<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
Schedule 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 26)
Michaels Stores, Inc.
(Name of Issuer)
Common Stock, par value $0.10 per share
(Title of Class of Securities)
594087-10-8
(CUSIP Number)
Robert L. Estep
Jones, Day, Reavis & Pogue
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
(214) 220-3939
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 22, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_] (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
(Continued on following pages)
(Page 1 of 121 Pages)
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 2 of 121 Pages
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sam Wyly ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,631,905
OWNED BY -------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 300,000
-------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,265,238
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
300,000
-------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,565,238
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 3 of 121 Pages
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charles J. Wyly, Jr. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,597,607
OWNED BY -------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 300,000
-------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,865,024
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
300,000
-------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,165,024
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 4 of 121 Pages
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Maverick Entrepreneurs Fund, Ltd. (f/k/a First Dallas Limited)
75-2319145
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 300,000
OWNED BY -------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 0
-------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
300,000
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
-------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
300,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 5 of 121 Pages
This Schedule 13D/A Amendment No. 26 hereby amends the Schedule 13D, as
amended by Amendment Nos. 1 through 25 (collectively the "Schedule 13D"), filed
jointly by Sam Wyly, Charles J. Wyly, Jr. and Maverick Entrepreneurs Fund, Ltd.
(f/k/a First Dallas Limited) ("Maverick Entrepreneurs" and collectively with Sam
Wyly and Charles J. Wyly, Jr., the "Reporting Persons") with respect to the
securities of Michaels Stores, Inc. (the "Company"). Defined terms used but not
defined herein shall have the meanings as previously set forth in the Schedule
13D.
Item 1. Security and Issuer.
-------------------
Not amended.
Item 2. Identity and Background.
-----------------------
Not amended.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Item 3 is hereby amended to add the following at the end thereof:
The source of funds to purchase a portion of the shares of Common Stock
beneficially owned by the Reporting Persons was borrowings under revolving lines
of credit maintained by Maverick Entrepreneurs and each of the trusts described
in Item 5 of this Schedule 13D with each of NationsBank of Texas, N.A.
("NationsBank") and Citibank, N.A. ("Citibank"). See Item 6 below.
The options described in Item 5 as held by Sam Wyly and Charles J.
Wyly, Jr. were granted under stock option plans of the Company.
Item 4. Purpose of Transaction.
----------------------
Not amended.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Item 5 is hereby amended and restated in its entirety to read as
follows:
(a)-(c) Mr. Sam Wyly beneficially owns 2,565,238 shares, or
approximately 10.5% of the outstanding Common Stock. Sam Wyly beneficially owns
(i) 633,333 of such shares by virtue of this ownership of options to purchase
Common Stock, (ii) 1,074,536 of such shares as general partner of Tallulah,
Ltd., (iii) 300,000 of such shares as general partner of Maverick Entrepreneurs,
(iv) 15,836 of such shares by virtue of his holding a power of attorney to vote
the shares of two adult children, and (v) an aggregate of 541,533 of such shares
as trustee of the trusts listed below:
<TABLE>
<CAPTION>
Number of Shares
Name of Trust Beneficially Owned
------------- ------------------
<S> <C>
1. The Christiana Parker Wyly Trust 82,393
2. The Andrew David Sparrow Wyly Trust 82,393
3. The Laurie L. Wyly Revocable Trust 123,943
4. The Lisa Wyly Revocable Trust 123,943
5. The Kelly Wyly Elliot Trust 128,861
</TABLE>
Sam Wyly possesses sole voting power with respect to 1,631,905 shares of Common
Stock, sole dispositive power with respect to 2,265,238 shares of Common Stock
and shared voting and dispositive power with respect to 300,000 shares of Common
Stock held by Maverick Entrepreneurs.
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 6 of 121 Pages
Charles J. Wyly, Jr. beneficially owns 2,165,024 shares, or
approximately 9.0% of the outstanding Common Stock. Charles J. Wyly, Jr.
beneficially owns (i) 267,417 of such shares by virtue of his ownership of
options to purchase Common Stock, (ii) 755,000 of such shares as general partner
of Brush Creek, Ltd., (iii) 300,000 of such shares as general partner of
Maverick Entrepreneurs, (iv) 374 of such shares by virtue of his holding a power
of attorney to vote the shares of two adult children, and (v) an aggregate of
842,233 of such shares as trustee of the trusts listed below:
<TABLE>
<CAPTION>
Number of Shares
Name of Trust Beneficially Owned
------------- ------------------
<S> <C>
1. The Martha Caroline Wyly Trust 170,000
2. The Charles J. Wyly, III Trust 224,247
3. The Emily Ann Wyly Trust 224,146
4. The Jennifer Lynn Wyly Trust 223,840
</TABLE>
Charles J. Wyly, Jr. possesses sole voting power with respect to 1,597,607
shares of Common Stock, sole dispositive power with respect to 1,865,024 shares
of Common Stock and shared voting and dispositive power with respect to 300,000
shares of Common Stock held by Maverick Entrepreneurs.
Maverick Entrepreneurs beneficially owns and possesses sole voting and
dispositive power with respect to 300,000 shares, or approximately 1.3% of the
outstanding Common Stock.
The Reporting Persons as a group beneficially own 4,430,262 shares of
Common Stock, or approximately 18.0% of the outstanding Common Stock. The
Reporting Persons as a group possess sole voting power with respect to 3,529,512
shares of Common Stock and sole dispositive power with respect to 4,430,262
shares of Common Stock.
(d)-(e) Not amended.
Item 6. Contracts, Arrangements, Understandings or Relationships with respect
---------------------------------------------------------------------
to Securities of the Issuer.
- ---------------------------
Item 6 is hereby amended to add the following at the end thereof:
Each of (i) the trusts described in Item 5 for which Sam Wyly is
trustee (the "Sam Wyly Trusts") and Tallulah, Ltd., (ii) the trusts described in
Item 5 for which Charles J. Wyly, Jr. is trustee (the "Charles Wyly Trusts") and
Brush Creek, Ltd., and (iii) Maverick Entrepreneurs maintain separate revolving
lines of credit with NationsBank (collectively, the "NationsBank Credit
Facilities"). The obligations of each borrower to repay advances made under its
NationsBank Credit Facilities are several, full-recourse obligations that are
secured by the pledge of shares of Common Stock beneficially owned by the
Reporting Persons as well as other securities. Each advance under a NationsBank
Credit Facility bears interest at NationsBank's prime rate or at a floating
rate, as elected by the borrower. Sam Wyly and Charles J. Wyly, Jr. have each
guaranteed the obligations of Maverick Entrepreneurs under its NationsBank
Credit Facility. The NationsBank Credit Facilities were amended and restated on
November 22, 1996 to provide that all amounts outstanding under the NationsBank
Credit Facilities will mature on November 22, 1998.
Each of (i) Tallulah, Ltd., (ii) Brush Creek, Ltd., (iii) each of the
Sam Wyly Trusts, and (iv) each of the Charles Wyly Trusts also maintains a
separate revolving line of credit with Citibank (collectively, the "Citibank
Credit Facilities"). The obligations of each borrower to repay advances made
under its Citibank Credit Facility are full-recourse obligations that are
secured by the borrower's pledge of certain shares of Common Stock beneficially
owned by the Reporting Persons, as well as other securities and assets. Each
advance under a Citibank Credit Facility bears interest at a rate of Citibank's
announced base rate, plus 1.0%, or at a Eurodollar-based rate, minus 1.0%, as
elected by the borrower, Sam Wyly and Charles J. Wyly, Jr. have guaranteed the
obligations of Tallulah, Ltd. and Brush Creek, Ltd., respectively, under the
applicable Citibank Credit Facility, and certain of the beneficiaries of each of
the Sam Wyly Trusts and the Charles Wyly Trusts, have guaranteed the obligations
of the respective trusts under the applicable Citibank Credit Facility. All
amounts outstanding under the Citibank Credit Facilities mature on December 16,
1996. Each of the Sam Wyly Trusts, the Charles Wyly Trusts, Maverick
Entrepreneurs, Tallulah, Ltd. and Brush Creek, Ltd. presently intends to renew
its Citibank Credit Facility, or refinance such credit facility with another
lender, prior to such maturity date.
The foregoing description of the agreements relating to the NationsBank
Credit Facilities and the Citibank Credit Facilities is qualified in its
entirety by reference to such agreements, copies of which have been filed as
exhibits to this Schedule 13D and are incorporated herein by reference.
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 7 of 121 Pages
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 1. Agreement pursuant to Rule 13d-1(f)(1)(iii).
Exhibit 2. Form of Amended and Restated Loan Agreement, dated
November 22, 1996, among NationsBank and (i) the
Sam Wyly Trusts and Tallulah, Ltd.; (ii) the
Charles Wyly Trusts and Brush Creek Limited; and
(iii) Maverick Entrepreneurs.
Exhibit 3. Form of Pledge Agreement, dated November 22, 1994,
between NationsBank and (i) Tallulah, Ltd.; (ii)
each of the Sam Wyly Trusts; (iii) Brush Creek,
Ltd.; (iv) each of the Charles Wyly Trusts; and (v)
Maverick Entrepreneurs.
Exhibit 4. Form of Collateral Maintenance Agreement, dated
November 22, 1994, between NationsBank and (i)
Tallulah, Ltd.; (ii) each of the Sam Wyly Trusts;
(iii) Brush Creek, Ltd.; (iv) each of the Charles
Wyly Trusts; and (v) Maverick Entrepreneurs.
Exhibit 5. Guaranty, executed as of November 22, 1994, by
Tallulah, Ltd., the Sam Wyly Trusts, Brush Creek,
Ltd., the Charles Wyly Trusts, and Even Wyly, in
favor of NationsBank.
Exhibit 6. Form of Credit Agreement, dated as of December 16,
1994, as amended, between Citibank and (i)
Tallulah, Ltd.; (ii) each of the Sam Wyly Trusts;
(iii) Brush Creek, Ltd.; and (iv) each of the
Charles Wyly Trusts.
Exhibit 7. Form of Pledge Agreement, dated as of December 16,
1994, as amended, between Citibank, and (i)
Tallulah, Ltd.; (ii) each of the Sam Wyly Trusts;
(iii) Brush Creek, Ltd.; and (iv) each of the
Charles Wyly Trusts.
Exhibit 8. Form of Guaranty Agreement, dated as of December
16, 1994, in favor of Citibank by (i) the general
partner of Tallulah, Ltd.; (ii) the general partner
of Brush Creek, Ltd.; and (iii) certain of the
beneficiaries of each of the Sam Wyly Trusts and
the Charles Wyly Trusts.
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 8 of 121 Pages
SIGNATURES
After reasonable inquiry, and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Date: December 10, 1996 /s/ SAM WYLY
-----------------------------------------
Sam Wyly
/s/ CHARLES J. WYLY, JR.
-----------------------------------------
Charles J. Wyly, Jr.
MAVERICK ENTREPRENEURS FUND, LTD. (f/k/a FIRST
DALLAS LIMITED)
By: /s/ SAM WYLY
--------------------------------
Sam Wyly
General Partner
By: /s/ CHARLES J. WYLY, JR.
--------------------------------
Charles J. Wyly, Jr.
General Partner
<PAGE>
CUSIP NO. 594087-10-8 13D/A Page 9 of 121 Pages
EXHIBIT INDEX
Exhibit No.
- -----------
1. Agreement pursuant to Rule 13d-1(f)(1)(iii)
2. Form of Amended and Restated Loan
Agreement, dated November 22, 1996, among
NationsBank and (i) the Sam Wyly Trusts
and Tallulah, Ltd.; (ii) the Charles Wyly
Trusts and Brush Creek Limited; and (iii)
Maverick Entrepreneurs.
3. Form of Pledge Agreement, dated November
22, 1994, between NationsBank and (i)
Tallulah, Ltd.; (ii) each of the Sam Wyly
Trusts; (iii) Brush Creek Ltd.; (iv) each of
the Charles Wyly Trusts; and (v) Maverick
Entrepreneurs.
4. Form of Collateral Maintenance Agreement,
dated November 22, 1994 between
NationsBank and (i) Tallulah, Ltd.; (ii) each
of the Sam Wyly Trusts; (iii) Brush Creek,
Ltd.; (iv) each of the Charles Wyly Trusts;
and (v) Maverick Entrepreneurs.
5. Guaranty, executed as of November 22, 1994,
by Tallulah, Ltd., the Sam Wyly Trusts,
Brush Creek, Ltd., the Charles Wyly Trusts,
and Even Wyly, in favor of NationsBank.
6. Form of Credit Agreement, dated as of
December 16, 1994, as amended, between
Citibank and (i) Tallulah, Ltd.; (ii) each of
the Sam Wyly Trusts; (iii) Brush Creek, Ltd.;
and (iv) each of the Charles Wyly Trusts.
7. Form of Pledge Agreement, dated as of
December 16, 1994, as amended, between
Citibank and (i) Tallulah, Ltd.; (ii) each of
the Sam Wyly Trusts; (iii) Brush Creek, Ltd.;
and (iv) each of the Charles Wyly Trusts.
8. Form of Guaranty Agreement, dated as of
December 16, 1994 in favor of Citibank by (i)
the general partner of Tallulah, Ltd.; (ii) the
general partner of Brush Creek, Ltd.; and
(iii) certain of the beneficiaries of each of the
Sam Wyly Trusts and the Charles Wyly
Trusts.
<PAGE>
Exhibit 1
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G of the General Rules
and Regulations of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, the undersigned agree that the statement to
which this Exhibit is attached is filed on behalf of each of them.
Date: December 10, 1996 /s/ SAM WYLY
--------------------------------------------
Sam Wyly
/s/ CHARLES J. WYLY, JR.
--------------------------------------------
Charles J. Wyly, Jr.
MAVERICK ENTREPRENEURS FUND, LTD. (f/k/a FIRST
DALLAS LIMITED)
By: /s/ SAM WYLY
-------------------------------------
Sam Wyly
General Partner
By: /s/ CHARLES J. WYLY, JR.
-------------------------------------
Charles J. Wyly, Jr.
General Partner
<PAGE>
Exhibit 2
---------
NationsBank Form of Amended and Restated Loan Agreement
================================================================================
Date November 22, 1996
Between
- --------------------------------------------------------------------------------
Borrowers: Bank:
NationsBank of Texas, N.A.
- ----------------------------------- 901 Main Street
19th Floor
- ----------------------------------- Dallas, Texas 75202
- -----------------------------------
- -----------------------------------
- -----------------------------------
- -----------------------------------
- -----------------------------------
- -----------------------------------
8080 N. Central Expressway
Suite 1300
Dallas, Texas 75206
- --------------------------------------------------------------------------------
This Amended and Restated Loan Agreement ("Agreement") is made on the above date
by and between Borrowers and Bank.
1. THE LOAN.
A. Bank agrees to lend and each Borrower severally agrees to borrow an amount
not to exceed the amount set forth next to each such Borrower's name on
Schedule I attached hereto (individually, a "Loan" and collectively, the
"Loans") on the terms and conditions set forth herein and subject to the
other limitations set forth herein and in the other Loan Documents (as
defined herein). Each Loan will be evidenced by a Promissory Note in the
form of Exhibit A attached hereto executed by the applicable Borrower, or
any renewal thereof, with interest and principal payable as stated therein
(the "Notes"). The loans are renewals and restatements of (and not
novations of) those certain loans from Bank to Borrower, as evidenced by
the Loan Agreement dated November 22, 1994 between Borrowers and Bank.
B. Each Loan provides for a revolving line of credit under which a Borrower
may from time to time borrow, repay and reborrow funds; provided, however,
the aggregate amount of funds under any particular Loan that may be
outstanding at any time shall in all events be subject to the limitations
set forth on Schedule I and in the applicable Note and Collateral
Maintenance Agreement (as defined herein). The Loans shall mature on
November 22, 1998, unless sooner accelerated in accordance with the terms
hereof.
C. Bank and Borrowers acknowledge and agree that each Borrower's individual
liability hereunder shall be limited to the amount set forth on Schedule I
hereto, plus interest accrued thereon, plus any fees and expenses owing
hereunder.
2. SECURITY. Each Loan is to be secured by a pledge of certain securities
pursuant to a Pledge Agreement (the "Pledge Agreement") and a Collateral
Maintenance Agreement (the "Collateral Maintenance Agreement"), each
Agreement dated November 22, 1994 between a Borrower and Bank.
-1-
<PAGE>
3. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as to itself to Bank as follows:
A. Good Standing. Such Borrower (other than ____________________________) is
a trust duly established and validly existing under the laws of the State
of Texas and has all powers and permits, consents and authorizations
necessary to own and operate its properties and to carry on its business
as presently conducted. ______________ ("________") is a limited
partnership duly organized and validly existing under the laws of the
State of Texas and has all powers and permits, consents and authorizations
necessary to own and operate its properties and to carry on its business
as presently conducted.
B. Trustee/General Partner. ________ is (i) the sole trustee ("Trustee") of
such Borrower other than ____________ and (ii) the sole general partner
("General Partner") of ________.
C. Authority and Compliance. The Trustee, on behalf of such Borrower other
than ________, and _________ have full power and authority to enter into
this Agreement, to make the borrowings hereunder, to execute and deliver
the Notes and the other Loan Documents (as defined herein) to which such
Borrower is or may be a party and to incur the obligations provided for
herein, all of which have been duly authorized by all proper and necessary
action on the part of such Borrower. No consent or approval of any public
authority or person is required as a condition to the validity of this
Agreement or the Notes or the performance hereunder, and Borrower is in
compliance with all laws and regulatory requirements to which it is
subject.
D. Binding Agreement. This Agreement and the Notes constitute valid and
legally binding obligations of Borrower, enforceable in accordance with
their terms.
E. Financial Statements. The books and records of Borrower properly reflect
such Borrower's financial condition, and there has been no material change
in such Borrower's financial condition as represented in the financial
statements dated June 30, 1996 delivered to Bank.
F. Litigation. There are no proceedings pending or, to the best knowledge of
the Trustee, or _________, threatened before any court or administrative
agency which will or may have a material adverse effect on the financial
condition or operations of any such Borrower.
G. No Conflicting Agreements. There are no provisions of Borrower's (other
than _____________________) trust agreement or ________'s agreement of
limited partnership and no provisions of any existing agreement, mortgage,
indenture or contract binding on Borrower or affecting its respective
property or business, which would conflict with or in any way prevent the
execution, delivery or carrying out of the terms of this Agreement and the
Notes.
H. Taxes. All income taxes and other taxes due and payable by Borrower
through the date of this Agreement have been paid prior to becoming
delinquent.
I. Use of Proceeds. The proceeds of the Loans will be used by Borrower to (i)
refinance in part the indebtedness of Borrowers currently owing to The
First Boston Corporation and (ii) invest in such securities as such
Borrower deems reasonably prudent. Such Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
"margin stock" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System; provided, however that proceeds
of the Loans may also be used for the purpose of investing in other
parties for the purpose of purchasing or carrying any such "margin stock,"
or for the purpose of reducing or retiring any indebtedness incurred for
such purpose. Neither such Borrower, nor any person acting on behalf of
Borrower, has taken or will take any action which might cause the Notes or
this Agreement to violate Regulations G, T or U or any other regulation of
the Board of Governors of the Federal Reserve
-2-
<PAGE>
System or violate the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereafter be in effect.
J. Continuation of Representations and Warranties. All representations and
warranties made under this Agreement shall be deemed made at and as of the
date hereof, and at and as of the date of any future advance under any
Note.
4. CLOSING CONDITIONS
A. Conditions to Initial Advance. The obligation of Bank to execute this
Agreement and to make the initial advances hereunder shall be subject to
the satisfaction of the following conditions precedent:
1) Loan Documents. Each of this Agreement, the Notes, and the
reaffirmation of the Pledge Agreements and the Collateral Maintenance
Agreements and such other ancillary documents and instruments in
furtherance of the transaction contemplated herein as requested by Bank
in connection with the Loans (the "Loan Documents") shall have been
duly executed and delivered by the respective parties thereto, shall be
in full force and effect and shall be in form and substance
satisfactory to Bank.
2) Necessary Action. All action (whether trust, partnership or otherwise)
necessary for the valid execution, delivery and performance by each
Borrower of this Agreement and the other Loan Documents to which it is
a party shall have been duly and effectively taken, and evidence
thereof satisfactory to Bank shall have been provided to Bank.
3) Validity of Liens. The Pledge Agreements shall be effective to create
in favor of Bank a legal, valid and enforceable first priority security
interest in and lien upon the collateral described therein. All
filings, recordings, deliveries of instruments and other actions
necessary or desirable in the opinion of Bank to protect and preserve
such security interests shall have been duly effected.
4) Payment of Fees. Bank shall have received the commitment fees in the
aggregate amount of $30,000, as contemplated by Section 6 below.
B. Conditions to All Borrowings. The obligation of Bank to make any future
advance under any Note shall be subject to the satisfaction of the
following conditions precedent:
1) Representations and Warranties. The representations and warranties of
Borrowers contained herein and in any other Loan Documents shall be
true and correct as of the date of which they were made and shall also
be true and correct at and as of the time of the advance with the same
effect as if made at and as of that time (except to the extent such
representations and warranties expressly relate to an earlier date) and
Bank shall have received a certificate of a Subagent (as defined
herein), to such effect.
2) No Event of Default. No event of default hereunder or under any of the
other Loan Documents shall have occurred and be continuing and Bank
shall have received a certificate of a Subagent, to such effect.
3) No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the
reasonable opinion of Bank would make it illegal for Bank to make such
advance.
4) Proceedings and Documents. All proceedings in connection with the
transactions contemplated hereby and the other Loan Documents shall be
satisfactory in form and substance to Bank and Bank shall have received
all information and documents as Bank may reasonably request.
-3-
<PAGE>
5. FEES. Each Borrower shall pay to Bank an annual commitment fee in the amount
of 1/10 of one percent (0.10%) of the commitment amount set forth next to
such Borrower's name on Schedule I, such fee to be due and payable on the
date hereof and on each annual anniversary thereafter so long as the Loans
are outstanding.
6. AFFIRMATIVE COVENANTS. So long as any Borrower may borrow hereunder and
until payment in full of the Notes and performance of all other obligations
of Borrowers hereunder, each Borrower will:
A. Financial Statements. Maintain a system of accounting satisfactory to Bank
and permit Bank's officers or authorized representatives to visit such
Borrower's offices and inspect such Borrower's books of account and other
records and make photocopies thereof at such reasonable times and as often
as Bank may desire, and pay the reasonable fees and disbursements of any
accountants or other agents of Bank selected by Bank for the foregoing
purposes. Each Borrower agrees to provide Bank with the following
statements and reports:
1) Within one hundred twenty (120) days after the end of each fiscal year,
a balance sheet of such Borrower as of the end of such fiscal year,
which shall be in reasonable detail, complete and correct in all
material respects.
2) Within thirty (30) days after the end of each fiscal quarter and such
other times as Bank may reasonably request, information or statements
respecting each Borrower's trading activity in the collateral securing
the Loans.
B. Existence and Compliance. Maintain its existence and comply with all laws,
regulations and governmental requirements applicable to it or to any of
its property, business and transactions.
C. Adverse Conditions or Events. Promptly advise Bank in writing of any
condition, event or act which comes to its attention that would or might
materially affect such Borrower's financial condition, Bank's rights in or
to any collateral under this Agreement or the other Loan Documents, and of
any litigation filed against such Borrower in which the potential loss
reasonably could be anticipated to exceed $50,000.
D. Taxes. Pay all taxes as the same become due and payable unless timely
extensions have been filed or the same are being contested in good faith
by appropriate proceedings and adequate reserves are maintained.
E. Form U-1. If required by Bank, promptly furnish to Bank a statement that
conforms with the requirements of Federal Reserve Form U-1 as referred to
in Regulation U or in any other relevant Federal Reserve Form or
Regulation provided for from time to time by the Board of Governors of the
Federal Reserve System.
7. NEGATIVE COVENANTS. So long as any Borrower may borrow hereunder and until
payment in full of the Notes and performance of all other obligations of
Borrowers hereunder, no Borrower will, without the prior written consent of
Bank:
A. Transfer of Assets or Control. Permit any transfer of control or ownership
of such Borrower.
B. Amendment of Trust Agreement/Partnership Agreement. No Borrower that is a
trust shall permit any amendment or modification of its trust agreement or
a change of the trustee thereof and ________ shall not permit any
amendment or modification of its agreement of limited partnership or a
change of the general partner.
8. EVENTS OF DEFAULT. With respect to any particular Borrower, any one or more
of the following events shall be deemed an event of default hereunder as to
such Borrower:
-4-
<PAGE>
A. Default shall be made in the payment of any installment of principal or
interest upon any Note or any other obligation of a Borrower to Bank when
due and payable, whether at maturity or otherwise and such default shall
continue for three (3) business days thereafter; or
B. Default shall be made by a Borrower in the performance of any term,
covenant or agreement contained herein, any of the other Loan Documents,
or in any other security agreement, deed of trust, mortgage, assignment or
other contract securing payment of any indebtedness of such Borrower to
Bank and such default shall continue for thirty (30) calendar days
following notice thereof being given by Bank to such Borrower or Agent; or
C. Any representation or warranty herein contained or in any financial
statement, certificate, report or opinion or other agreement submitted to
Bank in connection with the Loans or pursuant to the requirements of this
Agreement shall prove to have been incorrect or misleading in any material
respect when made; or
D. Default shall be made by a Borrower in the performance of any term or
covenant in any agreement or instrument with any other party which would
have a material adverse effect on such Borrower or Bank's rights hereunder
or under the other Loan Documents, and such default is not remedied within
the applicable cure period; or
E. A Borrower makes an assignment for the benefit of creditors, admits in
writing its inability to pay its debts generally as they become due, files
a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions
or applies to any tribunal for the appointment of any receiver or any
trustee for it or any substantial part of its property, commences any
action relating to a Borrower or any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or if there is commenced
against a Borrower any such action, or a Borrower by any act indicates its
consent to or approval of any trustee for such Borrower or any substantial
part of its property, or suffers any such receivership or trustee to
continue undischarged; or
F. Without the prior written consent of Bank, a Borrower that is a trust is
at any time revoked, terminated or liquidated or ________ is dissolved or
liquidated or ______________ dies.
Upon the happening of any of the foregoing events of default which shall be
continuing, Bank may at its option declare all outstanding principal and
unpaid interest on the applicable Loan and any other indebtedness of the
particular defaulting Borrower to Bank to be immediately due and payable, and
Bank shall have no further obligation to fund advances hereunder to such
Borrower. Upon such declaration by Bank, Bank shall have all rights and
remedies available under the Loan Documents as well as those available at law
or in equity. Notwithstanding the foregoing, upon the occurrence of an event
of default described in Section 8.E. to any particular Borrower, the entire
outstanding principal and unpaid interest on the Loan and all other
indebtedness of such Borrower to Bank shall be immediately and automatically
due and payable, without notice to such Borrower of any kind and Bank's
obligation to make advances to such Borrower shall immediately terminate.
9. APPOINTMENT OF AGENT. Each Borrower hereby appoints and designates
_____________ as agent ("Agent") for and on behalf of such Borrower with
respect to all matters arising under or in connection with this Agreement,
the other Loan Documents and the applicable Loan hereunder including, without
limitation, requesting and receiving advances, making payments on the
applicable Loan, negotiating, executing and delivering modifications or
renewals of the Loan Documents, receiving notices from Bank, delivering such
other documents or instruments as the Bank may request in connection with the
Loans, and generally communicating with Bank regarding such Borrower's
obligations hereunder. Any funds advanced hereunder may be distributed to
Agent who shall have responsibility to distribute such funds to the
applicable Borrower. Agent is hereby granted full power and authority to
bind each Borrower in respect of any term, condition, covenant or undertaking
hereunder. Bank shall be entitled to rely on the appointment without any
independent verification. Each Borrower hereby further appoints and
designates each and any of Sharyl
-5-
<PAGE>
Robertson, Amy Phillips and Rena Alexander as subagents ("Subagents") for and
on behalf of such Borrower to perform all administrative functions under the
Loan Documents, including submitting advance requests, receiving and sending
notices and delivering certificates on behalf of such Borrower. Borrowers
shall not remove or otherwise change the Agent without the prior written
consent of Bank. The appointment hereunder is coupled with an interest and
irrevocable.
10. MISCELLANEOUS.
A. Expenses. Each Borrower severally agrees to pay all out-of-pocket expenses
of Bank in connection with this Agreement and the other Loan Documents and
the collection of its applicable Note including, without limitation, the
administration, enforcement and realization upon any collateral or
guaranty. Each Borrower severally also agrees to pay all reasonable
attorneys' fees and all expenses incurred in recording the documents
securing its applicable Loan.
B. Cumulative Rights and No Waiver. Each and every right granted to Bank
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity shall be cumulative of and may be
exercised in addition to any and all other rights of Bank, and no delay in
exercising any right shall operate as a waiver thereof, nor shall any
single or partial exercise by Bank of any right preclude any other or
future exercise thereof or the exercise of any other right. Any of the
foregoing covenants and agreements may be waived by Bank but only in
writing signed by a Vice President or higher level officer of Bank.
Borrower expressly waives any presentment, demand, protest or other notice
of any kind.
No notice to or demand on a Borrower in any case shall, of itself, entitle
such or any other Borrower to any other or further notice or demand in
similar or other circumstances. No delay or omission by Bank in exercising
any power or right hereunder shall impair any such right or power or be
construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such power preclude other or further
exercise thereof, or the exercise of any other right or power hereunder.
C. Maximum Interest. Notwithstanding any other provision contained in this
Agreement, Bank does not intend to charge and no Borrower shall be
required to pay any amount of interest or other fees or charges that is in
excess of the maximum permitted by applicable law. Each Borrower agrees
that during the full term hereof, the maximum lawful interest rate for the
obligations hereunder as determined under Texas law shall be the indicated
rate ceiling as specified in Article 5069-1.04 of the V.A.T.S. Further, to
the extent that any other lawful rate ceiling exceeds the rate ceiling so
determined, then the higher rate ceiling shall apply. Any payment in
excess of such maximum shall be refunded to the applicable Borrower or
credited against principal, at the option of Bank.
D. Applicable Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of Texas (without regard to its conflicts of law
provisions).
E. Notice. Except as otherwise provided in this Agreement, any notices or
communications required or permitted hereunder shall be in writing and
shall be deemed to have been given (i) the day it is personally delivered,
if sent by hand or expedited delivery service, or (ii) five days after it
is mailed, if sent by certified or registered mail.
F. Amendment. No modification, consent, amendment or waiver of any provision
of this Agreement, nor consent to any departure by a Borrower therefrom,
shall be effective unless the same shall be in writing and signed by a
Vice President or higher level officer of Bank, and then shall be
effective only in the specific instance and for the purpose for which
given. This Agreement is binding upon each Borrower, its successors and
assigns, and inures to be benefit of Bank, its successors and assigns.
-6-
<PAGE>
G. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM
BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE
FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND
MEDIATION SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH
BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.
JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY
OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION
OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN DALLAS, TEXAS AND
-------------
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF
CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP
TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
---------------------
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR
(II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF THE BANK (A) TO EXERCISE SELF HELP REMEDIES SUCH AS
(BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL
OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF,
WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN
SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE
PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE
INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE
MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
H. NOTICE OF FINAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
NATIONSBANK OF TEXAS, N.A. TRUST
-----------------------------
By: By:
---------------------------------- -----------------------------
Marta O. Engram
Vice President, Private Banking , Trustee
----------------
TRUST
-----------------------------
By:
-----------------------------
, Trustee
----------------
TRUST
-----------------------------
By:
-----------------------------
, Trustee
----------------
TRUST
-----------------------------
By:
-----------------------------
, Trustee
----------------
TRUST
-----------------------------
By:
-----------------------------
, Trustee
----------------
----------------------------------
, LTD.
----------------------------
By:
-----------------------------
,
------------------
General Partner
The undersigned hereby acknowledges appointment as Agent for the Borrowers
hereunder.
-----------------------------
------------------
-8-
<PAGE>
SCHEDULE I
Borrower Maximum Loan Amount
- -------- -------------------
$
- ---------------------------- ----------
$
- ---------------------------- ----------
$
- ---------------------------- ----------
$
- ---------------------------- ----------
$
- ---------------------------- ----------
$
- ---------------------------- ----------
$
- ---------------------------- ----------
$
----------
-9-
<PAGE>
Exhibit 3
---------
NATIONSBANK OF TEXAS, N.A.
FORM OF
PLEDGE AGREEMENT
----------------
Date November 22, 1994
Between: and
================================================================================
BANK: (SECURED PARTY) PLEDGOR:
NATIONSBANK OF TEXAS, N.A. __________________________
901 Main, 19th Floor 8080 N. Central Expressway
Dallas, Dallas County, Texas 75202 Suite 1300
Dallas, Texas 75206
(address including county)
================================================================================
Pledgor Is [_] Individual [_] Corporation [x] Partnership [_] Other _____
- --------------------------------------------------------------------------------
Address is Pledgor's: [_] Residence [X] Place of Business [_] Chief Executive
Office if more
than one place
of business
================================================================================
(This Agreement contains some provisions preceded by boxes. Mark only those
boxes beside provisions which will be applicable to this transaction. A box
which is not marked means that the provision beside it is not applicable to this
transaction.)
A. Security Interest. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor pledge, assign and grant to
Bank a security interest and lien in the Collateral (hereinafter defined) to
secure the payment and performance of the Obligation (hereinafter defined).
B. Collateral. The security interest is granted in the following
("Collateral"):
1.
[X] SPECIFIC SECURITIES: The following securities, together with all
securities hereafter delivered to Bank in substitution for or in addition
to those securities: _______ shares of common stock, $.10 par value, of
Michaels Stores, Inc. The parties acknowledge that Pledgor may from time
to time provide additional shares of stock of Michaels Stores, Inc. or
Sterling Software, Inc. as collateral hereunder.
[_] AGENCY ACCOUNT: All of Pledgor's property now or hereafter held in
account(s) number ("Account") by the Trust Group of NationsBank of Texas,
N.A. ("Agent") as agent or custodian for Pledgor under an agreement for
custody, investment management, investment advisory or similar services
between Pledgor and the Agent, specifically including but not limited to
all documents,
-1-
<PAGE>
instruments, ordinary goods, certificates of title, general intangibles,
chattel paper, mineral interests, certificated and uncertificated
securities, securities in book-entry form, mutual funds, U.S. government
and state obligations, deposit accounts and cash (but excluding collective
investment funds and anything construed as real property under applicable
state law).
[_] BROKERAGE ACCOUNT: All of Pledgor's property now or hereafter held by
__________________ ("Broker") in cash account number(s) ___________________
("Account") pursuant to the terms of any agreement for custody, investment
management, investment advisory or similar services between Broker and
Pledgor, specifically including but not limited to all documents,
instruments, general intangibles, certificated and uncertificated
securities, securities in book-entry form, mutual funds, U.S. government
and state obligations, deposit accounts and cash.
[_] OTHER:
2. Proceeds. All additions, substitutes and replacements for and proceeds of
the above Collateral (including all income and benefits resulting from
any of the above, such as dividends payable or distributable in cash,
property or stock; interest, premium and principal payments; redemption
proceeds and subscription rights; and shares or other proceeds of
conversions or splits of any securities in Collateral). Any securities
received by Pledgor which shall comprise such additions, substitutes and
replacements for, or proceeds of, the Collateral, shall be held in trust
for Bank and shall be delivered immediately to Bank. Any cash proceeds
shall be held in trust for Bank and upon request shall be delivered
immediately to Bank.
3. Deposit Accounts. The balance of every deposit account of Pledgor
maintained with the Bank and any other claim of Pledgor against Bank, now
or hereafter existing, liquidated or unliquidated, and all money,
instruments, securities, documents, chattel paper, credits, claims,
demands, income, and any other property, rights and interests of Pledgor
which at any time shall come into the possession or custody or under the
control of Bank or any of its agents, affiliates or correspondents, for
any purpose, and the proceeds of any thereof. Bank shall be deemed to have
possession of any of the Collateral in transit to or set apart for it or
any of its agents, affiliates or correspondents.
It is contemplated by the parties that Pledgor shall provide additional
collateral from time to time hereunder as additional security for the
Obligation, and may from time to time with the prior written consent of Bank
sell or otherwise dispose of any Collateral provided that Pledgor provides Bank
with substitute collateral. At the time of each addition or substitution of
Collateral, the securities added or substituted shall be set forth on a Pledge
Certificate, substantially in the form of Schedule I attached hereto (the
"Pledge Certificate") delivered to Bank on or before any advances requested in
connection therewith shall be made and such additional and/or substituted
Collateral and the security interest granted to Bank therein shall be completed
to the satisfaction of Bank. All such additional and/or substituted Collateral
shall be Collateral for purposes of this Agreement, and shall secure the
Obligation in the same manner as the Collateral for which it is added to and/or
substituted.
C. Obligation
1. Description of Obligation. The following obligations ("Obligation") are
secured by this Agreement:
a. [_] All Debt: All debts, obligations, liabilities and agreements of
Pledgor to Bank, now or hereafter existing, arising directly or indirectly
between Pledgor and Bank whether absolute or contingent, joint or several,
secured or unsecured, due or not due, liquidated or unliquidated, arising
by operation of law or otherwise, and all renewals, extensions or
rearrangements of any of the above;
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<PAGE>
[x] Promissory Note: All debt arising under promissory note dated
November 22, 1994 in the principal face amount of $__________ executed by
Pledgor and payable to the order of Bank, and any and all renewals,
extensions and rearrangements thereof.
b. All costs incurred by Bank to obtain, preserve, perfect and enforce
this Agreement and maintain, preserve, collect and realize upon the
Collateral;
c. All expenses of the Bank, including fees and expenses of the Bank's
counsel, incident to the enforcement of payment of the Obligation;
d. All amounts which may be owed by Pledgor to Bank pursuant to that
certain Guaranty Agreement of even date herewith by Pledgor and certain
other guarantors named therein with respect to indebtedness of Maverick
Entrepreneurs Fund, Ltd.; and
e. Interest on the above amounts as agreed between Bank and Pledgor.
In the event any amount paid to Bank on any Obligation is subsequently recovered
from Bank in or as a result of any bankruptcy, insolvency or fraudulent
conveyance proceeding involving an obligor of the Obligation other than Pledgor,
Pledgor shall be liable to Bank for the amounts so recovered up to the fair
market value of the Collateral whether or not the Collateral has been released
or the security interest terminated. In the event the Collateral has been
released or the security interest terminated, the fair market value of the
Collateral shall be determined, at Bank's option, as of the date the Collateral
was released, the security interest terminated, or said amounts were recovered.
2. Use of Proceeds. The proceeds of any indebtedness or obligation secured by
the Collateral [x] may be [_] will not be (check one box) used directly or
indirectly to purchase or carry any "margin stock" as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, or extend
credit to or invest in other parties for the purpose of purchasing or carrying
any such "margin stock," or to reduce or retire any indebtedness incurred for
such purpose or otherwise in a manner which would violate Regulations G, T or U.
D. Pledgor's Warranties. Pledgor hereby represents and warrants to Bank as
follows:
1. Financing Statements. Except as may be noted by schedule attached hereto and
incorporated herein by reference, no financing statement covering the Collateral
is or will be on file in any public office, except the financing statements
relating to this security interest, and no security interest, other than the one
herein created, has attached or been perfected in the Collateral or any part
thereof.
2. Ownership. Pledgor owns, or will use the proceeds of any loans by Bank to
become the owner of, the Collateral free from any setoff, claim, restriction,
lien, security interest or encumbrance except liens for taxes not yet due and
payable and the security interest hereunder.
3. Claims of Pledgor on Collateral. All account debtors and other obligors whose
debts or obligations are part of the Collateral have no right to setoffs,
counterclaims or adjustments, and no defenses in connection therewith.
4. Power and Authority. Pledgor has full power and authority to make this
Agreement, and all necessary consents and approvals of any persons, entities,
governmental or regulatory authorities and securities exchanges have been
obtained to effectuate the validity of this Agreement.
5. Solvency of Pledgor. The fair market value of Pledgor's assets exceeds its
liabilities; Pledgor is currently paying its debts as the same become due; the
execution of this Agreement and the pledge of the Collateral
-3-
<PAGE>
hereunder will not render Pledgor insolvent; and Pledgor, in entering into this
Agreement and performing its obligations hereunder, has no intent to hinder,
delay or defraud any of its creditors.
E. Pledgor's Covenants. Until full payment and performance of all of the
Obligation and termination or expiration of any obligation or commitment of Bank
to make advances or loans to Borrower, unless Bank otherwise consents in
writing:
1. Obligation and This Agreement. Pledgor shall perform all of its agreements
herein and in any other agreements between it and Bank.
2. Ownership of Collateral. Pledgor shall defend the Coll ateral against all
claims and demands of all persons at any time claiming any interest therein
adverse to Bank. Pledgor shall keep the Collateral free from all liens and
security interests except those for taxes not yet due and payable and the
security interest hereby created.
3. Bank's Costs. Pledgor shall pay all costs necessary to obtain, preserve,
perfect, defend and enforce the security interest created by this Agreement,
collect the Obligation, and preserve, defend, enforce and collect the
Collateral, including but not limited to taxes, assessments, reasonable
attorney's fees, legal expenses and expenses of sales. Whether Collateral is or
is not in Bank's possession, and without any obligation to do so and without
waiving Pledgor's default for failure to make any such payment, Bank at its
option may pay any such costs and expenses and discharge encumbrances on
Collateral, and such payments shall be a part of the Obligation and bear
interest at the rate set out in the Obligation. Pledgor agrees to reimburse Bank
on demand for any costs so incurred.
4. Information and Inspection. Pledgor shall (i) promptly furnish Bank any
information with respect to Collateral requested by Bank that is otherwise
publicly available pursuant to reporting requirements under the Security
Exchange Act of 1934; (ii) allow Bank or its representatives to inspect and
copy, or furnish Bank or its representatives with copies of, all records
relating to the Collateral and the Obligation; and (iii) promptly furnish Bank
or its representatives with any other information Bank may reasonably request.
5. Additional Documents. Pledgor shall sign and deliver any papers furnished by
Bank which are necessary or desirable in the judgment of Bank to obtain,
maintain and perfect the security interest hereunder and to enable Bank to
comply with any federal or state law in order to obtain or perfect Bank's
interest in Collateral or to obtain proceeds of Collateral.
6. Right of Bank to Notify Debtors. At any time Pledgor is in default hereunder,
Bank may notify persons obligated on any Collateral to make payments directly to
Bank and Bank may take control of all proceeds of any Collateral. Until Bank
elects to exercise such rights, Pledgor, as agent of Bank, shall collect and
enforce all payments owed on Collateral.
7. Notice of Changes. Pledgor will notify Bank immediately of (i) a change in
Pledgor's place of business, or (ii) the occurrence of an event of default as
defined herein.
8. Possession of Collateral. Pledgor shall deliver a copy of this Agreement (or
other notice acceptable to Bank) to any Broker, financial intermediary, or any
other person in possession of any of the Collateral or on whose books the
interest of Pledgor in the Collateral appears, and such delivery shall
constitute notice to such person of Bank's security interest in the Collateral
and shall constitute Pledgor's instruction to such person to note the Bank's
security interest on their books and records, or deliver to Bank certificates or
other evidence of the Collateral promptly upon Bank's request. Pledgor will
deliver all investment securities and other instruments and documents which are
a part of the Collateral and in Pledgor's possession to Bank immediately, or if
hereafter acquired, immediately following acquisition, in a form suitable for
transfer by delivery or accompanied by duly executed instruments of transfer or
assignment in blank with signatures appropriately guaranteed in form and
substance suitable to Bank.
-4-
<PAGE>
9. Change of Name/Status. Pledgor shall give the Bank at least 30 days' prior
written notice of a name change, change in corporate status, use of any trade
name or engagement in any business in which it was not engaged on the date of
this Agreement.
10. Change of Partnership Agreement. Without the prior consent of Bank, Pledgor
shall not permit any amendment or modification of its Partnership Agreement or a
change in its general partner.
11. Borrowings. Pledgor shall not create, incur, assume or become liable in any
manner for any indebtedness (for borrowed money, deferred payment for the
purchase of assets, lease payments, as surety or guarantor for the debt of
another, or otherwise) except for debt incurred in the ordinary course of
Pledgor's business.
12. Power of Attorney. Pledgor appoints Bank and any officer thereof as
Pledgor's attorney-in-fact with full power in Pledgor's name and on Pledgor's
behalf to do following an event of default hereunder every act which Pledgor is
obligated to do or may be required to do hereunder; however, nothing in this
paragraph shall be construed to obligate Bank to take any action hereunder nor
shall Bank be liable to Pledgor for failure to take any action hereunder. This
appointment shall be deemed a power coupled with an interest and shall not be
terminable as long as the Obligation is outstanding and shall not terminate on
the disability or incompetence of Pledgor. Without limiting the generality of
the foregoing, Bank shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made payable to
Pledgor representing any dividend, interest payment or other distribution
payable in respect of the Collateral or any part thereof.
13. Other Parties and Other Collateral. No renewal or extensions of or any other
indulgence with respect to the Obligation or any part thereof, no modification
of the documents(s) evidencing the Obligation, no release of any security, no
release of any person (including any maker, indorser, guarantor or surety)
liable on the Obligation, no delay in enforcement of payment, and no delay or
omission or lack of diligence or care in exercising any right or power with
respect to the Obligation or any security therefor or guaranty thereof or under
this Agreement shall in any manner impair or affect the rights of Bank under any
law, hereunder, or under any other agreement pertaining to the Collateral. Bank
need not file suit or assert a claim for personal judgment against any person
for any part of the Obligation or seek to realize upon any other security for
the Obligation, before foreclosing or otherwise realizing upon the Collateral.
Pledgor waives any right that can be waived to the benefit of or to require or
control application of any other security or proceeds thereof, and agrees that
Bank shall have no duty or obligation to Pledgor to apply to the Obligation any
such other security or proceeds thereof.
14. Waivers by Pledgor. Except as may be required hereunder or in any other
document with respect to the Obligation, Pledgor waives notice of the creation,
advance, increase, existence, extension or renewal of, and of any indulgence
with respect to, the Obligation; waives presentment, demand, notice of dishonor,
and protest; waives notice of the amount of the Obligation outstanding at any
time, notice of any change in financial condition of any person liable for the
Obligation or any part thereof, notice of any event of default, notice of intent
to accelerate, notice of acceleration and all other notices respecting the
Obligation; and agrees that maturity of the Obligation and any part thereof may
be accelerated, extended or renewed one or more times by Bank in its discretion,
without notice to Pledgor. Pledgor waives any right to require that any action
be brought against any other person (including any other pledgor) or to require
that resort be had to any other security or to any balance of any deposit
account. Pledgor further waives any right of subrogation or to enforce any right
of action against any other pledgor or obligor until the Obligation is paid in
full.
15. Additional Provisions. If one or more Riders to this Agreement are executed
by Pledgor, the covenants and provisions of each such Rider shall be
incorporated by reference into this Agreement. (check applicable boxes)
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<PAGE>
[_] Collateral Maintenance Rider: Pledgor agrees to maintain collateral in
accordance with the terms of the Collateral Maintenance Rider attached
hereto and made a part hereof for all purposes.
[x] Rule 144 Rider: The Collateral is comprised in whole or in part of
Control and/or Restricted Stock, which shall be subject to the additional
terms and provisions described on the Rule 144 Rider attached hereto and made
a part hereof for all purposes.
F. Rights and Powers of Bank
1. General. Bank, before or after default, without liability to Pledgor may:
take control of proceeds, including stock received as dividends or by reason of
stock splits; release Collateral in its possession to any Pledgor, temporarily
or otherwise; require additional Collateral; reject as unsatisfactory any
property hereafter offered by Pledgor as Collateral; take control of funds
generated by the Collateral, such as cash dividends, interest and proceeds, and
use same to reduce any part of the Obligation and exercise all other rights
which an owner of such Collateral may exercise, except the right to vote or
dispose of Collateral before an event of default; and at any time transfer any
of the Collateral or evidence thereof into its own name or that of its nominee.
Bank shall not be liable for failure to collect any account or instruments, or
for any act or omission on the part of Bank, its officers, agents or employees,
except for its or their own willful misconduct or gross negligence. The
foregoing rights and powers of Bank will be in addition to, and not a limitation
upon, any rights and powers of Bank given by law, elsewhere in this Agreement,
or otherwise.
2. Convertible Collateral. Bank may present for conversion any Collateral which
is convertible into any other instrument or investment security or a combination
thereof with cash, but Bank shall not have any duty to present for conversion
any Collateral unless it shall have received from Pledgor detailed written
instructions to that effect at a time reasonably far in advance of the final
conversion date to make such conversion possible.
G. Default.
1. Event of Default. An event of default shall occur if Pledgor or any other
obligor on all or part of the Obligation shall fail following any applicable
cure period to timely and properly pay or observe, keep or perform any term,
covenant, agreement or condition in this Agreement or in any other agreement
between Pledgor and Bank or between Bank and any other obligor on the
Obligation, including in any other note or instrument, loan agreement, security
agreement, deed of trust, mortgage, promissory note, assignment or other
agreement or instrument concerning the Obligation.
2. Rights and Remedies. If any event of default shall occur, then, in each and
every such case, Bank may, without (a) presentment, demand, or protest, (b)
notice of default, dishonor, demand, non-payment, or protest, (c) notice of
intent to accelerate all or any part of the Obligation, (d) notice of
acceleration of all or any part of the Obligation, or (e) notice of any other
kind, all of which Pledgor hereby expressly waives (except for any notice
required under this Agreement, any other loan document or which may not be
waived under applicable law), at any time thereafter exercise and/or enforce any
of the following rights and remedies, at Bank's option:
i. Acceleration. The Obligation shall, at Bank's option, become immediately
due and payable, and the obligation, if any, of Bank to permit further
borrowings under the Obligation shall at Bank's option immediately cease and
terminate.
ii. Liquidation of Collateral. Sell, or instruct any Agent or Broker to sell,
all or any part of the Collateral in a public or private sale, direct any
Agent or Broker to liquidate all or any part of any Account and deliver all
proceeds thereof to Bank, and apply all proceeds to the payment of any or all
of the Obligation in such order and manner as Bank shall, in its discretion,
choose.
-6-
<PAGE>
iii. Uniform Commercial Code. All of the rights, powers and remedies of a
secured creditor under the Uniform Commercial Code as adopted in the
jurisdiction to which Bank is subject under this Agreement (the "UCC").
iv. Right of Set Off. Without notice or demand to Pledgor, set off and
apply against any and all of the Obligation any and all deposits (general
or special, time or demand, provisional or final) and any other
indebtedness, at any time held or owing by the Bank to or for the credit
of the account of Pledgor.
Pledgor specifically understands and agrees that any sale by Bank of all
or part of the Collateral pursuant to tnk terms of this Agreement may be
effected by Bank at times and in manners which could result in the
proceeds of such sale as being significantly and materially less than
might have been received if such sale had occurred at different times or
in different manners, and Pledgor hereby releases Bank and its officers
and representatives from and against any and all obligations and
liabilities arising out of or related to the timing or manner of any such
sale.
If, in the opinion of Bank, there is any question that a public sale or
distribution of any Collateral will violate any state or federal
securities law, Bank may offer and sell such Collateral in a transaction
exempt from registration under federal securities law, and any such sale
made in good faith by Bank shall be deemed "commercially reasonable."
H. General
1. Parties Bound. Bank's rights hereunder shall inure to the benefit of its
successors and assigns, and in the event of any assignment or transfer of any of
the Obligation or the Collateral, Bank thereafter shall be fully discharged from
any responsibility with respect to the Collateral so assigned or transferred,
but Bank shall retain all rights and powers hereby given with respect to any of
the Obligation or Collateral not so assigned or transferred. All
representations, warranties and agreements of Pledgor are joint and several and
all shall be binding upon the successors and assigns of Pledgor.
2. Waiver. No delay of Bank in exercising any power or right shall operate as a
waiver thereof; nor shall any single or partial exercise of any power or right
preclude other or further exercise thereof or the exercise of any other power or
right. No waiver by Bank of any right hereunder or of any default by Pledgor
shall be binding upon Bank unless in writing, and no failure by Bank to exercise
any power or right hereunder or waiver of any default by Pledgor shall operate
as a waiver of any other or further exercise of such right or power or of any
further default. Each right, power and remedy of Bank as provided for herein or
in any of the loan documents, or which shall now or hereafter exist at law or in
equity or by statute or otherwise, shall be cumulative and concurrent and shall
be in addition to every other such right, power or remedy. The exercise or
beginning of the exercise by Bank of any one or more of such rights, powers or
remedies shall not preclude the simultaneous or later exercise by Bank of any or
all other such rights, powers or remedies.
3. Agreement Continuing. This Agreement shall constitute a continuing agreement,
applying to all future as well as existing transactions, whether or not of the
character contemplated at the date of this Agreement, and if all transactions
between Bank and Pledgor shall be closed at any time, shall be equally
applicable to any new transactions thereafter. Provisions of this Agreement,
unless by their terms exclusive, shall be in addition to other agreements
between the parties. Time is of the essence of this Agreement.
4. Definitions. Unless the context indicates otherwise, definitions in the UCC
apply to words and phrases in this Agreement; if a conflict exists between UCC
definitions and words and phrases herein, UCC definitions shall apply.
5. Notice. Except as otherwise provided in this Agreement, any notices of
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given (i) the day it is personally delivered, if delivered
by hand or expedited delivery service, or (ii) five days after it is mailed, if
sent by certified or registered mail.
-7-
<PAGE>
7. Modifications. No provision hereof shall be modified or limited except by a
written agreement expressly referring hereto and to the provisions so modified
or limited and signed by Pledgor and Bank. The provisions of this Agreement
shall not be modified or limited by course of conduct or usage of trade.
8. Partial Invalidity. The unenforceability or invalidity of any provision of
this Agreement shall not affect the enforceability or validity of any other
provision herein and the invalidity or unenforceability of any provision of any
loan document to any person or circumstance shall not affect the enforceability
or validity of such provision as it may apply to other persons or circumstances.
9. Gender and Number. Where appropriate, the use of one gender shall be
construed to include the others or any of them; and the singular number shall be
construed to include the plural, and vice versa.
10. Applicable Law and Venue. This Agreement has been delivered in the State of
Texas and shall be construed in accordance with the laws of the State of Texas
(except for its conflict of laws principles). It is performable by Pledgor in
the county or city of Bank's address set out above and Pledgor expressly waives
any objection as to venue in any such location. Wherever possible each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
11. Financing Statement. To the extent permitted by applicable law, a carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral shall be sufficient as a financing statement.
12. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be considered to be an original, but all of which shall
constitute one and the same instrument. As used herein "this Agreement" shall
include all attachments and addenda.
13. BINDING ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF DALLAS,
-------------
TEXAS AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION;
FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO
EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
-8-
<PAGE>
B. RESERVATIONS OF RIGHTS NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (I)
----------------------
LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER
BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK
HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF OR THE APPOINTMENT OF A
RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. AT BANK'S OPTION, FORECLOSURE UNDER A DEED OF TRUST OR MORTGAGE
MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING: THE EXERCISE OF A POWER OF SALE
UNDER THE DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL SALE UNDER THE DEED OF
TRUST OR MORTGAGE, OR BY JUDICIAL FORECLOSURE. NEITHER THIS EXERCISE OF SELF
HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER
OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
14. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
BANK/SECURED PARTY: PLEDGOR:
NationsBank of Texas, N.A. ----------------------------
- -------------------
By: By:
------------------------------------ --------------------------------
Marta O. Engram ---------------------
Vice President, Private Banking ---------------------
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<PAGE>
SCHEDULE I
PLEDGE CERTIFICATE
Reference is hereby made to that certain Pledge Agreement dated as of
November 22, 1994 ("Pledge Agreement"), between ________________________________
("Pledgor"), and NationsBank of Texas, N.A., a national banking association
("Bank"). This Pledge Certificate is delivered pursuant to Paragraph B of the
Pledge Agreement. All capitalized terms used and not otherwise defined herein
shall have their respective meanings as set forth in the Pledge Agreement.
Pledgor hereby certifies that concurrently with the delivery of this
Pledge Certificate,
[_] Pledgor is delivering to Bank the following items of Collateral as
additional Collateral for the Obligation (collectively, the "Additional
Collateral"):
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
[_] Pledgor is selling or otherwise disposing of the following items
of Collateral:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
and Pledgor is delivering to Bank the following items of Collateral being
substituted therefor:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(collectively, the "Substituted Collateral").
Pledgor hereby acknowledges that Pledgor has granted to Bank a security
interest in the Additional Collateral and/or Substituted Collateral pursuant to
the Pledge Agreement to secure the Obligation and that the Collateral covered by
the Pledge Agreement includes, without limitation, the Substituted Collateral
and Additional Collateral. Pledgor hereby represents and warrants that all of
the representations and warranties contained in the Pledge Agreement are true
and correct, including with respect to the Additional Collateral and Substituted
Collateral, on the date hereof as though made as of the date hereof.
EXECUTED this _____ day of ______________________, 19___.
-----------------------------------
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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<PAGE>
Exhibit 4
---------
FORM OF
COLLATERAL MAINTENANCE AGREEMENT
--------------------------------
This Collateral Maintenance Agreement (this "Agreement") is made and
entered into effective November 22, 1994, by and between _____________________
("Pledgor") whose address is 8080 North Central Expressway, Suite 1300, Dallas,
Texas 75206, and NATIONSBANK OF TEXAS, N.A., a national banking association
("Bank"), whose address is 901 Main Street, 19th Floor, Dallas, Texas 75202.
W I T N E S S E T H:
-------------------
WHEREAS, Pledgor has requested that Bank make a loan to it in the
maximum principal amount of ____________________________________________ Dollars
($__________) (the "Loan") to be evidenced by a promissory note dated November
22, 1994 (as hereafter modified, renewed or extended, the "Note") and in
accordance with the terms of that certain Loan Agreement of even date herewith
between Pledgor and Bank (the "Loan Agreement"); and
WHEREAS, as a condition to the making of the Loan, Bank has required
Pledgor's promise to collateralize the Loan at all times in accordance with this
Agreement; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Pledgor hereby agree as follows:
1. Loan. The Loan shall be evidenced by and subject to the terms,
----
conditions and covenants of the Loan Agreement, the Note, the Pledge Agreement
(as defined herein), this Agreement and all other documents now or hereafter
securing, guaranteeing or otherwise pertaining to the Loan, as renewed,
extended, amended or supplemented from time to time (collectively, the "Loan
Documents"), and shall be due and payable to Bank as provided therein. Pledgor
agrees that the Collateral Value (as defined herein) shall equal or exceed 200%
of the initial advance or any subsequent advance under the Loan.
2. Security for the Loan. To secure payment and satisfaction of the
---------------------
Loan, and all renewals, extensions or rearrangements thereof, Pledgor has
executed and delivered to Bank, contemporaneously with the execution of this
Agreement, a Pledge Agreement of even date herewith (the "Pledge Agreement")
pursuant to which Bank is granted a valid, perfected and enforceable first
priority security interest in the securities identified in the Pledge Agreement
(the "Collateral").
Pledgor agrees to execute any and all amendments or supplements to the
Pledge Agreement and other Loan Documents and to take other actions which Bank
deems reasonably necessary to evidence, perfect, or protect its security
interest in any Collateral concurrently herewith or hereafter pledged to secure
the Loan and to comply with all applicable laws, including without limitation,
Regulation U of the Board of Governors of the Federal Reserve System. Pledgor
also agrees to immediately deliver or cause to be delivered to Bank all
Collateral pledged or to be pledged to Bank and such stock powers as are
requested by Bank.
3. Maintenance of Collateral. Pledgor agrees at all times during the
-------------------------
term of the Loan, and any renewals, extensions or rearrangements thereof, to
maintain Collateral securing the Loan such that the Collateral Value will at all
times equal or exceed 150% of outstanding principal balance of the Loan (the
"Loan Balance").
4. Value of Collateral. For the purposes of this Agreement, the
-------------------
"Collateral Value" shall be determined at any given time by multiplying the per
share price of such stock at the most recent close of trading on a trading
exchange for such stock times (ii) the number of shares of such stock held by
-----
Bank as Collateral.
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<PAGE>
In the event that stock held as Collateral is not traded on an exchange, the
Collateral Value of such stock shall be determined by obtaining a quote of value
of such stock from a reputable brokerage firm selected by Bank.
5. Events of Default. Pledgor and Bank understand and agree that if at any
-----------------
time the Collateral Value is less than 150% of the Loan Balance, Bank shall
notify Pledgor of such occurrence and Pledgor shall have five (5) business days
to either: (i) pledge additional Collateral satisfactory to Bank, in Bank's sole
opinion, such that the ratio of the Collateral Value to the Loan Balance equals
or exceeds 166% or (ii) reduce the Loan Balance by an amount such that the ratio
of the Collateral Value to the Loan Balance equals or exceeds 166%. Any such
reduction in the Loan Balance shall not affect or reduce any future principal
payments due on the Loan except to the extent such reductions are applied
against Loan payments in accordance with the Loan Documents. In the event
Pledgor fails to pledge additional Collateral or reduce the Loan Balance within
said five (5) business day period so that the ratio of the Collateral Value to
the Loan Balance equals or exceeds 166%, such occurrence shall constitute an
event of default under the Loan Documents and at Bank's option, all obligations
of Bank to extend credit pursuant to the Note and the other Loan Documents shall
terminate, and notwithstanding any notice provisions in the Note or other Loan
Documents, at Bank's option, the principal and interest accrued on the Note
shall become due and payable without any presentment, acceleration, demand,
protest, notice of intent to accelerate, notice of acceleration, notice of
protest or notice of any kind, all of which are hereby expressly waived by
Pledgor. In addition to any other remedies that may be available to Bank, upon
an event of default as described herein, Bank may, and Pledgor hereby authorizes
Bank to, sell all or any part of the Collateral and to apply the proceeds of
such Collateral to payment of the principal, interest and any other costs or
expenses due on the Loan. Pledgor specifically understands and agrees that any
such sales by Bank of all or part of the Collateral pursuant to the terms of
this Agreement may be effected by Bank at times and in manners which could
result in the proceeds of such sales being significantly and materially less
than might have been received if such sales had occurred at different times or
in different manners, and Pledgor hereby indemnifies Bank from and against any
and all obligations and liabilities arising out of or related to the timing or
manner of any such sales.
Unless Pledgor has no liability therefor otherwise than under this Agreement,
Pledgor shall be liable to Bank for any deficiency that exists on the Loan if
the application of such proceeds does not satisfy the principal, interest and
other costs and expenses due on the Loan in full, and any proceeds in excess of
the principal, interest and other costs and expenses due on the Loan (if any)
shall be delivered by Bank to the person or persons legally entitled to it. To
the extent necessary to enable Bank to sell the Collateral or any part thereof,
Pledgor hereby grants Bank a power of attorney and designates Bank as Pledgor's
attorney-in-fact to sell the Collateral and apply the proceeds as herein
provided. This power of attorney is coupled with an interest, is irrevocable,
and shall not terminate upon the disability of Pledgor. Bank may waive any
default without waiving any other prior or subsequent default.
6. Sale or Substitution of Collateral. Subject to the provisions of
----------------------------------
paragraph 3 above, Bank and Pledgor understand and agree that at any time
Pledgor is not in default on the Note, Pledge Agreement or other Loan Documents,
Pledgor may sell or substitute any or all of the Collateral, provided that the
entirety of the net proceeds (i.e., one hundred percent (100%) of the proceeds
net of any brokerage firm sales commission) of any sale of any Collateral shall
be delivered to Bank to be applied by Bank first to the payment of any unpaid
interest then accrued on the Loan and then to principal of the Loan, or if a
substitution of Collateral, that new Collateral shall be acceptable to Bank in
its sole discretion and the ratio of the Collateral Value to the Loan Balance
shall be as determined by Bank in its sole discretion. Notwithstanding anything
in this paragraph to the contrary, any sales or substitutions of Collateral
shall comply with Regulation U of the Board of Governors of the Federal Reserve
System.
7. Term of Agreement. This Agreement shall remain in full force and effect
-----------------
until the Loan, including all renewals, extensions and rearrangements thereof,
has been paid in full.
8. Entire Agreement. This Agreement, the Note and the other Loan Documents
----------------
constitute the entire agreement, understanding, representations and warranties
of the parties hereto and supersede all prior
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<PAGE>
agreements, arrangements and understandings between the parties. Should a
conflict in any terms, conditions or covenants exist between this Agreement and
any other document, this Agreement shall be controlling.
9. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas (without regard to its conflicts
of law provisions) and federal laws governing national banking associations.
10. Controlling Agreement. The parties intend to comply with applicable
---------------------
usury laws. All existing and future agreements regarding the debt evidenced by
the Note are hereby limited and controlled by the provisions of this paragraph.
In no event (including but not limited to prepayment, default, demand for
payment, or acceleration) shall the interest taken, reserved, contracted for,
charged or received under the Note or other Loan Documents or otherwise exceed
the Maximum Amount. If from any possible construction of any document, interest
would otherwise be payable in excess of the Maximum Amount, such document shall
be automatically reformed and the interest payable automatically reduced to the
Maximum Amount, without necessity of execution of any amendment or new document.
If Bank ever receives interest in an amount which apart from this provision
would exceed the Maximum Amount, the excess shall, without penalty, be applied
to principal of the Note in inverse order of maturity of installments or be
refunded to the payor if the Note is paid in full. Bank does not intend to
charge or receive unearned interest on acceleration. All interest paid or agreed
to be paid shall be spread throughout the full term (including extensions) of
the debt so that the amount of interest does not exceed the Maximum Amount. For
purposes of this paragraph "Maximum Amount" shall mean the maximum nonusurious
amount of interest permitted by whichever of applicable United States federal
law or Texas law permits the higher interest rate, including to the extent
permitted by applicable law, any amendments thereof hereafter or any new law
hereafter coming into effect to the extent a higher maximum rate is permitted
thereby.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
BANK: PLEDGOR:
NATIONSBANK OF TEXAS, N.A. ---------------------------
By: By:
----------------------------------- ------------------------
Marta O. Engram ---------------
Vice President, Private Banking
-3-
<PAGE>
Exhibit 5
---------
NationsBank
NationsBank of Texas, N.A. Continuing and Unconditional Guaranty
- --------------------------------------------------------------------------------
1. Guaranty. For Value Received, and to induce NationsBank of Texas, N.A.
(Banking Center) 901 Main Street, 19th Floor, Dallas, Texas 75202 (Attn: Marta
O. Engram) ("Bank"), to make loans or advances or to extend credit or other
financial accommodations or benefits, with or without security, to or for the
account of Maverick Entrepreneurs Fund, Ltd., a Texas limited partnership
("Borrower"), the undersigned (individually, a "Guarantor" and collectively,
"Guarantors") severally become surety for and irrevocably and unconditionally
guarantee to Bank the full and prompt payment when due, whether by acceleration
or otherwise, of any and all Liabilities (as defined herein) of Borrower to
Bank, together with reasonable attorney's fees, costs and expenses incurred by
Bank in enforcing any and all of such indebtedness. This Guaranty is continuing
but shall be limited as to the amount as provided herein.
Guarantors further unconditionally guarantee the faithful, prompt and complete
compliance by Borrower with all terms, conditions, covenants, agreements and
undertakings of Borrower (herein collectively referred to as the "Obligations")
under all notes and other documents evidencing the Liabilities and under all
deeds to secure debt, deeds of trust, mortgages, security agreements and other
agreements, documents and instruments executed in connection with the
Liabilities or related thereto (all such deeds to secure debt, deeds of trust,
mortgages, security agreements and other documents securing payment of the
Liabilities and all notes and other agreements, documents, and instruments
evidencing or relating to the Liabilities and Obligations being herein
collectively called the "Loan Documents"). The undertakings of Guarantors
hereunder are independent of the Liabilities and Obligations of Borrower and a
separate action or actions for payment, damages or performance may be brought or
prosecuted against any or all Guarantors, whether or not an action is brought
against Borrower or to realize upon the security for the Liabilities and/or
Obligations and whether or not Borrower is joined in any such action or actions,
and whether or not notice is given or demand is made upon Borrower.
Bank shall not be required to proceed first against Borrower, or any other
person, firm or corporation, whether primarily or secondarily liable, or against
any Collateral held by it, or any other guarantor (including any other
Guarantor) before resorting to any Guarantor for payment, and no Guarantor or
any other guarantor (including any other Guarantor) shall be entitled to assert
as a defense to the enforceability of the Guaranty any defense of Borrower or
any other person with respect to any Liabilities or Obligations.
2. Paragraph Headings and Governing Law. Guarantors agree that the
paragraph headings in this Guaranty are for convenience only and that they will
not limit any of the provisions of this Guaranty. Guarantors further agree that
this Guaranty shall be governed by and construed in accordance with the laws of
the State of Texas and applicable United States federal law. Guarantors further
agree that this Guaranty shall be deemed to have been made in the State of Texas
at Bank's address indicated herein, and shall be governed by, and construed in
accordance with, the laws of the State of Texas, or the United States courts
located within the State of Texas, and is performable in Dallas County, Texas.
3. Definitions.
A. "Liability" or "Liabilities" as used herein shall include all
liabilities, overdrafts, indebtedness, and obligations of Borrower to Bank,
whether direct or indirect, absolute or contingent, joint or several, secured or
unsecured, due or not due, liquidated or unliquidated, arising by operation of
law or otherwise, now or hereafter existing, pursuant to that certain Loan
Agreement of even date herewith between Maverick Entrepreneurs Fund, Ltd. and
Bank and the indebtedness of Borrower thereunder, including but not limited to
all extensions or renewals thereof, and all sums payable under or by virtue
thereof, including without limitation, all amounts of principal and interest,
all expenses (including attorney's fees and cost of collection as specified)
incurred in the collection thereof or the enforcement of rights thereunder or in
enforcing this Guaranty (including without limitation, any liability arising
from failure to comply with state or federal laws, rules and regulations
concerning the control of hazardous wastes or substances at or with respect to
any real estate securing any loan guaranteed hereby), whether arising in the
ordinary course of business or otherwise, and whether held or to be held by Bank
for its own account or as agent for another or others. If Borrower is a
partnership, corporation or other entity
-1-
<PAGE>
the term "Liability" or "Liabilities" as used herein shall include all
Liabilities to Bank of any successor entity or entities.
B. "Guarantors" as used herein shall mean each Guarantor or any one or
more of them. Anyone executing this Guaranty shall be bound by the terms hereof
without regard to execution by anyone else. This Guaranty is binding upon each
Guarantor, his, their or its executors, administrators, successors or assigns,
and shall inure to the benefit of Bank, its successors, endorsees or assigns.
"Guarantor" as used in this instrument shall be construed as singular or plural
to correspond with the number of persons executing this instrument as Guarantor.
The pronouns used in this Agreement are in the masculine gender but shall be
construed as female or neuter as an occasion may require.
C. "Collateral" means the property subject to a security interest, and
includes accounts and chattel paper which have been sold, including but not
limited to all additions and accessions thereto, all replacements or substitutes
therefor, and all immediate and remote proceeds of the sale or other disposition
thereof.
4. Waivers by Guarantors. Each Guarantor waives notice of acceptance of this
Guaranty, notice of any Liability or Obligations to which it may apply, and
waives presentment, demand for payment, protest, notice of dishonor or
nonpayment of any Liabilities, waives notice of intent to accelerate, notice of
acceleration and notice of any suit or the taking of other action by Bank
against Borrower, any Guarantor or any other person and any other notice to any
party liable thereon (including any other Guarantor) and any applicable statute
of limitations.
Each Guarantor also hereby waives any claim, right or remedy which such
Guarantor may now have or hereafter acquire against Borrower that arises
hereunder and/or from the performance by any Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim, right
or remedy of Bank against Borrower or any security which Bank now has or
hereafter acquires, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise.
Each Guarantor hereby agrees to waive the benefits of any provision of law
requiring that Bank exhaust any right or remedy, or take any action, against
Borrower, any Guarantor, any other person and/or property including, without
limitation, to the extent permitted by applicable law, the provisions of the
Texas Civil Practice and Remedies Code ss.17.001, Texas Rules of Civil Procedure
Rule 31 and the Texas Business and Commerce Code ss.34.03, as amended, or
otherwise.
Bank may at any time and from time to time (whether before or after revocation
or termination of this Guaranty) without notice to Guarantors (except as
required by law), without incurring responsibility to Guarantors, without
impairing, releasing, or otherwise affecting the obligations of Guarantors, in
whole or in part, and without the endorsement or execution by any Guarantor of
any additional consent, waiver or guaranty: (a) change the manner, place or
terms of payment of the Liabilities and/or the Obligations; (b) change or extend
the time of or renew or alter, any Liability or Obligation or installment
thereof, or any security therefor; (c) loan additional monies or extend
additional credit to Borrower, with or without security, thereby creating new
Liabilities or Obligations the payment or performance of which shall be
guaranteed hereunder, and the Guaranty herein made shall apply to the
Liabilities and Obligations as so changed, extended, surrendered, realized upon
or otherwise altered; (d) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property at any time
pledged or mortgaged to secure the Liabilities or Obligations and any offset
there against; (e) exercise or refrain from exercising any rights against
Borrower or others (including any Guarantor) or act or refrain from acting in
any other manner; (f) settle or compromise any liability or obligation or any
security therefor and subordinate the payment of all or any part thereof to the
payment of any liability or obligation of any other parties primarily or
secondarily liable on any of the Liabilities or Obligations; (g) release or
compromise any liability of any Guarantor hereunder or any liability or
obligation of any other parties primarily or secondarily liable on any of the
Liabilities or Obligations; or (h) apply any sums from any sources to any
Liability or Obligation without regard to any Liabilities or Obligations
remaining unpaid.
-2-
<PAGE>
5. Subordination. Upon demand of Bank, each Guarantor agrees that it will not
demand, take or receive from Borrower, by set-off or in any other manner,
payment of any liabilities and/or obligations, now and at any time or times
hereafter owing by Borrower to such Guarantor unless and until all the
Liabilities shall have been fully paid and all the Obligations have been
performed, and any security interest, liens or encumbrances which such Guarantor
now has and from time to time hereafter may have upon any of the assets of
Borrower shall be made subordinate, junior and inferior and postponed in
priority, operation and effect to any security interest of Bank in such assets.
6. Waivers by Bank. No delay on the part of Bank in exercising any of its
options, powers or rights, or any partial or single exercise thereof, shall
constitute a waiver thereof. No waiver of any of its rights hereunder, and no
modification or amendment of this Guaranty, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; and each
such waiver, if any, shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of Bank or the obligations of
any such Guarantor to Bank in any other respect at any other time.
7. Termination. This Guaranty shall continue until written notice of revocation
signed by each respective Guarantor or until written notice of the death of such
Guarantor shall actually have been received by Bank, notwithstanding change in
name, location, composition or structure of, or the dissolution, termination or
increase, decrease or change in personnel, owners or partners of Borrower, or
any one or more of Guarantors, provided, however, that no notice of revocation
or termination hereof shall affect in any manner rights arising under this
Guaranty with respect to Liabilities or Obligations that shall have been
created, contracted, assumed or incurred prior to receipt of such written notice
pursuant to any agreement entered into by Bank prior to receipt of such notice,
and the sole effect of such notice of revocation or termination hereof shall be
to exclude from this Guaranty Liabilities or Obligations thereafter arising that
are unconnected with Liabilities or Obligations theretofore arising or
transactions entered into theretofore.
In the event of the death of a Guarantor, the liabilities of the estate of the
deceased Guarantor shall continue in full force and effect as to (i) the
Liabilities existing at the date of death, and any renewals or extensions
thereof, and (ii) loans or advances made to or for the account of Borrower after
the date of death of the deceased Guarantor pursuant to the liabilities of Bank
under a commitment made to Borrower prior to the date of such death. As to all
surviving Guarantors, this Guaranty shall continue in full force and effect
after the death of a Guarantor, not only as to the Liabilities existing at that
time, but also as to Liabilities thereafter incurred by Borrower to Bank.
This Guaranty shall automatically terminate when all Liabilities have been paid
in full and Bank has no further obligation to advance funds to Borrower under
the Loan Documents.
8. Partial Invalidity and/or Enforceability of Guaranty. The unenforceability or
invalidity of any provision of this Guaranty shall not affect the enforceability
or validity of any other provision herein and the invalidity or unenforceability
of any provision of any Loan Document as it may apply to any person or
circumstance shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.
In the event Bank is required to relinquish or return the payments, the
Collateral or the proceeds thereof, in whole or in part, which had been
previously applied to or retained for application against any Liability or
Obligation, by reason of a proceeding arising under the Bankruptcy Code, or for
any other reason, this Guaranty shall automatically continue to be effective
notwithstanding any previous cancellation or release effected by Bank.
9. Obligations of Guarantors. In the event that Borrower fails to perform any of
the Obligations or pay any of the Liabilities, Guarantors shall upon demand by
Bank, promptly and with due diligence pay all Liabilities and perform and
satisfy for the benefit of Bank all Obligations.
No Guarantor will, without the prior written consent of Bank, become a party to
a merger or consolidation with any other company, except where such Guarantor is
the surviving corporation or entity, and all covenants under this Guaranty are
assumed by the surviving corporation. Further, no Guarantor may change the
status of or type
-3-
<PAGE>
of entity that Guaranty is, without the written consent of Bank and all
covenants under this Guaranty are assumed by the new or surviving entity. Each
Guarantor further agrees that this Guaranty shall be binding, legal and
enforceable against such Guarantor in the event Borrower changes its name,
status or type of entity.
10. Financial and Other Information. Guarantors agree to furnish to Bank any and
all financial information and any other information regarding Guarantors and/or
Collateral requested in writing by Bank within ten (10) days of the date of the
request. Each Guarantor has made an independent investigation of the financial
condition and affairs of Borrower prior to entering into this Guaranty, and each
Guarantor has made and will continue to make an independent appraisal of the
creditworthiness of Borrower; and in entering into this Guaranty, no Guarantor
has relied upon any representation of Bank as to the financial condition,
operation or creditworthiness of Borrower. Guarantors further agree that Bank
shall have no duty or responsibility now or hereafter to make any investigation
or appraisal of Borrower on behalf of such Guarantor or to provide Guarantor
with any credit or other information which may come to its attention now or
hereafter.
11. Notices. All notices required or permitted to be given herein shall be sent
by registered or certified mail, return receipt requested, to the Bank at the
address shown in the preamble to this Guaranty and to Guarantors at 8080 North
Central Expressway, Suite 1300, Dallas, Texas 75206 or such other address
provided to Bank by like notice. The parties agree that the notice shall be
considered received five (5) days after being placed in the United States mail.
12. Events of Default. The following are events of default hereunder: (a) the
failure to pay or perform any Obligation or Liability of any Guarantor to Bank,
or to any affiliate of Bank, whether under this Guaranty or any other agreement,
note or instrument now or hereafter existing which relates to the Liabilities,
as and when due (whether upon demand, at maturity or by acceleration); (b) the
failure to pay or perform any other obligation, liability or indebtedness of any
Guarantor as and when due, which results in the acceleration thereof, whether to
Bank or some other party, the Collateral for which constitutes an encumbrance on
the Collateral for this Guaranty; (c) death of a Guarantor (if an individual),
revocation or termination (if a trust) without prior consent of Bank, or a
proceeding being filed or commenced against any Guarantor for dissolution or
liquidation, or any Guarantor voluntarily or involuntarily terminating or
dissolving or being terminated or dissolved; (d) the insolvency of, the
appointment of a custodian, trustee, liquidator or receiver for or for any of
the property of, or an assignment for the benefit of creditors by, or the filing
of a petition under any bankruptcy, insolvency or debtor's relief law or for any
adjustment of indebtedness, composition or extension by or against any
Guarantor; (e) any lien or additional security interest being placed upon any of
the Collateral which is security for this Guaranty; (f) acquisition at any time
or from time to time of title to the whole of or any part of the Collateral
which is security for this Guaranty by any person, partnership, corporation or
other entity; (g) Bank determining that any representation or warranty made by
any Guarantor to Bank is, or was, untrue or materially misleading; (h) failure
of any Guarantor to timely deliver such financial statements and other
statements of condition; (i) any default under any Loan Documents; (j) entry of
a judgment against any Guarantor which Bank deems to be of a material nature, in
Bank's sole discretion; (k) the seizure or forfeiture of, or the issuance of any
writ of possession, garnishment or attachment, or any turnover order for any
property of any Guarantor; (l) termination of Guaranty by a Guarantor; or (m)
the inability of any Guarantor to pay debts as they mature whether owing to Bank
or any other party.
13. Remedies. Upon the occurrence of any event of default hereunder, Bank shall
have all of the remedies of a creditor and, to the extent applicable, of a
secured party, under all applicable law, and without limiting the generality of
the foregoing, Bank may, at its option and without notice or demand: (a) declare
any Liability accelerated and due and payable at once; and (b) take possession
of any Collateral wherever located, and sell, resell, assign, transfer and
deliver all or any part of said Collateral of any Guarantor at any public or
private sale or otherwise dispose of any or all of the Collateral in its then
condition, for cash or on credit or for future delivery, and in connection
therewith Bank may impose reasonable conditions upon any such sale. Bank, unless
prohibited by law the provisions of which cannot be waived, may purchase all or
any part of said Collateral to be sold, free from and discharged of all trusts,
claims, rights or redemption and equities of Borrower or Guarantors whatsoever;
Guarantors acknowledge and agree that the sale of any Collateral through any
nationally recognized broker-dealer, investment banker or any other method
common in the securities industry shall be
-4-
<PAGE>
deemed a commercially reasonable sale under the Uniform Commercial Code or any
other equivalent statute or federal law, and expressly waives notice thereof
except as provided herein; and (c) set-off against any or all liabilities of any
Guarantor all money owed by Bank in any capacity to such Guarantor whether or
not due, and also set-off against all other liabilities of Borrower to Bank all
money owed by Bank in any capacity to Borrower or a Guarantor, and if exercised
by Bank, Bank shall be deemed to have exercised such right of set-off and to
have made a charge against any such money immediately upon the occurrence of
such default although made or entered on the books subsequent thereto.
14. Attorney Fees, Costs and Expenses. Guarantors shall pay all costs of
collection and reasonable attorney's fees, including fees in connection with any
suit, mediation or arbitration proceeding, out of court payment agreement,
trial, appeal, bankruptcy proceedings or otherwise, incurred or paid by Bank in
enforcing the payment of any Liability or enforcing or preserving any right or
interest of Bank hereunder, including the collection, preservation, sale or
delivery of any Collateral from time to time pledged to Bank, and after
deducting such fees, costs and expenses from the proceeds of sale or collection,
Bank may apply any residue to pay any of the Liabilities and Guarantors shall
continue to be liable for any deficiency with interest at the rate specified in
any instrument evidencing the Liability or, at the Bank's option, equal to the
highest lawful rate, which shall remain a liability.
15. Preservation of Property. Bank shall not be bound to take any steps
necessary to preserve any rights in any of the property of Guarantors pledged to
Bank to secure Guarantors' obligations against prior parties who may be liable
in connection therewith, and Guarantors hereby agree to take any such steps.
Bank, nevertheless, at any time, may (a) take any action it deems appropriate
for the care or preservation of such property or of any rights of Guarantors or
Bank therein, (b) demand, sue for, collect or receive any money or property at
any time due, payable or receivable on account of or in exchange for any
property of Guarantors, (c) compromise and settle with any person liable on such
property, or (d) extend the time of payment or otherwise change the terms of the
Loan Documents as to any party liable on the Loan Documents, all without notice
to, without incurring responsibility to, and without affecting any of the
obligations or liabilities of Guarantors.
16. Collateral. Bank at all times and from time to time shall have the right to
require Guarantors to deliver to Bank Collateral satisfactory to Bank to secure
Guarantors' undertakings hereunder and/or the liabilities of Guarantors
hereunder.
Bank is granted a contractual right of set-off and will not be liable for
dishonoring checks or withdrawals where the exercise of Bank's contractual right
of set-off results in insufficient funds in any Guarantor's account. As
authorized by law, each Guarantor grants to Bank this contractual right of
set-off in all deposits of such Guarantor now or at anytime hereafter in the
possession of Bank, including but not limited to any joint account, special
account, account by the entireties, tenancy in common, and all dividends and
distributions now or hereafter in the possession or control of Bank.
|_| Check if applicable. In addition to the provisions stated above, Guarantor
hereby pledges, assigns and grants to Bank a security interest in and title to
the Collateral described in the security agreement, deed of trust, deed to
secure debt, mortgage or other Collateral instrument dated _____________, 19__
which Collateral, except for any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System), shall secure this Guaranty,
whether currently existing or arising in the future. Guarantor agrees to execute
such security agreements, financing statements and other documents as Bank may
reasonably require or request to obtain and perfect its security interest in
said Collateral.
17. Limitation on Liability. Each Guarantor's liability hereunder shall be
limited to (i) the amount set forth next to such Guarantor's name on Schedule I
attached hereto, which represents a percentage of the total loan commitment
under the Loan Documents, plus (ii) accrued interest thereon as provided in the
Loan Documents, and (iii) fees and expenses owing under the Loan Documents. The
liability of each such Guarantor under this Guaranty shall not be reduced by any
payments on the Liabilities except payments which reduce the principal balance
of the loan and the total loan commitment to an amount less than the amount set
forth on Schedule I.
-5-
<PAGE>
Further, the liability on any Guarantor hereunder shall not be reduced by any
amounts credited against the Liabilities on account of the purchase price paid
upon the sale (whether at a foreclosure sale or otherwise) of property pledged
or in which a security interest has been granted to Bank pursuant to any
security agreement as part of the Loan Documents, except to the extent that the
amounts credited against the Liabilities as a result of such sale reduce the
principal balance of the loan and the total loan commitment to an amount less
than the amount set forth on Schedule I.
18. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS GUARANTY
OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR
ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
GUARANTY MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS GUARANTY APPLIES IN
ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN DALLAS, TEXAS
-------------
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL
ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS GUARANTY SHALL BE DEEMED TO (i)
---------------------
LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR
REPOSE AND ANY WAIVERS CONTAINED IN THIS GUARANTY; OR (ii) BE A WAIVER BY THE
BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. ss. 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (iii) LIMIT THE RIGHT OF THE BANK HERETO (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. BANK MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS GUARANTY. AT BANK'S OPTION,
FORECLOSURE UNDER A DEED OF TRUST OR MORTGAGE MAY BE ACCOMPLISHED BY ANY OF THE
FOLLOWING: THE EXERCISE OF A POWER OF SALE UNDER THE DEED OF TRUST OR MORTGAGE,
OR BY JUDICIAL SALE UNDER THE DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL
FORECLOSURE. NEITHER THIS EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
19. NOTICE OF FINAL AGREEMENT. THIS WRITTEN CONTINUING AND UNCONDITIONAL
GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
-6-
<PAGE>
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
executed as of November 22, 1994.
BANK: GUARANTORS:
NationsBank of Texas, N.A. Tallulah, Ltd.
By: /s/ Marta O. Engram By: /s/ Sam Wyly
--------------------------------------- -------------------------------
Marta O. Engram Sam Wyly
Vice President, Private Banking General Partner
Brush Creek, Ltd.
By: /s/ Charles J. Wyly, Jr.
-------------------------------
Charles J. Wyly, Jr.
General Partner
Laurie L. Wyly Revocable Trust
By: /s/ Sam Wyly
-------------------------------
Sam Wyly, Trustee
Lisa Wyly Revocable Trust
By: /s/ Sam Wyly
-------------------------------
Sam Wyly, Trustee
Kelly Wyly Elliot Trust
By: /s/ Sam Wyly
-------------------------------
Sam Wyly, Trustee
Andrew David Sparrow Wyly Trust
By: /s/ Sam Wyly
-------------------------------
Sam Wyly, Trustee
-8-
<PAGE>
Christiana Parker Wyly Trust
By: /s/ Sam Wyly
-----------------------------------------
Sam Wyly, Trustee
Charles Joseph Wyly, III Trust
By: /s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr., Trustee
Martha Caroline Wyly Trust
By: /s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr., Trustee
Emily Ann Wyly Trust
By: /s/ Charles J. Wyly Jr.
-----------------------------------------
Charles J. Wyly, Jr., Trustee
Jennifer Lynn Wyly Trust
By: /s/ Charles J. Wyly
-----------------------------------------
Charles J. Wyly, Trustee
/s/ Sam Wyly
-----------------------------------------
Sam Wyly
/s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr.
/s/ Evan Wyly
-----------------------------------------
Evan Wyly
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<PAGE>
SCHEDULE I
Guarantor Maximum Liability
- --------- -----------------
Tallulah, Ltd. $
Brush Creek, Ltd.
Evan Wyly
Charles J. Wyly
Sam Wyly
Laurie L. Wyly Revocable Trust
Lisa Wyly Revocable Trust
Kelly Wyly Elliot Trust
Andrew David Sparrow Wyly Trust
Christiana Parker Wyly Trust
Martha Caroline Wyly Trust
Charles Joseph Wyly, III Trust
Emily Ann Wyly Trust
Jennifer Lynn Wyly Trust
-10-
<PAGE>
Exhibit 6
---------
U.S. $____________
REVOLVING CREDIT FACILITY
FORM OF CREDIT AGREEMENT
dated as of December 16, 1994
between
--------------,
as the Borrower,
and
CITIBANK, N.A.,
as the Bank
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms..........................................1
Advance..................................................................1
Agreement................................................................1
Base Rate................................................................1
Base Rate Advance........................................................2
Business Day.............................................................2
Cash and Cash Equivalents................................................2
Collateral...............................................................3
Collateral Account.......................................................3
Commitment...............................................................3
Confidential Information.................................................3
Continuation", "Continue", and "Continued................................3
Control Person Statement.................................................3
"Convert," "Conversion" and "Converted"..................................3
Eurodollar Rate..........................................................3
Eurodollar Rate Advance..................................................4
Event of Default.........................................................4
General Partner..........................................................4
Guarantor................................................................4
Guaranty Agreement.......................................................4
Hedge Agreement..........................................................4
Interest Period..........................................................4
LIBO Rate................................................................4
Loan Document............................................................4
Market Rate..............................................................4
Maverick.................................................................4
Michaels.................................................................5
Note.....................................................................5
Other Taxes..............................................................5
Partnership Agreement....................................................5
Partnership Certificate..................................................5
Person...................................................................5
Pledge Agreement.........................................................5
Pledged Collateral.......................................................5
Pledged Shares...........................................................5
Readily Marketable Securities............................................5
Rule 144.................................................................6
Sterling.................................................................6
Subsidiary...............................................................6
Taxes....................................................................7
Termination Date.........................................................7
Type.....................................................................7
SECTION 1.02. Accounting Terms...............................................7
SECTION 1.03. Articles, Sections, Etc........................................7
SECTION 1.04. Computation of Time Periods....................................7
(i)
<PAGE>
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.01. The Advances....................................................7
SECTION 2.02. Making the Advances.............................................7
SECTION 2.03. Responsibility for Requests for Advances........................8
SECTION 2.04. Facility Fees...................................................9
SECTION 2.05. Reduction and Termination of the Commitment.....................9
SECTION 2.06. Repayment.......................................................9
SECTION 2.07. Interest........................................................9
(a) Ordinary Interest.................................................9
(i) Eurodollar Rate Advances............................9
(ii) Base Rate Advances................................10
(b) Default Interest.................................................10
(c) Interest Periods.................................................10
SECTION 2.08. Optional Prepayments...........................................11
(a) Base Rate Advances...............................................11
(b) Eurodollar Rate Advances.........................................11
SECTION 2.09. Certain Mandatory Prepayments..................................11
SECTION 2.10. Increased Costs................................................11
SECTION 2.11. Additional Interest............................................12
SECTION 2.12. Increased Capital..............................................12
SECTION 2.13. Voluntary Continuation of Advances.............................12
SECTION 2.14. Illegality, Etc................................................13
SECTION 2.15. Payments and Computations......................................14
SECTION 2.16. Taxes..........................................................14
SECTION 2.17. Hedge Agreements...............................................15
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Initial Advance.........................16
SECTION 3.02. Conditions Precedent to All Advances...........................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.................19
ARTICLE V
CERTAIN COVENANTS OF THE BORROWER
SECTION 5.01. Certain Affirmative Covenants..................................20
(a) Use of Advances..................................................20
(b) Compliance with Laws, Etc........................................20
(c) Payment of Taxes, Etc............................................20
(d) Reporting Requirements...........................................21
SECTION 5.02. Certain Negative Covenants.....................................22
(a) Liens, Etc.......................................................22
(ii)
<PAGE>
ARTICLE VI
CERTAIN OTHER COVENANTS
SECTION 6.01. Collateral to Loan Coverage....................................23
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default..............................................25
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc................................................27
SECTION 8.02. Notices, Etc...................................................27
SECTION 8.03. No Waiver; Remedies............................................27
SECTION 8.04. Costs, Expenses and Taxes......................................28
SECTION 8.05. Right of Set-Off...............................................28
SECTION 8.06. Binding Effect.................................................28
SECTION 8.07. Counterparts...................................................30
SECTION 8.08. Interest.......................................................30
SECTION 8.09. Governing Law; Consent to Jurisdiction.........................30
SECTION 8.10. WAIVER OF JURY TRIAL...........................................31
Exhibit A - Promissory Note
Exhibit B - Pledge Agreement
Exhibit C -
Form of Legal Opinion of Jackson & Walker, L.L.P., Counsel for
the Borrower
(iii)
<PAGE>
FORM OF CREDIT AGREEMENT
Dated as of December 16, 1994
______________, a _________________________ (the "Borrower"), acting
through its , and CITIBANK, N.A., a national banking association (the "Bank"),
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Credit Agreement
---------------------
(this "Agreement"), the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Advance" means an advance by the Bank to the Borrower
pursuant to Article II.
"Agreement" means this Credit Agreement, as the same may from
time to time be amended or supplemented.
"Base Rate" means, for any Interest Period or any other
period, a fluctuating interest rate per annum as shall be in effect from time to
time, which rate per annum shall at all times be equal to:
(a) the rate of interest announced publicly by the Bank
in New York, New York, from time to time, as the Bank's base
rate; or
(b) if the rate referred to in clause (a) above is unavailable
for any reason, then "Base Rate" shall mean a fluctuating interest rate
per annum equal to the sum (adjusted to the nearest 1/4 of one percent
or, if there is no nearest 1/4 of one percent, to the next higher 1/4
of one percent) of (i) 1/2 of one percent per annum, plus (ii) the rate
per annum obtained by dividing (A) the latest three-week moving average
of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly on each
Monday (or, if any such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by the Bank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated on the basis of quotations for such rates received by the
Bank from three New York certificate of deposit dealers of recognized
standing selected by Citibank, N.A., by (B) a percentage equal to 100%
minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental
or
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<PAGE>
other marginal reserve requirement) for the Bank in respect of
liabilities consisting of or including (among other liabilities)
three-month U.S. dollar nonpersonal time deposits each at least
$100,000, plus (iii) the average during such three-week period of the
----
daily net annual assessment rates estimated by the Bank for determining
the then current annual assessment payable by the Bank to the Federal
Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank, N.A. in the United States.
"Base Rate Advance" means an Advance which bears interest as
provided in Section 2.07 (a)(ii).
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City or Dallas, Texas, and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Cash and Cash Equivalents" means the aggregate amount of the
following, to the extent owned by the Borrower free and clear of all liens,
security interests, charges, encumbrances and rights of others: (a) cash on
hand; (b) United States dollar demand deposits maintained in the United States
with any commercial bank and United States dollar time deposits maintained in
the United States with, or certificates of deposit having a maturity of one year
or less issued by, any commercial bank which has its head office in the United
States and which has a combined capital and surplus of at least $100,000,000.00;
(c) direct obligations of, or obligations unconditionally guaranteed by, the
United States and having a maturity of one year or less; (d) readily marketable
commercial paper having a maturity of one year or less, issued by any
corporation organized and existing under the laws of the United States or any
state thereof or the District of Columbia and rated by Standard & Poor's
Corporation or Moody's Investors Service, Inc. (or, if neither such organization
shall rate such commercial paper at any time, rated by any nationally recognized
rating organization in the United States) with the highest rating assigned by
such organization; (e) repurchase agreements which (i) are callable at any time
or have a maturity date of one year or less, (ii) are entered into with any
commercial bank that has its head office in the United States and has a combined
capital and surplus of at least $100,000,000.00 and (iii) are secured by direct
obligations of, or obligations unconditionally guaranteed by, the United States
and having a maturity of one year or less; (f) mutual funds that invest
exclusively in direct obligations of, or obligations unconditionally guaranteed
by, the United States and having a maturity of one year or less; and (g) such
other short-term investments as shall be acceptable to the Bank from time to
time in its sole discretion.
"Collateral" means, collectively, (a) the Pledged Collateral,
(b) all additional shares of stock of any issuer of any of the Pledged Shares,
or any successor to any such issuer, from
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<PAGE>
time to time acquired by the Borrower and pledged and delivered by the Borrower
to the Bank pursuant to Section 6.01, and all certificates representing such
additional shares and all dividends (including, but not limited to, stock
dividends), cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional shares for any reason, including, but not limited to, any
change in the number or kind of outstanding shares of any securities of any
issuer of any of the Pledged Shares, or any successor to any such issuer, by
reason of any recapitalization, merger, consolidation, reorganization,
separation, liquidation, stock split, stock dividend, combination of shares or
other similar corporate event, (c) all cash from time to time pledged and
delivered by the Borrower to the Bank for deposit in any one or more of the
Collateral Accounts pursuant to Section 6.01, and (d) all proceeds of any and
all of the properties described in clauses (a), (b) and (c) of this definition.
"Collateral Account" has the meaning assigned to that
term in the Pledge Agreement.
"Commitment" has the meaning assigned to that term in
Section 2.01.
"Confidential Information" means the information furnished to
the Bank by the Borrower pursuant to clause (i) of Section 5.01(d) and any other
information that is furnished to the Bank by the Borrower and is clearly
identified by the Borrower to the Bank in writing as confidential information.
"Continuation", "Continue", and "Continued" each refer to a
continuation of a Eurodollar Rate Advance pursuant to Section 2.14.
"Control Person Statement" means the Control Person Statement,
dated as of a December 16, 1994, furnished by or on behalf of the Borrower to
the Bank.
"Convert," "Conversion" and "Converted" each refers to a
conversion of an Advance of one Type into an Advance of another Type pursuant to
Section 2.14.
"Dollars" and "$" means lawful money of the United States
of America.
"Eurodollar Rate" means, for any Interest Period for any
Advance, an interest rate per annum equal to the sum of the LIBO Rate for such
Interest Period plus one percent (1.00%) per annum.
"Eurodollar Rate Advance" means an Advance which bears
interest as provided in Section 2.07(a)(i).
"Event of Default" has the meaning assigned to that term
in Section 7.01.
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<PAGE>
"General Partner" means ________, not individually but as
general partner of the Borrower.
"Guarantor" means ______________, as an individual.
"Guaranty Agreement" means that certain Guaranty Agreement of
Guarantor of even date herewith, as the same may from time to time be amended or
supplemented.
"Hedge Agreement" means any equity derivative (including, but
not limited to, any equity swap, future or option agreement), any interest rate
swap, cap or collar agreement, any interest rate future or option contract, any
currency swap agreement, any currency future or option agreement, any future
commodity contract or option or any other similar agreement designed to hedge
against fluctuations in equity values, interest rates or foreign exchange rates.
"Interest Period" means, for each Eurodollar Rate Advance, the
period commencing on the date of such Advance or the date of the Conversion of
any Advance into such a Eurodollar Rate Advance and ending on the last day of
the period selected by the Borrower pursuant to the provisions of Section
2.07(c) and, thereafter, each subsequent period commencing on the day following
the last day of the immediately preceding Interest Period and ending on the last
day of the period selected by the Borrower pursuant to the provisions of Section
2.07(c).
"LIBO Rate" means, for any Interest Period for any Eurodollar
Rate Advance, an interest rate per annum equal to the rate of interest per annum
at which deposits in United States dollars are offered by the principal office
of the Bank in London, England, to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to such Advance and for a period equal
to such Interest Period.
"Loan Document" means any of this Agreement, the Note, the
Pledge Agreement, the Guaranty Agreement and any other pledge and security
agreements executed and delivered pursuant to Section 6.01, as the same may be
amended or otherwise modified from time to time.
"Market Rate" has the meaning assigned to that term in
Section 8.04(b).
"Maverick" means the current market value of partnership
interests in Maverick Fund.
"Michaels" means Michaels Stores, Inc., a corporation duly
formed and validly existing under the laws of the State of Delaware.
-4-
<PAGE>
"Note" means a promissory note of the Borrower payable to the
order of the Bank, in substantially the form of Exhibit A, evidencing the
aggregate indebtedness of the Borrower to the Bank resulting from the Advances
and delivered to the Bank pursuant to Article III, as the same may be amended,
extended, renewed or otherwise modified from time to time.
"Other Taxes" has the meaning assigned to that term in
Section 2.16(b).
"Partnership Agreement" means that certain Limited Partnership
Agreement entered into as of ___________, 1992, pursuant to which the Borrower
was formed, as such "Partnership Agreement" may be from time to time amended,
restated or modified.
"Partnership Certificate" has the meaning assigned such
term in Section 3.01(j).
"Person" means an individual, a partnership (including a
general partnership, a limited partnership and a limited liability partnership),
a limited liability company, a corporation (including a business trust), a joint
stock company, a trust, an unincorporated association, a joint venture or any
other entity, or a government or any political subdivision or agency of any
government.
"Pledge Agreement" means a pledge agreement, duly executed by
the Borrower in substantially the form of Exhibit B, as the same may be amended
or otherwise modified from time to time.
"Pledged Collateral" has the meaning assigned to that
term in the Pledge Agreement.
"Pledged Shares" has the meaning assigned to that term in
the Pledge Agreement.
"Readily Marketable Securities" means the aggregate current
market value of marketable securities listed or admitted to trading on the New
York Stock Exchange or the American Stock Exchange or quoted on the NASDAQ
National Market and legally and beneficially owned by the Borrower and/or by the
Guarantor free and clear of all liens, security interests, options, charges,
encumbrances and restrictions, including, but not limited to, restrictions
(contractual or otherwise) on the transferability of such securities, but
excluding restrictions on the transferability of any such marketable securities
imposed by Rule 144 so long as a minimum of three years has elapsed or is deemed
to have elapsed pursuant to Rule 144 since the later of (a) the date of the
acquisition by the Borrower of such marketable securities from the respective
issuers thereof or from any affiliate (as that term is defined in paragraph
(a)(1) of Rule 144) of any such issuers and (b) the date of payment by the
Borrower of the full purchase price or other consideration paid or given to
acquire such marketable
-5-
<PAGE>
securities from the respective issuers thereof or from any affiliate (as that
term is defined in paragraph (a)(1) of Rule 144). For the purposes of Section
5.02(b), the current market value of any marketable security quoted on the
NASDAQ National Market shall mean the closing bid price as quoted for such
security on the NASDAQ National Market on the Business Day immediately preceding
the date of determination, and the current market value of any marketable
security listed or admitted to trading on the New York Stock Exchange or the
American Stock Exchange shall mean the last reported sale price of such security
on the New York Stock Exchange or the American Stock Exchange, as the case may
be, on the Business Day immediately preceding the date of determination or, if
no such reported sale takes place on such immediately preceding Business Day,
the average of the last reported bid and asked prices for such security on the
New York Stock Exchange or the American Stock Exchange, as the case may be, on
such immediately preceding Business Day.
"Rule 144" means Rule 144 under the Securities Act of 1933, as
amended from time to time.
"Sterling" means Sterling Software, Inc., a corporation duly
formed and validly existing under the laws of the State of Delaware.
"Subsidiary" means, for any Person, any corporation,
partnership (including a general partnership, a limited partnership and a
limited liability partnership), limited liability company, joint venture, trust
or estate of which, or in which, (a) in the case of a corporation, more than
fifty percent of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), or (b) in the case of a partnership, a limited liability company
or a joint venture, more than fifty percent of the interest in the capital or
profits of such partnership, limited liability company or joint venture, or (c)
in the case of a trust or estate, more than fifty percent of the beneficial
interest of such trust or estate, is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries, or by one or
more other Subsidiaries.
"Taxes" has the meaning assigned to that term in Section
2.16(a).
"Termination Date" means December 16, 1996, or the earlier
date of termination in whole of the Commitment pursuant to Section 2.05, Section
2.09 or Section 7.01.
"Type" refers to an Advance and means a Base Rate Advance or a
Eurodollar Rate Advance, as the case may be.
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<PAGE>
SECTION 1.02. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied.
SECTION 1.03. Articles, Sections, Etc. Unless stated otherwise in this
-----------------------
Agreement, references to this Agreement to Articles, Sections, Schedules and
Exhibits are references to Articles and Sections of, and Schedules and Exhibits
attached to, this Agreement. Each Schedule to this Agreement is by this
reference incorporated in this Agreement.
SECTION 1.04. Computation of Time Periods. In this Agreement, the Note and
---------------------------
the other Loan Documents, for the purpose of computing periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and each of the words "to" and "until" means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.01. The Advances. The Bank agrees, on the terms and conditions
------------
set forth in this Agreement, to make Advances to the Borrower from time to time
on any Business Day during the period from the date hereof until the Termination
Date in an aggregate amount not to exceed __________________________________ and
No/1OO Dollars ($____________), as such amount may be reduced pursuant to
Section 2.05 (the "Commitment"). Subject to Section 2.02(b), each Eurodollar
Rate Advance shall be in an amount not less than $100,000. Amounts borrowed
hereunder and repaid or prepaid may be reborrowed.
SECTION 2.02. Making the Advances.
-------------------
(a) Each Eurodollar Rate Advance shall be made on notice given not later
than 12:00 noon (New York City time) two Business Days prior to the date of the
proposed Advance, by or on behalf of the Borrower to the Bank, specifying the
date and amount thereof and selecting the interest rate therefor pursuant to
Section 2.07 and, the initial Interest Period for such Advance. Not later than
2:00 p.m. (New York City time) on the date of such Advance and upon fulfillment
of the applicable conditions set forth in Article III, the Bank will make such
Advance available to the Borrower in same day funds at the Bank's address
referred to in Section8.02.
(b) Any other provision of this Agreement to the contrary
notwithstanding, the Borrower may not select the Eurodollar Rate for any Advance
if the principal amount of such Advance is less than $100,000, unless, on the
date of such Eurodollar Rate Advance the Borrower also Continues one or more
Advances pursuant to Section 2.13 into an Advance of the same Type and having
the same Interest Period as such Eurodollar Rate Advance and the aggregate
amount of such Eurodollar Rate Advances so made and Continued on such date is
not less than $100,000.
-7-
<PAGE>
(c) Each notice from or on behalf of the Borrower to the Bank
requesting a Eurodollar Rate Advance shall be irrevocable and binding on the
Borrower. If any Eurodollar Rate Advance is not made as a result of any failure
to fulfill the applicable conditions to such Advance set forth in Article III on
or before the date for such Advance specified in the notice from or on behalf of
the Borrower to the Bank requesting such Advance, then the Borrower shall pay to
the Bank, upon demand by the Bank, an amount equal to the loss or expense
incurred or sustained by the Bank as a result of such failure as set forth in a
statement prepared by the Bank in good faith and in reasonable detail.
SECTION 2.03. Responsibility for Requests for Advances.
----------------------------------------
(a) The Borrower hereby authorizes the Bank to make Advances under
this Agreement upon notice given by the Borrower or upon notice given on behalf
of the Borrower by Sharyl Robertson, Amy Phillips or Rena Alexander and any
other Person designated in writing by the Borrower to the Bank from time to
time, each of whom shall at all times continue to be authorized by the Advance
to request Advances on behalf of the Borrower under this Agreement until receipt
by the Bank of written notice from the Borrower of the revocation of such
authority of any such Person. Each Advance made by the Bank upon notice given by
the Borrower or by Sharyl Robertson, Amy Phillips or Rena Alexander or any other
Person designated in writing by the Borrower to the Bank shall be conclusively
presumed to have been made to or for the benefit of the Borrower when made by
the Bank in accordance with such notice and deposited in an account in the name
of the Borrower pursuant to such notice, regardless of whether any Person
(including, but not limited to, any Person authorized to request Advances on
behalf of the Borrower) other than the Borrower also shall have authority to
withdraw funds from such account. The Borrower agrees to repay, and to pay
interest on, any Advance that is so made, deposited or credited by the Bank.
(b) The Borrower acknowledges and agrees that the making by the Bank
of Advances in response to notices given via telephone facsimile communications
is in the interest of the Borrower and that the Bank cannot effectively
determine whether a specific notice requesting an Advance and purporting to have
been made by or on behalf of the Borrower is actually authorized or authentic.
In order to induce the Bank to make Advances in response to notices given via
telephone facsimile communications, the Borrower hereby assumes all risks
regarding the validity, authenticity and due authorization of all notices
requesting Advances that are purported to be given by or on behalf of the
Borrower, whether or not the Person giving such notice has authority in fact to
request Advances on behalf of the Borrower and whether or not the requested
Advance or the application of the proceeds of such Advance constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both. The Bank shall incur no liability to the
Borrower in acting upon any notice or other communication, whether given via
telephone
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<PAGE>
facsimile or telex or otherwise in writing, which the Bank believes in good
faith to have been given by any Person authorized to give notices requesting
Advances on behalf of the Borrower or in otherwise acting in good faith under
this Agreement.
SECTION 2.04. Facility Fees. In consideration of the Commitment
-------------
available on the terms of this Agreement, the Borrower agrees to pay to the Bank
a facility fee equal to one tenth of one percent (0.10%) of the then outstanding
Commitment, payable on the 16th day of December in each calendar year for so
long as the Commitment is outstanding, commencing on December 16, 1994.
SECTION 2.05. Reduction and Termination of the Commitment.
-------------------------------------------
(a) The Borrower shall have the right, upon at least two
Business Days notice to the Bank, to terminate in whole or reduce in part the
unused portion of the Commitment; provided that each partial reduction shall be
in an amount of not less than $1,200,000.00.
(b) Any other provision of this Agreement to the contrary
notwithstanding, the Commitment shall terminate in whole on February 28, 1995,
if (i) the Borrower shall not have given notice of the initial Advance pursuant
to Section 2.02(a) on or before February 28, 1995, and (ii) the applicable
conditions to the initial Advance set forth in Article III shall not have been
fulfilled on or before February 28, 1995.
SECTION 2.06. Repayment. The Borrower shall repay the
---------
aggregate unpaid principal amount of all Advances on or before the
Termination Date.
SECTION 2.07. Interest.
--------
(a) Ordinary Interest. The Borrower shall pay interest on the
-----------------
unpaid principal amount of each Advance from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum:
(i) Eurodollar Rate Advances. During such periods as
------------------------
such Advance is a Eurodollar Rate Advance, a rate per annum equal at
all times during the Interest Period for such Advance to the Eurodollar
Rate for such Interest Period, payable monthly on the last day of each
calendar month and on the last day of such Interest Period.
(ii) Base Rate Advances. During such periods as such
------------------
Advance is a Base Rate Advance, a rate per annum equal
to all times to the Base Rate in effect from time to time
minus one percent (1.00%), payable monthly on the last day of
each calendar month and on the date such Base Rate Advance
shall be Converted or paid in full.
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<PAGE>
(b) Default Interest. The Borrower shall pay interest on the
----------------
unpaid principal amount of each Advance that is not paid when due and on the
unpaid amount of all interest, fees and other amounts payable hereunder that is
not paid when due, payable on demand, at a rate per annum equal at all times to
(i) in the case of any amount of principal, the greater of (A) three percent
(3.00%) per annum above the rate per annum required to be paid on such Advance
immediately prior to the date on which such amount became due and (B) three
percent (3.00%) per annum above the Base Rate in effect from time to time, and
(ii) in the case of all other amounts, three percent (3.00%) per annum above the
Base Rate in effect from time to time.
(c) Interest Periods. The duration of each Interest Period
----------------
shall be (i) one, two, three or six months in the case of a Eurodollar Rate
Advance as the Borrower may, upon notice received by the Bank not later than
12:00 noon (New York City time) two Business Days prior to the first day of such
Interest Period, select; provided that:
(A) the duration of any Interest Period which commences
before the Termination Date, and would otherwise end after
such date shall end on such date; and
(B) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last
day of such Interest Period shall be extended to occur on the
next succeeding Business Day; provided that, in the case of
--------
any Interest Period for a Eurodollar Rate Advance, if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, then the last day
of such Interest Period shall occur on the next preceding
Business Day.
If the Borrower shall fail to select an Interest Period, the Borrower shall be
deemed to have selected the one (1) month Interest Period.
SECTION 2.08. Optional Prepayments.
--------------------
(a) Base Rate Advances. The Borrower may, upon at least two
------------------
Business Days notice to the Bank stating the proposed date and principal amount
of the prepayment, and if such notice is given the borrower shall, prepay the
outstanding principal amounts of the Base Rate Advances, in whole or in part,
plus accrued interest to the date of such prepayment on the principal amount
prepaid.
(b) Eurodollar Rate Advances. The Borrower may, upon at least
------------------------
thirty days notice to the Bank specifying the Advance to be prepaid and stating
the proposed date and principal amount of the prepayment, and if such notice is
given the Borrower shall, prepay the entire outstanding principal amount of any
Eurodollar Rate Advance specified in such notice, plus accrued interest to the
date of such prepayment on the principal amount prepaid; provided that
--------
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<PAGE>
the Borrower shall be obligated to pay the Bank in respect of such prepayment
pursuant to Section 8.04(b).
SECTION 2.09. Certain Mandatory Prepayments. Upon the death of the
-----------------------------
Guarantor or the appointment by a court of competent jurisdiction of a guardian,
conservator, committee or other similar appointee for the Borrower or Guarantor,
then, and in any such event, (a) the obligation of the Bank to make Advances
shall automatically be terminated and (b) the Advances, the Note, all interest
thereon and all other amounts payable under this Agreement shall automatically
become and be due and payable on the ninetieth day after the earlier to occur of
the date of such death or the date of such appointment, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
SECTION 2.10. Increased Costs. If, due to either (a) the introduction
---------------
of or any change (other than any change by way of imposition or increase of
reserve requirements referred to in Section 2.11) in or in the interpretation of
any law or regulation or (b) the compliance with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to the Bank of agreeing
to make or making, funding or maintaining Eurodollar Rate Advances to the extent
not reflected in the Eurodollar Rate, then the Borrower shall from time to time,
upon demand by the bank, pay to the Bank additional amounts sufficient to
compensate the Bank for such increased cost incurred or accrued by the Bank not
more than ninety days prior to the date of such demand by the Bank. A
certificate as to the amount of such increased cost, submitted to the Borrower
by the Bank, shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 2.11. Additional Interest. The Borrower shall pay to the Bank,
-------------------
so long as the Bank shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency liabilities (as
such term is defined in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time), additional interest on the
unpaid principal amount of each Eurodollar Rate Advance, from the date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (a) the LIBO
Rate for the Interest Period for such Advance from (b) the rate obtained by
dividing such LIBO Rate by a percentage equal to 100% minus the reserve
percentage applicable during such Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve
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<PAGE>
requirement (including, but not limited to, any emergency, supplemental or other
marginal reserve requirement) for the Bank with respect to liabilities or assets
consisting of or including Eurocurrency liabilities having a term equal to such
Interest Period, payable on each date on which interest is payable on such
Advance. Such additional interest shall be determined by the Bank and notified
to the Borrower, and such determination by the Bank shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.12. Increased Capital. If the Bank determines that compliance
-----------------
with any law 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 the
Bank or any corporation controlling the Bank and that the amount of such capital
is increased by or based upon the existence of the Bank's commitment to lend
hereunder and other commitments of this type, then, upon demand by the Bank
within ninety days after such increase in capital, the Borrower shall
immediately pay to the Bank, from time to time, as specified by such corporation
in the light of such circumstances, to the extent that the Bank reasonably
determines such increase in capital to be allocable to the existence of the
Bank's commitment to lend hereunder. A certificate as to such amounts submitted
to the Borrower by the bank shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 2.13. Voluntary Continuation of Advances. The Borrower may on
----------------------------------
any Business Day, upon notice given to the Bank not later than 12:00 noon (New
York City time) on the second Business Day prior to the date of the proposed
Continuation and subject to the provisions of Sections 2.07 and 2.14, Continue a
Eurodollar Rate Advance with another Interest Period as selected pursuant to
Section 2.07(c); provided that any Continuation of any Eurodollar Rate Advance
--------
shall be made on, and only on, the last day of an Interest Period for such
Eurodollar Rate Advance; provided, further, that the Borrower may not Continue a
-------- -------
Eurodollar Rate Advance if the principal amount of the Eurodollar Rate Advance
is less than $100,000. Each notice of a Continuation pursuant to this Section
2.13 shall, within the restrictions specified above, specify (a) the date of
such Continuation, (b) the Advance to be Continued and (c) the duration of the
Interest Period for such Advance. In the event that (i) the Borrower fails to
provide the Bank with notice of Continuation on any Eurodollar Advance and (ii)
such Advance is less than $100,000, but greater than $25,000, then such Advance
will be Converted to a Base Rate Advance until the next Eurodollar Rate Advance
that, when combined with all outstanding Base Rate Advances is equal to or
greater than $100,000, is Continued at which time such Base Rate Advance will be
aggregated with such Eurodollar Rate Advance and Continued with such Eurodollar
Rate Advance.
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<PAGE>
SECTION 2.14. Illegality, Etc.
---------------
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the Bank shall notify the Borrower that the introduction of,
or any change in or in the interpretation of, any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts that
it is unlawful, for the Bank to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, then (i) the obligation of the Bank to make Eurodollar Rate Advances
shall be suspended until the Bank shall notify the Borrower that the
circumstances causing such suspension no longer exist and (ii) the Borrower
shall forthwith prepay in full all Eurodollar Rate Advances then outstanding,
plus interest accrued thereon, unless the Borrower, within five Business Days of
notice from the Bank, Converts all Eurodollar Rate Advances then outstanding
into Base Rate Advances.
(b) If, with respect to any Eurodollar Rate Advance, the Bank
notifies the Borrower that (i) the Bank is unable to determine the Eurodollar
Rate or (ii) the Eurodollar Rate for any Interest Period for such Advance will
not adequately reflect the cost to the Bank of making, funding or maintaining
such Eurodollar Rate Advance for such Interest Period, such Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance, and the obligation of the Bank to
make Eurodollar Rate Advances shall be suspended until the Bank shall notify the
Borrower that the circumstances causing such suspension no longer exist.
(c) Within five (5) Business Days after the Bank notifies the
Borrower that the reason for the suspension of the Eurodollar Rate Advances has
ended, the Borrower shall Convert all of the Base Rate Advances to Eurodollar
Rate Advances pursuant to the terms of Section 2.02 as if such Conversion were a
new Eurodollar Rate Advance.
SECTION 2.15. Payments and Computations.
-------------------------
(a) The Borrower shall make each payment under any Loan Document
not later than 12:00 noon (New York city time) on the day when due in United
States dollars to the Bank at its address referred to in Section 8.02 in same
day funds.
(b) The Borrower hereby authorizes the Bank, if and to the extent
payment is not made when due under any Loan Document, to charge from time to
time against any or all of the Borrower's accounts with the Bank any amount so
due.
(c) All computations of interest shall be made by the Bank on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day, but excluding the last day) occurring in the period
for which such interest or commitment fees are payable. Each determination by
the Bank of an
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interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(d) Whenever any payment under any Loan Document shall be stated
to be due on a day other than a Business Day, and such extension of time shall
in such case be included in the computation of payment of interest or commitment
fee, as the case may be; provided that if such extension would cause payment of
interest on or principal of any Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
SECTION 2.16. Taxes.
-----
(a) Any and all payments by the Borrower hereunder or under the
Note shall be made, in accordance with Section 2.15, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Bank, net income taxes that are imposed by the
United States and franchise taxes and net income taxes that are imposed on the
Bank by the state or foreign jurisdiction under the laws of which the Bank is
organized or any political subdivision thereof (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 to the Bank hereunder or
under the Note, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including, but not limited to,
deductions applicable to additional sums payable under this Section 2.16) the
Bank receives an amount equal to the sum the Bank would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) 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 shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Note or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or the
Note (all such taxes, charges and levies being hereinafter referred to as "Other
Taxes").
(c) The Borrower shall indemnify the Bank for the full amount of
Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 2.16, paid by the Bank and
any liability (including, but not limited to, penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within thirty days from the date the Bank makes
written demand therefor.
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<PAGE>
(d) Within thirty days after the date of any payment of Taxes,
the Borrower shall furnish to the Bank, at the Bank's address referred to in
Section 8.02, the original receipt of payment thereof or a certified copy of
such receipt. In the case of any payment hereunder or under the Note by the
Borrower through an account or branch outside the United States or on behalf of
the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Bank, at such address of
the Bank, an opinion of counsel acceptable to the Bank stating that such payment
is exempt from Taxes. For the purposes of this subsection (d) and subsection (a)
of this Section 2.16, the terms "United States" and "United States person" shall
have the respective meanings specified in section 7701 of the Internal Revenue
Code.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.16 shall survive the payment in full of principal and interest
hereunder and under the Note.
SECTION 2.17. Hedge Agreements. It is expressly contemplated that the
----------------
Bank may, in its sole discretion, enter into Hedge Agreements with the Borrower
from time to time and that under any such Hedge Agreements the Bank shall be
entitled to any and all benefits of which the Bank is entitled under the Loan
Documents.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Initial Advance. The obligation of
--------------------------------------
the Bank to make its initial Advance is subject to the condition precedent that
the Bank shall have received on or before the day of such Advance the following,
each dated such day, in form and substance satisfactory to the Bank:
(a) The Note duly executed by the Borrower;
(b) The Pledge Agreement duly executed by the Borrower,
together with:
(i) acknowledgement copies or stamped receipt copies
of proper financing statements, duly filed under the Uniform Commercial
Code of all jurisdictions that the Bank may deem necessary or desirable
in order to perfect the security interests created by the Pledge
Agreement;
(ii) completed requests for information, listing the
financing statements referred to in Section 3.01(b)(i) and all
other effective financing statements filed in the jurisdictions
referred to in Section 3.01(b)(i) that name the Borrower as debtor,
together with copies of such other
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<PAGE>
financing statements (none of which shall cover the collateral
purported to be covered by the Pledge Agreement);
(iii) certificates, representing the Pledged Shares
accompanied by the following:
(A) a letter from each issuer of Pledged
Shares (singularly, an "Issuer Letter") directing the transfer
agent to remove the legend on such Pledged Shares;
(B) a letter from the transfer agent for
each issuer of such Pledged Shares stating that such transfer
agent will
(i) remove any restrictive legend on such
Pledged Shares upon delivery of the
certificates representing such issuer's
Pledged Shares and the related Issuer Letter;
(ii) hold such Pledged Shares as agent
for the Bank while removing the legends; and
(iii) deliver the reissued Pledged Shares
to the Bank after removal of any such
restrictive legend; and
(C) undated stock powers executed in blank
or registered in the name of the Bank or such nominee or
nominees as the Bank shall specify; and
(iv) evidence that all other actions (including, but
not limited to, the giving of any and all notices) necessary or, in the
opinion of the Bank, desirable to perfect and protect the security
interests created by the Pledge Agreement have been taken;
(c) Federal Reserve Form U-1 provided for in Regulation U
issued by the Board of Governors of the Federal Reserve System, the statements
made in which shall be such, in the opinion of the Bank, as to permit the
transactions contemplated hereby in accordance with said Regulation U;
(d) Certified copies of all documents evidencing
necessary governmental approvals, if any, with respect to each Loan
Document;
(e) The balance sheet of the Guarantor as at June 30, 1994 in
reasonable detail and day certified by the Guarantor as being accurate and
fairly presenting the financial condition of the Guarantor as at such date and
for such period;
(f) The balance sheet of the Borrower as at June 30,
1994 in reasonable detail and duly certified by the Trustee as
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<PAGE>
being accurate and fairly presenting the financial condition of the
Trust as at such date and for such period;
(g) A certificate of the Borrower certifying the name and true
signature of the Person authorized to request Advances on behalf of the Borrower
pursuant to Section 2.03;
(h) A favorable written opinion of the law firm of Jackson &
Walker, L.L.P., counsel for the Borrower, substantially in the form of Exhibit
C, and as to such other matters as the Bank may reasonably request;
(i) The Guaranty Agreement duly executed by the Guarantor;
(j) Receipt by the Bank of certificate (the "Partnership
Certificate") from the Borrower certifying (i) that a true and complete copy of
the Partnership Agreement has been provided to the Bank, and (ii) the general
partner has all necessary power and authority to act on behalf of the Borrower;
and
(k) Receipt and review of any such documentation as the
Bank may reasonably request concerning the Collateral.
SECTION 3.02. Conditions Precedent to All Advances. The obligation of
------------------------------------
the Bank to make each Advance (including the initial Advance) shall be subject
to the further conditions precedent that on the date of such Advance:
(a) The following statements shall be true (and each of the
giving of the applicable notice requesting such Advance and the acceptance by
the Borrower of the proceeds of such Advance shall constitute a representation
and warranty by the Borrower that on the date of such Advance such statements
are true):
(i) The representations and warranties contained in
Section 4.01 of this Agreement, Section 4 of the Pledge Agreement and
the Partnership Certificate are correct on and as of the date of such
Advance, before and after giving effect to such Advance and to the
application of the proceeds therefrom, as though made on and as of such
date;
(ii) The balance sheet of the Borrower then most recently
furnished to the Bank pursuant to Section 5.01(d)(i) is accurate and
fairly presents the financial condition of the Borrower as at the date
of such balance sheet, and since the date of such balance sheet there
has been no material adverse change in such condition;
(iii) The balance sheet of the Guarantor then most
recently furnished to the Bank pursuant to the Guaranty Agreement is
accurate and fairly presents the financial condition of the Guarantor
as at the date of such balance
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<PAGE>
sheet, and since the date of such balance sheet there has been
no material adverse change in such condition;
(iv) No event has occurred and is continuing, or
would result from such Advance or from the application of the proceeds
therefrom, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both;
(v) The ratio of the aggregate current market value
of the Pledged Shares to the aggregate unpaid principal amount of the
Advances (including the amount of the requested Advance) is not less
than 2.0 to 1.0; and
(b) The Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably request, including, without
limitation, additional Federal Reserve Form U-1 provided for in Regulation U
issued by the Board of Governors of the Federal Reserve System, the statements
made in which shall be such, in the opinion of the Bank, as to permit the
transactions contemplated hereby in accordance with said Regulation U to the
extent required in connection with the pledge of additional shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
----------------------------------------------
The Borrower represents and warrants as follows:
(a) The General Partner has the legal capacity to execute and
deliver this Agreement and the other Loan Documents on behalf of the Borrower
and to execute, deliver and perform the Loan Documents to which the Guarantor is
or will be a party.
(b) The execution, delivery and performance by the Borrower of
each Loan Document to which the Borrower is or will be a party do not and will
not (i) contravene any law or any contractual restriction or fiduciary duty
binding on or affecting the Borrower or General Partner or (ii) result in or
require the creation of any lien, security interest or other charge or
encumbrance (other than pursuant to the Loan Documents) upon or with respect to
any of the Trust's properties.
(c) No consent, authorization or approval or other action by,
and no notice to or filing or registration with, any governmental authority or
regulatory body or any other Person is required for the due execution, delivery
and performance by the Borrower of any Loan Document to which the Borrower is or
will be a party.
(d) This Agreement is, and each other Loan Document to which
the Borrower will be a party when delivered hereunder will be, legal, valid and
binding obligations of the Borrower,
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<PAGE>
enforceable against the Borrower in accordance with their respective terms.
(e) The balance sheet of the Borrower as at June 30, 1994, a
copy of which certified by the Borrower has been furnished to the Bank, is
accurate and fairly presents the financial condition of the Trust as at such
date, and since June 30, 1994, there has been no material adverse change in such
condition.
(h) There is no pending or threatened action, suit or
proceeding affecting the Borrower or the General Partner before any court, any
arbitrator or mediator or any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which may materially
adversely affect the financial condition or operations of the Borrower or the
General Partner or which purports to affect the legality, validity or
enforceability of this Agreement, any other Loan Document to which the Borrower
is or will be a party, or the Trust Agreement.
(i) No proceeds of any Advance will be used to acquire any
equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 if the result of such acquisition is to effect a
change in control of the issuer thereof.
(j) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System).
(k) The Borrower is not a party to any indenture, loan or
credit agreement, lease or other instrument or agreement which could have a
material adverse effect on the business, properties, assets, operations or
condition, financial or otherwise, of the Borrower or on the ability of the
Borrower to perform the Borrower's obligations under this Agreement or any other
Loan Document.
(l) The Borrower has provided the Bank with accurate and
complete copies of all indentures, loan or credit agreements, leases or other
instruments or agreements of any kind which have been submitted to the Bank
pursuant to this Agreement.
(m) All tax returns (federal, state and local) required to be
filed on behalf of the Borrower have been filed and all taxes shown on such tax
returns to be due, including, but not limited to, interest and penalties have
been paid.
(n) The address specified for the Borrower in Section 8.02 is
a mailing address of the Borrower.
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<PAGE>
ARTICLE V
CERTAIN COVENANTS OF THE BORROWER
SECTION 5.01. Certain Affirmative Covenants. So long as the Note shall
-----------------------------
remain unpaid in whole or in part or the Bank shall have any Commitment
hereunder, the Borrower shall, unless the Bank shall otherwise consent in
writing;
(a) Use of Advances. Use and apply the proceeds of the Advances
---------------
for commercial, business or investment purposes including the refinancing of
existing margin debt and other lawful purposes.
(b) Compliance with Laws, Etc. Comply, and cause the Trust to
-------------------------
comply, in all material respects with all applicable laws, rules, regulations
and orders.
(c) Payment of Taxes, Etc. Without limiting the generality of
---------------------
Section 5.01(b), pay and discharge before the same shall become delinquent, (i)
all taxes, assessments and governmental charges or levies imposed upon the
Borrower or upon any property of the Borrower and (ii) all lawful claims which,
if unpaid, might by law become a lien upon any property of the Borrower or the
Trust; provided that the Borrower shall not be required to pay or discharge any
such tax, assessment, charge or claim which is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being maintained
in accordance with generally accepted accounting principles consistently
applied.
(d) Reporting Requirements. Furnish to the Bank:
----------------------
(i) as soon as available and in any event within sixty days
after the last day of the most recently ended fiscal quarter, a balance
sheet of the Trust as at the end of such fiscal quarter, including a
listing of all contingent liabilities of the Trust, in reasonable
detail and in form satisfactory to the Bank and certified by the
Borrower as being accurate and fairly presenting the financial
condition of the Trust as at the end of such fiscal quarter, and
accompanied by (A) a certificate of the Borrower stating that no Event
of Default or other event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default has occurred and
is continuing or, if an Event of Default or any such other event has
occurred and is continuing, a statement as to the nature thereof and
the action which the Borrower has taken and proposes to take with
respect thereto, and (B) a certificate of compliance of the Borrower
and accompanying schedule in form and detail satisfactory to the Bank
of the computations used by the Borrower in determining compliance with
the covenants set forth in Section 5.02(b) and Section 5.02(c);
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<PAGE>
(ii) as soon as available and in any event within sixty days
after the end of each fiscal quarter of Michaels and Sterling, the 1OQ
report of Michaels and Sterling, respectively;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Default and each other event
which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default, continuing on the date of such
statement, a statement of the Borrower setting forth details of such
Event of Default or such other event and the action which the Borrower
has taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of
all Forms 3 (Initial Statement of Beneficial Ownership of Securities),
Forms 4 (Statement of Changes of Beneficial Ownership of Securities)
and Forms 5 which the Borrower files with the Securities and Exchange
Commission (or any governmental authority or regulatory body that may
be substituted therefor) by reason or in respect of any securities of,
or any relationship of the Borrower to, any issuer of any securities
constituting any of the Collateral;
(v) promptly after the sending or filing thereof, copies of
all reports, filings and registration statements which the Borrower
files with the Securities and Exchange Commission (or any governmental
authority or regulatory body that may be substituted therefor) or any
national securities exchange;
(vi) promptly after the earlier of the commencement
thereof or receipt by the Borrower of notice or knowledge thereof,
notice of any pending or threatened action, suit, proceeding or
investigation affecting the Borrower or the Trust by or before any
court, any arbitrator or mediator or any governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, or of any claim for the payment of money asserted against the
Borrower or the Trust which seeks or involves an amount exceeding
$2,000,000.00 or which may materially adversely affect the properties
assets, operations or condition, financial or otherwise, of the
Borrower or the Trust;
(vii) prompt notice of any material adverse change in the
business, properties, assets, operations or condition, financial or
otherwise, of the Borrower since the dates of the financial statements
of the Trust then most recently furnished to the Bank pursuant to
Section 5.01(d)(i);
(viii) in the event any securities of any class of any
issuer that are included in the Collateral at any time constitute ten
percent or more of the issued and outstanding
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<PAGE>
securities of such issuer and such class, prompt notice of such event;
and
(ix) such other information respecting the business,
properties, assets, operations or condition, financial or otherwise, of
the Borrower or any Subsidiary of the Borrower as the Bank may from
time to time reasonably request.
SECTION 5.02. Certain Negative Covenants. So long as the Note shall
--------------------------
remain unpaid in whole or in part or the Bank shall have any Commitment
hereunder, the Borrower will not, without the written consent of the Bank:
(a) Liens, Etc. Create or suffer to exist any lien, security
----------
interest or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of the Collateral, whether now owned or
hereafter acquired, other than the security interest created by the Pledge
Agreement and any other lien or security interest created in favor of the Bank
pursuant to Section 6.01.
(b) Liquidity. Permit the current market value of the
---------
unpledged Cash and Cash Equivalents and/or Readily Marketable Securities
(excluding any securities issued by Michaels or Sterling), but including
interests in Maverick of the Borrower and the Guarantor, collectively, to be
less than fifteen percent (15%) of the Commitment for a period of ten (10)
consecutive Business Days; provided, that it is expressly contemplated that
within such period of ten (10) consecutive Business Days the Borrower shall have
the ability to increase such current market value of the unpledged Cash and Cash
Equivalents and/or Readily Marketable Securities (excluding any securities
issued by Michaels or Sterling), but including interests in Maverick in
accordance with the provisions of subsection (ii) of Section 6.01.
(c) Balancing. Permit the shares of either Michaels or
---------
Sterling pledged by the Borrower to the Bank to represent more than sixty
percent (60%) of the total market value of Collateral for a period of ten (10)
consecutive Business Days; provided that it is expressly contemplated that
--------
within such period of ten (10) consecutive Business Days the Borrower shall have
the ability to increase the number of Michaels or Sterling shares pledged by the
Borrower to the Bank in accordance with the provisions of subsection (ii) of
Section 6.01 in order to prevent the shares of either Michaels or Sterling
pledged by the Borrower to the Bank to represent more than sixty percent (60%)
of the total market value of Collateral.
ARTICLE VI
CERTAIN OTHER COVENANTS
SECTION 6.01. Collateral to Loan Coverage. If, at any time
---------------------------
prior to payment in full in cash of all obligations of the Borrower now or
hereafter existing under this Agreement, the Note and the
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other Loan Documents (whether for principal, interest, fees, expenses or
otherwise), or at any other time when the Bank shall have any Commitment under
this Agreement, the ratio of the aggregate current market value of the
Collateral to the aggregate unpaid principal amount of the Advances shall be
less than 1.66 to 1.0 but equal to or greater than 1.50 to 1.0, then, within two
Business Days of such event, the Borrower
(i) shall prepay the outstanding principal amounts of
the Advances, in whole or in part, plus accrued interest to the date of
such prepayment on the principal amount prepaid, and/or
(ii) shall (i) pledge, assign and deliver to the Bank
cash for deposit in one or more of the Collateral Accounts and/or
pledge and assign to the Bank, and grant to the Bank security interests
in, such additional shares of stock owned by the Borrower as shall be
acceptable to the Bank in its sole discretion, all as security for the
payment of all obligations of the Borrower now or hereafter existing
under this Agreement, the Note and the other Loan Documents (whether
for principal, interest, fees, expenses or otherwise), (ii) duly
execute and deliver to the Bank such pledge and security agreements
(including, but not limited to, amendments to the Pledge Agreement), as
specified by and in form and substance satisfactory to the Bank,
securing the payment of all obligations of the Borrower now or
hereafter existing under this Agreement, the Note and the other Loan
Documents (whether for principal, interest, fees, expenses or
otherwise) and constituting pledges and assignments of and security
interests in such cash as shall be pledged and delivered by the
Borrower to the Bank for deposit in one or more of the Collateral
Accounts and in such additional shares of stock as shall be acceptable
to the Bank in its sole discretion, (iii) take whatever action
(including, but not limited to, the delivery to the Bank of original
instruments, stock certificates and stock powers, the filing of Uniform
Commercial Code financing statements and amendments to financing
statements and the giving of notices and endorsements) may be necessary
or advisable in the opinion of the Bank to vest in the Bank (or in any
representative or nominee of the Bank designated by the Bank,
including, but not limited to, any clearing corporation or custodian
bank as those terms are defined in the Uniform Commercial Code in
effect in the State of New York) valid, subsisting and perfected liens
on and security interests in the properties purported to be subject to
the pledge and security agreements delivered pursuant to this Section
6.01, enforceable against all third parties in accordance with their
respective terms, (iv) deliver to the Bank a signed favorable opinion,
addressed to the Bank, of counsel for the Borrower acceptable to the
Bank as to the matters contained in clauses (i), (ii) and (iii), as to
such pledge and security agreements being legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their
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<PAGE>
respective terms and as to such other matters as the Bank may
reasonably request, and (v) execute and deliver to the Bank any and all
further certificates, instruments and documents and take all such other
action as the Bank may deem desirable in obtaining the full benefits
of, or in preserving the security interests of, such pledge and
security agreements, so that, immediately after giving effect to such
prepayment and/or such other actions, the ratio of the aggregate
current market value of the Collateral to the aggregate unpaid
principal amount of the Advances shall be not less than 2.0 to 1.0. For
the purposes of this Section 6.01 and 7.01(j), the term "current market
value" shall have the meaning assigned to that term in Regulation U
issued by the Board of Governors of the Federal Reserve System.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following
-----------------
events (individually, an "Event of Default" and collectively,
"Events of Default") shall occur and be continuing:
(a) Any principal of, or interest on, the Note shall not
be paid on the date the same becomes due and payable or within
three Business Days thereafter; or
(b) Any representation or warranty made by the Borrower under
or in connection with any Loan Document, or any representation or warranty made
in the Control Person Statement, or any certification made by the Borrower or
the Guarantor in connection with any financial statement furnished to the Bank
under or in connection with any Loan Document, shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or the Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in any Loan Document on
the Borrower's or the Guarantor's part to be performed or observed if such
failure shall remain unremedied for ten days after written notice thereof shall
have been given to the Borrower by the Bank; or
(d) The Borrower or the Guarantor shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
is debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
the Guarantor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of its or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
-24-
<PAGE>
either such proceeding shall remain undismissed or unstayed for a period of
sixty days, or any of the actions sought in such proceeding (including, but not
limited to, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or the Guarantor
shall take any action to authorize any of the actions set forth above in this
Section 7.01(d); or
(e) Any judgment or order for the payment of money in excess
of $5,000,000.00 shall be rendered against the Borrower or the Guarantor and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of ten consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(f) Any lawful claims for the payment of money in an aggregate
amount exceeding $10,000,000.00 which, if unpaid, might by law become liens upon
any property of the Borrower or the Guarantor shall be asserted against the
Borrower or the Guarantor and shall not be contested by the Borrower or the
Guarantor, as the case may be, in good faith and by proper proceedings and as to
which appropriate reserves are not being maintained in accordance with generally
accepted accounting principles consistently applied; or
(g) Any material adverse change shall occur in the business,
properties, assets, operations or condition, financial or otherwise, of the
Borrower or the Guarantor; or
(h) Any provision of the Pledge Agreement, the Guaranty
Agreement or any other Loan Document after delivery thereof shall for any reason
cease to be valid and binding on the Borrower or the Guarantor, or the Borrower
or the Guarantor shall so state in writing; or
(i) The Pledge Agreement or any other Loan Document after
delivery thereof pursuant to Section 3.01 or Section 6.01 shall for any reason
(other than pursuant to the terms thereof) cease to create a valid and perfected
first priority security interest in any of the Collateral purported to be
covered thereby; or
(j) The ratio of the aggregate current market value of the
Collateral to the aggregate unpaid principal amount of the Advances shall be
less than 1.5 to 1.0; or
(k) Any of the Pledged Shares shall cease to be (i) quoted on
the Nasdaq National Market or (ii) listed or admitted to trading on the New York
Stock Exchange or the American Stock Exchange; then, and in any such event, the
Bank (A) may, by notice to the Borrower, declare the Bank's obligation to make
Advances to be terminated, whereupon the same shall forthwith terminate, and
-25-
<PAGE>
(B) may, by notice to the Borrower, declare the Note, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of an actual or deemed entry of an order for relief
- --------
with respect to the Borrower or the Guarantor under the United States Bankruptcy
Code, (1) the obligation of the Bank to make Advances shall automatically be
terminated and (2) the Advances, the Note, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement or the Note, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 8.02. Notices Etc. Except as expressly provided in Section
-----------
6.01, all notices and other communications provided for hereunder shall be in
writing (including, but not limited to, telephone facsimile communications) and
sent via certified or registered mail, return receipt requested, via telephone
facsimile, via personal delivery or via express courier or delivery service to
the Borrower or the Bank, as the case may be, at the respective addresses or
telephone facsimile numbers of the Borrower and the Bank specified below or, as
to either party, at such other address or telephone facsimile number as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section: if to the Borrower, at 8080 N. Central
Expressway, Suite 1300, Dallas, Texas 75206, Attn: Shari Robertson, telephone
facsimile number (214) 891-8245; and if to the Bank, at One Citicorp Center, 153
East 53rd Street, New York, New York 10043, Attention: Stephen Giannakakis, Vice
President, telephone facsimile number (212) 793-6232, with a copy to Citicorp
North America, Inc., Private Banking Division, 2100 Citicorp Center, 1200 Smith
Street, Houston, Texas 77002, Attention: Trey Roberts, Vice President, telephone
facsimile number (212) 793-6232. All such notices and other communications shall
be deemed given (a) when receipted for (or upon the date of attempted delivery
when delivery is refused) if sent via certified or registered mail, return
receipt requested, via (b) when received if sent via telephone facsimile
(confirmation of such receipt via telephone facsimile being deemed receipt).
Without limiting the generality of the preceding sentence, notices to the Bank
pursuant to the provisions
-26-
<PAGE>
of Article II shall in no event be effective until received by the
Bank.
SECTION 8.03. No Waiver; Remedies. No failure on the part of the Bank
-------------------
to exercise, and no delay in exercising, any right under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies provided in the Loan Documents are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes.
-------------------------
(a) The Borrower agrees to pay on demand all costs and
expenses in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents and the other
documents to be delivered under the Loan Documents, including, but not limited
to, the reasonable fees and out-of-pocket expenses of counsel for the Bank with
respect thereto and with respect to advising the Bank as to the Bank's rights
and responsibilities under the Loan Documents. The Borrower further agrees to
pay on demand all costs and expenses, if any (including, but not limited to,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of the Loan
Documents, including, but not limited to, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 8.04(a).
(b) If any payment of principal of any Eurodollar Rate Advance
is made other than on the last day of the Interest Period for such Advance, as a
result of any payment pursuant to Section 2.08(b), Section 2.09, Section 2.14 or
Section 6.01 or as a result of acceleration of the maturity of the Advances and
the Note pursuant to Section 7.01 or for any other reason, the Borrower shall
pay to the Bank, upon demand by the Bank, an amount equal to the loss or expense
incurred or sustained by the Bank as a result of such payment as set forth in a
statement prepared by the Bank in good faith and in reasonable detail.
SECTION 8.05. Right of Set-Off. Upon the occurrence and during the
----------------
continuance of any Event of Default the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Document,
whether or not the Bank shall have made any demand under such Loan Document and
although such obligations may be unmatured. The Bank agrees promptly to notify
the Borrower after any such set-off and application; provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section are in
-27-
<PAGE>
addition to other rights and remedies (including, but not limited to, other
rights of set-off) which the Bank may have.
SECTION 8.06. Binding Effect.
--------------
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Bank, the respective successors and assigns of the Borrower
and the Bank, and the heirs, executors, administrators and legal representatives
of the Borrower, except that the Borrower shall not have the right to assign the
Borrower's rights hereunder or any interest herein without the prior written
consent of the Bank, which consent may be withheld for no reason or for any
reason.
(b) The Bank, without any notice to or consent of the Borrower,
may sell participations to one or more Persons in or to all or any portion of
the Bank's rights and obligations under this Agreement, the Note and any other
Loan Document (including, but not limited to, all or any portion of the
Commitment, the Advances and the Note); provided that (i) the Bank's obligations
--------
under this Agreement (including, but not limited to, the commitment) shall
remain unchanged, (ii) the Bank shall remain solely responsible to the Borrower
for the performance of such obligations, (iii) the Bank shall remain the holder
of the Note for all purposes of this Agreement and (iv) the Borrower shall
continue to deal solely and directly with the Bank in connection with the Bank's
rights and obligations under this Agreement.
(c) The Bank, with the prior written consent of the Borrower,
which consent shall not be unreasonably withheld, may assign, syndicate or
otherwise transfer all or any portion of the Bank's rights and obligations under
this Agreement, the Note and any other Loan Document (including, but not limited
to, all or any portion of the Commitment, the Advances and the Note) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Bank in this Agreement or otherwise.
(d) Any other provision of this Agreement to the contrary
notwithstanding, the Bank may at any time create a security interest in all or
any portion of the Bank's rights under this Agreement (including, but not
limited to, the Advances owing to the Bank and the Note held by the Bank) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Board
of Governors of the Federal Reserve System.
(e) The Bank will use reasonable good faith efforts to hold in
confidence any Confidential Information, except to the extent that any such
Confidential Information can be shown to have been (i) previously known on a
nonconfidential basis by the Bank, (ii) in the public domain through no fault of
the Bank or (iii) later lawfully acquired by the Bank from sources other than
the Borrower; provided that the Bank may disclose Confidential Information (A)
--------
to the Bank's directors, officers, employees,
-28-
<PAGE>
accountants, attorneys, consultants, advisors, agents and other representatives
who are or reasonably are expected to be or become engaged in evaluating,
approving, structuring, negotiating, documenting or administering the Loan
Documents or the transactions contemplated by the Loan Documents, (B) to the
Bank's attorneys and independent auditors, (C) to any actual or prospective
participant, assignee or transferee under Section 8.06(b), Section 8.06(c) or
Section 8.06(d) so long as such Persons are informed by the Bank of the
confidential nature of such Confidential Information and are directed by the
Bank to other Person if such disclosure is reasonably incidental to the
administration of the Loan Documents or any of the transactions contemplated by
the Loan Documents, (E) upon any order of directive of, or any request by, any
court, arbitrator, mediator or governmental department, commission, board,
bureau, agency or instrumentality, (F) in connection with any action, suit or
proceeding to which the Bank or any affiliate of the Bank is a party, and (G) to
the extent reasonably required in connection with the exercise of any right or
remedy under this Agreement or another Loan Document. Without limiting the
preceding sentence, the Bank may disclose to any actual or prospective
participant, assignee or transferee under Section 8.06(b), Section 8.06(c) or
Section 8.06(d) any financial statements, documents and other information that
the Bank now or in the future has relating to the Advances, the Loan Documents,
the Collateral, the Borrower, any Subsidiary of the Borrower or the business,
properties, assets, operations or condition, financial or otherwise, of the
Borrower, or any Subsidiary of the Borrower.
SECTION 8.07. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 8.08. Interest. It is the intention of the parties hereto to
--------
conform strictly to the usury laws applicable to the Bank. Accordingly, if the
transactions contemplated hereby or by the Loan Documents would be usurious
under applicable law (including, without limitation, the laws of the United
States of America and the State of New York), then, in that event,
notwithstanding anything to the contrary herein or in the Loan Documents, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest applicable to the Bank that is contracted for, taken, reserved, charged
or received under this Agreement or any Loan Document shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be credited by the Bank on the principal amount outstanding under
the Note, or, if no principal amount is outstanding under the Note, refunded to
the Borrower; and (ii) in the event that the maturity of the principal is
accelerated, then such consideration that constitutes interest under any law
that is applicable to the Bank may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or the Loan Documents or otherwise shall be cancelled
automatically as of the date of such
-29-
<PAGE>
acceleration or prepayment and, if theretofore paid, shall be credited by the
Bank on the principal amount outstanding or, if the principal amount shall have
been paid in full, refunded by the Bank to the Borrower.
SECTION 8.09. Governing Law; Consent to Jurisdiction. This Agreement
--------------------------------------
and the Note shall be governed by, and construed in accordance with, the laws of
the State of New York. The Borrower hereby submits to the exclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any court of the State of New York sitting in New York City for purposes of all
legal proceedings arising out of or relating to this Agreement, the Note, any
other Loan Document or any transactions contemplated hereby or thereby. The
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which the Borrower may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Notwithstanding the preceding two sentences, the Bank retains the right to bring
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement, the Note, any
other Loan Document or any of the transactions contemplated hereby or thereby in
any court that has jurisdiction over the parties and subject matter.
SECTION 8.10. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
--------------------
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THIS AGREEMENT, THE NOTE, THE PLEDGE AGREEMENT, ANY OTHER
LOAN DOCUMENT, THE ADVANCES OR THE ACTIONS OF THE BANK IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the Borrower and the Bank have executed this
Agreement as of the date first above written.
(Borrower)
______________,
By: ____________________________________
________, its ____________________
(Bank)
CITIBANK N.A.
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<PAGE>
By:_______________________________________
Name: Stephen Giannakakis
Title: Vice President
-31-
<PAGE>
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "First Amendment") dated as
---------------
of September 30, 1996, is among _____________________, a _____________
________________ (the "Borrower"), acting through _____________________, its
--------
_____________________, and CITIBANK, N.A., a national banking association (the
"Bank").
- -----
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower and the Bank entered into that certain Credit
Agreement dated as of December 16, 1994 (the "Credit Agreement") pursuant to
----------------
which the Bank agreed to made certain Advances to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed to amend
certain provisions of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
-------------
Credit Agreement, but which are not defined in this First Amendment, shall have
the same meanings as defined in the Credit Agreement. Unless otherwise
indicated, all section references in this First Amendment refer to the Credit
Agreement.
Section 2. Amendments to the Pledge Agreement.
----------------------------------
2.1 Section 1.01 is amended to add the following:
"Sterling Commerce" means Sterling Commerce, Inc., a corporation
duly formed and validly existing under the laws of the State of
Delaware.
2.3 Section 1.01 of the Credit Agreement is hereby amended by
deleting the defined term "Control Person Statement" in its entirety and
inserting the following:
"Control Person Statement" means the Control Person Statement,
dated as of September 30, 1996, furnished by or on behalf of the
Borrower to the Bank.
2.4 Section 3.02 is amended to add the following:
(c) That in no event shall the aggregate of all advances
made by the Bank to the Borrower:
i. exceed ____________________ where
such advances are made against
<PAGE>
Collateral consisting of Sterling
stock or Sterling Commerce stock;
and
ii. exceed ____________________ where
such advances are made against
Collateral consisting of Michaels
stock.
(d) That in no event shall the aggregate of all of
the stock of Sterling Commerce that is pledged to the Bank
by the Borrower exceed ___________ % of the shares then
outstanding.
2.5 Section 5.01(d)(ii) is restated in its entirety to read as
follows:
"As soon as available and in any event within sixty (60) days
after the end of each fiscal quarter of Michaels, Sterling and
Sterling Commerce, the 10-Q Report of Michaels, Sterling and
Sterling Commerce, respectively;"
2.6 Sections 5.02(b) is restated in its entirety to read as follows:
(b) Liquidity. Permit the current market value of the
---------
unpledged Cash and Cash Equivalents and/or Readily Marketable
Securities (excluding any securities issued by Michaels, Sterling
or Sterling Commerce), but including interests in Maverick of the
Borrower and the Guarantor, collectively, to be less than fifteen
percent (15%) of the Commitment for a period of ten (10)
consecutive Business Days; provided, that it is expressly
contemplated that within such period of ten (10) consecutive
Business Days the Borrower shall have the ability to increase
such current market value of the unpledged Cash and Cash
Equivalents and/or Readily Marketable Securities (excluding any
securities issued by Michaels, Sterling or Sterling Commerce),
but including interests in Maverick in accordance with the
provisions of subsection (ii) of Section 6.01.
2.7 Section 5.02(c) is restated in its entirety to read as follows:
(c) Collateral Limits. Permit the aggregate of the shares
-----------------
pledged by the Borrower as Collateral to the Bank to exceed:
(i) _____ % of Michaels' outstanding stock;
-2-
<PAGE>
(ii) ____ % of Sterling's outstanding stock; or
(iii) ____ % of Sterling Commerce's outstanding stock.
2.8 Section 6.01 is restated in its entirety to read as follows:
Section 6.01. Collateral to Loan Coverage. (a) If, at any
---------------------------
time prior to payment in full in cash of all obligations of the
Borrower now or hereafter existing under this Agreement, the Note
and the other Loan Documents (whether for principal, interest,
fees, expenses or otherwise), or at any other time when the Bank
shall have any Commitment under this Agreement, the ratio of the
aggregate current market value of the Collateral to the aggregate
unpaid principal amount of the Advances shall be less than 1.66
to 1.0 but equal to or greater than 1.50 to 1.0, then, within two
Business Days of such event, the Borrower
(i) shall prepay the outstanding principal amounts of the
Advances, in whole or in part, plus accrued interest to the date
of such prepayment on the principal amount prepaid, and/or
(ii) shall (i) pledge, assign and deliver to the Bank cash
for deposit in one or more of the Collateral Accounts and/or
pledge and assign to the Bank, and grant to the Bank security
interests in, such additional shares of stock owned by the
Borrower as shall be acceptable to the Bank in its sole
discretion, all as security for the payment of all obligations of
the Borrower now or hereafter existing under this Agreement, the
Note and the other Loan Documents (whether for principal,
interest, fees, expenses or otherwise), (ii) duly execute and
deliver to the Bank such pledge and security agreements
(including, but not limited to, amendments to the Pledge
Agreement), as specified by and in form and substance
satisfactory to the Bank, securing the payment of all obligations
of the Borrower now or hereafter existing under this Agreement,
the Note and the other Loan Documents (whether for principal,
interest, fees, expenses or otherwise) and constituting pledges
and assignments of and security interests in such cash as shall
be pledged and delivered by the Borrower to the Bank for deposit
in one or more of the Collateral Accounts and in such additional
shares of stock as shall be acceptable to the Bank in its sole
discretion, (iii) take whatever action (including, but not
limited to, the delivery to the Bank of original instruments,
-3-
<PAGE>
stock certificates and stock powers, the filing of Uniform
Commercial Code financing statements and amendments to financing
statements and the giving of notices and endorsements) may be
necessary or advisable in the opinion of the Bank to vest in the
Bank (or in any representative or nominee of the Bank designated
by the Bank, including, but not limited to, any clearing
corporation or custodian bank as those terms are defined in the
Uniform Commercial Code in effect in the State of New York)
valid, subsisting and perfected liens on and security interests
in the properties purported to be subject to the pledge and
security agreements delivered pursuant to this Section 6.01,
enforceable against all third parties in accordance with their
respective terms, (iv) deliver to the Bank a signed favorable
opinion, addressed to the Bank, of counsel for the Borrower
acceptable to the Bank as to the matters contained in clauses
(i), (ii) and (iii), as to such pledge and security agreements
being legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their
respective terms and as to such other matters as the Bank may
reasonably request, and (v) execute and deliver to the Bank any
and all further certificates, instruments and documents and take
all such other action as the Bank may deem desirable in obtaining
the full benefits of, or in preserving the security interests of,
such pledge and security agreements,
so that, immediately after giving effect to such prepayment
and/or such other actions, the ratio of the aggregate current
market value of the Collateral to the aggregate unpaid principal
amount of the Advances shall be not less than 2.0 to 1.0. For
the purposes of this Section 6.01 and 7.01(j), the term "current
market value" shall have the meaning assigned to that term in
Regulation U issued by the Board of Governors of the Federal
Reserve System, except as the same may be adjusted by 6.01(b)
below.
(b) For purposes of calculating the value of the Collateral for
Section 6.01(a) above:
i. the value of the Michaels stock shall be excluded for
such period of time as the share price of Michaels
stock is below $7.50 per share;
-4-
<PAGE>
ii. the value of the Sterling stock shall be excluded for
such period of time as the share price of Sterling
stock is below $10.00 per share; and
iii. the value of the Sterling Commerce stock shall be
excluded for such period of time as the share price of
Sterling Commerce stock is below $10.00 per share.
2.9 Section 7.01 is amended to add the following after subparagraph (k) :
or (l) The Borrower fails to execute and deliver any of the
following documents:
i. The Second Amendment to Pledge Agreement;
ii. Federal Reserve Form U-1 relating to the pledged shares
described on Schedule I of the Second Amendment to
Pledge Agreement; and
iii. The stock certificates evidencing the pledged shares
(if certificated) as further described on Schedule I of
the Second Amendment to Pledge Agreement, or otherwise
cause perfection of the Bank's first and prior security
interest in the pledged shares in the event that any of
such pledged shares are uncertificated; and
iv. The Financing Statement relating to the Collateral; and
v. (Within 30 days after the date of the First Amendment)
a favorable written opinion of the law firm of Jones,
Day, Reavis & Pogue.
Section 3. Additional Conditions Precedent to the Advances. The
-----------------------------------------------
obligations of the Bank to make Advances after the date hereof shall be subject
to the following conditions precedent:
(a) The Bank shall have received multiple counterparts, as requested,
of this First Amendment, executed and delivered by a duly authorized
representative of the Borrower.
(b) No Event of Default as defined in the Credit Agreement shall have
occurred and be continuing as of the date of this First Amendment.
-5-
<PAGE>
(c) The Bank shall have received within 30 days of the date hereof, a
favorable written opinion of the law firm of Jones, Day, Reavis & Pogue as
to such matters as the Bank may reasonably request.
Section 4. Representations and Warranties. The Borrower hereby affirms
------------------------------
that as of the date of execution and delivery of this First Amendment, except as
affected by the transactions contemplated in this First Amendment, all of the
representations and warranties contained in the Credit Agreement are true and
correct in all material respects as though made on and as of the date hereof and
no Event of Default shall have occurred and be continuing.
Section 5. Effectiveness. Upon the execution hereof by the Borrower and
-------------
the Bank, this First Amendment shall be effective as of the date first written
above.
Section 6. Reference to and Effect on Credit Agreement.
-------------------------------------------
(a) On or after the date first written above, each reference in the
Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import, and each reference to the Credit Agreement in any
certificate or other document or instrument delivered in connection
therewith, shall mean and be a reference to the Credit Agreement as amended
hereby.
(b) Except as specifically amended above, the Credit Agreement is and
shall continue to be in full force and effect and is hereby ratified and
confirmed.
Section 7. Cost, Expenses and Taxes. The Seller agrees to pay on demand
------------------------
all reasonable costs and expenses of the Bank in connection with the
preparation, execution and delivery of this First Amendment and any other
documents to be delivered in connection herewith including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Bank with
respect thereto.
Section 8. Counterparts. This First Amendment may be executed by one or
------------
more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 9. No Oral Agreement. THIS WRITTEN FIRST AMENDMENT AND THE OTHER
-----------------
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 10. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
-6-
<PAGE>
(d) IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed effective as of the date first written above.
Borrower:
------------------------------------------------
By:
-------------------------------------------
, its
------------------ --------------
Witness: By:
-------------------------------------------
Name:
-----------------------------------------
Bank: CITIBANK, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
-7-
<PAGE>
Exhibit 7
---------
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of December 16,1994 (this "Agreement"),
is made by ______________, a ______________________ (the "Borrower"), acting
through ________, its ________________, to CITIBANK N.A., a national banking
association (the "Bank").
PRELIMINARY STATEMENTS
A. The Borrower and the Bank have entered into a Credit Agreement,
dated as of December 16, 1994 (said Credit Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "Credit Agreement").
Capitalized terms that are used in this Agreement but are not otherwise defined
in this Agreement shall have the respective meanings assigned to those terms in
the Credit Agreement.
B. The Borrower is the owner of the shares of stock described in
Schedule I and issued by the corporations named therein.
C. It is a condition precedent to the making of Advances by the Bank
under the Credit Agreement that the Borrower shall have made the pledge and
assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to make Advances under the Credit Agreement, the Borrower hereby agrees
as follows:
SECTION 1. Pledge. The Borrower hereby pledges and assigns to the Bank,
------
and hereby grants to the Bank a security interest in, the following property
(the "Pledged Collateral") and all of the Borrower's right, title and interest
in, to and under the Pledged Collateral:
(a) the shares described in Schedule I and the certificates
representing such shares (as hereinafter described in this paragraph
(a), the "Pledged Shares"), and all dividends (including, but not
limited to, stock dividends), cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares for any reason,
including, but not limited to, any change in the number or kind of
outstanding shares of any securities of any issuer of any of such
shares, or any successor to any such issuer, by reason of any
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or
other similar corporate event; provided, however, that in no event
-------- -------
shall such shares include shares that when aggregated with any and all
shares pledged in the aggregate by the other members of the Family
Group (hereinafter defined) to the Bank represent
-1-
<PAGE>
ten percent (10%) or more of the outstanding shares of any issuer; and
(b) any and all cash collateral accounts and custody or
safekeeping accounts now or hereafter established with the Bank in the
name of the Borrower or the Bank but under the sole control and
dominion of the Bank (individually, a "Collateral Account" and
collectively, the "Collateral Accounts"), all funds and other property
at any time delivered or transferred or credited to, or deposited or
held in, any one or more of the Collateral Accounts and all
certificates and instruments, if any, from time to time representing or
evidencing any one or more of the Collateral Accounts; and
(c) all proceeds of any and all of the foregoing Pledged
Collateral (including, but not limited to, proceeds that constitute
property of the types described above in this Section 1).
For purposes of this Section 1, "Family Group" means Brush Creek, Ltd., a Texas
limited partnership, Tallulah, Ltd., a Texas limited partnership, Evan Wyly, the
Laurie L. Wyly Trust, the Lisa Lynn Wyly Trust, the Kelly Wyly Elliott Trust,
the Andrew David Sparrow Wyly Trust, the Christiana Parker Wyly Trust, the
Martha Caroline Wyly Trust, the Charles Joseph Wyly, III Trust, the Jennifer
Lynn Wyly Trust and the Emily Ann Wyly Trust.
SECTION 2. Security for Obligations. This Agreement secures the payment
------------------------
of all obligations of the Borrower now or hereafter existing under the Credit
Agreement, the Note, any Hedging Agreement and this Agreement, whether for
principal, interest, fees, expenses or otherwise (all such obligations of the
Borrower being collectively the ("Obligations"). Without limiting the generality
of the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Obligations and would be owed by the Borrower to the Bank
under the Credit Agreement and the Note but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
SECTION 3. Delivery of Pledged Collateral. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Bank pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Bank. The Bank shall have the right, at any time in its
discretion and without notice to the Borrower, to transfer to or to register in
the name of the Bank or any of its nominees (including, but not limited to, any
clearing corporation or custodian bank (as those terms are defined in the
Uniform Commercial Code in effect in the State of New York) and any nominee of
any such clearing corporation or custodian bank) any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a);
provided
- --------
-2-
<PAGE>
that the Bank shall not have the right at any time that the Pledged Shares are
beneficially owned by the Borrower, to loan any of the Pledged Shares to any
Person to cover a short position or for any other purpose or to create any
security interest in any of the Pledged Shares. In addition, the Bank shall have
the right at any time to exchange certificates or instruments representing or
evidencing any Of the Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 4. Representations and Warranties. The Pledgor
------------------------------
represents and warrants as follows:
(a) The Pledged Shares have been duly authorized and
validly issued and are fully paid and non-assessable and the Pledged
Shares are "restricted securities" within the meaning of Rule 144
(hereinafter defined).
(b) The Borrower is the sole legal and beneficial owner of the
Pledged Collateral free and clear of any lien, security interest,
option or other charge, encumbrance or restriction (including, but not
limited to, any restriction (contractual or otherwise) on the
transferability of the Pledged Shares) except for the security interest
created by this Agreement and except for restrictions imposed by Rule
144 ("Rule 144") under the Securities Act of 1933, as from time to time
amended (the "Securities Act"), upon the transferability of the Pledged
Shares by the Borrower but not upon the transferability of the Pledged
Shares by the Bank.
(c) The Pledge and assignment of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral, securing the payment of
the Obligations.
(d) No consent of any other person or entity and no
authorization, approval, consent or other action by, and no notice to
or filing or registration with, any governmental authority or
regulatory body is required for (i) the pledge and assignment by the
Borrower of the Pledged Collateral pursuant to this Agreement, (ii) the
execution, delivery or performance of this Agreement by the Borrower,
(iii) the creation, perfection or maintenance of the security interest
created hereby (including, but not limited to, the first priority
nature of such security interest) or (iv) the exercise by the Bank of
the voting or other rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this
Agreement (except as may be required in connection with any disposition
of any portion of the Pledged Collateral by laws affecting the offering
and sale of securities generally).
(e) The Pledged Shares of each respective issuer thereof
indicated on Schedule I do not constitute ten percent or more of the
issued and outstanding shares of stock of such issuer.
-3-
<PAGE>
(f) The Borrower acquired the Pledged Shares on the respective
dates, in the respective manners and for the respective payments or
other considerations indicated on Schedule I. As calculated under
paragraph (d) of Rule 144, a minimum of three years has elapsed or is
deemed to have elapsed since the later of (i) the date of the
acquisition by the Borrower of the Pledged Shares from the respective
issuers thereof indicated on Schedule I or from any "affiliate" (such
term being used in this Section 4(f) as that term is defined in
paragraph (a)(1) of Rule 144) of any of such issuers and (ii) the date
of payment by the Borrower of the full purchase price or other
consideration paid or given to acquire the Pledged Shares from the
respective issuers thereof indicated on Schedule I or from any
affiliate of any of such issuers.
(g) If so indicated on Schedule I with respect to any issuer
of the Pledged Shares, the Borrower is a director on the board of
directors of such issuer, and the Borrower's term as such a director
expires on the date indicated on Schedule I with respect to such
issuer.
(h) If so indicated on Schedule I with respect to any issuer
of the Pledged Shares, the Borrower beneficially owns shares of
securities of such issuer that in the aggregate exceed ten percent of
the issued and outstanding securities of such issuer.
(i) As indicated on Schedule I with respect to any issuer of
the Pledged Shares, the Pledged Shares issued by such issuer either are
listed or admitted to trading on the national securities exchange, if
any, indicated for such issuer on Schedule I or are quoted on the
Nasdaq National Market as indicated for such issuer on Schedule I.
(j) No order of the Securities and Exchange Commission and no
provision of any federal or state securities laws or state "Blue Sky"
laws is or will be violated or contravened by any of (i) the making of
any Advance to the Borrower, (ii) the application of the proceeds of
any Advance, (iii) the repayment by the Borrower of all or any portion
of any Advance, (iv) the payment by the Borrower of any interest on any
Advance, (v) the pledge and assignment by the Borrower of the Pledged
Collateral pursuant to this Agreement, (vi) the execution, delivery or
performance of this Agreement by the Borrower or (vii) the creation,
perfection or maintenance of the security interest created hereby.
(k) The Borrower's federal tax identification is __- ________.
(l) There are no conditions precedent to the effectiveness of
this Agreement that have not been satisfied or waived.
-4-
<PAGE>
(m) The Borrower, independently and without reliance upon the
Bank and based on such documents and information as the Borrower has
deemed appropriate, has made the Borrower's own credit analysis and
decision to enter into this Agreement.
SECTION 5. Further Assurances. The Borrower agrees that at any
------------------
time and from time to time, at the expense of the Borrower, the
Borrower will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable, or that the Bank may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted
hereby or to enable the Bank to exercise and enforce its rights and
remedies hereunder with respect to any of the Pledged Collateral.
SECTION 6. Collateral Accounts. Without limiting the generality of
-------------------
Section 5, the Borrower, promptly upon request by the Bank, shall establish with
the Bank one or more Collateral Accounts and shall maintain each such Collateral
Account with the Bank so long as the Note shall remain unpaid in whole or in
part or the Bank shall have any Commitment under the Credit Agreement. It shall
be a term and condition of each Collateral Account, notwithstanding any term or
condition to the contrary in any other agreement relating to such Collateral
Account and except as otherwise provided by the provisions of this Section and
Section 12, that no amount (including, but not limited to, interest on any
Collateral Account that is an interest-bearing account) shall be paid or
released from such Collateral Account to or for the account of, or withdrawn
from such Collateral Account by or for the account of, the Borrower or any other
person or entity. Each Collateral Account shall be subject to such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect. Any cash deposited from time to time in any one or more of the
Collateral Accounts shall be held by the Bank as Pledged Collateral or as cash
proceeds received by the Bank in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral and shall not
constitute payment of any of the Obligations until applied by the Bank against
the Obligations pursuant to Section 12. The Bank may release Collateral to the
Borrower from time to time in the event the Bank determines in its sole
discretion that after any such release of Collateral the Bank will be adequately
secure; provided, however that any such release of Pledged Shares shall be to
-------- -------
the transfer agent of the issuer of such Pledged Shares.
SECTION 7. Voting Rights; Dividends; Etc.
-----------------------------
(a) So long as no Event of Default or event which, with the
giving of notice or the lapse of time, or both, would become an Event
of Default shall have occurred and be continuing:
-5-
<PAGE>
(i) The Borrower shall be entitled to exercise or retrain
from a exercising any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement.
(ii) The Borrower shall be entitled to receive and retain any
and all dividends paid in respect of the Pledged Collateral; provided
--------
that any and all
(A) dividends (including, but not limited to, stock
dividends) paid or payable other than in cash in respect of,
and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any
of the Pledged Collateral for any reason, including, but not
limited to, any change in the number or kind of outstanding
shares of any securities of any issuer of any of the Pledged
Shares, or any successor to any such issuer, by reason of any
recapitalization, merger, consolidation, reorganization,
separation, liquidation, stock split, stock dividend,
combination of shares or other similar corporate event,
(B) dividends and other distributions paid or payable in
cash in respect of any of the Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange
for, any of the Pledged Collateral, shall be, and shall be
forthwith delivered to the Bank to hold as, Pledged Collateral
and shall, if received by the Borrower, be received in trust
for the benefit of the Bank, be segregated from the other
property or funds of the Borrower, and be forthwith delivered
to the Bank as Pledged Collateral in the same form as so
received (with any necessary indorsement or assignment).
(iii) The Bank shall execute and deliver (or cause to be
executed and delivered) to the Borrower all such proxies and other
instruments as the Borrower may reasonably request for the purpose
of enabling the Borrower to exercise the voting and other rights
which the Borrower is entitled to exercise pursuant to Section
7(a)(i) and to receive the dividends which the Borrower is
authorized to receive and retain pursuant to Section 7(a)(ii).
-6-
<PAGE>
(b) Upon the occurrence and during the continuance of an Event
of Default or an event which, with the giving of notice or the lapse of
time, or both, would become an Event of Default:
(i) All rights of the Borrower (A) to exercise or retrain
from exercising the voting and other consensual rights which
the Borrower would otherwise be entitled to exercise pursuant
to Section 7(a)(i) shall, upon notice to the Borrower by the
Bank, cease and (b) to receive the dividends which the
Borrower would otherwise be authorized to receive and retain
pursuant to Section 7(a) (ii) shall automatically cease, and
all such rights shall thereupon become vested in the Bank
which shall thereupon have the sole right to exercise or
retrain from exercising such voting and other consensual
rights and to receive and hold as Pledged Collateral such
dividends.
(ii) All dividends which are received by the Borrower
contrary to the provisions of Section 7(b)(i) shall be
received in trust for the benefit of the Bank, shall be
segregated from other property and funds of the Borrower and
shall be forthwith paid over to the Bank as Pledged Collateral
in the same form as so received (with any necessary
indorsement).
SECTION 8. Transfers and Other Liens. The Borrower will not (a) sell,
-------------------------
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Pledged Collateral, or (b) create or permit
to exist any lien, security interest, option, right of first refusal or other
charge or encumbrance upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement.
SECTION 9. Bank Appointed Attorney-in-Fact. The Borrower hereby
-------------------------------
appoints the Bank the Borrower's attorney-in-fact, with full authority in the
place and stead of the Borrower and in the name of the Borrower or otherwise,
from time to time in the Bank's discretion to take any action and to execute any
instrument which the Bank may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Borrower under Section
7), including, without limitation, to receive, indorse and collect all
instruments made payable to the Borrower representing any dividend or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same and to file any reports or other filings
required by Rule 144 with the Securities and Exchange Commission or any other
governmental authority or regulatory body that may be substituted therefor or
with any national securities exchange.
SECTION 10. Bank May Perform. If the Borrower fails to perform any
----------------
agreement contained herein, the Bank may itself perform, or cause performance
of, such agreement, and the expenses
-7-
<PAGE>
of the Bank incurred in connection therewith shall be payable by the Borrower
under Section 13.
SECTION 11. Bank's Duties. The powers conferred on the Bank hereunder
-------------
are solely to protect the Bank's interest in the Pledged Collateral and shall
not impose any duty upon the Bank to exercise any such powers. Except for the
safe custody of any Pledged Collateral in the Bank's possession and the
accounting for moneys actually received by the Bank hereunder, the Bank shall
have no duty as to any of the Pledged Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any of the Pledged Collateral, whether or not the Bank
has or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any of the Pledged Collateral. The Bank shall be deemed to have
exercised reasonable care in the custody and preservation of any of the Pledged
Collateral in the Bank's possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Bank accords it own property.
SECTION 12. Remedies upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
(a) The Bank may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to the Bank, all the rights and remedies
of a secured party on default under the Uniform Commercial Code in
effect in the State of New York at that time (the "Code") (whether or
not the Code applies to the affected Collateral), and may also, without
notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any
exchange, at any broker's board or at any of the Bank's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Bank may deem commercially reasonable which may
include block transactions and/or sales at prices which are below the
current prices quoted on any open market. The Borrower agrees that, to
the extent notice of sale shall be required by law, at least three days
notice to the Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Bank shall not be obligated to make any
sale of any of the Pledged Collateral regardless of notice of sale
having been given. The Bank may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) The Bank also may, without notice to the Borrower except
as required by law and at any time or from time to time, in addition to
other rights and remedies provided for herein or otherwise available to
the Bank, charge, set-off and
-8-
<PAGE>
otherwise apply all or any part of any Collateral Account against all
or any part of the Obligations in such order as the Bank shall elect.
(c) Any cash held by the Bank as Pledged Collateral and all
cash proceeds received by the Bank in respect of any sale of,
collection from, or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Bank, be deposited
into one or more of the Collateral Accounts or otherwise held by the
Bank as collateral for, and/or then or at any time thereafter be
applied (after payment of any amounts payable to the Bank pursuant to
Section 13) in whole or in part by the Bank against, all or any part of
the Obligations in such order as the Bank shall elect. Any surplus of
such cash or cash proceeds held by the Bank and remaining after payment
in full of all the Obligations shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 13. Expenses. The Borrower will upon demand pay to the Bank the
--------
amount of any and all reasonable expenses, including, but not limited to, the
reasonable fees and expenses of the Bank's counsel and of any experts and
agents, which the Bank may incur in connection with (a) the administration of
this Agreement, (b) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (c) the exercise
or enforcement of any of the rights of the Bank hereunder or (d) the failure by
the Borrower to perform or observe any of the provisions hereof.
SECTION 14. Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement, and no consent to any departure by the Borrower from any
provision of this Agreement, shall in any event be effective unless the same
shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 15. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including, but not limited to,
telephone facsimile communications) and sent via certified or registered mail,
return receipt requested, via telephone facsimile, via personal delivery or via
express courier or delivery service to the Borrower or the Bank, as the case may
be, at the respective addresses or telephone facsimile numbers of the Borrower
and the Bank specified in the Credit Agreement, or, as to either party, at such
other address or telephone facsimile number as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and other communications shall be deemed given
(a) when receipted for (or upon the date of attempted delivery when delivery is
refused) if sent via certified or registered mail, return receipt requested, via
personal delivery or via express courier or delivery service,
-9-
<PAGE>
and (b) when received if sent via telephone facsimile (confirmation of such
receipt via telephone facsimile being deemed receipt).
SECTION 16. Continuing Security Interest; Assignments under Credit
------------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in the
- ---------
Pledged Collateral and shall (a) remain in full force and effect until the later
of (i) the payment in full in cash of the obligations and all other amounts
payable under this Agreement and (ii) the expiration or termination of the
Commitment, (b) be binding upon the Borrower and the heirs, executors,
administrators, legal representatives, successors and assigns of the Borrower,
and (c) inure to the benefit of, and be enforceable by, the Bank and the
successors, transferees and assigns of the Bank. Without limiting the generality
of the foregoing clause (c) and subject to the provisions of the Credit
Agreement, (a) the Bank, without any notice to or consent of the Borrower, may
sell participations to one or more persons or entities in or to all or any
portion of the Bank's rights nd obligations under the Credit Agreement
(including, but not limited to, all or any portion of the Commitment, the
Advances and the Note), and (b) the Bank, with the prior written consent of the
Borrower, which consent shall not be unreasonably withheld, may assign,
syndicate or otherwise transfer all or any portion of the Bank's rights and
obligations under the Credit Agreement (including, but not limited to, all or
any portion of the Commitment, the Advances and the Note) to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to the Bank herein or otherwise;
provided that, any other provision of this Agreement to the contrary
notwithstanding, the Bank may at any time create a security interest in all or
any portion of the Bank's rights under the Credit Agreement (including, but not
limited to, the Advances owing to the Bank and the Note held by the Bank) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Board
of Governors of the Federal Reserve System. Upon the later of the payment in
full in cash of the Obligations and all other amounts payable under this
Agreement and the expiration or termination of the Commitment the security
interest granted hereby shall terminate. Upon any such termination, the Bank
will at the Borrower's expense, (i) return stock certificates evidencing
ownership in Michaels and Sterling as shall not have been sold or otherwise
applied pursuant to the terms hereof to the then acting transfer agent for
Michaels or Sterling, as appropriate, with instructions that restrictive legends
by reapplied to such certificates after which such certificates are to be
returned to the Borrower or its designee by the transfer agent and (i) return to
the Borrower all other the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and execute and deliver to the
Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
SECTION 17. Sections and Schedules. Unless stated otherwise in this
----------------------
Agreement, references in this Agreement to Sections and Schedules are references
to Sections of, and Schedules attached to,
-10-
<PAGE>
this Agreement. Each Schedule attached to this Agreement is by this reference
incorporated in this Agreement.
SECTION 18. Governing Law; Terms. This Agreement shall be governed by,
--------------------
and construed in accordance with, the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms defined in Article 9 of the
Code are used herein as therein defined.
IN WITNESS WHEREOF, the Borrower has duly executed and delivered this
Agreement as of the date first above written.
-------------
By: ____________________________
________, as its ________
-------
-11-
<PAGE>
Schedule I
to
Pledge Agreement
by
_______________, as Borrower,
to
Citibank, N.A., a national banking association
A. Issuer: Michaels Stores, Inc., a Delaware corporation
("Michaels")
The Pledged Shares issued by Michaels are quoted on
the over-the-counter (NASDAQ).
Borrower beneficially owns shares of securities of
Michaels that in the aggregate exceed percent of the
issued and outstanding securities of Michaels.
(1) Stock Certificate No.: _____________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ______________
Manner of acquisition by Borrower:
Acquisition from _____________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of ___________
(2) Stock Certificate No.: _______________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ___________
Manner of acquisition by Borrower:
Acquisition from ________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of _____________
B. Issuer: Sterling Software, Inc., a Delaware corporation
("Sterling")
The Pledged Shares issued by Sterling are quoted on
the New York Stock Exchange (NYSE).
Borrower beneficially owns shares of securities of
Sterling that in the aggregate exceed - percent of
the issued and outstanding securities of Sterling.
-12-
<PAGE>
(1) Stock Certificate No.: ______________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ______________
Manner of acquisition by Borrower:
Acquisition from _________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of __________
(2) Stock Certificate No.: ________________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ___________
Manner of acquisition by Borrower: Acquisition
from _________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of __________
-13-
<PAGE>
===============================================================================
FORM OF FIRST AMENDMENT
to
PLEDGE AGREEMENT
among
____________________,
as the Borrower
and
CITIBANK, N.A.
Effective as of May 5, 1995
===============================================================================
<PAGE>
THIS FIRST AMENDMENT TO PLEDGE AGREEMENT (the "First Amendment") dated as
of May 5, 1995, is among __________________, a _________________________ (the
"Borrower"), acting through ________________ its _________________, and
CITIBANK, N.A., a national banking association (the "Bank").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower, the Bank entered into that certain Credit Agreement
dated as of December 16, 1994 (the "Credit Agreement") pursuant to which the
Borrower and the Bank also entered into that certain Pledge Agreement dated as
of December 16, 1994 (the "Pledge Agreement") pursuant to which the Bank agreed
to made certain Advances to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed to amend
certain provisions of the Pledge Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
-------------
Pledge Agreement or the Credit Agreement, but which are not defined in this
First Amendment, shall have the same meanings as defined in the Pledge Agreement
or the Credit Agreement. Unless otherwise indicated, all section references in
this First Amendment refer to the Pledge Agreement.
Section 2. First Amendment Advance. The Bank agrees, provided that the
-----------------------
additional conditions precedent hereto are satisfied, to make an initial Advance
as defined in the Credit Agreement (the "First Amendment Advance").
Section 3. Amendments to the Pledge Agreement.
----------------------------------
3.1 Schedule I. Schedule I to the Pledge Agreement is hereby deleted and
----------
Schedule I hereto is inserted in lieu thereof.
3.2 Section 1(a). Section 1(a) of the Pledge Agreement is hereby amended
------------
by inserting in the first line thereof after the phrase "Schedule I" and
before the phrase "and the certificates" the following:
"and any other shares delivered to the Bank pursuant hereto and any
shares shown on the account of the Bank on the books of a clearing
corporation and registered in the name of the clearing corporation,
another clearing corporation, a custodian bank or a nominee of any of
them".
<PAGE>
3.3 Section 3. Section 3 of the Pledge Agreement is hereby amended by
---------
inserting in at the end of the fourth line thereof after the phrase "in
blank," and before the phrase "all in form" as such phrase appears in the
fifth line thereof, the following:
"or shall be shown on the account of the Bank on the books of a
clearing corporation and registered in the name of the clearing
corporation, another clearing corporation, a custodian bank or a
nominee of any of them".
Section 4. Additional Conditions Precedent to the Advance.
----------------------------------------------
4.1 Conditions Precedent to the Advance. The obligation of the Bank to
-----------------------------------
make the First Amendment Advance shall be subject to the following
conditions precedent:
(a) In addition to the conditions precedent as set forth in Article
III of the Credit Agreement, the Borrower will execute and deliver the
following items:
(i) Federal Reserve Form U-1 relating to the pledged shares
described on Schedule I hereto; and
(ii) Undated stock powers relating to the pledged shares on
Schedule I hereto executed in blank or registered in the name of
the Bank or such nominee or nominees as the Bank shall specify.
(b) The Borrower will deliver to the Bank the stock certificates
evidencing the pledged shares (if certificated) as further described
on Schedule I hereto, or otherwise cause perfection of the Bank's
first and prior security interest in the pledged shares in the event
that any of such pledged shares are uncertificated.
(c) The Bank shall have received multiple counterparts, as requested,
of this First Amendment, executed and delivered by a duly authorized
representative of the Borrower.
(d) No Event of Default as defined in the Credit Agreement shall have
occurred and be continuing as of the date of this First Amendment.
Section 5. Representations and Warranties. The Borrower hereby affirms
------------------------------
that as of the date of execution and delivery of this First Amendment, except as
affected by the transactions contemplated in this First Amendment, all of the
representations and warranties contained in the Credit Agreement and the Pledge
Agreement are true and correct in all material respects as though
-2-
<PAGE>
made on and as of the date hereof and no Event of Default shall have occurred
and be continuing.
Section 6. Miscellaneous.
-------------
6.1 Confirmation. The provisions of the Pledge Agreement (as amended by
------------
this First Amendment) shall remain in full force and effect in accordance
with their terms following the effectiveness of this First Amendment.
6.2 Ratification and Affirmation of Guarantors. The Guarantor under the
------------------------------------------
Credit Agreement hereby expressly (i) acknowledges the terms of this First
Amendment, (ii) ratifies and affirms his obligations under the Guaranty
Agreement, (iii) acknowledges, renews and extends his continued liability
under said Guaranty Agreement and agrees that said Guaranty Agreement
remains in full force and effect.
6.3 Counterparts. This First Amendment may be executed by one or more of
------------
the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6.4 No Oral Agreement. THIS WRITTEN FIRST AMENDMENT AND THE OTHER
-----------------
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6.5 GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed effective as of the date first written above.
BORROWER:
-------------------------------------------------
By:
----------------------------------------------
, its
-------------- --------------------------
GUARANTOR:
-------------------------------------------------
, individually
----------------- -----------------
-3-
<PAGE>
Schedule I
to
First Amendment to Pledge Agreement
among
______________, as Borrower,
and
Citibank, N.A.
A. Issuer: Sterling Software, Inc., a Delaware corporation ("Sterling")
The Pledged Shares issued by Sterling are quoted on the New York
Stock Exchange (NYSE) .
Borrower beneficially owns shares of securities of Sterling that
in the aggregate exceed ____ percent of the issued and
outstanding securities of Sterling.
(1) Stock Certificate No.: ________
Class of Stock: Common Stock
Number of Shares: ________
Date acquired by Borrower: _____________________
Manner of acquisition by Borrower:
_____________________________________
Nature of payment by Borrower:
Transfer to ________________ of __________________
B. Issuer: Michaels Stores, Inc., a Delaware corporation ("Michaels")
The Pledged Shares issued by Michaels are quoted on the over-the-
counter (NASDAQ).
Borrower beneficially owns shares of securities of Michaels that
in the aggregate exceed ____ percent of the issued and
outstanding securities of Michaels.
-4-
<PAGE>
(1) Stock Certificate No.: __________
Class of Stock: Common Stock
Number of Shares: __________
Date acquired by Borrower: ____
Manner of acquisition by Borrower:
______________________________
Nature of payment by Borrower:
Transfer to ________________ of __________________
(2) Stock Certificate No.: __________
Class of Stock: Common Stock
Number of Shares: __________
Date acquired by Borrower: _____
Manner of acquisition by Borrower:
______________________________________
Nature of payment by Borrower:
Transfer to ________________ of ____________________
-5-
<PAGE>
================================================================================
FORM OF SECOND AMENDMENT
to
PLEDGE AGREEMENT
among
______________________
as the Borrower
and
CITIBANK, N.A.
Effective as of September 30, 1996
================================================================================
<PAGE>
THIS SECOND AMENDMENT TO PLEDGE AGREEMENT (the "Second Amendment") dated as
----------------
of September 30, 1996, is among ______________________, a ___________
________________ (the "Borrower"), acting through ______________________ its
--------
______________________, and CITIBANK, N.A., a national banking association (the
"Bank").
----
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower and the Bank entered into that certain Credit
Agreement dated as of December 16, 1994 (the "Credit Agreement") pursuant to
----------------
which the Borrower and the Bank also entered into that certain Pledge Agreement
dated as of December 16, 1994 as amended by the First Amendment to Pledge
Agreement dated as of May 5, 1995 (the "Pledge Agreement") pursuant to which the
----------------
Bank agreed to made certain Advances to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed to amend
certain provisions of the Pledge Agreement and the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
-------------
Pledge Agreement or the Credit Agreement, but which are not defined in this
Second Amendment, shall have the same meanings as defined in the Pledge
Agreement or the Credit Agreement. Unless otherwise indicated, all section
references in this Second Amendment refer to the Pledge Agreement.
Section 2. Amendments to the Pledge Agreement. Schedule I. Schedule I to
----------------------------------
the Pledge Agreement is hereby deleted in its entirety and Schedule I hereto is
inserted in lieu thereof.
Section 3. Representations and Warranties. The Borrower hereby affirms
------------------------------
that as of the date of execution and delivery of this Second Amendment, all of
the representations and warranties contained in the Credit Agreement and the
Pledge Agreement are true and correct in all material respects as though made on
and as of the date hereof and no Event of Default shall have occurred and be
continuing.
Section 4. Confirmation. The provisions of the Pledge Agreement (as
------------
amended by this Second Amendment) shall remain in full force and effect in
accordance with their terms following the effectiveness of this Second
Amendment.
Section 5. Ratification and Affirmation of Guarantors. The Guarantor
------------------------------------------
under the Credit Agreement hereby expressly (i) acknowledges the terms of this
Second Amendment and the amendment of even date herewith to the Credit
Agreement, (ii) ratifies and affirms his obligations under the Guaranty
Agreement, (iii) acknowledges,
<PAGE>
renews and extends his continued liability under said Guaranty Agreement and
agrees that said Guaranty Agreement remains in full force and effect.
Section 6. Counterparts. This Second Amendment may be executed by one or
------------
more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 7. No Oral Agreement. THIS WRITTEN SECOND AMENDMENT AND THE OTHER
-----------------
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 8.5 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed effective as of the date first written above.
BORROWER:
-------------------------------------------------
By:
----------------------------------------------
, Its
-------------------------- --------------
GUARANTOR: By:
----------------------------------------------
, individually
--------------------------------
WITNESS: By:
----------------------------------------------
Name:
--------------------------------------------
2
<PAGE>
Schedule I
to
the Pledge Agreement
between
__________, as Borrower,
and
Citibank, N.A.
A. Issuer: Sterling Software, Inc., a Delaware corporation
(1) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _______
Date acquired by Borrower: _________
Manner of acquisition by Borrower:
_____________________________________
B. Issuer: Sterling Commerce, Inc., a Delaware corporation
(1) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _______
Date acquired by Borrower: _________
Manner of acquisition by Borrower:
_____________________________________
C. Issuer: Michaels Stores, Inc., a Delaware corporation
(1) Stock Certificate No.: __________
Class of Stock: Common Stock
Number of Shares: _______
Date acquired by Borrower: ________
Manner of acquisition by Borrower:
_____________________________________
(2) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _________
Date acquired by Borrower: _____
Manner of acquisition by Borrower:
_____________________________________
4
<PAGE>
(3) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _________
Date acquired by Borrower: _____
Manner of acquisition by Borrower:
______________________________________
5
<PAGE>
Exhibit 8
---------
FORM OF GUARANTY AGREEMENT
--------------------------
This GUARANTY AGREEMENT by ______________ (hereinafter called
"Guarantor"), is in favor of Citibank, N.A., a national banking association (the
"Bank").
W I T N E S S E T H:
WHEREAS, on even date herewith, ______________, acting through
___________, its ____________ (hereinafter called "Borrower") and Bank entered
into that certain Credit Agreement (as the same may be amended from time to
time, the "Credit Agreement"); and
WHEREAS, one of the terms and conditions stated in the Credit Agreement
for the making of the loans described therein is the execution and delivery to
the Bank of this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of
the Credit Agreement, (ii) to induce the Bank, at any time or from time to time,
to loan monies, with or without security to or for the account of Borrower in
accordance with the terms of the Credit Agreement, (iii) at the special
insistence and request of the Bank, and (iv) for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereby agrees as follows:
ARTICLE 1
---------
General Terms
-------------
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement,
-------------------
the terms "Bank", "Borrower", "Guarantor" and "Credit Agreement" shall have the
meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement,
-------------------
the following terms shall have the following meanings, unless the context
otherwise requires:
"Collateral" shall have the meaning indicated in Section 4.1 hereof.
"Guarantor Claims" shall have the meaning indicated in Section 5.1
hereof.
"Guaranty Agreement" shall mean this Guaranty Agreement, as the same
may from time to time be amended or supplemented.
"Liabilities" shall mean (a) any and all indebtedness, obligations and
liabilities pursuant to the Credit Agreement, including without
limitation (i) the unpaid principal of and interest on the Note, (ii)
interest accruing subsequent to the filing
-1-
<PAGE>
of a petition or other action concerning bankruptcy or other similar
proceeding, and (iii) any and all indebtedness, obligations and
liabilities pursuant to any Hedge Agreement; and (b) all renewals,
rearrangements, increases, extensions for any period, amendments or
supplement in whole or in part of the Note or any documents evidencing
the above.
"Loan Documents" shall mean the Credit Agreement, the Notes and the
Loan Documents.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined
----------------------------
herein, all terms beginning with a capital letter which are defined in the
Credit Agreement shall have the same meanings herein as therein.
ARTICLE 2
---------
The Guaranty
------------
Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably and
----------------------
unconditionally guarantees the prompt payment at maturity of the Liabilities.
Section 2.2 Nature of Guaranty. This guaranty is an absolute,
------------------
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Borrower need be given to Guarantor.
This guaranty may not be revoked by Guarantor and shall continue to be effective
with respect to debt under the Liabilities arising or created after any
attempted revocation by Guarantor and after Guarantor's death and shall remain
in full force and effect until the Liabilities are paid in full and the
Commitment is terminated, notwithstanding that from time to time prior thereto
no Liabilities may be outstanding. Borrower and the Bank may modify, alter,
rearrange, extend for any period and/or renew from time to time, the
Liabilities, and the Bank may waive any Default or Events of Default without
notice to the Guarantor and in such event Guarantor will remain fully bound
hereunder on the Liabilities. This guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the Liabilities is
rescinded or must otherwise be returned by the Bank upon the insolvency,
bankruptcy or reorganization of Borrower or otherwise, all as though such
payment had not been made. This Guaranty Agreement may be enforced by the Bank
and any subsequent holder of the Liabilities and shall not be discharged by the
assignment or negotiation of all or part of the Liabilities. Guarantor hereby
expressly waives presentment, demand, notice of non-payment, protest and notice
of protest and dishonor, notice of Event of Default, notice of intent to
accelerate the maturity and notice of acceleration of the maturity and any other
notice in connection with the Liabilities, and also notice of acceptance of this
Guaranty Agreement, acceptance on the part of the Bank being conclusively
presumed by its request for this Guaranty Agreement and delivery of the same to
it.
-2-
<PAGE>
Section 2.3 Bank's Rights. Guarantor authorizes the Bank, without
-------------
notice or demand and without affecting Guarantor's liability hereunder, to take
and hold security for the payment of this Guaranty Agreement and/or the
Liabilities, and exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof as the Bank
in its discretion may determine; and to obtain a guaranty of the Liabilities
from any one or more Persons and at any time or times to enforce, waive,
rearrange, modify, limit or release any of such other Persons from their
obligations under such guaranties.
Section 2.4 Guarantor's Waivers. Guarantor waives any right to require
-------------------
the Bank to (a) proceed against Borrower or any other person liable on the
Liabilities, (b) enforce its rights against any other guarantor of the
Liabilities (c) proceed or enforce its rights against or exhaust any security
given to secure the Liabilities (d) have Borrower joined with Guarantor in any
suit arising out of this Guaranty Agreement and/or the Liabilities, or (e)
pursue any other remedy in the Bank's powers whatsoever. The Bank shall not be
required to mitigate damages or take any action to reduce, collect or enforce
the Liabilities. Guarantor waives any defense arising by reason of any
disability, lack of authority or power, or other defense of Borrower or any
other guarantor of the Liabilities, and shall remain liable hereon regardless of
whether Borrower or any other guarantor be found not liable thereon for any
reason. Until the Liabilities shall have been paid in full, Guarantor waives any
right to enforce any remedy which the Bank now has or may hereafter have against
Borrower, and waives any benefit of any right to participate in any security now
or hereafter held by the Bank. Whether and when to exercise any of the remedies
of the Bank under any of the Loan Documents shall be in the sole and absolute
discretion of the Bank, and no delay by the Bank in enforcing any remedy,
including delay in conducting a foreclosure sale, shall be a defense to the
Guarantor's liability under this Guaranty Agreement. To the extent allowed by
applicable law, the Guarantor hereby waives any good faith duty on the part of
the Bank in exercising any remedies provided in the Loan Documents and any
requirement of liquidation of any collateral pledged by the Borrower to be
"commercially reasonable" under the Texas Business and Commerce Code.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if
--------------------------------
the maturity of the Liabilities is accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will, forthwith upon
notice from the Bank of Borrower's failure to pay the Liabilities at maturity,
pay to the Bank at its banking quarters in New York, New York the amount due and
unpaid by Borrower and guaranteed hereby. The failure of the Bank to give this
notice shall not in any way release Guarantor hereunder.
Section 2.6 Bank's Expenses. If Guarantor fails to pay the Liabilities
---------------
after notice from the Bank of Borrower's failure to pay any Liabilities at
maturity, and if the Bank obtains the services of an attorney for collection of
amounts owing by Guarantor hereunder, or obtaining advice of counsel in respect
of any of their rights under the guaranty, or if suit is filed to enforce this
Guaranty Agreement, or if proceedings are had in any bankruptcy, probate,
receivership or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing by Guarantor
hereunder is
-3-
<PAGE>
collected through such proceedings, Guarantor agrees to pay to the Bank at its
banking quarters the Bank's reasonable attorneys' fees.
Section 2.7 Liability. It is expressly agreed that the liability of the
---------
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
----------------------------------------------------
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
- -----------------------
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
(a) Modifications, etc. Any renewal, extension, modification,
------------------
increase, decrease, alteration or rearrangement of all or any part of
the Liabilities, or of the Note, or the Credit Agreement or any
instrument executed in connection therewith, or any contract or
understanding between Borrower and the Bank, or any other Person,
pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance
---------------
or compromise that might be granted or given by the Bank to Borrower or
Guarantor or any Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
----------------------------------
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution, death or lack of power of Borrower or
Guarantor or any other Person at any time liable for the payment of all
or part of the Liabilities; or any dissolution of Borrower or
Guarantor, or any sale, lease or transfer of any or all of the assets
of Borrower or Guarantor, or any changes in the composition of Borrower
or Guarantor; or any reorganization of Borrower or Guarantor;
(d) Invalidity of Liabilities. The invalidity, illegality or
-------------------------
unenforceability of all or any part of the Liabilities, or any document
or agreement executed in connection with the Liabilities, for any
reason whatsoever, including without limitation the fact that the
Liabilities, or any part thereof, exceed the amount permitted by Law,
the act of creating the Liabilities or any part thereof is ultra vires
the officers or representatives executing the documents or otherwise
creating the Liabilities acted in excess of their authority, the
Liabilities violate usury laws applicable to the Borrower has valid
defenses, claims or offsets (whether at law, in equity or by agreement)
which render the Liabilities wholly or partially uncollectible from
Borrower, the creation, performance or repayment of the Liabilities (or
the execution, delivery and performance of any document or instrument
representing part of the Liabilities or executed in connection with the
Liabilities, or given to secure the repayment of the Liabilities) is
illegal, uncollectible or legally unenforceable, or the Credit
Agreement or other documents or instruments pertaining to the
Liabilities have been forged or otherwise are irregular or not genuine
or authentic;
-4-
<PAGE>
(e) Release of Obligors. Any full or partial release of the
-------------------
liability of Borrower on the Liabilities or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and severally,
to pay, perform, guarantee or assure the payment of the Liabilities or
any part thereof, it being recognized, acknowledged and agreed by
Guarantor that Guarantor may be required to pay the Liabilities in full
without assistance or support of any other Person, and Guarantor has
not been induced to enter into this Guaranty Agreement on the basis of
a contemplation, belief, understanding or agreement that parties other
than the Borrower will be liable to perform the Liabilities, or the
Bank will look to other parties to perform the Liabilities.
Notwithstanding the foregoing, Guarantor does not hereby waive or
release (expressly or impliedly) any rights of subrogation,
reimbursement or contribution which it may have, after payment in full
of the Liabilities, against others liable on the Liabilities;
Guarantor's rights of subrogation and reimbursement are however,
subordinate to the rights and claims of the Bank.
(f) Other Security. The taking or accepting of any other
--------------
security, collateral or guaranty, or other assurance of payment, for
all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender,
--------------------------
exchange, subordination, deterioration, waste, loss or impairment
(including without limitation negligent, willful, unreasonable or
unjustifiable impairment) of any collateral, property or security, at
any time existing in connection with, or assuring or securing payment
of, all or any part of the Liabilities;
(h) Care and Diligence. The failure of the Bank or any other
------------------
Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or
any part of such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security,
---------------
security interest or lien contemplated or intended to be given, created
or granted as security for the repayment of the Liabilities shall not
be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized
and agreed by Guarantor that Guarantor is not entering into this
Guaranty Agreement in reliance on, or in contemplation of the benefits
of, the validity, enforceability, collectibility or value of any of the
collateral for the Liabilities. Notwithstanding the foregoing,
Guarantor does not hereby waive or release (expressly or impliedly) any
right to be subrogated to the rights of the Bank in any collateral or
security for the Liabilities, after payment in full of the Liabilities;
Guarantor's rights of subrogation are, however, subordinate to the
rights, claims, liens and security interests of the Bank;
(j) Payments Rescinded. Any payment by Borrower to the Bank is
------------------
held to constitute a preference under the bankruptcy laws, or for any
reason the Bank is
-5-
<PAGE>
required to refund such payment or pay such amount to Borrower or
someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or
------------------------------
omitted to be taken with respect to the Credit Agreement, the
Liabilities, or the security and collateral therefor, whether or not
such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Liabilities
pursuant to the terms hereof; it being the unambiguous and unequivocal
intention of Guarantor that Guarantor shall be obligated to pay the
Liabilities when due, notwithstanding any occurrence, circumstance,
event, action, or omission whatsoever, whether contemplated or
uncontemplated, and whether or not otherwise or particularly described
herein, except for the full and final payment and satisfaction of the
Liabilities.
ARTICLE 3
---------
Representations, Warranties and Covenants
-----------------------------------------
Section 3.1 By Guarantor. In order to induce the Bank to accept this
------------
Guaranty Agreement, Guarantor represents, warrants and covenants to the Bank
(which representations, warranties and covenants will survive the creation of
the Liabilities and any extension of credit thereunder) that:
(a) Benefit to Guarantor. The guaranty pursuant to this
--------------------
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, G uarantor.
(b) Capacity. Guarantor possesses the requisite legal
--------
capacity to enter into the Guaranty Agreement.
(c) Binding Obligations. This Guaranty Agreement constitutes
-------------------
valid and binding obligations of Guarantor, enforceable in accordance
with its terms (except that enforcement may be subject to any
applicable bankruptcy, insolvency or similar laws generally affecting
the enforcement of creditors' rights).
(d) No Legal Bar or Resultant Lien. This Guaranty Agreement
------------------------------
will not violate any or any contract, agreement, law, regulation,
order, injunction, judgment, decree or writ to which Guarantor is
subject, or result in the creation or imposition of any Lien upon any
Properties of Guarantor.
(e) No Consent. Guarantor's execution, delivery and
----------
performance of this Guaranty Agreement does not require the consent or
approval of any other Person, including without limitation any
regulatory authority or governmental body of the United States or any
state thereof or any political subdivision of the United States or any
state thereof.
-6-
<PAGE>
(f) No Contravention. Guarantor's execution, delivery and
----------------
performance of this Guaranty Agreement does not and will not contravene
any law or any contractual restriction or fiduciary duty binding on or
affecting the Guarantor.
(g) Solvency. The Guarantor hereby represents that (i) it is
--------
not insolvent as of the date hereof and will not be rendered insolvent
as a result of this Guaranty Agreement, (ii) it is not engaged in
business or a transaction, or about to engage in a business or a
transaction, for which any property or assets remaining with such
Guarantor is unreasonably small capital, and (iii) it does not intend
to incur, or believe it will incur, debts that will be beyond its
ability to pay as such debts mature.
(h) Reporting Requirements. Guarantor will furnish to the Bank
----------------------
as soon as available and in any event within sixty days after the last
day of the most recently ended calendar quarter, a balance sheet of the
Guarantor as at the end of such calendar quarter, including a listing
of all contingent liabilities of the Guarantor, in reasonable detail
and in form satisfactory to the Bank and certified by the Guarantor as
being accurate and fairly presenting the financial condition of the
Guarantor as at the end of such calendar quarter, and accompanied by a
certificate of the Guarantor stating that no Event of Default or other
event which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default has occurred and is continuing or,
if an Event of Default or any such other event has occurred and is
continuing, a statement as to the nature thereof and the action which
the Guarantor has taken and proposes to take with respect thereto.
Section 3.2 No Representation by Bank. Neither the Bank nor any other
-------------------------
Person has made any representation, warranty or statement to the Guarantor in
order to induce the Guarantor to execute this Guaranty Agreement.
ARTICLE 4
---------
Security
--------
Section 4.1 Grant of Security Interest. As security for Guarantor's
--------------------------
obligations hereunder, Guarantor hereby grants to the Bank a security interest
in, a general lien upon and/or right of set-off against the following (herein
referred to as the "Collateral"): the balance of every deposit account, now or
hereafter existing, of Guarantor with the Bank and any other claim of Guarantor
against the Bank, now or hereafter existing, and all money, instruments,
securities, documents, chattel paper, credits, claims, demands and any other
property, rights and interest of Guarantor, which at any time shall come into
the possession or custody or under the control of the Bank or any of its agents
or affiliates, for any purpose, and shall include the Collateral in transit to
or set apart for them.
Section 4.2 Financing Statements. The right is expressly granted to
--------------------
the Bank, at its discretion, to file one or more financing statements or a copy
of this Guaranty Agreement
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<PAGE>
under the Uniform Commercial Code naming Guarantor as Debtor and the Bank as
Secured Party and indicating therein the types or describing the items of
Collateral.
Section 4.3 Remedies. In the event of default under this Guaranty
--------
Agreement, the Bank may sell or cause to be sold in New York, New York, or
elsewhere, in one or more sales or parcels, at such price as the Bank may deem
best, and for cash or on credit or for future delivery, without assumption of
any credit risk, all or any of the Collateral at any broker's board or at public
or private sale, without demand or performance or notice of intention to sell or
of time or place of sale (except such notice as is required by applicable
statute and cannot be waived), and the Bank or anyone else may be the purchaser
of any or all of the Collateral so sold and thereafter hold the same absolutely,
free from any claim or right of whatsoever kind, including any equity of
redemption of Guarantor, any such demand, notice or right and equity being
hereby expressly waived and released.
Section 4.4 Rights. The grant of the above security interest and lien
------
shall not in anywise limit or be construed as limiting the Bank to collect
payment of Guarantor's obligations hereunder only out of the Collateral, but it
is expressly understood and provided that all such obligations shall constitute
the absolute and unconditional obligations of Guarantor. The Bank shall not be
required to take any steps necessary to preserve any rights against prior
parties to any of the Collateral.
ARTICLE 5
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Subordination of Indebtedness
-----------------------------
Section 5.1 Subordination of All Guarantor Claims. As used herein, the
-------------------------------------
term "Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower arising as a result of
subrogation or otherwise as a result of Guarantor's payment of all or a portion
of the Liabilities. Until the Liabilities shall be paid and satisfied in full
and Guarantor shall have performed all of its obligations hereunder, Guarantor
shall not receive or collect, directly or indirectly, from Borrower or any other
party any amount upon the Guarantor Claims.
Section 5.2 Claims in Bankruptcy. In the event of receivership,
--------------------
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Borrower as debtor, the Bank shall have the right to prove
its claim in any proceeding, so as to establish its rights hereunder and receive
directly from the receiver, trustee or other court custodian, dividends and
payments which would otherwise be payable upon Guarantor
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<PAGE>
Claims. Guarantor hereby assigns such dividends and payments to the Bank. Should
the Bank receive, for application upon the Liabilities, any such dividend or
payment which is otherwise payable to Guarantor, and which, as between Borrower
and Guarantor, shall constitute a credit upon the Guarantor Claims, then upon
payment in full of the Liabilities, Guarantor shall become subrogated to the
rights of the Bank to the extent that such payments to the Bank on the Guarantor
Claims have contributed toward the liquidation of the Liabilities, and such
subrogation shall be with respect to that proportion of the Liabilities which
would have been unpaid if the Bank had not received dividends or payments upon
the Guarantor Claims.
Section 5.3 Payments Held in Trust. In the event that notwithstanding
----------------------
Sections 5.1 and 5.2 above, Guarantor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, Guarantor agrees to hold
in trust for the Bank an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions except
to pay them promptly to the Bank, and Guarantor covenants promptly to pay the
same to Bank.
Section 5.4 Liens Subordinate. Guarantor agrees that any liens,
-----------------
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower's assets securing payment of the
Liabilities, regardless of whether such encumbrances in favor of Guarantor or
the Bank presently exist of are hereafter created or attach. Without the prior
written consent of the Bank, Guarantor shall not (a) exercise or enforce any
creditor's right it may have against the Borrower, or (b) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceeding
(judicial or otherwise, including without limitation the commencement of or
joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any lien, mortgages, deeds of trust, security
interest, collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.
Section 5.5 Notation of Records. All promissory notes, accounts
-------------------
receivable ledgers or other evidence of the Guarantor Claims accepted by or held
by Guarantor shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this Guaranty
Agreement.
ARTICLE 6
---------
Miscellaneous
-------------
Section 6.1 Successors and Assigns. This Guaranty Agreement is and
----------------------
shall be in every particular available to the successors and assigns of the Bank
and is and shall always be fully binding upon the legal representatives, heirs,
successors and assigns of Guarantor, notwithstanding that some or all of the
monies, the repayment of which this Guaranty
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<PAGE>
Agreement applies, may be actually advanced after any bankruptcy, receivership,
reorganization, death, disability or other event affecting Guarantor.
Section 6.2 Notices. Any notice or demand to Guarantor under or in
-------
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with Section
8.02 of the Credit Agreement, addressed to Guarantor at the address on the
signature page hereof or at such other address provided to the Bank in writing.
Section 6.3 Business and Financial Information. The Guarantor will
----------------------------------
promptly furnish to the Bank from time to time upon request such information
regarding the business and affairs and financial condition of the Guarantor and
its subsidiaries as the Bank may reasonably request.
Section 6.4 Governing Law; Consent to Jurisdiction. This Guaranty
--------------------------------------
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York. The Guarantor hereby submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any court of the State of New York sitting in New York City for
purposes of all legal proceedings arising out of or relating to this Guaranty
Agreement, any other Loan Document or any transactions contemplated hereby or
thereby. The Guarantor irrevocably waives, to the fullest extent permitted by
law, any objection which the Guarantor may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Notwithstanding the preceding two sentences, the Bank retains the right
to bring any suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Guaranty
Agreement, any other Loan Document or any of the transactions contemplated
hereby or thereby in any court that has jurisdiction over the parties and
subject matter.
Section 6.5 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 6.6 WAIVER OF JURY TRIAL. THE GUARANTOR AND THE BANK HEREBY
--------------------
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THIS GUARANTY AGREEMENT, ANY OTHER LOAN DOCUMENT, THE
ADVANCES OR THE ACTIONS OF THE BANK IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
Section 6.7 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT
---------------- -------------------------------
EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE BANK AND THE
- ------------------------------------------------------------------------
GUARANTOR AND SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH
- -----------------------------------------------------------------------------
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY
- --------------------------------------------------------------------------------
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<PAGE>
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
- ---------------------------------------------------------------------------
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
- ----------------------------------------------------------------------
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
- -----------------------------------------------------------------------------
PARTIES.
- -------
WITNESS THE EXECUTION HEREOF, as of this the 16th day of December,
1994.
--------------
By: ___________________________________
8080 N. Central Expressway
Suite 1300
Dallas, Texas 75206
Telecopier No.: (214) 891-8341
Telephone No.: (214) 891-8245
Attention: Shari Robertson
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