordance with the Securities Act, or the rules and regulations
promulgated thereunder, or any other law. Debtor clearly understands that
Administrative Agent may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the Collateral than would otherwise be obtainable if same were
registered and sold in the open market. No sale so made in good faith by
Administrative Agent shall be deemed to be not "commercially reasonable" because
so made. Debtor agrees that in the event Administrative Agent shall, during the
continuance of an Event of Default, sell the Collateral or any portion thereof
at any private sale or sales, Administrative Agent shall have the right to rely
upon the advice and opinion of appraisers and other Persons, which appraisers
and other Persons are acceptable to Administrative Agent, as to the best price
reasonably obtainable upon such a private sale thereof. In the absence of
actual fraud, such reliance shall be conclusive evidence that Administrative
Agent handled such matter in a commercially reasonable manner under Applicable
Law.
(e) If Administrative Agent shall determine to exercise its right to sell
any or all of the Collateral, and if in the opinion of counsel for
Administrative Agent it is necessary, or if in the opinion of Administrative
Agent it is advisable, to have the Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act, Debtor will, to the
fullest extent it has the capability to do so, cause the issuers of the
D-20
Collateral contemplated to be sold to execute and deliver, and cause the
directors and officers of each thereof to execute and deliver, all at Debtor's
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things, as may be necessary or, in the opinion of
Administrative Agent, advisable to register the Collateral or that portion
thereof to be sold, under the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective and to remain
effective for such period as Administrative Agent may deem appropriate to
facilitate the sale or other disposition of such Collateral from the date of the
first public offering of the Collateral or that portion thereof to be sold, and
to make all amendments thereto and/or to the related prospectus which, in the
opinion of Administrative Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act. Debtor shall use its reasonable
best efforts to cause each issuer of Collateral to comply with the provisions of
the securities or "blue sky" laws of any jurisdiction which Administrative Agent
shall designate and to cause each Issuer to make available to its security
holders, as soon as practicable, an earnings statement which will satisfy the
provisions of the Securities Act and applicable "blue sky" laws.
(f) i) Debtor will maintain the accounts listed as restricted and blocked
accounts on Schedule 3 (the "Restricted Accounts") with Administrative
----------
Agent, in the name of Debtor, but such Restricted Accounts shall be under
the sole control and dominion of Administrative Agent.
ii) It shall be a term and condition of each Restricted Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to such Restricted Account, that no amount (including
interest and other proceeds of the cash and other property in the
Restricted Account) shall be paid or released to or for the account of, or
withdrawn by or for the account of, Debtor or any other Person from such
Restricted Account.
iii) After the occurrence and continuance of an Event of Default,
Debtor will promptly instruct each account debtor in respect of Receivables
arising from any sale of Inventory in the ordinary course of business to
make payment to the Restricted Accounts.
Debtor understands and acknowledges that Administrative Agent may and permits
Administrative Agent to remove amounts from the Restricted Accounts from time to
time and use the amounts to reduce the Obligations.
4.d. Further Approvals Required.
(a) In connection with the exercise by Administrative Agent of its rights
hereunder that effects the disposition of or use of
D-21
any Collateral, it may be necessary to obtain the prior consent or approval of
Tribunals and other Persons to a transfer or assignment of Collateral.
(b) Debtor hereby agrees, during the continuance of an Event of Default, to
execute, deliver, and file, and hereby appoints Administrative Agent as its
attorney-in-fact, during the continuance of an Event of Default, to execute,
deliver, and file on Debtor's behalf and in Debtor's name, all applications,
certificates, filings, instruments, and other documents (including without
limitation any application for an assignment or transfer of control or
ownership) that may be necessary or appropriate, in Administrative Agent's
opinion, to obtain such consents, waivers, or approvals. Upon request by
Administrative Agent, Debtor further agrees to use its reasonable best efforts
to obtain the foregoing consents, waivers, and approvals, including receipt of
consents, waivers, and approvals under applicable agreements prior to a Default
or Event of Default. Debtor acknowledges that there is no adequate remedy at
law for failure by it to comply with the provisions of this Section 4.4 and that
-----------
such failure would not be adequately compensable in damages, and therefore
agrees that this Section 4.4 may be specifically enforced. This appointment as
-----------
attorney-in-fact shall terminate upon the termination of this Agreement pursuant
to Section 5.3 hereof.
-----------
4.e. Indemnity and Expenses. (a) Debtor agrees to indemnify
Administrative Agent and each Secured Party from and against any and all claims,
losses and liabilities (including reasonable attorneys' fees) growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), expressly including such claims, losses or liabilities arising
out of mere negligence of Administrative Agent or any Secured Party, except
claims, losses or liabilities as finally judicially determined by a court of
competent jurisdiction to have resulted from Administrative Agent's or any
Secured Party's gross negligence or willful misconduct.
(b) Debtor will upon demand pay to Administrative Agent the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which Administrative Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Administrative Agent hereunder or (iv) the failure by
Debtor to perform or observe any of the provisions hereof.
V. MISCELLANEOUS
-------------
5.a. Cumulative Rights. All rights of Administrative Agent and each other
Secured Party under the Loan Documents are
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cumulative of each other and of every other right which Administrative Agent and
each other Secured Party may otherwise have at law or in equity or under any
other contract or other writing for the enforcement of the security interest
herein or the collection of the Obligations. The exercise of one or more rights
shall not prejudice or impair the concurrent or subsequent exercise of other
rights.
5.b. Modifications; Amendments; Etc. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by Debtor here
from, shall in any event be effective unless the same shall be in writing and
signed by Administrative Agent (and Debtor, in case of amendment), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
5.c. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the later of (i) the final payment in full of the
Obligations and all amounts payable under this Agreement and (ii) the expiration
or termination of the obligation of all Secured Parties to extend credit to
Debtor and the expiration of all Letters of Credit, (b) be binding upon Debtor,
its successors and assigns, and (c) inure to the benefit of, and be enforceable
by, Administrative Agent and its successors, transferees and assigns. Upon any
such termination, Administrative Agent will, at Debtor's expense, execute and
deliver to Debtor such documents as Debtor shall reasonably request to evidence
such termination. Debtor agrees that to the extent that Administrative Agent or
any Secured Party receives any payment or benefit and such payment or benefit,
or any part thereof, is subsequently invalidated, declared to be fraudulent or
preferential, set aside or is required to be repaid to a trustee, receiver, or
any other party under any Debtor Relief Law, common law or equitable cause, then
to the extent of such payment or benefit, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or benefit had not been made and, further, any such repayment
by Administrative Agent or any Secured Party, to the extent that Administrative
Agent or any Secured Party did not directly receive a corresponding cash
payment, shall be added to and be additional Obligations payable upon demand by
Administrative Agent or any Secured Party and secured hereby, and, if the lien
and security interest hereof shall have been released, such lien and security
interest shall be reinstated with the same effect and priority as on the date of
execution hereof all as if no release of such lien or security interest had ever
occurred.
5.D. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR
D-23
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS. UNLESS OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED
IN ARTICLE 9 OF THE UCC ARE USED HEREIN AS THEREIN DEFINED.
5.E. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT AND DEBTOR HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
5.f. Administrative Agent's Right to Use Agents. Administrative Agent may
exercise its rights under this Agreement through an agent or other designee.
5.g. No Interference, Compensation or Expense. Administrative Agent may
exercise its rights under this Agreement (a) without resistance or interference
by Debtor and (b) without payment of any rent, license fee or compensation of
any kind to Debtor.
5.h. Waivers of Rights Inhibiting Enforcement. To the extent not
prohibited by Applicable Law, Debtor waives (a) any claim that, as to any part
of the Collateral, a public sale, should Administrative Agent elect so to
proceed, is, in and of itself, not a commercially reasonable method of sale for
such Collateral, (b) except as otherwise provided in this Agreement, NOTICE OR
JUDICIAL HEARING IN CONNECTION WITH ADMINISTRATIVE AGENT'S DISPOSITION OF ANY OF
THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT DEBTOR WOULD OTHERWISE
HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE,
AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR OTHER
REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF ADMINISTRATIVE AGENT'S RIGHTS
HEREUNDER and (c) all rights of redemption, appraisal, valuation or to the
marshalling of assets.
5.i. Notices and Deliveries.
(a) Manner of Delivery. All notices and other communications provided for
hereunder shall be in writing and mailed, telecopied or delivered by reputable
overnight delivery service or by hand, if to the Debtor, addressed to it at its
address specified on the signature pages hereof, if to the Administrative Agent,
addressed to it at its address specified in the Credit Agreement, or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section 5.9. All such notices and other communications shall, when mailed,
telecopied, or delivered, be effective three days after being deposited in the
mails, when telecopied with confirmation of receipt, or when delivered by
reputable overnight delivery service or by hand to the addressee or its agent,
respectively.
D-24
(b) Addresses. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
i) if to Debtor, to it at:
Xxxxxxxx Manufacturing Company, Inc.
0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Chief Financial Officer
with a copy to:
Westar Limited
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
xx) if to Administrative Agent, to it at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx.
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(c) Effectiveness. Each notice, communication and any material to be given
or delivered to Administrative Agent or Debtor pursuant to this Agreement shall
be effective or deemed delivered or furnished (i) if sent by mail, on the fifth
Business Day after such notice, communication or material is deposited in the
mail, addressed as above provided, (ii) if sent by telecopier, when such notice,
communication or material is transmitted to the appropriate number determined as
above provided in this Section 5.9 and the appropriate receipt is received or
-----------
otherwise acknowledged and
D-25
(iii) if sent by hand delivery or overnight courier, when left at the address of
the addressee addressed as above provided.
5.j. Successors and Assigns. All of the provisions of this Agreement shall
be binding and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
5.k. Loan Document. This Agreement is a Loan Document executed pursuant to
the Credit Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and provisions
thereof.
5.l. Consent to Jurisdiction; Waiver of Immunities.
(a) Debtor hereby irrevocably submits to the non-exclusive jurisdiction of
any United States Federal or Texas State courts sitting in Dallas, Texas in any
action or proceeding arising out of or relating to this Agreement, and Debtor
hereby irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such court or that such
court is an inconvenient forum.
(b) Nothing in this section shall limit the right of Administrative Agent
or any Secured Party to bring any action or proceeding against Debtor or its
property in the courts of any other jurisdictions.
(c) Any judicial proceeding by Debtor against Administrative Agent or any
Secured Party involving, directly or indirectly, any matter in any way arising
out of, related to, or connected with this Agreement shall be brought only in a
court in Dallas, Texas to the extent that jurisdiction may be effected against
such Person in Dallas, Texas.
5.m. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws during the term
thereof, such provision shall be fully severable, this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a legal, valid, and enforceable
provision as similar in terms to the illegal, invalid, or unenforceable
provision as may be possible.
5.n. Obligations Not Affected. To the fullest extent permitted by
Applicable Law, the obligations of Debtor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:
D-26
(a) any amendment or modification or addition or supplement to any other
Loan Document, any instrument delivered in connection therewith or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by Administrative Agent or any
Secured Party of any right, remedy, power or privilege under or in respect of,
or any release of any guaranty, any collateral or the Collateral or any part
thereof provided pursuant to, this Agreement or any other Loan Document;
(c) any waiver, consent, extension, indulgence or other action or inaction
in respect of this Agreement or any other Loan Document or any assignment or
transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of Debtor, any other Obligor or any other
Person, whether or not Debtor shall have notice or knowledge of any of the
foregoing.
5.o. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
5.p. No Novation. The execution, delivery and effectiveness of this
-----------
Agreement shall not discharge or release the Lien or priority of any security
agreement, pledge agreement or other instrument securing the Debtor's
obligations for the payment of money outstanding under the Existing Credit
Agreement. Nothing herein contained shall be construed as a substitution or
novation of any Collateral Documents (as defined in the Existing Credit
Agreement) or the Liens granted hereby, all of which shall continue and remain
in full force and effect, except as modified hereby, or by instrument executed
concurrently herewith.
5.q. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
============================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
============================================
D-27
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
DEBTOR:
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
ADMINISTRATIVE AGENT:
NATIONSBANK OF TEXAS, N.A.
By:
Name:
Title:
D-28
Schedule 1
Equipment and Inventory Locations
Chief Place of Business, Chief Executive Office and
Location of Books and Records
*To Be Provided By Debtor*
==========================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
==========================================================
D-29
Schedule 2
Trade Names
*To Be Provided By Debtor*
==========================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
==========================================================
D-30
Schedule 3
Restricted Accounts
*To Be Provided By Debtor*
==========================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
==========================================================
D-31
Schedule 4
Rolling Stock
*To Be Provided By Debtor*
==========================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
==========================================================
D-32
EXHIBIT E
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT AND ASSIGNMENT
Between
XXXXXXXX MANUFACTURING COMPANY, INC.
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
Administrative Agent
September 19, 1997
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
E-1
TABLE OF CONTENTS
Page
----
X. XXXXX OF SECURITY INTEREST
--------------------------
1.01. Assignment and Grant of Security Interest. 1
1.02. Security for Obligations.................. 1
1.03. Validity and Priority of Security Interest 2
1.04. Maintenance of Status of Security Interest,
Collateral and Rights 2
(a) Required Action 2
(b) Protection of Collateral.... ............... 2
(c) Authorized Action 3
(d) Registrations 3
1.05. Debtor Remains Obligated; Administrative Agent
and Secured Parties Not Obligated......... 3
1.06. Termination............................... 3
1.07. Security Interest Absolute................ 4
II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.01. Authorization; Enforceability; Required
Consents; Absence of Conflicts... 4
2.02. Rights of Debtor................. 5
2.03. Perfection....................... 5
2.04. Registrations.................... 5
2.05. Other Property................... 5
III. COVENANTS
---------
3.01. Chief Executive Office......... 5
3.02. Preservation of Existence and Preservation of
Enforceability................. 5
3.03. Requested Information.......... 6
3.04. No Disposition of Collateral... 6
3.05. Additional Property............ 6
IV. EVENT OF DEFAULT
----------------
4.01. Application of Proceeds... 7
4.02. Remedies 7
4.03. Indemnity and Expenses.... 9
V. INTERPRETATION
--------------
5.01. Definitional Provision............ 9
(a) Certain Terms Defined by Reference 9
(b) Other Defined Terms 9
(c) Other Definitional Provisions..... 12
5.02. Power of Attorney................. 12
VI. MISCELLANEOUS
-------------
E-2
6.01. Expenses of Debtor's Agreements and Duties... 12
6.02. Administrative Agent's Right to Perform on
Debtor's Behalf.............................. 12
6.03. Administrative Agent's Right to Use Agents... 13
6.04. No Interference, Compensation or Expense..... 13
6.05. Limitation of Administrative Agent's
Obligations With Respect to Collateral....... 13
6.06. Rights of Administrative Agent under UCC and
Applicable Law............................... 13
6.07. Waivers of Rights Inhibiting Enforcement..... 13
6.08. Notices and Deliveries....................... 14
6.09. Rights and Remedies Cumulative............... 14
6.10. Amendments; Waivers.......................... 14
6.11. GOVERNING LAW................................ 14
6.12. WAIVER OF JURY TRIAL......................... 15
6.13. Consent to Jurisdiction; Waiver of
Immunities................................... 15
6.14. Severability of Provisions................... 15
6.15. Counterparts................................. 15
6.16. Successors and Assigns....................... 15
6.17. Loan Documents............................... 15
6.18. Obligations Not Affected..................... 16
6.19. No Novation.................................. 16
-----------
6.20. ENTIRE AGREEMENT............................. 16
E-3
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of September 19, 1997,
between Xxxxxxxx Manufacturing Company, Inc., a Texas corporation ("Debtor"),
------
and NationsBank of Texas, N.A., a national banking association, as
Administrative Agent ("Administrative Agent"), for itself and each other lender
--------------------
a party to the Credit Agreement described below (singly, a "Secured Party" and
-------------
collectively, "Secured Parties").
---------------
RECITALS.
--------
(1) Administrative Agent, Debtor, and Secured Parties entered into the
Credit Agreement dated as of September 19, 1997 (as the same has been and may
hereafter be supplemented, amended, modified and restated from time to time,
being the "Credit Agreement"; the terms defined therein and not otherwise
-----------------
defined herein being used herein as therein defined).
(2) It is the intention of the parties hereto that this Agreement create a
first priority security interest in certain collateral of Debtor securing the
payment of the obligations set forth in Section 1.02 hereof, subject to only
------------
Permitted Liens as provided in the Loan Documents.
(3) It is a condition precedent to the effectiveness of the Credit
Agreement that Debtor shall have executed and delivered this Agreement.
AGREEMENT.
---------
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce Secured Parties to, among other
things, make Advances under the Credit Agreement, Debtor hereby agrees with
Administrative Agent for its benefit and the ratable benefit of Secured Parties
as hereinafter set forth.
X. XXXXX OF SECURITY INTEREST
--------------------------
1.01. Assignment and Grant of Security Interest. Debtor hereby assigns
to, and pledges and grants to Administrative Agent for its benefit and the
ratable benefit of Secured Parties a security interest in, the entire right,
title and interest of Debtor, in and to the Collateral.
1.02. Security for Obligations. This Agreement creates a first priority
security interest as provided herein, securing the
E-4
payment and performance of any and all obligations now or hereafter existing of
Debtor, each Obligor and any other Person under the Credit Agreement and the
other Loan Documents, including any extensions, modifications, substitutions,
amendments and renewals thereof, whether for principal, interest, fees,
expenses, indemnification or otherwise) (all such obligations of Debtor, each
Obligor and each other Person being the "Obligations"). Without limiting the
-----------
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Obligations and would be owed by Debtor, each other
Obligor and any other Person to Administrative Agent or any Secured Party under
any Loan Document, but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding under
any Debtor Relief Law involving Debtor, any other Obligor or any other Person
(including all such amounts which would become due or would be secured but for
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of Debtor, any other Obligor or any other
Person under any Debtor Relief Law). Notwithstanding anything herein to the
contrary, the Obligations secured hereby shall be limited to an aggregate amount
which is equal to the largest amount that would not render the Lien granted
herein subject to avoidance under Section 548 of the Bankruptcy Code or any
applicable provisions of comparable state law.
1.03. Validity and Priority of Security Interest. Debtor agrees that
the Security Interest shall at all times be valid, perfected, continuing and
binding and enforceable against Debtor and all other Persons, in accordance with
the terms hereof, as security for the Obligations, and that the Collateral shall
not at any time be subject to any Lien, except as permitted in the Loan
Documents.
1.04. Maintenance of Status of Security Interest, Collateral and
Rights.
(a) Required Action. Debtor shall take all action that may be necessary or
that Administrative Agent may reasonably request, so as at all times (i) to
maintain the validity, perfection, enforceability and priority of the Security
Interest in the Collateral in conformity with the requirements of Section 1.03,
------------
and (ii) to protect and preserve, and to enable the exercise or enforcement of,
the rights of Administrative Agent hereunder, including (A) immediately
discharging all Liens, except as permitted in the Loan Documents, and (B)
executing and delivering financing or continuation statements, instruments of
pledge, notices and instructions in each case in form and substance reasonably
satisfactory to Administrative Agent.
(b) Protection of Collateral. Debtor shall protect, preserve, renew and
maintain, in each case in a manner consistent with reasonably responsible
business and legal practices, all rights of Debtor in the Collateral, including
(i) prosecuting such
E-5
suits, proceedings or other actions for infringement, unfair competition,
dilution or other damage as Debtor in its reasonable business judgment deems
appropriate under the circumstances or (ii) appearing in and defending any
action or proceeding that may materially adversely affect Debtor's title to or
Administrative Agent's security interest in all or any material part of the
Collateral, when such action is in Debtor's reasonable business judgment
necessary to protect Debtor's Collateral. Any reasonable expenses incurred by
Debtor in protecting, preserving, renewing and maintaining the Collateral shall
be borne by Debtor. To the maximum extent permitted by Laws, after an Event of
Default shall have occurred and be continuing, Administrative Agent shall have
the right, without taking title to any Collateral, to bring suit to enforce any
or all Collateral or its Security Interest in any or all of the Collateral, in
which event Debtor shall, at the reasonable request of Administrative Agent, do
any and all lawful acts and execute any and all proper documents reasonably
required by Administrative Agent in aid of such enforcement. All reasonable
costs, reasonable expenses and other moneys reasonably advanced by
Administrative Agent in connection with the foregoing shall, whether or not
there are then outstanding any amounts under the Credit Agreement, be treated as
Obligations, but the making of any Advances by Administrative Agent or any
Secured Party shall not relieve Debtor of any default hereunder.
(c) Authorized Action. Administrative Agent is hereby authorized to file
one or more financing or continuation statements, amendments thereto and
instruments of pledge, notices and instructions without the signature of or in
the name of Debtor when permitted by Applicable Law provided that Administrative
Agent shall give reasonably prompt notice of any such filings to Debtor. A
carbon, photographic or other reproduction of this Agreement or of any financing
statement filed in connection with this Agreement shall be sufficient as a
financing statement.
(d) Registrations. Debtor shall renew or maintain, as specified in and
permitted by any Applicable Law, and shall make any filings necessary to renew
or maintain the Registrations referred to in Section 2.04, provided that Debtor
------------
shall not be required to renew or maintain any Registration to the extent that
the failure to so renew or maintain could not reasonably be expected to have a
Material Adverse Effect.
1.05. Debtor Remains Obligated; Administrative Agent and Secured
Parties Not Obligated. The grant by Debtor to Administrative Agent of the
Security Interest shall not relieve Debtor from the performance of any term,
covenant, condition or agreement on its part to be performed or observed
(including by virtue of the exercise by Administrative Agent of any of its
rights hereunder), or from any liability to any Person, under or in respect of
any of the Collateral or impose any obligation on Administrative Agent or any
Secured Party or impose any liability
E-6
on Administrative Agent or any Secured Party for any act or omission on the part
of Debtor relative thereto.
1.06. Termination.
(a) In the event that the Obligations shall have been finally paid in full,
and all commitments by Secured Parties to extend credit shall have been
terminated and Administrative Agent shall have delivered to Debtor a written
termination agreement and any other releases reasonably requested by Debtor in
appropriate form for filing in the Patent and Trademark Office, or any other
governmental office, foreign or domestic, in which Administrative Agent has made
a filing to reflect the Security Interest granted herein, then this Agreement
shall also terminate and be of no further force and effect (except as provided
in Section 1.06(b)) and all rights to the Collateral shall revert to the Debtor.
---------------
(b) Debtor agrees that, if at any time all or any part of any payment
theretofore applied by Administrative Agent and Secured Parties to any of the
Obligations is or must be rescinded or returned by any Person for any reason
whatsoever (including the insolvency, bankruptcy or reorganization of Debtor or
any other Person), such Obligations shall, for the purposes of this Agreement,
to the extent that such payment is or must be rescinded or returned, be deemed
to have continued in existence, notwithstanding such application by
Administrative Agent or any Secured Party, and the Security Interest granted
hereunder shall continue to be effective or be reinstated, as the case may be,
as to such Obligations, all as though such application by Administrative Agent
or any Secured Party had not been made.
1.07. Security Interest Absolute. All rights of Administrative Agent
and Secured Parties and the Security Interest granted to Administrative Agent
hereunder, and all obligations of Debtor hereunder, shall, to the extent
permitted by Laws, be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of any Loan Documents;
(b) any change in the time, manner or place of payment or performance of,
or in any other term of, all or any of the Obligations or any other amendment to
or waiver of or any consent to departure from any Loan Documents;
(c) any exchange, release or non-perfection of any collateral (including
the Collateral or any part thereof), or any release of or amendment to or waiver
of or consent to departure from any guaranty, for all or any of the Obligations;
or
(d) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, Debtor, any other Obligor or any other Person.
E-7
II. REPRESENTATIONS AND WARRANTIES
------------------------------
Debtor represents and warrants as follows:
2.01. Authorization; Enforceability; Required Consents; Absence of
Conflicts. Debtor has the legal power, and has taken all necessary action to
authorize it, to execute, deliver and perform in accordance with its terms this
Agreement and to execute and deliver all financing statements and other filings
contemplated hereby, including those supplementary or additional filings
referred to in Section 3.05. This Agreement has been duly executed and
------------
delivered by Debtor and is the legal, valid and binding obligation of Debtor,
enforceable in accordance with its terms subject to (i) equitable principles
generally and (ii) Debtor Relief Laws (insofar as such laws relate to the
bankruptcy, insolvency or similar event of Debtor). The execution, delivery and
performance in accordance with its terms by Debtor of this Agreement does not
and (absent any change in any Law) will not (a) except for the filing and
acceptance of financing statements and continuation statements in connection
therewith delivered to Administrative Agent describing this Agreement and the
Collateral under the Code, the timely filing of this Agreement with the United
States Patent and Trademark Office and acceptance thereof to the extent
permitted by Applicable Law and those supplementary or additional filings
referred to in Section 3.05, require any Governmental Approval or any other
------------
consent or approval, including any consent or approval of any shareholder of
Debtor, (b) violate or conflict with its organizational documents, or (c)
violate or conflict with, result in a breach of, constitute a default under, or
result in or require the creation of any Lien (other than the Security Interest)
upon any assets of Debtor under any contract or agreement or Applicable Laws the
result of which could reasonably be expected to have a Material Adverse Effect.
2.02. Rights of Debtor. Debtor is the legal and beneficial owner of
the Collateral free and clear of any Lien or other charge or encumbrance,
including, without limitation, pledges, assignments, licenses, shop rights and
covenants by Debtor not to xxx any Person, except for the security interests and
assignment created by this Agreement any other Liens permitted under the Credit
Agreement, and by any license entered into in the ordinary course of business.
No effective financing statement or other instrument similar in effect naming
Debtor as "debtor" covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of Administrative
Agent relating to this Agreement or as otherwise permitted under the Loan
Documents.
2.03. Perfection. This Agreement, together with the filings referred
to in Section 2.01(a) above, will create in favor of Administrative Agent valid
and perfected security interests in the Collateral and such security interests
will be a first priority
E-8
security interest on existing Registrations, subject only to Permitted Liens;
provided that additional actions may be required with respect to the perfection
--------
of proceeds of the Collateral held on the date hereof.
2.04. Registrations. Annexes X-0, X-0, X-0 and B-2, as applicable, set
-----------------------------
forth a true and complete list of all Registrations in the United States Patent
and Trademark Office and related state filings owned by Debtor as of the date
hereof.
2.05. Other Property. On the date hereof, Debtor has no interest in
any Copyrights that is material to operation of Debtor's existing and
anticipated business and that are registered or subject to any application for
registration and Debtor does not believe, after appropriate review of all
relevant facts and circumstances, that any registration or filing with respect
to any interest Debtor may have in any property which may constitute Copyrights
is material to the operation of Debtor's existing and anticipated business.
III. COVENANTS
---------
3.01. Chief Executive Office. Debtor shall maintain its chief
executive office and the office where the books and records relating to the
Collateral are kept only at the location specified on Schedule 1 to the Security
Agreement.
3.02. Preservation of Existence and Preservation of Enforceability.
Debtor shall, so long as any of the Obligations remain outstanding, take all
reasonable action and obtain all consents and Government Approvals reasonably
required so that its obligations under this Agreement will at all times be
legal, valid and binding and enforceable in accordance with its terms, subject
to (i) equitable principles generally and (ii) Debtor Relief Laws (insofar as
such laws relate to the bankruptcy, insolvency or similar event of Debtor).
3.03. Requested Information. In addition to such other Information as
shall be specifically provided for herein, Debtor shall furnish to
Administrative Agent such other Information with respect to the Collateral as
Administrative Agent may reasonably request from time to time in connection with
the Collateral, or the protection, preservation, maintenance or enforcement of
the Security Interest or the Collateral, including, without limitation, all
documents and things in Debtor's possession, or subject to its demand for
possession, related to the production and sale by Debtor, or any subsidiary,
licensee or subcontractor thereof, of products or services sold by or under the
authority of Debtor in connection with the Collateral, including by way of
example, without limiting the interest granted by this Agreement: (i) all lists
and ancillary documents which identify and describe any of Debtor's customers,
or licensees, for products sold or services
E-9
rendered under or in connection with the Collateral, including without
limitation, such existing lists and ancillary documents which contain each
customer's full name and address, the full name and address of all of its
warehouses and branches, the identity of the Person or Persons having the
principal responsibility on each customer's behalf for ordering products or
services of the kind supplied by Debtor, the credit, payment, discount, delivery
and other sale terms applicable to such customer, together with detailed
information setting forth the total purchases, by brand, product, style and
size, and the patterns of such purchases; (ii) all product and service
specification documents and production and quality of services sold under or in
connection with the Collateral; (iii) all documents which reveal the names and
addresses of all sources of supply, and all terms of purchase and delivery, for
all materials and components used in the production or products or provision of
services, sold under or in connection with the Collateral; and (iv) all
documents constituting or concerning the then current or proposed advertising
and promotion by Debtor, licensees or subcontractors of products or services
sold under or in connection with the Collateral, including, by way of example
and not in limitation, all documents which reveal the media used or to be used
and the cost for all such advertising conducted within the described period or
planned for such products or services. In connection with its enforcement of
the Security Interest, Administrative Agent may use such Information or transfer
it to any assignee or sublicensee permitted hereunder for such assignee's or
sublicensee's use.
3.04. No Disposition of Collateral. Except to the extent permitted by
the Credit Agreement, Debtor shall not sell, transfer or otherwise dispose of
any of the Collateral or any interest therein that is material to Debtor's
business, or grant any license thereunder, except for licenses granted or other
dispositions in the ordinary course of business.
3.05. Additional Property. Prior to the application for, use or
acquisition or any interest in any Registration which is within the definition
of "Collateral" or modification, reformulation or other alteration to any
Registration that is material to Debtor's business, Debtor shall execute and
deliver to Administrative Agent all documents and instruments Administrative
Agent may reasonably require to grant to Administrative Agent a perfected first
priority Lien therein (subject only to Permitted Liens) and to subject to all of
such interest to this Agreement, including but not limited to any new,
supplementary or additional filings.
IV. EVENT OF DEFAULT
----------------
Upon the occurrence and during the continuance of an Event of Default:
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4.01. Application of Proceeds. All cash proceeds received by
Administrative Agent upon any sale of, collection of, or other realization upon,
all or any part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and expenses
-----
incurred in connection with the sale of, collection of or other realization upon
Collateral, including reasonable attorneys' fees and disbursements;
Second: To the payment of the Obligations as provided in the Credit
------
Agreement (with Debtor remaining liable for any deficiency); and
Third: To the extent of the balance (if any) of such proceeds, to the
-----
payment to Debtor or other Person entitled thereto.
4.02. Remedies.
(a) If an Event of Default has occurred and is continuing, Administrative
Agent may exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code in
effect in the State of Texas at that time (the "UCC") (whether or not the
---
Uniform Commercial Code applies to the affected Collateral), and also may (i)
require Debtor to, and Debtor hereby agrees that it will at its expense and upon
request of Administrative Agent forthwith, assemble all or part of the
Collateral (to the extent capable of being assembled) as directed by
Administrative Agent and make it available to Administrative Agent at a place to
be designated by Administrative Agent, which is reasonably convenient to both
parties or (ii) without notice, except as specified below, sell the Collateral
or any portion thereof in one or more parcels at public or private sale, at any
of Administrative Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as Administrative Agent may deem
commercially reasonable. Debtor agrees that, to the extent notice of sale shall
be required by Applicable Law, ten days' written notice to Debtor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification, provided that ten days' written
notice does not violate any Applicable Law. Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Administrative Agent may be the purchaser at any sale of the
Collateral and pay all or any part of the purchase price thereof by cancelling
part or all of the Obligations.
E-11
(b) If an Event of Default has occurred and is continuing, Administrative
Agent may obtain the appointment of a receiver of the Collateral.
(c) If an Event of Default has occurred and is continuing, Administrative
Agent may without notice to Debtor and at such time or times as Administrative
Agent in its sole discretion may determine, exercise any or all of Debtor's
rights in, to and under, or in any way connected with or related to, any or all
of the Collateral, including (i) enforcing the performance of, and exercising
any or all of Debtor's rights with respect to the Collateral, in each case by
legal proceedings or otherwise and (ii) settling, adjusting, compromising,
extending, renewing, discharging and releasing any or all of, and any legal
proceedings brought with respect to any or all of, Debtor's rights with respect
to the Collateral.
(d) If an Event of Default has occurred and is continuing, Administrative
Agent may exercise any other right or remedy available under any other Loan
Document or Laws.
(e) Debtor agrees that, in any sale of any of the Collateral,
Administrative Agent is authorized to comply with any limitation or restriction
in connection with such sale as counsel may advise Administrative Agent is
necessary in order to avoid any violation of applicable Law (including
compliance with such procedures as may restrict the number of prospective
bidders or purchasers, require that such prospective bidders and purchasers have
certain qualifications, and restrict such prospective bidders and purchasers to
Persons who will represent and agree that they are purchasing for their own
account or investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchase by any Tribunal, and Debtor further agrees that such compliance shall
not result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall Administrative Agent or any Secured
Party be liable or accountable to Debtor for any discount allowed by reason of
the fact that such Collateral was sold in compliance with any such limitation or
restriction.
(f) Upon written demand of Administrative Agent, Debtor shall execute and
deliver to Administrative Agent an assignment or assignments of the Collateral
and such other documents as are reasonably necessary and appropriate to carry
out the intent and purposes of this Agreement. Debtor agrees that such an
assignment and/or recording shall be applied to reduce the Obligations
outstanding only to the extent that Administrative Agent or any Lenders receives
cash proceeds in respect of the sale of, or realization upon, the Collateral.
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(g) For the purpose of enabling the Administrative Agent to exercise rights
and remedies under this Section 4.02 at such time as the Administrative Agent
------------
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, Debtor hereby grants to the Administrative Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to Debtor) to use, assign, license or
sublicense any of the Collateral now owned or hereafter acquired by Debtor,
wherever the same may be located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof.
4.03. Indemnity and Expenses.
(a) DEBTOR AGREES TO INDEMNIFY (WHICH SHALL BE PAYABLE FROM TIME TO TIME ON
DEMAND) ADMINISTRATIVE AGENT AND SECURED PARTIES FROM AND AGAINST ANY AND ALL
CLAIMS, LOSSES AND LIABILITIES GROWING OUT OF OR RESULTING FROM THIS AGREEMENT
(INCLUDING ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS,
LOSSES, OR LIABILITIES ARISING OUT OF MERE NEGLIGENCE OF ADMINISTRATIVE AGENT OR
ANY SECURED PARTY, EXCEPT CLAIMS, LOSSES OR LIABILITIES RESULTING SOLELY FROM
ADMINISTRATIVE AGENT'S OR ANY SECURED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(b) Debtor will upon demand pay to Administrative Agent the amount of any
and all reasonable expenses, including the reasonable fees and disbursements of
its counsel and of any experts and agents, which Administrative Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Administrative Agent hereunder, or (iv) the failure by
Debtor to perform or observe any of the provisions hereof.
V. INTERPRETATION
--------------
5.01. Definitional Provision.
(a) Certain Terms Defined by Reference. The terms "collateral",
"inventory", "rights", and "security interest" shall have the meanings ascribed
thereto in the UCC, or, when capitalized, the meanings specified in subsection
----------
(b) below.
---
(b) Other Defined Terms. For purposes of this Agreement:
"Agreement" means this Agreement, including all schedules, annexes and
---------
exhibits hereto.
E-13
"Collateral" means Debtor's rights, title and interests, (whatever they may
----------
be) in each of the following, in each case whether now or hereafter existing or
now owned or hereafter acquired by Debtor and whether or not the same is subject
to Article 9 of the UCC, and wherever the same may be located:
(i) the Trademarks and Goodwill;
(ii) the Patents;
(iii) all registrations or letters patent issued or applied for (now or
hereafter) with respect to the Trademarks and Patents and renewals thereof in
the United States and any state thereof (the "Registrations");
(iv) any renewal, reissue, re-examination certificate, extension or
the like with respect to the Trademarks and Patents;
(v) all rights to use the Trademarks as trade names or assumed names
in all aspects of its business;
(vi) all inventions, processes, production methods, proprietary
information, know-how and trade secrets;
(vii) all licenses, sublicenses or user or other agreements granted in
favor of or from Debtor with respect to any of the foregoing to the extent
assignable without violation thereof, together with any Goodwill connected with
or symbolized by any such licenses and agreements and the right to prepare for
sale and sell any and all inventory of Debtor now or hereafter covered by such
licenses and agreements;
(viii) all information, customer lists, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and automatic
machinery software and programs;
(ix) all field repair data, sales data and other information relating
to sales or service of products now or hereafter manufactured;
(x) all accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored and all
computer programs used for the compilation or printout of such information,
knowledge, records or data;
(xi) all proceeds and products of the foregoing. The inclusion of
"proceeds" of Collateral in the definition of "Collateral" shall not be deemed a
consent by Administrative Agent
E-14
to any sale or other disposition of any Collateral not otherwise specifically
permitted by the terms hereof.
"Copyright" means any copyright, copyright registration and applications
---------
for such registration, all subject matter related to such copyrights, in any and
all forms, and all copyrights and applications for registration of copyrights
related to such copyrights.
"Credit Agreement" is defined in the recitals.
---------------- --------
"Goodwill" means the goodwill of the businesses connected with the use of
--------
(or associated with) and symbolized by the Trademarks, but not any other
goodwill.
"Governmental Approval" means any authorization, consent, approval, license
---------------------
or exemption of, registration or filing with, or report or notice to, any
Tribunal.
"Information" means data, certificates, reports, statements (including
-----------
financial statements), documents and other information in form (including
electronic media) acceptable to Administrative Agent.
"Obligations" is defined in Section 1.02.
----------- ------------
"Patents" means all patents, all inventions and subject matter related to
-------
such patents, in any and all forms, and all patents and applications for patents
related to such patents, including but not limited to the patents listed on
Annex A-1 attached hereto, all inventions and all subject matter related to such
---------
patents, in any and all forms, and all patents and applications for patents
related to such patents, including those patents and applications listed on
Annex A-2 attached hereto, together with the reissues, divisions, continuations,
---------
renewals, extensions and continuations-in-part thereof, all income, royalties,
damages and payments now or hereafter due and payable under and with respect
thereto, including, without limitation, damages for past or future infringements
thereof and the right to xxx for past, present and future infringements thereof.
"Security Interest" means the continuing security interest of
-----------------
Administrative Agent in the Collateral intended to be effected by the terms of
this Agreement or any financing and continuation statements or other filings
contemplated hereby.
"Trademarks" means all trade names, trademarks, and service marks, in any
----------
and all forms, and all trade name, trademark and service xxxx registrations and
applications for registration related to such trademarks, trade names and
service marks, including but not limited to the registered trade names,
trademarks, and service marks listed on Annex B-1 attached hereto, and all
---------
applications for registration of trade names, trademarks,
E-15
and service marks, including those applications listed on Annex B-2 attached
---------
hereto, all common law rights to such trade names, trademarks and service marks,
the right to recover for all past, present and future infringements thereof, and
all other rights of any kind whatsoever accruing thereunder or pertaining
thereto.
"UCC" means Article 9 of the Uniform Commercial Code as in effect from time
---
to time in the State of Texas.
(c) Other Definitional Provisions. (i) Except as otherwise specified
herein, all references herein (A) to any Person shall be deemed to include such
Person's successors and assigns, (B) to any Applicable Law referred to herein
shall be deemed references to such Applicable Law as the same may have been or
may be amended or supplemented from time to time and (C) to this Agreement or
other agreement defined or referred to herein shall be deemed a reference to
this Agreement or other agreement as the terms thereof may have been or may be
amended, supplemented, waived or otherwise modified from time to time.
(ii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, the masculine gender includes the feminine, and the
singular number includes the plural, and vice versa.
(iii) Except as otherwise indicated, any reference herein to the
"Collateral", the "Obligations" or any other collective or plural term shall be
----------- -----------
deemed to be a reference to each and every item included within the category
described by such collective or plural term, so that a reference to the
"Collateral" or the "Obligations" shall be deemed a reference to any or all of
----------- -----------
the Collateral or the Obligations, as the case may be.
(iv) Capitalized Terms not otherwise defined herein have the meaning
specified in the Credit Agreement, and, to the extent of any conflict, terms as
defined in the Credit Agreement shall control (provided, that a more expansive
--------
or explanatory definition shall not be deemed a conflict).
5.02. Power of Attorney. Each power of attorney, license and other
authorization in favor of Administrative Agent or any other Person granted by or
pursuant to this Agreement shall be deemed to be irrevocable and coupled with an
interest.
VI. MISCELLANEOUS
-------------
6.01. Expenses of Debtor's Agreements and Duties. Administrative Agent
and Secured Parties shall not be liable for the costs and expenses of Debtor
arising out of Debtor's performance or observance of the terms, conditions,
covenants and agreements to be observed or performed by Debtor under this
Agreement.
E-16
6.02. Administrative Agent's Right to Perform on Debtor's Behalf. If
Debtor shall fail to observe or perform any of the terms, conditions, covenants
and agreements to be observed or performed by it under this Agreement, Secured
Party may (but shall not be obligated to) do the same or cause it to be done or
performed or observed, either in its name or in the name and on behalf of
Debtor, and in the event that Debtor shall have failed to observe or perform any
of the terms, conditions, covenants and agreements to be observed or performed
by it under this Agreement, then Debtor hereby authorizes Secured Party to do
so, and Debtor hereby appoints the Secured Party, and any other Person Secured
Party may designate, as Debtor's attorney-in-fact (exercisable from and after
the occurrence of an Event of Default which is continuing) to do, or cause to be
done, in the name, place and stead of Debtor in any way in which Debtor itself
could do, or cause to be done, any or all things necessary to observe or perform
the terms, conditions, covenants and agreements to be observed or performed by
Debtor under this Agreement. In addition, Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact (exercisable from and after the
occurrence of an Event of Default which is continuing) to execute and deliver in
Debtor's name and stead to any purchaser at any sale held under Section 4.02
------------
hereof any and all documents and instruments of assignment, transfer and
conveyance necessary or appropriate to transfer to such purchaser the Collateral
sold at such sale. Secured Party shall not exercise any powers granted pursuant
to this appointment as attorney-in-fact at any time that Debtor is fully
performing its obligations hereunder. This appointment as attorney-in-fact
shall terminate upon the termination of this Agreement.
6.03. Administrative Agent's Right to Use Agents. Administrative Agent
may exercise its rights under this Agreement through an agent or other designee.
6.04. No Interference, Compensation or Expense. Administrative Agent
may exercise its rights under this Agreement (a) without resistance or
interference by Debtor and (b) without payment of any royalty, rent, license fee
or compensation of any kind to Debtor.
6.05. Limitation of Administrative Agent's Obligations With Respect to
Collateral. (a) Administrative Agent shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto,
except to the extent of any gross negligence or willful misconduct of the
Administrative Agent.
(b) Nothing contained in this Agreement shall be construed as requiring or
obligating Administrative Agent, and Administrative Agent shall not be required
or obligated, to (i) present or file any claim or notice or take any action,
with respect to any Collateral or in connection therewith or (ii) notify Debtor
of any decline in the value of any Collateral.
E-17
6.06. Rights of Administrative Agent under UCC and Applicable Law.
Administrative Agent shall have, with respect to the Collateral, in addition to
all of their rights under this Agreement, (a) the rights of a secured party
under the UCC, whether or not the UCC would otherwise apply to the collateral in
question, and (b) the rights of a secured party under all other Applicable Laws.
6.07. Waivers of Rights Inhibiting Enforcement. To the extent not
prohibited by Applicable Law, Debtor waives (a) any claim that, as to any part
of the Collateral, a public sale, should Administrative Agent elect so to
proceed, is, in and of itself, not a commercially reasonable method of sale for
such Collateral, (b) except as otherwise provided in this Agreement, NOTICE OR
JUDICIAL HEARING IN CONNECTION WITH ADMINISTRATIVE AGENT'S DISPOSITION OF ANY OF
THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT DEBTOR WOULD OTHERWISE
HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE,
AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR OTHER
REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF ADMINISTRATIVE AGENT'S RIGHTS
HEREUNDER and (c) all rights of redemption, appraisement, or marshalling of
assets.
6.08. Notices and Deliveries. All notices and other communications
provided for hereunder shall be in writing and mailed, telecopied or delivered
by reputable overnight delivery service or by hand, if to the Debtor, addressed
to it at its address specified on the signature pages hereof, if to the
Administrative Agent, addressed to it at its address specified in the Credit
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each other party complying as to delivery with
the terms of this Section 6.08. All such notices and other communications
shall, when mailed, telecopied, or delivered, be effective three days after
being deposited in the mails, when telecopied with confirmation of receipt, or
when delivered by reputable overnight delivery service or by hand to the
addressee or its agent, respectively.
6.09. Rights and Remedies Cumulative. Each of Administrative Agent's
rights and remedies under this Agreement shall be in addition to all of its
other rights and remedies under this Agreement and Applicable Law, and nothing
herein shall be construed as limiting any such rights or remedies.
6.10. Amendments; Waivers. Any term, covenant, agreement or condition
of this Agreement may be amended, and any right under this Agreement may be
waived, if, but only if, such amendment or waiver is in writing and is signed by
Administrative Agent and, in the case of an amendment, by Debtor. Unless
otherwise specified in such waiver, a waiver of any right under this Agreement
shall be effective only in the specific instance and for the specific
E-18
purpose for which given. No election not to exercise, failure to exercise or
delay in exercising any right, nor any course of dealing or performance, shall
operate as a waiver of any right of the Administrative Agent under this
Agreement or Applicable Law, nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right of Administrative Agent under this Agreement or Applicable Law.
6.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REFERENCE TO
PRINCIPALS OF CONFLICTS OF LAWS) AND THE UNITED STATES OF AMERICA, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE REQUIRED TO BE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
6.12. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT AND DEBTOR HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
6.13. Consent to Jurisdiction; Waiver of Immunities.
(a) Debtor hereby irrevocably submits to the non-exclusive jurisdiction of
any United States Federal or Texas State courts sitting in Dallas, Texas, in any
action or proceeding arising out of or relating to this Agreement, and Debtor
hereby irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such court or that such
court is an inconvenient forum.
(b) Nothing in this section shall limit the right of Administrative Agent
or any Secured Party to bring any action or proceeding against Debtor or its
property in the courts of any other jurisdictions.
(c) Any judicial proceeding by Debtor against Administrative Agent or any
Secured Party involving, directly or indirectly, any matter in any way arising
out of, related to, or connected with this Agreement shall be brought only in a
court in Dallas, Texas to the extent that jurisdiction may be effected against
such Person in Dallas, Texas.
6.14. Severability of Provisions. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other
E-19
jurisdiction. In the event that any change in Applicable Law would render
invalid or unenforceable any provision of this Agreement, Debtor agrees to enter
into such amendments or modifications to this Agreement to provide
Administrative Agent with benefits intended to be granted by such provision.
6.15. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
6.16. Successors and Assigns. All of the provisions of this Agreement
shall be binding and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, Debtor may not assign its
--------
rights or obligations under this Agreement without the prior written consent of
the Lenders.
6.17. Loan Documents. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
6.18. Obligations Not Affected. To the fullest extent permitted by
Applicable Law, the obligations of Debtor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:
(a) any amendment or modification or addition or supplement to any Loan
Documents or any instrument delivered in connection therewith or any assignment
or transfer thereof;
(b) any exercise, non-exercise, or waiver by Administrative Agent or any
Secured Party of any right, remedy, power or privilege under or in respect of,
or any release of any guaranty or the Collateral or any part thereof provided
pursuant to, this Agreement or any other Loan Documents;
(c) any waiver, consent, extension, indulgence or other action or inaction
in respect of this Agreement, any other Loan Documents or any assignment or
transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of Debtor or any other Person, whether or
not Debtor shall have notice or knowledge of any of the foregoing.
6.19. No Novation. The execution, delivery and effectiveness of this
-----------
Agreement shall not discharge or release the Lien or priority of any security
agreement, pledge agreement or other instrument securing the Debtor's
obligations for the payment of money outstanding under the Existing Credit
Agreement. Nothing herein contained shall be construed as a substitution or
novation
E-20
of any Collateral Documents (as defined in the Existing Credit Agreement) or the
Liens granted hereby, all of which shall continue and remain in full force and
effect, except as modified hereby, or by instrument executed concurrently
herewith.
6.20. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL ARGUMENTS BETWEEN THE
-------------------------------------------------
PARTIES.
--------
=============================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
=============================================
E-21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the date first above
written.
DEBTOR:
XXXXXXXX MANUFACTURING COMPANY, INC.
Name:
Title:
0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Chief Financial Officer
with a copy to:
Westar Capital
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A., as
Administrative Agent
By:
Name:
Title:
X-00
Xxxxx X-0
---------
Patents
-------
Nature of Interest Country of
(e.g. owner, Patent No. Issue Date Issue
------------ ---------- ---------- ----------
licensee)
---------
X-00
Xxxxx X-0
Patent Applications
-------------------
Nature of Interest Serial Country of
(e.g. owner, No. Filing Issue
------------ ------ ------ ----------
licensee) Date
--------- ----
X-00
Xxxxx X-0
Registered Trademarks
---------------------
Nature of
Interest of Goods or
(e.g. owner, Registered Registration Int'l Services Date Country
licensee Trademark No. Class Covered Registered of
------------ ---------- ------------ Covered -------- ---------- Reg.
------- -------
X-00
Xxxxx X-0
Trademark Applications
----------------------
Trademark
Nature of Applicati on
Interest of relates Int'l Goods or Country
(e.g. owner, to Serial Class Services Date of of
licensee following No. Covered Covered Appl. Appl.
------------ Trademark ------ ------- -------- ------- -------
------------
E-26
EXHIBIT F
COMPLIANCE CERTIFICATE
NationsBank of Texas, N.A., ________, _____
as Administrative Agent
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
This Compliance Certificate is made as of _____________, _____. The
undersigned certifies that the calculations set forth herein are true, accurate,
and complete, and are made in accordance with the provisions of the Credit
Agreement among Xxxxxxxx Manufacturing Company, Inc., NationsBank of Texas,
N.A., as Administrative Agent, and Lenders, dated as of September 19, 1997 (as
amended, modified or supplemented, "Credit Agreement"). All defined terms used
herein but not specifically defined shall have the meanings set forth in the
Credit Agreement.
1. Borrowing Base. [to be completed monthly]
--------------
Borrower hereby represents and warrants that the following Borrowing Base
Report is true and correct in all respects as of ___________, _____ (the
"Reporting Date"). The Borrowing Base is determined as follows:
A. ELIGIBLE ASSETS
1. All Accounts $
2. Less ineligible Accounts (without duplication)
a. Accounts to which Borrower or a Subsidiary does not $
have lawful and absolute title
b. Accounts which are not the valid, legally enforceable $
obligation of the account debtor for goods or services
delivered or rendered to such Person
c. Accounts owed by a creditor of Borrower or a $
Subsidiary to the extent that such Account equals the
amount owed to such creditor
d. Portion of Accounts subject to any asserted dispute, $
offset, discount, counterclaim, or other claim or
defense of account debtor or to any asserted claim on
the part of the account debtor denying liability under
such Account
e. Accounts which Borrower or any Subsidiary may not $
assign or grant a security interest to Administrative
Agent
F-1
f. Accounts not evidenced by an invoice rendered to the $
account debtor
g. Accounts evidenced by chattel paper, promissory $
notes, or other instruments or the result of a
conditional sales agreement
h. Accounts subject to a Lien in favor of any Person $
other than Administrative Agent other than Permitted
Collateral Liens
i. Accounts due and payable for more than 90 days $
j. Accounts of account debtors primarily conducting $
business in and organized under a jurisdiction outside
the United States (other than Canada) and which are
not insured or supported by an irrevocable letter of
credit
k. Accounts where the account debtor is a Tribunal $
l. Accounts where the account debtor is the subject of a $
proceeding under a Debtor Relief Law
m. Accounts of account debtors (excluding Kmart $
Receivable) who have more than 15% of accounts due
and payable for more than 90 days and which are not
insured
n. Accounts not subject to a fully perfected first priority $
security interest in favor of Administrative Agent
o. Accounts where the account debtor is an Affiliate or $
employee
Ineligible Accounts $
3. Eligible Accounts [(1) - (2)] $
4. Eligible Accounts includible in Borrowing Base [80% x (3)] $
B. ELIGIBLE INVENTORY
1. All Inventory $
2. Less ineligible Inventory (without duplication)
a. 50% Work-in-Progress $
b. Obsolete Inventory $
c. Consignment Inventory $
d. Demonstration and display Inventory $
e. Inventory to which Borrower or any Subsidiary does $
not have lawful and absolute title
F-2
f. Inventory subject to a Lien in favor of any Person $
other than Administrative Agent, other than Permitted
Collateral Liens
g. Defective or unmerchantable Inventory $
h. Inventory located outside the United States $
i. Inventory located in leased facilities for which a $
Landlord's Waiver has not been delivered to
Administrative Agent
j. Inventory not subject to a fully perfected first $
priority security interest in favor of Administrative
Agent
k. The sale of such Inventory, upon an Event of Default, $
is subject to a Necessary Authorization restriction or
limitation
Ineligible Inventory $
3. Eligible Inventory [(1) - (2)] $
4. Eligible Inventory potentially includible in Borrowing Base $
[50% x (3)]
C. BORROWING BASE
1. Eligible Accounts includible in Borrowing Base (A.4.) $
2. Eligible Inventory includible in Borrowing Base (B.4.) $
Borrowing Base [(1) + (2)] $
2. Covenant Calculations.. [To be completed quarterly except M.]
---------------------
A. Leverage Ratio.
--------------
1. Total Debt
1. Indebtedness for borrowed money $
2. Capitalized Lease Obligations $
3. Obligations evidenced by bonds, debentures, notes or $
other similar instruments
4. Obligations to pay the deferred purchase price of $
property or services other than trade payables incurred
in the ordinary course of business
5. Total Debt [(a) + (b) + (c) + (d)] $
F-3
2. EBITDA
1. Pretax Net Income (excluding therefrom, to the extent $
included in determining Pretax Net Income, any item
of extraordinary gain, including net gains on the sale
of assets other than asset sales in the ordinary course
of business, and adding thereto, to the extent included
in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of
assets other than asset sales in the ordinary course of
business)
2. Interest expense (including in respect of Capitalized $
Lease Obligations)
3. EBIT Special Adjustments
(1) Management fees in favor of Westar Capital $
not to exceed $450,000
(2) Allocation costs related to integration of $
Borrower and Dogloo not to exceed $825,000
(3) Transaction fees and expenses related to $
Dogloo and Xxxxxxxx Transaction
(4) Schedule 9 Items $
(5) Excess of Westar Capital management fees $
accrued over such fees paid
(6) Excess of Westar Capital management fees $
paid over such fees accrued
(7) [(1) + (2) + (3) + (4) + (5) - (6)] $
4. Depreciation $
5. Amortization $
6. Other non-cash charges $
7. Operating Cash Flow [(a) + (b) + (c) + (d) + (e) + $
(f)]
3. Leverage Ratio [(1) : (2)] _____ to 1
F-4
B. Section 7.1(c). Capitalized Lease Obligations and Indebtedness
--------------
to purchase property, plant and equipment
1. Maximum ($10,000,000 minus Indebtedness pursuant to $
Section 7.1(h) and 7.1(m))
2. Actual $
3. Difference [(1) - (2)] $
C. Section 7.1(h). Indebtedness incurred or assumed in respect of
--------------
Acquisitions
1. Maximum ($10,000,000 minus Indebtedness pursuant to $
Section 7.1(c) and 7.1(m))
2. Actual $
3. Difference [(1) - (2)] $
D. Section 7.1(m). Other Indebtedness
--------------
1. Maximum ($10,000,000 minus Indebtedness pursuant to $
Section 7.1(c) and 7.1(h))
2. Actual $
3. Difference [(1) - (2)] $
E. Section 7.3(f). Investments and expenditures in respect of
--------------
Acquisitions of non-Domestic Subsidiaries
1. Maximum $10,000,000
2. Actual $
3. Difference [(1) - (2)] $
F. Section 7.3(h). Investments of non-cash consideration in sales
--------------
1. Maximum $ 2,500,000
2. Actual $
3. Difference [(1) - (2)] $
G. Section 7.3(j). Other Investments
--------------
1. Maximum $ 5,000,000
2. Actual $
3. Difference [(1) - (2)] $
H. Section 7.7. Capital Expenditures
-----------
1. Maximum ($5,000,000 + Net revenues multiplied by .05) $
2. Actual $
F-5
3. Difference [(1) - (2)] $
I. Section 7.8. Restricted Payments
-----------
1. Purchases and redemptions of officers, directors and
employees stock
1. Maximum $ 2,500,000
2. Actual $
2. Redemptions and repurchases required under Second
Securityholders Agreement
1. Maximum $ 250,000
2. Actual $
3. Dogloo Transaction Restricted Payments
1. Maximum (Base Amount, exclusive of accrued $36,882,000
dividends)
2. Actual $ ]
4. Additional redemptions of capital stock
1. Maximum $ 2,400,000
2. Actual $
5. Advisory Fees to Specified Investors
1. Maximum per fiscal year $ 600,000
2. Actual $
J. Section 7.11. Leverage Ratio
------------
1. Maximum
1. From and including December 31, 1997 to and ____ to 1
including September 30, 1998
2. From and including December 31, 1998 to but not ____ to 1
including June 30, 1999
3. From and including June 30, 1999 to but not including ____ to 1
June 30, 2000
4. From and including June 30, 2000 to but not including ____ to 1
June 30, 2001
5. From and including June 30, 2001 and thereafter ____ to 1
2. Actual (1.A.3. above) ____ to 1
K. Section 7.12. Fixed Charge Coverage Ratio
------------
F-6
1. Minimum ____ to 1
2. Actual
1. Pretax Cash Flow
(1) EBITDA (1.A.2.j. above) $
(2) Cash Capital Expenditures (excluding through $
September 30, 1998 Capital Expenditures in
excess of 5% of cumulative revenues)
(3) Total Pretax Cash Flow [(1) - (2)] $
2. Fixed Charges
(1) Scheduled principal payments in respect of $
Indebtedness
(2) Interest expense (including interest expense $
pursuant to Capitalized Lease Obligations)
(3) Fixed Charges [(1) + (2)] $
3. Fixed Charge Coverage Ratio [J.2.a.(3) to J.2.b.(3)] ____ to 1
L. Section 7.1
-----------
3. Interest Coverage Ratio
------------
1. Minimum
1. From and including December 31, 1997 to but not ____ to 1
including December 31, 1998
2. From and including December 31, 1998 to but not ____ to 1
including June 30, 2000
3. From and including June 30, 2000 and thereafter ____ to 1
2. Actual
1. EBITDA (1.A.2.j. above) $
2. Interest expense (including interest expense pursuant to $
Capitalized Lease Obligations)
3. Interest Coverage Ratio [L.2.a to L.2.b.] ____ to 1
M. Excess Cash Flow. [To be completed annually.]
----------------
1. Net Operating Cash Flow
1. Net Income $
2. Depreciation, amortization and other non-cash charges $
3. Net losses on asset sales and non-cash asset write $
downs
4. Capital Expenditures $
F-7
5. Scheduled principal payments on Indebtedness $
6. Net gain on asset sales $
7. Net Operating Cash Flow [(a) + (b) + (c) - (d) - (e) - $
(f)]
2. Cash Acquisition Consideration $
3. Voluntary prepayments of Indebtedness which cannot be $
reborrowed
4. Restricted Payments $
5. Excess Cash Flow [1. - 2. - 3. - 4.] $
The undersigned hereby further certifies to the following as of the date of
this Certificate:
1. The undersigned has reviewed the relevant terms of this Certificate
and has made, or caused to be made, under his/her supervision, a review of the
transactions and condition of the Borrower from the beginning of the accounting
period covered by the financial statements being delivered herewith to the date
of this Certificate and that such review has not disclosed the existence during
such period of any condition or event which constitutes a Default or Event of
Default.
2. The Borrower is in compliance in all material respects with all of the
terms and conditions of the Credit Agreement and other Loan Documents.
3. The financial statements delivered to Administrative Agent have been
prepared according to GAAP applied on a consistent basis in all material
respects with those previously delivered.
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
F-8
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE
Dated _______________, _____
Reference is made to the Credit Agreement dated as of September 19, 1997
(the "Credit Agreement") among Xxxxxxxx Manufacturing Company, Inc., a Texas
corporation ("Borrower"), NationsBank of Texas, N.A. as Administrative Agent
("Administrative Agent"), and the lenders parties thereto. Terms defined in the
Credit Agreement are used herein with the same meaning.
___________________ ("Assignor") and --------------------- ("Assignee")
agree as follows:
4. Subject to the terms and conditions of this Assignment and Acceptance,
Assignor hereby sells and assigns to Assignee, and Assignee hereby purchases and
assumes from Assignor, the following:
a. _____% interest in and to all of Assignor's rights and obligations
under the Credit Agreement as of the Effective Date (as defined below),
with respect to such percentage interest in Assignor's Revolving Credit
Commitment in effect on the Effective Date, the principal amount of
Revolving Credit Advances owing to Assignor on the Effective Date, the
Revolving Credit Note held by Assignor, and Assignor's participation in any
Letters of Credit and Reimbursement Obligations outstanding on the
Effective Date;
b. _____% interest in and to all of Assignor's rights and obligations
under the Credit Agreement as of the Effective Date, with respect to such
percentage interest in Assignor's Facility A Term Loan Commitment in effect
on the Effective Date, the principal amount of Facility A Term Loan
Advances owing to Assignor on the Effective Date and the Facility A Term
Loan Note held by Assignor;
c. _____% interest in and to all of Assignor's rights and obligations
under the Credit Agreement as of the Effective Date, with respect to such
percentage interest in Assignor's Facility B Term Loan Commitment in effect
on the Effective Date, the principal amount of Facility B Term Loan
Advances owing to Assignor on the Effective Date and the Facility B Term
Loan Note held by Assignor.
5. Assignor (a) represents and warrants that (i) as of the date hereof
its Revolving Credit Commitment (without giving effect to assignments thereof
which have not yet become effective) is $__________ and, as of the date hereof,
the outstanding principal amount of the Revolving Credit Advances owing to it
(without giving effect to assignments thereof which have not yet become
effective) is $_________, (ii) as of the date hereof its Facility A Term Loan
Commitment (without giving effect to assignments thereof which have not yet
become effective) is $________ and, as of the date hereof, the outstanding
principal amount of the Facility A Term Loan Advances owing to it (without
giving effect to assignments thereof which have not yet become effective) is
$__________, (iii) as of the date hereof its Facility B Term Loan Commitment
(without giving effect to assignments thereof which have not become effective)
is $____________ and, as of the date hereof, the outstanding principal amount of
Facility B
G-1
Term Loan Advances owing to it (without giving effect to assignments thereof
which have not yet become effective) is $___________, (iv) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any statements,
warranties, or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto or (ii) the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto; and (c) attaches the Promissory Notes referred to in
Paragraph 1 above to exchange such Promissory Notes for new Promissory Notes as
follows: (i) a Revolving Credit Note dated ____________, 199___, in the
principal amount of $_________ payable to the order of Assignee, and a Revolving
Credit Note dated _____________, 199___, in the principal amount of $_________
payable to the order of Assignor, [(ii) a Facility A Term Loan Note dated
___________, 199___, in the principal amount of $__________ payable to the order
of Assignee, and a Facility A Term Loan Note dated ___________, 199___, in the
principal amount of $__________ payable to the order of Assignor] [and (iii) a
Facility B Term Loan Note dated ______________, 199___, in the principal amount
of $_____________ payable to the order of Assignee, and a Facility B Term Loan
Note dated __________, 199___, in the principal amount of $_____________ payable
to the order of Assignor].
6. Assignee (a) confirms that it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to in Sections 4.1(j), 6.1 and 6.2 of the Credit Agreement
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (b) agrees that it will, independently and without reliance upon the
Administrative Agent, Assignor, or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement
and the other Loan Documents; (c) appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement, the other Loan Documents, and this Assignment and
Acceptance as are delegated to the Administrative Agent by the terms thereof and
hereof, together with such powers as are reasonably incidental thereto and
hereto; (d) agrees that it will perform in accordance with its terms all of the
obligations which by the terms of the Credit Agreement, the other Loan
Documents, and this Assignment and Acceptance are required to be performed by it
as a Lender; and (e) specifies the addresses set forth in Schedule I attached
hereto as its address for the receipt of notices and as its initial LIBOR Lender
Office, respectively[; and (f) attaches the forms prescribed by the IRS
certifying as to Assignee's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to be made to
Assignee under the Credit Agreement, the other Loan Documents, and this
Assignment and Acceptance].
7. The effective date for this Assignment and Acceptance shall be
___________________, 199___ (the "Effective Date").
8. Upon such acceptance as of the Effective Date and upon the remittance
of a $3,500 processing fee to the Administrative Agent, (a) Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender
G-2
thereunder and (b) Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
9. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas. Without excluding any other
jurisdiction, Assignee agrees that the courts of Texas will have jurisdiction
over proceedings in connection herewith.
10. After giving effect to this Assignment and Acceptance:
a. Assignee's Revolving Credit Specified Percentage shall be _____%.
b. Assignee's Facility A Term Loan Specified Percentage shall be
_____%.
c. Assignee's Facility B Term Loan Specified Percentage shall be
_____%.
d. Assignee's Total Specified Percentage shall be _____%.
e. Assignor's Revolving Credit Specified Percentage shall be _____%.
f. Assignor's Facility A Term Loan Specified Percentage shall be
_____%.
g. Assignor's Facility B Term Loan Specified Percentage shall be
_____%.
h. Assignor's Total Specified Percentage shall be _____%.
11. This Assignment and Acceptance may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
[NAME OF ASSIGNOR]
By:
Name:
Title:
G-3
[NAME OF ASSIGNEE]
By:
Name:
Title:
Accepted this ___ day of ____________, _____
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By:
Name:
Title:
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
G-4
Schedule I
ASSIGNEE'S ADDRESS
------------------
1. Address for the Advances and Receipt of Notices
-----------------------------------------------
2. Initial LIBOR Lending Office
----------------------------
G-5
EXHIBIT H
SUBSIDIARY GUARANTY
GUARANTY, dated _____________________________, made by each of the parties
listed on the signature pages hereof (collectively, the "Guarantors", and each,
a "Guarantor"), in favor of the Guarantied Parties referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Xxxxxxxx Manufacturing Company, Inc., a Texas corporation (the
"Borrower"), has entered into a Credit Agreement, dated as of September 19,
1997, the financial institutions party thereto, and NationsBank of Texas, N.A.,
as administrative agent for said financial institutions (said Agreement, as it
may be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement", and capitalized terms not defined herein but defined therein
being used herein as therein defined); and
WHEREAS, the Borrower, directly or indirectly, owns beneficially and of
record 100% of the capital stock or other equity interests of the Guarantors,
and the Borrower and each of the Guarantors are members of the same consolidated
group of companies and are engaged in related businesses, and the Guarantors
will derive direct and indirect economic benefit from the Advances; and
WHEREAS, it is a requirement of Section 5.12 of the Credit Agreement that
the Guarantors shall have executed and delivered this Guaranty; and
WHEREAS, the Lenders and the Administrative Agent are herein referred to as
the "Guarantied Parties";
NOW, THEREFORE, in consideration of the premises and to induce the Lenders
to make Advances and issue Letters of Credit, the Guarantors hereby agree as
follows:
SECTION 12. Guaranty. Each Guarantor hereby unconditionally and
--------
irrevocably guarantees the full and prompt payment when due, whether at stated
maturity, by acceleration or otherwise, of, and the performance of, the
Obligations, whether now or hereafter existing and whether for principal,
interest, fees, expenses or otherwise, and any and all expenses (including,
without limitation, reasonable counsel fees and expenses) incurred by any of the
Guarantied Parties in enforcing any rights under this Guaranty. This Guaranty
is an absolute guaranty of payment and performance and not a guaranty of
collection. Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically
H-1
excluding, however, any liabilities of such Guarantor in respect of intercompany
indebtedness to the Borrower, other Affiliates of the Borrower or other Obligors
to the extent that such indebtedness would be discharged in an amount equal to
the amount paid by such Guarantor hereunder) and after giving effect as assets
to the value (as determined under the applicable provisions of Fraudulent
Transfer Laws) of any agreement providing for an equitable allocation among such
Guarantor and other Obligors of obligations arising under guaranties by such
parties.
SECTION 13. Guaranty Absolute. Each Guarantor guaranties that the
-----------------
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes and the other Loan Documents, without set-off or
counterclaim, and regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Guarantied Parties with respect thereto. To the extent not prohibited by
Applicable Law, the liability of each Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of any other
Loan Document or any other agreement or instrument relating to any Loan
Document, or avoidance or subordination of any of the Obligations;
(b) any change in the time, manner or place of payment of, or in any other
term of, or any increase in the amount of, all or any of the Obligations, or any
other amendment or waiver of any term of, or any consent to departure from any
requirement of, the Credit Agreement, the Notes or any of the other Loan
Documents;
(c) any exchange, release or non-perfection of any Lien on any collateral
for, or any release or amendment or waiver of any term of any other guaranty of,
or any consent to departure from any requirement of any other guaranty of, all
or any of the Obligations;
(d) the absence of any attempt to collect any of the Obligations from the
Borrower or from any other Guarantor or any other action to enforce the same or
the election of any remedy by any of the Guarantied Parties;
(e) any waiver, consent, extension, forbearance or granting of any
indulgence by any of the Guarantied Parties with respect to any provision of any
other Loan Document;
(f) the election by any of the Guarantied Parties in any proceeding under
chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") of the
application of section 1111(b)(2) of the Bankruptcy Code;
(g) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under section 364 of the Bankruptcy Code;
(h) the disallowance, under section 502 of the Bankruptcy Code, of all or
any portion of the claims of any of the Guarantied Parties for payment of any of
the Obligations; or
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(i) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a borrower or a guarantor.
SECTION 14. Waiver. (a) Each Guarantor hereby (i) waives, to the extent
------
not prohibited by Applicable Law, (A) promptness, diligence, notice of
acceptance and any and all other notices with respect to any of the Obligations
or this Guaranty, (B) any requirement that any of the Guarantied Parties
protect, secure, perfect or insure any security interest in or other Lien on any
property subject thereto or exhaust any right or take any action against the
Borrower or any other Person or any Collateral, (C) the filing of any claim with
a court in the event of receivership or bankruptcy of the Borrower, (D) protest
or notice with respect to nonpayment of all or any of the Obligations, (E) the
benefit of any statute of limitation, (F) all demands whatsoever (and any
requirement that same be made on the Borrower as a condition precedent to much
Guarantor's obligations hereunder) and (G) all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Obligations or require suit against the Borrower or any other guarantor, whether
arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as
amended, Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended, Rule 31 of the Texas Rules of Civil Procedure, as amended, or
otherwise; and (ii) covenants and agrees that, except as set forth in Section 11
hereof, this Guaranty will not be discharged except by complete performance of
the Obligations and any other obligations of such Guarantor contained herein.
(b) If, in the exercise of any of its rights and remedies, any of the
Guarantied Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable law pertaining
to "election of remedies" or the like, each Guarantor hereby consents to such
action by such Guarantied Party and waives any claim based upon such action.
Any election of remedies which results in the denial or impairment of the right
of such Guarantied Party to seek a deficiency judgment against the Borrower
shall not impair the obligation of such Guarantor to pay the full amount of the
Obligations or any other obligation of such Guarantor contained herein.
(c) In the event any of the Guarantied Parties shall bid at any foreclosure
or trustee's sale or at any private sale permitted by law or under any of the
Loan Documents, such Guarantied Party may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by such Guarantied Party
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether such Guarantied Party or any other Person is the
successful bidder, shall be conclusively deemed to be the fair market value of
the Collateral and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Guaranty, notwithstanding that any present or
future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which any of the Guarantied Parties might
otherwise be entitled by reason of such bidding at any such sale.
(d) Each Guarantor agrees that notwithstanding the foregoing and without
limiting the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, the Guarantied Parties are prevented by
applicable law from exercising their respective rights to accelerate the
maturity of the Obligations, to collect interest on the Obligations, or to
enforce or exercise any other right or remedy with respect to the Obligations,
or the Administrative Agent is prevented from taking any action to realize on
the Collateral, such Guarantor agrees to pay to the Administrative Agent for the
account of
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the Guarantied Parties, upon demand therefor, the amount that would otherwise
have been due and payable had such rights and remedies been permitted to be
exercised by the Guarantied Parties.
(e) Each Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrower and of each other guarantor
of all or any part of the Obligations, and of all other circumstances bearing
upon the risk of nonpayment of the Obligations or any part thereof, that
diligent inquiry would reveal. Each Guarantor hereby agrees that the Guarantied
Parties shall have no duty to advise any Guarantor of information known to any
of the Guarantied Parties regarding such condition or any such circumstance. In
the event that any of the Guarantied Parties in its sole discretion undertakes
at any time or from time to time to provide any such information to any
Guarantor, such Guarantied Party shall be under no obligation (i) to undertake
any investigation not a part of its regular business routine, (ii) to disclose
any information which, pursuant to accepted or reasonable banking or commercial
finance practices, such Guarantied Party wishes to maintain confidential, or
(iii) to make any other or future disclosures of such information or any other
information to such Guarantor.
(f) Each Guarantor consents and agrees that the Guarantied Parties shall be
under no obligation to xxxxxxxx any assets in favor of any Guarantor or
otherwise in connection with obtaining payment of any or all of the Obligations
from any Person or source.
SECTION 15. Representations and Warranties. Each Guarantor hereby
------------------------------
represents and warrants to the Guarantied Parties as follows:
(a) Such Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation, (ii) is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction in which the failure to so qualify has a reasonable likelihood
of having a Material Adverse Effect, (iii) has all requisite corporate power and
authority to own its properties, to lease the property it operates under lease
and to conduct its business as now or currently proposed to be conducted, (iv)
is in compliance with its certificate of incorporation and by-laws, (v) is in
compliance with all other applicable requirements of Law except for such
noncompliances as in the aggregate would have no Material Adverse Effect, and
(vi) has all necessary licenses, permits, consents or approvals from or by, has
made all necessary filings with, and has given all necessary notices to, each
Tribunal having jurisdiction, to the extent required for such ownership,
operation and conduct, except for licenses, permits, consents or approvals which
can be obtained by the taking of ministerial action to secure the grant or
transfer thereof or failures which in the aggregate would not have any
reasonable likelihood of having a Material Adverse Effect.
(b) The execution, delivery and performance by such Guarantor of this
Guaranty and the other Loan Documents to which it is a party:
(i) are within its corporate powers;
(ii) have been duly authorized by all necessary corporate action,
including, without limitation, the consent of stockholders where required;
and
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(iii) do not and will not (A) contravene its certificate of
incorporation or by-laws or other comparable governing documents, (B)
violate any other applicable requirement of Law (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System), or any order or decree of any Tribunal or
arbitrator except to the extent that any such violation could not
reasonably be expected to have a Material Adverse Effect, (C) conflict with
or result in the breach of, or constitute a default under, or result in or
permit the termination or acceleration of, any of its agreements, (D)
result in the creation or imposition of any Lien upon any of its property
other than those in favor of the Administrative Agent on behalf of and for
the ratable benefit of the Secured Parties and Liens permitted by the
Credit Agreement, or (E) require the consent of, authorization by, approval
of, notice to, or filing or registration with, any Tribunal or any other
Person.
(c) This Guaranty has been duly executed and delivered by such Guarantor
and is the legal, valid and binding obligation of much Guarantor enforceable
against it in accordance with its terms, subject to Debtor Relief Laws (insofar
as any such law relates to the bankruptcy, insolvency or similar event of the
Guarantor) and general principles of equity.
(d) There are no pending or, to the knowledge of such Guarantor, threatened
actions, investigations or proceedings to which such Guarantor or any of its
Subsidiaries is a party or, to such Guarantor's knowledge, affecting such
Guarantor or any of its Subsidiaries before any court, Tribunal or arbitrator
with respect to which there is a reasonable likelihood of an adverse
determination and that, if adversely determined, is reasonably likely to have a
Material Adverse Effect. The performance by such Guarantor under this Guaranty
and under each of the other Loan Documents to which it is a party is not
restrained or enjoined (either temporarily, preliminarily or permanently) and no
material adverse conditions have been imposed by any Tribunal or arbitrator upon
any of the foregoing transactions.
SECTION 16. Amendments. Etc. No amendment or waiver of any provision of
----------------
this Guaranty nor consent to any departure by any Guarantor herefrom shall in
any event be effective unless the same shall be in writing, approved by the
Determining Lenders (or by all the Lenders where the approval of each Lender is
required under the Credit Agreement) and signed by the Administrative Agent, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 17. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing and mailed, telecopied or delivered
by reputable overnight delivery service or by hand, if to any Guarantor,
addressed to it at its address specified on the signature pages hereof, if to
any Guarantied Party, addressed to it at the address of such Guarantied Party
specified in the Credit Agreement, or, as to each party, at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 6. All such notices and
other communications shall, when mailed, telecopied, or delivered, be effective
three days after being deposited in the mail, when telecopied with confirmation
of receipt, or when delivered by reputable overnight delivery service or by hand
to the addressee or its agent, respectively.
SECTION 18. No Waiver; Remedies. (a) No failure on the part of any
-------------------
Guarantied Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any
H-5
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law or any
of the other Loan Documents.
(b) Failure by any of the Guarantied Parties at any time or times hereafter
to require strict performance by the Borrower, any Guarantor or any other Person
of any of the provisions, warranties, terms or conditions contained in any of
the Loan Documents now or at any time or times hereafter executed by the
Borrower, any Guarantor or such other Person and delivered to any of the
Guarantied Parties shall not waive, affect or diminish any right of any of the
Guarantied Parties at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of any of the Guarantied Parties or any
agent, officer, employee of any of the Guarantied Parties.
(c) No waiver by the Guarantied Parties of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by any of the Guarantied Parties permitted hereunder shall in way affect
or impair any of the rights of the Guarantied Parties or the obligations of any
Guarantor under this Guaranty or under any of the other Loan Documents. Any
determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Obligations
shall be conclusive and binding on each Guarantor irrespective of whether such
Guarantor was a party to the suit or action in which such determination was
made.
SECTION 19. Right of Set-off. Upon the occurrence and during the
----------------
continuance of any Event of Default, each of the Guarantied Parties is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Guarantied Party to or for the credit or the account of each
Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing under this Guaranty, irrespective of whether or not such
Guarantied Party shall have made any demand under this Guaranty and although
such obligations may be contingent and unmatured. Each of the Guarantied
Parties agrees promptly to notify each Guarantor after any such set-off and
application made by such Guarantied Party; provided, however, that the failure
-------- -------
to give such notice shall not affect the validity of such set-off and
application. The rights of each Guarantied Party under this Section 8 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Guarantied Party may have.
SECTION 20. Continuing Guaranty; Transfer of Notes. Subject to Section
--------------------------------------
11, this Guaranty is a continuing guaranty and shall (i) remain in full force
and effect until payment in full of the Obligations payable under this Guaranty
after termination of the Commitments, (ii) be binding upon each Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be enforceable by
the Guarantied Parties and their respective successors, transferees, and
assigns. Without limiting the generality of the foregoing clause (iii), each of
the Guarantied Parties may assign or otherwise transfer any Note held by it or
Obligations owing to it to any other Person, and such other Person shall
thereupon become vested with all the rights in respect thereof granted to such
Guarantied Party herein or otherwise with respect to such of the Notes and
Obligations so transferred or assigned, subject, however, to compliance with the
provisions of Section 11.6 of the Credit Agreement in respect of assignments.
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SECTION 21. Reimbursement. To the extent that any Guarantor shall be
-------------
required to repay a portion of the Advances which shall exceed the greater of
(a) the amount of such Advances actually received by such Guarantor and (b) the
amount which such Guarantor would otherwise have paid if such Guarantor had
repaid the aggregate amount of such Advances (excluding the amount thereof
repaid by the Borrower) in the same proportion as such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty bears to the aggregate net worth of the
Guarantors (calculated for each Guarantor based on such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty), then such Guarantor shall be reimbursed by
----
the other Guarantors for the amount of such excess, pro rata, based on their
--- ----
respective net worth immediately after the Agreement Date or the date such
Guarantor becomes a party to this Guaranty, as applicable. This Section 10 is
intended only to define the relative rights of the Guarantors, and nothing set
forth in this Section 10 is intended to or shall impair the obligations of the
Guarantors, jointly and severally, to pay to the Guarantied Parties the
Obligations as and when the same shall become due and payable in accordance with
the terms hereof.
SECTION 22. Reinstatement. This Guaranty shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
any Obligor for liquidation or reorganization, should any Obligor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Obligor's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligees of the Obligations or such part thereof, whether as a "voidable
preference," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
SECTION 23. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND BE
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS). WHEREVER POSSIBLE, EACH
PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS GUARANTY
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY AND WITHOUT
INVALIDATING THE REMAINING PROVISIONS OF THIS GUARANTY.
SECTION 24. Submission to Jurisdiction; Jury Trial. (a) Any legal action
--------------------------------------
or proceeding with respect to this Guaranty or any document related thereto may
be brought in the courts of the State of Texas or the United States of America
for Dallas, Texas, and, by execution and delivery of this Guaranty, each
Guarantor hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor
hereby irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
----- ---
conveniens, which it may now or hereafter have to the bringing of any such
----------
action or proceeding in such respective
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jurisdictions and consents to the granting of such legal or equitable relief as
is deemed appropriate by the court.
(b) Each Guarantor irrevocably consents to the service of process of any of
the aforesaid courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Guarantor at
its address provided herein, such service to become effective 30 days after such
mailing.
(c) Nothing contained in this Section 13 shall affect the right of any
Guarantied Party to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against any Guarantor or any of
such Guarantor's property in any other jurisdiction.
(d) EACH GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF ANY OBLIGOR OR ANY
GUARANTIED PARTY.
SECTION 25. Section Titles. The Section titles contained in this Guaranty
--------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of this Guaranty.
SECTION 26. Execution in Counterparts. This Guaranty may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Guaranty.
SECTION 27. Miscellaneous. All references herein to the Borrower or to
-------------
any Guarantor shall include their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession of or for the
Borrower or such Guarantor. All references to the singular shall be deemed to
include the plural where the context so requires.
SECTION 28. Subrogation and Subordination.
-----------------------------
(a) Notwithstanding any reference to subrogation contained herein to
the contrary, each Guarantor hereby irrevocably waives any claim or other rights
which it may have or hereafter acquire against the Borrower that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, any right to
participate in any claim or remedy of any Lender against the Borrower or any
collateral which any Lender now has or hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statutes or common
law, including without limitation, the right to take or receive from the
Borrower, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Lenders, and shall forthwith be paid to the
Administrative Agent to be credited and applied upon the Obligations, whether
matured or
H-8
unmatured, in accordance with the terms of the Credit Agreement. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the waiver
set forth in this Section 17(a) is knowingly made in contemplation of such
benefits.
(b) All debt and other liabilities of the Borrower to any Guarantor
("Borrower Debt") are expressly subordinate and junior to the Obligations and
any instruments evidencing the Borrower Debt shall contain provisions acceptable
to the Determining Lenders providing for such subordination and shall be binding
on all holders of such Borrower Debt.
SECTION 29. Guarantor Insolvency. Should any Guarantor voluntarily seek,
--------------------
consent to, or acquiesce in the benefits of any Debtor Relief Law or become a
party to or be made the subject of any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the rights of any Lender granted hereunder, then, the
obligations of such Guarantor under this Guaranty shall be, as between such
Guarantor and such Lender, a fully-matured, due, and payable obligation of such
Guarantor to such Lender (without regard to whether the Borrower is then in
default under the Credit Agreement or whether any part of the Obligations is
then due and owing by the Borrower to such Lender), payable in full by such
Guarantor to such Lender upon demand, which shall be the estimated amount owing
in respect of the contingent claim created hereunder.
SECTION 30. Rate Provision. It is not the intention of any Lender to make
--------------
an agreement violative of the laws of any applicable jurisdiction relating to
usury. Regardless of any provision in this Guaranty, no Lender shall ever be
entitled to contract, charge, receive, collect or apply, as interest on the
Obligations, any amount in excess of the Highest Lawful Rate. In no event shall
any Guarantor be obligated to pay any amount in excess of the Highest Lawful
Rate. If from any circumstance the Administrative Agent or any Lender shall
ever receive anything of value deemed excess interest under applicable law, an
amount equal to such excess shall be applied to the reduction of the principal
amount of outstanding Advances, and any remainder shall be promptly refunded to
the payor. In determining whether or not interest paid or payable with respect
to the Obligations, under any specified contingency, exceeds the Highest Lawful
Rate, the Guarantors and the Lenders shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such Obligations so that the interest paid
on account of such Obligations does not exceed the Highest Lawful Rate and/or
(d) allocate interest between portions of such Obligations; provided that if the
Obligations 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 the Highest Lawful Rate, the Lenders shall refund to
the payor the amount of such excess or credit the amount of such excess against
the total principal amount owing, and, in such event, no Lender shall be subject
to any penalties provided by any laws for contracting for, charging or receiving
interest in excess of the Highest Lawful Rate.
Section 31. Severability. If any provision of this Guaranty is held to be
------------
illegal, invalid, or unenforceable under present or future laws during the term
thereof, such provision shall be fully severable, this Guaranty shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect
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and shall not be affected by the illegal, invalid, or unenforceable provision or
by its severance herefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of this
Guaranty a legal, valid, and enforceable provision as similar in terms to the
illegal, invalid, or unenforceable provision as may be possible.
SECTION 32. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL
----------------
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
Notice Address for all Guarantors
for this Guaranty:
By:
Name:
Title:
Telephone:
Telecopier:
Accepted and Acknowledged:
NATIONSBANK OF TEXAS, N.A., as
Administrative Agent
By:
Name:
Title:
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EXHIBIT I
NOTICE OF BORROWING
NationsBank of Texas, N.A., as
Administrative Agent
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Re: Xxxxxxxx Manufacturing Company, Inc.
------------------------------------
Gentlemen:
The undersigned, an Authorized Signatory of Xxxxxxxx Manufacturing Company,
Inc., to the Credit Agreement, dated as of September 19, 1997, among the
undersigned, the financial institutions party thereto and NationsBank of Texas,
N.A., as Administrative Agent (said Agreement, as it may be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement" and capitalized terms not defined herein but defined therein being
used herein as therein defined), and hereby gives you notice, irrevocably,
pursuant to Section 2.1 of the Credit Agreement, that the undersigned hereby
requests a [Revolving Credit Advance] [Facility A Term Loan Advance] [Facility B
Term Loan Advance] under the Credit Agreement, and in that connection sets forth
below the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.1 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _____________, ____.
(ii) The aggregate amount of the [Revolving Credit] [Facility A Term
Loan] [Facility B Term Loan] Advances constituting the Proposed Borrowing
is $___________, of which amount $_______ consists of Base Rate Advances,
$_________ consists of LIBOR Rate Advances having an initial Interest
Period of _____ months.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(A) the representations and warranties of the Borrower contained in Article
4 of the Credit Agreement and in each of the other Loan Documents to which
it is a party (other than those representations and warranties that
specifically relate to an earlier date) are true and correct as though made
on and as of such date; and
(B) no Default or Event of Default is continuing, or will result from the
Proposed Borrowing.
I-1
Very truly yours,
XXXXXXXX MANUFACTURING COMPANY, INC.
By:
Name:
Title:
I-2
EXHIBIT J-1
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Xxxxx X. Xxxxxxxxxx
XXXXXXX, XXXXXXX & XXXXXXX, P.C.
3400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THE STATE OF ________ (S)
(S) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF ___________ (S)
THAT, XXXXXXXX MANUFACTURING COMPANY, INC., a Texas corporation
("Grantor"), for and in consideration of the sum of Ten Dollars to Grantor in
-------
hand paid by XXXXXXX X. XXXX, Trustee, of 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxxx Xxxxxx, Xxxxx 00000 ("Trustee"), in order to secure the payment of the
-------
indebtedness hereinafter referred to and the performance of the obligations,
covenants, agreements and undertakings of Grantor hereinafter described, does
hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to Trustee,
WITH POWER OF SALE, for the benefit of NationsBank of Texas, N.A., a national
banking association ("NationsBank"), having its principal office at 901 Main
-----------
Street, 67th Floor, Xxxxxx, Xxxxx 00000, as the administrative agent (in such
capacity NationsBank is called "Administrative Agent") on behalf of NationsBank
--------------------
and each other lender which is now or hereafter a party to the Credit Agreement
(as defined below) (collectively, "Banks" and singly, a "Bank") all of Grantor's
----- ----
leasehold interest in the real estate situated in Tarrant County, Texas
described in Exhibit A attached hereto and made a part hereof (the "Land"),
--------- ----
together with (i) all rights, power and privileges of Grantor as lessee under
those certain Lease Agreements with the lessors (the "Lessors") as described on
-------
Exhibit B attached hereto and made a part hereof, and memoranda of which are, or
---------
will be simultaneously herewith, recorded in the office of County Clerk of
_____________ County, (such Lease Agreements, together with any amendments,
modifications, renewals, extensions, amendments and restatements thereof,
collectively, the "Leases" and individually, a "Lease"); (ii) all of Grantor's
------ -----
interest in the buildings and other improvements ("Improvements") now on or that
------------
may be hereafter placed on said Land; (iii) Grantor's interest in all materials,
equipment, fixtures or other property whatsoever, now or hereafter attached to,
installed in, or used in connection with the buildings and other improvements
now erected or hereafter to be erected on said Land, including, but not limited
to, all heating, plumbing, lighting, water heating, cooking, laundry,
refrigerating, incinerating, ventilating and air conditioning equipment,
disposals, dishwashers, refrigerators and ranges, utility lines and equipment
(whether owned individually or jointly with others), sprinkler systems, fire
extinguishing apparatus and equipment, tanks, engines, pipers, fittings,
dynamos, generators, machines, elevators, motors, cabinets, shades, blinds,
partitions, window screens, screen doors, storm windows, awnings, drapes, and
rugs and other floor coverings, and all fixtures, accessions and appurentances
thereto, and all renewals or replacements of or
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substitutions for any of the foregoing, all of which property and things are
hereby declared to be permanent fixtures and accessions to the leasehold and
part of the realty conveyed herein as security for the indebtedness herein
mentioned; (iv) all interests now or hereafter of Grantor in and to all
easements and rights of way now or hereafter used in connection with any of the
foregoing real estate or as a means of ingress to or egress from said real
estate; (v) all interests now or hereafter of Grantor in and to any streets,
ways, alleys and/or strips of land adjoining said Land or any part thereof; (vi)
all licenses of Grantor necessary for the operation and maintenance of the
foregoing; and (vii) all rights, estates, hereditaments, powers and privileges
of Grantor appurtenant or incident to the foregoing. This conveyance shall
include and the lien, security interest and assignment created hereby shall
encumber and extend to all other, further or additional title, estates, interest
or rights which may exist now or at any time be acquired by Grantor in or to the
property demised under any lease creating a leasehold estate related to or
covering all or any of the foregoing property and including Grantor's rights, if
any, to purchase the property demised under any such lease and, if fee simple
title to any of such property shall ever become vested in Grantor, such fee
simple interest shall be encumbered by this Deed of Trust in the same manner as
if Grantor had fee simple title to such property as of the date of execution
hereof.
TO HAVE AND TO HOLD the foregoing property (the "Mortgaged Property") unto
------------------
Trustee and his successors or substitutes in this trust and to his or their
successors and assigns, IN TRUST, WITH POWER OF SALE, for the benefit of
Administrative Agent, however, upon the terms, provisions and conditions herein
set forth.
In order to secure the payment of the indebtedness described in this
Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Financing Statement ("Deed of Trust") and the performance of the obligations,
-------------
covenants, agreements and undertakings of Grantor described in this Deed of
Trust, Grantor hereby grants to Administrative Agent a security interest and
lien in all of Grantor's right, title and interest in and to all present and
future (i) goods, inventory, equipment (excluding, however, any equipment or
other property which is financed with Indebtedness permitted to be incurred
pursuant to Sections 7.1(c) and 7.1(h) of the Credit Agreement), furnishings,
fixtures, furniture, chattels and personal property of whatever nature owned by
Grantor now or hereafter attached or affixed to or used in or about the building
or buildings now erected or hereafter to be erected on the Mortgaged Property,
or otherwise located on the Mortgaged Property, (ii) fixtures, accessions and
appurtenances to any of the foregoing or following, (iii) renewals or
replacements of or substitutions for any of the foregoing or following, (iv)
building materials and equipment now or hereafter delivered to said premises and
intended to be installed therein, (v) occupancy agreements, leases, rents
(including security deposits and advance rentals under lease agreements now or
at any time hereafter covering or affecting any of the Mortgaged Property and
all property described in this Paragraph and held by or for the benefit of
---------
Grantor), fees, royalties, bonuses, issues, room rents, profits, revenues or
other income or benefits of whatever nature received or due in connection with
the Mortgaged Property and all property described in this Paragraph, (vi)
---------
monetary deposits which Grantor has been required to give to any public or
private utility with respect to utility services furnished to the Mortgaged
Property or to the Lessor or other lessor of the Real Property, (vii) permits,
licenses, franchises, certificates and agreements related to the foregoing, and
other rights and privileges obtained in connection with, or necessary for the
operation and maintenance of, the foregoing, and all other rights and privileges
obtained in connection with the Mortgaged Property and all property described in
this Paragraph, (viii) plans, specifications, maps, surveys, reports, operating,
---------
management and maintenance contracts, architectural, engineering and
construction contracts, books of
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account, insurance policies, guarantees, warranties and other documents, of
whatever kind or character, relating to the use, construction upon, occupancy,
leasing, sale or operation of the Mortgaged Property and all property described
in this Paragraph, (ix) all proceeds from the taking of any of the Mortgaged
---------
Property and any property described in this Paragraph or any rights appurtenant
---------
thereto by right of eminent domain or by private or other purchase in lieu
thereof, (x) all proceeds (including premium refunds) of each policy of
insurance relating to the Mortgaged Property and any property described in this
Paragraph, (xi) all guarantees, sureties and other agreements assuring
---------
performance of any obligation of any tenant of the Mortgaged Property and all
property described in this Paragraph, and (xii) all proceeds arising from or by
---------
virtue of the sale, lease or other disposition of the Mortgaged Property and any
property described in this Paragraph (all of the property described in this
---------
Paragraph hereinafter collectively called the "Personal Property") and all
--------- -----------------
proceeds and products of the Personal Property. (The Mortgaged Property and the
Personal Property are hereinafter sometimes collectively called the "Property").
--------
ARTICLE I
Secured Indebtedness
--------------------
33.a. Secured Indebtedness. This Deed of Trust is made to secure and
enforce the payment of the following, agreements, documents, obligations,
indebtedness and liabilities: (a) all present and future obligations,
indebtedness and liabilities, and all renewals and extensions of all or any part
thereof of Grantor to Banks or any Bank arising from, by virtue of, or pursuant
to the Credit Agreement dated as of September 19, 1997, among the Grantor,
Administrative Agent and Banks (said Credit Agreement, as amended, modified,
renewed, extended, restated or refinanced from time to time, the "Credit
Agreement"), the Notes (as defined in the Credit Agreement), the other Loan
Documents (as defined in the Credit Agreement), including, without limitation,
interest, fees and other charges that would accrue or become owing both prior to
and subsequent to and but for the commencement of any proceeding against or with
respect to Grantor under any chapter of the Bankruptcy Code of 1978, 11 U.S.C.
(S) 101 et. seq. whether or not a claim is allowed for the same in any such
-- ---
proceeding, and (b) all indebtedness and obligations incurred or arising
pursuant to the provisions of this Deed of Trust. The indebtedness referred to
in this Paragraph 1.1 is hereinafter sometimes called the "Secured
-------
Indebtedness". Initially-capitalized terms used herein and not otherwise herein
defined shall have the meaning given to such terms in the Credit Agreement.
ARTICLE II.
Representations and Warranties
------------------------------
34.a. Representations and Warranties. Grantor represents and warrants to
the Trustee and the Banks as follows:
(a) Title and Authority. Grantor is the lawful owner of good title
to the Leases, and has good right and authority to grant, bargain, sell,
transfer, assign and mortgage the Mortgaged Property, subject to Lessor's
consent, and to grant a security interest in the Personal Property.
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(b) Warranty. For so long as any of the Secured Indebtedness shall be
outstanding, Grantor will warrant and defend the title to the Mortgaged
Property against the claims of all persons whomsoever claiming or to claim
the same or any part thereof, subject to Permitted Liens.
(c) Leases. The Leases on the Land are in full force and effect; no
default (nor any event, which with notice or lapse of time or both, could
cause such a default) has occurred and is continuing thereunder and there
have been no renewals and/or extensions of, or supplements, modifications,
or amendments to any Lease. Grantor is in the possession of the premises
covered by, and leased under the Leases. No other lease or rental
agreement, oral or written, relates to Grantor's use or occupancy of the
Mortgaged Property other than the Leases.
2.b. Covenants and Agreements. So long as the Secured Indebtedness or any
part thereof remains unpaid, Grantor covenants and agrees with the Trustee and
the Banks as follows:
(a) Taxes on Lien.
In the event of the enactment after the date hereof of any law of the
State of Texas or of any other governmental entity deducting from the value
of property for the purpose of taxation any lien or security interest
thereon, or imposing upon the Trustee, the Administrative Agent or any Bank
the payment of the whole or any part of the taxes (excluding income,
franchise, gross receipts or similar taxes imposed on the Banks, the
Trustee or the Administrative Agent) or assessments or charges or liens
herein required to be paid by Grantor, or changing in any way the laws
relating to the taxation of deeds of trust or mortgages or security
agreements or debts secured by deeds of trust or mortgages or security
agreements or the interest of the trustee or beneficiary or mortgagee or
secured party in the property covered thereby, or the manner of collection
of such taxes, so as to affect this Deed of Trust or any of the Secured
Indebtedness or the Trustee, the Administrative Agent or any Bank, then,
and in any such event, Grantor, upon demand by the Trustee, the
Administrative Agent or any Bank, shall to the extent not prohibited by
Applicable Law, pay such taxes, assessments, charges or liens, or reimburse
the Trustee, the Administrative Agent or such Bank therefor.
(b) Grantor will maintain insurance with respect to the Mortgaged
Property in accordance with the Credit Agreement. Administrative Agent
understands and acknowledges that the Lease requires that all property
insurance maintained with respect to the leased premises provide that the
proceeds of such insurance be payable to the Lessors or the Lessors'
mortgagees, subject to all applicable provisions of the Leases with respect
to the use of such proceeds to restore the Improvements.
(c) Protection and Defense of Lien. If the validity of this Deed of
Trust or of any rights, titles, liens or security interests created or
evidenced hereby with respect to the Property or any part thereof shall be
attacked directly or indirectly or if any legal proceedings are instituted
against Grantor with respect thereto, Grantor will give prompt written
notice thereof to the Administrative Agent and at Grantor's own cost and
expense diligently will endeavor to cure any defect that may be developed
or claimed, and will take all necessary and proper steps for the defense of
such legal
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proceedings, including but not limited to the employment of counsel, the
prosecution or defense of litigation and the release or discharge of all
adverse claims, other than Permitted Liens, and the Trustee and
Administrative Agent, or either of them (whether or not named as parties to
legal proceedings with respect thereto) are hereby authorized and empowered
to take such additional steps as in their judgment and discretion
reasonably may be necessary or proper for the defense of any such legal
proceedings or the protection of the validity of this Deed of Trust and the
rights, titles, liens and security interests created or evidenced hereby,
including but not limited to the employment of counsel, the prosecution or
defense of litigation, the compromise or discharge of any adverse claims
made with respect to the Property, other than Permitted Liens, the purchase
of any tax title and the removal of prior liens or security interests which
do not constitute Permitted Liens, and all reasonable expenses so incurred
of every kind and character shall be a demand obligation owing by Grantor,
and the party incurring such expenses shall be subrogated to all rights of
the person receiving such payment. Should the Trustee or the
Administrative Agent intend to take any such action described in the
immediately preceding sentence, the Trustee or the Administrative Agent, as
appropriate, shall, subject to the immediately succeeding proviso, prior to
-------
taking any such action notify Grantor of such intention and give Grantor a
reasonable opportunity to provide such defense or protection; provided,
--------
however, if in the reasonable opinion of the Trustee or the Administrative
-------
Agent the giving of such notice and opportunity to provide such defense or
protection would materially impair or materially hinder such defense or
protection or would otherwise be materially disadvantageous to rights or
interests of the Trustee or the Administrative Agent hereunder or the
rights, title, liens or security interests created or evidenced hereby, the
Trustee and the Administrative Agent shall have no obligation to give such
notice and opportunity to provide such defense or protection prior to the
taking of any such action, but after taking any such action Trustee or
Administrative Agent shall give notice thereof to Grantor.
(d) Permitted Liens. Grantor will comply with and will perform all of
the covenants, agreements and obligations imposed upon it or the Property
in the Permitted Liens in accordance with their respective terms and
provisions if the failure to do so would have a Material Adverse Effect.
Grantor will not modify or permit any modification of any Permitted Lien
against the Mortgaged Property the result of which would have a Material
Adverse Effect without the prior written consent of Administrative Agent.
(e) Books and Records. Grantor will permit all contracts, statements,
invoices, bills and claims for labor, materials and services supplied for
the construction and operation of the improvements forming a part of the
Property to be inspected and copied by Administrative Agent and its
representatives at all times during reasonable business hours upon
reasonable notice; provided, however, if a Default shall have occurred and
be continuing there shall be no requirement to give reasonable notice. If
applicable, such information shall be kept confidential in accordance with
Section 11.14 of the Credit Agreement.
(f) Leases. Grantor may not lease or enter into any other occupancy
agreement authorizing the occupancy of any portion of any of the Mortgaged
Property by third parties without the prior written consent of
Administrative Agent, which consent shall not be unreasonably withheld.
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(g) Estoppel Certificate. Grantor shall at any time and from time to
time furnish promptly upon request a written statement in such form as may
be reasonably required by Administrative Agent stating (if it is the fact)
that the Leases are in full force and effect; that the Leases have not been
released, subordinated or modified; that there are no offsets or defenses
against the enforcement of any Lease; that this Deed of Trust is a valid
and binding obligation of Grantor, enforceable against Grantor in
accordance with its terms, subject to Debtor Relief Laws (as such term is
defined in the Credit Agreement); that this Deed of Trust has not been
released, subordinated or modified; and that to the best of Grantor's
knowledge there are no offsets or defenses against the enforcement of this
Deed of Trust, or if any of the foregoing statements are untrue, specifying
the reasons therefor.
(h) Compliance with Laws. Grantor shall, and shall use reasonable
efforts to cause any tenant of the Property to, comply with all applicable
restrictive covenants and all Applicable Laws except where failure to do so
could not be reasonably expected to have a Material Adverse Effect.
(i) Tax and Insurance Escrow. Upon the occurrence and during the
continuance of a Default, Grantor will upon written request of
Administrative Agent, deposit with Administrative Agent a sum equal to
accrued and unpaid ad valorem taxes, assessments and charges (which charges
for the purpose of this subparagraph shall include without limitation
ground rents and water and sewer rents and any other recurring charge which
could create or result in a lien against the Property) against the Property
for the then current year and the accrued and unpaid premiums for such
policies of insurance for the then current year, all as reasonably
estimated by Administrative Agent and prorated to the end of the calendar
month following the month during which such Default occurred, and
thereafter will deposit with Administrative Agent, on each date when an
installment of interest is due on the Notes, sufficient funds (as
reasonably estimated from time to time by Administrative Agent) to permit
the Administrative Agent to pay, at least 5 days prior to the delinquency
date thereof, the next maturing ad valorem taxes, assessments and charges
and premiums for such policies of insurance. Administrative Agent shall
have the right to rely upon tax information furnished by applicable taxing
authorities in the payment of such taxes or assessments and shall have no
obligation to make any protest of any such taxes or assessments. Any
excess over the amounts required for such purposes shall be held by
Administrative Agent for payment of future taxes, assessments, charges and
premiums, applied to any Secured Indebtedness, or refunded to Grantor, at
Administrative Agent's option; and any deficiency in such funds so
deposited shall be made up by Grantor upon demand of Administrative Agent.
All such funds so deposited shall bear interest at the normal interest rate
for money market deposits at NationsBank, may be mingled with the general
funds of Administrative Agent and shall be applied by Administrative Agent
toward the payment of such taxes, assessments, charges and premiums when
statements therefor are presented to Administrative Agent by Grantor (which
statements shall be presented by Grantor to Administrative Agent a
reasonable time before the applicable amount is due); provided, however,
that if Administrative Agent has made demand for payment of all of the
Secured Indebtedness, such funds may at Administrative Agent's option be
applied to the payment of the Secured Indebtedness in the order determined
by Administrative Agent and that Administrative Agent may at any time, in
its discretion, apply all or any part of such funds toward the payment of
any such taxes, assessments, charges or premiums which are past due,
together with any penalties or late charges with respect thereto. The
conveyance or transfer of Grantor's interest
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in the Property for any reason (including without limitation the
foreclosure of a subordinate lien or security interest or a transfer by
operation of law) shall constitute an assignment of transfer of Grantor's
interest in and rights to such funds held by Administrative Agent under
this subparagraph (i) but subject to the rights of Administrative Agent
hereunder.
(j) Further Assurances. Grantor will, on request of Administrative
Agent, (i) promptly correct any defect or error which may be discovered in
the contents of this Deed of Trust or in any other instrument executed in
connection herewith or in the execution or acknowledgment thereof; (ii)
execute, acknowledge, deliver and record or file such further instruments
(including without limitation further deeds of trust, security agreements,
financing statements, continuation statements and assignments of rents or
leases) and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purposes of this Deed of Trust and such
other instruments and to subject to the liens and security interests hereof
and thereof any property intended by the terms hereof and thereof to be
covered hereby and thereby including specifically, but without limitation,
any renewals, additions, substitutions, replacements, or appurtenances to
the Property; (iii) execute, acknowledge, deliver, procure and record or
file any document or instrument (including specifically any financing
statement) deemed reasonable by Administrative Agent to protect the lien or
the security interest hereunder against the rights or interests of third
persons, and Grantor will pay all reasonable costs connected with any of
the foregoing; and (iv) use reasonable efforts to cause any tenant under
any lease agreement of any of the Property to furnish, in the manner and to
the extent required under the Lease, any instrument or perform, in the
manner and to the extent required under the Lease, any act reasonably
deemed advisable by Administrative Agent to protect the lien or the
security interest hereunder.
(k) Leases. To the extent that a contrary action or omission would be
reasonably likely to cause a Material Adverse Effect: (1) Grantor shall
punctually and properly perform, observe, and otherwise comply with each
and every covenant, agreement, requirement and condition set forth in the
Leases, and do or cause to be done all things necessary or appropriate to
keep the Leases in full force and effect and to preserve and keep
unimpaired the rights of Grantor, Trustee and Administrative Agent
thereunder, and Grantor shall neither do nor suffer to be done any act of
commission or omission which would justify the Lessor under any Lease to
cancel same, evict Grantor, or declare due and payable all or any part of
the rental and other sums payable thereunder in advance of the time
specified therein for the payment thereof; (2) Grantor will not, without
the express written consent of Administrative Agent, surrender, forfeit,
cancel or terminate, or permit the surrender, forfeiture, cancellation, or
termination of any Lease in whole or in part, whether or not a default
shall have occurred and shall be continuing thereunder; and (3) Grantor
will not, without the express prior written consent of Administrative
Agent, amend, modify or impair, or permit the amendment, modification or
impairment of any Lease in any manner which would materially adversely
affect rights of Grantor, Trustee or Administrative Agent thereunder.
Grantor shall promptly notify Administrative Agent in writing upon receipt
or delivery by Grantor of any written notice of default under any Lease.
If for any reason Grantor cannot timely make any payment under any Lease or
perform or comply with any of its obligations under any Lease, Grantor
shall notify Administrative Agent in sufficient time to enable
Administrative Agent (but Administrative Agent shall not be obligated) to
timely make such payments and/or to perform or comply with such other
obligations.
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2.c. Right of Administrative Agent to Perform. Grantor agrees that, if
after any applicable notice or grace period, Grantor fails to perform any act or
to take any action which hereunder Grantor is required to perform or take, or to
pay any money which hereunder Grantor is required to pay, Administrative Agent,
in Grantor's name or in its own name and after the giving of any required notice
and expiration of any applicable cure period, may but shall not be obligated to
perform or cause to be performed such act or take such action or pay such money,
and any reasonable expenses so incurred by Administrative Agent, and any money
so paid by Administrative Agent, shall be a demand obligation owing by Grantor
to Administrative Agent and Administrative Agent, upon making such payment,
shall be subrogated to all of the rights of the person or entity receiving such
payment. Any amounts due and owing by Grantor to Administrative Agent pursuant
to this Deed of Trust shall bear interest from the date such amount becomes due
until paid at a rate of interest per annum equal to the lesser of (i) Base Rate
Basis, plus 2%, or (ii) the Highest Lawful Rate, and shall be a part of the
Secured Indebtedness and shall be secured by this Deed of Trust and by any other
Loan Document. Should Administrative Agent intend to perform or cause to be
performed such act or take such action or pay such money, Administrative Agent
shall, subject to the immediately succeeding proviso, prior to taking any such
-------
action notify Grantor of such intention and give Grantor a reasonable
opportunity to take such action; provided, however, if in the reasonable opinion
-------- -------
of Administrative Agent the giving of such notice and opportunity to take action
would materially impair the validity or priority of this Deed of Trust, the
rights or interests of the Trustee or Administrative Agent hereunder or any
rights, titles, liens or security interests created or evidenced hereby,
Administrative Agent shall have no obligation to give such notice and
opportunity to take action prior to taking of such action, but, nevertheless,
shall give prompt written notice of the taking of such action to Grantor.
ARTICLE III.
Remedies in Event of Default
----------------------------
35.a. Defaults. The term "Default" as used in this Deed of Trust shall
-------
mean the occurrence and continuance of an "Event of Default" as defined in the
Credit Agreement.
3.b. Acceleration. Upon the occurrence and during the continuance of a
Default, Administrative Agent shall have the option of declaring all Secured
Indebtedness in its entirety to be immediately due and payable, and the liens
and security interests evidenced hereby shall be subject to foreclosure in any
manner provided for herein or provided for by law as Administrative Agent may
elect.
3.c. Possession. Upon the occurrence and during the continuance of a
Default, Administrative Agent is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Property, or any
part thereof, and to take possession of the Property and of all books, records
and accounts relating thereto and to exercise without interference from Grantor
any and all rights which Grantor has with respect to the management, possession,
operation, protection or preservation of the Property, including the right to
rent the same for the account of Grantor and to deduct from such rents all
reasonable costs, expenses and liabilities of every reasonable character
incurred by Administrative Agent in collecting such rents and in managing,
operating, maintaining, protecting or preserving the Property and to apply the
remainder of such rents on the Secured Indebtedness in such manner as
Administrative Agent may elect. All such costs, expenses and liabilities
incurred by Administrative Agent in collecting such rents and in
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managing, operating, maintaining, protecting or preserving the Property, if not
paid out of rents as hereinabove provided, shall constitute a demand obligation
owing by Grantor and shall bear interest from the date of expenditure until paid
at a rate of interest per annum equal to the Default Rate, all of which shall
constitute a portion of the Secured Indebtedness. If necessary to obtain the
possession provided for above, Administrative Agent may invoke any and all legal
remedies to dispossess Grantor, including specifically one or more actions for
forcible entry and detainer, trespass to try title and restitution. In
connection with any action taken by Administrative Agent pursuant to this
Paragraph 3.3, Administrative Agent shall not be liable for any loss sustained
by Grantor resulting from any failure to let the Property, or any part thereof,
or from any other act or omission of Administrative Agent in managing the
Property, including without limitation, the negligence of Administrative Agent,
unless such loss is caused by the gross negligence or willful misconduct of
Administrative Agent, and Administrative Agent shall not be obligated to perform
or discharge any obligation, duty or liability under any lease agreement
covering the Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Should
Administrative Agent incur any such liability, the amount thereof, including
reasonable costs, expenses and reasonable attorneys' fees, shall be secured
hereby, and Grantor shall reimburse Administrative Agent therefor immediately
upon demand. Nothing in this Paragraph 3.3 shall impose any duty, obligation or
responsibility upon Administrative Agent for the control, care, management or
repair of the Property, or shall operate to make Administrative Agent
responsible or liable for any waste committed on the Property or by any other
parties or for any dangerous or defective condition of the Property, or for any
negligence in the management, upkeep, operation, repair or control of the
Property resulting in loss or injury or death to any tenant, licensee, employee
or stranger, unless such waste, dangerous or defective condition or injury or
death is directly a result of gross negligence or willful misconduct by
Administrative Agent, and not just Administrative Agent's own ordinary
negligence.
3.d. Foreclosure. During a Default, Trustee, his successor or substitute,
is authorized and empowered and it shall be his special duty at the request of
Administrative Agent to take all actions necessary to sell the Mortgaged
Property or any part thereof situated in the State of Texas in accordance with
the statutes of the State of Texas then in force governing sales of real estate
under powers conferred by deed of trust. Any sale made by Trustee hereunder may
be of the entire Mortgaged Property or in such parcels as Administrative Agent
may request, and any sale may be adjourned by announcement at the time and place
appointed for such sale without further notice except as may be required by law.
The sale by Trustee of less than the whole of the Mortgaged Property shall not
exhaust the power of sale herein granted, and Trustee is specifically empowered
to make successive sale or sales under such power until the whole of the
Mortgaged Property shall be sold; and, if the proceeds of such sale of less than
the whole of the Mortgaged Property shall be less than the aggregate of the
Secured Indebtedness and the expense of executing this trust as provided herein,
this Deed of Trust and the lien hereof shall remain in full force and effect as
to the unsold portion of the Mortgaged Property just as though no sale had been
made; provided, however, that Grantor shall never have any right to require the
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sale of less than the whole of the Mortgaged Property but Administrative Agent
shall have the right, at its sole election, to request Trustee to sell less than
the whole of the Mortgaged Property. After each sale, Trustee shall make to the
purchaser or purchasers at such sale good and sufficient conveyances in the name
of Grantor, conveying the Mortgaged Property so sold to the purchaser or
purchasers with general warranty of leasehold title, and shall receive the
proceeds of said sale or sales and apply the same as herein provided. Payment
of the purchase price to Trustee shall satisfy the obligation of purchaser at
such sale therefor, and such purchaser shall not be responsible for the
application thereof. The power of sale granted herein shall not
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be exhausted by any sale held hereunder by Trustee or his substitute or
successor, and such power of sale may be exercised from time to time and as many
times as Administrative Agent may deem necessary until all of the Mortgaged
Property has been duly sold and all of the Secured Indebtedness has been fully
paid. In the event any sale hereunder is not completed or is defective in the
opinion of Administrative Agent, such sale shall not exhaust the power of sale
hereunder and Administrative Agent shall have the right to cause a subsequent
sale or sales to be made hereunder. Any and all statements of fact or other
recitals made in any deed or deeds given by Trustee or any successor or
substitute appointed hereunder as to nonpayment of the Secured Indebtedness, or
as to the occurrence of any Default, or as to Administrative Agent having
declared all of such indebtedness to be due and payable, or as to the request to
sell, or as to notice of time, place and terms of sale and of the properties to
be sold having been duly given, or as to the refusal, failure or inability to
act of Trustee or any substitute or successor, or as to the appointment of any
substitute or successor trustee, or as to any other act or thing having been
duly done by Administrative Agent or by such Trustee, substitute or successor,
shall be taken as prima facie evidence of the truth of the facts so stated and
recited. Trustee, his successor or substitute, may appoint or delegate any one
or more persons as agent to perform any act or acts necessary or incident to any
sale held by Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of Trustee, his successor or substitute.
3.e. Judicial Foreclosure. This instrument shall be effective as a
mortgage as well as a deed of trust and during a Default may be foreclosed as to
any of the Property in any manner permitted by the laws of the State of Texas or
of any other state in which any part of the Property is situated, and any
foreclosure suit may be brought by the Trustee or by Administrative Agent. In
the event a foreclosure hereunder shall be commenced by the Trustee or his or
her substitute or successor, Administrative Agent may at any time before the
sale of the Property direct the said Trustee to abandon the sale, and may then
institute suit for the collection of the Notes and the other Secured
Indebtedness, and for the foreclosure of this Deed of Trust. It is agreed that
if Administrative Agent should institute a suit for the collection of the Notes
or any other Secured Indebtedness and for the foreclosure of this Deed of Trust,
Administrative Agent may at any time before the entry of a final judgment in
said suit dismiss the same, and require the Trustee or his or her substitute or
successor to sell the Property in accordance with the provisions of this Deed of
Trust.
3.f. Receiver. In addition to all other remedies herein provided for,
Grantor agrees that during a Default, Administrative Agent shall as a matter of
right be entitled to the appointment of a receiver or receivers for all or any
part of the Property, whether such receivership be incident to a proposed sale
of such Property or otherwise, and without regard to the value of the Property
or the solvency of any person or persons liable for the payment of the Secured
Indebtedness, and Grantor does hereby consent to the appointment of such
receiver or receivers, waives any and all defenses to such appointment and
agrees not to oppose any application therefor by Administrative Agent, but
nothing herein is to be construed to deprive Administrative Agent of any other
right, remedy or privilege it may now or hereafter have under the law to have a
receiver appointed; provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Administrative Agent
to receive payment of the rents and income from the Property. Any money
advanced by Administrative Agent in connection with any such receivership shall
be a demand obligation owing by Grantor to Administrative Agent and shall bear
interest from the date of making such advancement by Administrative Agent until
paid at a rate of interest per annum equal to the lesser of (i) the
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Base Rate Basis plus 2%, or (ii) the Highest Lawful Rate, and shall be secured
by this Deed of Trust and by any other instrument securing the Secured
Indebtedness.
3.g. Proceeds of Sale. The proceeds of any sale held by the Trustee or any
receiver or public officer in foreclosure of the liens evidenced hereby shall be
applied:
first, to the payment of all necessary reasonable costs and expenses
-----
incident to such foreclosure sale, including but not limited to all court
costs and charges of every character in the event foreclosed by suit, and a
reasonable fee to the Trustee acting under the provisions of Paragraph 3.4
if foreclosed by power of sale as provided in Paragraph 3.4;
second, to the payment in full of the Secured Indebtedness (including
------
specifically without limitation the principal, interest and reasonable
attorneys' fees due and unpaid on the Notes and the amounts due and unpaid
and owed to Administrative Agent under this Deed of Trust), to be
distributed pro rata to each Bank based on the percentage that the amount
of the Secured Indebtedness owing to each Secured Party bears to the total
unpaid amount of the Obligations; and
third, the remainder, if any, shall be paid to Grantor or other party
-----
legally entitled thereto.
3.h. The Administrative Agent as Purchaser. Administrative Agent shall
have the right to become the purchaser at any sale held by any Trustee or
substitute or successor or by any receiver or public officer, and Administrative
Agent purchasing at such sale shall have the right to credit upon the amount of
the bid made therefor, to the extent necessary to satisfy such bid, the Secured
Indebtedness owing to the Administrative Agent and/or Banks for the equal and
ratable benefit of Banks.
3.i. Uniform Commercial Code.
(a) During a Default, the Administrative Agent may exercise its rights
of enforcement with respect to the Personal Property under the Uniform
Commercial Code as adopted in the State of Texas, as amended, and in
conjunction with, in addition to or in substitution for those rights and
remedies, and all rights and remedies granted to Banks under any Loan
Document executed by Grantor governing security interests in personal
property of Grantor.
(b) any sale made pursuant to the provisions of this Paragraph 3.9
shall be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with the sale of the Mortgaged
Property under power of sale as provided herein upon giving the same notice
with respect to the sale of the Personal Property hereunder as is required
for such sale of the Mortgaged Property under power of sale; and
(c) any and all statements of fact or other recitals made in any xxxx
of sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of the Secured Indebtedness, or as to the
occurrence of any Default, or as to Administrative Agent and/or Banks
having declared all of such indebtedness to be due and payable, or as to
notice of time, place and terms of sale and of the properties to be sold
having been duly given, or as to any other act or thing
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having been duly done by Administrative Agent and/or Banks, shall be taken
as prima facie evidence of the truth of the facts so stated and recited;
and
(d) Administrative Agent may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any
sale held by Administrative Agent, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Administrative Agent.
3.j. Partial Foreclosure. During a Default, Administrative Agent shall
have the right to proceed with foreclosure of the liens and security interests
evidenced hereby without declaring the entire Secured Indebtedness due, and in
such event any such foreclosure sale may be made subject to the unmatured part
of the Secured Indebtedness; and any such sale shall not in any manner affect
the unmatured part of the Secured Indebtedness, but as to such unmatured part
this Deed of Trust shall remain in full force and effect just as though no sale
had been made. The proceeds of any such sale shall be applied as provided in
Paragraph 3.7 except that the amount paid under subparagraph second thereof
shall be only the matured portion of the Secured Indebtedness and any proceeds
of such sale in excess of those provided for in subparagraphs first and second
(modified as provided above) shall be applied to installments of principal of
and interest on the Notes in the inverse order of maturity. Several sales may
be made hereunder without exhausting the right of sale for any unmatured part of
the Secured Indebtedness.
3.k. Remedies Cumulative. All remedies herein expressly provided for are
cumulative of any and all other remedies existing at law or in equity and are
cumulative of any and all other remedies provided for in any other instrument
securing the payment of the Secured Indebtedness, or any part thereof, or
otherwise benefiting the Trustee, the Administrative Agent and the Banks, and
the Trustee, the Administrative Agent and the Banks shall, in addition to the
remedies herein provided, be entitled to avail themselves of all such other
remedies as may now or hereafter exist at law or in equity for the collection of
the Secured Indebtedness and the enforcement of the covenants herein and the
foreclosure of the liens and security interests evidenced hereby, and the resort
to any remedy provided for hereunder or under any such other instrument or
provided for by law shall not prevent the concurrent or subsequent employment of
any other appropriate remedy or remedies, except as may be provided under
applicable law.
3.l. Resort to Any Security. Administrative Agent may resort to any
security given by this Deed of Trust or to any other security now existing or
hereafter given to secure the payment of the Secured Indebtedness, in whole or
in part, and in such portions and in such order as may seem best to
Administrative Agent in its sole and uncontrolled discretion, and any such
action shall not be considered as a waiver of any of the rights, benefits, liens
or security interests evidenced by this Deed of Trust, except as may be provided
under applicable law.
3.m. Waiver. To the full extent Grantor may do so, Grantor agrees that
Grantor will not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension or redemption, and Grantor, for Grantor and Grantor's heirs, devisees,
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the extent permitted by law and except
with respect to rights set forth herein or in the other Loan Documents, hereby
waives and releases all rights of redemption, valuation, appraisement, stay of
execution, notice of intention
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to mature or declare due the whole of the Secured Indebtedness and all rights to
a marshaling of the assets of Grantor, including the Property, or to a sale in
inverse order of alienation in the event of foreclosure of the liens and
security interests hereby created. Grantor shall not have or assert any right
under any statute or rule of law pertaining to the marshaling of assets, sale in
inverse order of alienation, the exemption of homestead, the administration of
estates of decedents or other matters whatever to defeat, reduce or affect the
rights of the Trustee or Administrative Agent under the terms of this Deed of
Trust to a sale of the Property for the collection of the Secured Indebtedness
without any prior or different resort for collection, or the rights of the
Trustee or Administrative Agent under the terms of this Deed of Trust to the
payment of such indebtedness out of the proceeds of sale of the Property in
preference to every other claimant whatever. If any law referred to in this
Paragraph 3.13 and now in force, of which Grantor or Grantor's successors and
assigns and such other persons claiming any interest in the Property might take
advantage despite this Paragraph 3.13 shall hereafter be repealed or cease to be
in force, such law shall not thereafter be deemed to preclude the application of
this Paragraph 3.13. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, IF THE
PROPERTY IS SOLD IN ACCORDANCE WITH THE TERMS OF THIS DEED OF TRUST FOR AN
AMOUNT LESS THAN THE OBLIGATIONS OF GRANTOR TO TRUSTEE, BANKS OR ADMINISTRATIVE
AGENT, THE DEFICIENCY SHALL BE DETERMINED BY THE PURCHASE PRICE AT THE SALE.
3.n. Delivery of Possession After Foreclosure. In the event there is a
foreclosure sale hereunder and at the time of such sale Grantor or Grantor's
successors or assigns or any other persons claiming any interest in the Property
by, through or under Grantor are occupying or using the Property, or any part
thereof, each and all shall immediately become the tenant of the purchaser at
such sale, which tenancy shall be a tenancy from day-to-day, terminable at the
will of either landlord or tenant, at a reasonable rental per day based upon the
value of the property occupied, such rental to be due daily to the purchaser.
In the event the tenant fails to surrender possession of said property upon
demand, the purchaser shall be entitled to institute and maintain an action for
forcible entry and detainer of said property in the Justice of the Peace Court
in the Justice Precinct in which such property, or any part thereof, is
situated.
3.o. Insurance Premiums. Subject to the terms of the Leases, upon any
foreclosure of the Mortgaged Property pursuant to this Deed of Trust,
Administrative Agent shall have the right to cancel any policy of insurance
covering all or any part of the Mortgaged Property and shall be entitled to
receive any unearned premiums from such policy. The unearned premiums received
by Administrative Agent shall be applied in the same manner as provided in
Paragraph 3.7 above regarding the application of proceeds of sale of the
Mortgaged Property.
ARTICLE IV.
Assignment of Rents, Profits, Income,
-------------------------------------
Contracts and Bonds
-------------------
36.a. Assignment. Grantor does hereby absolutely and unconditionally
assign, transfer and set over to Administrative Agent all rents, income, profits
and proceeds to be derived from the Property, including without limitation the
immediate and continuing right, subject to the license granted below, to collect
and receive all of the rents, income, receipts, revenues, issues, profits and
other sums of money
J-1-13
that may now or at any time hereafter become due and payable to Grantor under
the terms of any present or future leases now or hereafter covering the
Property, or any part thereof, including but not limited to minimum rents,
additional rents, percentage rents, deficiency rents and liquidated damages
following default, all proceeds payable under any policy of insurance covering
the loss of rents resulting from untenantability caused by destruction or damage
to the Property, and liens and rights, whether constitutional, statutory,
contractual or otherwise, in favor of Grantor as the lessor of any of the
Property, and all of Grantor's rights to recover monetary amounts from any
lessee in bankruptcy including, without limitation, rights of recovery for use
and occupancy and damage claims arising out of lease defaults, including
rejections, under the Bankruptcy Reform Act of 1978, as amended, or any other
present or future federal or state insolvency, bankruptcy or similar law (all of
the foregoing hereinafter collectively called "Applicable Bankruptcy Law"),
-------------------------
together with any sums of money that may now or at any time hereafter become due
and payable to Grantor by virtue of any and all royalties, overriding royalties,
bonuses, delay rentals and any other amount of any kind or character arising
under any and all present and future oil, gas and mining leases covering the
Property or any part thereof; and all proceeds and other amounts paid or owing
to Grantor under or pursuant to any and all contracts and bonds relating to the
construction, erection or renovation of the Property; subject however to a
license hereby granted by Administrative Agent to Grantor to collect and receive
and expend all of the foregoing, subject to the terms and conditions hereof.
Upon the occurrence and continuance of any Default, Administrative Agent shall
have the right, power and privilege (but shall be under no duty) to terminate
such license whereupon Administrative Agent shall have the right and authority,
whether or not it takes possession of the Property, to seek enforcement of any
such lease, contract or bond and to demand, collect, receive, xxx for and
recover in its own name any and all of the above described amounts assigned
hereby and to apply the sum(s) collected, first to the payment of reasonable
expenses incident to the collection of the same, second to the payment of the
Secured Indebtedness, and the balance, if any, to Grantor or other party legally
entitled thereto; provided, however, that Administrative Agent shall not be
deemed to have taken possession of the Property except on the exercise of its
option to do so, evidenced by its demand and overt act for such purpose.
Grantor shall make no assignment or other disposition of the above described
amounts assigned hereby, nor, unless permitted under the Credit Agreement, shall
Grantor cancel or amend any such lease, contract, bond or any other instrument
under which such amounts are to be paid or waive, excuse, condone, discount, set
off, compromise or in any manner release any obligation thereunder if to do so
could reasonably be expected to have a Material Adverse Effect, nor shall
Grantor during the existence of a Default receive or collect any such amount
thus assigned for a period of more than one month in advance of the date on
which payment thereof is due and Grantor shall duly and punctually observe and
perform every obligation to be performed by it under each such lease, contract,
bond or other instrument if the failure to do so could reasonably be expected to
have a Material Adverse Effect, and shall not do or permit to be done anything
to impair the security thereof and shall enforce if the failure to do so could
reasonably be expected to have a Material Adverse Effect, every obligation of
each other party thereto. The assignment contained in this Paragraph 4.1. shall
become null and void upon the release of this Deed of Trust. It shall never be
necessary for Administrative Agent to institute legal proceedings of any kind
whatsoever to enforce the provisions of this Paragraph 4.1.
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ARTICLE V.
Hazardous Materials
-------------------
37.a. Definitions. For the purpose of this Deed of Trust, Grantor,
Administrative Agent and Trustee agree that, unless the context otherwise
specifies or requires, the following terms shall have the meaning specified
below:
(a) "Hazardous Materials" shall mean (a) any "hazardous waste" as
-------------------
defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.), as amended from time to time, and regulations
promulgated thereunder; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as amended from time to
------
time, and regulations promulgated thereunder; (c) asbestos; (d)
polychlorinated biphenyls; (e) underground storage tanks, whether empty,
filled or partially filled with any substance, (f) any substance the
presence of which on the Land and Improvements is prohibited by any
Governmental Requirements (as defined below); and (g) any other substance
which by any Governmental Requirements requires special handling or
notification of any federal, state or local governmental entity in its
collection, storage, treatment, or disposal.
(b) "Hazardous Materials Contamination" shall mean the contamination
(whether presently existing or with respect to Sections 5.3, 5.4 and 5.5
only, hereafter occurring) of the buildings, facilities, soil, groundwater,
air or other elements on or of the Land and Improvements by Hazardous
Materials, or the contamination of the buildings, facilities, soil,
groundwater, air or other elements on or of any other property as a result
of Hazardous Materials at any time (whether before or after the date of
this Deed of Trust) emanating from the Land and Improvements, in either
case, in a manner violating applicable Governmental Requirements.
(c) "Governmental Requirements" shall mean all laws, ordinances,
rules, and regulations of any Governmental Authority (as defined below)
applicable to Grantor or the Land and Improvements.
(d) "Governmental Authority" shall mean the United States, the state,
county, city, or any other political subdivision in which the Land and
Improvements is located, and any other political subdivision, agency, or
instrumentality exercising jurisdiction over Grantor or the Land and
Improvements.
5.b. Grantor's Warranties. Grantor hereby represents and warrants that:
(a) To Grantor's actual knowledge, no Hazardous Materials have been
collected, stored, treated or disposed of pursuant to Grantor's operations
in a manner which materially violates Applicable Law and no Hazardous
Materials which would have a Material Adverse Effect are now located on the
Land and Improvements other than Hazardous Materials used in the ordinary
course of Grantor's operations, all of which have been use in accordance,
in all material respects, with
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proper specifications and procedures in accordance with Applicable Law, and
neither Grantor nor, to Grantor's actual knowledge and belief, any other
person has ever caused or permitted any Hazardous Materials to be placed,
held, located or disposed on, under or at the Land and Improvements or any
part thereof in a manner which would have a Material Adverse Effect other
than Hazardous Materials used in the ordinary course of Grantor's
operations, all of which have been used in accordance, in all material
respects, with proper specifications and procedures in accordance with
Applicable Law;
(b) To Grantor's actual knowledge, no part of the Land and
Improvements is being used nor, to the Grantor's actual knowledge and
belief, has been used at any previous time for the disposal, storage,
treatment, processing or other handling of Hazardous Materials in a manner
which would have a Material Adverse Effect, nor is any part of the Land and
Improvements affected by any Hazardous Materials Contamination which would
have a Material Adverse Effect;
(c) To Grantor's actual knowledge and belief, no property adjoining
the Land and Improvements is being used, or has ever been used at any
previous time for the disposal, storage, treatment, processing or other
handling of Hazardous Materials which would have a Material Adverse Effect
nor is any other property adjoining the Land and Improvements affected by
Hazardous Materials Contamination which would have a Material Adverse
Effect.
5.c. Grantor's Covenants. Grantor agrees to (a) give notice to
Administrative Agent promptly upon Grantor's acquiring knowledge of the presence
of any Hazardous Materials which would have a Material Adverse Effect on the
Land and Improvements or of any Hazardous Materials Contamination which would
have a Material Adverse Effect with a full description thereof; and (b) promptly
comply with any Governmental Requirements requiring the removal, treatment or
disposal of such Hazardous Materials or Hazardous Materials Contamination and
provide Administrative Agent with reasonably satisfactory evidence of such
compliance, except to the extent that Grantor's liability for such removal,
treatment and disposal of such Hazardous Materials or Hazardous Materials
Contamination is being contested in good faith by Grantor.
5.d. Site Assessments. Grantor will permit Administrative Agent (by its
officers, employees and agents) from time to time, but not more frequently than
once in any twelve-month period (unless otherwise required by any Tribunal
having supervisory authority over Administrative Agent) to contract for the
services of persons (the "Site Reviewers") to perform environmental site
assessments (the "Site Assessments") on the Land and Improvements for the
purpose of determining whether there exists on the Land and Improvements any
environmental condition which could reasonably be expected to result in any
liability, cost or expense to the owner, occupier or operator of the Land and
Improvements arising under any Governmental Requirements relating to Hazardous
Materials. Subject to the consent of the Lessor and subject to the provisions
of the Lease, the Site Assessments may be performed at any time or times, upon
reasonable notice, and under reasonable conditions established by Grantor which
do not impede the performance of the Site Assessments. Site Assessments shall
be conducted in accordance with Governmental Requirements. Subject to the
consent of the Lessor and subject to the provisions of the Lease, the Site
Reviewers are hereby authorized to enter upon the Land and Improvements for such
purposes. Subject to the consent of the Lessor and subject to the provisions of
the Lease, the Site Reviewers are further authorized to perform both above and
below the ground testing for environmental
J-1-16
damage or the presence of Hazardous Materials on the Land and Improvements and
such other tests on the Land and Improvements as may be necessary to conduct the
Site Assessments in the reasonable opinion of the Site Reviewers. Grantor will
supply to the Site Reviewers such historical and operational information
regarding the Land and Improvements as Grantor has in its possession or control
and as may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments and will make available for meeting with the Site Reviewers
appropriate personnel employed by Grantor having knowledge of such matters. The
costs of performing such Site Assessments, except during a Default, shall be
paid by Administrative Agent. During a Default, the reasonable cost of
performing such Site Assessments shall be paid by Grantor upon demand of
Administrative Agent and any such expenses borne by Administrative Agent and not
promptly reimbursed by Grantor shall be secured by this Deed of Trust.
5.e. Indemnification. Regardless of whether any Site Assessments are
conducted hereunder, if any Default shall have occurred and be continuing or any
remedies in respect of the Land and Improvements are exercised by Administrative
Agent or any Bank, Grantor shall defend, indemnify and hold harmless
Administrative Agent and Banks from any and all liabilities (including strict
liability), actions, demands, penalties, losses, costs or expenses (including,
without limitation, reasonable attorneys' fees and expenses, and remedial
costs), suits, costs of any settlement or judgment and claims of any and every
kind whatsoever which may now or in the future (whether before or after the
release of this Deed of Trust) be paid, incurred or suffered by or asserted
against Administrative Agent or Banks by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the presence
on or under, or the escape, seepage, leakage, spillage, discharge, emission or
release from the Land and Improvements of any Hazardous Materials or any
Hazardous Materials Contamination or arise out of or result from the
environmental condition of the Land and Improvements or the applicability of any
Governmental Requirements relating to Hazardous Materials (including, without
limitation, CERCLA or any federal, state or local so-called "superfund" or
"superlien" laws, or any code, rule, regulation, order or decree promulgated
thereunder); provided, however, the indemnity provided above shall not apply to
any liabilities, actions, demands, penalties, losses, costs or expenses, suits,
costs of any settlement or judgment and claims of any and every kind whatsoever
which are determined in a final, non-appealable judgment by a court of competent
jurisdiction to have been (i) caused by or within the control of Administrative
Agent and/or Banks as a result of actions or omissions in their capacities as
beneficiaries of this Deed of Trust and not as a result of any determination in
such judgment or otherwise that any covenants, conditions or provisions in any
of the Loan Documents give or purport to give control over Grantor or the Land
and Improvements or (ii) which are the result of an event that occurs after
foreclosure of the Land and Improvements (or any portion thereof), the actual
taking of possessions of the Land or Improvements (or any portion thereof) by
Administrative Agent and/or any Bank or the taking of an assignment in lieu of
foreclosure covering the Land and Improvements (or any portion thereof), unless
such event occurs as a result of or arises out of a Hazardous Materials
Contamination or an environmental condition of the Land and Improvements that
occurred or existed prior to such foreclosure, possession, or such taking of an
assignment in lieu of foreclosure, provided that Grantor shall be liable only to
the extent of the Hazardous Materials Contamination or the environmental
condition of the Land and the Improvements prior to such foreclosure,
possession, or such taking of an assignment in lieu of foreclosure. The
covenants, warranties and indemnifications contained in this Section 5.5 shall
survive the release of this Deed of Trust and termination of the Credit
Agreement. For the purposes of this Section 5.5, the term "Administrative
Agent" and "Banks" shall include all subsequent owners or holders of any
obligations secured by this Deed of Trust, all directors, officers, employees
and agents of such entity and any persons
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or entities owned or controlled by or affiliated with Administrative Agent or
any Bank, and their respective directors, officers, employees and agents.
ARTICLE VI.
Miscellaneous
-------------
38.a. Release. If all of the Secured Indebtedness be finally and fully
paid and the Commitments (as defined in the Credit Agreement) have terminated,
the Property shall become wholly clear of the liens, security interests,
conveyances and assignments evidenced hereby, which shall be released of record
by Administrative Agent at Grantor's cost.
6.b. Successor Trustee. The Trustee may resign by an instrument in writing
addressed to Administrative Agent, or the Trustee may be removed at any time
with or without cause by an instrument in writing executed by Administrative
Agent. In case of the death, resignation, removal or disqualification of the
Trustee or if for any reason Administrative Agent shall deem it desirable to
appoint a substitute or successor trustee to act instead of the herein named
trustee or any substitute or successor trustee, then Administrative Agent shall
have the right and hereby is authorized and empowered to appoint a successor
trustee, or a substitute trustee, without other formality than appointment and
designation in writing executed by Administrative Agent and the authority hereby
conferred shall extend to the appointment of other successor and substitute
trustees successively until the Secured Indebtedness finally has been paid in
full or until the Property is sold hereunder. In the event the Secured
Indebtedness is owned by more than one person or entity, the holder or holders
of not less than a majority in the amount of such indebtedness shall have the
right and authority to make the appointment of a successor or substitute trustee
provided for in the preceding sentence. Such appointment and designation by
Administrative Agent or by the holder or holders of not less than a majority of
the Secured Obligations shall be full evidence of the right and authority to
make the same and of all facts therein recited. If Administrative Agent is a
corporation and such appointment is executed in its behalf by an officer of such
corporation, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by the
board of directors or any superior officer of the corporation. Upon the making
of any such appointment and designation, all of the estate and title of the
Trustee in the Property shall vest in the named successor or substitute trustee
and thereupon he shall succeed to and shall hold, possess and execute all the
rights, powers, privileges, immunities and duties herein conferred upon the
Trustee; but, nevertheless, upon the written request of Administrative Agent or
of the successor or substitute Trustee, the Trustee ceasing to act shall execute
and deliver an instrument transferring to such successor or substitute Trustee
all of the estate and title in the Property of the Trustee so ceasing to act,
together with all the rights, powers, privileges, immunities and duties herein
conferred upon the Trustee, and shall assign, transfer and deliver any of the
properties and moneys held by said Trustee hereunder to said successor or
substitute Trustee. All references herein to the Trustee shall be deemed to
refer to the Trustee (including any successor or substitute appointed and
designated as herein provided) from time to time acting hereunder. Grantor
hereby ratifies and confirms any and all acts which the herein named Trustee or
her successor or successors, substitute or substitutes, in this trust, lawfully
shall do by virtue hereof.
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6.c. Liability and Indemnification of Trustee. The Trustee shall not be
liable for any error of judgment or act done by the Trustee in good faith, or be
otherwise responsible or accountable under any circumstances whatsoever, except
for the Trustee's gross negligence or willful misconduct. The Trustee shall
have the right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by him or her hereunder,
believed by him or her in good faith to be genuine. All moneys received by the
Trustee, until used or applied as herein provided, shall be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by law), and the
Trustee shall be under no liability for interest on any monies received by him
or her hereunder, except to the extent required hereunder or under Applicable
Law. Grantor will reimburse the Trustee for, and indemnify and save harmless
him or her against, any and all liability and expenses which reasonably may be
incurred by him or her in the performance of his or her duties hereunder, except
for such liability and expenses attributable to the Trustee's gross negligence
or willful misconduct. The foregoing indemnity shall not terminate upon
release, foreclosure or other termination of this Deed of Trust.
6.d. Waiver by Administrative Agent. Administrative Agent may, subject to
the Credit Agreement, at any time and from time to time in writing (a) waive
compliance by Grantor with any covenant herein made by Grantor to the extent and
in the manner specified in such writing; (b) consent to Grantor doing any act
which Grantor hereunder is prohibited from doing, or consent to Grantor failing
to do any act which Grantor hereunder is required to do, to the extent and in
the manner specified in such writing; (c) release any part of the Property, or
any interest therein, from the lien and security interest of this Deed of Trust
without the joinder of the Trustee, or (d) release any party liable, either
directly or indirectly, for the Secured Indebtedness or for any covenant herein
or in any other instrument now or hereafter securing the payment of the Secured
Indebtedness, without impairing or releasing the liability of any other party.
No such act shall in any way impair the rights of Trustee or Administrative
Agent hereunder except to the extent specifically agreed to by Administrative
Agent in such writing.
6.e. Actions by Trustee or Administrative Agent. The lien, security
interest and other security rights of Trustee, Administrative Agent and Banks
hereunder shall not be impaired by any indulgence, moratorium or release granted
by Administrative Agent (except as provided in Section 6.1), including but not
limited to (a) any renewal, extension, increase or modification which
Administrative Agent or any Bank may grant with respect to any Secured
Indebtedness, (b) any surrender, compromise, release, renewal, extension,
exchange or substitution which Administrative Agent or any Bank may grant in
respect of the Property, or any part thereof or any interest therein (except to
the extent specifically surrendered, compromised, released, renewed, extended,
exchanged or substituted), or (c) any release or indulgence granted to any
endorser, guarantor or surety of any Secured Indebtedness. The taking of
additional security by Trustee or Administrative Agent shall not release or
impair the lien, security interest or other security rights of Trustee or
Administrative Agent hereunder or affect the liability of Grantor or of any
endorser or guarantor or other surety or improve the right of any permitted
junior lienholder in the Property.
6.f. Rights of Administrative Agent. Administrative Agent may, subject to
the Credit Agreement, waive any Default or other default without waiving any
other prior or subsequent Default or other default. Administrative Agent may
remedy any Default or other default without waiving the Default or other default
remedied. Neither the failure by Administrative Agent to exercise, nor the
delay by Administrative Agent
J-1-19
in exercising, any right, power or remedy upon any Default or other default
shall be construed as a waiver of such Default or other default or as a waiver
of the right to exercise any such right, power or remedy at a later date. No
single or partial exercise by Administrative Agent of any right, power or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise
thereof, and every such right, power or remedy hereunder may be exercised at any
time and from time to time. No modification or waiver of any provision hereof
or consent to any departure by Grantor therefrom shall in any event be effective
unless the same shall be in writing and signed by Administrative Agent, and then
such waiver or consent shall be effective only in the specific instances, for
the purpose for which given and to the extent therein specified. No notice to
or demand on Grantor in any case shall of itself entitle Grantor to any other or
further notice or demand in similar or other circumstances. Acceptance by
Administrative Agent of any payment in an amount less than the amount then due
on any Secured Indebtedness shall be deemed an acceptance on account only and
shall not in any way affect the existence of a Default or other default
hereunder.
6.g. Reproduction as Financing Statement. A carbon, photographic or other
reproduction of this Deed of Trust or of any financing statement relating to
this Deed of Trust shall be sufficient as a financing statement.
6.h. Fixture Filing. Some of the above goods are or are to become fixtures
on the Land. This Deed of Trust shall be effective as a financing statement
filed as a fixture filing with respect to all fixtures included within the
Property and is to be filed for record in the real property records of the
county where the Land is situated. The mailing address of Grantor is set forth
below the signature of Grantor to this Deed of Trust and the address of
Administrative Agent from which information concerning the security interest may
be obtained is 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000.
6.i. Filing and Recordation. Grantor will cause this Deed of Trust and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating hereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as the Trustee or
Administrative Agent shall reasonably request, and will pay all such recording,
filing, re-recording and refiling taxes, fees and other charges.
6.j. Dealing with Successor. In the event the ownership of the Property or
any part thereof becomes vested in a person other than Grantor, Administrative
Agent may, without notice to Grantor, deal with such successor or successors in
interest with reference to this Deed of Trust and to the Secured Indebtedness in
the same manner as with Grantor, without in any way vitiating or discharging
Grantor's liability hereunder or for the payment of the Secured Indebtedness.
Except as agreed to in writing by all Banks and Administrative Agent, no sale of
the Property, no forbearance on the part of Administrative Agent or any Bank and
no extension of the time for the payment of any of the Secured Indebtedness
given by Administrative Agent or any Bank shall operate to release, discharge,
modify, change or affect, in whole or in part, the liability of Grantor
hereunder or for the payment of the Secured Indebtedness or the liability of any
other person hereunder or for the payment of the Secured Indebtedness, except to
the extent proceeds of any such sale are applied as provided in Paragraph 3.7.
J-1-20
6.k. Place of Payment. Secured Indebtedness which may be owing hereunder
at any time by Grantor shall be payable at the place designated in the Loan
Documents, or if no such designation is made, at the office of Administrative
Agent at the address indicated in this Deed of Trust, or at such other place in
the continental United States as Administrative Agent may designate in writing.
6.l. Subrogation. To the extent that proceeds of the Secured Indebtedness
are used to pay indebtedness secured by any outstanding lien, security interest,
charge or prior encumbrance against the Property, such proceeds have been
advanced by Banks at Grantor's request and Banks shall be subrogated to any and
all rights, security interests and liens owned or held by any owner or holder of
such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released; provided, however, that the terms and provisions of this Deed of
Trust shall govern the rights and remedies of Banks and shall supersede the
terms, provisions, rights and remedies under and pursuant to the instruments
creating the lien or liens to which Banks are subrogated hereunder.
6.m. Application of Indebtedness. If any part of the Secured Indebtedness
cannot be lawfully secured by this Deed of Trust or if any part of the Property
cannot be lawfully subject to the lien and security interest hereof to the full
extent of such indebtedness, then all payments made shall be applied on said
indebtedness first in discharge of that portion thereof which is unsecured by
this Deed of Trust.
6.n. Usury. It is the intent of the Banks and Grantor in the execution of
the Credit Agreement, this Deed of Trust, the other Loan Documents and all other
instruments now or hereafter securing the Secured Indebtedness or executed in
connection therewith or under any other written or oral agreement by the
undersigned in favor of Administrative Agent and/or Banks to contract in strict
compliance with applicable usury law. In furtherance thereof, Administrative
Agent, Banks and Grantor stipulate and agree that none of the terms and
provisions contained in the Credit Agreement, this Deed of Trust, the other Loan
Documents or any other instrument securing the Notes or executed in connection
herewith, or in any other written or oral agreement by Grantor in favor of Banks
and/or Administrative Agent, shall ever be construed to create a contract to pay
for the use, forbearance or detention of money, or interest at a rate in excess
of the maximum interest rate permitted to be charged by applicable law. Neither
Grantor nor any guarantors, endorsers, sureties or other parties now or
hereafter becoming liable for the Secured Indebtedness or any part thereof shall
ever be required to pay interest on Secured Indebtedness or arising under any
instrument securing the Secured Indebtedness or under any of the other Loan
Documents, or in any other written or oral agreement by Grantor in favor of
Banks and/or Administrative Agent, at a rate in excess of the maximum interest
that may be lawfully charged under applicable law, and the provisions of this
Paragraph 6.14 shall control over all other provisions of the Credit Agreement,
this Deed of Trust, the other Loan Documents and any other instruments now or
hereafter securing the Secured Indebtedness or executed in connection herewith
or any other oral or written agreements which may be in apparent conflict
herewith. All interest paid or agreed to be paid to Banks and/or Administrative
Agent shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full of the
principal of the Secured Indebtedness so that the interest thereon for such full
period shall not exceed the maximum amount permitted by applicable law. Banks
and/or Administrative Agent expressly disavow any intention to charge or collect
excessive unearned interest or finance charges in the event the maturity of the
Secured Indebtedness is accelerated. If the maturity of the Secured
Indebtedness shall be accelerated for any reason or if the principal of the
Secured Indebtedness
J-1-21
is paid prior to the end of the term of the Secured Indebtedness, and as a
result thereof the interest received for the actual period of existence of the
loan evidenced by the Secured Indebtedness exceeds the applicable maximum lawful
rate, Banks and/or Administrative Agent shall refund to Grantor the amount of
such excess or shall credit the amount of such excess against the principal
balance of the Secured Indebtedness then outstanding. In the event that Banks
and/or Administrative Agent shall collect monies and/or any other thing of value
which are deemed to constitute interest which would increase the effective
interest rate on the Secured Indebtedness to a rate in excess of that permitted
to be charged by applicable law, an amount equal to interest in excess of the
lawful rate shall, upon such determination, at the option of Banks and/or
Administrative Agent, be either immediately returned to Grantor or credited
against the principal balance of the other Secured Indebtedness, without further
penalty to such holder. By execution of this Deed of Trust, Grantor
acknowledges that it believes the loan to be non-usurious and agrees that if, at
any time, Grantor should have reason to believe that such loan is in fact
usurious, it will give Banks and/or Administrative Agent notice of such
condition, and Grantor agrees that Banks and/or Administrative Agent shall have
90 days after receipt of such notice in which to make appropriate refund or
other adjustment in order to correct such condition if in fact such condition
exists. As used in this Paragraph 6.14, "interest" means any sum that must be
treated as interest under applicable law in determining whether a loan is
usurious. THE TERM "APPLICABLE LAW" AS USED IN THIS PARAGRAPH 6.14 SHALL MEAN
THE LAWS OF THE STATE OF TEXAS OR THE LAWS OF THE UNITED STATES, WHICHEVER LAWS
ALLOW THE GREATER RATE OF INTEREST, AS SUCH LAWS NOW EXIST OR MAY BE CHANGED OR
AMENDED OR COME INTO EFFECT IN THE FUTURE.
6.o. Notice. Any notice, request, demand or other communication required
or permitted hereunder, or under the Loan Documents, or under any other
instrument securing the payment of the Loan Documents (unless otherwise
expressly provided therein) shall be given in the same manner as in Section 11.1
of the Credit Agreement.
6.p. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the representatives,
successors and assigns of Grantor including all successors in interest of
Grantor in and to all or any part of the Property, and shall inure to the
benefit of the Trustee and Administrative Agent and their respective heirs,
successors, substitutes and assigns and shall constitute covenants running with
the land. All references in this Deed of Trust to Grantor, Trustee or
Administrative Agent shall be deemed to include all such heirs, devisees,
representatives, successors, substitutes and assigns.
6.q. Severability. A determination that any provision of this Deed of
Trust is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and any determination that the application of
any provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
6.r. Gender and Number. Within this Deed of Trust, words of any gender
shall be held and construed to include any other gender, and words in the
singular and plural number shall be held and construed to include the other
number, unless the context otherwise requires.
J-1-22
6.s. Counterparts. This Deed of Trust may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall
constitute one instrument.
6.t. Reporting Requirements. Grantor agrees to comply with any and all
reporting requirements applicable to the transaction secured by this Deed of
Trust which are set forth in any law, statute, ordinance, rule, regulation,
order or determination of any governmental authority, and further agrees upon
request of Administrative Agent to furnish Administrative Agent with evidence of
such compliance.
6.u. Headings. The paragraph headings contained in this Deed of Trust are
for convenience only and shall in no way enlarge or limit the scope or meaning
of the various and several paragraphs hereof.
6.v. Modification or Termination. The Loan Documents may only be modified
or terminated by a written instrument or instruments executed by the party
against whom enforcement of the modification or termination is asserted. Any
alleged modification or termination which is not so documented shall not be
effective as to any party.
6.w. ENTIRE AGREEMENT. THIS DEED OF TRUST, TOGETHER WITH THE CREDIT
AGREEMENT, AND ALL OTHER LOAN DOCUMENTS (ALL AS IN EFFECT ON THE DATE HEREOF AND
AS THE SAME MAY BE AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED HEREAFTER FROM
TIME TO TIME) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6.x. GOVERNING LAW. THIS DEED OF TRUST SHALL BE CONSTRUED, INTERPRETED,
ENFORCED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS WITHIN TEXAS.
6.y. Multiple Advance Loan. This Deed of Trust is given to secure, among
other things, a multiple advance loan and shall secure not only presently
existing indebtedness but also future advances, whether such advances are
obligatory or to be made at the option of the Administrative Agent or any Bank
or otherwise, to the same extent as if such future advances were made on the
date of execution of this Deed of Trust. The lien of this Deed of Trust shall
be valid as to all indebtedness hereby secured, including future advances, from
the time of its filing for record in the recorder's or registrar's office of the
county in which the Mortgaged Property is located.
6.z. Credit Agreement Controls. In the event of any conflict or
inconsistency between any of the terms and provisions of the Credit Agreement
and any of the terms and provisions of this Deed of Trust, the terms and
provisions of the Credit Agreement shall control.
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J-1-24
IN WITNESS WHEREOF, Grantor has executed this Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing as of the
_____ day of ____________, _______.
XXXXXXXX MANUFACTURING COMPANY, INC.
By:________________________________
Name:_________________________
Title:________________________
Address: 0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 00000
XXXXX XX XXXXX )
) ss:
COUNTY OF ________ )
This instrument was acknowledged before me on the _____ day of ________,
_________, by ________________________________, ____________________ of Xxxxxxxx
Manufacturing Company, Inc., a Texas corporation, on behalf of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the _______ day of _________,
__________.
-------------------------------------------
Notary Public in and for the State of Texas
My Commission Expires:
------------------------
J-1-25
EXHIBIT "A"
-----------
J-1-26
EXHIBIT "B"
-----------
J-1-27
EXHIBIT J-2
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Xxxxxx X. Xxxxxxx
XXXXXXX, XXXXXXX & XXXXXXX, P.C.
3400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
STATE OF _________________ (S)
(S) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF_________________ (S)
THAT, XXXXXXXX MANUFACTURING COMPANY, INC., a Texas corporation
(hereinafter called "Grantor"), in order to secure the payment of the
-------
indebtedness hereinafter referred to and the performance of the obligations,
covenants, agreements and undertakings of Grantor hereinafter described, does
hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to XXXXXXX X.
XXXX, Trustee, of Dallas County, Texas (hereinafter called the "Trustee") for
-------
the benefit of NATIONSBANK OF TEXAS, N.A., a national banking association
(hereinafter called "NationsBank"), having its principal office at 901 Main
-----------
Street, 67th Floor, Xxxxxx, Xxxxx 00000, as the administrative agent
(hereinafter in such capacity NationsBank is called the "Administrative Agent")
--------------------
on behalf of NationsBank and each other lender a party to the Credit Agreement
described below (hereinafter collectively called "Banks"), all of the real
-----
estate situated in the State(s) of in the Counties set forth in Exhibit
-------
"A" attached hereto and described in Exhibit "A" attached hereto and made a part
--- -----------
hereof (the "Land"), together with (i) all the buildings and other improvements
----
now on or that may be hereafter placed on said Land; (ii) Grantor's interest in
all materials, equipment, fixtures or other property whatsoever, now or
hereafter attached to, installed in, or used in connection with the buildings
and other improvements now erected or hereafter to be erected on said Land,
including, but not limited to, all heating, plumbing, lighting, water heating,
cooking, laundry, refrigerating, incinerating, ventilating and air conditioning
equipment, disposals, dishwashers, refrigerators and ranges, utility lines and
equipment (whether owned individually or jointly with others), sprinkler
systems, fire extinguishing apparatus and equipment, tanks, engines, pipes,
fittings, dynamos, generators, machines, elevators, motors, cabinets, shades,
blinds, partitions, window screens, screen doors, storm windows, awnings,
drapes, and rugs and other floor coverings, and all fixtures, accessions and
appurtenances thereto, and all renewals or replacements of or substitutions for
any of the foregoing, all of which property and things are hereby declared to be
permanent
J-2-1
fixtures and accessions to the freehold and part of the realty conveyed herein
as security for the indebtedness herein mentioned; (iii) Grantor's interest in
all easements and rights of way now or hereafter used in connection with any of
the foregoing real estate or as a means of ingress to or egress from said real
estate; (iv) Grantor's interest, now or hereafter acquired, in and to any
streets, ways, alleys and/or strips and gores of land adjoining said Land or any
part thereof; and (v) Grantor's interest in and to all rights, estates,
hereditaments, powers and privileges appurtenant or incident to the foregoing.
TO HAVE AND TO HOLD the foregoing property (herein called the "Mortgaged
---------
Property") unto the Trustee and his successors or substitutes in this trust and
--------
to his or their successors and assigns, IN TRUST, WITH POWER OF SALE, for the
benefit of the Administrative Agent, however, upon the terms, provisions and
conditions herein set forth.
In order to secure the payment of the indebtedness hereinafter referred to
and the performance of the obligations, covenants, agreements and undertakings
of Grantor hereinafter described, Grantor further grants (to the extent not
prohibited by Applicable Law) to the Administrative Agent a security interest
and lien in Grantor's right, title and interest in and to all present and future
(i) goods, inventory, equipment (excluding, however, any equipment or other
property which is financed with Indebtedness permitted to be incurred pursuant
to Sections 7.1(c) and 7.1(h) of the Credit Agreement), furnishings, fixtures,
furniture, chattels and other personal property of whatever nature owned by
Grantor now or hereafter attached or affixed to or used in or about the building
or buildings now erected or hereafter to be erected on the Mortgaged Property or
otherwise located on the Mortgaged Property, (ii) fixtures, accessions and
appurtenances to any of the foregoing or following, (iii) renewals or
replacements of or substitutions for any of the foregoing or following, (iv)
building materials and equipment now or hereafter delivered to said premises and
intended to be installed therein, (v) occupancy agreements, leases, rents
(including security and other deposits and advance rentals under occupancy
agreements and lease agreements now or at any time hereafter covering or
affecting any of the Mortgaged Property and all property described in this
paragraph and held by or for the benefit of Grantor), fees, royalties, bonuses,
issues, room rents, profits, revenues or other income or benefits of whatever
nature received or due in connection with the Mortgaged Property and all
property described in this paragraph, (vi) monetary deposits which Grantor has
been required to give to any public or private utility with respect to utility
services furnished to the Mortgaged Property, (vii) permits, licenses,
franchises, certificates, and agreements related to any of the foregoing or
following, and all other rights and privileges obtained in connection with, or
necessary for the operation and maintenance of, the foregoing, and all other
rights and privileges obtained in connection with the Mortgaged Property and all
property described in this paragraph, (viii) plans, specifications, maps,
surveys, reports, operating and management and maintenance contracts,
architectural, engineering, construction and development contracts, books of
account, insurance policies, guarantees, warranties and other documents, of
whatever kind or character, relating to the ownership, use, construction upon,
occupancy, leasing, sale or operation of the Mortgaged Property and all property
described in this paragraph, (ix) oil, gas and other hydrocarbons and other
minerals produced from or allocated to the Mortgaged Property and all products
processed or obtained therefrom, the proceeds thereof, and all accounts and
general intangibles under which such proceeds may arise, (x) all proceeds from
the taking of any of the Mortgaged Property and any property described in this
paragraph or any rights appurtenant thereto by right of eminent domain or by
private or other purchase in lieu thereof, (xi) all proceeds (including premium
refunds) of each policy of insurance relating to the Mortgaged Property and any
property described in this paragraph, (xii) all guarantees, sureties and other
agreements assuring
J-2-2
performance of any obligation of any tenant of the Mortgaged Property and all
property described in this paragraph, and (xiii) all proceeds arising from or by
virtue of the sale, lease or other disposition of the Mortgaged Property and any
property described in this paragraph (all of the property described in this
paragraph hereinafter collectively called the "Personal Property") and all
-----------------
proceeds and products of the Personal Property. (The Mortgaged Property and the
Personal Property are hereinafter sometimes collectively called the "Property").
--------
ARTICLE I.
Secured Indebtedness
--------------------
1.1. Secured Indebtedness. This Deed of Trust, Assignment of Leases and
--------------------
Rents, Security Agreement and Financing Statement (hereinafter called this "Deed
----
of Trust") is made to secure and enforce the payment of the following,
--------
agreements, documents, obligations, indebtedness and liabilities: (a) all
present and future obligations, indebtedness and liabilities, and all renewals
and extensions of all or any part thereof of Grantor to Banks or any Bank
arising from, by virtue of, or pursuant to the Credit Agreement dated as of
September __, 1997 among Grantor, Administrative Agent and Banks (said Credit
Agreement, as amended, modified, renewed, extended or restated from time to
time, the "Credit Agreement"), the Notes (as defined in the Credit Agreement),
----------------
the other Loan Documents (as defined in the Credit Agreement), including,
without limitation, interest, fees and other charges that would accrue or become
owing both prior to and subsequent to and but for the commencement of any
proceeding against or with respect to Grantor under any chapter of the
Bankruptcy Code of 1978, 11 U.S.C. (S) 101 et. seq. whether or not a claim is
-- ---
allowed for the same in any such proceeding, and (b) all indebtedness and
obligations incurred or arising pursuant to the provisions of this Deed of
Trust. The indebtedness referred to in this Paragraph 1.1 is hereinafter
sometimes called the "Secured Indebtedness". Initially capitalized terms used
--------------------
herein and not otherwise herein defined shall have the respective meanings given
to such terms in the Credit Agreement. This Deed of Trust, the Credit
Agreement, the Notes, the other Loan Documents as defined in the Credit
Agreement, and all other instruments, certificates, affidavits or documents
evidencing, governing, securing, guaranteeing, or relating to the Secured
Indebtedness all as amended, modified, renewed, extended or restated from time
to time, are hereinafter called the "Loan Documents".
--------------
J-2-3
ARTICLE II.
Representations and Warranties
------------------------------
2.1. Representations and Warranties. Grantor represents and warrants to
------------------------------
the Trustee, the Administrative Agent and the Banks as follows:
(a) Title and Authority. Grantor is the lawful owner of good and
-------------------
indefeasible fee simple title to the Property, subject only to the matters
described in Exhibit "B" attached hereto and made a part hereof (the
-----------
"Permitted Encumbrances") and has good right and authority to grant,
-----------------------
bargain, sell, transfer, assign and mortgage the Mortgaged Property and to
grant a security interest in the Personal Property.
(b) Compliance with Covenants and Laws. To the best of Grantor's
----------------------------------
knowledge after reasonable investigation, the construction, occupancy,
operation and use of the Property and the intended use thereof by Grantor
subject to the provisions of Article V below complies with all laws,
statutes, ordinances, rules, regulations, orders and determinations of any
governmental authority and any board of fire underwriters (or any body
exercising similar functions) and any restrictive covenants or deed
restrictions (whether recorded or otherwise), including, without
limitation, all applicable zoning, subdivision, platting, licensing,
building, flood disaster, statutes, ordinances, rules, regulations, orders
and determinations of any governmental authority (hereinafter sometimes
collectively called "Applicable Laws"), except where the failure to so
---------------
comply could not have a material adverse effect on (i) the financial
condition or prospects of Grantor, (ii) the value of the Property taken as
a whole, (iii) Grantor's use of, and business operations of, the Property
taken as a whole, or (iv) the validity or enforceability of this Deed of
Trust or the liens and security interests granted hereunder (hereinafter
collectively called "Material Adverse Effect"). To the best of Grantor's
-----------------------
knowledge after reasonable investigation, Grantor has obtained all
requisite zoning, utility, building, health, operating and occupancy
permits from the governmental authorities having jurisdiction over the
Property, except where the failure to obtain such zoning and permits would
not have a Material Adverse Effect.
(c) No Suits. There are no judicial or administrative actions, suits
--------
or proceedings pending or, to the best of Grantor's knowledge threatened,
affecting the Property which, if adversely determined, would be reasonably
likely to have a Material Adverse Effect, or involving the validity,
enforceability or priority of this Deed of Trust.
(d) Condition of Property. To the best of Grantor's knowledge after
---------------------
reasonable investigation, the Mortgaged Property is served by electric,
gas, storm and sanitary sewers, sanitary water supply, telephone and other
utilities required for the Grantor's current and anticipated uses thereof
on the date hereof at or within the boundary lines of the Mortgaged
Property. To the best of Grantor's knowledge after reasonable
investigation, all streets, alleys and easements (including without
limitation easements for ingress and egress, easements for vehicular
traffic and parking and for pedestrian traffic, easements for utilities,
and easements for reciprocal uses) necessary to serve Grantor's current and
anticipated uses of the Mortgaged Property have been completed and are
serviceable, such streets, alleys and easements have been dedicated and
accepted by applicable
J-2-4
governmental entities, and/or all agreements creating such easements have
been filed of record in the real property records of the County set forth
on Exhibit "A" attached hereto. The Mortgaged Property is in reasonably
---------------------------
good condition and repair and proper working order, and is free from damage
caused by fire or other casualty. Grantor has no actual knowledge of any
latent or patent structural or other significant defect or deficiency in
the Mortgaged Property that (i) would materially and adversely affect
Grantor's intended use of the Mortgaged Property or (ii) have a Material
Adverse Effect. None of the Mortgaged Property not covered by flood
insurance is within a flood plain. To the best of Grantor's knowledge
after reasonable investigation, none of the improvements on the Mortgaged
Property create an encroachment over, across or upon any of the Mortgaged
Property boundary lines, rights of way or easements, and no buildings or
other improvements on adjoining land create such an encroachment, except as
disclosed on the survey of the Land delivered to the Administrative Agent.
There is, to the actual knowledge of Grantor, no condemnation proceeding
pending or threatened that would affect the Mortgaged Property.
(e) Warranty. Grantor will warrant and forever defend the title to
--------
the Mortgaged Property against the claims of all persons whomsoever
claiming or to claim the same or any part thereof, subject to the Permitted
Encumbrances.
2.2. Covenants and Agreements. So long as the Secured Indebtedness or any
------------------------
part thereof remains unpaid, Grantor covenants and agrees with the
Administrative Agent and the Banks as follows:
(a) Taxes on Lien.
-------------
In the event of the enactment after the date hereof of any law of the
State of Texas or of any other governmental entity deducting from the value
of property for the purpose of taxation any lien or security interest
thereon, or imposing upon the Trustee, the Administrative Agent or any Bank
the payment of the whole or any part of the taxes (other than taxes imposed
on the overall income of Banks, the Trustee or the Administrative Agent) or
assessments or charges or liens herein required to be paid by Grantor, or
changing in any way the laws relating to the taxation of deeds of trust or
mortgages or security agreements or debts secured by deeds of trust or
mortgages or security agreements or the interest of the trustee or
beneficiary or mortgagee or secured party in the property covered thereby,
or the manner of collection of such taxes, so as to affect this Deed of
Trust or any of the Secured Indebtedness or the Trustee, the Administrative
Agent or any Bank, then, and in any such event, Grantor, upon demand by the
Trustee, the Administrative Agent or any Bank, shall to the extent not
prohibited by Applicable Law, pay such taxes, assessments, charges or
liens, or reimburse the Trustee, the Administrative Agent or such Bank
therefor.
(b) Ad Valorem Taxes. Grantor will cause to be paid prior to
----------------
delinquency all taxes and assessments heretofore or hereafter levied or
assessed against the Property, or any part thereof, and upon request of the
Administrative Agent will furnish the Administrative Agent with receipts
showing payment of such taxes and assessments prior to the applicable
delinquency date therefor; except that Grantor in good faith may contest,
by appropriate proceedings, the validity, applicability or amount of any
asserted tax or assessment, and, pending such contest, Grantor shall not be
deemed in Default hereunder if, prior to delinquency of the asserted tax or
assessment, Grantor establishes an escrow, or provides security reasonably
acceptable to the Administrative Agent, or
J-2-5
reserves have been established adequate to cover the payment of such tax or
assessment with costs, interest and penalties and a reasonable additional
sum to cover possible costs, interest and penalties (which escrow and/or
security shall be returned to Grantor upon payment of all such taxes,
assessments, costs, interest and penalties), and if Grantor promptly causes
to be paid any amount adjudged by a court of competent jurisdiction to be
due, with all costs, interest and penalties thereon, promptly after such
judgment becomes final; provided, however, that in any event each such
contest shall be concluded and the tax assessment, costs, interest and
penalties shall be paid prior to the date any writ or order is issued under
which the Property, or any part thereof, may be sold. No reserve (or
security required in (d) below) is required until such time that the
aggregate of alleged unpaid ad valorem taxes on all properties of Grantor
and all unpaid debts described in (d) below shall exceed $50,000.
(c) Operation of Property. Grantor will operate, and will cause the
---------------------
operation of, the Property in a reasonably good and workmanlike manner and
in accordance with all Applicable Laws and will pay all fees or charges of
any kind in connection therewith, except where the failure to so operate
and pay such fees or charges would not have a Material Adverse Effect.
Grantor will keep, and will cause the keeping of, the Property occupied to
the extent necessary not to impair the insurance carried thereon. Grantor
will not use or occupy, or allow the use or occupancy of, the Property in
any manner which violates any Applicable Law, or except where the failure
to so occupy would not have a Material Adverse Effect, which constitutes a
public or private nuisance or which makes void, voidable or cancelable, any
insurance then in force with respect thereto. Grantor will not, without
the prior written consent of the Administrative Agent (which consent shall
not be unreasonably withheld), initiate or consent to any zoning
reclassification of the Property or seek or consent to any variance under
existing zoning ordinances applicable to the Property or use or permit the
use of the Property in such a manner as would result in such use becoming a
nonconforming use under applicable zoning ordinances or other Applicable
Laws. Grantor will not, without the prior written consent of the
Administrative Agent (which consent shall not be unreasonably withheld),
impose any restrictive covenant or any encumbrance upon the Property which
does not constitute a Permitted Encumbrance, execute or file any
subdivision plat affecting the Property or consent to the annexation of the
Property to any municipality. Grantor shall not cause or permit any
drilling or exploration for, or extraction, removal or production of,
minerals from the surface or subsurface of the Property. Grantor will not
do anything to cause the value of the Property to be materially lessened.
If Grantor receives a written notice or claim from any federal, state or
other governmental entity pertaining to the Property, including,
specifically but without limitation, a notice that the Property is not in
compliance with any Applicable Law, Grantor promptly will furnish a copy of
such notice or claim to the Administrative Agent.
(d) Debts for Construction. Grantor will cause all debts and
----------------------
liabilities of any character, including without limitation all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Property, incurred in the construction,
maintenance, operation or development of the Property to be paid before the
same become delinquent. Notwithstanding the foregoing, Grantor in good
faith may contest, by appropriate proceedings, the validity, applicability
or amount of any asserted mechanics' or materialmen's liens, and, pending
such contest, Grantor shall not be deemed in Default hereunder if Grantor
provides the Administrative Agent with security reasonably satisfactory to
the Administrative Agent and if Grantor promptly
J-2-6
causes to be paid any amount adjudged by a court of competent jurisdiction
to be due, with all costs and interest thereon, promptly after such
judgment becomes final; provided, however, that in any event each such
contest shall be concluded and the lien, interest and costs shall be paid,
bonded around or otherwise removed prior to the date any writ or order is
issued under which the Property, or any part thereof, may be sold. No
security (or reserve required in (b) above) is required until such time
that the aggregate of alleged unpaid ad valorem taxes on all properties and
all unpaid debts described in this clause (d) shall exceed $50,000.
(e) Repair and Maintenance. Grantor will keep the Property reasonably
----------------------
in good order, repair, operating condition and appearance, causing all
reasonably necessary repairs and replacements, promptly to be made, and
will not allow any of the Property to be misused, abused or wasted or to
deteriorate, normal wear and tear and casualty excepted. Grantor promptly
will replace all worn-out or obsolete fixtures or personal property covered
by this Deed of Trust that are reasonably necessary in the operation of the
Property with fixtures or personal property comparable to the replaced
fixtures or personal property, and will repaint the Property when
reasonably needed. Notwithstanding the foregoing, Grantor will not,
without the prior written consent of the Administrative Agent do or permit
to be done anything to the Property that materially may impair its value,
including but not limited to (i) removing from the Property any fixtures or
personal property covered by this Deed of Trust (but not including any
personal property in which Grantor is the lessee thereof) which are
necessary or desirable in the operation of the Property, except such as is
replaced by Grantor by an article of equal suitability and value, owned by
Grantor, free and clear of any lien or security interest (except that (i)
created by this Deed of Trust or any other Loan Document, (ii) otherwise
permitted in the Loan Documents or (iii) in respect of capitalized leases)
or such as is permitted to be removed by a tenant pursuant to such tenant's
lease or (ii) making any structural or other alteration to the Property
that materially impairs the value thereof. Nothing contained herein will
prevent tenants of the Property from making alterations and improvements
expressly permitted under their leases of any part of the Mortgaged
Property. Upon request of the Administrative Agent, Grantor will deliver
to the Administrative Agent an inventory describing and showing the make,
model, serial number and location of all fixtures and personal property
used in the management, maintenance and operation of the Property, with a
certification by Grantor that said inventory is a true and complete
schedule of all such fixtures and personal property used in the management,
maintenance and operation of the Property, that such items specified in the
inventory constitute all of the fixtures and personal property required in
the management, maintenance and operation of the Property, and that all
such items are owned by Grantor free and clear of any lien or security
interest (except the Permitted Encumbrances).
(f) Insurance and Casualty. Grantor will keep the Property insured
----------------------
against loss or damage by fire, explosion, windstorm, hail, flood (as to
any portion of the Property which shall at any time be located in an
identified "flood prone" area in which flood insurance has been made
available pursuant to the Flood Disaster Protection Act of 1973, and then
in the amount of the outstanding balance of the Notes or the maximum amount
of coverage available, whichever is less), tornado and such other hazards
as required by the Administrative Agent and consistent with industry
standards. Notwithstanding the foregoing, Grantor further covenants and
agrees to keep the property insured by policies of fire, extended coverage
and other insurance in such company
J-2-7
or companies reasonably acceptable to the Administrative Agent and upon
such terms and provisions, and with such endorsements, all as reasonably
may be acceptable to the Administrative Agent and consistent with industry
standards. Grantor further agrees that Grantor will deliver to the
Administrative Agent receipts evidencing the payment of all premiums, and
certificates of insurance addressed to the Administrative Agent evidencing
compliance with the insurance requirements set forth herein and, when
appropriate, evidencing renewals of all such policies of insurance before
any such insurance shall expire. All insurance policies required pursuant
to this subparagraph (f) shall contain a prohibition against cancellation,
material endorsement, material alteration or reissuance of such policy
effecting a change in coverage thereunder unless such insurer first shall
have given the Administrative Agent 30 days prior written notice thereof.
All fire, extended and other insurance coverage insurance policies
required hereunder shall be on a replacement cost basis in an amount not
less than that necessary to comply with any co-insurance percentage
stipulated in the policy, but not less than one hundred percent (100%) of
the Property's insurable value, and shall be subject to deductibles, if
any, not to exceed $250,000. Grantor further agrees that all insurance
policies shall provide that proceeds thereunder will be jointly payable to
the Administrative Agent and Grantor, for the benefit of the Grantor and
Banks as their interests may appear pursuant and subject to a mortgagee
clause (without contribution) of standard form attached to or otherwise
made a part of the applicable policy. In the event any of the Property
covered by such insurance is destroyed or damaged by fire, explosion,
windstorm, hail or by any other casualty against which insurance shall have
been required hereunder, (i) the Administrative Agent may, but shall not be
obligated to, make proof of loss if not made promptly by Grantor, (ii) each
insurance company concerned is hereby authorized and directed to make
payment for such loss jointly to the Administrative Agent and Grantor, and
(iii) the Administrative Agent shall apply the insurance proceeds as
follows:
(A) first, to reimburse the Administrative Agent or the Trustee
-----
for all costs and expenses, including reasonable attorneys' fees,
incurred in connection with the collection of such proceeds; and
(B) second, if a Default has not occurred or, if a Default has
------
occurred, such Default is not then continuing, proceeds of insurance
from losses shall be used at Grantor's option by Grantor (i) for
repair or replacement of Property and Grantor shall provide the
Administrative Agent with evidence satisfactory to the Administrative
Agent of such use or (ii) to be applied to Secured Indebtedness.
(C) third, if a Default has occurred and is continuing, proceeds
-----
of insurance from losses shall at Banks' option be applied to Secured
Indebtedness or to repair or replacement of Property.
In any event, the unpaid portion of the Secured Indebtedness shall remain
in full force and effect and Grantor shall not be excused in the payment
thereof. If any act or occurrence of any kind or nature (including any
casualty on which insurance was not obtained or obtainable) shall result in
material damage to or material loss or destruction of the Property, Grantor
shall give prompt notice thereof to the Administrative Agent and, if
Grantor elects to restore the Property to its prior condition (pursuant to
subparagraph B of this Paragraph 2.2(f)(iii)), Grantor, at Grantor's sole
cost
J-2-8
and expense and regardless of whether the insurance proceeds, if any, shall
be sufficient for the purpose, promptly shall restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and
character immediately prior to such damage, loss or destruction in
accordance with plans and specifications submitted to and reasonably and
promptly approved by the Administrative Agent. Grantor hereby irrevocably
appoints the Administrative Agent as Grantor's attorney-in-fact, with full
authority in place and stead of Grantor and in the name of Grantor or
otherwise, after the occurrence of any Default and during the continuance
of same to obtain any insurance required to be obtained pursuant to this
Paragraph 2.2(f) and which is not so obtained and to receive, indorse, and
collect any drafts or other instruments, documents and chattel paper, in
connection therewith. The appointment of the Administrative Agent as
attorney-in-fact is coupled with an interest and is irrevocable prior to
final payment in full of the Secured Indebtedness.
(g) Liability and Other Insurance. Grantor shall maintain
-----------------------------
comprehensive general liability insurance against claims for bodily injury
or death and property damage occurring in or upon or resulting from the
Property, in standard form and with such insurance company or companies and
policy coverage limits and terms as reasonably may be acceptable to the
Administrative Agent, and such other insurance as the Administrative Agent
from time to time reasonably may require, with companies reasonably
acceptable to the Administrative Agent, upon such terms and provisions, in
such amounts, and with such endorsements, all as reasonably are approved by
the Administrative Agent. Grantor shall maintain with respect to each
policy or agreement evidencing such comprehensive general liability
insurance such endorsements as reasonably may be required by the
Administrative Agent consistent with accepted industry practice and shall
at all times following request therefor by the Administrative Agent deliver
and maintain with the Administrative Agent receipts evidencing the payment
of all premiums, and certificates of insurance addressed to the
Administrative Agent, evidencing compliance with the insurance requirements
set forth herein and, when appropriate, evidencing renewals of all such
policies of insurance 30 days before any such insurance shall expire. All
insurance policies required pursuant to this subparagraph (g) shall contain
a prohibition against cancellation, material endorsement, material
alteration or reissuance of such policy effecting a change in coverage
thereunder unless such insurer first shall have given the Administrative
Agent 30 days prior written notice thereof. Grantor further agrees that
all insurance policies described in this Paragraph 2.2(g) shall name the
Administrative Agent, for the benefit of the Banks, as an additional
insured party.
(h) Condemnation. Promptly upon obtaining actual knowledge of the
------------
institution of any proceedings for the condemnation of the Property, or any
portion thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Grantor will notify the
Administrative Agent of the pendency of such proceedings. The
Administrative Agent may participate in any such proceedings if in the
reasonable opinion of the Administrative Agent such participation is
necessary to protect the rights or interests of the Administrative Agent,
and Grantor shall from time to time deliver to the Administrative Agent all
instruments reasonably requested by it to permit such participation.
Grantor shall, at its expense, diligently prosecute any such proceedings,
and shall consult with the Administrative Agent, its attorneys and experts,
and cooperate with them in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in
lieu of condemnation with respect to the Property, or
J-2-9
any portion thereof, and all judgments, decrees and awards for injury or
damage to the Property, or any portion thereof, shall be paid to the
Administrative Agent and shall be applied as follows:
(i) first, to reimburse Grantor, the Administrative Agent or
-----
the Trustee for all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in connection with collection of
such proceeds;
(ii) second, to the payment of Secured Indebtedness; and
------
(iii) third, to the extent of the balance (if any) of such
-----
proceeds, to Grantor or other party legally entitled thereto.
Grantor hereby assigns and transfers all such proceeds, judgments, decrees
and awards to Banks and agrees to execute such further assignments of all
such proceeds, judgments, decrees and awards as Banks may reasonably
request; provided, however, the disbursement of such proceeds, judgments,
decrees and awards shall be applied as provided above in this Paragraph
2.2(h). The Banks are hereby authorized, in the name of Grantor, to execute
and deliver valid acquittances for, and to appeal from, any such judgment,
decree or award. The Banks shall not be, in any event or circumstances,
liable or responsible for failure to collect, or for failure to exercise
diligence in the collection of, any such proceeds, judgments, decrees
and/or awards.
(i) Protection and Defense of Lien. If the validity or priority of
------------------------------
this Deed of Trust or of any rights, titles, liens or security interests
created or evidenced hereby with respect to the Property, or any part
thereof, shall be attacked directly or indirectly or if any legal
proceedings are instituted against Grantor with respect thereto, Grantor
will give prompt written notice thereof to the Administrative Agent and at
Grantor's own cost and expense diligently will endeavor to cure any defect
that may be developed or claimed, and will take all necessary and proper
steps for the defense of such legal proceedings, including but not limited
to the employment of counsel, the prosecution or defense of litigation and
the release or discharge of all adverse claims (other than Permitted
Encumbrances), and the Trustee and the Administrative Agent, or either of
them, (whether or not named as parties to legal proceedings with respect
thereto) are hereby authorized and empowered to take such additional steps
as in their judgment and discretion reasonably may be necessary or proper
for the defense of any such legal proceedings or the protection of the
validity or priority of this Deed of Trust and the rights, titles, liens
and security interests created or evidenced hereby, including but not
limited to the employment of counsel, the prosecution or defense of
litigation, the compromise or discharge of any adverse claims (other than
Permitted Encumbrances) made with respect to the Property or any part
thereof, the purchase of any tax title and the removal of prior liens or
security interests which do not constitute Permitted Encumbrances, and all
reasonable expenses so incurred of every kind and character shall be a
demand obligation owing by Grantor, and the party incurring such expenses
shall be subrogated to all rights of the person receiving such payment.
Should the Trustee or the Administrative Agent intend to take any such
action described in the immediately preceding sentence, the Trustee or the
Administrative Agent, as appropriate, shall, subject to the immediately
succeeding proviso, prior to taking any such action notify Grantor of such
-------
intention and give Grantor a reasonable opportunity to provide such defense
or protection; provided, however, if in the reasonable opinion of the
-------- -------
Trustee or the
J-2-10
Administrative Agent the giving of such notice and opportunity to provide
such defense or protection would impair or hinder such defense or
protection or would otherwise be disadvantageous to rights or interests of
the Trustee or the Administrative Agent hereunder or the rights, title,
liens or security interests created or evidenced hereby, the Trustee and
the Administrative Agent shall have no obligation to give such notice and
opportunity to provide such defense or protection prior to the taking of
any such action, but after taking any such action the Trustee or the
Administrative Agent shall give notice thereof to Grantor.
(j) Permitted Encumbrances. Grantor will comply with and will perform
----------------------
all of the covenants, agreements and obligations imposed upon it or the
Property in the Permitted Encumbrances in accordance with their respective
terms and provisions if the failure to do so would have a Material Adverse
Effect. Grantor will not modify or permit any modification of any
Permitted Encumbrances against the Mortgaged Property, the result of which
would have a Material Adverse Effect without the prior written consent of
the Administrative Agent.
(k) Books and Records. Grantor will permit all contracts, statements,
-----------------
invoices, bills and claims for labor, materials and services supplied for
the construction and operation of the improvements forming a part of the
Property to be inspected and copied by the Administrative Agent and its
representatives at all times during reasonable business hours upon
reasonable notice; provided, however, if a Default shall have occurred and
be continuing there shall be no requirement to give reasonable notice. If
applicable, such information shall be kept confidential in accordance with
Section 11.14 of the Credit Agreement.
(l) Leases. Grantor may not lease or enter into any other occupancy
------
agreement covering any material portion of any of the Mortgaged Property by
third parties without the prior written consent of Grantor, which consent
shall not be unreasonably withheld.
(m) Fees and Expenses; Indemnification. Grantor will pay all
----------------------------------
appraisal fees, filing and recording fees, inspection fees, survey fees,
taxes, brokerage fees and commissions, abstract fees, title policy fees,
uniform commercial code search fees, escrow fees, reasonable attorney's
fees, and all other costs and expenses of every character reasonably and
properly incurred by Grantor, the Trustee, the Administrative Agent or
Banks in connection with this Deed of Trust, either at the closing thereof
or at any time during the term thereof, or otherwise attributable or
chargeable to Grantor as owner of the Property, and will reimburse the
Trustee, the Administrative Agent and Banks for all such costs and expenses
incurred by each of them. Grantor shall pay all reasonable and proper
expenses and reimburse the Trustee, the Administrative Agent and Banks for
any reasonable expenditures, including reasonable attorney's fees and legal
expenses, incurred or expended in connection with (i) the breach, by
Grantor of any covenant herein or (ii) the Trustee's or the Administrative
Agent's or Bank's reasonable exercise of any of the rights and remedies
hereunder or the Trustee's or the Administrative Agent's or Banks'
reasonable protection of the Property and the lien and security interest
therein. Grantor will indemnify and hold harmless the Trustee, the
Administrative Agent and Banks (for purposes of this subparagraph (m), the
terms "Administrative Agent" and "Banks" shall include the directors,
-------------------- -----
officers, employees and agents of the Administrative Agent and Banks and
any persons or entities owned or controlled by or affiliated with the
Administrative Agent and Banks) from and against, and reimburse them for,
all claims,
J-2-11
demands, liabilities, losses, damages, judgments, penalties, costs and
expenses (including, without limitation, reasonable attorney's fees) which
may be imposed upon, asserted against or incurred or paid by any of them
by reason of, on account of or in connection with any bodily injury or
death or property damage occurring in or upon or in the vicinity of the
Property through any cause whatsoever, or asserted against any of them on
account of any act performed or omitted to be performed hereunder or on
account of any transaction arising out of or in any way connected with the
Property or with this Deed of Trust. The foregoing indemnities shall not
apply with respect to matters caused by or arising out of the gross
negligence or willful misconduct of the Administrative Agent, Banks and/or
the Trustee. Grantor agrees, however, that it expressly intends to
indemnify the Administrative Agent, Banks and the Trustee from and hold
each of them harmless against any and all losses, liabilities, claims,
damages or expenses arising out of their ordinary negligence. The
foregoing indemnities, however, shall not apply with respect to any losses,
liabilities, claims, damages or expenses incurred by the Administrative
Agent, Banks or the Trustee in any action or proceeding by Grantor against
the Administrative Agent, Banks or the Trustee unless the Administrative
Agent, Banks or the Trustee prevail in such action or proceeding. The
foregoing indemnities shall not terminate upon release, foreclosure or
other termination of this Deed of Trust but will survive foreclosure of
this Deed of Trust or conveyance in lieu of foreclosure and the repayment
of the Secured Indebtedness and the discharge and release of this Deed of
Trust and the other Loan Documents, but Grantor shall not be liable for any
damages as a result of an event that occurs after foreclosure of the
Mortgaged Property (or any portion thereof) or the taking of a deed in lieu
of foreclosure covering the Mortgaged Property (or any portion thereof),
unless such damage occurs as a result of or arises out of a condition that
existed prior to such foreclosure or such taking of a deed in lieu of
foreclosure. Any amount to be paid hereunder by Grantor to the
Administrative Agent, Banks and/or the Trustee shall be a demand obligation
owing by Grantor to the Administrative Agent, Banks and/or the Trustee and
shall be subject to and governed by the provisions of Paragraph 2.3 hereof.
(n) Estoppel Certificate. Grantor shall at any time and from time to
--------------------
time furnish promptly upon request a written statement in such form as may
be reasonably required by the Administrative Agent stating that this Deed
of Trust is a valid and binding obligation of Grantor, enforceable against
Grantor in accordance with its terms, subject to Debtor Relief Laws (as
such term is defined in the Credit Agreement); that this Deed of Trust has
not been released, subordinated or modified; and that to the best of
Grantor's knowledge there are no offsets or defenses against the
enforcement of this Deed of Trust, or if any of the foregoing statements
are untrue, specifying the reasons therefor.
(o) Compliance with Laws. Grantor shall, and shall use reasonable
--------------------
efforts to cause any tenant of the Property to, comply with all applicable
restrictive covenants and all Applicable Laws with respect to which the
failure to so comply would have a Material Adverse Effect.
(p) Tax and Insurance Escrow. In order to secure the performance and
------------------------
discharge of Grantor's obligations under subparagraphs (b), (f) and (g) of
this Paragraph 2.2, but not in lieu of such obligations, Grantor will upon
written request of the Administrative Agent, deposit with the
Administrative Agent upon the occurrence and continuance of a Default, a
sum equal to accrued and unpaid ad valorem taxes, assessments and charges
(which charges for the purpose of this
J-2-12
subparagraph shall include without limitation ground rents and water and
sewer rents and any other recurring charge which could create or result in
a lien against the Property) against the Property for the then current year
and the accrued and unpaid premiums for such policies of insurance for the
then current year, all as reasonably estimated by the Administrative Agent
and prorated to the end of the calendar month following the month during
which such Default occurred, and thereafter will deposit with the
Administrative Agent, on each date when an installment of interest is due
on the Notes, sufficient funds (as reasonably estimated from time to time
by the Administrative Agent) to permit the Administrative Agent to pay, at
least 5 days prior to the delinquency date thereof, the next maturing ad
valorem taxes, assessments and charges and premiums for such policies of
insurance. The Administrative Agent shall have the right to rely upon tax
information furnished by applicable taxing authorities in the payment of
such taxes or assessments and shall have no obligation to make any protest
of any such taxes or assessments. Any excess over the amounts required for
such purposes shall be held by the Administrative Agent for payment of
future taxes, assessments, charges and premiums, applied to any Secured
Indebtedness, or refunded to Grantor, at the Administrative Agent's option;
and any deficiency in such funds so deposited shall be made up by Grantor
upon demand of the Administrative Agent. All such funds so deposited shall
bear interest at the normal interest rate for money market deposits at
NationsBank, may be mingled with the general funds of the Administrative
Agent and shall be applied by the Administrative Agent toward the payment
of such taxes, assessments, charges and premiums when statements therefor
are presented to the Administrative Agent by Grantor (which statements
shall be presented by Grantor to the Administrative Agent a reasonable time
before the applicable amount is due); provided, however, that if the
Administrative Agent has made demand for payment of all of the Secured
Indebtedness, such funds may at the Administrative Agent's option be,
applied to the payment of the Secured Indebtedness in the order determined
by the Administrative Agent and that the Administrative Agent may at any
time, in its discretion, apply all or any part of such funds toward the
payment of any such taxes, assessments, charges or premiums which are past
due, together with any penalties or late charges with respect thereto. The
conveyance or transfer of Grantor's interest in the Property for any reason
(including without limitation the foreclosure of a subordinate lien or
security interest or a transfer by operation of law) shall constitute an
assignment or transfer of Grantor's interest in and rights to such funds
held by the Administrative Agent under this subparagraph (p) but subject to
the rights of the Administrative Agent hereunder.
(q) Further Assurances. Grantor will, on request of the
------------------
Administrative Agent, (i) promptly correct any defect or error which may
be discovered in the contents of this Deed of Trust or in any other
instrument executed in connection herewith or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver and record or
file such further instruments (including without limitation further deeds
of trust, security agreements, financing statements, continuation
statements and assignments of rents or leases) and do such further acts as
may be reasonably necessary or proper to carry out more effectively the
purposes of this Deed of Trust and such other instruments and to subject to
the liens and security interests hereof and thereof any property intended
by the terms hereof or thereof to be covered hereby or thereby, including
specifically, but without limitation, any renewals, additions,
substitutions, replacements, or appurtenances to the Property; (iii)
execute, acknowledge, deliver, procure and record or file any document or
instrument (including specifically any financing statement) deemed
advisable by the Administrative Agent to protect the lien or the security
interest hereunder against the rights or
J-2-13
interests of third persons, and Grantor will pay all reasonable costs
associated with any of the foregoing; (iv) use reasonable efforts to cause
any tenant under any lease agreement of any of the Property to furnish any
instrument or perform any act deemed advisable by the Administrative Agent
to protect the lien or the security interest hereunder; and (v) provide
such certificates, documents, reports, information, affidavits and other
instruments (including but not limited to appraisals, surveys and current
title reports) and do such further acts as may be reasonably necessary or
proper in the reasonable determination of the Administrative Agent to
enable the Administrative Agent to comply with the requirements or requests
of any agency having jurisdiction over the Administrative Agent or any of
the Banks or any examiners of such agencies with respect to the Secured
Indebtedness, Grantor or the Property.
2.3. Right of the Administrative Agent to Perform. Grantor agrees that,
--------------------------------------------
if, after any applicable notice or grace period, Grantor fails to perform any
act or to take any action which hereunder Grantor is required to perform or
take, or to pay any money which hereunder Grantor is required to pay, the
Administrative Agent, in Grantor's name or in its own name and after the giving
of any required notice and expiration of any applicable cure period, may but
shall not be obligated to perform or cause to be performed such act or take such
action or pay such money, and any reasonable expenses so incurred by the
Administrative Agent, and any money so paid by the Administrative Agent, shall
be a demand obligation owing by Grantor to the Administrative Agent and the
Administrative Agent, upon making such payment, shall be subrogated to all of
the rights of the person or entity receiving such payment. Any amounts due and
owing by Grantor to the Administrative Agent pursuant to this Deed of Trust
shall bear interest from the date such amount becomes due until paid at a rate
of interest per annum equal to the lesser of (i) the Base Rate Basis, plus 2%,
or (ii) the highest lawful rate, and shall be a part of the Secured Indebtedness
and shall be secured by this Deed of Trust and by any other Loan Document.
Should the Administrative Agent intend to perform or cause to be performed such
act or take such action or pay such money, the Administrative Agent shall,
subject to the immediately succeeding proviso, prior to taking any such action
-------
notify Grantor of such intention and give Grantor a reasonable opportunity to
take such action; provided, however, if in the reasonable opinion of the
-------- -------
Administrative Agent the giving of such notice and opportunity to take action
would materially impair the validity or priority of this Deed of Trust, the
rights or interests of the Trustee or the Administrative Agent hereunder or any
rights, titles, liens or security interests created or evidenced hereby, the
Administrative Agent shall have no obligation to give such notice and
opportunity to take action prior to taking such action, but, nevertheless, shall
give prompt written notice of the taking of such action to Grantor.
ARTICLE III.
Remedies in Event of Default
----------------------------
3.1. Defaults. The term "Default" as used in this Deed of Trust shall mean
-------- -------
the occurrence and continuance of an "Event of Default" as defined in the Credit
----------------
Agreement.
3.2. Acceleration. Upon the occurrence and during the continuance of a
------------
Default, the Administrative Agent shall have the option of declaring all Secured
Indebtedness in its entirety to be immediately due and payable, and the liens
and security interests evidenced hereby shall be subject to
J-2-14
foreclosure in any manner provided for herein or provided for by law as the
Administrative Agent may elect.
3.3. Possession. Upon the occurrence and during the continuance of a
----------
Default, the Administrative Agent is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Property, or any
part thereof, and to take possession of the Property and of all books, records
and accounts relating thereto and to exercise without interference from Grantor
any and all rights which Grantor has with respect to the management, possession,
operation, protection or preservation of the Property, including the right to
rent the same for the account of Grantor and to deduct from such rents all
reasonable costs, expenses and liabilities of every reasonable character
incurred by the Administrative Agent in collecting such rents and in managing,
operating, maintaining, protecting or preserving the Property and to apply the
remainder of such rents on the Secured Indebtedness in such manner as the
Administrative Agent may elect. All such costs, expenses and liabilities
incurred by the Administrative Agent in collecting such rents and in managing,
operating, maintaining, protecting or preserving the Property, if not paid out
of rents as hereinabove provided, shall constitute a demand obligation owing by
Grantor and shall bear interest from the date of expenditure until paid at a
rate of interest per annum equal to the Default Rate, all of which shall
constitute a portion of the Secured Indebtedness. If necessary to obtain the
possession provided for above, the Administrative Agent may invoke any and all
legal remedies to dispossess Grantor, including specifically one or more actions
for forcible entry and detainer, trespass to try title and restitution. In
connection with any action taken by the Administrative Agent pursuant to this
Paragraph 3.3, the Administrative Agent shall not be liable for any loss
sustained by Grantor resulting from any failure to let the Property, or any part
thereof, or from any other act or omission of the Administrative Agent in
managing the Property, including without limitation, the negligence of the
Administrative Agent, unless such loss is caused by the gross negligence or
willful misconduct of the Administrative Agent, and the Administrative Agent
shall not be obligated to perform or discharge any obligation, duty or liability
under any lease agreement covering the Property or any part thereof or under or
by reason of this instrument or the exercise of rights or remedies hereunder.
Should the Administrative Agent incur any such liability, the amount thereof,
including reasonable costs, expenses and reasonable attorneys' fees, shall be
secured hereby, and Grantor shall reimburse the Administrative Agent therefor
immediately upon demand. Nothing in this Paragraph 3.3 shall impose any duty,
obligation or responsibility upon the Administrative Agent for the control,
care, management or repair of the Property, or shall operate to make the
Administrative Agent responsible or liable for any waste committed on the
Property or by any other parties or for any dangerous or defective condition of
the Property, or for any negligence in the management, upkeep, operation, repair
or control of the Property resulting in loss or injury or death to any tenant,
licensee, employee or stranger, unless such waste, dangerous or defective
condition or injury or death is directly a result of gross negligence or willful
misconduct by the Administrative Agent, and not just the Administrative Agent's
own ordinary negligence. Grantor hereby assents to, ratifies and confirms any
and all actions of the Administrative Agent with respect to the Property taken
under this Paragraph 3.3.
3.4. Foreclosure. Upon the occurrence and during the continuance of a
-----------
Default, the Trustee or his or her successor or substitute is authorized and
empowered and it shall be his or her special duty at the request of the
Administrative Agent to take all actions necessary to sell the Mortgaged
Property, or any part thereof, situated in the State of Texas in accordance with
the statutes of the State of Texas then in force governing sales of real estate
under powers conferred by deed of trust. Any sale made by the
J-2-15
Trustee hereunder may be of the entire Mortgaged Property, as an entirety, or in
such parcels as the Administrative Agent may request, and any sale may be
adjourned by announcement at the time and place appointed for such sale without
further notice except as may be required by law. The sale by the Trustee of
less than the whole of the Mortgaged Property shall not exhaust the power of
sale herein granted, and the Trustee is specifically empowered to make
successive sale or sales under such power until the whole of the Mortgaged
Property shall be sold; and, if the proceeds of such sale of less than the whole
of the Mortgaged Property shall be less than the aggregate of the Secured
Indebtedness and the expense of executing this trust as provided herein, this
Deed of Trust and the lien hereof shall remain in full force and effect as to
the unsold portion of the Mortgaged Property just as though no sale had been
made; provided, however, that Grantor shall never have any right to require the
sale of less than the whole of the Mortgaged Property but the Administrative
Agent shall have the right, at its sole election, to request the Trustee to sell
less than the whole of the Mortgaged Property. After each sale, the Trustee
shall make to the purchaser or purchasers at such sale good and sufficient
conveyances in the name of Grantor, conveying the Property so sold to the
purchaser or purchasers in fee simple with general warranty of title, and shall
receive the proceeds of said sale or sales and apply the same as herein
provided. Payment of the purchase price to the Trustee shall satisfy the
obligation of purchaser at such sale therefor, and such purchaser shall not be
responsible for the application thereof. The power of sale granted herein shall
not be exhausted by any sale held hereunder by the Trustee or his or her
substitute or successor, and such power of sale may be exercised from time to
time and as many times as the Administrative Agent may deem necessary until all
of the Mortgaged Property has been duly sold and all Secured Indebtedness has
been fully paid. In the event any sale hereunder is not completed or is
defective in the opinion of the Administrative Agent, such sale shall not
exhaust the power of sale hereunder and the Administrative Agent shall have the
right to cause a subsequent sale or sales to be made hereunder. Any and all
statements of fact or other recitals made in any deed or deeds given by the
Trustee or any successor or substitute appointed hereunder as to nonpayment of
the Secured Indebtedness, or as to the occurrence of any Default, or as to the
Administrative Agent having declared all of such indebtedness to be due and
payable, or as to the request to sell, or as to notice of time, place and terms
of sale and of the properties to be sold having been duly given, or as to the
refusal, failure or inability to act of the Trustee or any substitute or
successor, or as to the appointment of any substitute or successor trustee, or
as to any other act or thing having been duly done by the Administrative Agent
or by such Trustee, substitute or successor, shall be taken as prima facie
evidence of the truth of the facts so stated and recited. The Trustee or his or
her successor or substitute may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by the
Trustee, including the posting of notices and the conduct of sale, but in the
name and on behalf of the Trustee or his or her successor or substitute.
3.5. Judicial Foreclosure. This instrument shall be effective as a
--------------------
mortgage as well as a deed of trust and upon the occurrence and during the
continuance of a Default may be foreclosed as to any of the Property in any
manner permitted by the laws of the State of Texas or of any other state in
which any part of the Property is situated, and any foreclosure suit may be
brought by the Trustee or by the Administrative Agent. In the event a
foreclosure hereunder shall be commenced by the Trustee or his or her substitute
or successor, the Administrative Agent may at any time before the sale of the
Property direct the said Trustee to abandon the sale, and may then institute
suit for the collection of the Notes and the other Secured Indebtedness, and for
the foreclosure of this Deed of Trust. It is agreed that if the Administrative
Agent should institute a suit for the collection of the Notes or any other
Secured Indebtedness and for the foreclosure of this Deed of Trust, the
Administrative Agent may at any time
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before the entry of a final judgment in said suit dismiss the same, and require
the Trustee or his or her substitute or successor to sell the Property in
accordance with the provisions of this Deed of Trust.
3.6. Receiver. In addition to all other remedies herein provided for,
--------
Grantor agrees that upon the occurrence and during the continuance of a Default,
the Administrative Agent shall as a matter of right be entitled to the
appointment of a receiver or receivers for all or any part of the Property,
whether such receivership be incident to a proposed sale of such Property or
otherwise, and without regard to the value of the Property or the solvency of
any person or persons liable for the payment of the Secured Indebtedness, and
Grantor does hereby consent to the appointment of such receiver or receivers,
waives any and all defenses to such appointment and agrees not to oppose any
application therefor by the Administrative Agent, but nothing herein is to be
construed to deprive the Administrative Agent of any other right, remedy or
privilege it may now or hereafter have under the law to have a receiver
appointed; provided, however, that the appointment of such receiver, trustee or
other appointee by virtue of any court order, statute or regulation shall not
impair or in any manner prejudice the rights of the Administrative Agent to
receive payment of the rents, room rents, deposits for lodging and income from
the Property. Any money advanced by the Administrative Agent in connection with
any such receivership shall be a demand obligation owing by Grantor to the
Administrative Agent and shall bear interest from the date of making such
advancement by the Administrative Agent until paid at a rate of interest per
annum equal to the Highest Lawful Rate, and shall be secured by this Deed of
Trust and by any other instrument securing the Secured Indebtedness.
3.7. Proceeds of Sale. The proceeds of any sale held by the Trustee or any
----------------
receiver or public officer in foreclosure of the liens evidenced hereby shall be
applied:
first, to the payment of all necessary and reasonable costs and
-----
expenses incident to such foreclosure sale, including but not limited to
all court costs and charges of every character in the event foreclosed by
suit, and a reasonable fee to the Trustee acting under the provisions of
Paragraph 3.4 if foreclosed by power of sale as provided in Paragraph 3.4;
second, to the payment in full of the Secured Indebtedness (including
------
specifically without limitation the principal, interest and reasonable
attorneys' fees due and unpaid on the Notes and the amounts due and unpaid
and owed to the Administrative Agent under this Deed of Trust), to be
distributed pro rata to each Bank based on the percentage that the amount
of the Secured Indebtedness owing to each Secured Party bears to the total
unpaid amount of the Obligations; and
third, the remainder, if any, shall be paid to Grantor or other party
-----
legally entitled thereto.
3.8. The Administrative Agent as Purchaser. The Administrative Agent shall
-------------------------------------
have the right to become the purchaser at any sale held by any Trustee or
substitute or successor or by any receiver or public officer, and the
Administrative Agent purchasing at such sale shall have the right to credit upon
the amount of the bid made therefor, to the extent necessary to satisfy such
bid, the Secured Indebtedness owing to the Administrative Agent and/or Banks for
the equal and ratable benefit of Banks.
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3.9. Uniform Commercial Code.
-----------------------
(a) Upon the occurrence and during the continuance of a Default, the
Administrative Agent may exercise its rights of enforcement with respect to
the Personal Property under the Uniform Commercial Code as adopted in the
State of Texas, as amended from time to time, and in conjunction with, in
addition to or in substitution for those rights and remedies, and all
rights and remedies granted to the Administrative Agent and/or Banks under
any Loan Document executed by Grantor governing security interests in
personal property of Grantor;
(b) any sale made pursuant to the provisions of this Paragraph 3.9
shall be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with the sale of the Mortgaged
Property under power of sale as provided herein upon giving the same notice
with respect to the sale of the Personal Property hereunder as is required
for such sale of the Mortgaged Property under power of sale;
(c) any and all statements of fact or other recitals made in any xxxx
of sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of the Secured Indebtedness, or as to the
occurrence of any Default, or as to the Administrative Agent and/or Banks
having declared all of such indebtedness to be due and payable, or as to
notice of time, place and terms of sale and of the properties to be sold
having been duly given, or as to any other act or thing having been duly
done by the Administrative Agent and/or Banks, shall be taken as prima
facie evidence of the truth of the facts so stated and recited; and
(d) The Administrative Agent may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any
sale held by the Administrative Agent, including the sending of notices and
the conduct of the sale, but in the name and on behalf of the
Administrative Agent.
3.10. Partial Foreclosure. During a Default, the Administrative Agent
-------------------
shall have the right to proceed with foreclosure of the liens and security
interests evidenced hereby without declaring the entire Secured Indebtedness
due, and in such event any such foreclosure sale may be made subject to the
unmatured part of the Secured Indebtedness; and any such sale shall not in any
manner affect the unmatured part of the Secured Indebtedness, but as to such
unmatured part this Deed of Trust shall remain in full force and effect just as
though no sale had been made. The proceeds of any such sale shall be applied as
provided in Paragraph 3.7 except that the amount paid under subparagraph second
thereof shall be only the matured portion of the Secured Indebtedness and any
proceeds of such sale in excess of those provided for in subparagraphs first and
second (modified as provided above) shall be applied to installments of
principal of and interest on the Notes in the inverse order of maturity.
Several sales may be made hereunder without exhausting the right of sale for any
unmatured part of the Secured Indebtedness.
3.11. Remedies Cumulative. All remedies herein expressly provided for are
-------------------
cumulative of any and all other remedies existing at law or in equity and are
cumulative of any and all other remedies provided for in any other instrument
securing the payment of the Secured Indebtedness, or any part thereof, or
otherwise benefiting the Trustee, the Administrative Agent and the Banks, and
the Trustee, the Administrative Agent and the Banks shall, in addition to the
remedies herein provided, be entitled to avail
J-2-18
themselves of all such other remedies as may now or hereafter exist at law or in
equity for the collection of the Secured Indebtedness and the enforcement of the
covenants herein and the foreclosure of the liens and security interests
evidenced hereby, and the resort to any remedy provided for hereunder or under
any such other instrument or provided for by law shall not prevent the
concurrent or subsequent employment of any other appropriate remedy or remedies.
3.12. Resort to Any Security. The Administrative Agent may resort to any
----------------------
security given by this Deed of Trust or to any other security now existing or
hereafter given to secure the payment of the Secured Indebtedness, in whole or
in part, and in such portions and in such order as may seem best to the
Administrative Agent in its sole and uncontrolled discretion, and any such
action shall not in anywise be considered as a waiver of any of the rights,
benefits, liens or security interests evidenced by this Deed of Trust, except as
may be provided to the contrary under applicable law.
3.13. Waiver. To the full extent Grantor may do so, Grantor agrees that
------
Grantor will not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension or redemption, and Grantor, for Grantor and Grantor's heirs, devisees,
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the extent permitted by law and except
with respect to rights expressly set forth herein or in the other Loan
Documents, hereby waives and releases all rights of redemption, valuation,
appraisement, stay of execution, notice of intention to mature or declare due
the whole of the Secured Indebtedness and all rights to a marshaling of the
assets of Grantor, including the Property, or to a sale in inverse order of
alienation in the event of foreclosure of the liens and security interests
hereby created. Grantor shall not have or assert any right under any statute or
rule of law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the rights of
the Trustee or the Administrative Agent under the terms of this Deed of Trust to
a sale of the Property for the collection of the Secured Indebtedness without
any prior or different resort for collection, or the rights of the Trustee or
the Administrative Agent under the terms of this Deed of Trust to the payment of
such indebtedness out of the proceeds of sale of the Property in preference to
every other claimant whatsoever. If the Property is sold for an amount less
than the Secured Indebtedness, the deficiency shall be determined by the
purchase price at the sale or sales. To the extent permitted by law, Grantor
waives all rights and claims with respect to Lender's ability to obtain a
Deficiency Judgment under Section 51.003 of the Texas Property Code. If any law
referred to in this Paragraph 3.13 and now in force, of which Grantor or
Grantor's successors and assigns and such other persons claiming any interest in
the Property might take advantage despite this Paragraph 3.13 shall hereafter be
repealed or cease to be in force, such law shall not thereafter be deemed to
preclude the application of this Paragraph 3.13. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW, IF THE PROPERTY IS SOLD IN ACCORDANCE WITH THE TERMS OF THIS
DEED OF TRUST FOR AN AMOUNT LESS THAN THE OBLIGATIONS OF GRANTOR TO TRUSTEE,
BANKS OR ADMINISTRATIVE AGENT, THE DEFICIENCY SHALL BE DETERMINED BY THE
PURCHASE PRICE AT THE SALE.
3.14. Delivery of Possession After Foreclosure. In the event there is a
----------------------------------------
foreclosure sale hereunder and at the time of such sale Grantor or Grantor's
successors or assigns or any other persons claiming any interest in the Property
by, through or under Grantor are occupying or using the Property, or any part
J-2-19
thereof, each and all shall immediately become the tenant of the purchaser at
such sale, which tenancy shall be a tenancy from day-to-day, terminable at the
will of either landlord or tenant, at a reasonable rental per day based upon the
value of the property occupied, such rental to be due daily to the purchaser.
In the event the tenant fails to surrender possession of said property upon
demand, the purchaser shall be entitled to institute and maintain an action for
forcible entry and detainer of said property in the Justice of the Peace Court
in the Justice Precinct in which such property, or any part thereof, is
situated.
3.15. Tender After Acceleration. If, following the occurrence of a
-------------------------
Default and the acceleration of the Secured Indebtedness but prior to the
foreclosure of this Deed of Trust against the Property, Grantor shall tender to
the Administrative Agent and/or Banks payment of an amount sufficient to pay the
entire Secured Indebtedness, such tender shall be deemed to be a voluntary
prepayment and, consequently, Grantor shall also pay to Banks any charge or
premium required to be paid in order to prepay principal and, if such principal
payment is made during any period when prepayment is prohibited by this Deed of
Trust, or the Loan Documents, the applicable charge or premium shall be the
maximum prepayment penalty provided for in the Loan Documents; provided,
however, that in no event shall any amount payable under this Paragraph 3.15,
when added to the interest otherwise payable on the Secured Indebtedness, exceed
the maximum interest permitted under Applicable Law.
3.16. Insurance Premiums. Upon any foreclosure of the Mortgaged Property
------------------
pursuant to this Deed of Trust, the Administrative Agent shall have the right to
cancel any policy of insurance covering all or any part of the Mortgaged
Property and shall be entitled to receive any unearned premiums from such
policy. The unearned premiums received by the Administrative Agent shall be
applied in the same manner as provided in Paragraph 3.7 above regarding the
application of proceeds of sale of the Mortgaged Property.
ARTICLE IV.
Assignment of Rents, Profits, Income,
-------------------------------------
Contracts and Bonds
-------------------
4.1. Assignment. Grantor does hereby absolutely and unconditionally
----------
assign, transfer and set over to the Administrative Agent all rents, income,
profits and proceeds to be derived from the Property, including without
limitation the immediate and continuing right, subject to the license granted
below, to collect and receive all of the rents, income, receipts, revenues,
issues, profits and other sums of money that may now or at any time hereafter
become due and payable to Grantor under the terms of any present or future
leases now or hereafter covering the Property, or any part thereof, including
but not limited to minimum rents, additional rents, percentage rents, deficiency
rents and liquidated damages following default, all proceeds payable under any
policy of insurance covering the loss of rents resulting from untenantability
caused by destruction or damage to the Property, and liens and rights, whether
constitutional, statutory, contractual or otherwise, in favor of Grantor as the
lessor of any of the Property, and all of Grantor's rights to recover monetary
amounts from any lessee in bankruptcy including, without limitation, rights of
recovery for use and occupancy and damage claims arising out of lease defaults,
including rejections, under the Bankruptcy Reform Act of 1978, as amended, or
any other present or future federal or state insolvency, bankruptcy or similar
law (all of the foregoing hereinafter collectively called "Applicable Bankruptcy
---------------------
Law"), together with any sums of money that may now or at any time hereafter
---
J-2-20
become due and payable to Grantor by virtue of any and all royalties, overriding
royalties, bonuses, delay rentals and any other amount of any kind or character
arising under any and all present and future oil, gas and mining leases covering
the Property, or any part thereof; and all proceeds and other amounts paid or
owing to Grantor under or pursuant to any and all contracts and bonds relating
to the construction, erection or renovation of the Property, or any part
thereof; subject however to a license hereby granted by the Administrative Agent
to Grantor to collect and receive and expend all of the foregoing, subject to
the terms and conditions hereof. Upon the occurrence and continuance of any
Default, the Administrative Agent shall have the right, power and privilege (but
shall be under no duty) to terminate such license whereupon the Administrative
Agent shall have the right and authority, whether or not it takes possession of
the Property, to seek enforcement of any such lease, contract or bond and to
demand, collect, receive, xxx for and recover in its own name any and all of the
above described amounts assigned hereby and to apply the sum(s) collected, first
to the payment of reasonable expenses incident to the collection of the same,
second to the payment of the Secured Indebtedness, and the balance, if any, to
Grantor or other party legally entitled thereto; provided, however, that the
Administrative Agent shall not be deemed to have taken possession of the
Property except on the exercise of its option to do so, evidenced by its demand
and overt act for such purpose. Grantor shall make no assignment or other
disposition of the above described amounts assigned hereby, nor, unless
permitted under the Credit Agreement, shall Grantor cancel or amend any such
lease, contract, bond or any other instrument under which such amounts are to be
paid or waive, excuse, condone, discount, set off, compromise or in any manner
release any obligation thereunder if to do so could reasonably be expected to
have a Material Adverse Effect, nor shall Grantor during the existence of a
Default receive or collect any such amount thus assigned for a period of more
than one month in advance of the date on which payment thereof is due and
Grantor shall duly and punctually observe and perform every obligation to be
performed by it under each such lease, contract, bond or other instrument if the
failure to do so could reasonably be expected to have a Material Adverse Effect
and shall not do or permit to be done anything to impair the security thereof
and shall enforce, if the failure to do so could reasonably be expected to have
a Material Adverse Effect, every obligation of each other party thereto. The
assignment contained in this Paragraph 4.1. shall become null and void upon the
release of this Deed of Trust. It shall never be necessary for the
Administrative Agent to institute legal proceedings of any kind whatsoever to
enforce the provisions of this Paragraph 4.1.
ARTICLE V.
Hazardous Materials
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5.1. Definitions. For the purpose of this Deed of Trust, Grantor, the
-----------
Administrative Agent and Trustee agree that, unless the context otherwise
specifies or requires, the following terms shall have the meaning specified
below:
(a) "Hazardous Materials" shall mean (a) any "hazardous waste" as
-------------------