FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number: 1-8308
LUBY'S CAFETERIAS, INC.
_____________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 74-1335253
_______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2211 Northeast Loop 410, P. O. Box 33069
San Antonio, Texas 78265-3069
_____________________________________________________________________________
(Address of principal executive offices) (Zip Code)
210/654-9000
_____________________________________________________________________________
(Registrant's telephone number, including area code)
_____________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: 23,612,081 shares outstanding as of February 29, 1996
(exclusive of 3,790,986 treasury shares)<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
LUBY'S CAFETERIAS, INC.
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
____ ____ ____ ____
(Amounts in thousands except per share data)
<S> <C> <C> <C> <C>
Sales $108,835 $100,570 $217,172 $202,016
Costs and expenses:
Cost of food 26,207 24,709 53,213 49,981
Payroll and related costs 29,994 27,415 60,298 55,228
Occupancy and other operating expenses 32,171 30,024 64,343 59,986
General and administrative expenses 5,291 4,781 10,264 9,550
________ ________ ________ ________
93,663 86,929 188,118 174,745
________ ________ ________ ________
Income from operations 15,172 13,641 29,054 27,271
Interest expense (671) (369) (1,199) (449)
Other income, net 373 459 723 802
________ ________ ________ ________
Income before income taxes 14,874 13,731 28,578 27,624
Provision for income taxes 5,552 5,149 10,691 10,359
________ ________ ________ ________
Net income $ 9,322 $ 8,582 $ 17,887 $ 17,265
________ ________ ________ ________
Net income per share $.40 $.36 $.77 $.71
________ ________ ________ ________
Cash dividends per share $.18 $.165 $.36 $.33
________ ________ ________ ________
Average number of shares outstanding 23,432 24,132 23,377 24,456
See accompanying notes.
/TABLE
<PAGE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S CAFETERIAS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
February 29, August 31,
1996 1995
____ ____
(Thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents $ 1,502 $ 12,392
Trade accounts and other receivables 439 311
Food and supply inventories 3,260 4,034
Prepaid expenses 3,434 2,849
Deferred income taxes 634 629
________ ________
Total current assets 9,269 20,215
Investments and other assets - at cost 13,004 13,008
Property, plant, and equipment - at cost, net 291,438 279,157
________ ________
$313,711 $312,380
________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ --- $ 57,000
Accounts payable - trade 8,229 10,969
Dividends payable 4,250 4,196
Accrued expenses and other liabilities 18,063 24,895
Income taxes payable 2,267 2,471
________ ________
Total current liabilities 32,809 99,531
Long-term debt 53,000 ---
Deferred income taxes and other credits 20,360 20,145
Shareholders' equity:
Common stock 8,769 8,769
Paid-in capital 26,945 26,945
Retained earnings 257,071 248,973
Less cost of treasury stock (85,243) (91,983)
________ ________
Total shareholders' equity 207,542 192,704
________ ________
$313,711 $312,380
________ ________
See accompanying notes.<PAGE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
<TABLE>
LUBY'S CAFETERIAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
February 29, February 28,
1996 1995
____ ____
(Thousands of dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $17,887 $17,265
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,674 8,120
Decrease in accrued expenses and other liabilities (6,610) (3,593)
Other (2,732) (2,754)
_______ _______
Net cash provided by operating activities 17,219 19,038
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of land held for future use --- 495
Purchases of land held for future use (3,999) (4,808)
Purchases of property, plant, and equipment (16,605) (10,904)
_______ _______
Net cash used in investing activities (20,604) (15,217)
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under
stock option plan 4,891 2,892
Net proceeds (payments) of short-term borrowings (57,000) 32,000
Net proceeds from long-term debt 53,000 ---
Purchases of treasury stock --- (35,566)
Dividends paid (8,396) (8,167)
_______ _______
Net cash used in financing activities (7,505) (8,841)
_______ _______
Net decrease in cash and cash equivalents (10,890) (5,020)
Cash and cash equivalents at beginning of period 12,392 10,909
_______ _______
Cash and cash equivalents at end of period $ 1,502 $ 5,889
_______ _______
See accompanying notes.
/TABLE
<PAGE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
<TABLE>
LUBY'S CAFETERIAS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For the Six Months Ended February 29, 1996 and February 28, 1995
(UNAUDITED)
<CAPTION>
Total
Common Stock Paid-in Retained Shareholders'
Issued Treasury Capital Earnings Equity
______ ________ _______ ________ ____________
(Thousands of dollars)
<S> <C> <C> <C> <C> <C>
Balance at August 31, 1994 $8,769 $(51,202) $26,945 $229,014 $213,526
Net income for the period --- --- --- 17,265 17,265
Common stock issued under
employee benefit plans, net
of shares tendered in partial
payment --- 3,994 --- (990) 3,004
Cash dividends --- --- --- (7,929) (7,929)
Purchases of treasury stock --- (37,219) --- --- (37,219)
______ ________ _______ ________ ________
Balance at February 28, 1995 $8,769 $(84,427) $26,945 $237,360 $188,647
______ ________ _______ ________ ________
Balance at August 31, 1995 $8,769 $(91,983) $26,945 $248,973 $192,704
Net income for the period --- --- --- 17,887 17,887
Common stock issued under
employee benefit plans, net
of shares tendered in partial
payment and including tax
benefits --- 6,740 --- (1,339) 5,401
Cash dividends --- --- --- (8,450) (8,450)
______ ________ _______ ________ ________
Balance at February 29, 1996 $8,769 $(85,243) $26,945 $257,071 $207,542
______ ________ _______ ________ ________
See accompanying notes.
/TABLE
<PAGE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S CAFETERIAS, INC.
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
(UNAUDITED)
Note 1: All adjustments which are, in the opinion of management, necessary to
a fair statement of the results for the interim periods have
been made. All such adjustments are of a normal recurring nature.
The results for the interim period are not necessarily indicative
of the results to be expected for the full year.
Note 2: Certain reclassifications have been made to prior year amounts to
conform to current year presentation.
Note 3: The Company entered into a new $100 million credit facility with a
syndication of four banks. As part of this credit facility, the
Company has a revolving credit agreement which allows borrowings for
varying periods through February 27, 2001, at the lower of the prime
rate or other rate options available at the time of borrowing. The
credit facility includes a maximum commitment for letters of credit of
$20 million. The Company pays a facility fee of .1% on the total
commitment. The credit facility contains business covenants which,
among other things, impose certain financial restrictions on the
Company relating primarily to leverage and net worth. As of
February 29, 1996, the balance outstanding under the revolving credit
agreement was $53,000,000 at an interest rate of 5.54%.
<PAGE>
Part I - FINANCIAL INFORMATION (continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
_______________________________
Cash and cash equivalents decreased by $10,890,000 from the end of the
preceding fiscal year to February 29, 1996. All capital expenditures for
fiscal 1996 are being funded from cash flows from operations, cash
equivalents, short-term borrowings, and long-term debt. Capital expenditures
for the six months ended February 29, 1996, were $20,604,000. As of
February 29, 1996, the Company owned 16 undeveloped land sites and nine land
sites on which cafeterias are under construction.
During fiscal 1995 the Company purchased 2,000,000 shares of its common stock
at a cost of $45,176,000, which are being held as treasury stock. To complete
the treasury stock purchases and fund capital expenditures, the Company
required external financing and borrowed funds under a $100,000,000
line-of-credit agreement. During February 1996, the Company entered into a
new $100 million credit facility with a syndication of four banks. As part of
this credit facility, the Company has a revolving credit agreement which
allows borrowings for varying periods through February 27, 2001, at the lower
of the prime rate or other rate options available at the time of borrowing.
As of February 29, 1996, the amount outstanding under this revolving credit
agreement was $53,000,000. The Company believes that additional financing
from external sources can be obtained on terms acceptable to the Company in
the event such financing is required.
Results of Operations
_____________________
Quarter ended February 29, 1996 compared to the quarter ended February 28,
1995.
______________________________________________________________________________
Sales increased $8,265,000, or 8.2%, due to the addition of eight new
cafeterias in fiscal 1996 and 11 in fiscal 1995, and due to an increase in
average sales volume at cafeterias opened over one year.
Cost of food increased $1,498,000, or 6.1%, due primarily to the increase in
sales and was offset by improved margins from the price increase on the Lu Ann
Platter, which took effect on December 1, 1995. Payroll and related costs
increased $2,579,000, or 9.4%, due primarily to the increase in sales, higher
wages for hourly employees in existing cafeterias, and higher wage costs
associated with increased expansion over the prior year. Occupancy and other
operating expenses increased $2,147,000, or 7.2%, due primarily to the
increase in sales; the opening of four new cafeterias; and higher managers'
salaries, which are based on the profitability of the cafeterias. General and
administrative expenses increased $510,000, or 10.7%, due primarily to two
additional area vice president positions, higher manager trainee salaries, and
higher moving expenses, all associated with the increased number of new store
openings.
Interest expense increased $302,000 due to higher borrowings under the
line-of-credit agreement.
Six months ended February 29, 1996 compared to the six months ended
February 28, 1995.
______________________________________________________________________________
Sales increased $15,156,000, or 7.5%, due primarily to the addition of eight
new cafeterias in fiscal 1996 and 11 in fiscal 1995, and due to an increase in
average sales volume at cafeterias opened over one year.
Cost of food increased $3,232,000, or 6.5%, due primarily to the increase in
sales and was offset by improved margins from price increases. Payroll and
related costs increased $5,070,000, or 9.2%, due primarily to the increase in
sales, higher wages for hourly employees in existing cafeterias, and higher
wage costs associated with increased expansion over the prior year. Occupancy
and other operating expenses increased $4,357,000, or 7.3%, due primarily to
the increase in sales; the opening of eight new cafeterias; and higher
managers' salaries, which are based on the profitability of the cafeterias.
General and administrative expenses increased $714,000, or 7.5%, due primarily
to additional corporate expenses associated with the increased number of new
store openings as discussed above.
Interest expense increased $750,000 due to higher borrowings under the
line-of-credit agreement.
<PAGE>
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 1996 annual meeting of shareholders of Luby's Cafeterias, Inc. was
held on January 12, 1996.
(b) The directors elected at the meeting were David B. Daviss, Roger R.
Hemminghaus, and William E. Robson. The other directors whose terms
continued after the meeting are Lauro F. Cavazos, John E. Curtis, Jr.,
Ralph Erben, John B. Lahourcade, Walter J. Salmon, George H. Wenglein,
and Joanne Winik.
(c) The matters voted upon at the meeting were (i) the election of three
directors to serve until the 1999 annual meeting of shareholders and
(ii) the approval of the appointment of Ernst & Young LLP as auditors
for the 1996 fiscal year.
(d) With respect to the election of directors, the results of the voting
were:
Shares Voted Shares Broker
Nominee For Abstained Nonvotes
David B. Daviss 19,877,086 871,882 -0-
Roger R. Hemminghaus 20,627,828 121,140 -0-
George H. Wenglein 20,629,275 119,693 -0-
(e) With respect to approval of the appointment of auditors, the results
of the voting were:
Shares voted "for" 20,688,253
Shares voted "against" 15,722
Shares abstaining 44,993
Broker nonvotes -0-
<PAGE>
Part II - OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
2 Agreement and Plan of Merger dated November 1, 1991, between
Luby's Cafeterias, Inc., a Texas corporation, and Luby's
Cafeterias, Inc., a Delaware corporation (filed as Exhibit 2
to the Company's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1991, and incorporated herein by
reference).
3(a) Certificate of Incorporation of Luby's Cafeterias, Inc., a
Delaware corporation, as in effect February 28, 1994 (filed as
Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q
for the quarter ended February 28, 1994, and incorporated
herein by reference).
3(b) Bylaws of Luby's Cafeterias, Inc., a Delaware corporation
(filed as Exhibit 3(b) to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1991, and
incorporated herein by reference).
4(a) Description of Common Stock Purchase Rights of Luby's
Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective
April 26, 1991, File No. 1-8308, and incorporated herein by
reference).
4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
November 30, 1991, and incorporated herein by reference).
4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
February 28, 1995, and incorporated herein by reference).
4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended May 31,
1995, and incorporated herein by reference).
4(e) Credit Agreement dated February 27, 1996, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas,
N.A.
10(a) Form of Deferred Compensation Agreement entered
into between Luby's Cafeterias, Inc. and various officers
(filed as Exhibit 10(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1981, and
incorporated herein by reference).
10(b) Annual Incentive Plan for Area Vice Presidents of Luby's
Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit
10(d) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1983, and incorporated herein by
reference).
10(c) Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted
October 19, 1983 (filed as Exhibit 10(e) to the Company's
Annual Report on Form 10-K for the fiscal year ended
August 31, 1983, and incorporated herein by reference).
10(d) Performance Unit Plan of Luby's Cafeterias, Inc. approved by
the shareholders on January 12, 1984 (filed as Exhibit 10(f)
to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1984, and incorporated herein by
reference).
10(e) Employment Contract dated January 8, 1988, between Luby's
Cafeterias, Inc. and George H. Wenglein (filed as Exhibit
10(h) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1988, and incorporated herein by
reference).
10(f) Management Incentive Stock Plan of Luby's Cafeterias, Inc.
(filed as Exhibit 10(i) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1989, and
incorporated herein by reference).
10(g) Nonemployee Director Deferred Compensation Plan of Luby's
Cafeteris, Inc. adopted October 27, 1994 (filed as Exhibit
10(g) to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1994, and incorporated herein
by reference).
10(h) Nonemployee Director Stock Option Plan of Luby's Cafeterias,
Inc. approved by the shareholders on January 13, 1995 (filed
as Exhibit 10(h) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1995, and incorporated
herein by reference).
10(i) Employment Contract dated January 12, 1996, between Luby's
Cafeterias, Inc. and John B. Lahourcade.
11 Statement re computation of per share earnings.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUBY'S CAFETERIAS, INC.
(Registrant)
By: Ralph Erben
_____________________________
Ralph Erben
Chairman of the Board and
Chief Executive Officer
By: John E. Curtis, Jr.
_____________________________
John E. Curtis, Jr.
President,
Chief Operating Officer, and
Chief Financial Officer
Dated: April 12, 1996<PAGE>
EXHIBIT INDEX
Exhibit Document
2 Agreement and Plan of Merger dated November 1, 1991,
between Luby's Cafeterias, Inc., a Texas corporation,
and Luby's Cafeterias, Inc., a Delaware corporation
(filed as Exhibit 2 to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 30, 1991,
and incorporated herein by reference).
3(a) Certificate of Incorporation of Luby's Cafeterias,
Inc., a Delaware corporation, as in effect February 28,
1994 (filed as Exhibit 3(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28,
1994, and incorporated herein by reference).
3(b) Bylaws of Luby's Cafeterias, Inc., a Delaware corporation
(filed as Exhibit 3(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 30, 1991,
and incorporated herein by reference).
4(a) Description of Common Stock Purchase Rights of Luby's
Cafeterias, Inc., in Form 8-A (filed April 17, 1991,
effective April 26, 1991, File No. 1-8308, and incorporated
herein by reference).
4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
November 30, 1991, and incorporated herein by reference).
4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
February 28, 1995, and incorporated herein by reference).
4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the
Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 1995, and incorporated herein
by reference).
4(e) Credit Agreement dated February 27, 1996, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank
of Texas, N.A.
10(a) Form of Deferred Compensation Agreement entered into
between Luby's Cafeterias, Inc. and various officers
(filed as Exhibit 10(b) to the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 1981,
and incorporated herein by reference).
10(b) Annual Incentive Plan for Area Vice Presidents of
Luby's Cafeterias, Inc. adopted October 19,
1983 (filed as Exhibit 10(d) to the Company's
Annual Report on Form 10-K for the fiscal year
ended August 31, 1983, and incorporated herein by
reference).
10(c) Incentive Bonus Plan of Luby's Cafeterias, Inc.
adopted October 19, 1983 (filed as Exhibit 10(e)
to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1983, and
incorporated herein by reference).
10(d) Performance Unit Plan of Luby's Cafeterias, Inc.
approved by the shareholders on January 12, 1984
(filed as Exhibit 10(f) to the Company's Annual
Report on Form 10-K for the fiscal year ended
August 31, 1984, and incorporated herein by reference).
10(e) Employment Contract dated January 8, 1988, between
Luby's Cafeterias, Inc. and George H. Wenglein
(filed as Exhibit 10(h) to the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 1988,
and incorporated herein by reference).
10(f) Management Incentive Stock Plan of Luby's Cafeterias,
Inc. (filed as Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the fiscal year ended August 31,
1989, and incorporated herein by reference).
10(g) Nonemployee Director Deferred Compensation Plan of
Luby's Cafeteris, Inc. adopted October 27, 1994
(filed as Exhibit 10(g) to the Company's Quarterly
Report on Form 10-Q for the quarter ended
November 30, 1994, and incorporated herein by reference).
10(h) Nonemployee Director Stock Option Plan of Luby's Cafeterias,
Inc. approved by the shareholders on January 13, 1995
(filed as Exhibit 10(h) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28,
1995, and incorporated herein by reference).
10(i) Employment Contract dated January 12, 1996, between
Luby's Cafeterias, Inc. and John B. Lahourcade.
11 Statement re computation of per share earnings.
Exhibit 4(e)
$100,000,000
CREDIT AGREEMENT
AMONG
LUBY'S CAFETERIAS, INC.
CERTAIN LENDERS
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER
February 27, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
Section 1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Amendments and Renewals. . . . . . . . . . . . . . . . . . 15
Section 1.3 Construction . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 2
Revolving Credit Advances
Section 2.1 Revolving Credit Advances. . . . . . . . . . . . . . . . . 15
Section 2.2 Manner of Borrowing and Disbursement . . . . . . . . . . . 16
Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) On Base Rate Advances. . . . . . . . . . . . . . . . . . . 17
(b) On LIBOR Advances. . . . . . . . . . . . . . . . . . . . . 18
(c) Interest if No Notice of Selection of Interest Rate Basis 18
(d) Interest After an Event of Default . . . . . . . . . . . . 18
Section 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Facility Fee . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Other Fees . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.5 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Voluntary Prepayments . . . . . . . . . . . . . . . . . . 19
(b) Mandatory Prepayment . . . . . . . . . . . . . . . . . . . 19
(c) Prepayments, Generally . . . . . . . . . . . . . . . . . . 19
Section 2.6 Reduction of Commitment . . . . . . . . . . . . . . . . . 20
(a) Voluntary Reduction . . . . . . . . . . . . . . . . . . . 20
(b) Mandatory Reduction . . . . . . . . . . . . . . . . . . . 20
(c) General Requirements . . . . . . . . . . . . . . . . . . . 20
Section 2.7 Non-Receipt of Funds by the Administrative Lender . . . . 20
Section 2.8 Payment of Principal of Revolving Credit Advances . . . . 21
(a) End of Interest Period . . . . . . . . . . . . . . . . . . 21
(b) Commitment Reduction . . . . . . . . . . . . . . . . . . . 21
(c) Maturity Date . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.9 Reimbursement . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.10 Manner of Payment . . . . . . . . . . . . . . . . . . . . 21
Section 2.11 LIBOR Lending Offices . . . . . . . . . . . . . . . . . . 22
Section 2.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . 22
Section 2.13 Calculation of Rates . . . . . . . . . . . . . . . . . . . 23
Section 2.14 Booking Loans . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.16 Letters of Credit . . . . . . . . . . . . . . . . . . . . 26
(a) The Letter of Credit Facility . . . . . . . . . . . . . . 26
(b) Request for Issuance . . . . . . . . . . . . . . . . . . . 27
(c) Drawing and Reimbursement . . . . . . . . . . . . . . . . 27
(d) Increased Costs . . . . . . . . . . . . . . . . . . . . . 28
(e) Obligations Absolute . . . . . . . . . . . . . . . . . . . 28
(f) Compensation . . . . . . . . . . . . . . . . . . . . . . . 29
(g) L/C Cash Collateral Account . . . . . . . . . . . . . . . 30
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Revolving Credit
Advances and the Initial Letters of Credit . . . . . . . 31
Section 3.2 Conditions Precedent to All Revolving Credit Advances
and Letters of Credit . . . . . . . . . . . . . . . . . . 32
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties . . . . . . . . . . . . . 34
(a) Organization; Power; Qualification. . . . . . . . . . . . 34
(b) Authorization . . . . . . . . . . . . . . . . . . . . . . 34
(c) Compliance with Other Loan Papers and Contemplated
Transactions. . . . . . . . . . . . . . . . . . . . . . . 34
(d) Licenses, etc.. . . . . . . . . . . . . . . . . . . . . . 35
(e) Compliance with Law . . . . . . . . . . . . . . . . . . . 35
(f) Title to Properties . . . . . . . . . . . . . . . . . . . 35
(g) Litigation. . . . . . . . . . . . . . . . . . . . . . . . 35
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(i) Financial Statements; Material Liabilities. . . . . . . . 35
(j) No Adverse Change . . . . . . . . . . . . . . . . . . . . 36
(k) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(l) Compliance with Regulations G, T, U and X . . . . . . . . 37
(m) Governmental Regulation . . . . . . . . . . . . . . . . . 37
(n) Absence of Default. . . . . . . . . . . . . . . . . . . . 38
(o) Investment Company Act. . . . . . . . . . . . . . . . . . 38
(p) Environmental Matters . . . . . . . . . . . . . . . . . . 38
(q) Certain Fees. . . . . . . . . . . . . . . . . . . . . . . 39
(r) Necessary Authorizations. . . . . . . . . . . . . . . . . 39
(s) Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . 39
(t) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 39
(u) Solvency. . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.2 Survival of Representations and Warranties, etc . . . . . 40
ARTICLE 5
Business Covenants
Section 5.1 Maintenance of Property, Insurance, Accounting Practices,
Corporate Existence . . . . . . . . . . . . . . . . . . . 40
Section 5.2 Inspection of Properties and Books . . . . . . . . . . . 41
Section 5.3 Merger and Sale of Assets . . . . . . . . . . . . . . . . 41
Section 5.4 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.5 Contingent Liabilities . . . . . . . . . . . . . . . . . 42
Section 5.6 Incurrence and Retention of Debt . . . . . . . . . . . . 42
Section 5.7 Investments . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.8 Notice of Litigation . . . . . . . . . . . . . . . . . . 43
Section 5.9 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 43
Section 5.10 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.11 Accounting Changes . . . . . . . . . . . . . . . . . . . 43
Section 5.12 Environmental Matters . . . . . . . . . . . . . . . . . . 43
Section 5.13 ERISA Compliance . . . . . . . . . . . . . . . . . . . . 44
Section 5.14 Business . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.15 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.16 Transactions with Affiliates . . . . . . . . . . . . . . 45
Section 5.17 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 45
Section 5.18 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 6
Information
Section 6.1 Financial Statements and Other Reports by the Borrower. . 46
Section 6.2 Officer's Certificate . . . . . . . . . . . . . . . . . . 48
ARTICLE 7
Default
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . 48
Section 7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 8
Changes in Circumstances
Section 8.1 LIBOR Basis Determination Inadequate . . . . . . . . . . 51
Section 8.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . 52
Section 8.4 Effect On Base Rate Advances . . . . . . . . . . . . . . 53
Section 8.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 9
AGREEMENT AMONG LENDERS
Section 9.1 Agreement Among Lenders . . . . . . . . . . . . . . . . . 53
(a) Administrative Lender . . . . . . . . . . . . . . . . . . 53
(b) Replacement of Administrative Lender. . . . . . . . . . . 54
(c) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 54
(d) Delegation of Duties. . . . . . . . . . . . . . . . . . . 54
(e) Reliance by Administrative Lender . . . . . . . . . . . . 54
(f) Limitation of Administrative Lender's Liability . . . . . 55
(g) Liability Among Lenders . . . . . . . . . . . . . . . . . 55
(h) Rights as Lender. . . . . . . . . . . . . . . . . . . . . 55
Section 9.2 Lender Credit Decision . . . . . . . . . . . . . . . . . 56
Section 9.3 Benefits of Article . . . . . . . . . . . . . . . . . . . 56
ARTICLE 10
Miscellaneous
Section 10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.4 Determination by the Lenders Conclusive and Binding . . . 58
Section 10.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.8 Severability . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.9 Interest and Charges . . . . . . . . . . . . . . . . . . 61
Section 10.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . 61
Section 10.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.12 Amendment and Waiver . . . . . . . . . . . . . . . . . . 62
Section 10.13 Exception to Covenants . . . . . . . . . . . . . . . . . 62
Section 10.14 No Liability of Issuing Bank . . . . . . . . . . . . . . 62
Section 10.15 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.16 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . 63
Section 10.17 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 63
<PAGE>
Schedules and Exhibits
Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Litigation
Schedule 3: Subsidiaries
Schedule 4: Existing Investments
Schedule 5: Existing Liens
Schedule 6: Existing Debt
Schedule 7: Investment Policy
Exhibit A: Revolving Credit Note
Exhibit B: Subsidiary Guaranty
Exhibit C: Assignment Agreement
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of February 27, 1996, among LUBY'S
CAFETERIAS, INC., a Delaware corporation ("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
The Borrower has requested that the Lenders make a credit facility
available to the Borrower in the maximum principal amount of $100,000,000.
The Lenders have agreed to provide the credit facility, 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
Section 1.1 Defined Terms. For purposes of this Agreement:
"Administrative Lender" means NationsBank of Texas, N.A., a national
banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 9.1(b) hereof.
"Affiliate" means any Person that directly or indirectly through one or
more Subsidiaries Controls, or is Controlled By or Under Common Control with,
the Borrower.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented and restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Environmental Laws" means applicable laws pertaining to
health 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"), the Texas Water Code, and the Texas Solid
Waste Disposal Act.
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and 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
courts and arbitrators 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 Sections 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, including, without limitation, Article
5069-1.04, Title 79, Revised Civil Statutes of Texas, 1925, as amended ("Art.
1.04"), and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit; provided that the parties hereto agree that the provisions of Chapter
15, Title 79, Revised Civil Statutes of Texas, 1925, as amended, shall
not apply to Revolving Credit Advances, this Agreement, the Revolving Credit
Notes or any other Loan Papers.
"Applicable Margin" means (a) with respect to the Base Rate Advances, 0%
per annum, (b) with respect to LIBOR Advances with Interest Periods of one,
two, three or six months, 0.225% per annum, and (c) with respect to LIBOR
Advances with Interest Periods of seven or fourteen days, 0.325% per annum.
"Art. 1.04" has the meaning specified in the definition of "Applicable
Law."
"Assignees" means any assignee of a Lender pursuant to an Assignment
Agreement and has the meaning specified in Section 10.6 hereof.
"Assignment Agreement" has the meaning specified in Section 10.6 hereof.
"Authorized Officer" means any of the following officers of the Borrower:
Chairman of the Board or President.
"Authorized Signatory" means such senior personnel of the Borrower as may
be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to
request Revolving Credit Advances or Letters of Credit hereunder.
"Base Rate Advance" means a Revolving Credit Advance which the Borrower
requests to be made as a Base Rate Advance or which is reborrowed as a Base
Rate Advance, in accordance with the provisions of Section 2.2 hereof.
"Base Rate Basis" means, for any day, a per annum interest rate equal to
the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day plus (iii) the Applicable Margin, or (b) the sum of (i) the Prime
Rate on such day plus (ii) the Applicable Margin. The Base Rate Basis shall
be adjusted automatically as of the opening of business on the effective date
of each change in the Prime Rate to account for such change.
"Borrower" means Luby's Cafeterias, Inc., a Delaware corporation.
"Business Day" means a day on which banks are open for the transaction of
business in Dallas, Texas, and, with respect to any LIBOR Advance, in London,
England.
"Capital Stock" means, with respect to any Person, any capital stock,
beneficial or partnership interests or other equivalent interests (regardless
of how designated) of such Person and shares, interests, participations or
other ownership interests (however designated) of any Person and any rights
(other than debt securities convertible into corporate stock), warrants or
options to purchase any of the foregoing.
"Capitalized Lease Obligations" means that portion of any obligation of
the Borrower or any Subsidiary as lessee under a lease which at the time would
be required to be capitalized on a balance sheet prepared in accordance with
GAAP.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States government or any agency thereof, (b) certificates of deposit,
Eurodollar time deposits, overnight bank deposits and bankers' acceptances of,
and retail repurchase agreements with, any bank having combined capital and
surplus of at least $250,000,000 or any Lender, which deposits, bankers'
acceptances or agreements have remaining terms or maturities of one year or
less from the date of acquisition and (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Group, a Division of McGraw-Hill,
Inc., a New York corporation, or P-l by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of investments.
"Change of Control" means (a) any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable), is or becomes the "beneficial owner" (as that term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable),
except that a person shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, directly or
indirectly, of more than 50% of the total voting power in the aggregate of all
classes of Capital Stock then outstanding of the Borrower normally entitled to
vote in elections of directors, or (b) during any period of 24 consecutive
months after February 27, 1996, 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 or whose nomination for election by
the shareholders of the Borrower was approved by a vote of a majority of the
directors 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.
"Code" means the Internal Revenue Code of 1986, as amended, together with
all regulations thereunder.
"Commitment" means $100,000,000, as reduced pursuant to Section 2.6
hereof.
"Consolidated Net Income" means, for any period, determined in accordance
with GAAP, consolidated net income for such period.
"Control" or "Controlled By" or "Under Common Control" means possession,
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, 5% 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.
"Controlled Group" shall mean as of the applicable date, as to any
Person, 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.
"Debt" of any Person means, at any date, without duplication, all
obligations, contingent or otherwise, (a) of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (b) of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) representing the
balance deferred and unpaid of the purchase price of any property or services
(other than accounts payable or other obligations arising in the ordinary
course of business), if and to the extent any of the foregoing described in
clauses (a), (b) and (c) would appear as a liability on the balance sheet of
such Person, (d) of such Person in respect of bankers' acceptances, letters of
credit or other similar instruments (or reimbursement obligations with respect
thereto), (e) of such Person under Capitalized Lease Obligations, (f) all
liabilities secured by a Lien on any asset of such Person to the extent of the
value of such asset, whether or not such liability is an obligation of such
Person, (g) all liability of others guaranteed by such Person (but only to the
extent of such guarantees), (h) to the extent not otherwise included,
obligations of such Person under currency risk-hedging agreements and Interest
Rate Protection Agreements, (i) the liquidation preference and any mandatory
redemption payment obligations of such Person in respect of Capital Stock of
such Person, and (j) in the case of such Person, unfunded vested benefits
under any Plan.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief laws affecting the rights of creditors generally from time to
time in effect.
"Default" means an Event of Default and/or any of the events specified in
Section 7.1, regardless of whether there shall have occurred any passage of
time 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 the lesser
of (a) the Highest Lawful Rate, or (b) the sum of the Prime Rate plus three
percent.
"Determining Lenders" means, on any date of determination, any
combination of the Lenders having at least 51% of the aggregate amount of the
Revolving Credit Advances; provided, however, that if there are no Revolving
Credit Advances outstanding hereunder, "Determining Lenders" shall mean any
combination of Lenders whose Specified Percentages hereunder aggregate at
least 51%.
"EBITDA" means, for any period, determined in accordance with GAAP on a
consolidated basis, the sum of (a) Operating Income, plus (b) nonrecurring,
non-cash charges which decrease Operating Income, plus (c) depreciation and
amortization, minus (d) nonrecurring credits which are included in Operating
Income.
"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 under 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 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 7.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Existing Debt" means that Debt described on Schedule 6 hereto.
"Existing Investments" means those Investments described on Schedule 4
hereto.
"Existing Liens" means those Liens described on Schedule 5 hereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of 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 rate quoted to
the Administrative Lender on such day on such transactions as determined by
Administrative Lender.
"Fee Letter" has the meaning specified in Section 2.4(b) hereof.
"Financial Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Facility which is a "financial guarantee - type standby
letter of credit" as defined in Appendix A to 12 CFR Part 3 issued by the
Office of the Comptroller of the Currency.
"GAAP" means generally accepted accounting principles, 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 (except as stated in the last
sentence of this definition). The requisite that such principles be applied
on a consistent basis shall mean that the accounting principles observed in a
current period are comparable in all material respects to those applied in a
preceding period, except as otherwise required by the adoption of Statements
by the Financial Accounting Standards Board. Notwithstanding the foregoing,
each determination and computation with respect to financial covenants and
ratios in this Agreement shall be made in accordance with GAAP as in effect on
the Agreement Date.
"Guaranty" or "Guaranteed", as applied to an obligation of another
Person, means and includes (a) a guaranty, direct or indirect, in any manner,
of any part or all of such obligation, and (b) 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.
"Guaranty Agreements" means the Subsidiary Guaranty and any other
Guaranty executed by a Guarantor.
"Guarantor" means each Restricted Subsidiary.
"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. For purposes of determining the Highest Lawful Rate
under the Applicable Law of the State of Texas, the applicable rate ceiling
shall be (a) the indicated rate ceiling described in and computed in
accordance with the provisions of Section (a)(1) of Art. 1.04, or (b) if the
parties subsequently contract as allowed by Applicable Law, the quarterly
ceiling or the annualized ceiling computed pursuant to Section (d) of Art.
1.04; provided, however, that at any time the indicated rate ceiling, the
quarterly ceiling or the annualized ceiling shall be less than 18% per annum
or more than 24% per annum, the provisions of Sections (b)(1) and (2) of said
Art. 1.04 shall control for purposes of such determination, as applicable.
"Increased Advance Costs" has the meaning specified in Section 8.3
hereof.
"Increased Letter of Credit Costs" has the meaning specified in
Section 2.16(d) hereof.
"Indemnified Matters" has the meaning specified in Section 5.18 hereof.
"Indemnitees" has the meaning specified in Section 5.18 hereof.
"Interest Period" means (a) for any Base Rate Advance, the period
beginning on the day the Advance was made and ending on the Maturity Date, and
(b) for any LIBOR Advance, the period beginning on the day such Advance is
made and ending seven days (to the extent available), fourteen days (to the
extent available), one, two, three or six months thereafter (as the Borrower
shall select); provided, however, that all of the foregoing provisions
relating to Interest Periods in respect of LIBOR Advances 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; and
(iii) there shall be outstanding at any one time no more than
five Interest Periods in the aggregate.
"Interest Rate Protection Agreement" means an interest rate swap, cap,
collar or similar interest rate protection agreement between the Borrower or
any Restricted Subsidiary and other Person.
"Investment" means, in one or a series of related transactions, any
direct or indirect 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 advances to employees for
moving and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business) or capital contribution or transfer of property,
assets or value to, or investment, in any other Person, including without
limitation the incurrence or sufferance of Debt or the purchase of accounts
receivable of any other Person that are not current assets or do not arise in
the ordinary course of business.
"Investment Policy" means that certain Investment Policy of the Borrower
in effect on the Agreement Date as specified on Schedule 7 hereto.
"Issuing Bank" means NationsBank of Texas, N.A. in its capacity as issuer
of the Letters of Credit.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a Commitment or is owed
any part of the Obligations (including the Administrative Lender in its
individual capacity), and each Assignee that hereafter becomes party hereto
pursuant to Section 10.6 hereof.
"L/C Cash Collateral Account" has the meaning specified in Section
2.16(g) hereof.
"L/C Related Documents" has the meaning specified in Section 2.16(e)
hereof.
"Letters of Credit" means letters of credit under the Letter of Credit
Facility.
"Letter of Credit Agreement" has the meaning specified in Section 2.16(b)
hereof.
"Letter of Credit Facility" means the amount of Letters of Credit the
Issuing Bank may issue pursuant to Section 2.16(a) hereof.
"Leverage Ratio" means, for any date of determination, the ratio of
(a) Total Debt as of the fiscal quarter immediately preceding the date of
determination to (b) EBITDA, for the four consecutive fiscal quarters
preceding the date of determination. For purposes of calculation of EBITDA,
there shall be (a) included in EBITDA (without duplication) the EBITDA of any
assets acquired during any such four fiscal quarters and (b) excluded from
EBITDA the EBITDA of any asset disposed during any such four fiscal quarters.
"LIBOR Advance" means a Revolving Credit 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, with respect to each LIBOR Advance for each Interest
Period, a rate per annum equal to the lesser of (a) the Highest Lawful Rate or
(b) the sum of the LIBOR Rate plus the Applicable Margin.
"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 Lender.
"LIBOR Rate" means, for any Interest Period (a) of one, two, three or six
months, the interest rate per annum (rounded upward to the nearest
one-sixteenth (1/16th) of one percent) at which deposits in United States
Dollars are offered to the Administrative Lender by leading banks reasonably
selected by the Administrative Lender in the London interbank market at
approximately 11:00 a.m. (London time), two Business Days before the first day
of such Interest Period, in an amount approximately equal to the principal
amount of, and for a length of time approximately equal to the Interest Period
for, the LIBOR Advance sought by the Borrower, and (b) of seven or fourteen
days, the Eurodollar option rate published by Classer Marshall, Inc. (Telerate
page 4833) at approximately 10:00 a.m. (Dallas, Texas time), two Business Days
before the first day of such Interest Period in an amount approximately equal
to the principal amount of, and for a length of time approximately equal to
the Interest Period for, the LIBOR Advance sought by the Borrower.
"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 encumbrance of any kind in respect of such property, whether or not
choate, vested or perfected.
"Loan Papers" means this Agreement, the Revolving Credit Notes, the
Guaranty Agreements, the Fee Letter, and any other document or agreement
executed or delivered from time to time by the Borrower, any Restricted
Subsidiary or any other Person in connection herewith or as security for all
or any part of the Obligations.
"Loan Party" means the Borrower and each Guarantor.
"Material Adverse Change or Effect" means any act or circumstance or
event which (a) could reasonably be expected to be (i) material and adverse to
the consolidated financial condition of the Borrower and its Restricted
Subsidiaries or (ii) material and adverse to the consolidated business
prospects, operations or properties of the Borrower and its Restricted
Subsidiaries or (b) impairs the ability of the Borrower, any Restricted
Subsidiary or any other Person to perform in any material respect their
respective obligations under the Loan Papers.
"Maturity Date" means February 27, 2001, or the earlier date of
termination in whole of the Commitment pursuant to Section 2.6 or 7.2 hereof.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations.
"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.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with,
any governmental or other regulatory authority necessary or appropriate to
enable the Borrower or any Restricted Subsidiary to maintain and operate its
business and properties.
"Net Cash Proceeds" means the aggregate amount of cash received by the
Borrower in respect of the sale of Capital Stock of the Borrower, less the sum
of all fees, commissions and other expenses incurred in connection with such
sale.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, as determined in accordance with
GAAP.
"Net Proceeds" means the aggregate amount of consideration received by
the Borrower in respect of the sale of any property of the Borrower, less the
sum of all fees, commissions and other expenses incurred in connection with
the sale.
"Net Worth" means an amount equal to the sum of the Capital Stock and
additional paid-in-capital plus retained earnings (or minus accumulated
deficit) of the Borrower and its Subsidiaries, less (a) treasury stock and (b)
amounts attributable to any write-up in book value of assets resulting from a
revaluation thereof subsequent to August 31, 1995, all in accordance with
GAAP.
"Non-Financial Letter of Credit" means any Letter of Credit issued under
the Letter of Credit Facility which is a "performance-based standby letter of
credit" as defined in Appendix A to 12 CFR Part 3 issued by the Office of the
Comptroller of the Currency.
"Notice of Issuance" means the meaning specified in Section 2.16(b)
hereof.
"Obligations" means (a) all obligations of any nature (whether matured or
unmatured, fixed or contingent, including the Reimbursement Obligations) of
the Borrower, any Restricted Subsidiary or any other Person to the Lenders and
the Issuing Bank under the Loan Papers as they may be amended from time to
time, and (b) all obligations of the Borrower, any Restricted Subsidiary or
any other Person for losses, damages, expenses or any other liabilities of any
kind that any Lender may suffer by reason of a breach by the Borrower, any
Restricted Subsidiary or any other Person of any obligation, covenant or
undertaking with respect to any Loan Paper.
"Obligor" means Borrower or each other Person liable for performance of
any of the Obligations or the property of which secures any of the
Obligations.
"Operating Income" means, with respect to any Person for any period, the
operating income (loss) of such Person, as determined in accordance with GAAP.
"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.
"Other Taxes" has the meaning specified in Section 2.14 hereof.
"Participant" has the meaning specified in Section 10.6(c) hereof.
"Participation" has the meaning specified in Section 10.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investment" means Investments in (a) wholly-owned Restricted
Subsidiaries (i) that are subject to the provisions of this Agreement, (ii)
that concurrently therewith unconditionally guarantee the performance of the
Borrower's obligations under this Agreement and (iii) that concurrently
deliver to the Lenders (A) an opinion acceptable to the Lenders with respect
to the validity and enforceability of such guarantee and (B) such other
documents, such as corporate resolutions, certificates of incumbency, by-laws
and articles of incorporation, as the Lenders shall reasonably require, (b)
Investments permitted by the Investment Policy, (c) Existing Investments, (d)
Investments in Cash Equivalents and (e) Investments in Unrestricted
Subsidiaries, provided that at no time shall (i) the gross revenues of all
Unrestricted Subsidiaries for any four consecutive fiscal quarters constitute
10% or more of the consolidated gross revenues of the Borrower and its
Subsidiaries for such period or (ii) the assets of all Unrestricted
Subsidiaries constitute 10% or more of the consolidated assets of the Borrower
and its Subsidiaries.
"Permitted Liens" means, as applied to any Person:
(a) any Lien in favor of the Administrative Lender or a trustee on its
behalf to secure the Obligations;
(b) (i) Liens on real estate for real estate taxes not yet delinquent,
(ii) Liens created by lease agreements to secure the payments of rental
amounts and other sums not yet due thereunder, (iii) Liens on leasehold
interests created by the lessor in favor of any mortgagee of the leased
premises, and (iv) Liens for taxes, assessments, governmental charges, levies
or claims that are being diligently contested in good faith by appropriate
proceedings 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 in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person;
(f) Liens created to secure the purchase price of assets acquired by
such Person, which is incurred solely for the purpose of financing the
acquisition of such assets and incurred at the time of acquisition, so long as
(i) each such Lien shall at all times be confined solely to the asset or
assets so acquired (and proceeds thereof), (ii) the Liens were placed on such
assets at the time such assets were acquired and (iii) the aggregate principal
amount of Debt secured by such Liens does not exceed $50,000,000, and
refinancings thereof so long as any such Lien remains solely on the asset or
assets acquired and the amount of Debt related thereto is not increased;
(g) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been
secured, provided that (i) such Person shall have established adequate
reserves for such judgments or awards, (ii) such judgments or awards shall be
fully insured and the insurer shall not have denied coverage, or (iii) such
judgments or awards shall have been bonded to the satisfaction of the Lenders;
(h) Any Liens existing on the Agreement Date which are described on
Schedule 5 hereto, and Liens resulting from the refinancing of the related
Debt, provided that the Debt secured thereby shall not be increased and the
Liens shall not cover additional assets of the Borrower;
(i) any obligations or duties, affecting any property, to any
municipality or public authority with respect to any franchise, grant, license
or permit which do not materially impair the use of any material property for
the purposes for which such property is held by such Person;
(j) zoning laws or ordinances and municipal regulations which do not
materially impair the use of any material property for the purposes for which
such property is held by such Person; and
(k) Liens, minor irregularities in or deficiencies of title on any
property which do not materially impair the use of any material property for
the purposes for which such property is held by such Person.
"Person" means and includes an individual, corporation, partnership,
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 that is covered by Title IV of ERISA) pursuant
to which any employees of the Borrower, its Subsidiaries or any member of
their Controlled Group participate.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Administrative 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 Administrative Lender as
its "prime rate;" it being understood that such rate may not be the lowest
rate of interest charged by the Administrative Lender.
"Quarterly Date" means the first Business Day of each January, April,
July and October, beginning April 1, 1996.
"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 and not
theretofore reimbursed by the Borrower.
"Refinancing Advance" means any Revolving Credit Advance which is used to
pay the principal amount (or any portion thereof) of a Revolving Credit
Advance at the end of its Interest Period and which, after giving effect to
such application, does not result in an increase in the aggregate amount of
outstanding Revolving Credit Advances.
"Release Date" means the date on which the Revolving Credit Notes have
been paid, all other Obligations due and owing have been paid and performed in
full, and the Commitment has been terminated.
"Reportable Event" has the meaning specified in Section 4043(b) of ERISA.
"Restricted Subsidiary" means each direct and indirect Subsidiary of the
Borrower which is not an Unrestricted Subsidiary.
"Revolving Credit Advance" means an Advance made pursuant to Section 2.1
hereof.
"Revolving Credit Note" means any Promissory Note of the 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.
"Rights" means rights, remedies, powers and privileges.
"S.E.C." means the United States Securities and Exchange Commission.
"Solvent" means, with respect to any Person, that the fair value of the
assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and 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
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 Donohoe, Jameson & Carroll, P.C.,
or such other legal counsel as the Administrative Lender may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof, or if applicable, specified in
its most recent Assignment Agreement.
"Subsidiary" with respect to any Person, means any corporation,
partnership or other business entity of which an aggregate of 50% or more of
the outstanding Capital Stock having ordinary voting power to elect a majority
of the board of directors, managers, trustees or other controlling persons, or
an equivalent controlling interest therein, of such Person is at the time,
directly or indirectly, owned by such Person, by such Person and/or one or
more Subsidiaries of such Person or by one or more Subsidiaries of such Person
(irrespective of whether, at the time, Capital Stock of any other class or
classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
"Subsidiary Guaranty" means the Guaranty executed by each Guarantor
guaranteeing payment and performance of the Obligations, substantially in the
form of Exhibit B hereto, as such agreement may be amended, modified,
supplemented or restated from time to time.
"Taxes" has the meaning specified in Section 2.15 hereof.
"Total Debt" means, as of any date of determination, the sum (without
duplication) of (a) all Debt of the Borrower and its Subsidiaries, minus (b)
all Debt of the Borrower and its Subsidiaries of the type described in clauses
(h) and (j) of the definition of "Debt" herein.
"Tribunal" means any state, commonwealth, federal, foreign territorial,
or other court or governmental department, commission, board, bureau, agency
or instrumentality.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
time.
"Unrestricted Subsidiary" means each direct and indirect Subsidiary of
the Borrower (a) the gross revenues of which for the then most recently
completed four fiscal quarters constituted (or, with respect to any Subsidiary
acquired during such four fiscal quarters, would have constituted, had the
gross revenues of such Subsidiary been included for such period) less than 5%
of the consolidated gross revenues for the Borrower and its Subsidiaries for
such period and (b) the assets of which as of the end of any fiscal quarter
constituted less than 5% of the consolidated assets of the Borrower and its
Subsidiaries as of the end of such fiscal quarter.
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.
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
Revolving Credit Advances
Section 2.1 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 up to and
including the Maturity Date in an aggregate amount not to exceed an amount
equal to (i) its Specified Percentage of the Commitment less (ii) an amount
equal to its Specified Percentage of the aggregate amount of all Reimbursement
Obligations then outstanding (assuming compliance with all conditions to
drawing) for the purposes set forth in Section 5.17 hereof. Notwithstanding
the immediately preceding sentence, at no time shall the sum of (i) the
aggregate principal amount of Revolving Credit Advances outstanding, plus (ii)
the aggregate principal amount of all Reimbursement Obligations exceed the
Commitment. Subject to Section 2.9 hereof, Revolving Credit Advances may be
repaid and then reborrowed. Any Revolving Credit Advance shall, at the option
of the Borrower as provided in Section 2.2 hereof (and, in the case of LIBOR
Advances, subject to availability and to the provisions of Article 8 hereof),
be made as a Base Rate Advance or a LIBOR Advance; provided that there shall
not be outstanding to any Lender, at any one time, more than four LIBOR
Advances. On the Maturity Date unless sooner paid as provided herein, the
outstanding Revolving Credit Advances shall be repaid in full.
Section 2.2 Manner of Borrowing and Disbursement.
(a) In the case of Base Rate Advances other than a Refinancing Advance,
the Borrower, through an Authorized Signatory, shall give the Administrative
Lender prior to 10:30 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 (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 or reborrow a Base Rate Advance
hereunder. Such notice of borrowing shall specify the requested funding date,
which shall be a Business Day, and the amount of the proposed aggregate Base
Rate Advances to be made by Lenders. Each Base Rate Advance shall have an
Interest Period beginning on the date such Advance is made and ending on the
Quarterly Date next following the date the Advance is made; provided that no
such Interest Period shall extend past the Maturity Date.
(b) In the case of LIBOR Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender at least three Business Days'
irrevocable written notice for LIBOR Advances, 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), of its intention to borrow or reborrow a
LIBOR Advance hereunder. Notice shall be given to the Administrative Lender
prior to 11:00 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 availability and to Article 8 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 Maturity
Date.
(c) Subject to Sections 2.1 and 2.9 hereof, at least three Business Days
prior to each Payment Date for a LIBOR Advance, the Borrower, through an
Authorized Signatory, shall give the Administrative Lender 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),
specifying whether all or a portion of such LIBOR Advance outstanding on the
Payment Date (i) is to be repaid and then reborrowed in whole or in part as a
Base Rate Advance or a LIBOR Advance, or (ii) is to be repaid and not
reborrowed; provided, however, notwithstanding anything in this Agreement to
the contrary, if on any Payment Date a Default shall exist, such LIBOR Advance
may only be reborrowed as a Base Rate Advance. Upon such Payment Date, such
LIBOR Advance shall, subject to the provisions hereof, be so repaid and, as
applicable, reborrowed.
(d) Subject to Sections 2.1 and 2.9 hereof, upon irrevocable written
notice to the Administrative Lender prior to 11:00 a.m., Dallas, Texas, time
on each Payment Date (or three Business Days prior to such Payment Date if the
Borrower wishes to reborrow a LIBOR Advance), through an Authorized Signatory,
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), the Borrower may
repay a Base Rate Advance on its Payment Date, and (i) reborrow all or a
portion of the principal amount thereof as a Base Rate Advance, (ii) reborrow
all or a portion of the principal amount thereof as one or more LIBOR
Advances, or (iii) not reborrow all or any portion of such Base Rate Advance.
Upon such Payment Date or date of repayment, such Base Rate Advance shall,
subject to the provisions hereof, be so repaid and, as applicable, reborrowed.
(e) The aggregate amount of Base Rate Advances to be made by the
Lenders on any day shall be in a principal amount which is at least $5,000,000
and which is an integral multiple of $500,000; provided, however, that such
amount may equal the unused amount of the 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 $5,000,000 and
which is an integral multiple of $1,000,000.
(f) The Administrative Lender shall promptly notify the Lenders of each
notice received from the Borrower pursuant to this Section. Failure of the
Borrower to give any notice in accordance with Sections 2.2(c) and (d) hereof
shall result in a repayment of any such existing Advance on the applicable
Payment Date by a Refinancing Advance which is a Base Rate Advance. Each
Lender shall, not later than 1:00 p.m., Dallas, Texas time, on the date of any
Revolving Credit Advance that is not a Refinancing Advance, deliver to the
Administrative Lender, at its address set forth herein, such Lender's
Specified Percentage of such Revolving Credit Advance in immediately available
funds in accordance with the Administrative Lender's instructions. Prior to
2:00 p.m., Dallas, Texas time, on the date of any Revolving Credit Advance
hereunder that is not a Refinancing Advance, the Administrative Lender shall,
subject to satisfaction of the conditions set forth in Article 3, disburse the
amounts made available to the Administrative Lender 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
Lender. All Revolving Credit Advances shall be made by each Lender according
to its Specified Percentage.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of each Base Rate Advance, from the date such Advance is
made until it is due (whether at maturity, by reason of acceleration, by
scheduled reduction, or otherwise) or repaid, which shall be payable as
set forth in Section 2.3(a)(ii) hereof, at a simple interest rate per
annum equal to the Base Rate Basis for such Base Rate Advance as in
effect from time to time, provided that interest on such Base Rate
Advance shall not exceed the Maximum Amount. If at any time the Base
Rate Basis would exceed the Highest Lawful Rate, interest payable on such
Base Rate Advance 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 such Advance equals
the amount of interest that would have accrued if the Base Rate Basis had
been in effect at all times.
(ii) Interest on each Base Rate 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 each Quarterly Date
and on the Maturity Date.
(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) or repaid, at a rate per annum equal to the LIBOR Basis for
such Advance. The Administrative Lender, whose determination shall be
conclusive, shall determine the LIBOR Basis on the second Business Day
prior to the applicable funding date and shall notify the Borrower and
the Lenders of such LIBOR Basis.
(ii) Subject to Section 10.9 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 Maturity Date; provided, however, that if the Interest
Period for such Advance exceeds three months, interest shall also be due
and payable in arrears on each Quarterly Date during such Interest
Period.
(c) Interest if No Notice of Selection of Interest Rate Basis. If the
Borrower fails to give the Administrative Lender timely notice of its
selection of a LIBOR Basis or an Interest Period for a LIBOR Advance, or if
for any reason a determination of a LIBOR Basis for any Advance is not timely
concluded due to the fault of the Borrower, the appropriate Base Rate Basis
shall apply to such Advance.
(d) Interest After an Event of Default. (i) After an Event of Default
(other than an Event of Default specified in Section 7.1(f) hereof) and during
any continuance thereof, at the option of Determining Lenders, and (ii) after
an Event of Default specified in Section 7.1(f) hereof and during any
continuance thereof, automatically and without any action by the
Administrative Lender 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 Maturity Date, and shall accrue until the earlier
of (i) waiver or cure (to the satisfaction of the Determining Lenders) of the
applicable Event of Default, (ii) agreement by the 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 Revolving Credit Advances, to exercise any other rights or remedies under
the Loan Papers, or to give notice to the Borrower of the decision to charge
interest at the Default Rate. The Lenders will undertake to notify the
Borrower, after the effective date, of the decision to charge interest at the
Default Rate.
Section 2.4 Fees.
(a) Facility Fee. Subject to Section 10.9 hereof, the Borrower agrees
to pay to the Administrative Lender, for the ratable account of the Lenders, a
per annum facility fee equal to the product of (i) 0.10% multiplied by (ii)
the daily average amount of the Commitment. Such fee shall accrue from the
Agreement Date and shall be (i) payable in arrears on each Quarterly Date and
on the Maturity Date, (ii) fully earned when due, (iii) subject to Section
10.9 hereof, nonrefundable when paid, and (iv) computed on the basis of a year
of 360 days, for the actual number of days elapsed.
(b) Other Fees. Subject to Section 10.9 hereof, the Borrower agrees to
pay to the Administrative Lender, for its account and not the account of the
Lenders, the fees provided for in the letter agreement ("Fee Letter"), dated
as of the Agreement Date, between the Borrower and the Administrative Lender
on the date and in the amounts specified therein.
Section 2.5 Prepayment.
(a) Voluntary Prepayments. The principal amount of any Base Rate
Advance may be prepaid in full or in part at any time, without penalty and
without regard to the Payment Date for such Advance, upon notice as required
for a repayment of a Base Rate Advance as provided in Section 2.2(d) hereof.
LIBOR Advances may be voluntarily prepaid upon notice as required for
repayments of LIBOR Advances as provided in Section 2.2(c) hereof, 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
Commitment, the Borrower shall prepay outstanding Revolving Credit Advances in
an amount necessary to reduce the same to an amount less than or equal to the
Commitment as so reduced. 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 and Reimbursement Obligations exceed the Commitment after any
reduction thereof, the Borrower shall repay any such excess amount and all
accrued interest thereon on the date of such reduction.
(c) Prepayments, Generally. Any prepayment of a Revolving Credit
Advance shall be accompanied by interest accrued on the principal amount being
prepaid. Any voluntary partial prepayment of a Base Rate Advance shall be in a
principal amount of $500,000 or an integral multiple thereof. All voluntary
prepayments shall be applied in the order directed in writing by the Borrower
to the Administrative Lender.
Section 2.6 Reduction of Commitment.
(a) Voluntary Reduction. The Borrower shall have the right, upon not
less than five Business Days' notice (provided no notice shall be required for
a termination in whole of the Commitment) by an Authorized Signatory to the
Administrative Lender (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 Commitment, in whole or in
part. Each partial termination shall be in an aggregate amount which is at
least $5,000,000 and which is an integral multiple of $500,000, and no
voluntary reduction in the 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 Maturity Date, the Commitment shall
automatically reduce to zero.
(c) General Requirements. Upon any reduction of the Commitment pursuant
to this Section, the Borrower shall immediately make a prepayment of Revolving
Credit Advances in accordance with Section 2.5(b) hereof. The Borrower shall
reimburse each Lender for any loss or out-of-pocket expense incurred by each
Lender in connection with any such payment, as set forth in Section 2.9 hereof
to the extent applicable. The Borrower shall not have any right to rescind
any termination or reduction. Once reduced, the Commitment may not be
increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Lender. Unless
the Administrative Lender shall have been notified by a Lender prior to the
date of any proposed Revolving Credit Advance (which notice shall be effective
upon receipt) that such Lender does not intend to make the proceeds of such
Revolving Credit Advance available to the Administrative Lender, the
Administrative Lender may assume that such Lender has made such proceeds
available to the Administrative Lender on such date, and the Administrative
Lender 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 Lender by such
Lender, the Administrative Lender shall, without prejudice to the Borrower's
rights against such Lender, 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 Lender
receives such amount from the Lender, at a per annum rate equal to the lesser
of (i) the Highest Lawful Rate or (ii)(A) in the case of such Lender, the
Federal Funds Rate or (B) in the case of the Borrower, the interest rate
applicable to such Revolving Credit Advance. No Lender shall be liable for
any other Lender's failure to fund a Revolving Credit Advance hereunder.
Section 2.8 Payment of Principal of Revolving Credit Advances. The
Borrower agrees to pay the principal amount of the Revolving Credit Advances
to the Administrative Lender for the account of the Lenders as follows:
(a) End of Interest Period. The principal amount of each Revolving
Credit Advance hereunder shall be due and payable on its Payment Date, which
principal payment may be made by means of a Refinancing Advance.
(b) Commitment Reduction. On the date of reduction of the Commitment
pursuant to Section 2.6 hereof, including the Maturity Date, the aggregate
amount of the Revolving Credit Advances outstanding on such date of reduction
in excess of the Commitment as reduced shall be due and payable, which
principal payment may not be made by means of Refinancing Advances.
(c) Maturity Date. To the extent not otherwise required to be paid
earlier as provided herein, the principal amount of the Revolving Credit
Advances, all accrued interest and fees thereon, and all other Obligations
related thereto, shall be due and payable in full on the 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), or (b) any prepayment for any
reason of any LIBOR Advance in whole or in part, the Borrower agrees to pay to
any such Lender, upon its demand, an amount sufficient to compensate such
Lender for all such losses and out-of-pocket expenses, subject to Section 10.9
hereof. Such Lender's good faith determination of the amount of such losses
or out-of-pocket expenses, calculated in its usual fashion, absent manifest
error, shall be binding and conclusive. Such losses shall include, without
limiting the generality of the foregoing, lost profits and reasonable expenses
incurred by such Lender in connection with the re-employment of funds prepaid,
repaid, converted or not borrowed, converted or paid, as the case may be.
Upon request of the Borrower, such Lender shall provide a certificate setting
forth the amount to be paid to it by the Borrower hereunder and calculations
therefor.
Section 2.10 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower of the
principal of or interest on the Revolving Credit Advances, fees, and any other
amount owed under this Agreement or any other Loan Paper shall be made not
later than 12:00 noon (Dallas, Texas time) on the date specified for payment
under this Agreement to the Administrative Lender at the Administrative
Lender'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 Paper 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 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 Papers without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) If some but less than all amounts due from the Borrower are received
by the Administrative Lender, the Administrative Lender shall apply such
amounts in the following order of priority: (i) to the payment of the
Administrative Lender's expenses incurred on behalf of the Lenders then due
and payable, if any; (ii) to the payment of all other fees and amounts then
due and payable under the Loan Papers; (iii) to the payment of interest then
due and payable on the Revolving Credit Advances; and (iv) to the payment of
principal then due and payable on the Revolving Credit Advances.
(e) Each payment by the Borrower in respect of obligations relating to
the Revolving Credit Advance and the Letters of Credit (whether for principal,
interest, fees or otherwise) shall be made to the Administrative Lender for
the account of the Lenders pro rata in accordance with their respective
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 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 8.2 or 8.3 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. Any Lender obtaining a payment
(whether voluntary or involuntary, due to the exercise of any right of
set-off, or otherwise) on account of its Revolving Credit Advances or its
participation in the Letters of Credit (other than pursuant to Sections 2.15,
2.16(d), 8.3 or 8.5), in excess of its Specified Percentage of all payments
made by the Borrower with respect to Revolving Credit Advances and the Letters
of Credit shall purchase from each other Lender such participation in the
Revolving Credit Advances made by such other Lender or its participation in
the Letters of Credit as shall be necessary to cause such purchasing Lender to
share the excess payment pro rata according to Specified Percentages with each
other Lender; 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.
Section 2.13 Calculation of Rates. 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 Booking Loans. Any Lender may make, carry or transfer
Revolving Credit Advances at, to or for the account of any of its branch
offices or the office of any affiliate of such Lender.
Section 2.15 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 Lender, 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, (i) by the jurisdiction
under the laws of which such Lender or the Administrative Lender (as the case
may be) is organized and in which it has its applicable lending office or any
political subdivision thereof; (ii) by reason of failure by the Lender or the
Administrative Lender to comply with the requirements of paragraph (e) of this
Section 2.15; 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 Papers (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 any Taxes from or in respect of any sum
payable hereunder to any Lender or the Administrative Lender, (x) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.15) such Lender or the Administrative Lender (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 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 2.15(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 Paper (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Lender 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 2.15) paid by such Lender or the Administrative
Lender (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 than penalties, additions to tax, interest and
expenses arising as a result of gross negligence on the part of such Lender or
the Administrative Lender, provided, however, that the Borrower shall have no
obligation to indemnify such Lender or the Administrative Lender unless and
until such Lender or the Administrative Lender shall have delivered to the
Borrower a certificate setting forth in reasonable detail the basis of the
Borrower's obligation to indemnify such Lender or the Administrative Lender
pursuant to this Section 2.15. This indemnification shall be made within 30
days from the date such Lender or the Administrative Lender (as the case may
be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Administrative Lender the original or a certified copy of
a receipt evidencing payment thereof. If no Taxes are payable in respect of
any payment hereunder, the Borrower will furnish to the Administrative Lender
a certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Administrative Lender, in either case stating that such
payment is exempt from or not subject to Taxes, provided, however, that such
certificate or opinion need only be given if: (i) the Borrower makes any
payment from any account located outside the United States, or (ii) the
payment is made by a payor that is not a United States Person. For purposes
of this Section 2.15 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 10.6 after the
Agreement Date, the date upon which such Lender becomes a party hereto)
deliver to the Borrower through the Administrative Lender, with a copy to
the Administrative Lender:
(A) if any lending office is located in the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"),
(B) if any lending office is located outside the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto
("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for
the account of such lending office or lending offices under this
Agreement free from 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 no longer effective,
deliver to the Borrower through the Administrative Lender, with a copy to
the Administrative Lender, in replacement for the forms previously
delivered by it hereunder:
(A) if such changed or additional lending office is located in the
United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of
Form 1001,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for
the account of such changed or additional lending office under this
Agreement free from 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 Lender
with a copy to the Administrative Lender, two (2) accurate and complete
original signed copies of Form 4224 or Form 1001 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; and
(v) it shall notify the Borrower within 30 days 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 without any deduction or
withholding of United States federal income tax.
(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 2.15 shall survive the payment in full of principal and
interest hereunder.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.15 shall use its reasonable best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its 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
materially disadvantageous to such Lender.
(h) Each Lender (and the Administrative Lender with respect to payments
to the Administrative Lender 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, by virtue of the location of any
Lender's lending office) and (ii) otherwise cooperate with the Borrower to
minimize amounts payable by the Borrower under this Section 2.15; provided,
however, the Lenders and the Administrative Lender shall not be obligated by
reason of this Section 2.15(h) to contest the payment of any Taxes or Other
Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrower pays sums pursuant to
this Section 2.15 and the Lender or the Administrative Lender receives a
refund of any or all of such sums, such refund shall be applied to reduce any
amounts then due and owing under this Agreement or, to the extent that no
amounts are due and owing under this Agreement at the time such refunds are
received, 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.
Section 2.16 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, Financial Letters of Credit and
Non-Financial Letters of Credit (collectively, 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 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) $20,000,000 (the "Letter of Credit
Facility") and (ii) the remainder of (A) the Commitment minus (B) the
aggregate principal amount of Revolving Credit Advances then outstanding. No
Letter of Credit shall have an expiration date (including all rights of
renewal) later than the Maturity Date. 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 in respect thereof in an amount equal to the product of
(x) such Lender's 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 2.16(a), repay any Advances
resulting from drawings thereunder pursuant to Section 2.16(c) and request the
issuance of additional Letters of Credit under this Section 2.16(a).
(b) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 a.m. (Dallas, Texas time) on the third
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank, which shall give to the
Administrative Lender and each Lender prompt notice thereof by telex,
telecopier or cable. 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 (a "Notice of Issuance") shall be by telex, telecopier or cable,
specifying therein, in the case of a Letter of Credit, the requested
(A) date of such issuance (which shall be a Business Day), (B) maximum amount
of such Letter of Credit, (C) expiration date of such Letter of Credit, (D)
name and address of the beneficiary of such Letter of Credit, (E) form of such
Letter of Credit and (F) 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 10.1 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 applicable 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 11:00 a.m. (Dallas, Texas time) on
the first Business Day after such drawing, the Issuing Bank shall promptly
notify Administrative Lender 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 Revolving Credit 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
Lender for the account of the Issuing Bank, by deposit at the Administrative
Lender's office, in same day funds, the amount of such Revolving Credit
Advance. In the event that any Lender fails to make available to the
Administrative Lender for the account of the Issuing Bank the amount of such
Revolving Credit 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 any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental
authority charged with the administration thereof shall either (i) 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 (ii)
impose on the Issuing Bank or any Lender any other condition regarding this
Agreement or such Lender or any Letter of Credit, and the result of any event
referred to in the preceding clause (i) or (ii) shall be to increase the cost
to the Issuing Bank of issuing or maintaining any Letter of Credit or to any
Lender of purchasing any participation therein or making any Advance pursuant
to Section 2.16(c) ("Increased Letter of Credit Costs"), then, upon demand by
the Issuing Bank or such Lender, the Borrower shall, subject to Section 10.9
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 for such Increased
Letter of Credit Costs. A certificate as to the amount of such Increased
Letter of Credit Costs, submitted to the Borrower by the Issuing Bank or such
Lender, shall include in reasonable detail the basis for the demand for
additional compensation and shall be conclusive and binding for all purposes,
absent manifest error. The obligations of the Borrower under this Section
2.16(d) shall survive termination of this Agreement. The Issuing Bank or any
Lender claiming any additional compensation under this Section 2.16(d) shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
reduce or eliminate any such additional compensation which may thereafter
accrue and which efforts would not, in the sole discretion 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 2.16(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 Paper, any Letter of Credit Agreement, any Letter of Credit or
any other agreement or instrument relating thereto (collectively, the
"L/C Related Documents");
(ii) 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 2.16(c) or 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, except to the extent that the failure of the Issuing Bank to
determine such insufficiency is a result of the Issuing Bank's gross
negligence or wilful misconduct;
(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 willful 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
Subsidiary Guaranty or any other 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 2.16(c); or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance 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.
(i) Financial Letters of Credit. Subject to Section 10.9 hereof,
the Borrower shall pay to the Administrative Lender for the account of
each Lender a per annum fee (which shall be payable quarterly in arrears
on each Quarterly Date and on the Maturity Date) equal to the product of
(A) 0.225% multiplied by (B) the average daily amount available for
drawing under all outstanding Financial Letters of Credit. Such fee
shall be computed on a basis of a year of 360 days over the actual number
of days elapsed.
(ii) Non-Financial Letters of Credit. Subject to Section 10.9
hereof, the Borrower shall pay to the Administrative Lender for the
account of each Lender a per annum fee (which shall be payable quarterly
in arrears on each Quarterly Date and on the Maturity Date) equal to the
product of (A) 0.1125% multiplied by (B) the average daily amount
available for drawing under all outstanding Non-Financial Letters of
Credit. Such fee shall be computed on the basis of a year of 360 days
over the actual number of days elapsed.
(iii) Other Fees. In addition to the foregoing fees, subject to
Section 10.9 hereof, the Borrower shall also pay to the Issuing Bank for
its sole account such customary issuance fees, costs and expenses as may
be separately agreed to between the Borrower and the Issuing Bank.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence and continuance of an Event of Default and
demand by the Administrative Lender pursuant to Section 7.2(c), the
Borrower will promptly pay to the Administrative Lender in immediately
available funds (which payment may not be made by means of a Revolving
Credit Advance) an amount equal to 100% of the maximum amount then
available to be drawn under the Letters of Credit then outstanding. Any
amounts so received by the Administrative Lender shall be deposited by
the Administrative Lender 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 Lender
(for the benefit of the Issuing Bank and Lenders), and creates in the
Administrative Lender's favor (for the benefit of the Issuing Bank and
Lenders) a Lien in, all money, instruments and securities at any 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 Lender
and the Borrower shall have no right to withdraw or to cause the
Administrative Lender to withdraw any funds deposited in the L/C Cash
Collateral Account. At any time and from time to time, upon the
Administrative Lender'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 Lender'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.
(iii) The Administrative Lender shall (A) apply any funds in the
L/C Cash Collateral Account on account of Reimbursement Obligations when
the same become due and payable if and to the extent that the Borrower
shall fail directly to pay such Reimbursement Obligations and (B) after
the Maturity Date and provided no Letters of Credit are outstanding,
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 Lender 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) 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 Lender 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 Administrative Lender, 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 Lender's name for the account of the Lenders. 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 Lender and the Lenders harmless from
any and all such losses and taxes. Administrative Lender may liquidate
any investment held in the L/C Cash Collateral Account in order to apply
the proceeds of such investment on account of the Reimbursement
Obligations (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
Lender) as a result of such application.
(v) The Borrower shall pay to the Administrative Lender the fees
customarily charged by the Issuing Bank with respect to the maintenance
of accounts similar to the L/C Cash Collateral Account.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Revolving Credit
Advances and the Initial Letters of Credit. The obligation of each Lender to
sign this Agreement and to make any Revolving Credit Advance, and the
obligation of the Issuing Bank to issue Letters of Credit is subject to
receipt by the Administrative Lender of the following, in form and substance
satisfactory to each Lender, with a copy (except for the Revolving Credit
Notes) for each Lender, or satisfaction of the following:
(a) a loan certificate of the Borrower certifying as to the accuracy of
its representations and warranties in the Loan Papers, certifying that no
Default has occurred, and including a certificate of incumbency with respect
to each Authorized Signatory, and including (i) a copy of the certificate of
incorporation of the Borrower, certified to be true, complete and correct by
the secretary of state of its state of incorporation, (ii) a copy of the
by-laws of the Borrower, as in effect on the Agreement Date, (iii) a copy of
the resolutions of the Borrower authorizing it to execute, deliver and perform
this Agreement, the Revolving Credit Notes and the other Loan Papers to which
it is a party, and (iv) a copy of a certificate of good standing and a
certificate of existence for its state of incorporation and each state in
which it is qualified to do business;
(b) duly executed Revolving Credit Notes, payable to the order of each
Lender and in an amount for each Lender equal to its Specified Percentage of
the Commitment;
(c) opinions of counsel to the Borrower and the Subsidiaries addressed
to the Lenders and in form and substance satisfactory to the Lenders, dated
the Agreement Date, and covering the matters set forth in Sections 4.1(a),
(b), (c), (g), (l), (m) and (o) and such other matters incident to the
transactions contemplated hereby as the Administrative Lender or Special
Counsel may reasonably request;
(d) reimbursement for the Administrative Lender for Special Counsel's
reasonable fees not to exceed $7,500 and expenses rendered through the
Agreement Date;
(e) evidence that all corporate or other proceedings of the Borrower and
Subsidiaries taken in connection with the transactions contemplated by this
Agreement and the other Loan Papers shall be reasonably satisfactory in form
and substance to the Lenders and Special Counsel; and the Lenders shall have
received copies of all documents or other evidence which the Administrative
Lender, Special Counsel or any Lender may reasonably request in connection
with such transactions;
(f) any fees required to be paid pursuant to the Fee Letter; and
(g) in form and substance satisfactory to the Lenders and Special
Counsel, such other documents, instruments and certificates as the
Administrative Lender or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation the status,
organization or authority of the Borrower or any Subsidiary or any other
Person executing a Loan Paper, and the enforceability of the Obligation.
Section 3.2 Conditions Precedent to All Revolving Credit Advances and
Letters of Credit. The obligation of each Lender to make each Revolving
Credit Advance hereunder, and the obligation of the Issuing Bank to issue each
Letter of Credit hereunder is subject to fulfillment of the following
conditions immediately prior to or contemporaneously with each such Advance or
issuance:
(a) With respect to Revolving Credit Advances other than Refinancing
Advances and each issuance of a Letter of Credit, (i) 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 such
Revolving Credit Advance or issuance, shall be true and correct at such time
in all material respects, both before and after giving effect to the
application of the proceeds of such Revolving Credit Advance or issuance and
(ii) no event or circumstance has occurred and is continuing which could
reasonably be expected to have a Material Adverse Effect;
(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 Lender. 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 Revolving Credit Advance or
issuance, is received by the Administrative Lender from the Borrower prior to
the making of such Revolving Credit Advance or issuance;
(c) There shall not exist a Default hereunder, with respect to Revolving
Credit Advances other than Refinancing Advances, or with respect to the
issuance of Letters of Credit, or an Event of Default, with respect to any
Refinancing Advance, and, with respect to each Revolving Credit Advance other
than a Refinancing Advance, and with respect to issuance of each Letter of
Credit, the Administrative Lender shall have received written or telephonic
certification thereof by an Authorized Signatory (which certification, if
telephonic, shall be followed promptly by written certification);
(d) The aggregate Revolving Credit Advances and amounts available for
draw under Letters of Credit, after giving effect to such proposed Revolving
Credit Advance or Letter of Credit, shall not exceed the maximum principal
amount then permitted to be outstanding hereunder; and
(e) The Administrative Lender shall have received all such other
certificates, reports, statements, opinions of counsel or other documents as
the Administrative Lender or any Lender may reasonably request; provided,
however, that the obligation of each Lender to make a Revolving Credit Advance
pursuant to Section 2.16(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, (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 Letter of
Credit for which such Revolving Credit Advance is made pursuant to Section
2.16(c) shall have been satisfied in full at the time of the issuance of such
Letter of Credit.
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 incorporation and percentage ownership by the
Borrower or another Subsidiary of the Subsidiaries listed on Schedule 3 are
true and correct. As of the Agreement Date, the Borrower has no Restricted
Subsidiaries. Each of the Borrower and its Restricted Subsidiaries is a
corporation, partnership or joint venture, as designated on Schedule 3, duly
organized, validly existing and in good standing under the laws of its state
of organization. Each of the Borrower and its Restricted Subsidiaries has the
corporate or other 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 Restricted Subsidiaries is duly qualified, in good standing
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 except where the failure to be so qualified or authorized would
not have a Material Adverse Effect.
(b) Authorization. The Borrower has corporate power and has taken all
necessary corporate action to authorize it to borrow hereunder. Each of the
Loan Parties has corporate or other power and has taken all necessary
corporate or other action to execute, deliver and perform the Loan Papers to
which it is party in accordance with the terms thereof, and to consummate the
transactions contemplated thereby. Each Loan Paper has been duly executed and
delivered by the Loan Party executing it. Each of the Loan Papers to which
the Loan Parties are party is a legal, valid and binding respective obligation
of the Loan Party executing it, enforceable in accordance with its terms,
subject 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 any Loan Party).
(c) Compliance with Other Loan Papers and Contemplated Transactions.
The execution, delivery and performance by the Loan Parties of the Loan Papers
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 not already obtained, (ii) violate any Applicable Law, (iii)
conflict with, result in a breach of, or constitute a default under the
articles of incorporation, by-laws, articles of partnership, partnership
agreements or similar governing documents of any Loan Party, or under any
Necessary Authorization, indenture, agreement or other instrument, to which
any Loan Party is a party or by which they or their respective properties may
be bound, or (iv) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by any
Loan Party, except Permitted Liens.
(d) Licenses, etc. All Necessary Authorizations which are material 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 which could reasonably be expected to have a Material Adverse
Effect. The Borrower and its Restricted Subsidiaries are and will continue to
be in compliance in all material respects with all provisions thereof. No
circumstance exists which might impair the utility of the Necessary
Authorization or the right to renew such Necessary Authorization the effect of
which would have a Material Adverse Effect. No Necessary Authorization which
could reasonably be expected to have a Material Adverse Effect is the subject
of any pending or, to the best of the Borrower's knowledge, threatened
challenge, suspension, cancellation or revocation.
(e) Compliance with Law. The Borrower and its Restricted Subsidiaries
are in compliance in all respects with all Applicable Laws, except where the
failure to so comply would not have a Material Adverse Effect.
(f) Title to Properties. The Borrower and its Restricted Subsidiaries
have good and indefeasible title to, or a valid leasehold interest in, all of
their material assets. None of their assets are subject to any Liens, except
Permitted Liens. No effective 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 Restricted Subsidiaries as debtor or
covers (or purports to cover) any assets of the Borrower or any of its
Restricted Subsidiaries. The Borrower and its Restricted 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.
(g) Litigation. Except as reflected on Schedule 2 hereto, there is no
action, suit or proceeding pending against, or, to the best of the Borrower's
knowledge, threatened against the Borrower or any of its Restricted
Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Restricted Subsidiaries, or any of their properties, in
any court or before any arbitrator of any kind or before or by any
governmental body in which the amount claimed (in excess of applicable
insurance) exceeds $1,000,000.
(h) Taxes. All federal, state and other tax returns of the Borrower and
its Subsidiaries required by law to be filed have been duly filed and all
federal, state and other taxes, assessments and other governmental charges or
levies upon the Borrower and its Subsidiaries or any of their respective
properties, income, profits and assets, which are due and payable, have been
paid, unless the same are being diligently contested in good faith by
appropriate proceedings, with adequate reserves established therefor, and no
Lien has attached and no foreclosure, distraint, sale or similar proceedings
have been commenced. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of their respective taxes are, in the
reasonable judgment of the Borrower, adequate.
(i) Financial Statements; Material Liabilities. The Borrower has
furnished or caused to be furnished to the Lenders copies of its August 31,
1995 and November 30, 1995 financial statements, which present fairly in
accordance with GAAP the financial position of the Borrower and its
Subsidiaries as at such dates and the results of operations for the periods
then ended. The Borrower and its Subsidiaries taken as a whole have no
material liabilities, contingent or otherwise, nor material losses, except as
set forth in the August 31, 1995 financial statements.
(j) No Adverse Change. Since August 31, 1995, no event or circumstances
has occurred or arisen that could have a Material Adverse Effect.
(k) ERISA. None of the Borrower or its Controlled Group maintains or
contributes to any Plan other than those disclosed to the Administrative
Lender in writing. 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 Federal or state law, rule or regulation.
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 governmental authority, the
failure of which to file could reasonably result in liability of the Borrower
or any member of its Controlled Group in excess of $1,000,000 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 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 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 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 $1,000,000 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 best of 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 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 Material Adverse Effect. None of
the Borrower or, to the best of 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
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. 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 Material Adverse Effect. None of the Borrower or any member of its
Controlled Group maintains or has established any Plan, which is a material
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 the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA") and the regulations
thereunder. 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 COBRA and the regulations thereunder, except to
the extent that the failure to so comply could not reasonably be expected to
have a Material Adverse Effect. None of the Borrower or any member of its
Controlled Group maintains, has established, or has ever participated in a
multiemployer welfare benefit arrangement within the meaning of Section
3(40)(A) of ERISA.
(l) Compliance with Regulations G, T, U and X. Neither the Borrower nor
any of its Subsidiaries is 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 Revolving Credit Advances or any 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. No assets of the
Borrower and its Restricted Subsidiaries are margin stock. None of the
Borrower and its Subsidiaries nor any agent acting on their behalf, have taken
or will knowingly take any action which might cause this Agreement or any
other Loan Papers to violate any regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect.
(m) Governmental Regulation. The Borrower and its Restricted
Subsidiaries are not required to obtain any Necessary Authorization that has
not already been obtained from, or effect any material filing or registration
that has not already been effected with, any federal, state or local
regulatory authority in connection with the execution and delivery of this
Agreement or any other Loan Paper, or the performance thereof (other than any
enforcement of remedies by the Administrative Lender on behalf of the Lenders,
in accordance with their respective terms, including any borrowings hereunder.
(n) Absence of Default. The Borrower and its Restricted Subsidiaries
are in compliance in all respects with all of the provisions of their articles
of incorporation, by-laws, articles of partnership, partnership agreement or
other governing 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 Restricted Subsidiaries under any material indenture, agreement or
other instrument, or any judgment, decree or order to which the Borrower or
any of its Restricted Subsidiaries or by which they or any of their material
properties is bound.
(o) Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is required to register under the provisions of the Investment
Company Act of 1940, as amended. 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
governmental or public body of authority pursuant to any provisions of such
act.
(p) Environmental Matters. Neither the Borrower nor any of its
Restricted Subsidiaries has any actual knowledge or reason to believe that any
substance deemed hazardous by any Applicable Environmental Law, has been
installed on any real property now owned by the Borrower or any of its
Restricted Subsidiaries which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. The Borrower and
its Restricted Subsidiaries have complied in all respects with all Applicable
Environmental Laws except to the extent that the failure to so comply,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Borrower and its Restricted Subsidiaries are not
in violation in any respects of or subject to any existing, pending or, to the
best of the Borrower's knowledge, threatened investigation or inquiry by any
governmental authority or to any material remedial obligations under any
Applicable Environmental Laws, except to the extent that the results of such
investigation, inquiry or remedial obligation would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect, and
this representation and warranty would continue to be true and correct
following disclosure to the applicable governmental authorities of all
relevant facts, conditions and circumstances, if any, pertaining to any real
property of the Borrower and its Restricted Subsidiaries. The Borrower and
its Restricted Subsidiaries have obtained all material permits, licenses or
similar authorizations necessary to construct, occupy, operate or use any
buildings, improvements, fixtures, and equipment forming a part of any real
property of the Borrower or any Restricted Subsidiary by reason of any
Applicable Environmental Laws, except where the failure to obtain such
authorization would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. The Borrower and its Restricted
Subsidiaries undertook, at the time of acquisition of any real
property, reasonable inquiry into the previous ownership and uses of such real
property consistent with good commercial or customary practice as applied and
used in the real estate industry at the time of each such acquisition. The
Borrower and its Restricted Subsidiaries have taken all reasonable steps to
determine, and the Borrower and its Restricted Subsidiaries have no actual
knowledge or reason to believe, after reasonable investigation, that any
hazardous substances or solid wastes have been disposed of or otherwise
released on or to the real property of the Borrower or any of its Restricted
Subsidiaries, within the meaning of the Applicable Environmental Laws, except
to the extent that the failure to so depose or release, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(q) Certain Fees. No broker's, finder's or other fee or commission will
be payable by the Borrower or any of its Subsidiaries (other than to the
Lenders hereunder) with respect to the making of the Commitments or the
Revolving Credit Advances or the issuance of the Letters of Credit hereunder.
The Borrower agrees to indemnify and hold harmless the Administrative Lender
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.
(r) Necessary Authorizations. No event has occurred which permits (or
with the passage of time would permit) the revocation or termination of any
Necessary Authorization, or which could result in the imposition of any
restriction thereon, of such a nature that could reasonably be expected to
have a Material Adverse Effect.
(s) Patents, Etc. The Borrower and its Restricted Subsidiaries have
obtained all patents, trademarks, service-marks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are
necessary for the operation of their business as presently conducted and as
proposed to be conducted. Nothing has come to the attention of the Borrower
or any of its Restricted Subsidiaries to the effect that (i) any process,
method, part or other material presently contemplated to be employed by the
Borrower or any Restricted Subsidiary may infringe any patent, trademark,
service-mark, 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 Restricted Subsidiary contesting its
right to sell or use any such process, method, part or other material,
provided with respect to clauses (i) and (ii) that such events are limited to
those which could reasonably be expected to have a Material Adverse Effect.
(t) Disclosure. Neither this Agreement nor any other document,
certificate or statement which has been furnished to any Lender by or on
behalf of the Borrower or any Subsidiary in connection herewith contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statement contained herein and therein not
misleading at the time it was furnished. There is no fact known to the
Borrower and not known to the public generally that could reasonably be
expected to materially adversely affect the assets or business of the Borrower
and its Restricted Subsidiaries, or in the future could reasonably be expected
(so far as the Borrower can now foresee) 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 Restricted
Subsidiaries on a consolidated basis are, Solvent.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Papers shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Revolving Credit Advance and issuance of each Letter of
Credit, and each shall be true and correct when made, except to the extent
(a) previously fulfilled in accordance with the terms hereof, (b) applicable
to a specific date or otherwise subsequently inapplicable or modified to give
effect to the transactions expressly permitted hereby, or (c) previously
waived in writing by the Determining Lenders with respect to any particular
factual circumstance. 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 Revolving Credit Advance or the
issuance of any Letter of Credit under this Agreement.
ARTICLE 5
Business Covenants
So long as any of the Obligations are outstanding and unpaid or the
Commitment is outstanding (whether or not the conditions to borrowing have
been or can be fulfilled):
Section 5.1 Maintenance of Property, Insurance, Accounting Practices,
Corporate Existence. The Borrower covenants and agrees to, and will cause
each of its Restricted Subsidiaries to:
(a) Maintain its material property in good condition and make all
necessary renewals, replacements, additions, betterments and improvements
thereto, consistent with sound business practice and as is customary in the
case of corporations or other entities of established reputation engaged in
the same or a similar business and similarly situated;
(b) Maintain, with financially sound and reputable insurers, or through
its own program of self-insurance established in accordance with sound and
appropriate practices, insurance with respect to its material properties and
business against such casualties and contingencies, of such types, and in such
amounts as is customary in the case of corporations or other entities of
established reputation engaged in the same or a similar business and similarly
situated;
(c) Keep books of record and accounts in which entries will be made of
all of its business transactions, and will reflect in it financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP;
(d) Do or cause to be done all things necessary to preserve and keep in
full force and effect its material rights;
(e) Do or cause to be done all things necessary to preserve and keep in
full force and effect its existence (except as may be specifically permitted
by this Agreement); and
(f) Cause to be paid and discharged (i) all lawful tax assessments and
governmental charges imposed from the income or profits of the Borrower and
its Restricted Subsidiaries or upon any property belonging to the Borrower or
any Restricted Subsidiary and (ii) all lawful claims, whether for labor,
materials, supplies, services or anything else, which have become due and
payable and which by law have or may become a Lien upon the property of the
Borrower or any of its Restricted Subsidiaries; provided, however, that the
Borrower and its Restricted Subsidiaries shall not be required to cause to be
paid or discharged any such tax assessment, charge or claim so long as the
amount, applicability or validity thereof shall be contested in good faith by
appropriate proceedings, and adequate book reserves shall have been
established to the extent required by GAAP with respect thereto.
Section 5.2 Inspection of Properties and Books. The Borrower
covenants and agrees that it will permit, and will cause each of its
Restricted Subsidiaries to permit, any Lender, upon (i) reasonable request, if
such request is prior to the occurrence of a Default or an Event of Default or
(ii) request, if such request is after the occurrence of a Default or an Event
of Default, to any Authorized Officer, to visit and inspect any of the
properties of, to examine the books of account and records of the Borrower or
any of its Restricted Subsidiaries and to take extracts therefrom and to
discuss the affairs, finances or accounts of the Borrower or any of its
Restricted Subsidiaries, and to be advised as to the same by the officers of
the Borrower, at all such times during normal business hours, in such detail
and through such agents and representatives as such Bank may reasonably
desire.
Section 5.3 Merger and Sale of Assets.
(a) The Borrower covenants and agrees that it will not, and will cause
each of its Restricted Subsidiaries to not, directly or indirectly (i) sell,
transfer or otherwise dispose of any of its assets (whether now owned or
hereafter acquired) or (ii) enter into any arrangement with any Person,
whereby the Borrower or any such Restricted Subsidiary shall sell or transfer
any property, whether now owned or hereafter acquired, used or useful in its
business, and thereafter rent or lease the property so sold or transferred
("Sale-Leaseback"), except (i) sales of inventory or equipment in the ordinary
course of business, (ii) dispositions of obsolete inventory or equipment,
waste or by-product material in the ordinary course of business, (iii)
dispositions of Cash Equivalents or cash in the ordinary course of business
and (iv) other dispositions of property and Sale-Leasebacks (A) for not less
than the fair market value of such property and (B) provided the aggregate Net
Proceeds of all such dispositions and Sale-Leasebacks during any fiscal year
shall not exceed 5% of the consolidated total assets of the Borrower and its
Subsidiaries as of the end of the immediately preceding fiscal year.
(b) The Borrower covenants and agrees that it will not, and will cause
each of its Restricted Subsidiaries to not, merge into or consolidate with any
other Person; provided, however, if after giving effect to any such merger or
consolidation, (i) the business of the Borrower or any such Restricted
Subsidiary, as appropriate, will not be materially changed and (ii) the
Borrower or any such Subsidiary, as appropriate, will not be in default in
respect of any of the covenants contained in any material agreement,
including, without limitation, this Agreement, to which the Borrower or any
such Restricted Subsidiary is a party or by which its property may be bound,
(1) any Person may merge or consolidate with the Borrower,
provided that the Borrower shall be the continuing and surviving
corporation, and
(2) any such Subsidiary may merge with or consolidate with any
Person, provided that, unless such merger or consolidation shall be with
the Borrower, such Restricted Subsidiary shall be the continuing and
surviving corporation.
Section 5.4 Net Worth. The Borrower covenants and agrees that it will
not allow its Net Worth at any time to be less than the sum of (i)
$150,000,000 plus (ii) 50% of Consolidated Net Income (excluding Consolidated
Net Income for any fiscal quarter in which Consolidated Net Income was a
negative number) earned on or after the Agreement Date, plus (iii) 75% of the
Net Cash Proceeds of any equity issues of the Borrower's Capital Stock in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, after the Agreement Date.
Section 5.5 Contingent Liabilities. The Borrower covenants and agrees
that it will not, and will cause each of its Restricted Subsidiaries to not,
guarantee, endorse, contingently agree to purchase, or otherwise become
liable, directly or indirectly, upon the obligation of or in connection with
the earnings, the assets, the stock, or the dividends of any other Person
(other than the Borrower or any such Restricted Subsidiary), except (i)
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection, (ii) Existing Debt, and (iii) guarantees and contingent
obligations incurred after the Agreement Date not to exceed $5,000,000 in
aggregate principal amount.
Section 5.6 Incurrence and Retention of Debt. The Borrower covenants
and agrees that it will not, and will cause each Restricted Subsidiary to not,
incur, create, assume, or suffer to exist any Debt except (a) the Obligations,
(b) Existing Debt, (c) Debt in respect of contingent obligations to the extent
permitted under Section 5.5, (d) Debt in respect of Interest Rate Protection
Agreements, (e) Debt of the Borrower or a Restricted Subsidiary to a
Restricted Subsidiary or the Borrower, provided that any such Debt shall be
subject to a subordination agreement in form and substance satisfactory to the
Administrative Lender, and (f) other Debt in an aggregate amount not to exceed
$50,000,000 at any time outstanding.
Section 5.7 Investments. The Borrower will not, and will cause each
of its Restricted Subsidiaries to not, make or permit to remain any Investment
other than a Permitted Investment.
Section 5.8 Notice of Litigation. The Borrower covenants and agrees
that it will, and will cause each of its Restricted Subsidiaries to, promptly
give notice in writing to the Lenders (i) of any litigation to which the
Borrower or any such Restricted Subsidiary becomes a party, if (A) the amount
in controversy exceeds $1,000,000 and (B) the Borrower's insurance carrier
does not acknowledge coverage with respect to such litigation, and (ii) of all
proceedings before any governmental or regulatory agencies (A) affecting or
potentially affecting the business or property of the Borrower or any such
Restricted Subsidiary in an amount in excess of $1,000,000 or (B) materially
affecting the ability of the Borrower or any such Restricted Subsidiary to
perform their respective covenants and obligations hereunder or under any
other obligations owed any Lender.
Section 5.9 Leverage Ratio. The Borrower covenants and agrees that it
will not allow the Leverage Ratio to be greater than 2.00 to 1 at the end of
any fiscal quarter.
Section 5.10 Liens. The Borrower covenants and agrees that it will
not create, assume or suffer to exist, or permit any of its Restricted
Subsidiaries to create, assume or suffer to exist, any Lien on any asset now
owned or hereafter acquired by it except Permitted Liens. The Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, agree with
any Person other than the Lenders hereunder 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.
Section 5.11 Accounting Changes. The Borrower covenants and agrees
that it will not, and will not permit any of its Restricted Subsidiaries to,
make any change in its accounting treatment or financial reporting practices,
except as permitted or required by GAAP in effect from time to time. The
Borrower will not change its fiscal year or the calculation of its fiscal
quarter ends without the prior written consent of the Determining Lenders,
which consent shall not be unreasonably withheld.
Section 5.12 Environmental Matters.
(a) The Borrower covenants and agrees that it will not, and will not
permit any of its Restricted Subsidiaries to, use, generate, manufacture,
produce, store, release, discharge or dispose of on, under or about any real
property owned or leased by the Borrower or any of its Restricted Subsidiaries
(such owned or leased real property, the "Property"), or transport to or from
the Property, any Hazardous Substance (as defined below), or permit any other
Person to do so, where such could reasonably be expected to have a Material
Adverse Effect.
(b) The Borrower shall keep and maintain and shall cause each of its
Restricted Subsidiaries to keep and maintain, the Property in compliance with
any Environmental Law (as defined below) where the failure to do so could
reasonably be expected to have a Material Adverse Effect.
(c) In the event that any investigation, site monitoring, containment,
cleanup, removal, restoration or other remedial work of any kind or nature
(the "Remedial Work") with respect to the Property is required to be performed
by the Borrower or any of its Restricted Subsidiaries under any applicable
local, state or federal law or regulation, any judicial order, or by any
governmental entity because of, or in connection with, the current or future
presence, suspected presence, release or suspected release of a Hazardous
Substance in or into the air, soil, groundwater or surface water at, on, under
or within the Property (or any portion thereof) where the failure to perform
such Remedial Work could reasonably be expected to have a Material Adverse
Effect, the Borrower or such Restricted Subsidiary shall within thirty (30)
days after written demand for performance thereof by the Lenders (or such
shorter period of time as may be required under any applicable law,
regulation, order or agreement), commence and thereafter diligently prosecute
to completion, all such Remedial Work.
(d) As used herein, (i) "Environmental Law" means any federal, state or
local law, statute, ordinance, or regulation now or hereafter in effect
pertaining to health, industrial hygiene, or the environmental conditions on,
under or about the Property, and (ii) the term "Hazardous Substance" means
those substances included within the definitions of "hazardous substances",
"hazardous materials", "toxic substances", or "solid waste" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 et seq. and the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq., and in the
regulations promulgated pursuant to said laws, and such other substances,
materials and wastes which are or become regulated under applicable local,
state or federal law, or which are classified as hazardous or toxic under
federal, state, or local laws or regulations.
Section 5.13 ERISA Compliance. The Borrower covenants and agrees that
it shall, and shall cause each of its Subsidiaries to (i) at all times, make
prompt payment of all contributions required under all Plans and required to
meet the minimum funding standard set forth in ERISA with respect to its
Plans, (ii) after the discovery by an Authorized Officer, notify the Lenders
immediately of any fact, including, but not limited to, any Reportable Event
arising in connection with any of its Plans, which might constitute grounds
for termination thereof by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Plan, together
with a statement, if requested by any Lender, as to the reason therefor and
the action, if any, proposed to be taken with respect thereto, and (iii) not
permit any Plan to be subject to any involuntary termination proceedings.
Section 5.14 Business. The Borrower covenants and agrees that it will
not, and will not permit any of its Restricted Subsidiaries to, engage in,
directly or through other Persons, any business other than the businesses now
carried on and other businesses related thereto.
Section 5.15 Debt. The Borrower covenants and agrees that it will
not, and will cause each of its Restricted Subsidiaries to not, default,
beyond any notice, grace or cure period, in the performance of any agreement,
term, covenant or condition contained in any agreement or instrument under or
by which any Debt of the Borrower or any such Subsidiary is created, evidenced
or secured, if the effect of such default is to cause or permit such Debt to
become due before its stated maturity.
Section 5.16 Transactions with Affiliates. The Borrower covenants and
agrees that it will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction
(including, but not limited to, the sale or exchange of property or the
rendering of service) with any of its Affiliates, other than (a) in the
ordinary course of business and upon fair and reasonable terms no less
favorable than the Borrower or any such Restricted Subsidiary could obtain or
could become entitled to in an arm's-length transaction with a Person which
was not an Affiliate and (b) a line of credit extended to an Unrestricted
Subsidiary in the aggregate principal amount of $5,400,000 bearing interest at
a fixed rate of seven and one-half percent per annum.
Section 5.17 Use of Proceeds. The Borrower shall use the proceeds of
the Commitment to repurchase Capital Stock and for working capital and general
corporate purposes.
Section 5.18 Indemnity.
(a) The Borrower agrees to defend, protect, indemnify and hold harmless
the Administrative Lender, each Lender, each of their respective affiliates,
and each of their respective (including such affiliates') officers, directors,
employees, agents, attorneys, shareholders 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, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the 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 its
predecessors in interest, or the past, present or future environmental
condition of property of the Borrower or otherwise), in any manner relating to
or arising out of this Agreement, the other Loan Papers, or any act,
event or transaction or alleged act, event or transaction relating or
attendant thereto, the making of any Participations in the Revolving Credit
Advances or the Letters of Credit and the management of the Revolving Credit
Advances or the Letters of Credit, INCLUDING IN CONNECTION WITH, OR AS A
RESULT, IN WHOLE OR IN PART, OF ANY NEGLIGENCE OF ADMINISTRATIVE LENDER OR ANY
LENDER (other than those matters raised exclusively by a Participant against
the Administrative Lender or any Lender and not the Borrower), or the use or
intended use of the proceeds of the Revolving Credit Advances or the 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 willful misconduct of any Indemnitee, as
finally judicially determined by a court of competent jurisdiction, and (ii)
matters raised by one Lender against another Lender or by any shareholders of
a Lender against a Lender or its management (collectively, "Indemnified
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) In addition, the Borrower shall periodically, upon request,
reimburse each Indemnitee for its reasonable legal and other actual expenses
(including the cost of any investigation and preparation) incurred in
connection with any Indemnified Matter. If for any reason the foregoing
indemnification is unavailable to any Indemnitee or insufficient to hold any
Indemnitee harmless with respect to Indemnified Matters, then the Borrower
shall contribute to the amount paid or payable by such Indemnitee as a result
of such loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the Borrower and the
Borrower's stockholders on the one hand and such Indemnitee on the other hand
but also the relative fault of the Borrower and such Indemnitee, as well as
any other relevant equitable considerations. 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 Lender, the Lenders and all other
Indemnitees. This Section shall survive any termination of this Agreement and
payment of the obligations.
ARTICLE 6
Information
Section 6.1 Financial Statements and Other Reports by the Borrower.
The Borrower will deliver to each Lender:
(a) As soon as practicable after the end of each of the first three
quarterly fiscal periods in each fiscal year of the Borrower, and in any event
within 45 days thereafter, duplicate copies of consolidated combined balance
sheets, statements of earnings, shareholders' equity and cash flows of the
Borrower and its Subsidiaries for the portion of the fiscal year ending with
such quarter; all in reasonable detail and accompanied by an Officer's
Certificate certifying that the aforementioned financial statements present
fairly the consolidated financial position of the Borrower and its
Subsidiaries at the end of such quarter and the results of operations and the
changes in financial position for the portion of the fiscal year ending with
such quarter, determined in accordance with GAAP.
(b) As soon as practicable after the end of each fiscal year of the
Borrower and in any event within 90 days thereafter, duplicate copies of
consolidated balance sheets, statements of earnings, shareholders' equity and
cash flows of the Borrower and its Subsidiaries for such year; all in
reasonable detail, prepared on a basis consistent with the financial
statements delivered to all Lenders in prior periods and accompanied by an
unqualified opinion and report of Ernst & Young LLP, or other independent
certified accountants of recognized standing selected by the Borrower and
reasonably consented to by Lenders, which report shall state that no Default
or Event of Default under this Agreement has come to the knowledge of such
accountants or, if such is not the case, the details of such Default or Event
of Default.
(c) As soon as practicable after the Borrower or any Subsidiary files
with the S.E.C. any of the following documents and in any event within 10 days
thereafter, a copy of:
(i) Any final Registration Statement filed for the registration of
any securities under the Securities Act of 1933, as amended;
(ii) Each Annual and Periodic Report filed under Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended;
(iii) Each definitive Proxy Statement filed pursuant to the
Securities Exchange Act of 1934, as amended; and
together with any other document filed with the S.E.C. or the New York
Stock Exchange, Inc., as may be requested by any Lender.
(d) Upon request by any Lender, copies of the following:
(i) Each annual report/return, as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the regulations
promulgated thereunder, in connection with each of its Plans for each
Plan year; and
(ii) Such additional information concerning any of its Plans as may
be reasonably requested.
(e) Promptly upon the occurrence of a Default or Event of 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.
(f) Promptly upon becoming aware thereof, notice of the commencement or
filing (or of a threat to commence or file) of any action, suit or proceeding
before any court or any federal, state, municipal or other governmental agency
or authority involving claims for damages, fines or penalties in excess of
$1,000,000 (after deducting any amount with respect to which the Borrower or
any of its Restricted Subsidiaries is insured) against or in any other way
relating to the Borrower or any of its Restricted Subsidiaries or any of their
respective properties or businesses.
(g) With reasonable promptness, such other data and information as from
time to time may be reasonably requested by any Lender.
Section 6.2 Officer's Certificate. Each set of financial statements
delivered pursuant to Sections 6.1(a) and (b) shall be accompanied by an
Officer's Certificate (a) stating whether there exists on the date of such
certificate any Default or Event of Default, and if any such Default or Event
of Default exists, specifying the nature and period of existence thereof and
the action the Borrower is taking or proposes to take with respect thereto and
(b) containing calculations of compliance with Sections 5.3(a), 5.4, 5.5, 5.6
and 5.9.
ARTICLE 7
Default
Section 7.1 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) The Borrower fails to make any payment of principal on any Note or
any Reimbursement Obligation on the date such payment is due;
(b) The Borrower fails to make any payment of interest on any Note,
Reimbursement Obligation or any other costs, fees, expenses or other amounts
payable hereunder or under the other Loan Papers within one Business Day after
the date such payment is due;
(c) The Borrower or any of its Restricted Subsidiaries fails to perform
or observe (i) any covenant contained in Article 5 of this Agreement or (ii)
any other covenant in this Agreement or any other Loan Paper to be performed
or observed by it and such failure with respect to such other covenants
continues for a period of 10 days;
(d) Any warranty or representation by or on behalf of the Borrower or
any of its Restricted Subsidiaries contained in this Agreement or any other
Loan Paper is false or misleading in any material respect;
(e) The Borrower or any of its Restricted Subsidiaries fails to make any
payment due on any other Debt in an aggregate amount of at least $1,000,000
beyond any applicable grace period, including any extension thereof, or the
Borrower or any of its Restricted Subsidiaries fails to perform or observe any
other provision contained in any such Debt or any agreement securing or
relating to such Debt if and only if the effect of such failure to make such
payment or to perform or observe such other provision is to cause or permit
the holder of such Debt or any Person acting on such holder's behalf to cause
such Debt to become due or purchased prior to its stated maturity;
(f) The Borrower or any of its Subsidiaries (i) shall become insolvent,
(ii) shall fail to pay its debts generally as they become due, (iii) shall
make a general assignment for the benefit of creditors, (iv) shall voluntarily
seek, consent to, or acquiesce in the benefit of any Debtor Relief Law, (v)
shall become a party to or is made the subject of any proceeding provided for
by any Debtor Relief Law, other than as a creditor or claimant (unless, in the
event such proceeding is involuntary, the petition instituting same is
dismissed within 30 days after its filing), or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing;
(g) The Borrower or any of its Restricted Subsidiaries fails to have
discharged, within a period of 45 days after the expiration of all rights of
appeal, any judgment, warrant of attachment, sequestration, or similar
proceeding against any of its respective assets with a value, individually or
collectively, in excess of $1,000,000;
(h) Any material provision of any Loan Paper after delivery thereof
hereunder shall for any reason cease to be valid and binding on the Person
(other than any Lender) executing such Loan Paper, or the Borrower or such
Person shall so state in writing;
(i) A final judgment or judgments for the payment of money shall be
entered by a court or courts against the Borrower or any of its Restricted
Subsidiaries and such judgment or judgments remain unstayed or undischarged
for a period of 30 days from the date of entry thereof and the aggregate
amount of all such judgments exceeds $1,000,000 (net of actual insurance
coverage if the Lenders receive evidence satisfactory to them that coverage
exists);
(j) 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 shall engage in transactions which in the
aggregate would reasonably result in a direct or indirect liability to the
Borrower or any member of its Controlled Group in excess of $1,000,000 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, in the aggregate in excess
of $1,000,000, or request a funding waiver from the Internal Revenue Service
for contributions in the aggregate in excess of $1,000,000; (iii) the Borrower
or any member of its Controlled Group shall incur any withdrawal liability in
the aggregate in excess of $1,000,000 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 in excess of $1,000,000, 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 Lender, the Administrative
Lender 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; (viii)
the benefits of any Plan shall be increased, or the Borrower or any member
of its Controlled Group shall begin to maintain, or begin to contribute to,
any Plan, without the prior written consent of the Determining Lenders; or
(ix) 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 (v) through (ix) shall constitute Events
of Default only if, as of the date thereof or any subsequent date, the amount
of liability that the Borrower or any member of its Controlled Group
reasonably is likely to incur in the aggregate under Section 4062, 4063, 4064,
4219 or 4023 of ERISA or any other provision of law with respect to all such
Plans, computed by the actuary of the Plan taking into account any applicable
rules and regulations of the PBGC at such time, and based on the actuarial
assumptions used by the Plan, resulting from or otherwise associated with such
event exceeds $1,000,000; or
(k) A Change of Control shall have occurred.
Section 7.2 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
7.1(f) hereof, the Administrative Lender shall, upon the direction of the
Determining Lenders, terminate the Commitment and/or declare the principal of
and interest on the Revolving Credit Advances and all Obligations and other
amounts owed under the Loan Papers to be forthwith due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, anything in the Loan Papers to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in
Section 7.1(f) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith become due and payable and the Commitment
shall automatically forthwith terminate, all without any action by the
Administrative Lender, any Lender or any holders of the Revolving Credit Notes
and without presentment, demand, protest or other notice of any kind, all of
which are expressly waived, anything in the Loan Papers to the contrary
notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Lender may demand upon the Borrower to, and forthwith upon such
demand, the Borrower shall, pay to the Administrative Lender in same day funds
at the office of the Administrative Lender in such demand for deposit in the
L/C Cash Collateral Account, an amount equal to 100% of the maximum amount
available to be drawn under the Letters of Credit then outstanding.
(d) The Administrative Lender may exercise all of the post-default
rights granted to it under the Loan Papers or under Applicable Law.
(e) The rights and remedies of the Administrative Lender hereunder shall
be cumulative, and not exclusive.
ARTICLE 8
Changes in Circumstances
Section 8.1 LIBOR Basis Determination Inadequate. If with respect to
any proposed LIBOR Advance for any Interest Period, any Lender determines that
(i) 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 LIBOR
Basis 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 shall forthwith give notice thereof to the
Borrower, whereupon until such Lender notifies 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.
Section 8.2 Illegality. If any applicable law, rule or regulation, or
any change therein or adoption thereof, or 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 Lender. Before
giving any notice to the Borrower pursuant to this Section, the notifying
Lender shall designate a different 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, 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.
Concurrently with repaying each affected LIBOR Advance owing to such
Lender, notwithstanding anything contained in Article 2 hereof, the Borrower
shall 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 Revolving Credit Advances owing to such Lender shall equal the
outstanding principal amount of the Revolving Credit Advances owing
immediately prior to such repayment.
Section 8.3 Increased Costs.
(a) If any applicable law, rule or regulation, or any change in or
adoption of any law, rule or regulation, or 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 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 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); 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 United States market for
certificates of deposit or the London interbank market any other
condition affecting its LIBOR Advances or its obligation to make such
Advances;
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 ("Increased Advance Costs"), then, within 15 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 Advance Costs, subject to
Section 10.9 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 sole judgment of the affected
Lender made in good faith, be materially 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 and
calculations therefor shall be conclusive in the absence of manifest error.
In determining such amount, a Lender may use any reasonable averaging and
attribution methods. 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 shall
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 Revolving Credit Advances owing to such Lender shall equal the outstanding
principal amount of the Revolving Credit Advances owing immediately prior to
such prepayment.
Section 8.4 Effect On Base Rate Advances. If notice has been given
pursuant to Section 8.1, 8.2 or 8.3 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 8.5 Capital Adequacy. If either (a) the introduction of or
any change in or in the interpretation of any law, rule or regulation or
(b) compliance by a Lender with any law, rule or regulation or any guideline
or request from any central bank or other governmental authority (whether or
not having the force of law) affects 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 Revolving Credit Advances hereunder and other commitments or
advances of such Lender of this type, then, upon demand by such Lender,
subject to Section 10.9, 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 Commitment hereunder. A
certificate as to such amounts submitted to the Borrower by a Lender
hereunder, shall, in the absence of manifest error, be conclusive and
binding for all purposes.
ARTICLE 9
AGREEMENT AMONG LENDERS
Section 9.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Lender. Each Lender hereby appoints the
Administrative Lender 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 Papers; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, unless and until the Administrative Lender
shall have received such requests, the Administrative Lender may take such
administrative action, or refrain from taking such administrative action, as
it may deem advisable and in the best interests of the Lenders; to arrange the
means whereby the proceeds of the Revolving Credit 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
Revolving Credit Advances, fee or other amount; and to deliver to the Borrower
requests, demands, approvals and consents received from the Lenders.
Administrative Lender agrees to promptly distribute to each Lender, at such
Lender's address set forth below information, requests, documents and payments
received from the Borrower.
(b) Replacement of Administrative Lender. Should the Administrative
Lender or any successor Administrative Lender ever cease to be a Lender
hereunder, or should the Administrative Lender or any successor Administrative
Lender ever resign as Administrative Lender, or should the Administrative
Lender or any successor Administrative Lender ever be removed with cause by
the Determining Lenders, then the Lender appointed by the other Lenders shall
forthwith become the Administrative Lender, and the Borrower and the Lenders
shall execute such documents as any Lender may reasonably request to reflect
such change. If the Administrative Lender also then serves in the capacity of
the Issuing Bank, such resignation or removal shall constitute resignation or
removal of the Issuing Bank. Any resignation or removal of the Administrative
Lender or any successor Administrative Lender shall become effective upon the
appointment by the Lenders of a successor Administrative Lender; provided,
however, that if the Lenders fail for any reason to appoint a successor within
60 days after such removal or resignation, the Administrative Lender or any
successor Administrative Lender (as the case may be) shall thereafter have no
obligation to act as Administrative Lender hereunder.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
Specified Percentage, of any expenses paid by the Administrative Lender
directly and solely in connection with any of the Loan Papers if
Administrative Lender does not receive reimbursement therefor from other
sources within 60 days after the date incurred, unless payment of such fees is
being diligently disputed by such Lender or the Borrower in good faith. Any
amount so paid by the Lenders to the Administrative Lender shall be returned
by the Administrative Lender 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 Lender.
(d) Delegation of Duties. The Administrative Lender 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 Lender. The Administrative Lender 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 the Administrative Lender. The
Administrative Lender may, in its reasonable judgment, deem and treat the
payee of any Revolving Credit Note as the owner thereof for all purposes
hereof.
(f) Limitation of Administrative Lender's Liability. Neither the
Administrative Lender 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 Papers 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 Lender shall be under no duty to enforce any rights with
respect to any of the Revolving Credit Advances, or any security therefor.
The Administrative Lender 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 satisfaction against loss, cost, liability and expense.
The Administrative Lender shall not be responsible in any manner to any Lender
for the effectiveness, enforceability, genuineness, validity or due execution
of any of the Loan Papers, or for any representation, warranty, document,
certificate, report or statement made herein or furnished in connection
with any Loan Papers, 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 Papers on the part of the Borrower. To the extent
not reimbursed by the Borrower, each Lender hereby jointly and severally
indemnifies and holds harmless the Administrative Lender, pro rata according
to its Specified Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and/or disbursements of any kind or nature whatsoever which may be
imposed on, asserted against, or incurred by the Administrative Lender in any
way with respect to any Loan Papers or any action taken or omitted by the
Administrative Lender under the Loan Papers (including any negligent action of
the Administrative Lender), except to the extent the same result from gross
negligence or wilful misconduct by the Administrative Lender.
(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 Papers) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
Revolving Credit Advances made by it and Revolving Credit Note issued to it,
the Administrative Lender shall have the same rights as a Lender and may
exercise the same as though it were not the Administrative Lender, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Administrative Lender in its individual capacity. The
Administrative Lender 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 Lender were not the Administrative Lender hereunder and without
any duty to account therefor to the Lenders.
Section 9.2 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Lender or any
other Lender and based upon the financial statements delivered to such Lender
by the Borrower, 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 Lender 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 Papers.
Section 9.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders;
consequently, no Person shall be entitled to rely upon, or to raise as a
defense, in any manner whatsoever, the failure of the Administrative Lender or
any Lender to comply with such provisions.
ARTICLE 10
Miscellaneous
Section 10.1 Notices.
(a) All notices and other communications under this Agreement shall be
in writing 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, or one day after being delivered to the telegraph
office or sent out by telex 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:
Luby's Cafeterias, Inc.
2211 Northeast Loop 410
San Antonio, Texas 78217
Attn: Ron Riemenschneider
(ii) If to the Administrative Lender, at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Douglas E. Hutt, Senior Vice President
(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 10.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative Lender
in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Papers, the transactions contemplated
hereunder and thereunder, and the making of Revolving Credit Advances
hereunder, including without limitation the reasonable fees (not to exceed
$7,500) and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and attorneys' fees of the
Administrative Lender in connection with the administration of the
transactions contemplated in this Agreement and the other Loan Papers and the
preparation, negotiation, execution and delivery of any waiver, amendment or
consent by the Lenders relating to this Agreement or the other Loan Papers;
and
(c) all costs, out-of-pocket expenses and attorneys' fees of the
Administrative Lender and each Lender incurred for enforcement, collection,
restructuring, refinancing and "work-out", or otherwise incurred in obtaining
performance under the Loan Papers, and all costs and out-of-pocket expenses of
collection if default is made in the payment of the Revolving Credit Notes,
which in each case shall include without limitation fees and expenses of
consultants, counsel for the Administrative Lender and any Lender, and
administrative fees for the Administrative Lender.
Section 10.3 Waivers. The rights and remedies of the Lenders under
this Agreement and the other Loan Papers shall be cumulative and not exclusive
of any rights or remedies which they would otherwise have. No failure or
delay by the Administrative Lender 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 a Revolving Credit Advance or the issuance of any
Letter of Credit. In the event that any Lender decides to fund a Revolving
Credit Advance or the Issuing Bank decides to issue a Letter of Credit 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 Revolving Credit
Advances or the Issuing Bank to honor any further requests for Letters of
Credit or preclude the Lenders from exercising any rights available under the
Loan Papers 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 Lender
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 Lender or any of the Lenders are a party thereto, relating to
the Borrower.
Section 10.4 Determination by the Lenders Conclusive and Binding. Any
material determination required or expressly permitted to be made by the
Administrative Lender or any Lender under this Agreement shall be made in its
reasonable judgment and in good faith, and shall when made, absent manifest
error, be conclusive and binding on all parties.
Section 10.5 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 of an Event of Default, each Lender and any subsequent
holder of any Revolving Credit Note, and any assignee or participant (provided
that the Borrower has consented to such participant as provided in Section
10.6(c)) in any Revolving Credit 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 Debt evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Debt 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
Revolving Credit Advances and other amounts due hereunder to be due and
payable as permitted by Section 7.2 and although such obligations and
liabilities, or any of them, shall be contingent or unmatured. Any sums
obtained by any Lender or by any assignee, participant or subsequent holder of
any Note shall be subject to pro rata treatment of all Obligations and other
liabilities hereunder.
Section 10.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Papers without the prior written
consent of the Lenders.
(b) No Lender shall be entitled to assign its interest in this
Agreement, its Notes or its Advances, except as hereinafter set forth.
(c) A Lender may at any time sell participations in all or any part of
its Advances, its portion of the Commitment, and all other interests of such
Lender under this Agreement and the other Loan Papers, including but not
limited to the Letters of Credit and the Reimbursement Obligations
(collectively, "Participations") to any banks or other financial institutions
("Participants") provided that such Participation shall not confer on any
Person (other than the parties hereto) any right to vote on, approve or sign
amendments or waivers, or any other independent benefit or any legal or
equitable right, remedy or other claim under this Agreement or any other Loan
Papers, other than the right to vote on, approve, or sign amendments or
waivers or consents with respect to items that would result in (i) any
increase in the commitment of any Participant; or (ii)(A) the extension of the
date of maturity of, or (B) the extension of the due date for any payment of
principal, interest or fees respecting, or (C) the reduction of the amount of
any installment of principal or interest on or the change or reduction of any
mandatory reduction required hereunder, or (D) a reduction of the rate of
interest on, the Revolving Credit Advances, the Letters of Credit or the
Reimbursement Obligations, or change in Applicable Margin; or
(iii) the release of security for the Obligations, including without
limitation any guarantee; or (iv) the reduction of any fees payable hereunder.
Notwithstanding the foregoing, the Borrower agrees that, if the Borrower shall
consent to any Participation (provided that consent is not required with
respect to a Participation), the Participants shall be entitled to the
benefits of Article 8 and Section 10.5 hereof as though they were Lenders.
The Borrower agrees that the Lenders may provide copies of all financial
information received from the Borrower to such Participants. To the fullest
extent it may effectively do so under Applicable Law, the Borrower agrees that
any Participant may exercise any and all rights of banker's lien, set-off and
counterclaim with respect to this Participation as fully as if such
Participant were the holder of the Revolving Credit Advances in the amount of
its Participation.
(d) Each Lender may assign to one or more financial institutions or
funds organized under the laws of the United States, or any state thereof, or
under the laws of any other country that is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, which is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business (each, an "Assignee")
its rights and obligations under this Agreement and the other Loan Papers;
provided, however, that (i) except as otherwise provided herein, each such
assignment shall be subject to the prior written consent of the Administrative
Lender and the Borrower (which consent shall not be unreasonably withheld),
(ii) each such assignment shall be of a constant, and not a varying,
percentage of the Lender's rights and obligations under this Agreement, (iii)
the amount of the Commitment and Revolving Credit Advances being assigned
pursuant to each such assignment (determined as of the date of the assignment
with respect to such assignment), shall in no event be less than $5,000,000,
(iv) the applicable Lender, Administrative Lender and applicable Assignee
shall execute and deliver to the Administrative Lender an Assignment and
Acceptance Agreement (an "Assignment Agreement") in substantially the form of
Exhibit C hereto, together with the Revolving Credit Notes subject to such
assignment, (v) the Assignee or the Lender executing the Assignment as the
case may be, shall deliver to the Administrative Lender a processing fee of
$3,500; and (vi) the Administrative Lender shall give the Borrower notice of
any proposed assignment no later than 5 days prior to any assignment by any
Lender. 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 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 assigning
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. Notwithstanding anything
in this clause (d) to the contrary, any Lender may assign its rights and
obligations under this Agreement to an affiliate of such Lender without the
prior written consent of the Administrative Lender and the Borrower, but
otherwise subject to the restrictions set forth herein.
(e) Notwithstanding anything in clause (d) above to the contrary, any
Lender may assign and pledge all or any portion of its Revolving Credit
Advances and Revolving Credit 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; 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 Assignee and consented to by the Borrower, and any Revolving Credit Note
subject to such assignment, the Borrower shall, within three Business Days
after its receipt of such Assignment Agreement, at its own expense, execute
and deliver to the Administrative Lender in exchange for the surrendered
Revolving Credit Note a new Revolving Credit Note to the order of such
Assignee in an amount equal to the portion of the Revolving Credit Advances
and Commitment assigned to it pursuant to such Assignment Agreement and a new
Revolving Credit Note to the order of the assigning Lender in an amount equal
to the portion of the Revolving Credit Advances and Commitment retained by it
hereunder. Such new Revolving Credit Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Revolving
Credit Note, shall be dated the effective date of such Assignment Agreement
and shall otherwise be in substantially the form of Exhibit A hereto.
(g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.6,
disclose to the assignee or Participant or proposed assignee or participant,
any information relating to the Borrower furnished to such Lender by or on
behalf of the Borrower.
(h) Except as specifically set forth in this Section 10.6, nothing in
this Agreement or any other Loan Papers, 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 Papers.
Section 10.7 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 10.8 Severability. Any provision of this Agreement which is
for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 10.9 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 Papers, no Lender shall ever be entitled to receive, collect or apply, as
interest on the Obligations, any amount in excess of the Maximum 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 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 Maximum Amount, 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 Maximum
Amount, 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 Maximum Amount. This Section shall control every
other provision of all agreements pertaining to the transactions contemplated
by or contained in the Loan Papers.
Section 10.10 Confidentiality. Each Lender and the Administrative
Lender agrees (on behalf of itself and each of its affiliates, directors,
officers, employees and representatives) to use reasonable precautions 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
pursuant to this Agreement which is identified by the Borrower as being
confidential at the time the same is delivered to the Lenders or the
Administrative Lender, 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 Lender, (c) to bank examiners, auditors or accountants of any
Lender, (d) to the Administrative Lender or any other Lender, (e) in
connection with any litigation to which any one or more of Lenders is a party,
provided, further, that, unless specifically prohibited by Applicable Law
or court order, each Lender shall, prior to disclosure thereof, notify the
Borrower of any request for disclosure of any such non-public information (i)
by any governmental agency or representative thereof (other than any such
request in connection with an examination of such Lender's financial condition
by such governmental agency) or (ii) pursuant to legal process, or (f) to any
assignee or participant (or prospective assignee or participant) so long as
such assignee or participant (or prospective assignee or participant) agrees
to keep such information confidential in a manner consistent with the
provisions of this Section 10.10; and provided finally that in no event shall
any Lender or the Administrative Lender by obligated or required to return any
materials furnished by the Borrower.
Section 10.11 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 10.12 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 Specified Percentage or commitment of
any Lender, or (ii) extend 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 Revolving
Credit Advance, the Reimbursement Obligations or other amount owing under any
Loan Papers, or (iii) release any security for or guaranty of the Obligations
(except pursuant to this Agreement), or (iv) reduce the fees payable
hereunder, or (v) revise this Section 10.12, or (vi) waive the date for
payment of any of the Obligations, or (vii) amend the definition of
Determining Lenders; (b) without the consent of the Administrative Lender, if
it would alter the rights, duties or obligations of the Administrative Lender;
or (c) without the consent of the Issuing Bank, if it would alter the rights,
duties or obligations of the Issuing Bank. 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
Lender and, in the case of an amendment, by the Borrower.
Section 10.13 Exception to Covenants. Neither the Borrower nor any
Subsidiary 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 10.14 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,
except for any payment made upon the Issuing Bank's gross negligence or
willful misconduct; 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 the Borrower proves were caused by (i)
the Issuing Bank's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit comply with the terms
of the Letter of Credit or (ii) the Issuing Bank's willful 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 10.15 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN PAPERS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS
AMENDED, SHALL NOT APPLY TO THE REVOLVING ADVANCES, THIS AGREEMENT AND THE
OTHER LOAN PAPERS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE BORROWER
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 PAPERS.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE LENDER 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 THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY ADVANCES
HEREUNDER.
SECTION 10.17 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN PAPERS, 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.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
<PAGE>
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: LUBY'S CAFETERIAS, INC.
By: John E. Curtis, Jr.
_______________________
Name: John E. Curtis, Jr.
Title: President and Chief
Operating Officer
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
By: Douglas E. Hutt
______________________
Douglas E. Hutt
Senior Vice President
<PAGE>
LENDERS: NATIONSBANK OF TEXAS, N.A.,
as a Lender
Specified Percentage:
35%
By: Douglas E. Hutt
_____________________
Douglas E. Hutt
Senior Vice President
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Douglas E. Hutt
Senior Vice President
SUNTRUST BANK, ATLANTA
Specified Percentage:
20%
By: Jennifer L. McClure
_________________________
Name: Jennifer L. McClure
Title: Banking Officer
By: John A. Fields, Jr.
__________________________
Name: John A. Fields, Jr.
Title: Vice President
25 Park Place, 24th Floor
Atlanta, Georgia 30303
Attn: Jennifer L. McClure
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
Specified Percentage:
25%
By: Robert P. Carswell
__________________________________
Name: Robert P. Carswell
Title: Senior Vice President
1020 Northeast Loop 410, 1st Floor
San Antonio, Texas 78209
Attn: Robert P. Carswell
THE BANK OF TOKYO, LTD., DALLAS
AGENCY
Specified Percentage:
20%
By: John E. Beckwith
_________________________________
Name: J. Beckwith
Title: Vice President
2001 Ross Avenue, Suite 3150, LB 118
Trammell Crow Center
Dallas, Texas 75201
Attn: J. Beckwith
Exhibit 10(i)
EMPLOYMENT CONTRACT
This Contract is made as of January 12, 1996, between Luby's Cafeterias,
Inc. (the "Company"), a Delaware corporation, and John B. Lahourcade
("Employee"), as follows:
1. Recitals. Employee has rendered valuable services to the Company as an
executive officer and has contributed materially to the growth and success of
the Company over a period of many years. Employee's tenure as an executive
officer of the Company is terminating on the date of this Contract. The
Company desires to obtain for itself the continued services of Employee in the
capacity of a consultant in order that the Company's management may continue
to have the benefits of the experience, knowledge, and advice of Employee with
regard to the Company's business and operations.
2. Employment. The Company hereby employs Employee as a consultant to the
Company, and Employee hereby accepts such employment, upon the terms and
conditions of this Contract.
3. Term. Such employment shall be for a term of five years commencing
January 12, 1996, and ending January 11, 2001; provided, however, that such
employment shall terminate upon the death of Employee or at such time as the
Board of Directors shall determine that Employee is unable, by reason of
disability, to perform his duties under this Contract.
4. Duties. During his employment, Employee shall, upon request, consult with
the Company's management concerning the Company's business and operations.
Consultations shall take place at the Company's principal offices or at such
other place or places as may be agreed upon from time to time. Consultations
shall be scheduled at reasonable times by mutual agreement.
5. Compensation and Benefits. As compensation for Employee's services under
this Contract, the Company shall pay to Employee during the term of his
employment a salary of $7,083.33 per month. In addition, Employee shall be
entitled to participate during the term of his employment in the Company's
group medical and hospitalization plan for its employees on the same basis as
executive officers of the Company are entitled to participate. Unless
otherwise agreed by the Company, Employee shall not be entitled to participate
in any other employee benefit plans of the Company.
6. Expenses. The Company shall reimburse Employee for reasonable and
necessary expenses incurred by Employee in connection with the performance of
his duties under this Contract, subject to the presentation of vouchers or
other appropriate evidence of the expenses incurred.
7. Non-compete. During the term of his employment, Employee shall not,
directly or indirectly, enter into, engage in or give material assistance to
any business or enterprise which is in direct competition with the business of
the Company; provided, however, that this covenant shall not be violated by
Employee's ownership of stocks, bonds or other securities traded upon any
stock exchange or in the over-the-counter market.
Executed in duplicate as of the day and year first above written.
LUBY'S CAFETERIAS, INC.
By: John E. Curtis, Jr.
_________________________
President
John B. Lahourcade
_________________________
John B. Lahourcade
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
The following is a computation of the weighted average number of shares
outstanding which is used in the computation of per share earnings for Luby's
Cafeterias, Inc. for the three and six months ended February 29, 1996 and
February 28, 1995.
Three months ended February 29, 1996:
23,340,118 x shares outstanding for 11 days 256,741,298
23,345,163 x shares outstanding for 21 days 490,248,423
23,398,704 x shares outstanding for 30 days 701,961,120
23,529,859 x shares outstanding for 13 days 305,888,167
23,590,511 x shares outstanding for 16 days 377,448,176
_____________
2,132,287,184
Divided by number of days in the period 91
_____________
23,431,727
Six months ended February 29, 1996:
23,313,132 x shares outstanding for 21 days 489,575,772
23,315,089 x shares outstanding for 21 days 489,616,869
23,320,721 x shares outstanding for 18 days 419,772,978
23,331,311 x shares outstanding for 8 days 186,650,488
23,334,503 x shares outstanding for 23 days 536,693,569
23,340,118 x shares outstanding for 11 days 256,741,298
23,345,163 x shares outstanding for 21 days 490,248,423
23,398,704 x shares outstanding for 30 days 701,961,120
23,529,859 x shares outstanding for 13 days 305,888,167
23,590,511 x shares outstanding for 16 days 377,448,176
_____________
4,254,596,860
Divided by number of days in the period 182
_____________
23,376,906
Three months ended February 28, 1995:
24,383,698 x shares outstanding for 14 days 341,371,772
24,270,808 x shares outstanding for 20 days 485,416,160
24,189,103 x shares outstanding for 28 days 677,294,884
23,851,100 x shares outstanding for 28 days 667,830,800
_____________
2,171,913,616
Divided by number of days in the period 90
_____________
24,132,374
Six months ended February 28, 1995:
25,074,982 x shares outstanding for 18 days 451,349,676
24,941,910 x shares outstanding for 12 days 299,302,920
24,934,917 x shares outstanding for 16 days 398,958,672
24,713,278 x shares outstanding for 15 days 370,699,170
24,520,641 x shares outstanding for 17 days 416,850,897
24,416,386 x shares outstanding for 13 days 317,413,018
24,383,698 x shares outstanding for 14 days 341,371,772
24,270,808 x shares outstanding for 20 days 485,416,160
24,189,103 x shares outstanding for 28 days 677,294,884
23,851,100 x shares outstanding for 28 days 667,830,800
_____________
4,426,487,969
Divided by number of days in the period 181
_____________
24,455,735
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 1,502
<SECURITIES> 0
<RECEIVABLES> 439
<ALLOWANCES> 0
<INVENTORY> 3,260
<CURRENT-ASSETS> 9,269
<PP&E> 430,320
<DEPRECIATION> 138,882
<TOTAL-ASSETS> 313,711
<CURRENT-LIABILITIES> 32,809
<BONDS> 0
0
0
<COMMON> 8,769
<OTHER-SE> 198,773<F1>
<TOTAL-LIABILITY-AND-EQUITY> 313,711
<SALES> 217,172
<TOTAL-REVENUES> 217,172
<CGS> 113,511
<TOTAL-COSTS> 113,511
<OTHER-EXPENSES> 64,343
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,199
<INCOME-PRETAX> 28,578
<INCOME-TAX> 10,691
<INCOME-CONTINUING> 17,887
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,887
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
<FN>
<F1>Other stockholders' equity amount is less cost of treasury stock of $85,243.
</FN>
</TABLE>
