UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File No.1-5571
TANDY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 One Tandy Center, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(817) 390-3700
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes __X__ No ____
The number of shares outstanding of the issuer's Common Stock, $1 par
value, on July 31, 1994 was 63,259,777.
Index to Exhibits is on Sequential Page No. 14.
Total pages 213.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE> TANDY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<CAPTIONS>
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales and operating revenues $ 1,009,277 $ 843,111 $ 2,001,412 $ 1,707,823
Cost of products sold 602,103 474,245 1,186,884 949,237
----------- ----------- ----------- -----------
Gross Profit 407,174 368,866 814,528 758,586
----------- ----------- ----------- -----------
Expenses:
Selling, general and administrative 346,131 306,654 678,051 619,844
Depreciation and amortization 21,052 20,438 41,796 40,403
Net interest income (15,742) (8,211) (28,736) (15,699)
----------- ----------- ----------- -----------
351,441 318,881 691,111 644,548
----------- ----------- ----------- -----------
Income before income taxes, discontinued
operations and cumulative effect of
change in accounting principle 55,733 49,985 123,417 114,038
Provision for income taxes 21,318 18,244 47,207 41,624
----------- ----------- ----------- -----------
Income from continuing operations 34,415 31,741 76,210 72,414
Loss from discontinued operations:
Operating loss, net of tax -- (39,077) -- (57,619)
Loss on disposal, net of tax -- (70,000) -- (70,000)
----------- ----------- ----------- -----------
-- (109,077) -- (127,619)
Income (loss) before cumulative effect of
change in accounting principle 34,415 (77,336) 76,210 (55,205)
Cumulative effect on prior years of change
in accounting principle -- -- -- 13,014
----------- ----------- ----------- -----------
Net income (loss) $ 34,415 $ (77,336) $ 76,210 $ (42,191)
=========== =========== =========== ===========
Net income (loss) per average common and
common equivalent share:
Income from continuing operations $ 0.42 $ 0.38 $ 0.92 $ 0.88
Loss from discontinued operations -- (1.39) -- (1.63)
----------- ----------- ----------- -----------
Income (loss) before cumulative effect of
change in accounting principle 0.42 (1.01) 0.92 (0.75)
Cumulative effect on prior years of change
in accounting principle -- -- -- 0.17
----------- ----------- ----------- -----------
Net income (loss) per average common
and common equivalent share $ 0.42 $ (1.01) $ 0.92 $ (0.58)
=========== =========== =========== ===========
Average common and common equivalent
shares outstanding 78,601 78,571 78,796 78,419
=========== =========== =========== ===========
Dividends declared per common share $ 0.15 $ 0.15 $ 0.30 $ 0.30
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE> TANDY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
<CAPTIONS>
(In thousands)
June 30, Dec. 31, June 30,
1994 1993 1993
------------ ------------ -----------
<S> <C> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 278,271 $ 213,235 $ 120,001
Accounts and notes receivable, less
allowance for doubtful accounts 508,612 582,443 488,039
Inventories, at lower of cost or market 1,212,099 1,276,302 1,162,527
Other current assets 118,821 88,005 141,636
------------ ------------ ------------
Total current assets 2,117,803 2,159,985 1,912,203
Property, plant and equipment, at cost,
less accumulated depreciation 489,163 463,738 437,357
Investment in discontinued operations 18,314 405,664 568,651
Other assets, net of accumulated amortization 194,253 189,712 87,659
------------ ------------ ------------
$ 2,819,533 $ 3,219,099 $ 3,005,870
============ ============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 85,972 $ 346,164 $ 337,696
Subordinated debentures, net of
unamortized bond discount -- 31,739 31,140
Current portion of TESOP guarantee 9,800 10,050 10,550
Accounts payable 252,271 279,942 227,316
Accrued expenses 294,362 349,057 265,791
Income taxes payable 25,566 14,690 1,161
------------ ------------ ------------
Total current liabilities 667,971 1,031,642 873,654
------------ ------------ ------------
Notes payable, due after one year 81,718 127,708 163,863
Guarantee of TESOP indebtedness 54,030 58,930 63,830
Deferred income taxes -- -- 30,713
Other non-current liabilities 47,959 50,069 49,485
------------ ------------ ------------
Total other liabilities 183,707 236,707 307,891
------------ ------------ ------------
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized
Series A junior participating, 100,000 shares
authorized and none issued -- -- --
Series B convertible, 100,000 shares
authorized and issued 429,982 429,982 429,982
Series C PERCS, 150,000 shares
authorized and issued 100,000 100,000 100,000
Common stock, $1 par value, 250,000,000 shares
authorized with 85,645,000 shares issued 85,645 85,645 85,645
Additional paid-in-capital 89,645 85,752 83,095
Retained earnings 2,066,932 2,028,041 1,926,487
Foreign currency translation effects 1,288 1,003 (11,460)
Stock held in treasury, at cost 22,221,000,
21,689,000 and 21,932,000 common
shares, respectively (738,706) (707,331) (710,537)
Unearned deferred compensation related to TESOP (66,931) (72,342) (78,887)
------------ ------------ ------------
Total stockholders' equity 1,967,855 1,950,750 1,824,325
Commitments and contingent liabilities
------------ ------------ ------------
$ 2,819,533 $ 3,219,099 $ 3,005,870
============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE> TANDY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
<CAPTIONS>
(In thousands)
Six Months Ended
June 30,
-------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 76,210 $ (42,191)
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect on prior years of change in accounting principle -- (13,014)
Loss reserve on disposal of discontinued operations -- 70,000
Depreciation and amortization 41,796 51,376
Provision for credit losses and bad debts 13,049 25,892
Other items 6,454 4,036
Changes in operating assets and liabilities
Receivables 103,433 112,510
Inventories 64,766 50,372
Other current assets (2,199) (22,392)
Accounts payable, accrued expenses and income taxes (97,839) (86,655)
------------ ------------
Net cash provided by operating activities 205,670 149,934
------------ ------------
Investing activities:
Additions to property, plant and equipment, net of retirements (67,858) (35,717)
Proceeds from sale of divested operations 351,250 --
Other investing activities (651) (2,709)
------------ ------------
Net cash provided (used) by investing activities 282,741 (38,426)
------------ ------------
Financing activities:
Purchase of treasury stock (50,208) (11,818)
Sale of treasury stock to employee stock purchase program 22,752 24,642
Dividends paid (37,399) (37,423)
Redemption of subordinated debentures (32,431) --
Changes in short-term borrowings, net (274,420) (60,818)
Changes in long-term borrowings, net (51,669) (18,716)
------------ ------------
Net cash used by financing activities (423,375) (104,133)
------------ ------------
Increase in cash and short-term investments 65,036 7,375
Cash and short-term investments, beginning of period 213,235 112,626
------------ ------------
Cash and short-term investments, end of period $ 278,271 $ 120,001
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three months and six months ended
June 30, 1994 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1994. For further information,
refer to the consolidated financial statements and management's
discussion and analysis of results of operations and financial condition
included in Tandy Corporation's ("Tandy" or the "Company") Form 10-K for
the year ended December 31, 1993.
NOTE 2-RELATIONS WITH INTERTAN
As of June 30, 1994, InterTAN owed Tandy an aggregate of $56,884,000.
The current portion of the InterTAN obligation approximates $5,023,000
and the non-current portion approximates $51,861,000. During the quarter
ended June 30, 1994, Tandy recognized approximately $2,906,000 of sales
to and commission income from InterTAN and interest income of $2,041,000.
During the six months ended June 30, 1994, Tandy recognized approximately
$14,043,000 of sales to and commission income from InterTAN and interest
income of $4,014,000. Sales to InterTAN approximated $19,416,000 and
$33,660,000, respectively, for the three- and six-month periods ending
June 30, 1993.
InterTAN has increased its bank revolving credit facility to Canadian
$60,000,000. In the case of InterTAN's default on the bank credit line,
Tandy will, at the option of InterTAN's new banking syndicate, purchase
InterTAN's inventory and related accounts receivable at 50% of their net
book value, up to the amount of outstanding bank loans, but not to exceed
Canadian $60,000,000. In that event, Tandy could foreclose on its first
priority lien on InterTAN's assets. If Tandy fails to purchase the
inventory and related accounts receivable of InterTAN from the banking
syndicate, the syndicate upon notice to Tandy and expiration of time, can
foreclose on InterTAN's assets in Canada and the U.K. ahead of Tandy.
The inventory repurchase agreement between InterTAN's banking syndicate
and Tandy has been amended and restated to reflect the foregoing. As
required by an agreement with Tandy, InterTAN has registered the warrants
received by Tandy as part of the consideration for the debt
restructuring, under the Securities Act of 1933. These warrants have a
five-year term and are exercisable for approximately 1,450,000 shares of
InterTAN common stock at a price of $6.62 per share.
A&A International will continue as the exclusive purchasing agent for
InterTAN in the Far East on a commission basis. Commencing in March 1994,
only the purchasing agent commission and sales by Tandy manufacturing
plants to InterTAN were recorded as sales. InterTAN purchases from third
parties through A&A International are no longer recorded as sales,
reflecting the arrangement under the new merchandise agreement.
Accordingly, management expects that reported sales by Tandy to InterTAN
in 1994 will be considerably lower than sales disclosed in prior years;
however, the earned income relating thereto will not be materially
different.
NOTE 3-DISCONTINUED OPERATIONS
On June 25, 1993, the Board of Directors of Tandy adopted a formal plan
of divestiture under which it would sell its computer manufacturing and
marketing businesses, the O'Sullivan Industries, Inc. ("O'Sullivan")
ready-to-assemble furniture manufacturing and related marketing business,
the Memtek Products division and the Lika printed circuit board business.
As of June 30, 1994, all manufacturing operations except Lika have been
divested.
O'Sullivan Industries. On January 27, 1994, the Company announced that
it had reached an agreement with the underwriters to sell common stock of
O'Sullivan Industries Holdings, Inc., the parent company of O'Sullivan,
to the public at $22 per share. The net proceeds realized by Tandy in
the initial public offering, together with a $40,000,000 cash dividend
from O'Sullivan, approximated $350,000,000. The initial public offering
closed on February 2, 1994.
Tandy has accrued approximately $1,893,000 and $3,155,000 during the
quarter and six months ended June 30, 1994, pursuant to the Tax Sharing
and Tax Benefit Reimbursement Agreement between Tandy and O'Sullivan
Industries Holdings, Inc. in which the Company will receive payments from
O'Sullivan resulting from the increased tax basis of O'Sullivan's assets,
thereby increasing tax deductions and, accordingly, reducing income taxes
payable by O'Sullivan. The amount to be received by the Company each
year will approximate the federal tax benefit expected to be realized
with respect to the increased tax basis. These payments will be made
over a 15-year period. The Company has recognized and will continue to
recognize these payments as additional sale proceeds and gain in the year
in which the payments become due and payable to the Company.
Lika. On August 4, 1994, Tandy signed an agreement to sell its Lika
printed circuit board division to Viktron Limited Partnership, an
Illinois limited partnership. This transaction is expected to close,
subject to the completion of due diligence, in September 1994.
NOTE 4-REVOLVING CREDIT AGREEMENT
The backup facility to Tandy's commercial paper program was renewed in
May 1994. This agreement is to be used only if maturing commercial paper
cannot be repaid due to an inability to sell new paper. The agreement is
composed of two facilities--one for $200,000,000 expiring in May 1995 and
another $200,000,000 facility expiring in May 1997. Annual commitment
fees for the facilities are 2/25 of 1% per annum and 1/8 of 1% per annum,
respectively, whether used or unused. At June 30, 1994, there were no
amounts outstanding in the facility.
NOTE 5-SHARE REPURCHASE PROGRAM
On August 1, 1994, the Company announced that its Board of Directors
authorized management to purchase up to 7,500,000 shares of its common
stock in addition to shares required for employee plans. Purchases will
be made from time to time in the open market, and it is expected that
funding of the program will come from existing cash and short-term debt.
NOTE 6-RETIREMENT OF DEBT
The Company's issue of 10% subordinated debentures due June 30, 1994 was
called by the Company on February 23, 1994 for redemption on April 1,
1994. The redemption was at a price equal to 100% of face value of the
subordinated debentures for a total of $32,431,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Net Sales and Operating Revenues
Net sales and operating revenues for the periods ended June 30 were:
<TABLE>
<CAPTIONS>
(In thousands)
Three Months Ended % Increase Six Months Ended % Increase
-------------------------- ---------- -------------------------- ----------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Radio Shack $ 595,375 $ 569,799 4.5% $ 1,198,094 $ 1,155,446 3.7%
Tandy Name Brand 93,561 94,511 (1.0) 194,408 222,166 * (12.5)
Incredible Universe 59,196 23,033 157.0 110,189 44,897 145.4
Computer City 241,693 126,223 91.5 453,480 231,182 96.2
----------- ----------- ----------- -----------
989,825 813,566 21.7 1,956,171 1,653,691 18.3
Import/Export and Other Sales 19,452 29,545 (34.2) 45,241 54,132 (16.4)
----------- ----------- ----------- -----------
$ 1,009,277 $ 843,111 19.7% $ 2,001,412 $ 1,707,823 17.2%
=========== =========== =========== ===========
* Includes 110 McDuff/VideoConcepts stores closed during the March 1993 quarter.
</TABLE>
Sales of retail operations increased in virtually all areas except Tandy
Name Brand, which closed 110 stores in the March quarter of 1993.
Excluding the closed stores, retail operations had a 22% sales gain for
the quarter ended June 30, 1994 and a 21% sales gain for the six-month
period. Radio Shack's new promotional programs which began this quarter
had favorable sales results for June with 7% comparable store sales
gains. The opening of new Incredible Universe and Computer City stores
in the latter part of 1993 and the first two quarters of 1994 increased
sales for those divisions. Since June 30, 1993, 25 Computer City stores
and three Incredible Universe stores have opened. On a same-store basis,
U.S. retail sales increased 4.4% for the quarter and 4.5% for the
six-month period. Commencing in March 1994, InterTAN purchases from
third parties through A&A International are no longer recorded as sales;
therefore, sales by the Import/Export group have decreased approximately
$18,400,000 for the quarter and $22,300,000 for the six-month period.
Increases in repair and other income from support operations have
partially offset this decline by $5,500,000 for the quarter and
$8,800,000 for the six-month period.
Gross Profit
Gross profit as a percent of net sales declined to 40.3% during the three
months ended June 30, 1994 from 43.8% during the corresponding 1993
period. For the six months ended June 30, 1994 and 1993, the gross
profit percentages were 40.7% and 44.4%, respectively. This trend toward
lower gross margins is expected to continue as additional sales are
contributed by Computer City and Incredible Universe stores which operate
on lower margins. In the second quarter of fiscal 1994, Computer City
and Incredible Universe accounted for approximately 30% of consolidated
sales compared to 18% in the second quarter of 1993. For the six months
ended June 30, 1994 and 1993, Computer City and Incredible Universe
accounted for approximately 28% and 16% of consolidated sales,
respectively. As computer sales at Radio Shack decrease and sales of
higher-margin items increase, gross profit at Radio Shack may continue to
increase slightly.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percent of sales and
operating revenues declined 2.1 percentage points in comparison with the
second quarter of 1993 and declined 2.4 percentage points in comparison
with the six months ended June 30, 1993. Most expense categories,
including rent, payroll and bad debt expense, were lower as a percent of
sales during the three and six months ended June 30, 1994 as compared
with the same prior year periods. The improved quality of credit card
receivables resulted in a reduction of bad debt expense of $10,695,000
for the six months ended June 30, 1994, in comparison with the six months
ended June 30, 1993. The lower rent and payroll costs as a percent of
sales reflects the lower relative costs associated with the Company's
newer retail formats. Advertising costs increased this quarter as a
result of Radio Shack's new promotional programs. The Company expects
SG&A expenses as a percent of sales to continue to decrease as more
Computer City and Incredible Universe stores are opened.
Net Interest Income
Interest income and expense for the periods ended June 30 were:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
(In thousands) 1994 1993 1994 1993
-------- -------- -------- --------
Interest income $ 22,114 $ 16,111 $ 45,101 $ 32,810
Interest expense (6,372) (7,900) (16,365) (17,111)
-------- -------- -------- --------
$ 15,742 $ 8,211 $ 28,736 $ 15,699
======== ======== ======== ========
Proceeds from divestitures resulted in increased short-term investments
and decreased short-term borrowings and thus impacted interest income and
interest expense. The increase in interest income is also due in part to
interest earned on notes receivable from AST Research Inc. and InterTAN.
The accretion of discount included in interest income from InterTAN
approximated $933,000 and $1,784,000 for the three and six months ended
June 30, 1994, respectively. Tandy also received $4,391,000 in interest
income from the IRS reflecting the settlement of outstanding tax issues
during the quarter and $8,846,000 for the six-month period. Interest
income earned by Tandy Credit Corporation decreased $3,895,000 from that
earned in the June 30, 1993 quarter due to lower outstanding credit card
receivable balances and increased use of credit promotions. A $2,000,000
IRS interest accrual was recorded during the March 31, 1994 quarter;
excluding this accrual, interest expense was 16% lower than in the six
months ended June 30, 1993. Interest expense in the current quarter was
19% lower than during the second quarter of 1993, primarily due to lower
debt levels.
Provision for Income Taxes
Provision for income taxes for each quarterly period is based on the
estimate of the annual effective tax rate for the fiscal year as
evaluated at the end of each quarter. The effective tax rates for each
of the first two quarters of 1994 and 1993 were 38.25% and 36.50%,
respectively. The increase is primarily due to federal tax rate
legislation enacted during 1993 whereby the corporate income tax rate was
increased to 35% from 34%.
Earnings Per Share
Earnings per share is calculated by dividing net income less Series B
preferred stock dividends paid or payable by average common and common
share equivalents outstanding during the respective periods. For the
three months ended June 30, 1994 and 1993, preferred dividends amounted
to $1,607,000 and $1,782,000, respectively. Preferred dividends amounted
to $3,413,000 and $3,614,000 for the six months ended June 30, 1994 and
1993, respectively. Earnings per share from continuing operations for
the three and six months ended June 30, 1994 increased from that for the
same periods of 1993. However, the Company recorded losses from
discontinued operations of $127,619,000 or $1.63 per share for the first
six months of fiscal 1993, partially offset by a benefit of $13,014,000,
or $0.17 per share, for cumulative effect on prior years of change in
accounting principle. The loss from discontinued operations for the
second quarter of 1993 was $109,077,000 or $1.39 per share, which
included a loss on disposal of $70,000,000.
Cash Flow and Financial Condition
Tandy's cash flow and financial condition, in management's opinion,
remains strong. Cash flow from operating activities increased in the
three- and six-month periods ended June 30, 1994 as compared with the
same periods of the prior year. This increase relates primarily to
increased operating income in 1994 as losses from discontinued operations
decreased cash flow in 1993. Cash provided by investing activities for
the six-month period ended June 30, 1994 includes cash received from the
divestiture of discontinued operations. Property, plant and equipment
additions have increased in comparison with that of the prior year due to
additional fixtures required for the Radio Shack Gift Express (SM)
program, new Radio Shack (R) stores and the Company's expansion of its
Computer City (R) and Incredible Universe (R) store concepts. Management
anticipates capital expenditure requirements to continue to increase over
1993 levels while Computer City and Incredible Universe retail chains are
expanding. Cash used for financing activities increased for the
six-month period ended June 30, 1994 due to the reduction of debt. The
Company's issue of 10% subordinated debentures due June 30, 1994 was
called by the Company on February 23, 1994 for redemption on April 1,
1994. The redemption was at 100% of face value or $32,431,000.
Cash and short-term investments at June 30, 1994 were $278,271,000 as
compared to $120,001,000 at June 30, 1993. Total debt as a percentage of
total capitalization was 10.5% at June 30, 1994, compared to 22.8% at
December 31, 1993 and 23.0% at June 30, 1993. Total debt has been
reduced as proceeds from divested manufacturing operations and cash flows
from operating activities have been used to pay off debt. Long-term debt
as a percentage of total capitalization was 6.2% at June 30, 1994
compared to 7.4% at December 31, 1993 and 9.4% at June 30, 1993.
The revolving credit backup facility to Tandy's commercial paper program
was renewed in May 1994. This agreement is to be used only if maturing
commercial paper cannot be repaid due to an inability to sell new paper.
The agreement is composed of two facilities--one for $200,000,000
expiring in May 1995 and another $200,000,000 facility expiring in May
1997. Annual commitment fees for the facilities are 2/25 of 1% per annum
and 1/8 of 1% per annum, respectively, whether used or unused.
On August 1, 1994, the Company announced that its Board of Directors
authorized management to purchase up to 7,500,000 shares of its common
stock in addition to shares required for employee plans. Purchases will
be made from time to time in the open market, and it is expected that
funding of the program will come from existing cash and short-term debt.
Inventory
Compared to June 30, 1993, total inventories at June 30, 1994 have
increased $49,572,000 or 4%. The increase in total inventory levels was
primarily attributable to inventory increases necessary to support new
store openings of Computer City and Incredible Universe store concepts.
Partially offsetting this increase was decreased inventory levels at
Radio Shack and Tandy Name Brand due to efficiencies achieved in the
replenishment system and the carrying levels of computer-related items.
Inventory levels have been reduced from the amounts maintained at
December 31, 1993 due to seasonal fluctuations in inventory levels of
Radio Shack and Tandy Name Brand and improvements in the replenishment
system. This decrease since December was partially offset by a combined
increase in inventory levels to support new Incredible Universe and
Computer City stores, resulting in a net decrease of 5% in inventory
levels since December 31, 1993. Inventory is primarily comprised of
finished goods.
Changes in Stockholders' Equity
(in thousands) Outstanding
Common Shares Dollars
------------- ----------
Balance at December 31, 1993 63,956 $1,950,750
Foreign currency translation
adjustments, net of deferred
taxes -- 285
Sale of treasury stock to
employee plans 573 22,752
Purchase of treasury stock (1,176) (49,543)
Exercise of stock options 71 2,268
Repurchase of preferred stock -- (2,959)
Preferred stock dividends,
net of tax -- (2,218)
PERCS dividend -- (16,050)
TESOP deferred compensation earned -- 5,411
Common stock dividends -- (19,051)
Net income -- 76,210
------------- ----------
Balance at June 30, 1994 63,424 $1,967,855
============= ==========
Discontinued Operations
On June 25, 1993, the Board of Directors of Tandy adopted a formal plan
of divestiture under which it would sell its computer manufacturing and
marketing businesses, the O'Sullivan Industries, Inc. ("O'Sullivan")
ready-to-assemble furniture manufacturing and related marketing business,
the Memtek Products division and the Lika printed circuit board business.
As of June 30, 1994, all manufacturing operations except Lika have been
divested.
O'Sullivan Industries. On January 27, 1994, the Company announced that
it had reached an agreement with the underwriters to sell common stock of
O'Sullivan Industries Holdings, Inc., the parent company of O'Sullivan,
to the public at $22 per share. The net proceeds realized by Tandy in
the initial public offering, together with a $40,000,000 cash dividend
from O'Sullivan, approximated $350,000,000. The initial public offering
closed on February 2, 1994.
Tandy has accrued approximately $1,893,000 and $3,155,000 during the
quarter and six months ended June 30, 1994, pursuant to the Tax Sharing
and Tax Benefit Reimbursement Agreement between Tandy and O'Sullivan
Industries Holdings, Inc. in which the Company will receive payments from
O'Sullivan resulting from the increased tax basis of O'Sullivan's assets,
thereby increasing tax deductions and, accordingly, reducing income taxes
payable by O'Sullivan. The amount to be received by the Company each
year will approximate the federal tax benefit expected to be realized
with respect to the increased tax basis. These payments will be made
over a 15-year period. The Company has recognized and will continue to
recognize these payments as additional sale proceeds and gain in the year
in which the payments become due and payable to the Company.
Lika. On August 4, 1994, Tandy signed an agreement to sell its Lika
printed circuit board division to Viktron Limited Partnership, an
Illinois limited partnership. This transaction is expected to close,
subject to the completion of due diligence, in September 1994.
InterTAN Update
As of June 30, 1994, InterTAN owed Tandy an aggregate of $56,884,000.
The current portion of the InterTAN obligation approximates $5,023,000
and the non-current portion approximates $51,861,000. During the quarter
ended June 30, 1994, Tandy recognized approximately $2,906,000 of sales
to and commission income from InterTAN and interest income of $2,041,000.
During the six months ended June 30, 1994, Tandy recognized approximately
$14,043,000 of sales to and commission income from InterTAN and interest
income of $4,014,000. Sales to InterTAN approximated $19,416,000 and
$33,660,000, respectively, for the three- and six-month periods ending
June 30, 1993.
InterTAN has increased its bank revolving credit facility to Canadian
$60,000,000. In the case of InterTAN's default on the bank credit line,
Tandy will, at the option of InterTAN's new banking syndicate, purchase
InterTAN's inventory and related accounts receivable at 50% of their net
book value, up to the amount of outstanding bank loans, but not to exceed
Canadian $60,000,000. In that event, Tandy could foreclose on its first
priority lien on InterTAN's assets. If Tandy fails to purchase the
inventory and related accounts receivable of InterTAN from the banking
syndicate, the syndicate upon notice to Tandy and expiration of time, can
foreclose on InterTAN's assets in Canada and the U.K. ahead of Tandy.
The inventory repurchase agreement between InterTAN's banking syndicate
and Tandy has been amended and restated to reflect the foregoing. As
required by an agreement with Tandy, InterTAN has registered the warrants
received by Tandy as part of the consideration for the debt
restructuring, under the Securities Act of 1933. These warrants have a
five-year term and are exercisable for approximately 1,450,000 shares of
InterTAN common stock at a price of $6.62 per share.
A&A International will continue as the exclusive purchasing agent for
InterTAN in the Far East on a commission basis. Commencing in March
1994, only the purchasing agent commission and sales by Tandy
manufacturing plants to InterTAN were recorded as sales. InterTAN
purchases from third parties through A&A International are no longer
recorded as sales, reflecting the arrangement under the new merchandise
agreement. Accordingly, management expects that reported sales by Tandy
to InterTAN in 1994 will be considerably lower than sales disclosed in
prior years; however, the earned income relating thereto will not be
materially different.
Credit Card Subsidiary
Tandy National Bank ("the Bank"), a limited purpose nationally chartered
credit card bank, was established on May 11, 1994. The Bank, a wholly
owned subsidiary of Tandy Corporation, was created to operate the
consumer credit card programs for Tandy. All new accounts approved after
May 12, 1994 will be originated and owned by the Bank. Existing Tandy
Credit Corporation ("TCC") cardholders who wish to utilize Tandy's
consumer credit card program in the future may open an account with the
Bank simply by making a purchase with their existing credit card. If
this occurs, the Bank will open an account for the cardholder and pay off
the existing balance with TCC. TCC will now purchase receivables from
the Bank instead of Tandy. The Bank will act as servicer of the accounts
and will receive a servicing fee from TCC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Tandy has various claims, lawsuits, disputes with third parties,
investigations and pending actions involving allegations of negligence,
product defects, discrimination, infringement of intellectual property
rights, securities matters, tax deficiencies, violations of permits or
licenses, and breach of contract and other matters against the Company
and its subsidiaries incident to the operation of its business. The
liability, if any, associated with these matters was not determinable at
June 30, 1994. While certain of these matters involve substantial
amounts, and although occasional adverse settlements or resolutions may
occur and negatively impact earnings in the year of settlement, it is the
opinion of management that their ultimate resolution will not have a
materially adverse effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of Stockholders held on May 19, 1994, the Company
elected directors to serve for the ensuing year and voted to approve the
Compensation Plan for the Chief Executive Officer. Out of the 78,906,184
eligible votes, 68,559,225 votes were cast at the meeting either by
proxies solicited in accordance with Schedule 14A or by security holders
voting in person. There were 5,530,940 broker non-votes which are not
included in the following table as they were not treated as being present
at the meeting. In the case of directors, abstentions are treated as
votes withheld and are included in the table. The tabulation of votes
for each nominee is set forth below under Item No. 1 and the vote on the
Compensation Plan for the Chief Executive Officer is set forth under Item
No. 2 below:
Item No. 1
-----------
Nominees for Directors
----------------------
VOTES VOTES
DIRECTORS FOR WITHHELD
--------------- ----------- --------
James I. Cash, Jr. 67,726,059 833,166
Caroline R. Hunt 67,643,596 915,629
Lewis R. Kornfeld, Jr. 67,505,106 1,054,119
Jack L. Messman 67,696,773 862,452
William G. Morton, Jr. 67,474,555 1,084,670
Thomas G. Plaskett 67,412,721 1,146,504
John V. Roach 67,230,932 1,328,293
William T. Smith 67,603,265 955,960
Alfred J. Stein 67,562,979 996,246
William E. Tucker 67,283,335 1,275,890
Jesse L. Upchurch 67,857,030 702,195
John A. Wilson 67,752,648 806,577
Item No. 2
-----------
Compensation Plan for the Chief Executive Officer
-------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
62,488,025 5,220,232 850,968
ITEM 5. OTHER INFORMATION
On August 1, 1994, the Company announced that its Board of Directors
authorized management to purchase up to 7,500,000 shares of its common
stock in addition to shares required for employee plans. Purchases will
be made from time to time in the open market, and it is expected that
funding of the program will come from existing cash and short-term debt.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation S-K.
A list of the exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Index to Exhibits
on page 14, which immediately precedes such exhibits.
b) Reports on Form 8-K.
No reports on Form 8-K were filed for the quarter ended
June 30, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tandy Corporation
(Registrant)
Date: August 12, 1994 By /s/ Richard L. Ramsey
----------------------------
Richard L. Ramsey
Vice President and Controller
(Authorized Officer)
Date: August 12, 1994 /s/ William C. Bousquette
----------------------------
William C. Bousquette
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
TANDY CORPORATION
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page No.
2a Agreement for Purchase and Sale of Assets
dated as of June 30,1993 between AST
Research, Inc., as Purchaser and Tandy
Corporation, TE Electronics Inc., and
GRiD Systems Corporation, as Sellers
(without exhibits) (filed as Exhibit 2
to Tandy's July 13, 1993 Form 8-K filed
on July 27, 1993, Accession No.
0000096289-93-000004 and incorporated
herein be reference).
2b Amended and Restated Stock Exchange
Agreement dated February 1, 1994 by and
among O'Sullivan Industries Holdings,
Inc., and TE Electronics Inc. (filed as
Exhibit 2b to Tandy's Form 10-K filed on
March 30, 1994, Accession No. 0000096289-
94-000029 and incorporated herein by
reference).
2c U.S. Purchase Agreement dated January
26, 1994 by and among O'Sullivan
Industries Holdings, Inc., TE Electronics
Inc. and the U.S. Underwriters which
included Merrill Lynch & Co., Wheat
First Butcher & Singer, The Chicago
Dearborn Company and Rauscher Pierce
Refsnes, Inc. (filed as Exhibit 2c to
Tandy's Form 10-K filed on March 30,
1994, Accession No. 0000096289-94-000029
and incorporated herein by reference).
2d International Purchase Agreement dated
January 26, 1994 by and among O'Sullivan
Industries Holdings, Inc., TE Electronics
Inc. and the U.S. Underwriters which
included Merrill Lynch International
Limited and UBS Limited (filed as Exhibit
2d to Tandy's Form 10-K filed on March
30, 1994, Accession No.0000096289-94-
000029 and incorporated herein by reference).
3a(i) Restated Certificate of Incorporation of
Tandy dated December 10, 1982 (filed as
Exhibit 4A to Tandy's 1993 Form S-8 for
the Tandy Corporation Incentive Stock
Plan, Reg. No. 33-51603, filed on November
12, 1993, Accession No.0000096289-93-
000017 and incorporated herein by reference).
3a(ii) Certificate of Amendment of Certificate
of Incorporation of Tandy Corporation
dated November 13, 1986 (filed as Exhibit
4A to Tandy's 1993 Form S-8 for the Tandy
Corporation Incentive Stock Plan, Reg.
No. 33-51603, filed on November 12, 1993,
Accession No. 0000096289-93-000017 and
incorporated herein by reference).
3a(iii) Certificate of Amendment of Certificate
of Incorporation, amending and restating
the Certificate of Designation, Preferences
and Rights of Series A Junior Participating
Preferred Stock dated June 22, 1990 (filed
as Exhibit 4A to Tandy's 1993 Form S-8
for the Tandy Corporation Incentive
Stock Plan, Reg. No. 33-51603, filed on
November 12, 1993, Accession No. 0000096289-
93-000017 and incorporated herein by
reference).
3a(iv) Certificate of Designations of Series B
TESOP Convertible Preferred dated June
29, 1990 (filed as Exhibit 4A to Tandy's
1993 Form S-8 for the Tandy Corporation
Incentive Stock Plan, Reg. No. 33-51603,
filed on November 12, 1993, Accession
No. 0000096289-93-000017 and incorporated
herein by reference).
3a(v) Certificate of Designation, Series C
Conversion Preferred Stock dated February
13, 1992 (filed as Exhibit 4A to Tandy's
1993 Form S-8 for the Tandy Corporation
Incentive Stock Plan, Reg. No. 33-51603,
filed on November 12, 1993, Accession
No. 0000096289-93-000017 and incorporated
herein by reference).
3b Tandy Corporation Bylaws, restated as
of August 4, 1993 (filed as Exhibit 4B
to Tandy's Form S-8 for the Tandy
Corporation Incentive Stock Plan, Reg.
No. 33-51603, filed on November 12, 1993,
Accession No. 0000096289-93-000017 and
incorporated herein by reference).
4a Indenture, dated June 30, 1974, for 10%
Subordinated Debentures due 1994 (filed
as Exhibit 4a to Tandy's Form 10-K filed
on March 30, 1994, Accession No.0000096289-
94-000029 and incorporated herein by
reference).
4b Amended and restated Rights Agreement
with the First National Bank of Boston
dated June 22, 1990 for Preferred Share
Purchase Rights (filed as Exhibit 4b to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
4c Revolving Credit Agreement between Tandy
Corporation and Texas Commerce Bank,
individually and as Agent for sixteen
other banks, dated as of May 27, 1994
(without exhibits). 17
4d Continuing Guaranty dated as of June 18,
1991 by Tandy Corporation in favor of
holders of indebtedness issued by Tandy
Credit Corporation that is or may be
publicly traded and is rated by at least
one nationally recognized rating agency
(filed as Exhibit 4e to Tandy's Form 10-K
filed on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
10a* Salary Continuation Plan for Executive
Employees of Tandy Corporation and
Subsidiaries including amendment dated
June 14, 1984 with respect to participation
by certain executive employees, as restated
October 4, 1990 (filed as Exhibit 10a to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10b* Form of Executive Pay Plan Letters (filed
as Exhibit 10b to Tandy's Form 10-K filed
on March 30, 1994, Accession No.0000096289-
94-000029 and incorporated herein by
reference).
10c* Post Retirement Death Benefit Plan for
Selected Executive Employees of Tandy
Corporation and Subsidiaries as restated
June 10, 1991 (filed as Exhibit 10c to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10d* Tandy Corporation Officers Deferred
Compensation Plan as restated July 10,
1992 (filed as Exhibit 10d to Tandy's
Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10e* Special Compensation Plan No. 1 for Tandy
Corporation Executive Officers, adopted
in 1993 (filed as Exhibit 10e to Tandy's
Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10f* Special Compensation Plan No. 2 for Tandy
Corporation Executive Officers, adopted
in 1993 (filed as Exhibit 10f to Tandy's
Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10g* Special Compensation Plan for Directors
of Tandy Corporation dated November 13,
1986 (filed as Exhibit 10g to Tandy's
Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10h* Director Fee Resolution (filed as Exhibit
10h to Tandy's Form 10-K filed on March
30, 1994, Accession No. 0000096289-94-
000029 and incorporated herein by reference).
10i* Tandy Corporation 1985 Stock Option Plan
as restated effective August 1990 (filed
as Exhibit 10i to Tandy's Form 10-K
filed on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
10j* Tandy Corporation 1993 Incentive Stock
Plan as restated October 14, 1993 (filed
as Exhibit 4B to Tandy's Form S-8 for
Tandy Corporation Incentive Stock Plan,
Reg. No. 33-51603, filed on November 12,
1993, Accession No. 0000096289-93-000017
and incorporated herein by reference).
10k* Tandy Corporation Officers Life Insurance
Plan as amended and restated effective
August 22, 1990 (filed as Exhibit 10k to
Tandy's Form 10-K filed on March 30,
1994, Accession No. 0000096289-94-000029
and incorporated herein by reference).
10l* Restated Trust Agreement Tandy Employees
Supplemental Stock Program through
Amendment No. III dated March 29, 1993
(filed as Exhibit 10H to Tandy's Form
10-K/A-4 filed on September 3, 1993,
Accession No. 0000096289-93-000011 and
incorporated herein by reference).
10m* Forms of Termination Protection Agreements
for (i) Corporate Executives, (ii) Division
Executives, and (iii) Subsidiary Executives
(filed as Exhibit 10m to Tandy's Form
10-K filed on March 30, 1994, Accession
No. 0000096289-94-000029 and incorporated
herein by reference).
10n* Tandy Corporation Termination Protection
Plans for Executive Employees of Tandy
Corporation and its Subsidiaries (i) the
Level I and (ii) Level II Plans (filed
as Exhibit 10n to Tandy's Form 10-K filed
on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
10o* Forms of Bonus Guarantee Letter Agreements
with certain Executive Employees of Tandy
Corporation and its Subsidiaries i)
Formula, ii) Discretionary, and iii) Pay
Plan (filed as Exhibit 10o to Tandy's
Form 10-K filed on March 30, 1994, Accession
No. 0000096289-94-000029 and incorporated
herein by reference).
10p* Form of Indemnity Agreement with Directors,
Corporate Officers and two Division
Officers of Tandy Corporation (filed as
Exhibit 10p to Tandy's Form 10-K filed
on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
11 Statement of Computation of Earnings per
Share 212
12 Statement of Computation of Ratios of
Earnings to Fixed Charges 213
_______________________
* Each of these exhibits is a "management contract or
compensatory plan, contract, or arrangement".
<PAGE>
<PAGE><TABLE> EXHIBIT
TANDY CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<CAPTIONS>
(In thousands, except ratios)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Reconciliation of net income (loss) per statements
of income to amounts used in computation of
primary earnings earnings per share:
Net income (loss), as reported $ 34,415 $ (77,336) $ 76,210 $ (42,191)
Less dividends on preferred stock:
Series B (1,607) (1,782) (3,413) (3,614)
Series C (8,025) (8,025) (16,050) (16,050)
--------- --------- --------- ---------
Net income (loss) available to common stockholders 24,783 (87,143) 56,747 (61,855)
Plus dividends on Series C preferred stock 8,025 8,025 16,050 16,050
--------- --------- --------- ---------
Net income (loss) for primary earnings per share $ 32,808 $ (79,118) $ 72,797 $ (45,805)
========= ========= ========= =========
Weighted average number of common shares outstanding 63,442 63,571 63,547 63,419
Weighted average number of $2.14 depositary shares,
representing Series C preferred stock, treated as
outstanding common stock due to mandatory conversion 15,000 15,000 15,000 15,000
Weighted average number of common shares issuable
under stock option plans, net of assumed treasury
stock repurchases at average market prices 159 (b) 249 (b)
--------- --------- --------- ---------
Weighted average number of common and common
equivalent shares outstanding 78,601 78,571 78,796 78,419
========= ========= ========= =========
Net income (loss) per average common and common
equivalent share $ 0.42 $ (1.01) $ 0.92 $ (0.58)
========= ========= ========= =========
FULLY DILUTED EARNINGS PER SHARE (a)
Reconciliation of net income (loss) per statements
of income to amounts used in computation of fully
diluted earnings per share:
Net income (loss) available to common stockholders $ 24,783 $ (87,143) $ 56,747 $ (61,855)
Plus dividends on Series C preferred stock 8,025 8,025 16,050 16,050
Adjustments for assumed conversion of Series B
preferred stock to common stock as of the
later of the beginning of the period or the
date of issuance, August 1, 1990:
Plus dividends on Series B preferred stock,
net of tax on allocated shares 1,607 (b) 3,413 (b)
Less additional contribution that would have
been required for the TESOP if Series B
preferred stock had been converted (925) (b) (1,955) (b)
--------- --------- --------- ---------
Net income (loss), as adjusted $ 33,490 $ (79,118) $ 74,255 $ (45,805)
========= ========= ========= =========
Reconciliation of weighted average number of shares
outstanding to amount used in computation of fully
diluted earnings per share:
Weighted average number of shares outstanding 78,601 78,574 78,796 78,442
Adjustment to reflect assumed exercise of stock
options as of the beginning of the period 15 (b) 16 (b)
Adjustment to reflect assumed conversion of
Series B preferred stock to common stock as
of the later of the beginning of the period
or the date of issuance, August 1, 1990 1,981 (b) 2,013 (b)
--------- --------- --------- ---------
Weighted average number of common and common
equivalent shares outstanding, as adjusted 80,597 78,574 80,825 78,442
========= ========= ========= =========
Fully diluted net income per average common
and common equivalent share $ 0.42 $ (1.01) $ 0.92 $ (0.58)
========= ========= ========= =========
(a) This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11) although not required by
footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
(b) For the three months and six months ended June 30, 1994 these items are anti-dilutive and thus are omitted
from the calculation.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 12
TANDY CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS (1)
<CAPTIONS>
(In thousands, except ratios)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges
Income from continuing operations $ 34,415 $ 31,741 $ 76,210 $ 72,414
Plus provision for income taxes 21,318 18,244 47,207 41,624
--------- --------- --------- ---------
Income before income taxes 55,733 49,985 123,417 114,038
Fixed charges:
Interest expense and amortization
of debt discount 6,372 7,900 16,365 17,111
Amortization of issuance expense 62 102 150 208
Appropriate portion (33 1/3%) of rentals 17,799 16,440 35,333 32,524
--------- --------- --------- ---------
Total fixed charges 24,233 24,442 51,848 49,843
--------- --------- --------- ---------
Earnings before income taxes
and fixed charges $ 79,966 $ 74,427 $ 175,265 $ 163,881
========= ========= ========= =========
Ratios of earnings to fixed charges 3.30 3.05 3.38 3.29
========= ========= ========= =========
Ratios of Earnings to Fixed Charges
and Preferred Dividends:
Total fixed charges, as above $ 24,233 $ 24,442 $ 51,848 $ 49,843
Preferred dividends 9,632 9,807 19,463 19,664
--------- --------- --------- ---------
Total fixed charges and preferred dividends 33,865 34,249 71,311 69,507
========= ========= ========= =========
Earnings before income taxes, fixed charges
and preferred dividends $ 79,966 $ 74,427 $ 175,265 $ 163,881
========= ========= ========= =========
Ratios of earnings to fixed charges
and preferred dividends 2.36 2.17 2.46 2.36
========= ========= ========= =========
(1) The computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges and
Preferred Dividends excludes results of operations from discontinued operations and fixed charges
relating to these same operations.
</TABLE>
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
(Facility A)
Dated as of
May 27, 1994
among
Tandy Corporation,
The Banks Listed Herein,
and
Texas Commerce Bank National Association,
as Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINED TERMS, ACCOUNTING
TERMS AND CONSTRUCTION
SECTION 1.01 Certain Defined Terms I-1
SECTION 1.02 Accounting Terms I-14
SECTION 1.03 Interpretation I-14
ARTICLE II
THE LOANS
SECTION 2.01 Commitments II-1
SECTION 2.02 Loans II-1
SECTION 2.03 Notice of Borrowings II-2
SECTION 2.04 Conversion and Continuation of
Borrowings II-2
SECTION 2.05 Notes; Repayment of Loans II-4
SECTION 2.06 Interest on Loans II-4
SECTION 2.07 Interest on Overdue Amounts II-5
SECTION 2.08 Fees II-5
SECTION 2.09 Termination and Reduction of
Commitments II-6
SECTION 2.10 Alternate Rate of Interest II-6
SECTION 2.11 Prepayment of Loans II-7
SECTION 2.12 Reserve Requirements; Change in
Circumstances II-7
SECTION 2.13 Change in Legality II-9
SECTION 2.14 Indemnity II-9
SECTION 2.15 Pro Rata Treatment II-10
SECTION 2.16 Payments II-10
SECTION 2.17 Sharing of Setoffs II-11
SECTION 2.18 Payments Free of Taxes II-11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Organization; Corporate Powers III-1
SECTION 3.02 Authorization III-1
SECTION 3.03 Governmental Approval III-1
SECTION 3.04 Enforceability III-1
SECTION 3.05 Financial Statements III-1
SECTION 3.06 No Material Adverse Change III-2
SECTION 3.07 Title to Properties III-2
SECTION 3.08 Litigation; Compliance with
Laws; Etc. III-2
SECTION 3.09 Agreements; No Default III-3
SECTION 3.10 Federal Reserve Regulations III-3
SECTION 3.11 Taxes III-3
SECTION 3.12 Pension and Welfare Plans III-4
SECTION 3.13 No Material Misstatements III-4
SECTION 3.14 Investment Company Act; Public
Utility Holding Company Act III-4
SECTION 3.15 Compliance with Laws III-4
SECTION 3.16 Maintenance of Insurance III-4
SECTION 3.17 Existing Liens III-4
SECTION 3.18 Environmental Matters III-5
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01 Conditions Precedent to the
Initial Borrowing IV-1
SECTION 4.02 Conditions Precedent to Each
Borrowing IV-2
SECTION 4.03 Conditions Precedent to Conversions
and Continuations IV-2
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01 Existence V-1
SECTION 5.02 Repair V-1
SECTION 5.03 Insurance V-1
SECTION 5.04 Obligations and Taxes V-1
SECTION 5.05 Financial Statements; Reports V-2
SECTION 5.06 Litigation and Other Notices V-2
SECTION 5.07 ERISA V-3
SECTION 5.08 Books, Records and Access V-3
SECTION 5.09 Use of Proceeds V-3
SECTION 5.10 Nature of Business V-4
SECTION 5.11 Compliance V-4
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01 Liens VI-1
SECTION 6.02 Merger, Purchase and Sale VI-1
SECTION 6.03 Investments VI-3
SECTION 6.04 Transactions with Affiliates VI-4
SECTION 6.05 Other Agreements VI-4
SECTION 6.06 Fiscal Year; Accounting VI-4
SECTION 6.07 Credit Standards VI-4
SECTION 6.08 Pension Plans VI-4
SECTION 6.09 Senior Indebtedness to Tangible
Net Worth Ratio VI-4
SECTION 6.10 Tangible Net Worth of the Company VI-4
SECTION 6.11 Guaranties VI-4
SECTION 6.12 Leases VI-5
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01 Events of Default VII-1
ARTICLE VIII
THE AGENTS
SECTION 8.01 Authorization and Action VIII-1
SECTION 8.02 Agent's Reliance, Etc. VIII-1
SECTION 8.03 Agent and Affiliates; TCB, and
Affiliates VIII-2
SECTION 8.04 Agent's Indemnity VIII-3
SECTION 8.05 Bank Credit Decision VIII-3
SECTION 8.06 Successor Administrative Agent VIII-4
SECTION 8.07 Notice of Default VIII-4
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices, Etc. IX-1
SECTION 9.02 Survival of Agreement IX-1
SECTION 9.03 Successors and Assigns;
Participations IX-2
SECTION 9.04 Expenses of the Banks; Indemnity IX-5
SECTION 9.05 Right of Setoff IX-5
SECTION 9.06 Governing Law IX-6
SECTION 9.07 Waivers; Amendments IX-6
SECTION 9.08 Interest IX-7
SECTION 9.09 Severability IX-8
SECTION 9.10 Counterparts IX-8
SECTION 9.11 Binding Effect IX-8
SECTION 9.12 Final Agreement of the Parties IX-8
EXHIBITS
Form of Administrative Questionnaire Exhibit 1.01A
Form of Note Exhibit 2.05
Pension and Welfare Plans Exhibit 3.12
Existing Liens Exhibit 3.17
Form of Opinion Letter of Counsel to
the Company Exhibit 4.01
Investments Exhibit 6.03
Form of Assignment and Acceptance Exhibit 9.03
<PAGE>
REVOLVING CREDIT AGREEMENT (Facility A) dated as of
May 27, 1994, among TANDY CORPORATION, a Delaware corporation
(the "Company"), the Banks listed on the signature pages
hereof (the "Banks") and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, as Agent for the
Banks (in such capacity together with any successor Agent
pursuant to Section 8.06, the "Agent").
ARTICLE I
CERTAIN DEFINED TERMS, ACCOUNTING TERMS AND CONSTRUCTION
SECTION 1.01 Certain Defined Terms. As used in
this Agreement, the following terms shall have the following
meanings:
"ABR Borrowing" means a Borrowing comprised of
Alternate Base Rate Loans.
"Accounts" means any and all rights of the Company
and the Subsidiaries of the Company to payment for goods and
services sold or leased, including any such right evidenced
by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or
hereafter acquired or arising in the future, including
accounts receivable from Affiliates.
"Adjusted CD Rate" means, with respect to any CD
Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next higher 1/8 of 1%)
equal to the sum of (a) a rate per annum equal to the product
of (i) the Fixed Certificate of Deposit Rate in effect for
such Interest Period and (ii) Statutory Reserves, plus (b)
the Assessment Rate. For purposes hereof, the term "Fixed
Certificate of Deposit Rate" shall mean the arithmetic
average (rounded to the nearest 1/8 of 1% or, if there is no
nearest 1/8 of 1%, the next higher 1/8 of 1%) of the
prevailing rates per annum bid on or about 10:00 a.m. (New
York, New York time) to the Agent on the first Business Day
of the Interest Period for such Borrowing by three New York
City negotiable certificate of deposit dealers of recognized
standing selected by the Agent for the purchase at face value
of negotiable certificates of deposit of major United States
money center banks in a principal amount approximately equal
to the Agent's portion of such Borrowing and with a maturity
comparable to such Interest Period.
"Administrative Questionnaire" means an
Administrative Questionnaire in the form of Exhibit 1.01 A
hereto, which each Bank shall complete and provide to the
Agent.
"Affiliate" means any Person (including any member
of the immediate family of any such natural person) who
directly or indirectly beneficially owns or controls 5% or
more of the total voting power of shares of capital stock of
the Company having the right to vote for directors under
ordinary circumstances, any person controlling, controlled by
or under common control with any such person (within the
meaning of Rule 405 under the Securities Act of 1933) and any
director or executive officer of such person.
"Agency Fee" has the meaning specified in Section
2.08(b).
"Agent" has the meaning specified in the
introduction to this Agreement.
"Agent's Letter" has the meaning specified in
Section 2.08(b).
"Agreement" means this Revolving Credit Agreement
(Facility A).
"Alternate Base Rate" means, for any day, a
fluctuating rate per annum (rounded upwards to the next
highest 1/8 of 1% if not already an integral multiple of 1/8
of 1%) equal to the greatest of (a) the Prime Rate in effect
on such day, (b) the Base CD Rate in effect on such day plus
1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. "Prime Rate" shall mean, as of a
particular date, the prime rate most recently announced by
TCB and thereafter entered in the minutes of TCB's Loan and
Discount Committee, automatically fluctuating upward and
downward with and at the time specified in each such
announcement without notice to the Company or any other
Person, which prime rate may not necessarily represent the
lowest or best rate actually charged to a customer. "Base CD
Rate" means the sum of (x) the product of (i) the Three-Month
Secondary CD Rate and (ii) the Statutory Reserves and (y) the
Assessment Rate. "Three-Month Secondary CD Rate" means, for
any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next
preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately
9:00 a.m., Houston, Texas time, on such day (or, if such day
shall not be Business Day, on the next preceding Business
Day) by the Agent from three New York City negotiable
certificate of deposit dealers of recognized standing
selected by the Agent. "Federal Funds Effective Rate" shall
mean, for any day, an interest rate per annum equal to the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it. If the
Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective
Rate for any reason, including the inability or failure of
the Agent to obtain sufficient bids or publications in
accordance with the terms thereof, the Alternate Base Rate
shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist.
Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective date
of such change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" means any Loan with
respect to which the Company shall have selected an interest
rate based on the Alternate Base Rate in accordance with the
provisions of Article II.
"Applicable Fee Percentage" means, on any date, the
applicable percentage set forth below based upon the ratings
applicable on such date to the Company's senior, unsecured,
non-credit-enhanced long term indebtedness for borrowed money
("Index Debt"):
Applicable Fee
Percentage
______________
Category 1
__________
A or higher by S&P; and .08%
A3 or higher by Moody's
Category 2
__________
Lower than A and equal to or .100%
greater than BBB+ by S&P; and
Lower than A3 and equal to or
greater than Baa1 by Moody's
Category 3
__________
BBB by S&P; and .125%
Baa2 by Moody's
Category 4
__________
BBB or lower by S&P; or .150%
Baa3 or lower by Moody's
For purposes of the foregoing, (a) if neither Moody's nor S&P
shall have in effect a rating for Index Debt, then both such
rating agencies will be deemed to have established ratings
for Index Debt in Category 4; (b) if only one of Moody's and
S&P shall have in effect a rating for Index Debt, the Company
and the Banks will negotiate in good faith to agree upon
another rating agency to be substituted by an amendment to
this Agreement for the rating agency which shall not have a
rating in effect, and pending the effectiveness of such
amendment the Applicable Fee Percentage will be determined by
reference to the available rating; (c) if the ratings
established or deemed to have been established by Moody's and
S&P shall fall within different Categories, the Applicable
Fee Percentage shall be determined by reference to the
superior (or numerically lower) Category; and (d) if any
rating established or deemed to have been established by
Moody's or S&P shall be changed (other than as a result of a
change in the rating system of either Moody's or S&P), such
change shall be effective as of the date on which such change
is first announced by the rating agency making such change.
Each change in the Applicable Fee Percentage shall apply
during the period commencing on the effective date of such
change and ending on the date immediately preceding the
effective date of the next such change. If the rating system
of either Moody's or S&P shall change prior to the Maturity
Date, the Company and the Banks shall negotiate in good faith
to amend the references to specific ratings in this
definition to reflect such changed rating system.
"Applicable Margin" means, on any date, with
respect to Eurodollar Loans, Certificate of Deposit Loans or
Alternate Base Rate Loans, as the case may be, the applicable
spreads set forth below based upon the ratings applicable on
such date to the Company's Index Debt.
Eurodollar Certificate of Deposit
Alternate Base
Loan Spread Loan Spread Rate
___________ ___________ Loan
Spread
______
Category 1
__________
A or higher by S&P; and .275% .40% 0%
A3 or higher by Moody's
Category 2
__________
Lower than A and equal to .35% .475% 0%
or greater than BBB+ by
S&P; and
Lower than A3 and equal
to or greater than Baa1
by Moody's
Category 3
__________
BBB by S&P; and .435% .56% 0%
Baa2 by Moody's
Category 4
__________
BBB or lower by S&P; or .50% .625% 0%
Baa3 or lower by Moody's
For purposes of the foregoing, (a) if neither Moody's nor S&P
shall have in effect a rating for Index Debt, then both such
rating agencies will be deemed to have established ratings
for Index Debt in Category 4; (b) if only one of Moody's and
S&P shall have in effect a rating for Index Debt, the Company
and the Banks will negotiate in good faith to agree upon
another rating agency to be substituted by an amendment to
this Agreement for the rating agency which shall not have a
rating in effect, and pending the effectiveness of such
amendment the Applicable Margin will be determined by
reference to the available rating; (c) if the rating
established or deemed to have been established by Moody's and
S&P shall fall within different Categories, the Applicable
Margin shall be determined by reference to the superior (or
numerically lower) Category; and (d) if any rating
established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in
the rating system of either Moody's or S&P), such change
shall be effective as of the date on which such change is
first announced by the rating agency making such change.
Each change in the Applicable Margin shall apply to all
Eurodollar Loans and all Certificate of Deposit Loans that
are outstanding at any time during the period commencing on
the effective date of such change and ending on the date
immediately preceding the effective date of the next such
change. If the rating system of either Moody's or S&P shall
change prior to the Maturity Date, the Company and the Banks
shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed
rating system.
"Applicable Lending Office" means, with respect to
each Bank, such Bank's Domestic Lending Office in the case of
an Alternate Base Rate Loan or Certificate of Deposit Loan
and such Bank's Eurodollar Lending Office in the case of a
Eurodollar Loan.
"Assessment Rate" means, for any day, the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as well
capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. 327.3(d) (or any successor
provision) to the FDIC (or any successor) for the FDIC (or
such successor) insuring time deposits at offices of such
institution in the United States.
"Assignment and Acceptance" has the meaning
specified in Section 9.03.
"Banks" has the meaning specified in the
introduction to this Agreement.
"Base CD Rate" has the meaning specified in the
definition of the term Alternate Base Rate.
"Board" means the Board of Governors of the Federal
Reserve System of the United States.
"Borrowing" means a group of Loans of a single Type
made by the Banks on a single date and as to which a single
Interest Period is in effect.
"Borrowing Date" means, with respect to each
Borrowing, the Business Day upon which the proceeds of such
Borrowing are made available to the Company.
"Business Day" means a day when the Agent and each
Bank are open for business, and if the applicable Business
Day relates to any Eurodollar Loan, a day on which dealings
are carried on in the London interbank market and commercial
banks are open for domestic or international business in
London, England, in New York City, New York and in Houston,
Texas.
"Capital Lease" means any lease required to be
accounted for as a capital lease under generally accepted
accounting principles.
"CD Borrowing" means a Borrowing comprised of
Certificate of Deposit Loans.
"Certificate of Deposit Loan" means any Loan with
respect to which the Company shall have selected an interest
rate based on the Adjusted CD Rate in accordance with the
provisions of Article II.
"Change of Control" means any of (a) the
acquisition by any Person or two or more Persons (excluding
underwriters in the course of their distribution of voting
stock in an underwritten public offering) acting in concert,
of beneficial ownership (within the meaning of Rule 13d 3 of
the Securities and Exchange Commission) of 25% or more of the
outstanding shares of voting stock of the Company, (b) a
majority of the members of the Board of Directors of the
Company on any date shall not have been (i) members of the
Board of Directors of the Company on the date 12 months prior
to such date or (ii) approved by Persons who constitute at
least a majority of the members of the Board of Directors of
the Company as constituted on the date 12 months prior to
such date or (c) all or substantially all of the assets of
the Company are sold in a single transaction or series of
related transactions to any Person.
"Code" means the Internal Revenue Code of 1986 and
any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time
to time. References to sections of the Code shall be
construed to also refer to any successor sections.
"Commitment" means, with respect to each Bank, the
amount set forth beneath the name of such Bank on the
signature pages hereof (or, as to any Person who becomes a
Bank after the Execution Date, on the signature page of the
Assignment and Acceptance executed by such Person), as such
amount may be permanently terminated or reduced from time to
time pursuant to Section 2.09 or Section 7.01, and as such
amount may be increased or decreased from time to time by
assignment or assumption pursuant to Section 9.03. The
Commitment of each Bank shall automatically and permanently
terminate on the Maturity Date.
"Commitment Fee" has the meaning specified in
Section 2.08.
"Communications" has the meaning specified in
Section 9.01.
"Company" has the meaning specified in the
introduction to this Agreement.
"Confidential Information Memorandum" means the
Confidential Information Memorandum dated April 1994
furnished by Chemical Securities, Inc., as arranger on behalf
of TCB, relating to the revolving credit facilities evidenced
by this Agreement.
"Consolidated Senior Indebtedness" means all
Indebtedness of the Company and its Subsidiaries, other than
Subordinated Indebtedness, calculated on a consolidated
basis.
"Consolidated Tangible Net Worth" means, with
respect to the Company, at any time, the total Stockholders'
Equity less the total amount of any intangible assets and
plus the total amount of any Subordinated Indebtednee unless
already included in Stockholders Equity, with all such
amounts being calculated for the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles applied on a
consistent basis. Intangible assets shall include
unamortized debt discount and expense, unamortized deferred
charges and goodwill.
"Default" means any event or condition which, with
the lapse of time or giving of notice or both, would
constitute an Event of Default.
"Dollars" and the symbol "$" mean the lawful
currency of the United States of America.
"Domestic Lending Office" means, with respect to
any Bank, the office of such Bank specified as its "Domestic
Lending Office" on such Bank's signature page to this
Agreement or, as to any Person who becomes a Bank after the
Execution Date, on the signature page of the Assignment and
Acceptance executed by such Person or such other office of
such Bank as such Bank may hereafter designate from time to
time as its "Domestic Lending Office" by notice to the
Company and the Agent.
"Effective Date" means the date on which the
conditions to Borrowing set forth in Article IV are first
met.
"Eligible Assignee" means (a) any Bank or any
Affiliate of any Bank; (b) a commercial bank organized under
the laws of the United States, or any state thereof, and
having total assets in excess of $1,000,000,000 and having
deposits that rated in either of the two highest generic
letter rating categories (without regard to subcategories)
from either S&P or Moody's; (c) a commercial bank organized
under the laws of any other country which is a member of the
OECD, or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, provided
that such bank is acting through a branch or agency located
in the country in which it is organized or another country
which is also a member of the OECD; (d) the central bank of
any country which is a member of the OECD; or (e) any other
financial institution approved by the Company and the Agent
(which approval shall not be unreasonably withheld).
"ERISA" means the Employee Retirement Income
Security Act of 1974, and any successor statute of similar
import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections
of ERISA shall be construed to also refer to any successor
sections.
"ERISA Affiliate" means any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of
trades or businesses, as described in sections 414(b) and
414(c), respectively, of the Code or section 4001 of ERISA.
"Eurodollar Borrowing" means a Borrowing comprised
of Eurodollar Loans.
"Eurodollar Lending Office" means, with respect to
each Bank, the branches or Affiliates of such Bank which such
Bank has designated as its "Eurodollar Lending Office" on
such Bank's signature page to this Agreement or, as to any
Person who becomes a Bank after the Execution Date, on the
signature page of the Assignment and Acceptance executed by
such Person or such other office of such Bank as such Bank
may hereafter designate from time to time as its "Eurodollar
Lending Office" by notice to the Company and the Agent.
"Eurodollar Loan" means any Loan with respect to
which the Company shall have selected an interest rate based
on the LIBO Rate in accordance with the provisions of Article
II.
"Event of Default has the meaning specified in
Article VII.
"Execution Date means the earliest date upon which
all of the following shall have occurred: counterparts of
this Agreement shall have been exe cuted by the Company and
each Bank, and the Agent shall have received counterparts
hereof which taken together, bear the signature of the
Company and each Bank.
"Existing Agreement" means the Revolving Credit
Agreement dated as of June 17, 1991, as amended, among the Company,
TCC, the banks party thereto, TCB, as funds administrator and
Texas Commerce Bank, National Association, as administrative agent.
"Federal Funds Effective Rate" has the meaning
specified in the definition of "Alternate Base Rate."
"Fixed Certificate of Deposit Rate" has the meaning
specified in the definition of "Adjusted CD Rate."
"Guaranties" by any Person means all obligations
(other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection) of such
Person guaranteeing or, in effect, guaranteeing any
Indebtedness, dividend or other obligation, of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including all obligations incurred
through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor,
(b) to advance or supply funds (i) for the purchase
or payment of such Indebtedness or obligation, (ii) to
maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation,
(c) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of such
Indebtedness or such obligation, or
(d) otherwise to assure the owner of the
Indebtedness or the obligation of the primary obligor against
loss in respect thereof.
For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to
the principal amount of such Indebtedness for borrowed money
which has been guaranteed, and a Guaranty in respect of any
other obligation or liability or any dividend shall be deemed
to be Indebtedness equal to the maximum aggregate amount of
such obligation, liability or dividend.
"Highest Lawful Rate" means, as to any Bank, at the
particular time in question, the maximum nonusurious rate of
interest which, under applicable law, such Bank is then
permitted to charge the Company on the Loans. If the maximum
rate of interest which, under applicable law, the Banks are
permitted to charge the Company on the Loans shall change
after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, as
of the effective time of such change without notice to the
Company.
"Indebtedness" of any Person means, without
duplication:
(a) any obligation of such Person for borrowed
money, including:
(i) any obligation of such Person evidenced by
bonds, debentures, notes or other similar debt
instruments, and
(ii) any obligation for borrowed money which is
non-recourse to the credit of such Person but which is
secured by any asset of such Person,
(b) any obligation of such Person on account of
deposits or advances,
(c) all obligations of such Person under
conditional sale or other title retention agreements relating
to property purchased by such Person,
(d) any obligation of such Person for the deferred
purchase price of any property or services, except accounts
payable arising in the ordinary course of such Person's
business,
(e) rentals in respect of Capital Leases of such
Person,
(f) Guaranties by such Person to the extent
required pursuant to the definition thereof,
(g) any Indebtedness of another Person secured by a
Lien on any asset of such first Person, whether or not such
Indebtedness is assumed by such first Person, and
(h) any Indirect Indebtedness of such Person.
"Indemnitee" has the meaning specified in Section 9.04.
"Index Debt has the meaning specified in the
definition of "Applicable Fee Percentage."
"Indirect Indebtedness" of a Person means (a) the
Indebtedness of a partnership in which such Person is a
general partner and (b) the amount of any liability of such
Person created by the Indebtedness of a joint venture in
which such Person is a joint venturer.
"Insignificant Foreign Subsidiary" means a
Subsidiary of the Company which is not organized under the
laws of a state of the United States and which is not a
Significant Subsidiary of the Company.
"Interest Payment Date" means, as to any Loan, the
last day of the Interest Period applicable to such Loan (and,
in addition, in the case of any Interest Period of six
months' or 180 days' duration, the day that would have been
the Interest Payment Date of such Interest Period if such
Interest Period had been of three months' or 90 days'
duration).
"Interest Period means: (a) as to any Eurodollar
Loan, the period commencing on the date of such Eurodollar
Loan and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day)
in the calendar month that is 1, 2, 3 or 6 months thereafter,
as the Company may elect, (b) as to any Certificate of
Deposit Loan, a period of 30, 60, 90 or 180 days' duration,
as the Company may elect, commencing on the date of such
Certificate of Deposit Loan and (c) as to any Alternate Base
Rate Loan, a period of 90 days' duration, commencing on the
date of such Loan; provided, however, that (i) if any
Interest Period would end on a day that shall not be a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, with respect to
Eurodollar Loans only, such next succeeding Business Day
would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day,
(ii) no Interest Period shall end later than the Maturity
Date and (iii) interest shall accrue from and including the
first day of an Interest Period to but excluding the last day
of such Interest Period.
"Investment" means, as to any Person, any
investment so classified under generally accepted accounting
principles made by stock purchase, capital contribution, loan
or advance or by purchase of property or otherwise, but in
any event shall include as an investment in any other Person
the amount of all Indebtedness owed by such other Person and
all Accounts from such other Person which are not current
assets or did not arise from services rendered or sales to
such other Person in the ordinary course of business.
"LIBO Rate means the rate (rounded to the nearest
1/8 of 1% or, if there is no nearest 1/8 of 1%, the next
higher 1/8 of 1%) at which dollar deposits approximately
equal in principal amount to the Agent's portion of such
Borrowing and for a maturity equal to the applicable Interest
Period are offered in immediately available funds to the
principal office of the Agent in London, England (or if the
Agent does not at the time any such determination is made,
maintain an office in London, England, the principal office
of any Affiliate of the Agent in London, England) by leading
banks in the London interbank market for Eurodollars at
approximately 11:00 a.m., London, England time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means any mortgage, pledge, hypothecation,
judgment lien or similar legal process, title retention lien,
or other lien or security interest, including the interest of
a vendor under any conditional sale or other title retention
agreement and the interest of a lessor under any Capital
Lease.
"Loan" means an Alternate Base Rate Loan, a
Certificate of Deposit Loan or a Eurodollar Loan.
"Loan Documents" means this Agreement, the Notes,
the Agent's Letter and all other documents and instruments
executed by the Company or any other Person in connection
with this Agreement and the Loans.
"Margin Stock" has the meaning specified in
Regulation U.
"Maturity Date" means May 26, 1995, or the earlier
termination of the Commitments pursuant to Section 7.01.
"Maximum Permissible Rate" has the meaning
specified in Section 9.08.
"Moody's" means Moody's Investors Service.
"Note" and "Notes" have the meaning specified in
Section 2.05.
"Notice of Borrowing" has the meaning specified in
Section 2.03.
"OECD" means the Organization for Economic
Cooperation and Development.
"Other Activities" has the meaning specified in
Section 8.03.
"Other Financings" has the meaning specified in
Section 8.03.
"Other Taxes" has the meaning specified in Section
2.18.
"PBGC" means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its
functions under ERISA.
"Person" means any natural person, corporation,
business trust, association, company, limited liability
company, joint venture, partnership or government or any
agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is
defined in ERISA, established or maintained by the Company or
any ERISA Affiliate or as to which the Company or any ERISA
Affiliate contributes or is a member or otherwise may have
any liability.
"Prime Rate" has the meaning specified in the
definition of the term "Alternate Base Rate."
"Register" has the meaning specified in Section
9.03(d).
"Regulation G" means Regulation G of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation T" means Regulation T of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Reportable Event" means a Reportable Event as
defined in Section 4043(b) of ERISA.
"Required Banks" means, at any time Banks holding
66-2/3% of the aggregate principal amount of the Loans at the
time outstanding, or if no Loans are outstanding, Banks
having 66-2/3% of the Total Commitment.
"Short-term Indebtedness means, at any date,
Indebtedness which matures one year or less from such date
and which is not directly or indirectly renewable or
extendible, at the option of the obligor, by its terms or the
terms of any instrument or agreement relating thereto, to a
date more than one year from such date.
"Significant Subsidiary" means, as to the Company
or any Subsidiary of the Company, any Subsidiary of such
Person who either (a) has a net worth in excess of 5% of the
consolidated net worth of the Company and its other
Subsidiaries, or (b) has gross revenues in excess of 5% of
the consolidated gross revenues of the Company and its other
Subsidiaries based, in each case, on the most recent audited
financial statements of the Company. In all events the
Significant Subsidiaries of the Company shall include GRID
Systems Corporation, a California corporation, TCC, TRC,
Tandy Bank, TE Electronics, Inc., a Delaware corporation, A&A
International, Inc., a Nevada corporation, and Technology
Properties, Inc., a Delaware corporation.
"S&P" means Standard & Poor's Ratings Group, a
Division of McGraw-Hill, Inc.
"Statutory Reserves" means a fraction (expressed as
a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of
the maximum reserve percentages (including any marginal,
special, emergency, or supplemental reserves) expressed as a
decimal established by the Board and any other banking
authority to which any Bank is subject for new negotiable
time deposits in Dollars of over $100,000 with maturities
approximately equal to (a) the applicable Interest Period, in
the case of the Adjusted CD Rate, and (b) three months, with
respect to the Base CD Rate. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Stockholders' Equity" means, with respect to the
Company at any date, the sum of (a) its capital stock taken
at par value, (b) its capital surplus and (c) its retained
earnings less treasury stock, all computed in accordance with
generally accepted accounting principles applied on a
consistent basis.
"Subordinated Indebtedness" means Indebtedness of
the Company having maturities and terms, and which is
subordinated to payment of the Notes in a manner, approved in
writing by the Agent and the Required Banks.
"Subsidiary" means any Person of which or in which
any other Person (the "parent") and the other Subsidiaries of
the parent own directly or indirectly 50% or more of:
(a) the combined voting power of all classes of
stock having general voting power under ordinary
circumstances to elect a majority of the board of directors
of such Person, if it is a corporation;
(b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar
entity; or
(c) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization.
"Tandy Bank" means Tandy National Bank, a national
banking association.
"Taxes" has the meaning specified in Section 2.18.
"TCB" means Texas Commerce Bank National
Association.
"TCC" means Tandy Credit Corporation, a Delaware
corporation.
"Three-Month Secondary CD Rate" has the meaning
specified in the definition of "Alternate Base Rate."
"Total Commitment" means, at any time, the
aggregate amount of the Commitments, as in effect at such
time.
"Transferee" has the meaning specified in Section
2.18.
"TRC" means Tandy Receivables Corporation, a
Delaware corporation.
"Type" means any type of Loan determined with
respect to the interest option applicable thereto, i.e., a
Eurodollar Loan, a Certificate of Deposit Loan or an
Alternate Base Rate Loan.
"Wholly owned Subsidiary" means any Person of which
the Company or its other Wholly owned Subsidiaries own
directly or indirectly 100% of:
(a) the issued and outstanding shares of stock
(except shares required as directors' qualifying shares and
shares constituting less than 2% of the issued and
outstanding shares) and all Indebtedness for borrowed money;
(b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar
entity; or
(c) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization.
SECTION 1.02. Accounting Terms. Except as
otherwise herein specifically provided, each accounting term
used herein shall have the meaning given it under generally
accepted accounting principles as in effect from time to time
as set forth in the opinions, statements and pronouncements
of the Accounting Principles Board of the American Institute
of Certified Public Accountants and the Financial Accounting
Standards Board and applied on a consistent basis; provided,
however, that each reference in Article VI and in the
definition of any term used in Article VI to generally
accepted accounting principles shall mean generally accepted
accounting principles in effect on the date hereof.
SECTION 1.03. Interpretation. (a) In this
Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number
and vice versa;
(ii) reference to any gender includes each other
gender;
(iii) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this
Agreement as a whole and not to any particular Article,
Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement,
and reference to a Person in a particular capacity
excludes such Person in any other capacity or
individually, provided that nothing in this clause (iv)
is intended to authorize any assignment not otherwise
permitted by this Agreement;
(v) reference to any agreement (including this
Agreement), document or instrument means such agreement,
document or instrument as amended, supplemented or
modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms
hereof, and reference to any Note includes any note
issued pursuant hereto in extension or renewal thereof
and in substitution or replacement therefor;
(vi) unless the context indicates otherwise,
reference to any Article, Section, Schedule or Exhibit
means such Article or Section hereof or such Schedule or
Exhibit hereto;
(vii) the words "including" (and with correlative
meaning "include") means including, without limiting the
generality of any description preceding such term;
(viii) with respect to the determination of any
period of time, the word "from" means "from and
including" and the word "to" means "to but excluding";
and
(ix) reference to any law means such as amended,
modified, codified or reenacted, in whole or in part,
and in effect from time to time.
(b) The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
(c) No provision of this Agreement shall be
interpreted or construed against any Person solely because
that Person or its legal representative drafted such
provision.
<PAGE>
ARTICLE II
THE LOANS
SECTION 2.01. Commitments. (a) Subject to the
terms and conditions and relying upon the representations and
warranties herein set forth, each Bank, severally and not
jointly, agrees to make revolving credit loans (each a
"Loan") to the Company at any time and from time to time on
and after the date hereof and until the earlier of the
Business Day next preceding the Maturity Date and the
termination of the Commitment of such Bank in accordance with
the terms hereof. Notwithstanding the foregoing, (i) the
aggregate principal amount of all Loans of a Bank at any time
outstanding shall not exceed such Bank's Commitment and (ii)
the aggregate principal amount of all Loans made by all Banks
at any time outstanding shall not exceed the Total
Commitment.
(b) Within the foregoing limits and subject to the
terms, conditions and limitations set forth herein, the
Company may borrow, repay, prepay and reborrow Loans
hereunder on and after the date hereof and prior to the
Maturity Date.
SECTION 2.02. Loans. (a) Each Borrowing made by
the Banks to the Company on any Borrowing Date shall be in a
minimum aggregate principal amount of $5,000,000 and an
integral multiple of $1,000,000, and shall consist of Loans
of the same Type made ratably by the Banks in accordance with
their respective Commitments; provided, however, that the
failure of any Bank to make any Loan shall not relieve any
other Bank of its obligation to lend hereunder. The Loan by
each Bank to the Company on the initial Borrowing Date shall
be made against delivery to such Bank of a Note, payable to
the order of such Bank, executed by the Company, as referred
to in Section 2.05.
(b) Each Borrowing shall be an ABR Borrowing, a CD
Borrowing or a Eurodollar Borrowing as the Company may
request pursuant to Section 2.03. Each Bank may fulfill its
Commitment with respect to any Eurodollar Loan or Certificate
of Deposit Loan by causing, at its option, any domestic or
foreign branch or Affiliate of such Bank to make such Loan,
provided that the exercise of such option shall not affect
the obligation of the Company, to repay such Loan in
accordance with the terms of the applicable Note. Subject to
the provisions of Section 2.03 and Section 2.12, Borrowings
of more than one Type may be outstanding at the same time.
(c) Each Bank shall make its pro rata portion of
the amount of each Borrowing to the Company hereunder on the
proposed Borrowing Date thereof by paying the amount required
to the Agent in Houston, Texas in U. S. Dollars and in
immediately available funds not later than 1:00 p.m.,
Houston, Texas time, and, subject to satisfaction of the
conditions set forth in Article IV, the Agent shall promptly
and in any event on the same day, credit the amounts so
received to the general deposit account of the Company with
the Agent, or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not
have been met, return the amounts so received to the
respective Banks. Unless the Agent shall have received
notice from a Bank prior to the date of any Borrowing that
such Bank will not make available to the Agent such Bank's
portion of such Borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date
of such Borrowing in accordance with this Section 2.02(c) and
the Agent may, in reliance upon such assumption, make
available to the Company on such date a corresponding amount.
If, and to the extent that such Bank shall not have made such
portion available to the Agent, such Bank and the Company
severally agree to repay to the Agent forthwith on demand
such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the
Company until the date such amount is repaid to the Agent (i)
in the case of the Company, the interest rate applicable at
the time to the Loans comprising such Borrowing and (ii) in
the case of such Bank, the Federal Funds Effective Rate. If
such Bank shall repay to the Agent such corresponding amount,
such amount shall constitute such Bank's Loan as part of such
Borrowing for purposes of this Agreement.
SECTION 2.03. Notice of Borrowings. (a) In order
to effect a Borrowing, the Company shall give irrevocable
written notice (or irrevocable telephone notice thereof,
confirmed as soon as practicable by written notice) to the
Agent (a "Notice of Borrowing") (i) in the case of an ABR
Borrowing, not later than 11:00 a.m., Houston, Texas time, on
the Borrowing Date of a proposed Borrowing, (ii) in the case
of a CD Borrowing, not later than 10:00 a.m., Houston, Texas
time, two Business Days before the Borrowing Date of a
proposed Borrowing and (iii) in the case of a Eurodollar
Borrowing, not later than 10:00 a.m., Houston, Texas time,
three Business Days before the Borrowing Date of a proposed
Borrowing. Each Notice of Borrowing shall be irrevocable and
shall in each case refer to this Agreement and specify (i)
whether the Borrowing then being requested is to be an ABR
Borrowing, a CD Borrowing or a Eurodollar Borrowing, (ii) the
Borrowing Date of such Borrowing (which shall be a Business Day)
and the aggregate amount thereof (which, in the case of an ABR
Borrowing, shall not be less than $5,000,000 and shall
be in an integral multiple of $1,000,000, and which, in the
case of a CD Borrowing or a Eurodollar Borrowing, shall not
be less than $25,000,000 and shall be in an integral multiple
of $5,000,000) and (iii) if such Borrowing is to be a CD
Borrowing or a Eurodollar Borrowing, the Interest Period or
Interest Periods with respect thereto. If no election as to
the Type of Borrowing is specified in any such notice by the
Company, such Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any CD Borrowing or
Eurodollar Borrowing is specified in any such notice by the
Company, then in the case of a CD Borrowing , the Company
shall be deemed to have selected an Interest Period of 30
days duration and in the case of a Eurodollar Borrowing, the
Company shall be deemed to have selected an Interest Period
of one month's duration. The Agent shall promptly advise the
Banks of any notice given by the Company pursuant to this
Section 2.03(a) and of each Bank's portion of the requested
Borrowing.
(b) Notwithstanding any provision to the contrary
in this Agreement more than one Borrowing may occur on the
same Borrowing Date. For purposes of the foregoing,
Borrowings comprised of Loans having different Interest
Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
SECTION 2.04. Conversion and Continuation of
Borrowings. The Company shall have the right at any time
upon prior irrevocable notice to the Agent (a) not later than
11:00 a.m., Houston, Texas time, on the date of conversion,
to convert any Eurodollar Borrowing or CD Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., Houston, Texas
time, two Business Days prior to conversion or continuation,
to convert any Eurodollar Borrowing or ABR Borrowing into a
CD Borrowing or to continue any CD Borrowing as a CD
Borrowing for an additional Interest Period, (c) not later
than 10:00 a.m., Houston, Texas time, three Business Days
prior to conversion or continuation, to convert any ABR
Borrowing or CD Borrowing into a Eurodollar Borrowing or to
continue any Eurodollar Borrowing as a Eurodollar Borrowing
for an additional Interest Period, (d) not later than 10:00
a.m., Houston, Texas time, three Business Days prior to
conversion, to convert the Interest Period with respect to
any Eurodollar Borrowing to another permissible Interest
Period and (e) not later than 10:00 a.m., Houston, Texas
time, two Business Days prior to conversion, to convert the
Interest Period with respect to any CD Borrowing to another
permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made
pro rata among the Banks in accordance with the
respective principal amounts of the Loans comprising the
converted or continued Borrowing;
(ii) if less than all the outstanding principal
amount of any Borrowing shall be converted or continued,
the aggregate principal amount of such Borrowing
converted or continued shall be an integral multiple of
$1,000,000 and not less than $5,000,000;
(iii) if any Eurodollar Borrowing or CD Borrowing
is converted at a time other than the end of the
Interest Period applicable thereto, the Company shall
pay, upon demand, any amounts due to the Banks pursuant
to Section 2.14;
(iv) any portion of a Borrowing maturing or
required to be repaid in less than one month may not be
converted into or continued as a Eurodollar Borrowing;
(v) any portion of a Borrowing maturing or required
to be repaid in less than 30 days may not be converted
into or continued as a CD Borrowing;
(vi) any portion of a Eurodollar Borrowing or CD
Borrowing which cannot be converted into or continued as
a Eurodollar Borrowing or a CD Borrowing by reason of
clauses (iv) and (v) above shall be automatically
converted at the end of the Interest Period in effect
for such Borrowing into an ABR Borrowing;
(vii) no Interest Period may be selected for any
Eurodollar Borrowing or CD Borrowing that would end
later than the Maturity Date; and
(viii) accrued interest on a Loan (or portion
thereof) being converted or continued shall be paid by
the Company at the time of conversion or continuation.
Each notice pursuant to this Section 2.04 shall be
irrevocable and shall refer to this Agreement and specify (w)
the identity and amount of the Borrowing that the Company
requests to be converted or continued, (x) whether such
Borrowing is to be converted to or continued as a Eurodollar
Borrowing, a CD Borrowing or an ABR Borrowing, (y) if such
notice requests a conversion, the date of such conversion
(which shall be a Business Day) and (z) if such Borrowing is
to be converted to or continued as a Eurodollar Borrowing or
CD Borrowing, the Interest Period with respect thereto. If
no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar
Borrowing or CD Borrowing, the Company shall be deemed to
have selected an Interest Period of one month's duration, in
the case of a Eurodollar Borrowing, or 30 days' duration, in
the case of a CD Borrowing. The Agent shall promptly advise
the other Banks of any notice given pursuant to this Section
2.04 and of each Bank's portion of any converted or continued
Borrowing. If the Company shall not have given notice in
accordance with this Section 2.04 to continue any Borrowing
into a subsequent Interest Period (and shall not otherwise
have given notice in accordance with this Section 2.04 to
convert such Borrowing), such Borrowing shall, at the end of
the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued
into a new Interest Period as an ABR Borrowing.
SECTION 2.05. Notes; Repayment of Loans. (a) The
Loans made by each Bank to the Company shall be evidenced by
a note (a "Note" and collectively, the "Notes" ) duly
executed on behalf of the Company, dated the Execution Date,
in substantially the form attached hereto as Exhibit 2.05,
payable to such Bank in a principal amount equal to its
Commitment on such date. The Company agrees to pay the
outstanding principal balance of each Loan, as evidenced by
the Note, on the Maturity Date. Each Note shall bear
interest from its date on the outstanding principal balance
thereof as provided in Section 2.06.
(b) Each Bank or the Agent on its behalf, shall,
and is hereby authorized by the Company to, endorse on the
schedule attached to the Note delivered to such Bank (or a
continuation of such schedule attached to such Note and made
a part thereof), or otherwise record in such Bank's internal
records, an appropriate notation evidencing the date and
amount of each Loan, as from such Bank to the Company, as
well as the date and amount of each payment and prepayment
with respect thereto; provided, however, that the failure of
any Bank or the Agent to make such a notation or any error in
such a notation shall not affect the obligation of the
Company hereunder or under the Note of such Bank to repay the
principal amount of the Loan made by such Bank hereunder and
under such Note to such Bank together with all interest
accruing thereon.
SECTION 2.06. Interest on Loans. (a) Subject to
the provisions of Section 2.07, each Alternate Base Rate Loan
shall bear interest at a rate per annum, equal to the lesser
of (i) the Alternate Base Rate and (ii) the Highest Lawful
Rate (if the Alternate Base Rate is based on the Prime Rate,
computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be; if the
Alternate Base Rate is based on the Base CD Rate or the
Federal Funds Effective Rate, computed on the basis of the
actual number of days elapsed over a year of 360 days).
(b) Subject to the provisions of Section 2.07, each
Certificate of Deposit Loan shall bear interest at a rate per
annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the lesser of (i)
the Adjusted CD Rate for the Interest Period in effect for
such Loan plus the Applicable Margin and (ii) the Highest
Lawful Rate.
(c) Subject to the provisions of Section 2.07, each
Eurodollar Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the lesser of (i) the LIBO
Rate for the Interest Period in effect for such Loan plus the
Applicable Margin and (ii) the Highest Lawful Rate.
(d) Interest on each Loan shall be payable in
arrears on each Interest Payment Date applicable to such Loan
except as otherwise provided in this Agreement. The
applicable LIBO Rate, Adjusted CD Rate or Alternate Base Rate
shall be determined by the Agent, and such determination
shall be conclusive absent demonstrable error. The Agent
shall promptly advise the Company and each Bank of each such
determination.
SECTION 2.07. Interest on Overdue Amounts. If the
Company shall default in the payment of the principal of or
interest on any Loan or any other amount due hereunder, by
acceleration or otherwise, the Company shall on demand from
time to time pay interest, to the extent permitted by law, on
such defaulted amount up to (but not including) the date of
actual payment (after as well as before judgment) at a rate
per annum (computed on the basis of the actual number of days
elapsed over a period of 360 days) equal to the lesser of (a)
the Highest Lawful Rate and (b) the Alternate Base Rate plus
2% per annum.
SECTION 2.08. Fees. (a) The Company shall pay
each Bank, through the Agent, on the last day of each March,
June, September and December, and on the Maturity Date, in
immediately available funds, a commitment fee (such Bank's
"Commitment Fee") equal to the Applicable Fee Percentage
times the amount of the Commitment of such Bank, whether used
or unused, during the quarter (or shorter period commencing
with the Execution Date or ending with the Maturity Date)
ending on such date. All Commitment Fees under this Section
2.08(a) shall be computed on the basis of the actual number
of days elapsed in a year of 365 or 366 days, as the case may
be. The Commitment Fee due to each Bank shall cease to
accrue on the earlier of the Maturity Date or the termination
of the Commitment of such Bank pursuant to Section 2.09.
(b) The Company shall pay the Agent, an agency fee
(the "Agency Fee") in such amount as may be agreed between
the Company and the Agent pursuant to that certain letter
agreement of even date herewith between the Company and the
Agent (the "Agent's Letter").
(c) The Company shall pay to TCB, for its own
account, on or before the Execution Date all fees due to it
pursuant to that certain letter agreement dated April 15,
1994 between the Company and TCB.
SECTION 2.09. Termination and Reduction of
Commitments. (a) Upon at least ten Business Days' prior
written notice to the Agent, the Company may at any time in
whole permanently terminate, or from time to time permanently
reduce, the Total Commitment, ratably among the Banks in
accordance with their respective Commitments; provided,
however, that any partial reduction of the Total Commitment
shall be in a minimum aggregate principal amount of
$20,000,000.
(b) At the time the Commitments of any Bank are
terminated or reduced pursuant to Section 2.09(a) the Company
shall pay to the Agent for the account of each such Bank, the
Commitment Fees on the amount of the Commitments so
terminated or reduced owed through the date of such
termination or reduction.
SECTION 2.10. Alternate Rate of Interest. (a) In
the event, and on each occasion, that on the day two Business
Days prior to the commencement of any Interest Period for a
Eurodollar Borrowing, the Agent shall have determined (which
determination shall be conclusive and binding upon the
Company) that dollar deposits in the amount of the requested
principal amount of such Borrowing are not generally
available in the London interbank market, or that the rate at
which dollar deposits are being offered will not adequately
and fairly reflect the cost to any Bank of making or
maintaining the principal amount of its Eurodollar Loan
comprising such Borrowing during such Interest Period, or
reasonable means do not exist for ascertaining the LIBO Rate,
the Agent shall as soon as practicable thereafter give
written or telex notice of such determination to the Company
and the Banks, and any request by the Company for the making
of a Eurodollar Borrowing shall, until the circumstances
giving rise to such notice no longer exist, be deemed to be a
request for a Borrowing to be comprised of Alternate Base
Rate Loans or, if the Company shall so specify in its notice
to the Agent, a request for a CD Borrowing so long as the
circumstances giving rise to a notice under Section 2.10(b)
shall not exist. Each determination of the Agent hereunder
shall be conclusive absent demonstrable error. In the event
of such determination, the Company requesting such Borrowing
shall have the right to withdraw its Notice of Borrowing
requesting Eurodollar Loans.
(b) In the event, and on each occasion, that on or
before the day on which the Adjusted CD Rate for a CD
Borrowing is to be determined, the Agent shall have
determined (which determination shall be conclusive and
binding upon the Company absent demonstrable error) that the
Adjusted CD Rate for such Borrowing cannot be ascertained for
any reason, including the inability or failure of the Agent
to obtain sufficient bids in accordance with the terms of the
definition of Fixed Certificate of Deposit Rate, or the Agent
shall determine that the Adjusted CD Rate for such CD
Borrowing will not adequately and fairly reflect the cost to
any Bank of making or maintaining the principal amount of its
Certificate of Deposit Loan during such Interest Period, the
Agent shall, as soon as practicable thereafter, give written
or telex notice of such determination to the Company and the
Banks, and any request by the Company for the making of a CD
Borrowing shall, until the circumstances giving rise to such
notice no longer exist, be deemed to be a request for an ABR
Borrowing, or, if the Company shall so specify in its notice
to the Agent, a request for a Borrowing to be comprised of
Eurodollar Loans so long as the circumstances giving rise to
a notice under Section 2.10(a) shall not exist. Each
determination by the Agent hereunder shall be conclusive
absent demonstrable error. In the event of such
determination, the Company requesting such Borrowing shall
have the right to withdraw its Notice of Borrowing requesting
a CD Borrowing.
SECTION 2.11. Prepayment of Loans. (a) Each
Borrowing may be prepaid at any time and from time to time,
in whole or in part, subject to the requirements of Section
2.14 but otherwise without premium or penalty, upon at least
five Business Days' prior written or telex notice to the
Agent; provided, however, that each such partial prepayment
shall be in an integral multiple of $1,000,000 and a minimum
aggregate principal amount of $5,000,000.
(b) On the date of any termination or reduction of
the Total Commitment pursuant to Section 2.09(a), the Company
shall prepay so much of its Loans (up to the amount by which
the Commitment is so terminated or reduced) as shall be
necessary in order that the aggregate principal amount of the
Loans outstanding will not exceed the Commitment following
such termination or reduction. All prepayments under this
paragraph shall be subject to Section 2.14.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing
(or portion thereof) to be prepaid, whether the Borrowing
shall be irrevocable and shall commit the Company making such
prepayment to prepay such Loan by the amount stated therein
on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment.
SECTION 2.12. Reserve Requirements; Change in
Circumstances. (a) It is understood that the cost to each
Bank of making or maintaining any of the Eurodollar Loans may
fluctuate as a result of the applicability of reserve
requirements imposed by the Board at the ratios provided for
in Regulation D on the date hereof. The Company agrees to
pay to each of the Banks from time to time such amounts as
shall be necessary to compensate such Bank for the portion of
the cost of making or maintaining Eurodollar Loans resulting
from any such reserve requirements provided for in Regulation
D as in effect on the date hereof, it being understood that
the rates of interest applicable to Eurodollar Loans have
been determined on the assumption that no such reserve
requirements exist or will exist and that such rates do not
reflect costs imposed on the Banks in connection with such
reserve requirements.
(b) Notwithstanding any other provision herein, if
after the date of this Agreement any change in applicable law
or regulation or in the interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation
of payments to any Bank of the principal of or interest on
any Certificate of Deposit Loan or Eurodollar Loan made by
such Bank or any other fees or amounts payable hereunder
(other than taxes imposed on the overall net income of such
Bank by the jurisdiction in which such Bank has its principal
office or is located or by any political subdivision or
taxing authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, such Bank (except any such
reserve requirement which is reflected in the Adjusted CD
Rate) or shall impose on such Bank or the London interbank
market any other condition affecting this Agreement or the
Certificate of Deposit Loans or Eurodollar Loans made by such
Bank and the result of any of the foregoing shall be to
increase the cost to such Bank of making or maintaining any
Certificate of Deposit Loan or Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in
respect thereof, by an amount deemed by such Bank in its sole
discretion to be material, then such additional amount or
amounts as will compensate such Bank for such additional
costs or reduction will be paid to such Bank by the Company
with respect to the Eurodollar Loans or Certificate of
Deposit Loans, as the case may be.
(c) If any Bank shall have determined that the
applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital
Measurement and Capital Standards," or the adoption after the
date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any
of the foregoing by any governmental authority, central bank
or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any
lending office of such Bank) or any Bank's holding company
with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Bank's
capital or on the capital of such Bank's holding company, if
any, as a consequence of this Agreement or the Loans made by
such Bank pursuant hereto to a level below that which such
Bank or such Bank's holding company could have achieved but
for such adoption, change or compliance (taking into
consideration such Bank's policies and the policies of such
Bank's holding company with respect to capital adequacy) by
an amount deemed by such Bank to be material, then from time
to time the Company shall pay to such Bank such additional
amount or amounts as will compensate such Bank or such Bank's
holding company for any such reduction suffered. It is
agreed that the interest rates and fees provided for in this
Agreement have been determined on the understanding that the
Banks will not be required to maintain capital against their
Commitments under currently applicable laws, regulations and
regulatory guidelines, and that the Banks will be entitled to
make claims under this paragraph in the event such
understanding proves to be incorrect.
(d) A certificate of each Bank setting forth such
amount or amounts as shall be necessary to compensate such
Bank (or participating banks or other entities pursuant to
Article IX) as specified in paragraph (a), (b) or (c) above
shall be delivered to the Company obligated with respect
thereto and shall be rebuttably presumptive evidence of the
amount or amounts which such Bank is entitled to receive.
The Company shall pay each Bank the amount shown as due from
it on any such certificate within 10 days after its receipt
of the same.
(e) Failure on the part of any Bank to demand
compensation for any increased costs or reduction in amounts
received or receivable with respect to any Interest Period
shall not constitute a waiver of such Bank's rights to demand
compensation for any increased costs or reduction in amounts
received or receivable in such Interest Period or in any
other Interest Period. The protection of this Section 2.12
shall be available to each Bank regardless of any possible
contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any
demand by such Bank for compensation.
(f) Nothing in this Section 2.12 shall entitle any
Bank to receive interest at a rate per annum in excess of the
Highest Lawful Rate.
SECTION 2.13. Change in Legality. (a)
Notwithstanding anything to the contrary herein contained, if
any change in any law or regulation or in the interpretation
thereof by any governmental authority charged with the
administration or interpretation thereof shall make it
unlawful for any Bank to make or maintain any Eurodollar Loan
or to give effect to its obligations as contemplated hereby,
then, by written notice to the Company and to the Agent, such
Bank may:
(i) declare that Eurodollar Loans will not
thereafter be made by such Bank hereunder, whereupon any
request by the Company for a Eurodollar Borrowing shall,
as to such Bank only, be deemed a request for an
Alternate Base Rate Loan unless such declaration shall
be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans
made by it be converted to Alternate Base Rate Loans, in
which event all such Eurodollar Loans shall be
automatically converted to Alternate Base Rate Loans as
of the effective date of such notice as provided in
paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or
(ii) above, all payments and prepayments of principal which
would otherwise have been applied to repay the Eurodollar
Loans that would have been made by such Bank or the converted
Eurodollar Loans of such Bank shall instead be applied to
repay the Alternate Base Rate Loans made by such Bank in lieu
of, or resulting from the conversion of, such Eurodollar
Loans; provided, however, the Alternate Base Rate Loans
resulting from the conversion of such Eurodollar Loans shall
be prepayable only at the times the converted Eurodollar
Loans would have been prepayable, notwithstanding the
provisions of Section 2.11(a).
(b) For purposes of Section 2.13(a), a notice to
the Company by any Bank shall be effective as to each
Eurodollar Loan, if lawful, on the last day of the then
current Interest Period or, if there are then two or more
current Interest Periods, on the last day of each such
Interest Period, respectively; otherwise, such notice shall
be effective on the date of receipt by the Company.
SECTION 2.14. Indemnity. (a) The Company shall
indemnify each Bank against any loss or expense which such
Bank may sustain or incur as a consequence of (i) any failure
by the Company to fulfill on the date of any Borrowing
hereunder the applicable conditions set forth in Article IV,
(ii) any failure by the Company to borrow, convert or
continue hereunder after delivery of a Notice of Borrowing or
a notice of conversion or continuation has been given
pursuant to Section 2.04, (iii) any payment, prepayment or
conversion of a Certificate of Deposit Loan or Eurodollar
Loan required by any other provision of this Agreement or
otherwise made on a date other than the last day of the
applicable Interest Period, (iv) any default in payment or
prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise), or (v) the occurrence of any Event
of Default, including, but not limited to, any loss or
reasonable expense sustained or incurred or to be sustained
or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part
thereof as a Certificate of Deposit Loan or Eurodollar Loan.
Such loss or reasonable expense shall include an amount equal
to the excess, if any, as reasonably determined by each Bank
of (A) its cost of obtaining the funds for the Loan being
paid, prepaid or converted or not borrowed (based on the
Adjusted CD Rate or the LIBO Rate applicable thereto) for the
period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure to borrow) over (B) the
amount of interest (as reasonably determined by such Bank)
that could be realized by such Bank in reemploying during
such period the funds so paid, prepaid or converted or not
borrowed. A certificate of each Bank setting forth any
amount or amounts which such Bank is entitled to receive
pursuant to this Section 2.14 shall be delivered to the
Company and shall be rebuttably presumptive evidence of the
amount or amounts which such Bank is entitled to receive.
Nothing in this Section 2.14 shall entitle any Bank to
receive interest at a rate per annum in excess of the Highest
Lawful Rate.
(b) The provisions of this Section 2.14 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement
or any Note, or any investigation made by or on behalf of any
Bank. All amounts due under this Section 2.14 shall be
payable on written demand therefor.
SECTION 2.15. Pro Rata Treatment. Except as
permitted under Section 2.12, Section 2.13 and Section 2.14
each Borrowing, each payment or prepayment of principal of
the Notes, each payment of interest on such Notes, each other
reduction of the principal or interest outstanding under such
Notes, however achieved, each payment of the Commitment Fees
and each reduction of the Commitments shall be made pro rata
among the Banks in the proportions that their respective
Commitments bear to the Total Commitment.
SECTION 2.16. Payments. (a) The Company shall
make all payments (including principal of or interest on any
Borrowing or any fees or other amounts) hereunder and under
any other Loan Document not later than 1:00 p.m., Houston,
Texas time, on the date when due in dollars to the Agent at
its offices at 1111Fannin, Houston, Texas, in immediately
available funds.
(b) Whenever any payment (including principal of or
interest on any Borrowing or any fees or other amounts)
hereunder or under any other Loan Document shall become due,
or otherwise would occur, on a day that is not a Business
Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be
included in the computation of interest or fees, if
applicable.
SECTION 2.17. Sharing of Setoffs. Each Bank
agrees that if it shall, in any manner, including through the
exercise of a right of banker's lien, setoff or counterclaim
against the Company , or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable
bankruptcy, insolvency or other similar law or otherwise,
obtain payment (voluntary or involuntary) in respect of the
Note held by it as a result of which the unpaid principal
portion of the Note held by it shall be proportionately less
than the unpaid principal portion of the Note held by any
other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Note
held by such other Bank, so that the aggregate unpaid
principal amount of the Note and participations in Notes held
by each Bank shall be in the same proportion to the aggregate
unpaid principal amount of all Notes then outstanding as the
principal amount of the Note held by it prior to such
exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes outstanding prior to such
exercise of banker's lien, setoff or counterclaim; provided,
however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.17 and
the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The
Company expressly consents to the foregoing arrangements and
agrees that any Person holding a participation in a Note
deemed to have been so purchased may exercise any and all
rights of banker's lien, setoff or counterclaim with respect
to any and all moneys owing by the Company to such Bank as
fully as if such Bank had made a Loan directly to the Company
in the amount of such participation.
SECTION 2.18. Payments Free of Taxes. (a) Any and
all payments by the Company hereunder shall be made free and
clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the Agent's or any Bank's (or any
transferee's or assignee's, including a participation
holder's (any such entity a "Transferee")) net income and
franchise taxes imposed on the Agent or any Bank (or
Transferee) by the United States or any jurisdiction under
the laws of which it is organized or any political
subdivision thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If the Company
shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to the Banks (or any
Transferee) or the Agent, (i) the sum payable shall be
increased by the amount necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 2.18) such Bank
(or Transferee) or the Agent (as the case may be) shall
receive an amount equal to the sum it would have received had
no such deductions been made, (ii) the Company shall make
such deductions and (iii) the Company shall pay the full
amount deducted to the relevant taxing authority or other
governmental authority in accordance with applicable law.
(b) In addition, the Company agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter
referred to as "Other Taxes").
(c) The Company will indemnify each Bank (or
Transferee) and the Agent for the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.18)
paid by such Bank (or Transferee) or the Agent, as the case
may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other
governmental authority. Such indemnification shall be made
within 30 days after the date any Bank (or Transferee) or the
Agent, as the case may be, makes written demand therefor. If
a Bank (or Transferee) or the Agent shall become aware that
it is entitled to receive a refund in respect of Taxes or
Other Taxes, it shall promptly notify the Company of the
availability of such refund and shall, within 30 days after
receipt of a request by the Company, apply for such refund at
the Company's expense. If any Bank (or Transferee) or the
Agent receives a refund in respect of any Taxes or Other
Taxes for which such Bank (or Transferee) or the Agent has
received payment from the Company hereunder it shall promptly
notify the Company of such refund and shall, within 30 days
after receipt of a request by the Company (or promptly upon
receipt, if the Company has requested application for such
refund pursuant hereto), repay such refund to the Company,
net of all out-of-pocket expenses of such Bank and without
interest; provided that the Company, upon the request of such
Bank (or Transferee) or the Agent, agrees to return such
refund (plus penalties, interest or other charges) to such
Bank (or Transferee) or the Agent in the event such Bank (or
Transferee) or the Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of
Taxes or Other Taxes withheld by the Company in respect of
any payment to any Bank (or Transferee) or the Agent, the
Company will furnish to the Agent, at its address referred to
in Section 9.01, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
contained in this Section 2.18 shall survive the payment in
full of the principal of and interest on all Loans made
hereunder.
(f) Each Bank (or Transferee) which is organized
outside the United States shall promptly notify the Company
of any changes in its funding office and upon written request
of the Company shall, prior to the immediately following due
date of any payment by the Company hereunder, deliver to the
Company such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant
thereto, including Internal Revenue Service Form 1001 or Form
4224 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-1(a) or
Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Bank (or
Transferee) establishing that such payment is (i) not subject
to withholding under the Code because such payment is
effectively connected with the conduct by such Bank (or
Transferee) of a trade or business in the United States or
(ii) totally exempt from United States tax under a provision
of an applicable tax treaty. Unless the Company and the
Agent have received forms or other documents satisfactory to
them indicating that payments hereunder or under the Notes
are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax
treaty, the Company or the Agent shall withhold taxes from
such payments at the applicable statutory rate in the case of
payments to or for any Bank (or Transferee) or assignee
organized under the laws of a jurisdiction outside the United
States.
(g) The Company shall not be required to pay any
additional amounts to any Bank (or Transferee) in respect of
United States withholding tax pursuant to paragraph (a) above
if the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank (or Transferee) to
comply with the provisions of paragraph (f) above unless such
failure results from (i) a change in applicable law,
regulation or official interpretation thereof or (ii) an
amendment, modification or revocation of any applicable tax
treaty or a change in official position regarding the
application or interpretation thereof, in each case after the
Execution Date (and, in the case of a Transferee, after the
date of assignment or transfer).
(h) Any Bank (or Transferee) claiming any
additional amounts payable pursuant to this Section 2.18
shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document
requested by the Company or to change the jurisdiction of its
applicable lending office if the making of such a filing or
change would avoid the need for or reduce the amount of any
such additional amounts which may thereafter accrue and would
not, in the sole determination of such Bank, be otherwise
disadvantageous to such Bank (or Transferee).
(i) If any Bank (or Transferee) requests
compensation pursuant to this Section 2.18, the Company may
give notice to such Bank (with a copy to the Agent) that it
wishes to seek one or more Eligible Assignees (which may be
one or more of the Banks) to assume the Commitments of such
Bank and to purchase its outstanding Loans and Notes. Each
Bank (or Transferee) requesting compensation pursuant to this
Section 2.18 hereto agrees to sell all of its Commitments,
its Loans and its Note pursuant to Section 9.03 to any such
Eligible Assignee for an amount equal to the sum of the
outstanding unpaid principal of and accrued interest on such
Loans and Note plus all Commitment Fees and other fees and
amounts due such Bank (or Transferee) hereunder calculated,
in each case, to the date such Commitment, Loans and Note are
purchased, whereupon such Bank (or Transferee) shall
thereafter have no further Commitments or other obligation to
the Company hereunder or under any Note.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent
and the Banks as follows:
SECTION 3.01. Organization; Corporate Powers. The
Company and each Significant Subsidiary is duly organized,
validly existing and in good standing under the laws of the
state of its respective incorporation or organization, has
the requisite power and authority to own its property and
assets and to carry on its business as now conducted and is
qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to
qualify would not have a material adverse effect on the
condition, financial or otherwise, of the Company. The
Company has the corporate power to execute, deliver and
perform its obligations under this Agreement, to borrow
hereunder and to execute and deliver the Notes.
SECTION 3.02. Authorization. The execution,
delivery and performance of this Agreement, the Borrowings
hereunder, and the execution and delivery of the Notes by the
Company (a) have been duly authorized by all requisite
corporate and, if required, stockholder action on the part of
the Company and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate of
incorporation or the bylaws of the Company, (B) any order of
any court, or any rule, regulation or order of any other
agency of government binding upon the Company or (C) any
provisions of any indenture, agreement or other instrument to
which the Company is a party, or by which the Company or any
of its properties or assets are or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in
(b)(i)(C) above or (iii) result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever
upon any property or assets of the Company.
SECTION 3.03. Governmental Approval. No
registration with or consent or approval of, or other action
by, any federal, state or other governmental agency,
authority or regulatory body is or will be required in
connection with the execution, delivery and performance of
this Agreement, the execution and delivery of the Notes or
the Borrowings hereunder.
SECTION 3.04. Enforceability. This Agreement has
been duly executed and delivered by the Company and
constitutes legal, valid and binding obligations of the
Company and the Notes, when duly executed and delivered by
the Company, will constitute legal, valid and binding
obligations of the Company, in each case enforceable in
accordance with their respective terms (subject, as to the
enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws
affecting creditors rights generally).
SECTION 3.05. Financial Statements. (a) The
audited consolidated financial statements of the Company, as
at December 31, 1993, a copy of which has been furnished to
the Banks, have been prepared in conformity with generally
accepted accounting principles applied on a basis consistent
with that of the preceding fiscal year, and present fairly
the financial conditions of the Company and its Subsidiaries,
as at such date and the consolidated results of the
operations of the Company and its Subsidiaries for the periods
then ended.
(b) The Form 10 Q of the Company as at March 31,
1994, copies of which have been furnished to the Banks, have
been prepared in accordance with all applicable rules,
regulations and guidelines of the Securities and Exchange
Commission and present fairly the financial condition of the
Company and its Subsidiaries, as at such dates and the
results of their operations for the periods then ended,
subject to year end audit adjustments.
SECTION 3.06. No Material Adverse Change. There
has been no material adverse change in the businesses,
assets, operations, prospects or condition, financial or
otherwise, of the Company since December 31, 1993.
SECTION 3.07. Title to Properties. The Company
and each of its Significant Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its
properties and assets, except for such properties as are no
longer used or useful in the conduct of its business or as
have been disposed of in the ordinary course of business and
except for minor defects in title that do not interfere with
the ability of the Company to conduct its business as now
conducted.
SECTION 3.08. Litigation; Compliance with Laws;
Etc. (a) There are not any actions, suits or proceedings at
law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary of the
Company or the business, assets or rights of the Company or
any Subsidiary of the Company (i) which involve this
Agreement or any of the transactions contemplated hereby or
(ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined,
could, individually or in the aggregate, materially impair
the ability of the Company to conduct business substantially
as now conducted, or materially and adversely affect the
business, assets, operations, prospects or condition
(financial or otherwise) of the Company, or impair the
validity or enforceability of or the ability of the Company
to perform its obligations under this Agreement, the Notes or
any of the other Loan Documents.
(b) The Company is not in violation of any law, the
breach or consequence of which would materially and adversely
affect the ability of the Company to carry on its business,
or in default under any material order, writ, injunction,
award or decree of any court, arbitrator, administrative
agency or other governmental authority binding upon it or its
assets or any material indenture, mortgage, contract,
agreement or other undertaking or instrument to which it is a
party or by which any of its properties may be bound, and
nothing has occurred which would materially and adversely
affect the ability of the Company to carry on its business or
perform its obligations under any such order, writ,
injunction, award or decree or any such material indenture,
mortgage, contract, agreement or other undertaking or
instrument.
SECTION 3.09. Agreements; No Default. (a) The
Company is not a party to any agreement or instrument or
subject to any corporate restriction that has a present
material and adverse effect on the business, properties,
assets, operations, prospects or condition (financial or
otherwise), of the Company.
(b) The Company is not in default in any manner
that would materially and adversely affect the business,
properties, assets, operations, prospects or condition
(financial or otherwise) of the Company or the performance,
observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement
or instrument to which it is a party.
(c) Neither the Company nor any of its Subsidiaries
is in default under any agreement or instrument to which the
Company or any Subsidiary is a party or by which any of their
respective properties or assets is bound or affected, which
default might materially and adversely affect the financial
condition or operations of the Company and its Subsidiaries
taken as a whole. No Event of Default has occurred and is
continuing.
SECTION 3.10. Federal Reserve Regulations.
(a) The Company is not engaged principally, or as
one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be
used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or
carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii)
for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the Regulations of the
Board, including Regulations G, T, U or X; provided, however,
the Company may acquire Margin Stock if, upon the acquisition
of such Margin Stock, 25% or less of the Company's total
assets subject to the restrictions set forth in Section 6.01
would then be composed of Margin Stock, and furnish to the
Agent upon its request, a statement in conformity with the
requirements of Federal Reserve Form U 1 referred to in
Regulation U.
SECTION 3.11. Taxes. The Company and each of its
Subsidiaries has filed all tax returns which are required to
have been filed and has paid, or made adequate provisions for
the payment of, all of its taxes which are due and payable,
except such taxes, if any, as are being contested in good
faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required
by generally accepted accounting principles have been
maintained. The federal income tax liability of the Company
has been audited by the Internal Revenue Service and has been
finally determined and satisfied (or the time for audit has
expired) for all tax years up to and including the tax year
ended June 30, 1984. The Company deems the amounts and
maximum final judgments from such action to be immaterial to
the Company. The Company is not aware of any proposed
assessment against it or any of its Subsidiaries for
additional taxes (or any basis for any such assessment) which
might be material to the Company and its Subsidiaries taken
as a whole.
SECTION 3.12. Pension and Welfare Plans. Each
Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and: (a) no
Reportable Event has occurred and is continuing with respect
to any Plan, (b) since December 31, 1993, neither the Company
nor any ERISA Affiliate has withdrawn from any Plan or
instituted steps to do so, except as listed on Exhibit 3.12
and (c) since December 31, 1993, no steps have been
instituted to terminate any Plan, except as listed on Exhibit
3.12. No condition exists or event or transaction has
occurred in connection with any Plan which could result in
the incurrence by the Company or any ERISA Affiliate of any
material liability, fine or penalty. Neither the Company nor
any ERISA Affiliate is a member of, or contributes to, any
multiple employer Plan as described in section 4064 of ERISA.
Neither the Company nor any of its Subsidiaries has any
contingent liability with respect to any post-retirement
"welfare benefit plans," as such term is defined in ERISA.
SECTION 3.13. No Material Misstatements. Neither
this Agreement, the other Loan Documents, the Confidential
Information Memorandum nor any other document delivered by or
on behalf of the Company or any of its Affiliates (including
the Company's Annual Report on Form 10 K for 1993 and the
Company's Quarterly Report on Form 10 Q for the fiscal
quarter ended at March 31, 1994) in connection with any Loan
Document or included therein contained or contains any
material misstatement of fact or omitted or omits to state
any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made,
not misleading.
SECTION 3.14. Investment Company Act; Public
Utility Holding Company Act. The Company is neither an
"investment company" nor a company "controlled" by an
investment company as defined in, nor subject to regulation
under, the Investment Company Act of 1940. The Company is
not a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of
1935.
SECTION 3.15. Compliance with Laws. To the best
knowledge of the Company, after due investigation, the
Company and its Subsidiaries are in material compliance with
all statutes and governmental rules and regulations
applicable to them.
SECTION 3.16. Maintenance of Insurance. The
Company maintains, and causes each of its Subsidiaries to
maintain, insurance to such extent and against such hazards
and liabilities as is commonly maintained by companies
similarly situated.
SECTION 3.17. Existing Liens. None of the assets
of the Company or any of its Subsidiaries is subject to any
Lien, except:
(a) Liens for current taxes not delinquent or taxes
being contested in good faith and by appropriate proceedings
and as to which such reserves or other appropriate provisions
as may be required by generally accepted accounting
principles are being maintained;
(b) carriers', warehousemen's, mechanics',
materialmen's and other like statutory Liens arising in the
ordinary course of business securing obligations which are
not overdue for a period of more than 90 days or which are
being contested in good faith and by appropriate proceedings
and as to which such reserves or other appropriate provisions
as may be required by generally accepted accounting
principles are being maintained;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social
security legislation;
(d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, and other
obligations of a like nature incurred in the ordinary course
of business, and Liens securing reimbursement obligations
created by open letters of credit for the purchase of
inventory;
(e) Liens granted by a Subsidiary of the Company to
secure such Subsidiary's Indebtedness to the Company or to
any other Subsidiary of the Company;
(f) Liens, if any, disclosed in the financial
statements referred to in Section 3.05; and
(g) Liens listed on Exhibit 3.17.
SECTION 3.18. Environmental Matters. The Company
and each of its Subsidiaries has complied in all material
respects with all applicable federal, state, local and other
statutes, ordinances, orders, judgments, rulings and
regulations relating to environmental pollution or to
environmental regulation or control. Neither the Company nor
any of its Subsidiaries have received notice of any failure
so to comply which alone or together with any other such
failure could result in a material adverse effect on the
business, assets, operations, prospects or condition
(financial or otherwise) of the Company or such Subsidiary.
None of the facilities of the Company or any of its
Subsidiaries manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic
pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance
Control Act, the Clean Air Act or the Clean Water Act, in
violation of any regulations promulgated pursuant thereto or
in any other applicable law where such violation could
result, individually or together with other violations, in a
material adverse effect on the business, assets, operations,
prospects or condition (financial or otherwise) of the
Company or such Subsidiary.
<PAGE>
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to the Initial
Borrowing. The obligation of each Bank to make its initial
Loan is subject to the condition precedent that the Agent
shall have received on or before the initial Borrowing Date
the following, each dated (unless otherwise indicated) the
Execution Date and, with respect to all such documents
referred to in Section 4.01(a), Section 4.01(c), Section
4.01(d) and Section 4.01(f), in sufficient copies for each
Bank:
(a) A counterpart of this Agreement (to which all
of the Exhibits and Schedules have been attached) executed by
the Company, the Agent and the Banks.
(b) Notes of the Company dated of even date
herewith, properly executed by the Company to the order of
the Banks, respectively.
(c) The Banks shall have received (i) a copy of the
certificate of incorporation, as amended, of the Company,
certified by the Secretary of State of Delaware and a
certificate as to the good standing of and charter documents
filed by the Company from such Secretary of State; (ii) a
copy of the certificate of authority to do business in the
State of Texas, certified by the Secretary of State of Texas
and a certificate as to the good standing of the Company from
the Comptroller of the State of Texas; (iii) a certificate of
the Secretary or an Assistant Secretary of the Company, dated
the initial Borrowing Date and certifying (A) that attached
thereto is a true and complete copy of the bylaws of the
Company as in effect on the date of such certificate and at
all times since a date prior to the date of the resolutions
described in (B) below, (B) that attached thereto is a true
and complete copy of resolutions duly adopted by the Board of
Directors of the Company authorizing the execution, delivery
and performance of this Agreement and the Notes to be
delivered by the Company and the Borrowings by the Company
hereunder and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation of the Company has not
been amended since the date of the last amendment thereto
shown on the good standing certificate furnished pursuant to
(i) above, and (D) as to the incumbency and specimen
signature of each officer of the Company executing this
Agreement, the Notes or any other document delivered in
connection herewith or therewith; (iii) a certificate of
another officer of the Company as to the incumbency and
specimen signature of the Secretary or such Assistant
Secretary of the Company; and (iv) such other documents as
any Bank or Andrews & Kurth L.L.P., special counsel for the
Agent, may reasonably request.
(d) A certificate of a Senior Vice President, an
Executive Vice President or a Vice President of the Company
dated the initial Borrowing Date certifying (i) the truth of
the representations and warranties made by the Company in
this Agreement, (ii) the absence of the occurrence and
continuance of any Default or Event of Default and (iii) that
on or prior to the initial Borrowing Date, the principal of
and interest on all loans, all accrued fees and all other
amounts due under the Existing Credit Agreement shall have
been paid in full and the commitments thereunder shall have
been terminated.
(e) The Agent shall have received the Agent's
Letter duly executed by the Company.
(f) The opinion of counsel to the Company, dated
the initial Borrowing Date, addressed to the Agent and the
Banks and in the form of Exhibit 4.01 hereto.
(g) An Administrative Questionnaire completed by
each Bank.
(h) The fees and disbursements required to be paid
by Section 9.04 on the initial Borrowing Date shall have been
paid or provision therefore shall have been made.
SECTION 4.02. Conditions Precedent to Each
Borrowing. The obligation of each Bank to make a Loan on the
occasion of any Borrowing (including the initial Borrowing)
shall be subject to the further conditions precedent that on
the Borrowing Date of such Borrowing the following statements
shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the Company of the
proceeds of such Borrowing shall constitute a representation
and warranty by the Company that on the date of such
Borrowing such statements are true):
(a) The representations and warranties contained in
Article III are correct on and as of the date of such
Borrowing, before and after giving effect to such Borrowing
and to the application of the proceeds therefrom, as though
made on and as of such date;
(b) No event has occurred and is continuing, or
would result from such Borrowing or from the application of
the proceeds therefrom, which constitutes either a Default or
an Event of Default; and
(c) Following the making of such Borrowing and all
other Borrowings to be made on the same day under this
Agreement, the aggregate principal amount of all Loans then
outstanding shall not exceed the Total Commitment.
SECTION 4.03. Conditions Precedent to Conversions
and Continuations. The obligation of the Banks to convert
any existing Borrowing into a Eurodollar Borrowing or a CD
Borrowing or to continue any exisitng Borrowing as a
Eurodollar Borrowing or a CD Borrowing is subject to the
condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have
occurred and be continuing or would result from the making of
such conversion or continuation. The acceptance of the
benefits of each such conversion and continuation shall
constitute a representation and warranty by the Company to
each of the Banks that no Default or Event of Default shall
have occurred and be continuing or would result from the
making of such conversion or continuation.
<PAGE>
ARTICLE V
AFFIRMATIVE COVENANTS
So long as this Agreement shall remain in effect or
the principal of or interest on any Note, any Commitment Fee
or any other expense or amount payable hereunder shall be
unpaid and until the Commitments of the Banks shall expire or
terminate, unless the Required Banks shall otherwise consent
in writing, the Company covenants and agrees with the Agent
and each Bank that:
SECTION 5.01. Existence. The Company will
maintain and preserve, and, subject to the provisions of
clauses (w), (x) and (y) of Section 6.02, will cause each
Significant Subsidiary to maintain and preserve, its
respective existence as a corporation or other form of
business organization, as the case may be, and all rights,
privileges, licenses, patents, patent rights, copyrights,
trademarks, trade names, franchises and other authority to
the extent material and necessary for the conduct of its
respective businesses in the ordinary course as conducted
from time to time, including, in the case of the Company, its
good standing and qualification to do business in the State
of Texas.
SECTION 5.02. Repair. The Company will maintain,
preserve and keep, and will cause each of its Significant
Subsidiaries to maintain, preserve and keep, all of its
properties in good repair, working order and condition, and
from time to time make, and the Company will make, and will
cause each of the Significant Subsidiaries to make, all
necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at
all times the efficiency thereof shall be fully preserved and
maintained; the Company will at all times do or cause to be
done all things necessary to preserve, renew and keep in full
force and effect, and will cause each Significant Subsidiary
to do or cause to be done all things necessary to preserve,
renew and keep in full force and effect, the rights,
licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its
businesses; maintain and operate such businesses in
substantially the manner in which they are presently
conducted and operated (subject to changes in the ordinary
course of business); comply in all material respects with all
laws and regulations applicable to the operation of such
businesses whether now in effect or hereafter enacted and
with all other applicable laws and regulations; and take all
action which may be required to obtain, preserve, renew and
extend all licenses, permits and other authorizations which
may be material to the operation of such businesses.
SECTION 5.03. Insurance. The Company will
maintain, on a consolidated basis, insurance to such extent
and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as the Agent or
the Required Banks may reasonably request from time to time.
SECTION 5.04. Obligations and Taxes. The Company
will pay and discharge and will cause each of its
Subsidiaries to pay and discharge, when due, all taxes,
assessments and governmental charges or levies imposed upon
the Company or such Subsidiary, as the case may be, as well
as all lawful claims for labor, materials and supplies or
otherwise unless and only to the extent that the Company or
such Subsidiary, as the case may be, is contesting such
taxes, assessments and governmental charges, levies or claims
in good faith and by appropriate proceedings and the Company
or such Subsidiary has set aside on its books such reserves
or other appropriate provisions therefor as may be required
by generally accepted accounting principles.
SECTION 5.05. Financial Statements; Reports. The
Company will furnish to the Agent and each Bank:
(a) Annual Audit Reports. Within 90 days after the
end of each fiscal year of the Company, a copy of the annual
audit report of the Company and its Subsidiaries prepared on
a consolidated basis in conformity with generally accepted
accounting principles consistently applied and certified by
Price Waterhouse or another independent certified public
accountant of recognized national standing;
(b) Quarterly Financial Statements. Within 45 days
after the end of each quarter (except the last quarter) of
each fiscal year of the Company, a copy of the Form 10 Q of
the Company, for such quarter, prepared in accordance with
the rules, regulations and guidelines of the Securities and
Exchange Commission, subject to normal year end audit
adjustments;
(c) Officer's Certificate. Together with the
financial statements furnished by the Company under the
preceding clauses (a) and (b), a certificate of the Company's
Chief Financial Officer, Vice President and Treasurer or Vice
President and Controller dated the date of such annual audit
report or such quarterly financial statement, as the case may
be, to the effect that no Event of Default or Default, has
occurred or is continuing, or if there is any such event,
describing it and the steps, if any, being taken to cure it;
(d) SEC and Other Reports. Copies of each filing
and report made by the Company or any of its Subsidiaries
with or to any securities exchange or the Securities and
Exchange Commission and each communication from the Company
or any of its Subsidiaries to shareholders generally,
promptly upon the making thereof; and
(e) Requested Information. Promptly, from time to
time, such other reports or information as the Agent or any
Bank may reasonably request.
SECTION 5.06. Litigation and Other Notices. The
Company will notify the Agent and the Banks in writing of any
of the following immediately upon learning of the occurrence
thereof, describing the same and, if applicable, the steps
being taken by the Person(s) affected with respect thereto:
(a) Judgment. The entry of any judgment or decree
against the Company and its other Subsidiaries, taken as a
whole, if the amount of such judgment or decree exceeds
$25,000,000 (after deducting the amount with respect to which
the Company or such Subsidiary is insured and with respect to
which the insurer has assumed responsibility in writing);
(b) Suits and Proceedings. The filing or
commencement of any action, suit or proceeding, whether at
law or in equity or by or before any court or any federal,
state, municipal or other governmental agency or authority as
to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, could
materially impair the right of the Company or any Significant
Subsidiary to carry on business substantially as then
conducted or materially and adversely affect the business,
assets, operations, prospects or condition (financial or
otherwise) of the Company or any Significant Subsidiary;
(c) Default. The occurrence of any Event of
Default or Default;
(d) Material Adverse Change. The occurrence of a
material adverse change in the business, operations or
condition (financial or otherwise) of the Company and the
Significant Subsidiaries, taken as a whole;
(e) Pension and Welfare Plans. The occurrence of a
Reportable Event with respect to any Plan; the institution of
any steps by the Company, any of its Subsidiaries or any
ERISA Affiliate, the PBGC or any other Person to terminate
any Plan; the institution of any steps by the Company, or any
of its Subsidiaries or any ERISA Affiliate to withdraw from
any Plan; or the incurrence of any material increase in the
contingent liability of the Company or any of its
Subsidiaries with respect to any post-retirement welfare
benefits; and
(f) Other Events. The occurrence of such other
events as the Agent or the Required Banks may reasonably from
time to time specify.
SECTION 5.07. ERISA. The Company will comply, and
will cause each of its Subsidiaries to comply, in all
material respects with the applicable provisions of ERISA.
SECTION 5.08. Books, Records and Access. The
Company will maintain, and will cause each Significant
Subsidiary to maintain, complete and accurate books and
records in which full and correct entries and conformity with
generally accepted accounting principles shall be made of all
dealings and transactions in relation to the business and
activities of the Company and each Significant Subsidiary.
The Company will permit, and will cause each Significant
Subsidiary to permit, reasonable access by the Agent and each
Bank, upon reasonable request, to the books and records
relating to the Company and the Significant Subsidiary during
normal business hours, to permit or cause to be permitted,
the Agent and each Bank to make extracts from such books and
records and permit, or cause to be permitted, upon reasonable
request, any authorized representative designated by any Bank
to discuss the affairs, finances and condition of the Company
or any Significant Subsidiary with such Person's principal
financial officers and principal accounting officers and such
other officers as the Company shall deem appropriate.
SECTION 5.09. Use of Proceeds. The Company will
use the proceeds of the Loans only for general corporate
purposes including the repayment of obligations outstanding
under the Existing Agreement and the repayment of its
commercial paper maturing from time to time.
SECTION 5.10. Nature of Business. The Company
will engage in, and will cause each Significant Subsidiary to
engage in, substantially the same field of business as they
are engaged in on the date hereof.
SECTION 5.11. Compliance. The Company will
comply, and will cause each of its Subsidiaries to comply, in
all material respects with all statutes and governmental
rules and regulations applicable to it including all such
statutes and government rules and regulations relating to
environmental pollution or to environmental regulation and
control.
<PAGE>
ARTICLE VI
NEGATIVE COVENANTS
So long as this Agreement shall remain in effect or
the principal of or interest on any Note, any Commitment Fee
or any other expense or amount payable hereunder shall be
unpaid and until the Commitments of the Banks shall expire or
terminate, unless the Required Banks shall otherwise consent
in writing, the Company covenants and agrees with the Agent
and each Bank that:
SECTION 6.01. Liens. The Company will not, and
will not permit any of its Subsidiaries to, incur, create,
assume or permit to exist any Lien on any of its property or
assets, whether owned at the date hereof or hereafter
acquired, or assign or convey any rights to or security
interests in any future revenues, except:
(a) Liens in connection with the acquisition by the
Company or such Subsidiary of property after the date hereof
by way of purchase money, mortgage, conditional sale or other
title retention agreement, capitalized lease or other
deferred payment contract, and attaching only to the property
being acquired, if the Indebtedness secured thereby does not
exceed 80% (100% in the case of a capitalized lease) of the
fair market value of such property at the time of acquisition
thereof nor $100,000,000 in the aggregate for the Company and
all Subsidiaries at any one time outstanding;
(b) Liens referred to in Section 3.17;
(c) other Liens securing obligations of the Company
and its Subsidiaries not to exceed $50,000,000 in the
aggregate and attaching to property of the Company or such
other Subsidiary whose aggregate fair market value does not
exceed $50,000,000; and
(d) extensions, renewals and replacements of liens
referred to in paragraphs (a) through (c) of this Section
6.01; provided, that any such extension, renewal or
replacement lien shall be limited to the property or assets
covered by the Lien extended, renewed or replaced and that
the obligations secured by any such extension, renewal or
replacement lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended,
renewed or replaced.
SECTION 6.02. Merger, Purchase and Sale. The
Company will not, and will not permit any of its Subsidiaries
to:
(a) be a party to any merger or consolidation;
(b) sell, transfer, convey, lease or otherwise
dispose of all or any substantial part of its assets;
(c) sell or assign, with or without recourse, any
accounts receivable or chattel paper; or
(d) purchase or otherwise acquire all or
substantially all the assets of any Person.
Notwithstanding the foregoing:
(u) the Company or any of its Subsidiaries may sell
or transfer real property including improvements located
thereon and thereafter the Company or any of its Subsidiaries
may rent or lease such property in a sale or leaseback
transaction so long as after giving effect to such sale and
leaseback transaction the Company and its Subsidiaries would
be in compliance with Section 6.12;
(v) TCC, TRC and Tandy Bank may sell all or
substantially all of their Accounts, including credit card
receivables, to any Person for reasonably equivalent value;
(w) any Subsidiary of the Company may merge into
the Company or into or with any Wholly owned Subsidiary so
long as the Company or such Wholly owned Subsidiary, as the
case may be, shall be the surviving entity;
(x) any Subsidiary of the Company may sell,
transfer, convey, lease or assign all or a substantial part
of its assets to the Company or any Wholly owned Subsidiary;
(y) any Person may merge into the Company and the
Company may acquire all or substantially all the assets of
any Person; and
(z) the Company and any of its Subsidiaries may in
the ordinary course of their business sell, transfer, convey,
lease or otherwise dispose of all or any substantial part of
the assets of the Company and its Subsidiaries taken as a
whole;
provided, in each of the cases described in the preceding
clauses (u), (v), (w), (x), (y) and (z), that immediately
thereafter and after giving effect thereto:
(i) no Event of Default or Default shall have
occurred and be continuing;
(ii) the Company is a surviving entity, except as
provided in clause (w); and
(iii) the surviving officers of the Company shall
be substantially the same.
For purposes of this Section 6.02 only, a sale,
transfer, conveyance, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of
the Company and its Subsidiaries only if the value of such
assets, when added to the value of all other assets sold,
transferred, conveyed, leased or otherwise disposed of by the
Company and its Subsidiaries (other than pursuant to clauses
(u), (v), (x) and (z) of this Section 6.02) during the same
fiscal year, exceeds 15% of the Company's consolidated total
assets determined as of the end of the immediately preceding
fiscal year. As used in the preceding sentence, the term
"value" shall mean, with respect to any asset disposed of,
the greater of such asset's book or fair market value as of
the date of disposition, with "book value" being the value of
such asset as would appear immediately prior to such
disposition on a balance sheet of the owner of such asset
prepared in accordance with generally accepted accounting
principles.
SECTION 6.03. Investments. The Company will not,
and will not permit any of its respective Subsidiaries to,
make or permit to exist any Investment in any Person, except
for:
(a) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale of goods
and services in the ordinary course of business;
(b) shares of stock, obligations or other
securities received in settlement of claims arising in the
ordinary course of business;
(c) Investments in securities, maturing within two
years and issued or fully guaranteed or insured by the United
States of America or any agency thereof;
(d) Investments in commercial paper, maturing in
270 days or less from the date of issuance, rated in the
highest or second highest grade by a nationally recognized
credit rating agency;
(e) Investments in United States dollar denominated
and eurodollar denominated time deposits, maturing within two
years from the date of such Investment and issued by a bank
or trust company having capital, surplus and undivided
profits aggregating at least $500,000,000;
(f) Investments outstanding on the date hereof in
Subsidiaries by the Company and its Subsidiaries;
(g) other Investments outstanding on the date
hereof and listed on Exhibit 6.03;
(h) other Investments of the Company and its
Subsidiaries not exceeding 10% of Consolidated Tangible Net
Worth at any time;
(i) Investments of Tandy Bank and TCC in Accounts;
(j) Investments of TRC in Accounts acquired from
TCC and Tandy Bank;
(k) Investments by the trustee of the Tandy Master
Trust of the proceeds due to TRC of credit card receivables
pursuant to one or more pooling and servicing agreements with
such trustee; and
(l) endorsements of negotiable instruments for
deposit or collection in the ordinary course of business.
SECTION 6.04. Transactions with Affiliates. The
Company will not enter into any transaction with any
Affiliate except in the ordinary course of business and upon
fair and reasonable terms no less favorable than the Company
could obtain or could become entitled to in an arm's-length
transaction with a person or entity which was not an
Affiliate.
SECTION 6.05. Other Agreements. The Company will
not, and will not permit any of its Subsidiaries to, enter
into any agreement containing any provision which would be
violated or breached by the Company's performance of its
obligations hereunder or under any instrument or document
delivered or to be delivered by the Company hereunder or in
connection herewith.
SECTION 6.06. Fiscal Year; Accounting. The
Company will not change its fiscal year or method of
accounting (other than immaterial changes and methods and
changes authorized by generally accepted accounting
principles).
SECTION 6.07. Credit Standards. Neither the
Company, TCC nor Tandy Bank will modify in any way the credit
standards and procedures, the collection policies or the loss
recognition procedures with respect to the creation or
collection of Accounts if the modification would have a
material adverse effect on the financial condition of the
Company, TCC or Tandy Bank, as the case may be.
SECTION 6.08. Pension Plans. The Company will not
permit, and will not permit any of its Subsidiaries to
permit, any condition to exist in connection with any Plan
which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, and not engage in, or
permit to exist or occur, and will not permit any of its
Subsidiaries to engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any
Plan which could result in the incurrence by the Company or
any such Subsidiary of any material liability, fine or
penalty.
SECTION 6.09. Senior Indebtedness to Tangible Net
Worth Ratio. The Company will not permit the ratio of its
Consolidated Senior Indebtedness to its Consolidated Tangible
Net Worth to exceed 1.0 to 1.0.
SECTION 6.10. Tangible Net Worth of the Company.
The Company will not permit its Consolidated Tangible Net
Worth to be less than $1,200,000,000.
SECTION 6.11. Guaranties. The Company will not,
and will not permit any of its Subsidiaries to, become or be
liable under any Guaranty except Guaranties (a) which (x) in
the case of Guaranties of Indebtedness for borrowed money,
guarantee Indebtedness with a maximum principal amount, and
(y) in all other cases are limited in amount to a stated
maximum dollar exposure, (b) which are included in
Indebtedness, and (c) which are:
(i) Guaranties by the Company or a Wholly-owned
Subsidiary of the Indebtedness of a Subsidiary of
Company;
(ii) Guaranties by a Subsidiary of the Company of
Indebtedness of the Company;
(iii) Guaranties by the Company of notes issued by
the plan trustee to fund the Tandy Employee Stock
Ownership Plan so long as the aggregate outstanding
principal amount of all such notes does not at any time
exceed 100,000,000; or
(iv) other Guaranties not exceeding 100,000,000 in
aggregate principal amount at any time outstanding.
SECTION 6.12. Leases. The Company will not at any
time enter into or permit to exist, and will not permit any
of its Subsidiaries to enter into or permit to exist, any
arrangements for the leasing by the Company or any of its
Subsidiaries, as lessee, of any real or personal property (or
any interest therein) under leases (other than capitalized
leases); provided, however, the Company and its Subsidiaries
may enter into and permit to exist such leases which require
the payment by the Company and such Subsidiaries on a
consolidated basis of minimum rental amounts in the aggregate
in any one fiscal year not in excess of 30% of Consolidated
Tangible Net Worth as of the end of the fiscal year preceding
such time.
<PAGE>
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. In case of the
happening of any of the following events (herein called
"Events of Default"):
(a) any representation or warranty made or deemed
made in or in connection with this Agreement, the Notes or
the Borrowings hereunder or in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or the execution and delivery
of the Notes or the Borrowings hereunder shall prove to have
been false or misleading in any material respect when made or
deemed made;
(b) default shall be made in the payment of any
principal of, or any installment of principal of, any Note
when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any
interest on any Note or any Commitment Fee or any other
amount due under this Agreement, when and as the same shall
become due and payable, and such default shall continue
unremedied for a period of five days;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement contained
in Sections 5.01, 5.05 or 5.06 or Article VI;
(e) default shall be made in the due observance or
performance of any other covenant, condition or agreement to
be observed or performed pursuant to this Agreement and such
default shall continue unremedied for 15 days;
(f) the Company or any of its Subsidiaries (other
than an Insignificant Foreign Subsidiary) shall (i)
voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or
any other federal or state bankruptcy, insolvency,
liquidation or similar law, (ii) consent to the institution
of, or fail to contravene in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (iii)
apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the
Company or such Subsidiary or for a substantial part of
either the Company's or such Subsidiary's property or assets,
(iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any corporate
or other action for the purpose of effecting any of the
foregoing;
(g) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of the
Company or any of its Subsidiaries (other than an
Insignificant Foreign Subsidiary), or of a substantial part
of the property or assets of the Company or such Subsidiary,
under Title 11 of the United States Code or any other federal
or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or such
Subsidiary or for a substantial part of the property of the
Company or such Subsidiary or (iii) the winding-up or
liquidation of the Company or such Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for 60 days;
(h) default or defaults (other than defaults in the
payment of principal or interest) shall be made with respect
to any Indebtedness of the Company, if the total Indebtedness
in default exceeds in the aggregate for the Company an amount
equal to $50,000,000 and if the effect of such default or
defaults shall be to accelerate, or to permit the holder or
obligee of any Indebtedness (or any trustee on behalf of such
holder or obligee) to accelerate (with or without notice or
lapse of time or both), the maturity of any Indebtedness; or
any payment of principal or interest, regardless of amount,
on any Indebtedness of the Company shall not be paid when
due, whether at maturity, by acceleration or otherwise (after
giving effect to any period of grace as specified in the
instrument evidencing or governing such Indebtedness);
(i) a Change of Control shall occur;
(j) a Reportable Event or Reportable Events shall
have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of the
Company or any of its Subsidiaries to the PBGC in an
aggregate amount in excess of $1,000,000 and within 30 days
after the reporting of such Reportable Event or Reportable
Events to the Banks, the Agent shall have notified the
Company in writing that (i) it has determined that on the
basis of such Reportable Event or Reportable Events there are
reasonable grounds for termination of the Plan by the PBGC or
for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and (ii) as a
result of such determination, an Event of Default exists
hereunder; or the PBGC shall have instituted proceedings to
terminate any Plan or Plans, or a trustee shall have been
appointed by a United States District Court to administer any
Plan or Plans, with vested unfunded liabilities aggregating
in excess of $1,000,000; or
(k) there shall be entered against the Company or
any of its Subsidiaries one or more judgments or decrees in
excess of $50,000,000 in the aggregate at any one time
outstanding for the Company and all such Subsidiaries and all
such judgments or decrees in the amount of such excess shall
not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof, excluding those
judgments or decrees for and to the extent which the Company
or any such Subsidiary is insured and with respect to which
the insurer has assumed responsibility in writing or for and
to the extent which the Company or any such Subsidiary is
otherwise indemnified if the terms of such indemnification
are satisfactory to the Required Banks;
then, and in any such event (other than an event with respect
to the Company described in paragraph (f) or (g) above), and
at any time thereafter during the continuance of such event,
the Agent may, and at the request of the Required Banks
shall, by written or telegraphic notice to the Company, take
either or both of the following actions at the same or
different times: (i) terminate forthwith the Commitments of
the Banks hereunder (if not theretofore terminated) and (ii)
declare the Notes then outstanding to be forthwith due and
payable, whereupon the principal of the Notes, together with
accrued interest thereon and any unpaid accrued Commitment
Fees and all other liabilities of the Company accrued
hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest,
notice of protest, notice of intent to accelerate, notice of
acceleration or any other notice of any kind, all of which
are hereby expressly waived by the Company, anything
contained herein or in any Note or other Loan Document to the
contrary notwithstanding; and in any event with respect to
the Company described in paragraph (f) or (g) above, the
Commitments of the Banks shall automatically terminate (if
not theretofore terminated) and the Notes shall automatically
become due and payable, both as to principal and interest,
without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any
kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any Note or other
Loan Document to the contrary notwithstanding.
<PAGE>
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. In order
to expedite the various transactions contemplated by this
Agreement, each Bank hereby irrevocably appoints and
authorizes TCB to act as Agent on its behalf. Each of the
Banks, and each subsequent holder of any Note by its
acceptance thereof, hereby irrevocably authorizes and directs
the Agent to take such action on behalf of such Bank or
holder under the terms and provisions of this Agreement and
to exercise such powers hereunder as are specifically
delegated to or required of the Agent by the terms and
provisions hereof, together with such powers as are
reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its agents and employees.
The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason
of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Bank; and nothing in this
Agreement or any other Loan Document, expressed or implied,
is intended to, or shall be so construed as to, impose upon
the Agent any obligations in respect of this Agreement or any
other Loan Document except as expressly set forth herein or
therein. The Agent is hereby expressly authorized on behalf
of the Banks, without hereby limiting any implied authority,
(a) to receive on behalf of each of the Banks any payment of
principal of or interest on the Notes outstanding hereunder
and all other amounts accrued hereunder paid to the Agent,
and promptly to distribute to each Bank its proper share of
all payments so received; (b) to give notice within a
reasonable time on behalf of each of the Banks to the Company
of any Default or Event of Default specified in this
Agreement of which the Agent has actual knowledge as provided
in Section 8.07; (c) to distribute to each Bank copies of all
notices, agreements, and other material as provided for in
this Agreement as received by the Agent; and (d) to
distribute to the Company any and all requests, demands and
approvals received by the Agent or from the Banks. As to any
matters not expressly provided for by this Agreement, the
Notes or the other Loan Documents (including enforcement or
collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the
instructions of the Required Banks, and such instructions
shall be binding upon all Banks and all holders of Notes and
the Loans; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or
applicable law.
SECTION 8.02. Agent's Reliance, Etc. (a) Neither
the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this
Agreement, the Notes or any of the other Loan Documents (i)
with the consent or at the request of the Required Banks or
(ii) in the absence of its or their own gross negligence or
willful misconduct (it being the express intention of the
parties hereto that the Agent and its directors, officers,
agents and employees shall have no liability for actions and
omissions under this Section 8.02 resulting from their sole
ordinary or contributory negligence).
(b) Without limitation of the generality of the
foregoing, the Agent: (i) may treat the payee of each Note
and the obligations of the Company hereunder as the holder
thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and in
form satisfactory to the Agent; (ii) may consult with legal
counsel (including counsel for the Company), independent
public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to
any Bank for any statements, warranties or representations
made in or in connection with this Agreement, any Note or any
other Loan Document; (iv) except as otherwise expressly
provided herein, shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement, any Note or
any other Loan Document or to inspect the property (including
the books and records) of the Company; (v) shall not be
responsible to any Bank for the due execution, legality,
validity, enforceability, collectibility, genuineness,
sufficiency or value of this Agreement, any Note, any other
Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (vi) shall not be responsible to
any Bank for the perfection or priority of any Lien securing
the Loans; and (vii) shall incur no liability under or in
respect of this Agreement, any Note or any other Loan
Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram,
telecopier, cable or telex) reasonably believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 8.03. Agent and Affiliates; TCB and
Affiliates. Without limiting the right of any other Bank to
engage in any business transactions with the Company or any
of its Affiliates, with respect to their Commitments, the
Loans, if any, made by them and the Notes, if any, issued to
them, TCB shall have the same rights and powers under this
Agreement, any Note or any of the other Loan Documents as any
other Bank and may exercise the same as though it were not
the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include TCB in its individual
capacity. TCB and its Affiliates may be engaged in, or may
hereafter engage in, one or more loan, letter of credit,
leasing or other financing activities not the subject of the
Loan Documents (collectively, the "Other Financings") with
the Company or any of its Affiliates, or may act as trustee
on behalf of, or depositary for, or otherwise engage in other
business transactions with the Company or any of its
Affiliates (all Other Financings and other such business
transactions being collectively, the "Other Activities") with
no responsibility to account therefor to the Banks. Without
limiting the rights and remedies of the Banks specifically
set forth in the Loan Documents, no other Bank shall have any
interest in (a) any Other Activities, (b) any present or
future guarantee by or for the account of the Company not
contemplated or included in the Loan Documents, (c) any
present or future offset exercised by the Agent in respect of
any such Other Activities, (d) any present or future property
taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the
Agent which may be or become security for the obligations of
the Company under the Loan Documents by reason of the general
description of indebtedness secured, or of property contained
in any other agreements, documents or instruments related to
such Other Activities; provided, however, that if any payment
in respect of such guarantees or such property or the
proceeds thereof shall be applied to reduction of the
obligations evidenced hereunder and by the Notes, then each
Bank shall be entitled to share in such application according
to its pro rata portion of such obligations.
SECTION 8.04. Agent's Indemnity. (a) The Agent
shall not be required to take any action hereunder or to
prosecute or defend any suit in respect of this Agreement,
the Notes or any other Loan Document unless indemnified to
the Agent's satisfaction by the Banks against loss, cost,
liability and expense. If any indemnity furnished to the
Agent shall become impaired, it may call for additional
indemnity and cease to do the acts indemnified against until
such additional indemnity is given. In addition, the Banks
agree to indemnify the Agent (to the extent not reimbursed by
the Company), ratably according to the respective aggregate
principal amounts of the Notes then held by each of them (or
if no Notes are at the time outstanding, ratably according to
the respective amounts of their Commitments, or if no
Commitments are outstanding, the respective amounts of the
Commitments immediately prior to the time the Commitments
ceased to be outstanding), from and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent (or either of
them) in any way relating to or arising out of this Agreement
or any action taken or omitted by the Agent under this
Agreement, the Notes and the other Loan Documents (including
any action taken or omitted under Article II of this
Agreement). Without limitation of the foregoing, each Bank
agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection
with the preparation, execution, administration, or
enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement, the Notes and the
other Loan Documents to the extent that the Agent is not
reimbursed for such expenses by the Company. The provisions
of this Section 8.04 shall survive the termination of this
Agreement, the payment of the Loans and/or the assignment of
any of the Notes.
(b) Notwithstanding the foregoing, no Bank shall
be liable under this Section 8.04 to the Agent for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements due to the Agent resulting from the Agent's
gross negligence or willful misconduct. Each Bank agrees,
however, that it expressly intends, under this Section 8.04,
to indemnify the Agent ratably as aforesaid for all such
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements
arising out of or resulting from the Agent's sole ordinary or
contributory negligence.
SECTION 8.05. Bank Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank and based on the financial
statements referred to in Section 3.05 and Section 5.05 and
such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Bank also acknowledges that
it will, independently and without reliance upon the Agent or
any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under or based
upon this Agreement, the other Loan Documents, any related
agreement or any document furnished hereunder.
SECTION 8.06. Successor Agent. Subject to the
appointment and acceptance of a successor Agent as provided
herein, the Agent may resign at any time by giving written
notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to
appoint a successor Agent, subject to the approval of the
Company, which approval shall not be unreasonably withheld.
If no successor Agent shall have been so appointed by the
Required Banks, approved by the Company and shall have
accepted such appointment, all within 30 calendar days after
the retiring Agent's giving of notice of resignation, then
the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized
or licensed under the laws of the United States or of any
state thereof and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appoint ment
as Agent hereunder and under the Notes by a successor Agent,
such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this
Agreement and the Notes. After any retiring Agent's
resignation as the Agent hereunder and under the Notes, the
provisions of this Article VIII and Section 9.04 shall inure
to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement and the Notes.
SECTION 8.07. Notice of Default. The Agent shall
not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the Agent
shall have received notice from a Bank or the Company
referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a "notice of
default" or "notice of event of default", as applicable. If
the Agent receives such a notice, the Agent shall give notice
thereof to the Banks and, if such notice is received from a
Bank, the Agent shall give notice thereof to the other Banks
and the Company. The Agent shall be entitled to take action
or refrain from taking action with respect to such Default or
Event of Default as provided in Section 8.01 and Section
8.02.
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices, Etc. The Agent, any Bank
or the holder of any of the Notes or Loans, giving consent or
notice or making any request of the Company provided for
hereunder, shall notify each Bank and the Agent thereof. In
the event that the holder of any Note (including any Bank)
shall transfer such Note, it shall promptly so advise the
Agent which shall be entitled to assume conclusively that no
transfer of any Note has been made by any holder (including
any Bank) unless and until the Agent receives written notice
to the contrary. All notices, consents, requests, approvals,
demands and other communications (collectively,
"Communications") provided for herein shall be in writing
(including telecopy Communications) and mailed, telecopied or
delivered:
(a) if to the Company, at 1700 One Tandy Center,
Fort Worth, Texas 76102, Attention of Dwain H. Hughes, Vice
President and Treasurer (Telecopy No. (817) 390-2638);
(b) if to the Agent, at 1111 Fannin, Houston,
Texas 77002, Attention of Susan Cummins, Investment Officer
(Telecopy No. (713) 546-2339) with a copy to Texas Commerce
Bank National Association, 201 Main Street, Fort Worth, Texas
76102, Attention: Corporate Lending (Telecopy No. (817)
878-7591); and
(c) if to any Bank, as specified on the signature
page for such Bank hereto or, in the case of any Person who
becomes a Bank after the date hereof, as specified on the
Assignment and Acceptance executed by such Person or in the
Administrative Questionnaire delivered by such Person or, in
the case of any party hereto, such other address or telecopy
number as such party may hereafter specify for such purpose
by notice to the other parties.
All Communications shall, when mailed, telecopied
or delivered, be effective when mailed by certified mail,
return receipt requested to any party at its address
specified above, on the signature page hereof or on the
signature page of such Assignment and Acceptance (or other
address designated by such party in a Communication to the
other parties hereto), or telecopied to any party to the
telecopy number set forth above, on the signature page hereof
or on the signature page of such Assignment and Acceptance
(or other telecopy number designated by such party in a
Communication to the other parties hereto), or delivered
personally to any party at its address specified above, on
the signature page hereof or on the signature page of such
Assignment and Acceptance (or other address designated by
such party in a Communication to the other parties hereto);
provided, however, Communications to the Agent pursuant to
Article II or Article VII shall not be effective until
received by the Agent.
SECTION 9.02. Survival of Agreement. All
covenants, agreements, representations and warranties made by
the Company herein and in the other Loan Documents and in the
certificates or other instruments prepared or delivered in
connection with this Agreement shall be considered to have
been relied upon by the Banks and shall survive the making by
the Banks of the Loans and the execution and delivery to the
Banks of the Notes evidencing such Loans and shall continue
in full force and effect as long as the principal of or any
accrued interest on any Note or any Commitment Fee or any
other fee or amount payable under the Notes or this Agreement
is outstanding and unpaid and so long as the Commitments have
not been terminated.
SECTION 9.03. Successors and Assigns;
Participations. (a) Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed
to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the
Company, the Agent or the Banks that are contained in this
Agreement shall bind and inure to the benefit of their
respective successors and assigns. The Company may not
assign or transfer any of its rights or obligations hereunder
without the prior written consent of all the Banks.
(b) Each Bank may assign to one or more Eligible
Assignees all or a portion of its interests, rights and
obligations under this Agreement (including a portion of its
Commitment and the same portion of the Loans at the time
owing to it and the Note held by it); provided, however, that
(i) except in the case of an assignment to a Bank or an
Affiliate of a Bank, the Company and the Agent must give
their prior written consent by countersigning the Assignment
and Acceptance (which consent shall not be unreasonably
withheld), (ii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Bank's
rights and obligations to this Agreement, (iii) the amount of
the Commitment of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to
the Agent) shall (A) be equal to the entire amount of the
Commitment of the assigning Bank or (B) if not equal to the
entire amount of the Commitment of the assigning Bank, in no
event be less than $3,000,000 and shall be in an amount which
is an integral multiple of $750,000; provided, however, for
purposes of this Section 9.03(b)(iii)(B), that the retained
Commitment of the assigning Bank may not be less than
$3,000,000, (iv) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance
substantially in the form of Exhibit 9.03 hereto (an
"Assignment and Acceptance"), together with any Note subject
to such assignment and a processing and recordation fee of
$2,000 payable by the Bank's assignor thereunder, and (v) the
assignee shall deliver to the Agent an Administrative
Questionnaire. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be
at least five Business Days after the execution thereof
unless otherwise agreed to by the assigning Bank, the
Eligible Assignee thereunder and the Agent, (x) the assignee
thereunder shall be a party hereto and under the other Loan
Documents and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Bank
hereunder and under the other Loan Documents and (y) the Bank
thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Bank thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse
claim, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with the Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (ii) such
assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial
condition of the Company or the performance or observance by
the Company of any of its obligations under this Agreement,
the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to
in Section 3.05 and Section 5.05 and such other documents and
information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment
and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such Bank's assignor or any
other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement
are required to be performed by it as a Bank.
(d) The Agent shall maintain at its address
referred to in Section 9.01 a copy of each Assignment and
Acceptance delivered to it and a register for the recordation
of the names and addresses of the Banks and the Commitments
of, and principal amount of the Loans owing to, each Bank
from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of demonstrable
error, and the Company and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder
for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Bank at any
reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and
Acceptance executed by an assigning Bank and an Eligible
Assignee together with the Note subject to such assignment,
the processing and recordation fee referred to in paragraph
(b) above and, if required, the Company's written consent to
such assignment, the Agent shall (subject to the consent of
the Company to such assignment, if required), if such
Assignment and Acceptance has been completed and is in the
form of Exhibit 9.03, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the
Company and the Banks. Within five Business Days after
receipt of notice, the Company, at its own expense, shall
execute and deliver to the Agent in exchange for the
surrendered Note a new Note to the order of such Eligible
Assignee in an amount equal to the assigning Bank's
Commitment assumed by it pursuant to such Assignment and
Acceptance, and a new Note to the order of the assigning Bank
in an amount equal to the portion of its Commitment retained
by the assigning Bank hereunder. Such new Notes shall be in
an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note, shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit 2.04
hereto, as applicable. Each cancelled Note shall be returned
to the Company.
(f) Each Bank may without the consent of the
Company or the Agent sell participations to one or more banks
or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it and the Note held
by it); provided, however, that (i) such Bank's obligations
under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to
the cost protection provisions contained in Sections 2.12
through 2.14 to the same extent that the Bank from which such
participating bank or other entity acquired its participation
would be entitled to the benefit of such cost protection
provisions and (iv) the Company, the Agent and the other
Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations
under this Agreement, and such Bank shall retain the sole
right to enforce the obligations of the Company relating to
the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than
amendments, modifications or waivers with respect to any fees
payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, or the dates fixed
for payments of principal of or interest on the Loans).
(g) Any Bank or participant may, in connection
with any assignment or participation or proposed assignment
or participation pursuant to this Section 9.03, disclose to
the assignee or participant or proposed assignee or
participant, any information relating to the Company
furnished to such Bank by or on behalf of the Company;
provided that prior to any such disclosure, each such
assignee or participant or proposed assignee or participant
shall agree (subject to customary exceptions) to preserve the
confidentiality of any confidential information relating to
the Company received from such Bank.
(h) Anything in this Section 9.03 to the contrary
notwithstanding, any Bank may at any time, without the
consent of the Company or the Agent, assign and pledge all or
any portion of its Commitment and the Loans owing to it to
any Federal Reserve Bank (and its transferees) as collateral
security pursuant to Regulation A of the Board and any
Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Bank from its
obligations hereunder.
(i) All transfers of any interest in any Note
hereunder shall be in compliance with all federal and state
securities laws, if applicable. Notwithstanding the
foregoing sentence, however, the parties to this Agreement do
not intend that any transfer under this Section 9.03 be
construed as a "purchase" or "sale" of a "security" within
the meaning of any applicable federal or state securities
laws.
SECTION 9.04. Expenses of the Banks; Indemnity.
(a) The Company agrees to pay all reasonable
out-of-pocket expenses reasonably incurred by the Agent in
connection with the preparation of this Agreement, the Notes
and the other Loan Documents or with any amendments,
modifications or waivers of the provisions hereof (whether or
not the transactions hereby contemplated shall be
consummated) or reasonably incurred by the Agent or any Bank
in connection with the enforcement or protection of their
rights in connection with this Agreement or with the Loans
made or the Notes issued hereunder, including the reasonable
fees and disbursements of Andrews & Kurth L.L.P., special
counsel for the Agent, and, in connection with such
enforcement or protection, the reasonable fees and
disbursements of other counsel for any Bank, including
allocated staff counsel costs for any Bank that elects to use
the services of staff counsel in lieu of outside counsel.
The Company agrees to indemnify the Banks from and hold them
harmless against any documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of this Agreement or any of the Notes
or other Loan Documents.
(b) The Company agrees to indemnify the Agent and
the Banks and their directors, officers, employees and agents
(each such Person being called an "Indemnitee") against, and
to hold the Banks and such other Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses,
incurred by or asserted against any Indemnitee arising out
of, in any way connected with, or as a result of (i) the
execution and delivery of this Agreement and the other
documents contemplated hereby, the performance by the parties
hereto and thereto of their respective obligations hereunder
and thereunder (including the making of the Commitment of
each Bank) and consummation of the transactions contemplated
hereby and thereby, (ii) the use of proceeds of the Loans or
(iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Bank, apply to any such losses, claims,
damages, liabilities or related expenses that are determined
by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee. The
Company agrees, however, that it expressly intends to
indemnify each Indemnitee from and hold each of them harmless
against any and all losses, liabilities, claims, damages or
expenses arising out of the ordinary sole or contributory
negligence of such Indemnitee, but not the gross negligence
or willful misconduct of such Indemnitee.
(c) The provisions of this Section 9.04 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement
or any Note, or any investigation made by or on behalf of any
Bank. All amounts due under this Section 9.04 shall be
payable on written demand therefor.
SECTION 9.05. Right of Setoff. If an Event of
Default shall have occurred and be continuing, each 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 such Bank or any branch Subsidiary or Affiliate of
such Bank to or for the credit or the account of the Company
against any of and all the obligations of the Company now or
hereafter existing under this Agreement and the Note held by
such Bank, irrespective of whether or not such Bank shall
have made any demand under this Agreement or such Note and
although such obligations may be unmatured. Each Bank agrees
promptly to notify the Company after any such setoff and
application made by such Bank, but the failure to give such
notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section 9.05
are in addition to other rights and remedies (including other
rights of setoff) which such Bank may have under applicable
law.
SECTION 9.06. Governing Law. This Agreement, the
Notes, the other Loan Documents and all other documents
executed in connection herewith, shall be deemed to be
contracts and agreements executed by the Company, the Agent
and the Banks under the laws of the State of Texas and of the
United States of America and for all purposes shall be
governed by, and construed and interpreted in accordance
with, the laws of said state (without regard to principles of
conflicts of law) and of the United States of America.
Without limitation of the foregoing, nothing in this
Agreement, the Notes or the other Loan Documents shall be
deemed to constitute a waiver of any rights which any Bank
may have under applicable federal legislation relating to the
amount of interest which such Bank may contract for, take,
receive, or charge in respect of any Loans, including any
right to take, receive, reserve and charge interest at the
rate allowed by the law of the state where such Bank is
located. The Agent, the Banks and the Company further agree
that insofar as the provisions of Article 1.04, Subtitle 1,
Title 79, of the Revised Civil Statutes of Texas, 1925, as
amended, are at any time applicable to the determination of
the Highest Lawful Rate with respect to the Notes, the
indicated rate ceiling computed from time to time pursuant to
Section (a) of such Article shall apply to the Notes,
provided, however, that to the extent permitted by such
Article, the Agent may from time to time by notice from the
Agent to the Company revise the election of such interest
rate ceiling as such ceiling affects the then current or
future balances of the Loans outstanding hereunder and under
the Notes. The provisions of Chapter 15 of Subtitle 3 of the
said Title 79 do not apply to this Agreement or any Note
issued hereunder.
SECTION 9.07. Waivers; Amendments. (a) No failure
or delay of any Agent or any Bank in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The
rights and remedies of the Agent and the Banks hereunder are
cumulative and not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provision of
this Agreement, the Notes or the other Loan Documents or
consent to any departure by the Company therefrom shall in
any event be effective unless the same shall be authorized as
provided in paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on the
Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
Each holder of any Note shall be bound by any amendment,
modification, waiver or consent authorized as provided
herein, whether or not such Note shall have been marked to
indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the
Company and the Required Banks; provided, however, that no
such agreement shall (i) change the principal amount of, or
extend or advance the maturity of or any date for the payment
of any principal of or interest on, any Loan, or waive or
excuse any such payment or any part thereof, or change the
rate of interest on any Loan, without the written consent of
each Bank affected thereby, (ii) change the Commitment of any
Bank without the written consent of such Bank, or change the
Commitment Fees of any Bank without the written consent of
each Bank or (iii) amend or modify the provisions of this
Section 9.07, Section 2.07, Sections 2.10 through 2.15,
Section 2.17, Section 2.18, Section 9.03 or the definition of
the "Required Banks," without the written consent of each
Bank; and provided further that no such agreement shall
amend, modify, waive or otherwise affect the rights or duties
of the Agent hereunder without the written consent of the
Agent. Each Bank and each holder of any Note shall be bound
by any modification or amendment authorized by this Section
9.07 regardless of whether its Note shall be marked to make
reference thereto, and any consent by any Bank or holder of a
Note pursuant to this Section 9.07 shall bind any Person
subsequently acquiring a Note from it, whether or not such
Note shall be so marked.
SECTION 9.08. Interest. Each provision in this
Agreement and each other Loan Document is expressly limited
so that in no event whatsoever shall the amount paid, or
otherwise agreed to be paid, to the Agent or any Bank for the
use, forbearance or detention of the money to be loaned under
this Agreement or any Loan Document or otherwise (including
any sums paid as required by any covenant or obligation
contained herein or in any other Loan Document which is for
the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate, and all amounts
owed under this Agreement and each other Loan Document shall
be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid which are for the use,
forbearance or detention of money under this Agreement or
such Loan Document shall in no event exceed that amount of
money which would cause the effective rate of interest to
exceed the Highest Lawful Rate. Anything in this Agreement
or any Note or any other Loan Document to the contrary
notwithstanding, the Company shall never be required to pay
unearned interest on any Note and shall never be required to
pay interest on such Note at a rate in excess of the Highest
Lawful Rate, and if the effective rate of interest which
would otherwise be payable under this Agreement, such Note
and the other Loan Documents would exceed the Highest Lawful
Rate, or if the holder of such Note shall receive any
unearned interest or shall receive monies that are deemed to
constitute interest which would increase the effective rate
of interest payable by the Company under this Agreement and
such Note to a rate in excess of the Highest Lawful Rate,
then (a) the amount of interest which would otherwise be
payable by the Company under this Agreement and such Note
shall be reduced to the amount allowed under applicable law,
and (b) any unearned interest paid by the Company or any
interest paid by the Company in excess of the Highest Lawful
Rate shall be credited on the principal of such Note (or, if
the principal amount of such Note shall have been paid in
full, refunded to the Company). It is further agreed that,
without limitation of the foregoing, all calculations of the
rate of interest contracted for, charged or received by any
Bank under the Notes held by it, or under this Agreement, are
made for the purpose of determining whether such rate exceeds
the Highest Lawful Rate applicable to such Bank (such Highest
Lawful Rate being such Bank's "Maximum Permissible Rate"),
and shall be made, to the extent permitted by usury laws
applicable to such Bank (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the
period of the full stated term of the Loans evidenced by said
Notes all interest at any time contracted for, charged or
received by such Bank in connection therewith. If at any
time and from time to time (i) the amount of interest payable
to any Bank on any date shall be computed at such Bank's
Maximum Permissible Rate pursuant to this Section 9.08 and
(ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Bank would
be less than the amount of interest payable to such Bank
computed at such Bank's Maximum Permissible Rate, then the
amount of interest payable to such Bank in respect of such
subsequent interest computation period shall continue to be
computed at such Bank's Maximum Permissible Rate until the
total amount of interest payable to such Bank shall equal the
total amount of interest which would have been payable to
such Bank if the total amount of interest had been computed
without giving effect to this Section 9.08.
SECTION 9.09. Severability. In the event any one
or more of the provisions contained in this Agreement, the
Notes or any other Loan Document should be held invalid,
illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected
or impaired thereby. The parties shall endeavor in good
faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together
shall constitute but one contract, and shall become effective
as provided in Section 9.11.
SECTION 9.11. Binding Effect. This Agreement
shall become effective on the Execution Date, and thereafter
shall be binding upon and inure to the benefit of the
Company, the Agent and each Bank and their respective
successors and assigns, except that the Company shall not
have the right to assign its rights hereunder or any interest
herein except as provided in Section 9.03(a).
SECTION 9.12. FINAL AGREEMENT OF THE PARTIES.
THIS WRITTEN AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULES
HERETO), THE NOTES, THE AGENT'S LETTER AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF 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 RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. Any previous agreement
among the parties with respect to the subject matter hereof
is superseded by this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party
other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
IN WITNESS HEREOF, the Company, the Banks listed on
the signature pages hereto and the Agent have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
TANDY CORPORATION
By: \s\ Dwain H. Hughes
Name: Dwain H. Hughes
Title: Vice President
and Treasurer
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION as Agent
By: \s\ Loren Jensen
Name: Loren Jensen
Title: Senior Vice
President
Tranche A Tranche B ALGEMENE BANK NEDERLAND N.V.,
Commitment Commitment HOUSTON AGENCY
$10,000,000 $10,000,000
By: \s\ Charles W. Randall
Name: Charles W. Randall
Title: Vice President
By: \s\ Alan C. Weitzner
Name: Alan C. Weitzner
Title: Assistant Vice
President
$20,000,000 $20,000,000 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: \s\ Samir Sidani
Name: Samir Sidani
Title: Vice President
$20,000,000 $20,000,000 THE BANK OF NEW YORK
By: \s\ Michael J. Moretti
Name: Michael J. Moretti
Title: Vice President
$15,000,000 $15,000,000 BARCLAYS BANK PLC
By: \s\ William C. Collins, II
Name: William C. Collins, II
Title: Vice President
$15,000,000 $15,000,000 CONTINENTAL BANK N.A.
By: \s\ Laurens F. Schaad, Jr.
Name: Laurens F. Schaad, Jr.
Title: Vice President
Tranche A Tranche B CREDIT LYONNAIS, CAYMAN ISLAND
Commitment Commitment BRANCH
$20,000,000 $20,000,000
By:
Name:
Title:
$20,000,000 $20,000,000 NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: \s\ David F. Brealey
Name: David F. Brealey
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: \s\ David F. Brealey
Name: David F. Brealey
Title: Vice President
$20,000,000 $20,000,000 NCNB TEXAS NATIONAL BANK
By: \s\ Vincent A. Liberio
Name: Vincent A. Liberio
Title: Senior Vice President
Tranch A Tranch B SOCIETE GENERALE, SOUTHWEST
Commitment Commitment AGENCY
$10,000,000 $10,000,000
By: \s\ Matthew Flanigan
Name: Matthew Flanigan
Title: Vice President Manager
By: \s\Louis P. Laville, III
Name: Louis P. Laville, III
Title: Assistant Treasurer
$ 5,000,000 $ 5,000,000 THE SUMITOMO BANK, LIMITED
HOUSTON AGENCY
By: \s\ Hideki Matsui
Name: Hideki Matsui
Title: General Manager
$20,000,000 $20,000,000 WESTPAC BANKING CORPORATION
By: \s\ Lawrence Creedon
Name: Lawrence Creedon
Title: Vice President
<PAGE>
Commitment: Banks
___________ _____
$15,000,000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
Name:
Title:
Address: 333 Clay Street, Suite 4550
Houston, Texas 77002
Telecopy No.: (713) 651-4841
Domestic Lending Office
Bank of America
Global Payments Operations
CSA South #5583
333 South Beaudry Avenue
Los Angeles, California 90017
Attention: Debbie Green
Eurodollar Lending Office
Bank of America
Global Payments Operations
CSA South #5583
333 South Beaudry Avenue
Los Angeles, California 90017
Attention: Debbie Green
<PAGE>
Commitment: Banks
___________ _____
$15,000,000
THE BANK OF NEW YORK
By: \s\ Ian K. Stewart
Name: Ian K. Stewart
Title: Vice President
Address: One Wall Street
New York, New York 10286
Telecopy No.: (212) 635-6434
Domestic Lending Office
The Bank of New York
One Wall Street
New York, New York 10286
Eurodollar Lending Office
The Bank of New York
One Wall Street
New York, New York 10286
<PAGE>
Commitment: Banks
___________ _____
$ 7,500,000
BANK ONE, TEXAS, N.A.
By:
Name:
Title:
Address: 500 Throckmorton
Fort Worth, Texas 76102
Telecopy No.: (817) 884-5697
Domestic Lending Office
Bank One, Texas, N.A.
500 Throckmorton
Fort Worth, Texas 76102
Eurodollar Lending Office
Bank One, Texas, N.A.
500 Throckmorton
Fort Worth, Texas 76102
<PAGE>
Commitment: Banks
----------- -----
$10,000,000
THE BANK OF TOKYO TRUST COMPANY
By:
Name:
Title:
Address: 1251 Avenue of the Americas
12th Floor
New York, New York 10116-3138
Telecopy No.: (212) 782-6440
Domestic Lending Office
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116-31386
Eurodollar Lending Office
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116-3138
<PAGE>
Commitment: Banks
----------- -----
$10,000,000
BARCLAYS BANK PLC
By:
Name:
Title:
Address: 222 Broadway, 11th Floor
New York, New York 10038
Telecopy No.: (212) 412-7580
Domestic Lending Office
Barclays Bank PLC
222 Broadway, 11th Floor
New York, New York 10038
Eurodollar Lending Office
Barclays Bank PLC
222 Broadway, 11th Floor
New York, New York 10038
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000
THE CHASE MANHATTAN BANK, N.A.
By:
Name:
Title:
Address: One Chase Manhattan Plaza
Global Insurance Corporate Finance
5th Floor
New York, New York 10081
Telecopy No.: (212) 552-1999 or 3651
Domestic Lending Office
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
Global Insurance Corporate Finance
5th Floor
New York, New York 10081
Eurodollar Lending Office
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
Global Insurance Corporate Finance
5th Floor
New York, New York 10081
<PAGE>
Commitment: Banks
----------- -----
$15,000,000
CONTINENTAL BANK N.A.
By: \s\ W. Thomas Barnett
Name: W. Thomas Barnett
Title: Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopy No.: (312) 987-5833
Domestic Lending Office
Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
Eurodollar Lending Office
Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
<PAGE>
Commitment: Banks
----------- -----
$15,000,000
CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
Address: 500 North Akard, Suite 3210
Dallas, Texas 75201
Telecopy No.: (214) 954-3312
Domestic Lending Office
Credit Lyonnais New York Branch
500 North Akard, Suite 3210
Dallas, Texas 75201
Attention: Judy Gordon
Eurodollar Lending Office
Credit Lyonnais New York Branch
500 North Akard, Suite 3210
Dallas, Texas 75201
Attention: Judy Gordon
<PAGE>
Commitment: Banks
----------- -----
$10,000,000
THE FIRST NATIONAL BANK OF BOSTON
By: \s\ Bethann R. Halligan
Name: Bethann R. Halligan
Title: Director
Address: 100 Federal Street 01-21-01
Boston, Massachusetts 02110
Telecopy No.: (617) 434-6685
Domestic Lending Office
The First National Bank of Boston
100 Federal Street 01-21-01
Boston, Massachusetts 02110
Eurodollar Lending Office
The First National Bank of Boston
100 Federal Street 01-21-01
Boston, Massachusetts 02110
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
Name:
Title:
Address: 301 South College Street
One First Union Center
Charlotte, NC 28288
Telecopy No.: (704) 374-2802
Domestic Lending Office
First Union National Bank of
North Carolina
301 South College Street
One First Union Center
Charlotte, North Carolina 28288
Eurodollar Lending Office
First Union National Bank of
North Carolina
301 South College Street
One First Union Center
Charlotte, North Carolina 28288
<PAGE>
Commitment: Banks
----------- -----
$10,000,000
MELLON BANK, N.A.
By:
Name:
Title:
Address: One Mellon Bank Center, Room 4535
Pittsburgh, Pennsylvania 15258-0001
Telecopy No.: (412) 234-5049 or
(412) 236-2027
Domestic Lending Office
Mellon Bank, N.A.
Three Mellon Bank Center
23rd Floor
Pittsburgh, Pennsylvania 15259
Attention: Loan Administration
Eurodollar Lending Office
Three Mellon Bank Center
23rd Floor
Pittsburgh, Pennsylvania 15259
Attention: Loan Administration
<PAGE>
Commitment: Banks
----------- -----
$15,000,000
NATIONAL WESTMINSTER BANK, Plc
New York Branch
By:
Name:
Title:
NATIONAL WESTMINSTER BANK, Plc
Nassau Branch
By:
Name:
Title:
Telecopy No.: (212) 602-4118
Domestic Lending Office
NATIONAL WESTMINSTER BANK, Plc
New York Branch
175 Water Street
New York, New York 10038
Eurodollar Lending Office
NATIONAL WESTMINSTER BANK, Plc
Nassau Branch
175 Water Street
New York, New York 10038
<PAGE>
Commitment: Banks
----------- -----
$15,000,000
NATIONSBANK OF TEXAS, N.A.
By:
Name:
Title:
Address: 500 West Seventh Street
Fort Worth, Texas 76113-2260
Telecopy No.: (817) 390-6545
Domestic Lending Office
NationsBank of Texas, N.A.
500 West Seventh Street
Fort Worth, Texas 76113-2260
Eurodollar Lending Office
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
<PAGE>
Commitment: Banks
----------- -----
$10,000,000
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
Name:
Title:
Address: 2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Telecopy No.: (214) 979-1104
Domestic Lending Office
Societe Generale, Southwest Agency
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Eurodollar Lending Office
Societe Generale, Southwest Agency
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000
THE SUMITOMO BANK, LIMITED
HOUSTON AGENCY
By:
Name:
Title:
Address: NationsBank Center
700 Louisiana, Suite 1750
Houston, Texas 77002
Telecopy No.: (713) 759-0020
Domestic Lending Office
The Sumitomo Bank, Limited
Houston Agency
NationsBank Center
The Sumitomo Bank, Limited Houston
Agency
700 Louisiana, Suite 1750
Houston, Texas 77002
Eurodollar Lending Office
The Sumitomo Bank, Limited
Houston Agency
NationsBank Center
The Sumitomo Bank, Limited Houston
Agency
700 Louisiana, Suite 1750
Houston, Texas 77002
<PAGE>
Commitment: Banks
----------- -----
$20,000,000
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By:
Name:
Title:
Address: 201 Main Street
Fort Worth, Texas 76102
Telecopy No.: (817) 878-7591
Domestic Lending Office
Texas Commerce Bank National
Association
201 Main Street
Fort Worth, Texas 76102
Eurodollar Lending Office
Texas Commerce Bank National
Association
712 Main Street
Houston, Texas 77002
<PAGE>
Commitment: Banks
----------- -----
$10,000,000
TORONTO DOMINION (TEXAS), INC.
By:
Name:
Title:
Address: 909 Fannin, Suite 1700
Houston, Texas 77010
Telecopy No.: (713) 951-9921
Domestic Lending Office
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Eurodollar Lending Office
The Toronto-Dominion Bank
Houston Agency
909 Fannin, Suite 1700
Houston, Texas 77010
<PAGE>
TANDY CORPORATION
OFFICERS CERTIFICATE
The undersigned, ________________________,
__________________________, and, _________________________,
[Assistant] Secretary, of Tandy Corporation, a Delaware
corporation (the Company ), DO HEREBY CERTIFY, in connection
with the execution of the Revolving Credit Agreement (Facility
A) dated as of May 27, 1994 (the Credit Agreement, terms
defined therein being used herein as therein defined) among
the Company, the Banks parties thereto, and Texas Commerce
Bank National Association, as Agent, that:
1. Attached hereto as Exhibit A is a correct copy
of the Articles of Incorporation of the Company together with
all amendments thereto.
2. Attached hereto as Exhibit B is a correct copy
of the Bylaws of the Company together with all amendments
thereto.
3. Attached hereto as Exhibit C is a correct copy
of resolutions duly adopted by the Board of Directors of the
Company at a meeting thereof duly called and held on
_________, 1994, at which meeting a quorum was present and
acting throughout. Such resolutions have not been amended,
modified or revoked and are in full force and effect on the
date hereof.
4. The persons named below are duly elected
officers of the Company, now hold the offices set forth
opposite their respective names, and have held such offices
since or prior to, 1994; and the signature opposite the
name and title of each of them is his or her correct
signature:
Name Office Signature
5. There exists on the date hereof no Default or
Event of Default with respect to the Company.
6. The representations and warranties contained in
the Loan Documents are true on and as of the date hereof
(except to the extent that such representations and warranties
have been affected by the transactions contemplated by the
Credit Agreement) with the same effect as though such
representations and warranties had been made on and as of the
date hereof.
IN WITNESS WHEREOF, the undersigned have signed this
certificate this day _________ of May, 1994.
Name:
Title:
Name:
Title:
[Assistant] Secretary
EXHIBIT 4c (continued)
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
(Facility B)
Dated as of
May 27, 1994
among
Tandy Corporation,
The Banks Listed Herein,
and
Texas Commerce Bank National Association,
as Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINED TERMS, ACCOUNTING
TERMS AND CONSTRUCTIONSECTION
SECTION 1.01 Certain Defined Terms I-1
SECTION 1.02 Accounting Terms I-14
SECTION 1.03 Interpretation I-14
ARTICLE II
THE LOANS
SECTION 2.01 Commitments II-1
SECTION 2.02 Loans II-1
SECTION 2.03 Notice of Borrowings II-2
SECTION 2.04 Conversion and Continuation of
Borrowings II-2
SECTION 2.05 Notes; Repayment of Loans II-4
SECTION 2.06 Interest on Loans II-4
SECTION 2.07 Interest on Overdue Amounts II-5
SECTION 2.08 Fees II-5
SECTION 2.09 Termination and Reduction of
Commitments II-6
SECTION 2.10 Alternate Rate of Interest II-6
SECTION 2.11 Prepayment of Loans II-7
SECTION 2.12 Reserve Requirements; Change in
Circumstances II-7
SECTION 2.13 Change in Legality II-9
SECTION 2.14 Indemnity II-9
SECTION 2.15 Pro Rata Treatment II-10
SECTION 2.16 Payments II-10
SECTION 2.17 Sharing of Setoffs II-11
SECTION 2.18 Payments Free of Taxes II-11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Organization; Corporate Powers III-1
SECTION 3.02 Authorization III-1
SECTION 3.03 Governmental Approval III-1
SECTION 3.04 Enforceability III-1
SECTION 3.05 Financial Statements III-1
SECTION 3.06 No Material Adverse Change III-2
SECTION 3.07 Title to Properties III-2
SECTION 3.08 Litigation; Compliance with
Laws; Etc. III-2
SECTION 3.09 Agreements; No Default III-3
SECTION 3.10 Federal Reserve Regulations III-3
SECTION 3.11 Taxes III-3
SECTION 3.12 Pension and Welfare Plans III-4
SECTION 3.13 No Material Misstatements III-4
SECTION 3.14 Investment Company Act; Public
Utility Holding Company Act III-4
SECTION 3.15 Compliance with Laws III-4
SECTION 3.16 Maintenance of Insurance III-4
SECTION 3.17 Existing Liens III-4
SECTION 3.18 Environmental Matters III-5
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01 Conditions Precedent to the
Initial Borrowing IV-1
SECTION 4.02 Conditions Precedent to Each
Borrowing IV-2
SECTION 4.03 Conditions Precedent to Conversions
and Continuations IV-2
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01 Existence V-1
SECTION 5.02 Repair V-1
SECTION 5.03 Insurance V-1
SECTION 5.04 Obligations and Taxes V-1
SECTION 5.05 Financial Statements; Reports V-2
SECTION 5.06 Litigation and Other Notices V-2
SECTION 5.07 ERISA V-3
SECTION 5.08 Books, Records and Access V-3
SECTION 5.09 Use of Proceeds V-3
SECTION 5.10 Nature of Business V-4
SECTION 5.11 Compliance V-4
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01 Liens VI-1
SECTION 6.02 Merger, Purchase and Sale VI-1
SECTION 6.03 Investments VI-3
SECTION 6.04 Transactions with Affiliates VI-4
SECTION 6.05 Other Agreements VI-4
SECTION 6.06 Fiscal Year; Accounting VI-4
SECTION 6.07 Credit Standards VI-4
SECTION 6.08 Pension Plans VI-4
SECTION 6.09 Senior Indebtedness to Tangible
Net Worth Ratio VI-4
SECTION 6.10 Tangible Net Worth of the Company VI-4
SECTION 6.11 Guaranties VI-4
SECTION 6.12 Leases VI-5
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01 Events of Default VII-1
ARTICLE VIII
THE AGENTS
SECTION 8.01 Authorization and Action VIII-1
SECTION 8.02 Agent's Reliance, Etc. VIII-1
SECTION 8.03 Agent and Affiliates; TCB,
and Affiliates VIII-2
SECTION 8.04 Agent's Indemnity VIII-3
SECTION 8.05 Bank Credit Decision VIII-3
SECTION 8.06 Successor Administrative Agent VIII-4
SECTION 8.07 Notice of Default VIII-4
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices, Etc. IX-1
SECTION 9.02 Survival of Agreement IX-1
SECTION 9.03 Successors and Assigns;
Participations IX-2
SECTION 9.04 Expenses of the Banks; Indemnity IX-5
SECTION 9.05 Right of Setoff IX-5
SECTION 9.06 Governing Law IX-6
SECTION 9.07 Waivers; Amendments IX-6
SECTION 9.08 Interest IX-7
SECTION 9.09 Severability IX-8
SECTION 9.10 Counterparts IX-8
SECTION 9.11 Binding Effect IX-8
SECTION 9.12 Final Agreement of the Parties IX-8
EXHIBITS
Form of Administrative Questionnaire Exhibit 1.01A
Form of Note Exhibit 2.05
Pension and Welfare Plans Exhibit 3.12
Existing Liens Exhibit 3.17
Form of Opinion Letter of Counsel to
the Company Exhibit 4.01
Investments Exhibit 6.03
Form of Assignment and Acceptance Exhibit 9.03
<PAGE>
REVOLVING CREDIT AGREEMENT (Facility B) dated as of
May 27, 1994, among TANDY CORPORATION, a Delaware corporation
(the "Company"), the Banks listed on the signature pages
hereof (the "Banks") and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, as Agent for the
Banks (in such capacity together with any successor Agent
pursuant to Section 8.06, the "Agent").
ARTICLE I
CERTAIN DEFINED TERMS, ACCOUNTING TERMS AND CONSTRUCTION
SECTION 1.01 Certain Defined Terms. As used in
this Agreement, the following terms shall have the following
meanings:
"ABR Borrowing" means a Borrowing comprised of
Alternate Base Rate Loans.
"Accounts" means any and all rights of the Company
and the Subsidiaries of the Company to payment for goods and
services sold or leased, including any such right evidenced
by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or
hereafter acquired or arising in the future, including
accounts receivable from Affiliates.
"Adjusted CD Rate" means, with respect to any CD
Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next higher 1/8 of 1%)
equal to the sum of (a) a rate per annum equal to the product
of (i) the Fixed Certificate of Deposit Rate in effect for
such Interest Period and (ii) Statutory Reserves, plus (b)
the Assessment Rate. For purposes hereof, the term "Fixed
Certificate of Deposit Rate" shall mean the arithmetic
average (rounded to the nearest 1/8 of 1% or, if there is no
nearest 1/8 of 1%, the next higher 1/8 of 1%) of the
prevailing rates per annum bid on or about 10:00 a.m. (New
York, New York time) to the Agent on the first Business Day
of the Interest Period for such Borrowing by three New York
City negotiable certificate of deposit dealers of recognized
standing selected by the Agent for the purchase at face value
of negotiable certificates of deposit of major United States
money center banks in a principal amount approximately equal
to the Agent's portion of such Borrowing and with a maturity
comparable to such Interest Period.
"Administrative Questionnaire" means an
Administrative Questionnaire in the form of Exhibit 1.01A
hereto, which each Bank shall complete and provide to the
Agent.
"Affiliate" means any Person (including any member
of the immediate family of any such natural person) who
directly or indirectly beneficially owns or controls 5% or
more of the total voting power of shares of capital stock of
the Company having the right to vote for directors under
ordinary circumstances, any person controlling, controlled by
or under common control with any such person (within the
meaning of Rule 405 under the Securities Act of 1933) and any
director or executive officer of such person.
"Agency Fee" has the meaning specified in Section
2.08(b).
"Agent" has the meaning specified in the
introduction to this Agreement.
"Agent's Letter" has the meaning specified in
Section 2.08(b).
"Agreement" means this Revolving Credit Agreement
(Facility B).
"Alternate Base Rate" means, for any day, a
fluctuating rate per annum (rounded upwards to the next
highest 1/8 of 1% if not already an integral multiple of 1/8
of 1%) equal to the greatest of (a) the Prime Rate in effect
on such day, (b) the Base CD Rate in effect on such day plus
1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. "Prime Rate" shall mean, as of a
particular date, the prime rate most recently announced by
TCB and thereafter entered in the minutes of TCB's Loan and
Discount Committee, automatically fluctuating upward and
downward with and at the time specified in each such
announcement without notice to the Company or any other
Person, which prime rate may not necessarily represent the
lowest or best rate actually charged to a customer. "Base CD
Rate" means the sum of (x) the product of (i) the Three-Month
Secondary CD Rate and (ii) the Statutory Reserves and (y) the
Assessment Rate. "Three-Month Secondary CD Rate" means, for
any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next
preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately
9:00 a.m., Houston, Texas time, on such day (or, if such day
shall not be Business Day, on the next preceding Business
Day) by the Agent from three New York City negotiable
certificate of deposit dealers of recognized standing
selected by the Agent. "Federal Funds Effective Rate" shall
mean, for any day, an interest rate per annum equal to the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it. If the
Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective
Rate for any reason, including the inability or failure of
the Agent to obtain sufficient bids or publications in
accordance with the terms thereof, the Alternate Base Rate
shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist.
Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective date
of such change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" means any Loan with
respect to which the Company shall have selected an interest
rate based on the Alternate Base Rate in accordance with the
provisions of Article II.
"Applicable Fee Percentage" means, on any date, the
applicable percentage set forth below based upon the ratings
applicable on such date to the Company's senior, unsecured,
non-credit-enhanced long term indebtedness for borrowed money
("Index Debt"):
Applicable Fee
Percentage
----------
Category 1
----------
A or higher by S&P; and .125%
A3 or higher by Moody's
Category 2
----------
Lower than A and equal to or .1875%
greater than BBB+ by S&P; and
Lower than A3 and equal to or
greater than Baa1 by Moody's
Category 3
----------
BBB by S&P; and .20%
Baa2 by Moody's
Category 4
----------
BBB or lower by S&P; or .25%
Baa3 or lower by Moody's
For purposes of the foregoing, (a) if neither Moody's nor S&P
shall have in effect a rating for Index Debt, then both such
rating agencies will be deemed to have established ratings
for Index Debt in Category 4; (b) if only one of Moody's and
S&P shall have in effect a rating for Index Debt, the Company
and the Banks will negotiate in good faith to agree upon
another rating agency to be substituted by an amendment to
this Agreement for the rating agency which shall not have a
rating in effect, and pending the effectiveness of such
amendment the Applicable Fee Percentage will be determined by
reference to the available rating; (c) if the ratings
established or deemed to have been established by Moody's and
S&P shall fall within different Categories, the Applicable
Fee Percentage shall be determined by reference to the
superior (or numerically lower) Category; and (d) if any
rating established or deemed to have been established by
Moody's or S&P shall be changed (other than as a result of a
change in the rating system of either Moody's or S&P), such
change shall be effective as of the date on which such change
is first announced by the rating agency making such change.
Each change in the Applicable Fee Percentage shall apply
during the period commencing on the effective date of such
change and ending on the date immediately preceding the
effective date of the next such change. If the rating system
of either Moody's or S&P shall change prior to the Maturity
Date, the Company and the Banks shall negotiate in good faith
to amend the references to specific ratings in this
definition to reflect such changed rating system.
"Applicable Margin" means, on any date, with
respect to Eurodollar Loans, Certificate of Deposit Loans or
Alternate Base Rate Loans, as the case may be, the applicable
spreads set forth below based upon the ratings applicable on
such date to the Company's Index Debt.
Eurodollar Certificate of Deposit
Alternate Base Rate
Loan Spread Loan Spread Loan Spread
----------- ----------- -----------
Category 1
----------
A or higher by S&P; and .275% .40% 0%
A3 or higher by Moody's
Category 2
----------
Lower than A and equal to .35% .475% 0%
or greater than BBB+ by
S&P; and
Lower than A3 and equal
to or greater than Baa1
by Moody's
Category 3
----------
BBB by S&P; and .435% .56% 0%
Baa2 by Moody's
Category 4
----------
BBB or lower by S&P; or .50% .625% 0%
Baa3 or lower by Moody's
For purposes of the foregoing, (a) if neither Moody's nor S&P
shall have in effect a rating for Index Debt, then both such
rating agencies will be deemed to have established ratings
for Index Debt in Category 4; (b) if only one of Moody's and
S&P shall have in effect a rating for Index Debt, the Company
and the Banks will negotiate in good faith to agree upon
another rating agency to be substituted by an amendment to
this Agreement for the rating agency which shall not have a
rating in effect, and pending the effectiveness of such
amendment the Applicable Margin will be determined by
reference to the available rating; (c) if the ratings
established or deemed to have been established by Moody's and
S&P shall fall within different Categories, the Applicable
Margin shall be determined by reference to the superior (or
numerically lower) Category; and (d) if any rating
established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in
the rating system of either Moody's or S&P), such change
shall be effective as of the date on which such change is
first announced by the rating agency making such change.
Each change in the Applicable Margin shall apply to all
Eurodollar Loans and all Certificate of Deposit Loans that
are outstanding at any time during the period commencing on
the effective date of such change and ending on the date
immediately preceding the effective date of the next such
change. If the rating system of either Moody's or S&P shall
change prior to the Maturity Date, the Company and the Banks
shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed
rating system.
"Applicable Lending Office" means, with respect to
each Bank, such Bank's Domestic Lending Office in the case of
an Alternate Base Rate Loan or Certificate of Deposit Loan
and such Bank's Eurodollar Lending Office in the case of a
Eurodollar Loan.
"Assessment Rate" means, for any day, the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as well
capitalized and within supervisory subgroup B (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. 327.3(d) (or any successor
provision) to the FDIC (or any successor) for the FDIC (or
such successor) insuring time deposits at offices of such
institution in the United States.
"Assignment and Acceptance" has the meaning
specified in Section 9.03.
"Banks" has the meaning specified in the
introduction to this Agreement.
"Base CD Rate" has the meaning specified in the
definition of the term "Alternate Base Rate."
"Board" means the Board of Governors of the Federal
Reserve System of the United States.
"Borrowing" means a group of Loans of a single Type
made by the Banks on a single date and as to which a single
Interest Period is in effect.
"Borrowing Date" means, with respect to each
Borrowing, the Business Day upon which the proceeds of such
Borrowing are made available to the Company.
"Business Day" means a day when the Agent and each
Bank are open for business, and if the applicable Business
Day relates to any Eurodollar Loan, a day on which dealings
are carried on in the London interbank market and commercial
banks are open for domestic or international business in
London, England, in New York City, New York and in Houston,
Texas.
"Capital Lease" means any lease required to be
accounted for as a capital lease under generally accepted
accounting principles.
"CD Borrowing" means a Borrowing comprised of
Certificate of Deposit Loans.
"Certificate of Deposit Loan" means any Loan with
respect to which the Company shall have selected an interest
rate based on the Adjusted CD Rate in accordance with the
provisions of Article II.
"Change of Control" means any of (a) the
acquisition by any Person or two or more Persons (excluding
underwriters in the course of their distribution of voting
stock in an underwritten public offering) acting in concert,
of beneficial ownership (within the meaning of Rule 13d 3 of
the Securities and Exchange Commission) of 25% or more of the
outstanding shares of voting stock of the Company, (b) a
majority of the members of the Board of Directors of the
Company on any date shall not have been (i) members of the
Board of Directors of the Company on the date 12 months prior
to such date or (ii) approved by Persons who constitute at
least a majority of the members of the Board of Directors of
the Company as constituted on the date 12 months prior to
such date or (c) all or substantially all of the assets of
the Company are sold in a single transaction or series of
related transactions to any Person.
"Code" means the Internal Revenue Code of 1986 and
any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time
to time. References to sections of the Code shall be
construed to also refer to any successor sections.
"Commitment" means, with respect to each Bank, the
amount set forth beneath the name of such Bank on the
signature pages hereof (or, as to any Person who becomes a
Bank after the Execution Date, on the signature page of the
Assignment and Acceptance executed by such Person), as such
amount may be permanently terminated or reduced from time to
time pursuant to Section 2.09 or Section 7.01, and as such
amount may be increased or decreased from time to time by
assignment or assumption pursuant to Section 9.03. The
Commitment of each Bank shall automatically and permanently
terminate on the Maturity Date.
"Commitment Fee" has the meaning specified in
Section 2.08.
"Communications" has the meaning specified in
Section 9.01.
"Company" has the meaning specified in the
introduction to this Agreement.
"Confidential Information Memorandum" means the
Confidential Information Memorandum dated April 1994
furnished by Chemical Securities, Inc., as arranger on behalf
of TCB, relating to the revolving credit facilities evidenced
by this Agreement.
"Consolidated Senior Indebtedness" means all
Indebtedness of the Company and its Subsidiaries, other than
Subordinated Indebtedness, calculated on a consolidated
basis.
"Consolidated Tangible Net Worth" means, with
respect to the Company, at any time, the total Stockholders
Equity less the total amount of any intangible assets and
plus the total amount of any Subordinated Indebtedness unless
already included in Stockholders Equity, with all such
amounts being calculated for the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles applied on a
consistent basis. Intangible assets shall include
unamortized debt discount and expense, unamortized deferred
charges and goodwill.
"Default" means any event or condition which, with
the lapse of time or giving of notice or both, would
constitute an Event of Default.
"Dollars" and the symbol "$" mean the lawful
currency of the United States of America.
"Domestic Lending Office" means, with respect to
any Bank, the office of such Bank specified as its "Domestic
Lending Office" on such Bank's signature page to this
Agreement or, as to any Person who becomes a Bank after the
Execution Date, on the signature page of the Assignment and
Acceptance executed by such Person or such other office of
such Bank as such Bank may hereafter designate from time to
time as its "Domestic Lending Office" by notice to the
Company and the Agent.
"Effective Date" means the date on which the
conditions to Borrowing set forth in Article IV are first
met.
"Eligible Assignee" means (a) any Bank or any
Affiliate of any Bank; (b) a commercial bank organized under
the laws of the United States, or any state thereof, and
having total assets in excess of $1,000,000,000 and having
deposits that rated in either of the two highest generic
letter rating categories (without regard to subcategories)
from either S&P or Moody's; (c) a commercial bank organized
under the laws of any other country which is a member of the
OECD, or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, provided
that such bank is acting through a branch or agency located
in the country in which it is organized or another country
which is also a member of the OECD; (d) the central bank of
any country which is a member of the OECD; or (e) any other
financial institution approved by the Company and the Agent
(which approval shall not be unreasonably withheld).
"ERISA" means the Employee Retirement Income
Security Act of 1974, and any successor statute of similar
import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections
of ERISA shall be construed to also refer to any successor
sections.
"ERISA Affiliate" means any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of
trades or businesses, as described in sections 414(b) and
414(c), respectively, of the Code or section 4001 of ERISA.
"Eurodollar Borrowing" means a Borrowing comprised
of Eurodollar Loans.
"Eurodollar Lending Office" means, with respect to
each Bank, the branches or Affiliates of such Bank which such
Bank has designated as its "Eurodollar Lending Office" on
such Bank's signature page to this Agreement or, as to any
Person who becomes a Bank after the Execution Date, on the
signature page of the Assignment and Acceptance executed by
such Person or such other office of such Bank as such Bank
may hereafter designate from time to time as its "Eurodollar
Lending Office" by notice to the Company and the Agent.
"Eurodollar Loan" means any Loan with respect to
which the Company shall have selected an interest rate based
on the LIBO Rate in accordance with the provisions of Article
II.
"Event of Default" has the meaning specified in
Article VII.
"Execution Date" means the earliest date upon which
all of the following shall have occurred: counterparts of
this Agreement shall have been executed by the Company and
each Bank, and the Agent shall have received counterparts
hereof which taken together, bear the signature of the
Company and each Bank.
"Existing Agreement" means the Revolving Credit
Agreement dated as of June 17, 1991, as amended, among the
Company, TCC, the banks party thereto, TCB, as funds
administrator and Texas Commerce Bank, National Association,
as administrative agent.
"Federal Funds Effective Rate" has the meaning
specified in the definition of "Alternate Base Rate."
"Fixed Certificate of Deposit Rate" has the meaning
specified in the definition of "Adjusted CD Rate."
"Guaranties" by any Person means all obligations
(other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection) of such
Person guaranteeing or, in effect, guaranteeing any
Indebtedness, dividend or other obligation, of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including all obligations incurred
through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor,
(b) to advance or supply funds (i) for the
purchase or payment of such Indebtedness or obligation, (ii)
to maintain working capital or other balance sheet condition
or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation,
(c) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of such
Indebtedness or such obligation, or
(d) otherwise to assure the owner of the
Indebtedness or the obligation of the primary obligor against
loss in respect thereof.
For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to
the principal amount of such Indebtedness for borrowed money
which has been guaranteed, and a Guaranty in respect of any
other obligation or liability or any dividend shall be deemed
to be Indebtedness equal to the maximum aggregate amount of
such obligation, liability or dividend.
"Highest Lawful Rate" means, as to any Bank, at the
particular time in question, the maximum nonusurious rate of
interest which, under applicable law, such Bank is then
permitted to charge the Company on the Loans. If the maximum
rate of interest which, under applicable law, the Banks are
permitted to charge the Company on the Loans shall change
after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, as
of the effective time of such change without notice to the
Company.
"Indebtedness" of any Person means, without
duplication:
(a) any obligation of such Person for borrowed
money, including:
(i) any obligation of such Person evidenced by
bonds, debentures, notes or other similar debt
instruments, and
(ii) any obligation for borrowed money which is
non-recourse to the credit of such Person but which is
secured by any asset of such Person,
(b) any obligation of such Person on account of
deposits or advances,
(c) all obligations of such Person under
conditional sale or other title retention agreements relating
to property purchased by such Person,
(d) any obligation of such Person for the deferred
purchase price of any property or services, except accounts
payable arising in the ordinary course of such Person's
business,
(e) rentals in respect of Capital Leases of such
Person,
(f) Guaranties by such Person to the extent
required pursuant to the definition thereof,
(g) any Indebtedness of another Person secured by
a Lien on any asset of such first Person, whether or not such
Indebtedness is assumed by such first Person, and
(h) any Indirect Indebtedness of such Person.
"Indemnitee" has the meaning specified in Section
9.04.
"Index Debt" has the meaning specified in the
definition of "Applicable Fee Percentage."
"Indirect Indebtedness" of a Person means (a) the
Indebtedness of a partnership in which such Person is a
general partner and (b) the amount of any liability of such
Person created by the Indebtedness of a joint venture in
which such Person is a joint venturer.
"Insignificant Foreign Subsidiary" means a
Subsidiary of the Company which is not organized under the
laws of a state of the United States and which is not a
Significant Subsidiary of the Company.
"Interest Payment Date" means, as to any Loan, the
last day of the Interest Period applicable to such Loan (and,
in addition, in the case of any Interest Period of six months
or 180 days duration, the day that would have been the
Interest Payment Date of such Interest Period if such
Interest Period had been of three months or 90 days
duration).
"Interest Period" means: (a) as to any Eurodollar
Loan, the period commencing on the date of such Eurodollar
Loan and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day)
in the calendar month that is 1, 2, 3 or 6 months thereafter,
as the Company may elect, (b) as to any Certificate of
Deposit Loan, a period of 30, 60, 90 or 180 days duration, as
the Company may elect, commencing on the date of such
Certificate of Deposit Loan and (c) as to any Alternate Base
Rate Loan, a period of 90 days duration, commencing on the
date of such Loan; provided, however, that (i) if any
Interest Period would end on a day that shall not be a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, with respect to
Eurodollar Loans only, such next succeeding Business Day
would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day,
(ii) no Interest Period shall end later than the Maturity
Date and (iii) interest shall accrue from and including the
first day of an Interest Period to but excluding the last day
of such Interest Period.
"Investment" means, as to any Person, any
investment so classified under generally accepted accounting
principles made by stock purchase, capital contribution, loan
or advance or by purchase of property or otherwise, but in
any event shall include as an investment in any other Person
the amount of all Indebtedness owed by such other Person and
all Accounts from such other Person which are not current
assets or did not arise from services rendered or sales to
such other Person in the ordinary course of business.
"LIBO Rate" means the rate (rounded to the nearest
1/8 of 1% or, if there is no nearest 1/8 of 1%, the next
higher 1/8 of 1%) at which dollar deposits approximately
equal in principal amount to the Agent's portion of such
Borrowing and for a maturity equal to the applicable Interest
Period are offered in immediately available funds to the
principal office of the Agent in London, England (or if the
Agent does not at the time any such determination is made,
maintain an office in London, England, the principal office
of any Affiliate of the Agent in London, England) by leading
banks in the London interbank market for Eurodollars at
approximately 11:00 a.m., London, England time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means any mortgage, pledge, hypothecation,
judgment lien or similar legal process, title retention lien,
or other lien or security interest, including the interest of
a vendor under any conditional sale or other title retention
agreement and the interest of a lessor under any Capital
Lease.
"Loan" means an Alternate Base Rate Loan, a
Certificate of Deposit Loan or a Eurodollar Loan.
"Loan Documents" means this Agreement, the Notes,
the Agent's Letter and all other documents and instruments
executed by the Company or any other Person in connection
with this Agreement and the Loans.
"Margin Stock" has the meaning specified in
Regulation U.
"Maturity Date" means May 26, 1997, or the earlier
termination of the Commitments pursuant to Section 7.01.
"Maximum Permissible Rate" has the meaning
specified in Section 9.08.
"Moody's" means Moody's Investors Service.
"Note" and "Notes" have the meaning specified in
Section 2.05.
"Notice of Borrowing" has the meaning specified in
Section 2.03.
"OECD" means the Organization for Economic
Cooperation and Development.
"Other Activities" has the meaning specified in
Section 8.03.
"Other Financings" has the meaning specified in
Section 8.03.
"Other Taxes" has the meaning specified in Section
2.18.
"PBGC" means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its
functions under ERISA.
"Person" means any natural person, corporation,
business trust, association, company, limited liability
company, joint venture, partnership or government or any
agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is
defined in ERISA, established or maintained by the Company or
any ERISA Affiliate or as to which the Company or any ERISA
Affiliate contributes or is a member or otherwise may have
any liability.
"Prime Rate" has the meaning specified in the
definition of the term "Alternate Base Rate."
"Register" has the meaning specified in Section
9.03(d).
"Regulation G" means Regulation G of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation T" means Regulation T of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board, as
the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Reportable Event" means a Reportable Event as
defined in Section 4043(b) of ERISA.
"Required Banks" means, at any time, Banks holding
66-2/3% of the aggregate principal amount of the Loans at the
time outstanding, or if no Loans are outstanding, Banks
having 66-2/3% of the Total Commitment.
"Short-term Indebtedness" means, at any date,
Indebtedness which matures one year or less from such date
and which is not directly or indirectly renewable or
extendible, at the option of the obligor, by its terms or the
terms of any instrument or agreement relating thereto, to a
date more than one year from such date.
"Significant Subsidiary" means as to the Company or
any Subsidiary of the Company, any Subsidiary of such Person
which either (a) has a net worth in excess of 5% of the
consolidated net worth of the Company and its other
Subsidiaries, or (b) has gross revenues in excess of 5% of
the consolidated gross revenues of the Company and its other
Subsidiaries based, in each case, on the most recent audited
financial statements of the Company. In all events the
Significant Subsidiaries of the Company shall include GRID
Systems Corporation, a California corporation, TCC, TRC,
Tandy Bank, TE Electronics, Inc., a Delaware corporation, A&A
International, Inc., a Nevada corporation, and Technology
Properties, Inc., a Delaware corporation.
"S&P" means Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc..
"Statutory Reserves" means a fraction (expressed as
a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of
the maximum reserve percentages (including any marginal,
special, emergency, or supplemental reserves) expressed as a
decimal established by the Board and any other banking
authority to which any Bank is subject for new negotiable
time deposits in Dollars of over $100,000 with maturities
approximately equal to (a) the applicable Interest Period, in
the case of the Adjusted CD Rate, and (b) three months, with
respect to the Base CD Rate. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Stockholders Equity" means, with respect to the
Company at any date, the sum of (a) its capital stock taken
at par value, (b) its capital surplus and (c) its retained
earnings less treasury stock, all computed in accordance with
generally accepted accounting principles applied on a
consistent basis.
"Subordinated Indebtedness" means Indebtedness of
the Company having maturities and terms, and which is
subordinated to payment of the Notes in a manner, approved in
writing by the Agent and the Required Banks.
"Subsidiary" means any Person of which or in which
any other Person (the "parent") and the other Subsidiaries of
the parent own directly or indirectly 50% or more of:
(a) the combined voting power of all classes of
stock having general voting power under ordinary
circumstances to elect a majority of the board of directors
of such Person, if it is a corporation;
(b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar
entity; or
(c) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization.
"Tandy Bank" means Tandy National Bank, a national
banking association.
"Taxes" has the meaning specified in Section 2.18.
"TCB" means Texas Commerce Bank National
Association.
"TCC" means Tandy Credit Corporation, a Delaware
corporation.
"Three-Month Secondary CD Rate" has the meaning
specified in the definition of "Alternate Base Rate."
"Total Commitment" means, at any time, the
aggregate amount of the Commitments, as in effect at such
time.
"Transferee" has the meaning specified in Section
2.18.
"TRC" means Tandy Receivables Corporation, a
Delaware corporation.
"Type" means any type of Loan determined with
respect to the interest option applicable thereto, i.e., a
Eurodollar Loan, a Certificate of Deposit Loan or an
Alternate Base Rate Loan.
"Wholly owned Subsidiary" means any Person of which
the Company or its other Wholly owned Subsidiaries own
directly or indirectly 100% of:
(a) the issued and outstanding shares of stock
(except shares required as directors qualifying shares and
shares constituting less than 2% of the issued and
outstanding shares) and all Indebtedness for borrowed money;
(b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar
entity; or
(c) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization.
SECTION 1.02. Accounting Terms. Except as
otherwise herein specifically provided, each accounting term
used herein shall have the meaning given it under generally
accepted accounting principles as in effect from time to time
as set forth in the opinions, statements and pronouncements
of the Accounting Principles Board of the American Institute
of Certified Public Accountants and the Financial Accounting
Standards Board and applied on a consistent basis; provided,
however, that each reference in Article VI and in the
definition of any term used in Article VI to generally
accepted accounting principles shall mean generally accepted
accounting principles in effect on the date hereof.
SECTION 1.03. Interpretation. (a) In this
Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number
and vice versa;
(ii) reference to any gender includes each other
gender;
(iii) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this
Agreement as a whole and not to any particular Article,
Section or other subdivision;
(iv) reference to any Person includes such
Person's successors and assigns but, if applicable, only
if such successors and assigns are permitted by this
Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or
individually, provided that nothing in this clause (iv)
is intended to authorize any assignment not otherwise
permitted by this Agreement;
(v) reference to any agreement (including this
Agreement), document or instrument means such agreement,
document or instrument as amended, supplemented or
modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms
hereof, and reference to any Note includes any note
issued pursuant hereto in extension or renewal thereof
and in substitution or replacement therefor;
(vi) unless the context indicates otherwise,
reference to any Article, Section, Schedule or Exhibit
means such Article or Section hereof or such Schedule or
Exhibit hereto;
(vii) the words "including" (and with correlative
meaning "include") means including, without limiting the
generality of any description preceding such term;
(viii) with respect to the determination of any
period of time, the word "from" means "from and
including" and the word "to" means "to but excluding";
and
(ix) reference to any law means such as amended,
modified, codified or reenacted, in whole or in part,
and in effect from time to time.
(b) The Article and Section headings herein and
the Table of Contents are for convenience only and shall not
affect the construction hereof.
(c) No provision of this Agreement shall be
interpreted or construed against any Person solely because
that Person or its legal representative drafted such
provision.
<PAGE>
ARTICLE II
THE LOANS
SECTION 2.01. Commitments. (a) Subject to the
terms and conditions and relying upon the representations and
warranties herein set forth, each Bank, severally and not
jointly, agrees to make revolving credit loans (each a
"Loan") to the Company at any time and from time to time on
and after the date hereof and until the earlier of the
Business Day next preceding the Maturity Date and the
termination of the Commitment of such Bank in accordance with
the terms hereof. Notwithstanding the foregoing, (i) the
aggregate principal amount of all Loans of a Bank at any time
outstanding shall not exceed such Bank's Commitment and (ii)
the aggregate principal amount of all Loans made by all Banks
at any time outstanding shall not exceed the Total
Commitment.
(b) Within the foregoing limits and subject to the
terms, conditions and limitations set forth herein, the
Company may borrow, repay, prepay and reborrow Loans
hereunder on and after the date hereof and prior to the
Maturity Date.
SECTION 2.02. Loans. (a) Each Borrowing made by
the Banks to the Company on any Borrowing Date shall be in a
minimum aggregate principal amount of $5,000,000 and an
integral multiple of $1,000,000, and shall consist of Loans
of the same Type made ratably by the Banks in accordance with
their respective Commitments; provided, however, that the
failure of any Bank to make any Loan shall not relieve any
other Bank of its obligation to lend hereunder. The Loan by
each Bank to the Company on the initial Borrowing Date shall
be made against delivery to such Bank of a Note, payable to
the order of such Bank, executed by the Company, as referred
to in Section 2.05.
(b) Each Borrowing shall be an ABR Borrowing, a CD
Borrowing or a Eurodollar Borrowing as the Company may
request pursuant to Section 2.03. Each Bank may fulfill its
Commitment with respect to any Eurodollar Loan or Certificate
of Deposit Loan by causing, at its option, any domestic or
foreign branch or Affiliate of such Bank to make such Loan,
provided that the exercise of such option shall not affect
the obligation of the Company, to repay such Loan in
accordance with the terms of the applicable Note. Subject to
the provisions of Section 2.03 and Section 2.12, Borrowings
of more than one Type may be outstanding at the same time.
(c) Each Bank shall make its pro rata portion of
the amount of each Borrowing to the Company hereunder on the
proposed Borrowing Date thereof by paying the amount required
to the Agent in Houston, Texas in U. S. Dollars and in
immediately available funds not later than 1:00 p.m.,
Houston, Texas time, and, subject to satisfaction of the
conditions set forth in Article IV, the Agent shall promptly
and in any event on the same day, credit the amounts so
received to the general deposit account of the Company with
the Agent, or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not
have been met, return the amounts so received to the
respective Banks. Unless the Agent shall have received
notice from a Bank prior to the date of any Borrowing that
such Bank will not make available to the Agent such Bank's
portion of such Borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date
of such Borrowing in accordance with this Section 2.02(c) and
the Agent may, in reliance upon such assumption, make
available to the Company on such date a corresponding amount.
If, and to the extent that such Bank shall not have made such
portion available to the Agent, such Bank and the Company
severally agree to repay to the Agent forthwith on demand
such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the
Company until the date such amount is repaid to the Agent (i)
in the case of the Company, the interest rate applicable at
the time to the Loans comprising such Borrowing and (ii) in
the case of such Bank, the Federal Funds Effective Rate. If
such Bank shall repay to the Agent such corresponding amount,
such amount shall constitute such Bank's Loan as part of such
Borrowing for purposes of this Agreement.
SECTION 2.03. Notice of Borrowings. (a) In order
to effect a Borrowing, the Company shall give irrevocable
written notice (or irrevocable telephone notice thereof,
confirmed as soon as practicable by written notice) to the
Agent (a "Notice of Borrowing") (i) in the case of an ABR
Borrowing, not later than 11:00 a.m., Houston, Texas time, on
the Borrowing Date of a proposed Borrowing, (ii) in the case
of a CD Borrowing, not later than 10:00 a.m., Houston, Texas
time, two Business Days before the Borrowing Date of a
proposed Borrowing and (iii) in the case of a Eurodollar
Borrowing, not later than 10:00 a.m., Houston, Texas time,
three Business Days before the Borrowing Date of a proposed
Borrowing. Each Notice of Borrowing shall be irrevocable and
shall in each case refer to this Agreement and specify (i)
whether the Borrowing then being requested is to be an ABR
Borrowing, a CD Borrowing or a Eurodollar Borrowing, (ii) the
Borrowing Date of such Borrowing (which shall be a Business
Day) and the aggregate amount thereof (which, in the case of
an ABR Borrowing, shall not be less than $5,000,000 and shall
be in an integral multiple of $1,000,000, and which, in the
case of a CD Borrowing or a Eurodollar Borrowing, shall not
be less than $25,000,000 and shall be in an integral multiple
of $5,000,000) and (iii) if such Borrowing is to be a CD
Borrowing or a Eurodollar Borrowing, the Interest Period or
Interest Periods with respect thereto. If no election as to
the Type of Borrowing is specified in any such notice by the
Company, such Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any CD Borrowing or
Eurodollar Borrowing is specified in any such notice by the
Company, then in the case of a CD Borrowing , the Company
shall be deemed to have selected an Interest Period of 30
days' duration and in the case of a Eurodollar Borrowing, the
Company shall be deemed to have selected an Interest Period
of one month's duration. The Agent shall promptly advise the
Banks of any notice given by the Company pursuant to this
Section 2.03(a) and of each Bank's portion of the requested
Borrowing.
(b) Notwithstanding any provision to the contrary
in this Agreement more than one Borrowing may occur on the
same Borrowing Date. For purposes of the foregoing,
Borrowings comprised of Loans having different Interest
Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
SECTION 2.04. Conversion and Continuation of
Borrowings. The Company shall have the right at any time
upon prior irrevocable notice to the Agent (a) not later than
11:00 a.m., Houston, Texas time, on the date of conversion,
to convert any Eurodollar Borrowing or CD Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., Houston, Texas
time, two Business Days prior to conversion or continuation,
to convert any Eurodollar Borrowing or ABR Borrowing into a
CD Borrowing or to continue any CD Borrowing as a CD
Borrowing for an additional Interest Period, (c) not later
than 10:00 a.m., Houston, Texas time, three Business Days
prior to conversion or continuation, to convert any ABR
Borrowing or CD Borrowing into a Eurodollar Borrowing or to
continue any Eurodollar Borrowing as a Eurodollar Borrowing
for an additional Interest Period, (d) not later than 10:00
a.m., Houston, Texas time, three Business Days prior to
conversion, to convert the Interest Period with respect to
any Eurodollar Borrowing to another permissible Interest
Period and (e) not later than 10:00 a.m., Houston, Texas
time, two Business Days prior to conversion, to convert the
Interest Period with respect to any CD Borrowing to another
permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made
pro rata among the Banks in accordance with the
respective principal amounts of the Loans comprising the
converted or continued Borrowing;
(ii) if less than all the outstanding principal
amount of any Borrowing shall be converted or continued,
the aggregate principal amount of such Borrowing
converted or continued shall be an integral multiple of
$1,000,000 and not less than $5,000,000;
(iii) if any Eurodollar Borrowing or CD Borrowing
is converted at a time other than the end of the
Interest Period applicable thereto, the Company shall
pay, upon demand, any amounts due to the Banks pursuant
to Section 2.14;
(iv) any portion of a Borrowing maturing or
required to be repaid in less than one month may not be
converted into or continued as a Eurodollar Borrowing;
(v) any portion of a Borrowing maturing or
required to be repaid in less than 30 days may not be
converted into or continued as a CD Borrowing;
(vi) any portion of a Eurodollar Borrowing or CD
Borrowing which cannot be converted into or continued as
a Eurodollar Borrowing or a CD Borrowing by reason of
clauses (iv) and (v) above shall be automatically
converted at the end of the Interest Period in effect
for such Borrowing into an ABR Borrowing;
(vii) no Interest Period may be selected for any
Eurodollar Borrowing or CD Borrowing that would end
later than the Maturity Date; and
(viii) accrued interest on a Loan (or portion
thereof) being converted or continued shall be paid by
the Company at the time of conversion or continuation.
Each notice pursuant to this Section 2.04 shall be
irrevocable and shall refer to this Agreement and specify (w)
the identity and amount of the Borrowing that the Company
requests to be converted or ontinued, (x) whether such
Borrowing is to be converted to or continued as a Eurodollar
Borrowing, a CD Borrowing or an ABR Borrowing, (y) if such
notice requests a conversion, the date of such conversion
(which shall be a Business Day) and (z) if such Borrowing is
to be converted to or continued as a Eurodollar Borrowing or
CD Borrowing, the Interest Period with respect thereto. If
no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar
Borrowing or CD Borrowing, the Company shall be deemed to
have selected an Interest Period of one month's duration, in
the case of a Eurodollar Borrowing, or 30 days' duration, in
the case of a CD Borrowing. The Agent shall promptly advise
the other Banks of any notice given pursuant to this Section
2.04 and of each Bank's portion of any converted or continued
Borrowing. If the Company shall not have given notice in
accordance with this Section 2.04 to continue any Borrowing
into a subsequent Interest Period (and shall not otherwise
have given notice in accordance with this Section 2.04 to
convert such Borrowing), such Borrowing shall, at the end of
the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued
into a new Interest Period as an ABR Borrowing.
SECTION 2.05. Notes; Repayment of Loans. (a) The
Loans made by each Bank to the Company shall be evidenced by
a note (a "Note" and collectively, the "Notes") duly executed
on behalf of the Company, dated the Execution Date, in
substantially the form attached hereto as Exhibit 2.05,
payable to such Bank in a principal amount equal to its
Commitment on such date. The Company agrees to pay the
outstanding principal balance of each Loan, as evidenced by
the Note, on the Maturity Date. Each Note shall bear
interest from its date on the outstanding principal balance
thereof as provided in Section 2.06.
(b) Each Bank or the Agent on its behalf, shall,
and is hereby authorized by the Company to, endorse on the
schedule attached to the Note delivered to such Bank (or a
continuation of such schedule attached to such Note and made
a part thereof), or otherwise record in such Bank's internal
records, an appropriate notation evidencing the date and
amount of each Loan, as from such Bank to the Company, as
well as the date and amount of each payment and prepayment
with respect thereto; provided, however, that the failure of
any Bank or the Agent to make such a notation or any error in
such a notation shall not affect the obligation of the
Company hereunder or under the Note of such Bank to repay the
principal amount of the Loan made by such Bank hereunder and
under such Note to such Bank together with all interest
accruing thereon.
SECTION 2.06. Interest on Loans. (a) Subject to
the provisions of Section 2.07, each Alternate Base Rate Loan
shall bear interest at a rate per annum, equal to the lesser
of (i) the Alternate Base Rate and (ii) the Highest Lawful
Rate (if the Alternate Base Rate is based on the Prime Rate,
computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be; if the
Alternate Base Rate is based on the Base CD Rate or the
Federal Funds Effective Rate, computed on the basis of the
actual number of days elapsed over a year of 360 days).
(b) Subject to the provisions of Section 2.07,
each Certificate of Deposit Loan shall bear interest at a
rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) equal to the lesser of
(i) the Adjusted CD Rate for the Interest Period in effect
for such Loan plus the Applicable Margin and (ii) the Highest
Lawful Rate.
(c) Subject to the provisions of Section 2.07,
each Eurodollar Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the lesser of (i) the LIBO
Rate for the Interest Period in effect for such Loan plus the
Applicable Margin and (ii) the Highest Lawful Rate.
(d) Interest on each Loan shall be payable in
arrears on each Interest Payment Date applicable to such Loan
except as otherwise provided in this Agreement. The
applicable LIBO Rate, Adjusted CD Rate or Alternate Base Rate
shall be determined by the Agent, and such determination
shall be conclusive absent demonstrable error. The Agent
shall promptly advise the Company and each Bank of each such
determination.
SECTION 2.07. Interest on Overdue Amounts. If the
Company shall default in the payment of the principal of or
interest on any Loan or any other amount due hereunder, by
acceleration or otherwise, the Company shall on demand from
time to time pay interest, to the extent permitted by law, on
such defaulted amount up to (but not including) the date of
actual payment (after as well as before judgment) at a rate
per annum (computed on the basis of the actual number of days
elapsed over a period of 360 days) equal to the lesser of (a)
the Highest Lawful Rate and (b) the Alternate Base Rate plus
2% per annum.
SECTION 2.08. Fees. (a) The Company shall pay
each Bank, through the Agent, on the last day of each March,
June, September and December, and on the Maturity Date, in
immediately available funds, a commitment fee (such Bank's
"Commitment Fee") equal to the Applicable Fee Percentage
times the amount of the Commitment of such Bank, whether used
or unused, during the quarter (or shorter period commencing
with the Execution Date or ending with the Maturity Date)
ending on such date. All Commitment Fees under this Section
2.08(a) shall be computed on the basis of the actual number
of days elapsed in a year of 365 or 366 days, as the case may
be. The Commitment Fee due to each Bank shall cease to
accrue on the earlier of the Maturity Date or the termination
of the Commitment of such Bank pursuant to Section 2.09.
(b) The Company shall pay the Agent, an agency fee
(the "Agency Fee") in such amount as may be agreed between
the Company and the Agent pursuant to that certain letter
agreement of even date herewith between the Company and the
Agent (the "Agent's Letter").
(c) The Company shall pay to TCB, for its own
account, on or before the Execution Date all fees due to it
pursuant to that certain letter agreement dated April 15,
1994 between the Company and TCB.
SECTION 2.09. Termination and Reduction of
Commitments. (a) Upon at least ten Business Days prior
written notice to the Agent, the Company may at any time in
whole permanently terminate, or from time to time permanently
reduce, the Total Commitment, ratably among the Banks in
accordance with their respective Commitments; provided,
however, that any partial reduction of the Total Commitment
shall be in a minimum aggregate principal amount of
$20,000,000.
(b) At the time the Commitments of any Bank are
terminated or reduced pursuant to Section 2.09(a) the Company
shall pay to the Agent for the account of each such Bank, the
Commitment Fees on the amount of the Commitments so
terminated or reduced owed through the date of such
termination or reduction.
SECTION 2.10. Alternate Rate of Interest. (a) In
the event, and on each occasion, that on the day two Business
Days prior to the commencement of any Interest Period for a
Eurodollar Borrowing, the Agent shall have determined (which
determination shall be conclusive and binding upon the
Company) that dollar deposits in the amount of the requested
principal amount of such Borrowing are not generally
available in the London interbank market, or that the rate at
which dollar deposits are being offered will not adequately
and fairly reflect the cost to any Bank of making or
maintaining the principal amount of its Eurodollar Loan
comprising such Borrowing during such Interest Period, or
reasonable means do not exist for ascertaining the LIBO Rate,
the Agent shall as soon as practicable thereafter give
written or telex notice of such determination to the Company
and the Banks, and any request by the Company for the making
of a Eurodollar Borrowing shall, until the circumstances
giving rise to such notice no longer exist, be deemed to be a
request for a Borrowing to be comprised of Alternate Base
Rate Loans or, if the Company shall so specify in its notice
to the Agent, a request for a CD Borrowing so long as the
circumstances giving rise to a notice under Section 2.10(b)
shall not exist. Each determination of the Agent hereunder
shall be conclusive absent demonstrable error. In the event
of such determination, the Company requesting such Borrowing
shall have the right to withdraw its Notice of Borrowing
requesting Eurodollar Loans.
(b) In the event, and on each occasion, that on or
before the day on which the Adjusted CD Rate for a CD
Borrowing is to be determined, the Agent shall have
determined (which determination shall be conclusive and
binding upon the Company absent demonstrable error) that the
Adjusted CD Rate for such Borrowing cannot be ascertained for
any reason, including the inability or failure of the Agent
to obtain sufficient bids in accordance with the terms of the
definition of Fixed Certificate of Deposit Rate, or the Agent
shall determine that the Adjusted CD Rate for such CD
Borrowing will not adequately and fairly reflect the cost to
any Bank of making or maintaining the principal amount of its
Certificate of Deposit Loan during such Interest Period, the
Agent shall, as soon as practicable thereafter, give written
or telex notice of such determination to the Company and the
Banks, and any request by the Company for the making of a CD
Borrowing shall, until the circumstances giving rise to such
notice no longer exist, be deemed to be a request for an ABR
Borrowing, or, if the Company shall so specify in its notice
to the Agent, a request for a Borrowing to be comprised of
Eurodollar Loans so long as the circumstances giving rise to
a notice under Section 2.10(a) shall not exist. Each
determination by the Agent hereunder shall be conclusive
absent demonstrable error. In the event of such
determination, the Company requesting such Borrowing shall
have the right to withdraw its Notice of Borrowing requesting
a CD Borrowing.
SECTION 2.11. Prepayment of Loans. (a) Each
Borrowing may be prepaid at any time and from time to time,
in whole or in part, subject to the requirements of Section
2.14 but otherwise without premium or penalty, upon at least
five Business Days' prior written or telex notice to the
Agent; provided, however, that each such partial prepayment
shall be in an integral multiple of $1,000,000 and a minimum
aggregate principal amount of $5,000,000.
(b) On the date of any termination or reduction of
the Total Commitment pursuant to Section 2.09(a), the Company
shall prepay so much of its Loans (up to the amount by which
the Commitment is so terminated or reduced) as shall be
necessary in order that the aggregate principal amount of the
Loans outstanding will not exceed the Commitment following
such termination or reduction. All prepayments under this
paragraph shall be subject to Section 2.14.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing
(or portion thereof) to be prepaid, whether the Borrowing
shall be irrevocable and shall commit the Company making such
prepayment to prepay such Loan by the amount stated therein
on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment.
SECTION 2.12. Reserve Requirements; Change in
Circumstances. (a) It is understood that the cost to each
Bank of making or maintaining any of the Eurodollar Loans may
fluctuate as a result of the applicability of reserve
requirements imposed by the Board at the ratios provided for
in Regulation D on the date hereof. The Company agrees to
pay to each of the Banks from time to time such amounts as
shall be necessary to compensate such Bank for the portion of
the cost of making or maintaining Eurodollar Loans resulting
from any such reserve requirements provided for in Regulation
D as in effect on the date hereof, it being understood that
the rates of interest applicable to Eurodollar Loans have
been determined on the assumption that no such reserve
requirements exist or will exist and that such rates do not
reflect costs imposed on the Banks in connection with such
reserve requirements.
(b) Notwithstanding any other provision herein, if
after the date of this Agreement any change in applicable law
or regulation or in the interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation
of payments to any Bank of the principal of or interest on
any Certificate of Deposit Loan or Eurodollar Loan made by
such Bank or any other fees or amounts payable hereunder
(other than taxes imposed on the overall net income of such
Bank by the jurisdiction in which such Bank has its principal
office or is located or by any political subdivision or
taxing authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, such Bank (except any such
reserve requirement which is reflected in the Adjusted CD
Rate) or shall impose on such Bank or the London interbank
market any other condition affecting this Agreement or the
Certificate of Deposit Loans or Eurodollar Loans made by such
Bank and the result of any of the foregoing shall be to
increase the cost to such Bank of making or maintaining any
Certificate of Deposit Loan or Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in
respect thereof, by an amount deemed by such Bank in its sole
discretion to be material, then such additional amount or
amounts as will compensate such Bank for such additional
costs or reduction will be paid to such Bank by the Company
with respect to the Eurodollar Loans or Certificate of
Deposit Loans, as the case may be.
(c) If any Bank shall have determined that the
applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital
Measurement and Capital Standards," or the adoption after the
date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any
of the foregoing by any governmental authority, central bank
or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any
lending office of such Bank) or any Bank's holding company
with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Bank's
capital or on the capital of such Bank's holding company, if
any, as a consequence of this Agreement or the Loans made by
such Bank pursuant hereto to a level below that which such
Bank or such Bank's holding company could have achieved but
for such adoption, change or compliance (taking into
consideration such Bank's policies and the policies of such
Bank's holding company with respect to capital adequacy) by
an amount deemed by such Bank to be material, then from time
to time the Company shall pay to such Bank such additional
amount or amounts as will compensate such Bank or such Bank's
holding company for any such reduction suffered.
(d) A certificate of each Bank setting forth such
amount or amounts as shall be necessary to compensate such
Bank (or participating banks or other entities pursuant to
Article IX) as specified in paragraph (a), (b) or (c) above
shall be delivered to the Company obligated with respect
thereto and shall be rebuttably presumptive evidence of the
amount or amounts which such Bank is entitled to receive.
The Company shall pay each Bank the amount shown as due from
it on any such certificate within 10 days after its receipt
of the same.
(e) Failure on the part of any Bank to demand
compensation for any increased costs or reduction in amounts
received or receivable with respect to any Interest Period
shall not constitute a waiver of such Bank's rights to demand
compensation for any increased costs or reduction in amounts
received or receivable in such Interest Period or in any
other Interest Period. The protection of this Section 2.12
shall be available to each Bank regardless of any possible
contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any
demand by such Bank for compensation.
(f) Nothing in this Section 2.12 shall entitle any
Bank to receive interest at a rate per annum in excess of the
Highest Lawful Rate.
SECTION 2.13. Change in Legality. (a)
Notwithstanding anything to the contrary herein contained, if
any change in any law or regulation or in the interpretation
thereof by any governmental authority charged with the
administration or interpretation thereof shall make it
unlawful for any Bank to make or maintain any Eurodollar Loan
or to give effect to its obligations as contemplated hereby,
then, by written notice to the Company and to the Agent, such
Bank may:
(i) declare that Eurodollar Loans will not
thereafter be made by such Bank hereunder, whereupon any
request by the Company for a Eurodollar Borrowing shall,
as to such Bank only, be deemed a request for an
Alternate Base Rate Loan unless such declaration shall
be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans
made by it be converted to Alternate Base Rate Loans, in
which event all such Eurodollar Loans shall be
automatically converted to Alternate Base Rate Loans as
of the effective date of such notice as provided in
paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or
(ii) above, all payments and prepayments of principal which
would otherwise have been applied to repay the Eurodollar
Loans that would have been made by such Bank or the converted
Eurodollar Loans of such Bank shall instead be applied to
repay the Alternate Base Rate Loans made by such Bank in lieu
of, or resulting from the conversion of, such Eurodollar
Loans; provided, however, the Alternate Base Rate Loans
resulting from the conversion of such Eurodollar Loans shall
be prepayable only at the times the converted Eurodollar
Loans would have been prepayable, notwithstanding the
provisions of Section 2.11(a).
(b) For purposes of Section 2.13(a), a notice to
the Company by any Bank shall be effective as to each
Eurodollar Loan, if lawful, on the last day of the then
current Interest Period or, if there are then two or more
current Interest Periods, on the last day of each such
Interest Period, respectively; otherwise, such notice shall
be effective on the date of receipt by the Company.
SECTION 2.14. Indemnity. (a) The Company shall
indemnify each Bank against any loss or expense which such
Bank may sustain or incur as a consequence of (i) any failure
by the Company to fulfill on the date of any Borrowing
hereunder the applicable conditions set forth in Article IV,
(ii) any failure by the Company to borrow, convert or
continue hereunder after delivery of a Notice of Borrowing or
a notice of conversion or continuation has been given
pursuant to Section 2.04, (iii) any payment, prepayment or
conversion of a Certificate of Deposit Loan or Eurodollar
Loan required by any other provision of this Agreement or
otherwise made on a date other than the last day of the
applicable Interest Period, (iv) any default in payment or
prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise), or (v) the occurrence of any Event
of Default, including, but not limited to, any loss or
reasonable expense sustained or incurred or to be sustained
or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part
thereof as a Certificate of Deposit Loan or Eurodollar Loan.
Such loss or reasonable expense shall include an amount equal
to the excess, if any, as reasonably determined by each Bank
of (A) its cost of obtaining the funds for the Loan being
paid, prepaid or converted or not borrowed (based on the
Adjusted CD Rate or the LIBO Rate applicable thereto) for the
period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure to borrow) over (B) the
amount of interest (as reasonably determined by such Bank)
that could be realized by such Bank in reemploying during
such period the funds so paid, prepaid or converted or not
borrowed. A certificate of each Bank setting forth any
amount or amounts which such Bank is entitled to receive
pursuant to this Section 2.14 shall be delivered to the
Company and shall be rebuttably presumptive evidence of the
amount or amounts which such Bank is entitled to receive.
Nothing in this Section 2.14 shall entitle any Bank to
receive interest at a rate per annum in excess of the Highest
Lawful Rate.
(b) The provisions of this Section 2.14 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement
or any Note, or any investigation made by or on behalf of any
Bank. All amounts due under this Section 2.14 shall be
payable on written demand therefor.
SECTION 2.15. Pro Rata Treatment. Except as
permitted under Section 2.12, Section 2.13 and Section 2.14
each Borrowing, each payment or prepayment of principal of
the Notes, each payment of interest on such Notes, each other
reduction of the principal or interest outstanding under such
Notes, however achieved, each payment of the Commitment Fees
and each reduction of the Commitments shall be made pro rata
among the Banks in the proportions that their respective
Commitments bear to the Total Commitment.
SECTION 2.16. Payments. (a) The Company shall
make all payments (including principal of or interest on any
Borrowing or any fees or other amounts) hereunder and under
any other Loan Document not later than 1:00 p.m., Houston,
Texas time, on the date when due in dollars to the Agent at
its offices at 1111Fannin, Houston, Texas, in immediately
available funds.
(b) Whenever any payment (including principal of
or interest on any Borrowing or any fees or other amounts)
hereunder or under any other Loan Document shall become due,
or otherwise would occur, on a day that is not a Business
Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be
included in the computation of interest or fees, if
applicable.
SECTION 2.17. Sharing of Setoffs. Each Bank
agrees that if it shall, in any manner, including through the
exercise of a right of banker's lien, setoff or counterclaim
against the Company , or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable
bankruptcy, insolvency or other similar law or otherwise,
obtain payment (voluntary or involuntary) in respect of the
Note held by it as a result of which the unpaid principal
portion of the Note held by it shall be proportionately less
than the unpaid principal portion of the Note held by any
other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Note
held by such other Bank, so that the aggregate unpaid
principal amount of the Note and participations in Notes held
by each Bank shall be in the same proportion to the aggregate
unpaid principal amount of all Notes then outstanding as the
principal amount of the Note held by it prior to such
exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes outstanding prior to such
exercise of banker's lien, setoff or counterclaim; provided,
however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.17 and
the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The
Company expressly consents to the foregoing arrangements and
agrees that any Person holding a participation in a Note
deemed to have been so purchased may exercise any and all
rights of banker's lien, setoff or counterclaim with respect
to any and all moneys owing by the Company to such Bank as
fully as if such Bank had made a Loan directly to the Company
in the amount of such participation.
SECTION 2.18. Payments Free of Taxes. (a) Any and
all payments by the Company hereunder shall be made free and
clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the Agent's or any Bank's (or any
transferee's or assignee's, including a participation
holder's (any such entity a "Transferee")) net income and
franchise taxes imposed on the Agent or any Bank (or
Transferee) by the United States or any jurisdiction under
the laws of which it is organized or any political
subdivision thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If the Company
shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to the Banks (or any
Transferee) or the Agent, (i) the sum payable shall be
increased by the amount necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 2.18) such Bank
(or Transferee) or the Agent (as the case may be) shall
receive an amount equal to the sum it would have received had
no such deductions been made, (ii) the Company shall make
such deductions and (iii) the Company shall pay the full
amount deducted to the relevant taxing authority or other
governmental authority in accordance with applicable law.
(b) In addition, the Company agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter
referred to as "Other Taxes").
(c) The Company will indemnify each Bank (or
Transferee) and the Agent for the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.18)
paid by such Bank (or Transferee) or the Agent, as the case
may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other
governmental authority. Such indemnification shall be made
within 30 days after the date any Bank (or Transferee) or the
Agent, as the case may be, makes written demand therefor. If
a Bank (or Transferee) or the Agent shall become aware that
it is entitled to receive a refund in respect of Taxes or
Other Taxes, it shall promptly notify the Company of the
availability of such refund and shall, within 30 days after
receipt of a request by the Company, apply for such refund at
the Company's expense. If any Bank (or Transferee) or the
Agent receives a refund in respect of any Taxes or Other
Taxes for which such Bank (or Transferee) or the Agent has
received payment from the Company hereunder it shall promptly
notify the Company of such refund and shall, within 30 days
after receipt of a request by the Company (or promptly upon
receipt, if the Company has requested application for such
refund pursuant hereto), repay such refund to the Company,
net of all out-of-pocket expenses of such Bank and without
interest; provided that the Company, upon the request of such
Bank (or Transferee) or the Agent, agrees to return such
refund (plus penalties, interest or other charges) to such
Bank (or Transferee) or the Agent in the event such Bank (or
Transferee) or the Agent is required to repay such refund.
(d) Within 30 days after the date of any payment
of Taxes or Other Taxes withheld by the Company in respect of
any payment to any Bank (or Transferee) or the Agent, the
Company will furnish to the Agent, at its address referred to
in Section 9.01, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
contained in this Section 2.18 shall survive the payment in
full of the principal of and interest on all Loans made
hereunder.
(f) Each Bank (or Transferee) which is organized
outside the United States shall promptly notify the Company
of any changes in its funding office and upon written request
of the Company shall, prior to the immediately following due
date of any payment by the Company hereunder, deliver to the
Company such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant
thereto, including Internal Revenue Service Form 1001 or Form
4224 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-1(a) or
Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Bank (or
Transferee) establishing that such payment is (i) not subject
to withholding under the Code because such payment is
effectively connected with the conduct by such Bank (or
Transferee) of a trade or business in the United States or
(ii) totally exempt from United States tax under a provision
of an applicable tax treaty. Unless the Company and the
Agent have received forms or other documents satisfactory to
them indicating that payments hereunder or under the Notes
are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax
treaty, the Company or the Agent shall withhold taxes from
such payments at the applicable statutory rate in the case of
payments to or for any Bank (or Transferee) or assignee
organized under the laws of a jurisdiction outside the United
States.
(g) The Company shall not be required to pay any
additional amounts to any Bank (or Transferee) in respect of
United States withholding tax pursuant to paragraph (a) above
if the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank (or Transferee) to
comply with the provisions of paragraph (f) above unless such
failure results from (i) a change in applicable law,
regulation or official interpretation thereof or (ii) an
amendment, modification or revocation of any applicable tax
treaty or a change in official position regarding the
application or interpretation thereof, in each case after the
Execution Date (and, in the case of a Transferee, after the
date of assignment or transfer).
(h) Any Bank (or Transferee) claiming any
additional amounts payable pursuant to this Section 2.18
shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document
requested by the Company or to change the jurisdiction of its
applicable lending office if the making of such a filing or
change would avoid the need for or reduce the amount of any
such additional amounts which may thereafter accrue and would
not, in the sole determination of such Bank, be otherwise
disadvantageous to such Bank (or Transferee).
(i) If any Bank (or Transferee) requests
compensation pursuant to this Section 2.18, the Company may
give notice to such Bank (with a copy to the Agent) that it
wishes to seek one or more Eligible Assignees (which may be
one or more of the Banks) to assume the Commitments of such
Bank and to purchase its outstanding Loans and Notes. Each
Bank (or Transferee) requesting compensation pursuant to this
Section 2.18 hereto agrees to sell all of its Commitments,
its Loans and its Note pursuant to Section 9.03 to any such
Eligible Assignee for an amount equal to the sum of the
outstanding unpaid principal of and accrued interest on such
Loans and Note plus all Commitment Fees and other fees and
amounts due such Bank (or Transferee) hereunder calculated,
in each case, to the date such Commitment, Loans and Note are
purchased, whereupon such Bank (or Transferee) shall
thereafter have no further Commitments or other obligation to
the Company hereunder or under any Note.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent
and the Banks as follows:
SECTION 3.01. Organization; Corporate Powers. The
Company and each Significant Subsidiary is duly organized,
validly existing and in good standing under the laws of the
state of its respective incorporation or organization, has
the requisite power and authority to own its property and
assets and to carry on its business as now conducted and is
qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to
qualify would not have a material adverse effect on the
condition, financial or otherwise, of the Company. The
Company has the corporate power to execute, deliver and
perform its obligations under this Agreement, to borrow
hereunder and to execute and deliver the Notes.
SECTION 3.02. Authorization. The execution,
delivery and performance of this Agreement, the Borrowings
hereunder, and the execution and delivery of the Notes by the
Company (a) have been duly authorized by all requisite
corporate and, if required, stockholder action on the part of
the Company and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate of
incorporation or the bylaws of the Company, (B) any order of
any court, or any rule, regulation or order of any other
agency of government binding upon the Company or (C) any
provisions of any indenture, agreement or other instrument to
which the Company is a party, or by which the Company or any
of its properties or assets are or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in
(b)(i)(C) above or (iii) result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever
upon any property or assets of the Company.
SECTION 3.03. Governmental Approval. No
registration with or consent or approval of, or other action
by, any federal, state or other governmental agency,
authority or regulatory body is or will be required in
connection with the execution, delivery and performance of
this Agreement, the execution and delivery of the Notes or
the Borrowings hereunder.
SECTION 3.04. Enforceability. This Agreement has
been duly executed and delivered by the Company and
constitutes legal, valid and binding obligations of the
Company and the Notes, when duly executed and delivered by
the Company, will constitute legal, valid and binding
obligations of the Company, in each case enforceable in
accordance with their respective terms (subject, as to the
enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws
affecting creditors rights generally).
SECTION 3.05. Financial Statements. (a) The
audited consolidated financial statements of the Company, as
at December 31, 1993, a copy of which has been furnished to
the Banks, have been prepared in conformity with generally
accepted accounting principles applied on a basis consistent
with that of the preceding fiscal year, and present fairly
the financial conditions of the Company and its Subsidiaries,
as at such date and the consolidated results of the
operations of the Company and its Subsidiaries for the period
then ended.
(b) The Form 10 Q of the Company as at March 31,
1994, copies of which have been furnished to the Banks, have
been prepared in accordance with all applicable rules,
regulations and guidelines of the Securities and Exchange
Commission and present fairly the financial condition of the
Company and its Subsidiaries, as at such dates and the
results of their operations for the periods then ended,
subject to year end audit adjustments.
SECTION 3.06. No Material Adverse Change. There
has been no material adverse change in the businesses,
assets, operations, prospects or condition, financial or
otherwise, of the Company since December 31, 1993.
SECTION 3.07. Title to Properties. The Company
and each of its Significant Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its
properties and assets, except for such properties as are no
longer used or useful in the conduct of its business or as
have been disposed of in the ordinary course of business and
except for minor defects in title that do not interfere with
the ability of the Company to conduct its business as now
conducted.
SECTION 3.08. Litigation; Compliance with Laws;
Etc. (a) There are not any actions, suits or proceedings at
law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary of the
Company or the business, assets or rights of the Company or
any Subsidiary of the Company (i) which involve this
Agreement or any of the transactions contemplated hereby or
(ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined,
could, individually or in the aggregate, materially impair
the ability of the Company to conduct business substantially
as now conducted, or materially and adversely affect the
business, assets, operations, prospects or condition
(financial or otherwise) of the Company, or impair the
validity or enforceability of or the ability of the Company
to perform its obligations under this Agreement, the Notes or
any of the other Loan Documents.
(b) The Company is not in violation of any law,
the breach or consequence of which would materially and
adversely affect the ability of the Company to carry on its
business, or in default under any material order, writ,
injunction, award or decree of any court, arbitrator,
administrative agency or other governmental authority binding
upon it or its assets or any material indenture, mortgage,
contract, agreement or other undertaking or instrument to
which it is a party or by which any of its properties may be
bound, and nothing has occurred which would materially and
adversely affect the ability of the Company to carry on its
business or perform its obligations under any such order,
writ, injunction, award or decree or any such material
indenture, mortgage, contract, agreement or other undertaking
or instrument.
SECTION 3.09. Agreements; No Default. (a) The
Company is not a party to any agreement or instrument or
subject to any corporate restriction that has a present
material and adverse effect on the business, properties,
assets, operations, prospects or condition (financial or
otherwise), of the Company.
(b) The Company is not in default in any manner
that would materially and adversely affect the business,
properties, assets, operations, prospects or condition
(financial or otherwise) of the Company or the performance,
observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement
or instrument to which it is a party.
(c) Neither the Company nor any of its
Subsidiaries is in default under any agreement or instrument
to which the Company or any Subsidiary is a party or by which
any of their respective properties or assets is bound or
affected, which default might materially and adversely affect
the financial condition or operations of the Company and its
Subsidiaries taken as a whole. No Event of Default has
occurred and is continuing.
SECTION 3.10. Federal Reserve Regulations. (a)
The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for
the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be
used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or
carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii)
for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the Regulations of the
Board, including Regulations G, T, U or X; provided, however,
the Company may acquire Margin Stock if, upon the acquisition
of such Margin Stock, 25% or less of the Company's total
assets subject to the restrictions set forth in Section 6.01
would then be composed of Margin Stock, and furnish to the
Agent upon its request, a statement in conformity with the
requirements of Federal Reserve Form U 1 referred to in
Regulation U.
SECTION 3.11. Taxes. The Company and each of its
Subsidiaries has filed all tax returns which are required to
have been filed and has paid, or made adequate provisions for
the payment of, all of its taxes which are due and payable,
except such taxes, if any, as are being contested in good
faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required
by generally accepted accounting principles have been
maintained. The federal income tax liability of the Company
has been audited by the Internal Revenue Service and has been
finally determined and satisfied (or the time for audit has
expired) for all tax years up to and including the tax year
ended June 30, 1984. The Company deems the amounts and
maximum final judgments from such action to be immaterial to
the Company. The Company is not aware of any proposed
assessment against it or any of its Subsidiaries for
additional taxes (or any basis for any such assessment) which
might be material to the Company and its Subsidiaries taken
as a whole.
SECTION 3.12. Pension and Welfare Plans. Each
Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and: (a) no
Reportable Event has occurred and is continuing with respect
to any Plan,
(b) since December 31, 1993, neither the Company
nor any ERISA Affiliate has withdrawn from any Plan or
instituted steps to do so, except as listed on Exhibit 3.12
and (c) since December 31, 1993, no steps have been
instituted to terminate any Plan, except as listed on Exhibit
3.12. No condition exists or event or transaction has
occurred in connection with any Plan which could result in
the incurrence by the Company or any ERISA Affiliate of any
material liability, fine or penalty. Neither the Company nor
any ERISA Affiliate is a member of, or contributes to, any
multiple employer Plan as described in section 4064 of ERISA.
Neither the Company nor any of its Subsidiaries has any
contingent liability with respect to any post-retirement
welfare benefit plans, as such term is defined in ERISA.
SECTION 3.13. No Material Misstatements. Neither
this Agreement, the other Loan Documents, the Confidential
Information Memorandum nor any other document delivered by or
on behalf of the Company or any of its Affiliates (including
the Company's Annual Report on Form 10 K for 1993 and the
Company's Quarterly Report on Form 10 Q for the fiscal
quarter ended at March 31, 1994) in connection with any Loan
Document or included therein contained or contains any
material misstatement of fact or omitted or omits to state
any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made,
not misleading.
SECTION 3.14. Investment Company Act; Public
Utility Holding Company Act. The Company is neither an
"investment company" nor a company "controlled" by an
investment company as defined in, nor subject to regulation
under, the Investment Company Act of 1940. The Company is
not a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of
1935.
SECTION 3.15. Compliance with Laws. To the best
knowledge of the Company, after due investigation, the
Company and its Subsidiaries are in material compliance with
all statutes and governmental rules and regulations
applicable to them.
SECTION 3.16. Maintenance of Insurance. The
Company maintains, and causes each of its Subsidiaries to
maintain, insurance to such extent and against such hazards
and liabilities as is commonly maintained by companies
similarly situated.
SECTION 3.17. Existing Liens. None of the assets
of the Company or any of its Subsidiaries is subject to any
Lien, except:
(a) Liens for current taxes not delinquent or
taxes being contested in good faith and by appropriate
proceedings and as to which such reserves or other
appropriate provisions as may be required by generally
accepted accounting principles are being maintained;
(b) carriers', warehousemen's, mechanics',
materialmen's and other like statutory Liens arising in the
ordinary course of business securing obligations which are
not overdue for a period of more than 90 days or which are
being contested in good faith and by appropriate proceedings
and as to which such reserves or other appropriate provisions
as may be required by generally accepted accounting
principles are being maintained;
(c) pledges or deposits in connection with workers
compensation, unemployment insurance and other social
security legislation;
(d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, and other
obligations of a like nature incurred in the ordinary course
of business, and Liens securing reimbursement obligations
created by open letters of credit for the purchase of
inventory;
(e) Liens granted by a Subsidiary of the Company
to secure such Subsidiary's Indebtedness to the Company or to
any other Subsidiary of the Company;
(f) Liens, if any, disclosed in the financial
statements referred to in Section 3.05; and
(g) Liens listed on Exhibit 3.17.
SECTION 3.18. Environmental Matters. The Company
and each of its Subsidiaries has complied in all material
respects with all applicable federal, state, local and other
statutes, ordinances, orders, judgments, rulings and
regulations relating to environmental pollution or to
environmental regulation or control. Neither the Company nor
any of its Subsidiaries have received notice of any failure
so to comply which alone or together with any other such
failure could result in a material adverse effect on the
business, assets, operations, prospects or condition
(financial or otherwise) of the Company or such Subsidiary.
None of the facilities of the Company or any of its
Subsidiaries manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic
pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance
Control Act, the Clean Air Act or the Clean Water Act, in
violation of any regulations promulgated pursuant thereto or
in any other applicable law where such violation could
result, individually or together with other violations, in a
material adverse effect on the business, assets, operations,
prospects or condition (financial or otherwise) of the
Company or such Subsidiary.
<PAGE>
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to the Initial
Borrowing. The obligation of each Bank to make its initial
Loan is subject to the condition precedent that the Agent
shall have received on or before the initial Borrowing Date
the following, each dated (unless otherwise indicated) the
Execution Date and, with respect to all such documents
referred to in Section 4.01(a), Section 4.01(c), Section
4.01(d) and Section 4.01(f), in sufficient copies for each
Bank:
(a) A counterpart of this Agreement (to which all
of the Exhibits and Schedules have been attached) executed by
the Company, the Agent and the Banks.
(b) Notes of the Company dated of even date
herewith, properly executed by the Company to the order of
the Banks, respectively.
(c) The Banks shall have received (i) a copy of
the certificate of incorporation, as amended, of the Company,
certified by the Secretary of State of Delaware and a
certificate as to the good standing of and charter documents
filed by the Company from such Secretary of State; (ii) a
copy of the certificate of authority to do business in the
State of Texas, certified by the Secretary of State of Texas
and a certificate as to the good standing of the Company from
the Comptroller of the State of Texas; (iii) a certificate of
the Secretary or an Assistant Secretary of the Company, dated
the initial Borrowing Date and certifying (A) that attached
thereto is a true and complete copy of the bylaws of the
Company as in effect on the date of such certificate and at
all times since a date prior to the date of the resolutions
described in (B) below, (B) that attached thereto is a true
and complete copy of resolutions duly adopted by the Board of
Directors of the Company authorizing the execution, delivery
and performance of this Agreement and the Notes to be
delivered by the Company and the Borrowings by the Company
hereunder and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation of the Company has not
been amended since the date of the last amendment thereto
shown on the good standing certificate furnished pursuant to
(i) above, and (D) as to the incumbency and specimen
signature of each officer of the Company executing this
Agreement, the Notes or any other document delivered in
connection herewith or therewith; (iii) a certificate of
another officer of the Company as to the incumbency and
specimen signature of the Secretary or such Assistant
Secretary of the Company; and (iv) such other documents as
any Bank or Andrews & Kurth L.L.P., special counsel for the
Agent, may reasonably request.
(d) A certificate of a Senior Vice President, an
Executive Vice President or a Vice President of the Company
dated the initial Borrowing Date certifying (i) the truth of
the representations and warranties made by the Company in
this Agreement, (ii) the absence of the occurrence and
continuance of any Default or Event of Default and (iii) that
on or prior to the initial Borrowing Date, the principal of
and interest on all loans, all accrued fees and all other
amounts due under the Existing Credit Agreement shall have
been paid in full and the commitments thereunder shall have
been terminated.
(e) The Agent shall have received the Agent's
Letter duly executed by the Company.
(f) The opinion of counsel to the Company, dated
the initial Borrowing Date, addressed to the Agent and the
Banks and in the form of Exhibit 4.01 hereto.
(g) An Administrative Questionnaire completed by
each Bank.
(h) The fees and disbursements required to be paid
by Section 9.04 on the initial Borrowing Date shall have been
paid or provision therefore shall have been made.
SECTION 4.02. Conditions Precedent to Each
Borrowing. The obligation of each Bank to make a Loan on the
occasion of any Borrowing (including the initial Borrowing)
shall be subject to the further conditions precedent that on
the Borrowing Date of such Borrowing the following statements
shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the Company of the
proceeds of such Borrowing shall constitute a representation
and warranty by the Company that on the date of such
Borrowing such statements are true):
(a) The representations and warranties contained
in Article III are correct on and as of the date of such
Borrowing, before and after giving effect to such Borrowing
and to the application of the proceeds therefrom, as though
made on and as of such date;
(b) No event has occurred and is continuing, or
would result from such Borrowing or from the application of
the proceeds therefrom, which constitutes either a Default or
an Event of Default; and
(c) Following the making of such Borrowing and all
other Borrowings to be made on the same day under this
Agreement, the aggregate principal amount of all Loans then
outstanding shall not exceed the Total Commitment.
SECTION 4.03. Conditions Precedent to Conversions
and Continuations. The obligation of the Banks to convert
any existing Borrowing into a Eurodollar Borrowing or a CD
Borrowing or to continue any existing Borrowing as a
Eurodollar Borrowing or a CD Borrowing is subject to the
condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have
occurred and be continuing or would result from the making of
such conversion or continuation. The acceptance of the
benefits of each such conversion and continuation shall
constitute a representation and warranty by the Company to
each of the Banks that no Default or Event of Default shall
have occurred and be continuing or would result from the
making of such conversion or continuation.
<PAGE>
ARTICLE V
AFFIRMATIVE COVENANTS
So long as this Agreement shall remain in effect or
the principal of or interest on any Note, any Commitment Fee
or any other expense or amount payable hereunder shall be
unpaid and until the Commitments of the Banks shall expire or
terminate, unless the Required Banks shall otherwise consent
in writing, the Company covenants and agrees with the Agent
and each Bank that:
SECTION 5.01. Existence. The Company will
maintain and preserve, and, subject to the provisions of
clauses (w), (x) and (y) of Section 6.02, will cause each
Significant Subsidiary to maintain and preserve, its
respective existence as a corporation or other form of
business organization, as the case may be, and all rights,
privileges, licenses, patents, patent rights, copyrights,
trademarks, trade names, franchises and other authority to
the extent material and necessary for the conduct of its
respective businesses in the ordinary course as conducted
from time to time, including, in the case of the Company, its
good standing and qualification to do business in the State
of Texas.
SECTION 5.02. Repair. The Company will maintain,
preserve and keep, and will cause each of its Significant
Subsidiaries to maintain, preserve and keep, all of its
properties in good repair, working order and condition, and
from time to time make, and the Company will make, and will
cause each of the Significant Subsidiaries to make, all
necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at
all times the efficiency thereof shall be fully preserved and
maintained; the Company will at all times do or cause to be
done all things necessary to preserve, renew and keep in full
force and effect, and will cause each Significant Subsidiary
to do or cause to be done all things necessary to preserve,
renew and keep in full force and effect, the rights,
licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of it
sbusinesses; maintain and operate such businesses in
substantially the manner in which they are presently
conducted and operated (subject to changes in the ordinary
course of business); comply in all material respects with all
laws and regulations applicable to the operation of such
businesses whether now in effect or hereafter enacted and
with all other applicable laws and regulations; and take all
action which may be required to obtain, preserve, renew and
extend all licenses, permits and other authorizations which
may be material to the operation of such businesses.
SECTION 5.03. Insurance. The Company will
maintain, on a consolidated basis, insurance to such extent
and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as the Agent or
the Required Banks may reasonably request from time to time.
SECTION 5.04. Obligations and Taxes. The Company
will pay and discharge and will cause each of its
Subsidiaries to pay and discharge, when due, all taxes,
assessments and governmental charges or levies imposed upon
the Company or such Subsidiary, as the case may be, as well
as all lawful claims for labor, materials and supplies or
otherwise unless and only to the extent that the Company or
such Subsidiary, as the case may be, is contesting such
taxes, assessments and governmental charges, levies or claims
in good faith and by appropriate proceedings and the Company
or such Subsidiary has set aside on its books such reserves
or other appropriate provisions therefor as may be required
by generally accepted accounting principles.
SECTION 5.05. Financial Statements; Reports. The
Company will furnish to the Agent and each Bank:
(a) Annual Audit Reports. Within 90 days after
the end of each fiscal year of the Company, a copy of the
annual audit report of the Company and its Subsidiaries
prepared on a consolidated basis in conformity with generally
accepted accounting principles consistently applied and
certified by Price Waterhouse or another independent
certified public accountant of recognized national standing;
(b) Quarterly Financial Statements. Within 45
days after the end of each quarter (except the last quarter)
of each fiscal year of the Company, a copy of the Form 10 Q
of the Company, for such quarter, prepared in accordance with
the rules, regulations and guidelines of the Securities and
Exchange Commission, subject to normal year end audit
adjustments;
(c) Officer's Certificate. Together with the
financial statements furnished by the Company under the
preceding clauses (a) and (b), a certificate of the Company's
Chief Financial Officer, Vice President and Treasurer or Vice
President and Controller dated the date of such annual audit
report or such quarterly financial statement, as the case may
be, to the effect that no Event of Default or Default, has
occurred or is continuing, or if there is any such event,
describing it and the steps, if any, being taken to cure it;
(d) SEC and Other Reports. Copies of each filing
and report made by the Company or any of its Subsidiaries
with or to any securities exchange or the Securities and
Exchange Commission and each communication from the Company
or any of its Subsidiaries to shareholders generally,
promptly upon the making thereof; and
(e) Requested Information. Promptly, from time to
time, such other reports or information as the Agent or any
Bank may reasonably request.
SECTION 5.06. Litigation and Other Notices. The
Company will notify the Agent and the Banks in writing of any
of the following immediately upon learning of the occurrence
thereof, describing the same and, if applicable, the steps
being taken by the Person(s) affected with respect thereto:
(a) Judgment. The entry of any judgment or decree
against the Company and its other Subsidiaries, taken as a
whole, if the amount of such judgment or decree exceeds
$25,000,000 (after deducting the amount with respect to which
the Company or such Subsidiary is insured and with respect to
which the insurer has assumed responsibility in writing);
(b) Suits and Proceedings. The filing or
commencement of any action, suit or proceeding, whether at
law or in equity or by or before any court or any federal,
state, municipal or other governmental agency or authority as
to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, could
materially impair the right of the Company or any Significant
Subsidiary to carry on business substantially as then
conducted or materially and adversely affect the business,
assets, operations, prospects or condition (financial or
otherwise) of the Company or any Significant Subsidiary;
(c) Default. The occurrence of any Event of
Default or Default;
(d) Material Adverse Change. The occurrence of a
material adverse change in the business, operations or
condition (financial or otherwise) of the Company and the
Significant Subsidiaries, taken as a whole;
(e) Pension and Welfare Plans. The occurrence of
a Reportable Event with respect to any Plan; the institution
of any steps by the Company, any of its Subsidiaries or any
ERISA Affiliate, the PBGC or any other Person to terminate
any Plan; the institution of any steps by the Company, or any
of its Subsidiaries or any ERISA Affiliate to withdraw from
any Plan; or the incurrence of any material increase in the
contingent liability of the Company or any of its
Subsidiaries with respect to any post-retirement welfare
benefits; and
(f) Other Events. The occurrence of such other
events as the Agent or the Required Banks may reasonably from
time to time specify.
SECTION 5.07. ERISA. The Company will comply, and
will cause each of its Subsidiaries to comply, in all
material respects with the applicable provisions of ERISA.
SECTION 5.08. Books, Records and Access. The
Company will maintain, and will cause each Significant
Subsidiary to maintain, complete and accurate books and
records in which full and correct entries in conformity with
generally accepted accounting principles shall be made of all
dealings and transactions in relation to the business and
activities of the Company and each Significant Subsidiary.
The Company will permit, and will cause each Significant
Subsidiary to permit, reasonable access by the Agent and each
Bank, upon reasonable request, to the books and records
relating to the Company and the Significant Subsidiary during
normal business hours, to permit or cause to be permitted,
the Agent and each Bank to make extracts from such books and
records and permit, or cause to be permitted, upon reasonable
request, any authorized representative designated by any Bank
to discuss the affairs, finances and condition of the Company
or any Significant Subsidiary with such Person s principal
financial officers and principal accounting officers and such
other officers as the Company shall deem appropriate.
SECTION 5.09. Use of Proceeds. The Company will
use the proceeds of the Loans only for general corporate
purposes including the repayment of obligations outstanding
under the Existing Agreement and the repayment of its
commercial paper maturing from time to time.
SECTION 5.10. Nature of Business. The Company
will engage in, and will cause each Significant Subsidiary to
engage in, substantially the same field of business as they
are engaged in on the date hereof.
SECTION 5.11. Compliance. The Company will
comply, and will cause each of its Subsidiaries to comply, in
all material respects with all statutes and governmental
rules and regulations applicable to it including all such
statutes and government rules and regulations relating to
environmental pollution or to environmental regulation and
control.
<PAGE>
ARTICLE VI
NEGATIVE COVENANTS
So long as this Agreement shall remain in effect or
the principal of or interest on any Note, any Commitment Fee
or any other expense or amount payable hereunder shall be
unpaid and until the Commitments of the Banks shall expire or
terminate, unless the Required Banks shall otherwise consent
in writing, the Company covenants and agrees with the Agent
and each Bank that:
SECTION 6.01. Liens. The Company will not, and
will not permit any of its Subsidiaries to, incur, create,
assume or permit to exist any Lien on any of its property or
assets, whether owned at the date hereof or hereafter
acquired, or assign or convey any rights to or security
interests in any future revenues, except:
(a) Liens in connection with the acquisition by
the Company or such Subsidiary of property after the date
hereof by way of purchase money, mortgage, conditional sale
or other title retention agreement, capitalized lease or
other deferred payment contract, and attaching only to the
property being acquired, if the Indebtedness secured thereby
does not exceed 80% (100% in the case of a capitalized lease)
of the fair market value of such property at the time of
acquisition thereof nor $100,000,000 in the aggregate for the
Company and all Subsidiaries at any one time outstanding;
(b) Liens referred to in Section 3.17;
(c) other Liens securing obligations of the
Company and its Subsidiaries not to exceed $50,000,000 in the
aggregate and attaching to property of the Company or such
other Subsidiary whose aggregate fair market value does not
exceed $50,000,000; and
(d) extensions, renewals and replacements of liens
referred to in paragraphs (a) through (c) of this Section
6.01; provided, that any such extension, renewal or
replacement lien shall be limited to the property or assets
covered by the Lien extended, renewed or replaced and that
the obligations secured by any such extension, renewal or
replacement lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended,
renewed or replaced.
SECTION 6.02. Merger, Purchase and Sale. The
Company will not, and will not permit any of its Subsidiaries
to:
(a) be a party to any merger or consolidation;
(b) sell, transfer, convey, lease or otherwise
dispose of all or any substantial part of its assets;
(c) sell or assign, with or without recourse, any
accounts receivable or chattel paper; or
(d) purchase or otherwise acquire all or
substantially all the assets of any Person.
Notwithstanding the foregoing:
(u) the Company or any of its Subsidiaries may
sell or transfer real property including improvements located
thereon and thereafter the Company or any of its Subsidiaries
may rent or lease such property in a sale or leaseback
transaction so long as after giving effect to such sale and
leaseback transaction the Company and its Subsidiaries would
be in compliance with Section 6.12;
(v) TCC, TRC and Tandy Bank may sell all or
substantially all of their Accounts, including credit card
receivables, to any Person for reasonably equivalent value;
(w) any Subsidiary of the Company may merge into
the Company or into or with any Wholly owned Subsidiary so
long as the Company or such Wholly owned Subsidiary, as the
case may be, shall be the surviving entity;
(x) any Subsidiary of the Company may sell,
transfer, convey, lease or assign all or a substantial part
of its assets to the Company or any Wholly owned Subsidiary;
(y) any Person may merge into the Company and the
Company may acquire all or substantially all the assets of
any Person; and
(z) the Company and any of its Subsidiaries may in
the ordinary course of their business sell, transfer, convey,
lease or otherwise dispose of all or any substantial part of
the assets of the Company and its Subsidiaries taken as a
whole;
provided, in each of the cases described in the preceding
clauses (u), (v), (w), (x), (y) and (z), that immediately
thereafter and after giving effect thereto:
(i) no Event of Default or Default shall have
occurred and be continuing;
(ii) the Company is a surviving entity, except as
provided in clause (w); and
(iii) the surviving officers of the Company shall
be substantially the same.
For purposes of this Section 6.02 only, a sale,
transfer, conveyance, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of
the Company and its Subsidiaries only if the value of such
assets, when added to the value of all other assets sold,
transferred, conveyed, leased or otherwise disposed of by the
Company and its Subsidiaries (other than pursuant to clauses
(u), (v), (x) and (z) of this Section 6.02) during the same
fiscal year, exceeds 15% of the Company's consolidated total
assets determined as of the end of the immediately preceding
fiscal year. As used in the preceding sentence, the term
"value" shall mean, with respect to any asset disposed of,
the greater of such asset's book or fair market value as of
the date of disposition, with "book value" being the value of
such asset as would appear immediately prior to such
disposition on a balance sheet of the owner of such asset
prepared in accordance with generally accepted accounting
principles.
SECTION 6.03. Investments. The Company will not,
and will not permit any of its respective Subsidiaries to,
make or permit to exist any Investment in any Person, except
for:
(a) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale of goods
and services in the ordinary course of business;
(b) shares of stock, obligations or other
securities received in settlement of claims arising in the
ordinary course of business;
(c) Investments in securities, maturing within two
years and issued or fully guaranteed or insured by the United
States of America or any agency thereof;
(d) Investments in commercial paper, maturing in
270 days or less from the date of issuance, rated in the
highest or second highest grade by a nationally recognized
credit rating agency;
(e) Investments in United States dollar
denominated and eurodollar denominated time deposits,
maturing within two years from the date of such Investment
and issued by a bank or trust company having capital, surplus
and undivided profits aggregating at least $500,000,000;
(f) Investments outstanding on the date hereof in
Subsidiaries by the Company and its Subsidiaries;
(g) other Investments outstanding on the date
hereof and listed on Exhibit 6.03;
(h) other Investments of the Company and its
Subsidiaries not exceeding 10% of Consolidated Tangible Net
Worth at any time;
(i) Investments of Tandy Bank and TCC in Accounts;
(j) Investments of TRC in Accounts acquired from
TCC and Tandy Bank;
(k) Investments by the trustee of the Tandy Master
Trust of the proceeds due to TRC of credit card receivables
pursuant to one or more pooling and servicing agreements with
such trustee; and
(l) endorsements of negotiable instruments for
deposit or collection in the ordinary course of business.
SECTION 6.04. Transactions with Affiliates. The
Company will not enter into any transaction with any
Affiliate except in the ordinary course of business and upon
fair and reasonable terms no less favorable than the Company
could obtain or could become entitled to in an arm's-length
transaction with a person or entity which was not an
Affiliate.
SECTION 6.05. Other Agreements. The Company will
not, and will not permit any of its Subsidiaries to, enter
into any agreement containing any provision which would be
violated or breached by the Company's performance of its
obligations hereunder or under any instrument or document
delivered or to be delivered by the Company hereunder or in
connection herewith.
SECTION 6.06. Fiscal Year; Accounting. The
Company will not change its fiscal year or method of
accounting (other than immaterial changes and methods and
changes authorized by generally accepted accounting
principles).
SECTION 6.07. Credit Standards. Neither the
Company, TCC nor Tandy Bank will modify in any way the credit
standards and procedures, the collection policies or the loss
recognition procedures with respect to the creation or
collection of Accounts if the modification would have a
material adverse effect on the financial condition of the
Company, TCC or Tandy Bank, as the case may be.
SECTION 6.08. Pension Plans. The Company will not
permit, and will not permit any of its Subsidiaries to
permit, any condition to exist in connection with any Plan
which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, and not engage in, or
permit to exist or occur, and will not permit any of its
Subsidiaries to engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any
Plan which could result in the incurrence by the Company or
any such Subsidiary of any material liability, fine or
penalty.
SECTION 6.09. Senior Indebtedness to Tangible Net
Worth Ratio. The Company will not permit the ratio of its
Consolidated Senior Indebtedness to its Consolidated Tangible
Net Worth to exceed 1.0 to 1.0.
SECTION 6.10. Tangible Net Worth of the Company.
The Company will not permit its Consolidated Tangible Net
Worth to be less than $1,200,000,000.
SECTION 6.11. Guaranties. The Company will not,
and will not permit any of its Subsidiaries to, become or be
liable under any Guaranty except Guaranties (a) which (x) in
the case of Guaranties of Indebtedness for borrowed money,
guarantee Indebtedness with a maximum principal amount, and
(y) in all other cases are limited in amount to a stated
maximum dollar exposure, (b) which are included in
Indebtedness, and (c) which are:
(i) Guaranties by the Company or a Wholly-owned
Subsidiary of the Indebtedness of a Subsidiary of
Company;
(ii) Guaranties by a Subsidiary of the Company of
Indebtedness of the Company;
(iii) Guaranties by the Company of notes issued by
the plan trustee to fund the Tandy Employee Stock
Ownership Plan so long as the aggregate outstanding
principal amount of all such notes does not at any time
exceed $100,000,000; or
(iv) other Guaranties not exceeding $100,000,000
in aggregate principal amount at any time outstanding.
SECTION 6.12. Leases. The Company will not at any
time enter into or permit to exist, and will not permit any
of its Subsidiaries to enter into or permit to exist, any
arrangements for the leasing by the Company or any of its
Subsidiaries, as lessee, of any real or personal property (or
any interest therein) under leases (other than capitalized
leases); provided, however, the Company and its Subsidiaries
may enter into and permit to exist such leases which require
the payment by the Company and such Subsidiaries on a
consolidated basis of minimum rental amounts in the aggregate
in any one fiscal year not in excess of 30% of Consolidated
Tangible Net Worth as of the end of the fiscal year preceding
such time.
<PAGE>
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. In case of the
happening of any of the following events (herein called
"Events of Default"):
(a) any representation or warranty made or deemed
made in or in connection with this Agreement, the Notes or
the Borrowings hereunder or in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or the execution and delivery
of the Notes or the Borrowings hereunder shall prove to have
been false or misleading in any material respect when made or
deemed made;
(b) default shall be made in the payment of any
principal of, or any installment of principal of, any Note
when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any
interest on any Note or any Commitment Fee or any other
amount due under this Agreement, when and as the same shall
become due and payable, and such default shall continue
unremedied for a period of five days;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement contained
in Sections 5.01, 5.05 or 5.06 or Article VI;
(e) default shall be made in the due observance or
performance of any other covenant, condition or agreement to
be observed or performed pursuant to this Agreement and such
default shall continue unremedied for 15 days;
(f) the Company or any of its Subsidiaries (other
than an Insignificant Foreign Subsidiary) shall (i)
voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or
any other federal or state bankruptcy, insolvency,
liquidation or similar law, (ii) consent to the institution
of, or fail to contravene in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (iii)
apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the
Company or such Subsidiary or for a substantial part of
either the Company's or such Subsidiary's property or assets,
(iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any corporate
or other action for the purpose of effecting any of the
foregoing;
(g) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of the
Company or any of its Subsidiaries (other than an
Insignificant Foreign Subsidiary), or of a substantial part
of the property or assets of the Company or such Subsidiary,
under Title 11 of the United States Code or any other federal
or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or such
Subsidiary or for a substantial part of the property of the
Company or such Subsidiary or (iii) the winding-up or
liquidation of the Company or such Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for 60 days;
(h) default or defaults (other than defaults in
the payment of principal or interest) shall be made with
respect to any Indebtedness of the Company, if the total
Indebtedness in default exceeds in the aggregate for the
Company an amount equal to $50,000,000 and if the effect of
such default or defaults shall be to accelerate, or to permit
the holder or obligee of any Indebtedness (or any trustee on
behalf of such holder or obligee) to accelerate (with or
without notice or lapse of time or both), the maturity of any
Indebtedness; or any payment of principal or interest,
regardless of amount, on any Indebtedness of the Company
shall not be paid when due, whether at maturity, by
acceleration or otherwise (after giving effect to any period
of grace as specified in the instrument evidencing or
governing such Indebtedness);
(i) a Change of Control shall occur;
(j) a Reportable Event or Reportable Events shall
have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of the
Company or any of its Subsidiaries to the PBGC in an
aggregate amount in excess of $1,000,000 and within 30 days
after the reporting of such Reportable Event or Reportable
Events to the Banks, the Agent shall have notified the
Company in writing that (i) it has determined that on the
basis of such Reportable Event or Reportable Events there are
reasonable grounds for termination of the Plan by the PBGC or
for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and (ii) as a
result of such determination, an Event of Default exists
hereunder; or the PBGC shall have instituted proceedings to
terminate any Plan or Plans, or a trustee shall have been
appointed by a United States District Court to administer any
Plan or Plans, with vested unfunded liabilities aggregating
in excess of $1,000,000; or
(k) there shall be entered against the Company or
any of its Subsidiaries one or more judgments or decrees in
excess of $50,000,000 in the aggregate at any one time
outstanding for the Company and all such Subsidiaries and all
such judgments or decrees in the amount of such excess shall
not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof, excluding those
judgments or decrees for and to the extent which the Company
or any such Subsidiary is insured and with respect to which
the insurer has assumed responsibility in writing or for and
to the extent which the Company or any such Subsidiary is
otherwise indemnified if the terms of such indemnification
are satisfactory to the Required Banks;
then, and in any such event (other than an event with respect
to the Company described in paragraph (f) or (g) above), and
at any time thereafter during the continuance of such event,
the Agent may, and at the request of the Required Banks
shall, by written or telegraphic notice to the Company, take
either or both of the following actions at the same or
different times: (i) terminate forthwith the Commitments of
the Banks hereunder (if not theretofore terminated) and (ii)
declare the Notes then outstanding to be forthwith due and
payable, whereupon the principal of the Notes, together with
accrued interest thereon and any unpaid accrued Commitment
Fees and all other liabilities of the Company accrued
hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest,
notice of protest, notice of intent to accelerate, notice of
acceleration or any other notice of any kind, all of which
are hereby expressly waived by the Company, anything
contained herein or in any Note or other Loan Document to the
contrary notwithstanding; and in any event with respect to
the Company described in paragraph (f) or (g) above, the
Commitments of the Banks shall automatically terminate (if
not theretofore terminated) and the Notes shall automatically
become due and payable, both as to principal and interest,
without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any
kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any Note or other
Loan Document to the contrary notwithstanding.
<PAGE>
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. In order
to expedite the various transactions contemplated by this
Agreement, each Bank hereby irrevocably appoints and
authorizes TCB to act as Agent on its behalf. Each of the
Banks, and each subsequent holder of any Note by its
acceptance thereof, hereby irrevocably authorizes and directs
the Agent to take such action on behalf of such Bank or
holder under the terms and provisions of this Agreement and
to exercise such powers hereunder as are specifically
delegated to or required of the Agent by the terms and
provisions hereof, together with such powers as are
reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its agents and employees.
The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason
of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Bank; and nothing in this
Agreement or any other Loan Document, expressed or implied,
is intended to, or shall be so construed as to, impose upon
the Agent any obligations in respect of this Agreement or any
other Loan Document except as expressly set forth herein or
therein. The Agent is hereby expressly authorized on behalf
of the Banks, without hereby limiting any implied authority,
(a) to receive on behalf of each of the Banks any payment of
principal of or interest on the Notes outstanding hereunder
and all other amounts accrued hereunder paid to the Agent,
and promptly to distribute to each Bank its proper share of
all payments so received; (b) to give notice within a
reasonable time on behalf of each of the Banks to the Company
of any Default or Event of Default specified in this
Agreement of which the Agent has actual knowledge as provided
in Section 8.07; (c) to distribute to each Bank copies of all
notices, agreements and other material as provided for in
this Agreement as received by the Agent; and (d) to
distribute to the Company any and all requests, demands and
approvals received by the Agent or from the Banks. As to any
matters not expressly provided for by this Agreement, the
Notes or the other Loan Documents (including enforcement or
collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the
instructions of the Required Banks, and such instructions
shall be binding upon all Banks and all holders of Notes and
the Loans; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or
applicable law.
SECTION 8.02. Agent's Reliance, Etc. (a) Neither
the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this
Agreement, the Notes or any of the other Loan Documents (i)
with the consent or at the request of the Required Banks or
(ii) in the absence of its or their own gross negligence or
willful misconduct (it being the express intention of the
parties hereto that the Agent and its directors, officers,
agents and employees shall have no liability for actions and
omissions under this Section 8.02 resulting from their sole
ordinary or contributory negligence).
(b) Without limitation of the generality of the
foregoing, the Agent: (i) may treat the payee of each Note
and the obligations of the Company hereunder as the holder
thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and in
form satisfactory to the Agent; (ii) may consult with legal
counsel (including counsel for the Company), independent
public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to
any Bank for any statements, warranties or representations
made in or in connection with this Agreement, any Note or any
other Loan Document; (iv) except as otherwise expressly
provided herein, shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement, any Note or
any other Loan Document or to inspect the property (including
the books and records) of the Company; (v) shall not be
responsible to any Bank for the due execution, legality,
validity, enforceability, collectibility, genuineness,
sufficiency or value of this Agreement, any Note, any other
Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (vi) shall not be responsible to
any Bank for the perfection or priority of any Lien securing
the Loans; and (vii) shall incur no liability under or in
respect of this Agreement, any Note or any other Loan
Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram,
telecopier, cable or telex) reasonably believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 8.03. Agent and Affiliates; TCB and
Affiliates. Without limiting the right of any other Bank to
engage in any business transactions with the Company or any
of its Affiliates, with respect to their Commitments, the
Loans, if any, made by them and the Notes, if any, issued to
them, TCB shall have the same rights and powers under this
Agreement, any Note or any of the other Loan Documents as any
other Bank and may exercise the same as though it were not
the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include TCB in its individual
capacity. TCB and its Affiliates may be engaged in, or may
hereafter engage in, one or more loan, letter of credit,
leasing or other financing activities not the subject of the
Loan Documents (collectively, the "Other Financings") with
the Company or any of its Affiliates, or may act as trustee
on behalf of, or depositary for, or otherwise engage in other
business transactions with the Company or any of its
Affiliates (all Other Financings and other such business
transactions being collectively, the "Other Activities") with
no responsibility to account therefor to the Banks. Without
limiting the rights and remedies of the Banks specifically
set forth in the Loan Documents, no other Bank shall have any
interest in (a) any Other Activities, (b) any present or
future guarantee by or for the account of the Company not
contemplated or included in the Loan Documents, (c) any
present or future offset exercised by the Agent in respect of
any such Other Activities, (d) any present or future property
taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the
Agent which may be or become security for the obligations of
the Company under the Loan Documents by reason of the general
description of indebtedness secured, or of property contained
in any other agreements, documents or instruments related to
such Other Activities; provided, however, that if any payment
in respect of such guarantees or such property or the
proceeds thereof shall be applied to reduction of the
obligations evidenced hereunder and by the Notes, then each
Bank shall be entitled to share in such application according
to its pro rata portion of such obligations.
SECTION 8.04. Agent's Indemnity. (a) The Agent
shall not be required to take any action hereunder or to
prosecute or defend any suit in respect of this Agreement,
the Notes or any other Loan Document unless indemnified to
the Agent s satisfaction by the Banks against loss, cost,
liability and expense. If any indemnity furnished to the
Agent shall become impaired, it may call for additional
indemnity and cease to do the acts indemnified against until
such additional indemnity is given. In addition, the Banks
agree to indemnify the Agent (to the extent not reimbursed by
the Company), ratably according to the respective aggregate
principal amounts of the Notes then held by each of them (or
if no Notes are at the time outstanding, ratably according to
the respective amounts of their Commitments, or if no
Commitments are outstanding, the respective amounts of the
Commitments immediately prior to the time the Commitments
ceased to be outstanding), from and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent (or either of
them) in any way relating to or arising out of this Agreement
or any action taken or omitted by the Agent under this
Agreement, the Notes and the other Loan Documents (including
any action taken or omitted under Article II of this
Agreement). Without limitation of the foregoing, each Bank
agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection
with the preparation, execution, administration, or
enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement, the Notes and the
other Loan Documents to the extent that the Agent is not
reimbursed for such expenses by the Company. The provisions
of this Section 8.04 shall survive the termination of this
Agreement, the payment of the Loans and/or the assignment of
any of the Notes.
(b) Notwithstanding the foregoing, no Bank shall
be liable under this Section 8.04 to the Agent for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements due to the Agent resulting from the Agent's
gross negligence or willful misconduct. Each Bank agrees,
however, that it expressly intends, under this Section 8.04,
to indemnify the Agent ratably as aforesaid for all such
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements
arising out of or resulting from the Agent s sole ordinary or
contributory negligence.
SECTION 8.05. Bank Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank and based on the financial
statements referred to in Section 3.05 and Section 5.05 and
such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Bank also acknowledges that
it will, independently and without reliance upon the Agent or
any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under or based
upon this Agreement, the other Loan Documents, any related
agreement or any document furnished hereunder.
SECTION 8.06. Successor Agent. Subject to the
appointment and acceptance of a successor Agent as provided
herein, the Agent may resign at any time by giving written
notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to
appoint a successor Agent, subject to the approval of the
Company, which approval shall not be unreasonably withheld.
If no successor Agent shall have been so appointed by the
Required Banks, approved by the Company and shall have
accepted such appointment, all within 30 calendar days after
the retiring Agent's giving of notice of resignation, then
the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized
or licensed under the laws of the United States or of any
state thereof and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment
as Agent hereunder and under the Notes by a successor Agent,
such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this
Agreement and the Notes. After any retiring Agent's
resignation as the Agent hereunder and under the Notes, the
provisions of this Article VIII and Section 9.04 shall inure
to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement and the Notes.
SECTION 8.07. Notice of Default. The Agent shall
not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the Agent
shall have received notice from a Bank or the Company
referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a notice of
default or notice of event of default , as applicable. If
the Agent receives such a notice, the Agent shall give notice
thereof to the Banks and, if such notice is received from a
Bank, the Agent shall give notice thereof to the other Banks
and the Company. The Agent shall be entitled to take action
or refrain from taking action with respect to such Default or
Event of Default as provided in Section 8.01 and Section
8.02.
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices, Etc. The Agent, any Bank
or the holder of any of the Notes or Loans, giving consent or
notice or making any request of the Company provided for
hereunder, shall notify each Bank and the Agent thereof. In
the event that the holder of any Note (including any Bank)
shall transfer such Note, it shall promptly so advise the
Agent which shall be entitled to assume conclusively that no
transfer of any Note has been made by any holder (including
any Bank) unless and until the Agent receives written notice
to the contrary. All notices, consents, requests, approvals,
demands and other communications (collectively,
"Communications") provided for herein shall be in writing
(including telecopy Communications) and mailed, telecopied or
delivered:
(a) if to the Company, at 1700 One Tandy Center,
Fort Worth, Texas 76102, Attention of Dwain H. Hughes, Vice
President and Treasurer (Telecopy No. (817) 390-2638);
(b) if to the Agent, at 1111 Fannin, Houston,
Texas 77002, Attention of Susan Cummins, Investment Officer
(Telecopy No. (713) 546-2339) with a copy to Texas Commerce
Bank National Association, 201 Main Street, Fort Worth, Texas
76102, Attention: Corporate Lending (Telecopy No. (817) 878-
7591); and
(c) if to any Bank, as specified on the signature
page for such Bank hereto or, in the case of any Person who
becomes a Bank after the date hereof, as specified on the
Assignment and Acceptance executed by such Person or in the
Administrative Questionnaire delivered by such Person or, in
the case of any party hereto, such other address or telecopy
number as such party may hereafter specify for such purpose
by notice to the other parties.
All Communications shall, when mailed, telecopied or
delivered, be effective when mailed by certified mail, return
receipt requested to any party at its address specified
above, on the signature page hereof or on the signature page
of such Assignment and Acceptance (or other address
designated by such party in a Communication to the other
parties hereto), or telecopied to any party to the telecopy
number set forth above, on the signature page hereof or on
the signature page of such Assignment and Acceptance (or
other telecopy number designated by such party in a
Communication to the other parties hereto), or delivered
personally to any party at its address specified above, on
the signature page hereof or on the signature page of such
Assignment and Acceptance (or other address designated by
such party in a Communication to the other parties hereto);
provided, however, Communications to the Agent pursuant to
Article II or Article VII shall not be effective until
received by the Agent.
SECTION 9.02. Survival of Agreement. All
covenants, agreements, representations and warranties made by
the Company herein and in the other Loan Documents and in the
certificates or other instruments prepared or delivered in
connection with this Agreement shall be considered to have
been relied upon by the Banks and shall survive the making by
the Banks of the Loans and the execution and delivery to the
Banks of the Notes evidencing such Loans and shall continue
in full force and effect as long as the principal of or any
accrued interest on any Note or any Commitment Fee or any
other fee or amount payable under the Notes or this Agreement
is outstanding and unpaid and so long as the Commitments have
not been terminated.
SECTION 9.03. Successors and Assigns;
Participations. (a) Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed
to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the
Company, the Agent or the Banks that are contained in this
Agreement shall bind and inure to the benefit of their
respective successors and assigns. The Company may not
assign or transfer any of its rights or obligations hereunder
without the prior written consent of all the Banks.
(b) Each Bank may assign to one or more Eligible
Assignees all or a portion of its interests, rights and
obligations under this Agreement (including a portion of its
Commitment and the same portion of the Loans at the time
owing to it and the Note held by it); provided, however, that
(i) except in the case of an assignment to a Bank or an
Affiliate of a Bank, the Company and the Agent must give
their prior written consent by countersigning the Assignment
and Acceptance (which consent shall not be unreasonably
withheld), (ii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Bank's
rights and obligations to this Agreement, (iii) the amount of
the Commitment of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to
the Agent) shall (A) be equal to the entire amount of the
Commitment of the assigning Bank or (B) if not equal to the
entire amount of the Commitment of the assigning Bank, in no
event be less than $3,000,000 and shall be in an amount which
is an integral multiple of $750,000; provided, however, for
purposes of this Section 9.03(b)(iii)(B), that the retained
Commitment of the assigning Bank may not be less than
$3,000,000, (iv) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance
substantially in the form of Exhibit 9.03 hereto (an
"Assignment and Acceptance"), together with any Note subject
to such assignment and a processing and recordation fee of
$2,000 payable by the Bank's assignor thereunder, and (v) the
assignee shall deliver to the Agent an Administrative
Questionnaire. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be
at least five Business Days after the execution thereof
unless otherwise agreed to by the assigning Bank, the
Eligible Assignee thereunder and the Agent, (x) the assignee
thereunder shall be a party hereto and under the other Loan
Documents and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Bank
hereunder and under the other Loan Documents and (y) the Bank
thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Bank thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse
claim, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with the Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (ii) such
assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial
condition of the Company or the performance or observance by
the Company of any of its obligations under this Agreement,
the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to
in Section 3.05 and Section 5.05 and such other documents and
information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment
and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such Bank's assignor or any
other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement
are required to be performed by it as a Bank.
(d) The Agent shall maintain at its address
referred to in Section 9.01 a copy of each Assignment and
Acceptance delivered to it and a register for the recordation
of the names and addresses of the Banks and the Commitments
of, and principal amount of the Loans owing to, each Bank
from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of demonstrable
error, and the Company and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder
for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Bank at any
reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and
Acceptance executed by an assigning Bank and an Eligible
Assignee together with the Note subject to such assignment,
the processing and recordation fee referred to in paragraph
(b) above and, if required, the Company's written consent to
such assignment, the Agent shall (subject to the consent of
the Company to such assignment, if required), if such
Assignment and Acceptance has been completed and is in the
form of Exhibit 9.03, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the
Company and the Banks. Within five Business Days after
receipt of notice, the Company, at its own expense, shall
execute and deliver to the Agent in exchange for the
surrendered Note a new Note to the order of such Eligible
Assignee in an amount equal to the assigning Bank's
Commitment assumed by it pursuant to such Assignment and
Acceptance, and a new Note to the order of the assigning Bank
in an amount equal to the portion of its Commitment retained
by the assigning Bank hereunder. Such new Notes shall be in
an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note, shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit 2.04
hereto, as applicable. Each cancelled Note shall be returned
to the Company.
(f) Each Bank may without the consent of the
Company or the Agent sell participations to one or more banks
or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it and the Note held
by it); provided, however, that (i) such Bank's obligations
under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to
the cost protection provisions contained in Sections 2.12
through 2.14 to the same extent that the Bank from which such
participating bank or other entity acquired its participation
would be entitled to the benefit of such cost protection
provisions and (iv) the Company, the Agent and the other
Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations
under this Agreement, and such Bank shall retain the sole
right to enforce the obligations of the Company relating to
the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than
amendments, modifications or waivers with respect to any fees
payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, or the dates fixed
for payments of principal of or interest on the Loans).
(g) Any Bank or participant may, in connection
with any assignment or participation or proposed assignment
or participation pursuant to this Section 9.03, disclose to
the assignee or participant or proposed assignee or
participant, any information relating to the Company
furnished to such Bank by or on behalf of the Company;
provided that prior to any such disclosure, each such
assignee or participant or proposed assignee or participant
shall agree (subject to customary exceptions) to preserve the
confiden tiality of any confidential information relating to
the Company received from such Bank.
(h) Anything in this Section 9.03 to the contrary
notwithstanding, any Bank may at any time, without the
consent of the Company or the Agent, assign and pledge all or
any portion of its Commitment and the Loans owing to it to
any Federal Reserve Bank (and its transferees) as collateral
security pursuant to Regulation A of the Board and any
Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Bank from its
obligations hereunder.
(i) All transfers of any interest in any Note
hereunder shall be in compliance with all federal and state
securities laws, if applicable. Notwithstanding the
foregoing sentence, however, the parties to this Agreement do
not intend that any transfer under this Section 9.03 be
construed as a "purchase" or "sale" of a "security" within
the meaning of any applicable federal or state securities
laws.
SECTION 9.04. Expenses of the Banks; Indemnity.
(a) The Company agrees to pay all reasonable out-of-pocket
expenses reasonably incurred by the Agent in connection with
the preparation of this Agreement, the Notes and the other
Loan Documents or with any amendments, modifications or
waivers of the provisions hereof (whether or not the
transactions hereby contemplated shall be consummated) or
reasonably incurred by the Agent or any Bank in connection
with the enforcement or protection of their rights in
connection with this Agreement or with the Loans made or the
Notes issued hereunder, including the reasonable fees and
disbursements of Andrews & Kurth L.L.P., special counsel for
the Agent, and, in connection with such enforcement or
protection, the reasonable fees and disbursements of other
counsel for any Bank, including allocated staff counsel costs
for any Bank that elects to use the services of staff counsel
in lieu of outside counsel. The Company agrees to indemnify
the Banks from and hold them harmless against any documentary
taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this
Agreement or any of the Notes or other Loan Documents.
(b) The Company agrees to indemnify the Agent and
the Banks and their directors, officers, employees and agents
(each such Person being called an "Indemnitee") against, and
to hold the Banks and such other Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses,
incurred by or asserted against any Indemnitee arising out
of, in any way connected with, or as a result of (i) the
execution and delivery of this Agreement and the other
documents contemplated hereby, the performance by the parties
hereto and thereto of their respective obligations hereunder
and thereunder (including the making of the Commitment of
each Bank) and consummation of the transactions contemplated
hereby and thereby, (ii) the use of proceeds of the Loans or
(iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Bank, apply to any such losses, claims,
damages, liabilities or related expenses that are determined
by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee. The
Company agrees, however, that it expressly intends to
indemnify each Indemnitee from and hold each of them harmless
against any and all losses, liabilities, claims, damages or
expenses arising out of the ordinary sole or contributory
negligence of such Indemnitee, but not the gross negligence
or willful misconduct of such Indemnitee.
(c) The provisions of this Section 9.04 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement
or any Note, or any investigation made by or on behalf of any
Bank. All amounts due under this Section 9.04 shall be
payable on written demand therefor.
SECTION 9.05. Right of Setoff. If an Event of
Default shall have occurred and be continuing, each 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 such Bank or any branch Subsidiary or Affiliate of
such Bank to or for the credit or the account of the Company
against any of and all the obligations of the Company now or
hereafter existing under this Agreement and the Note held by
such Bank, irrespective of whether or not such Bank shall
have made any demand under this Agreement or such Note and
although such obligations may be unmatured. Each Bank agrees
promptly to notify the Company after any such setoff and
application made by such Bank, but the failure to give such
notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section 9.05
are in addition to other rights and remedies (including other
rights of setoff) which such Bank may have under applicable
law.
SECTION 9.06. Governing Law. This Agreement, the
Notes, the other Loan Documents and all other documents
executed in connection herewith, shall be deemed to be
contracts and agreements executed by the Company, the Agent
and the Banks under the laws of the State of Texas and of the
United States of America and for all purposes shall be
governed by, and construed and interpreted in accordance
with, the laws of said state (without regard to principles of
conflicts of law) and of the United States of America.
Without limitation of the foregoing, nothing in this
Agreement, the Notes or the other Loan Documents shall be
deemed to constitute a waiver of any rights which any Bank
may have under applicable federal legislation relating to the
amount of interest which such Bank may contract for, take,
receive, or charge in respect of any Loans, including any
right to take, receive, reserve and charge interest at the
rate allowed by the law of the state where such Bank is
located. The Agent, the Banks and the Company further agree
that insofar as the provisions of Article 1.04, Subtitle 1,
Title 79, of the Revised Civil Statutes of Texas, 1925, as
amended, are at any time applicable to the determination of
the Highest Lawful Rate with respect to the Notes, the
indicated rate ceiling computed from time to time pursuant to
Section (a) of such Article shall apply to the Notes,
provided, however, that to the extent permitted by such
Article, the Agent may from time to time by notice from the
Agent to the Company revise the election of such interest
rate ceiling as such ceiling affects the then current or
future balances of the Loans outstanding hereunder and under
the Notes. The provisions of Chapter 15 of Subtitle 3 of the
said Title 79 do not apply to this Agreement or any Note
issued hereunder.
SECTION 9.07. Waivers; Amendments. (a) No failure
or delay of any Agent or any Bank in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The
rights and remedies of the Agent and the Banks hereunder are
cumulative and not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provision of
this Agreement, the Notes or the other Loan Documents or
consent to any departure by the Company therefrom shall in
any event be effective unless the same shall be authorized as
provided in paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on the
Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
Each holder of any Note shall be bound by any amendment,
modification, waiver or consent authorized as provided
herein, whether or not such Note shall have been marked to
indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the
Company and the Required Banks; provided, however, that no
such agreement shall (i) change the principal amount of, or
extend or advance the maturity of or any date for the payment
of any principal of or interest on, any Loan, or waive or
excuse any such payment or any part thereof, or change the
rate of interest on any Loan, without the written consent of
each Bank affected thereby, (ii) change the Commitment of any
Bank without the written consent of such Bank, or change the
Commitment Fees of any Bank without the written consent of
each Bank or (iii) amend or modify the provisions of this
Section 9.07, Section 2.07, Sections 2.10 through 2.15,
Section 2.17, Section 2.18, Section 9.03 or the definition of
the "Required Banks," without the written consent of each
Bank; and provided further that no such agreement shall
amend, modify, waive or otherwise affect the rights or duties
of the Agent hereunder without the written consent of the
Agent. Each Bank and each holder of any Note shall be bound
by any modification or amendment authorized by this Section
9.07 regardless of whether its Note shall be marked to make
reference thereto, and any consent by any Bank or holder of a
Note pursuant to this Section 9.07 shall bind any Person
subsequently acquiring a Note from it, whether or not such
Note shall be so marked.
SECTION 9.08. Interest. Each provision in this
Agreement and each other Loan Document is expressly limited
so that in no event whatsoever shall the amount paid, or
otherwise agreed to be paid, to the Agent or any Bank for the
use, forbearance or detention of the money to be loaned under
this Agreement or any Loan Document or otherwise (including
any sums paid as required by any covenant or obligation
contained herein or in any other Loan Document which is for
the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate, and all amounts
owed under this Agreement and each other Loan Document shall
be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid which are for the use,
forbearance or detention of money under this Agreement or
such Loan Document shall in no event exceed that amount of
money which would cause the effective rate of interest to
exceed the Highest Lawful Rate. Anything in this Agreement
or any Note or any other Loan Document to the contrary
notwithstanding, the Company shall never be required to pay
unearned interest on any Note and shall never be required to
pay interest on such Note at a rate in excess of the Highest
Lawful Rate, and if the effective rate of interest which
would otherwise be payable under this Agreement, such Note
and the other Loan Documents would exceed the Highest Lawful
Rate, or if the holder of such Note shall receive any
unearned interest or shall receive monies that are deemed to
constitute interest which would increase the effective rate
of interest payable by the Company under this Agreement and
such Note to a rate in excess of the Highest Lawful Rate,
then (a) the amount of interest which would otherwise be
payable by the Company under this Agreement and such Note
shall be reduced to the amount allowed under applicable law,
and (b) any unearned interest paid by the Company or any
interest paid by the Company in excess of the Highest Lawful
Rate shall be credited on the principal of such Note (or, if
the principal amount of such Note shall have been paid in
full, refunded to the Company). It is further agreed that,
without limitation of the foregoing, all calculations of the
rate of interest contracted for, charged or received by any
Bank under the Notes held by it, or under this Agreement, are
made for the purpose of determining whether such rate exceeds
the Highest Lawful Rate applicable to such Bank (such Highest
Lawful Rate being such Bank's "Maximum Permissible Rate"),
and shall be made, to the extent permitted by usury laws
applicable to such Bank (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the
period of the full stated term of the Loans evidenced by said
Notes all interest at any time contracted for, charged or
received by such Bank in connection therewith. If at any
time and from time to time (i) the amount of interest payable
to any Bank on any date shall be computed at such Bank's
Maximum Permissible Rate pursuant to this Section 9.08 and
(ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Bank would
be less than the amount of interest payable to such Bank
computed at such Bank's Maximum Permissible Rate, then the
amount of interest payable to such Bank in respect of such
subsequent interest computation period shall continue to be
computed at such Bank's Maximum Permissible Rate until the
total amount of interest payable to such Bank shall equal the
total amount of interest which would have been payable to
such Bank if the total amount of interest had been computed
without giving effect to this Section 9.08.
SECTION 9.09. Severability. In the event any one
or more of the provisions contained in this Agreement, the
Notes or any other Loan Document should be held invalid,
illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected
or impaired thereby. The parties shall endeavor in good
faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together
shall constitute but one contract, and shall become effective
as provided in Section 9.11.
SECTION 9.11. Binding Effect. This Agreement
shall become effective on the Execution Date, and thereafter
shall be binding upon and inure to the benefit of the
Company, the Agent and each Bank and their respective
successors and assigns, except that the Company shall not
have the right to assign its rights hereunder or any interest
herein except as provided in Section 9.03(a).
SECTION 9.12. FINAL AGREEMENT OF THE PARTIES.
THIS WRITTEN AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULES
HERETO), THE NOTES, THE AGENT'S LETTER AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF 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 RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. Any previous agreement
among the parties with respect to the subject matter hereof
is superseded by this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party
other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
IN WITNESS HEREOF, the Company, the Banks listed on
the signature pages hereto and the Agent have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
TANDY CORPORATION
By:\s\ Dwain H. Hughes
Name: Dwain H. Hughes
Title: Vice President
and Treasurer
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION as Agent
By:\s\ Loren Jensen
Name: Loren Jensen
Title: Senior Vice President
<PAGE>
Commitment: Banks
----------- -----
$15,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
Name:
Title:
Address: 333 Clay Street, Suite 4550
Houston, Texas 77002
Telecopy No.: (713) 651-4841
Domestic Lending Office
Bank of America
Global Payments Operations
CSA South #5583
333 South Beaudry Avenue
Los Angeles, California 90017
Attention: Debbie Green
Eurodollar Lending Office
Bank of America
Global Payments Operations
CSA South #5583
333 South Beaudry Avenue
Los Angeles, California 90017
Attention: Debbie Green
<PAGE>
Commitment: Banks
----------- -----
$15,000,000 THE BANK OF NEW YORK
By:\s\ Ian K. Stewart
Name: Ian K. Stewart
Title: Vice President
Address: One Wall Street
New York, New York 10286
Telecopy No.: (212) 635-6434
Domestic Lending Office
The Bank of New York
One Wall Street
New York, New York 10286
Eurodollar Lending Office
The Bank of New York
One Wall Street
New York, New York 10286
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000 BANK ONE, TEXAS, N.A.
By:
Name:
Title:
Address: 500 Throckmorton
Fort Worth, Texas 76102
Telecopy No.: (817) 884-5697
Domestic Lending Office
Bank One, Texas, N.A.
500 Throckmorton
Fort Worth, Texas 76102
Eurodollar Lending Office
Bank One, Texas, N.A.
500 Throckmorton
Fort Worth, Texas 76102
<PAGE>
Commitment: Banks
----------- -----
$10,000,000 THE BANK OF TOKYO TRUST COMPANY
By:
Name:
Title:
Address: 1251 Avenue of the Americas
12th Floor
New York, New York 10116-3138
Telecopy No.: (212) 782-6440
Domestic Lending Office
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116-31386
Eurodollar Lending Office
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116-3138
<PAGE>
Commitment: Banks
----------- -----
$10,000,000 BARCLAYS BANK PLC
By:
Name:
Title:
Address: 222 Broadway, 11th Floor
New York, New York 10038
Telecopy No.: (212) 412-7580
Domestic Lending Office
Barclays Bank PLC
222 Broadway, 11th Floor
New York, New York 10038
Eurodollar Lending Office
Barclays Bank PLC
222 Broadway, 11th Floor
New York, New York 10038
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000 THE CHASE MANHATTAN BANK, N.A.
By:
Name:
Title:
Address: One Chase Manhattan Plaza
Global Insurance Corporate
Finance
5th Floor
New York, New York 10081
Telecopy No.: (212) 552-1999 or 3651
Domestic Lending Office
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
Global Insurance Corporate Finance
5th Floor
New York, New York 10081
Eurodollar Lending Office
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
Global Insurance Corporate Finance
5th Floor
New York, New York 10081
<PAGE>
Commitment: Banks
----------- -----
$15,000,000 CONTINENTAL BANK N.A.
By:\s\ W. Thomas Barnett
Name: W. Thomas Barnett
Title: Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopy No.: (312) 987-5833
Domestic Lending Office
Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
Eurodollar Lending Office
Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
<PAGE>
Commitment: Banks
----------- -----
$15,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
Address: 500 North Akard, Suite 3210
Dallas, Texas 75201
Telecopy No.: (214) 954-3312
Domestic Lending Office
Credit Lyonnais New York Branch
500 North Akard, Suite 3210
Dallas, Texas 75201
Attention: Judy Gordon
Eurodollar Lending Office
Credit Lyonnais New York Branch
500 North Akard, Suite 3210
Dallas, Texas 75201
Attention: Judy Gordon
<PAGE>
Commitment: Banks
----------- -----
$10,000,000 THE FIRST NATIONAL BANK OF BOSTON
By:\s\ Bethann R. Halligan
Name: Bethann R. Halligan
Title: Director
Address: 100 Federal Street 01-21-01
Boston, Massachusetts 02110
Telecopy No.: (617) 434-6685
Domestic Lending Office
The First National Bank of Boston
100 Federal Street 01-21-01
Boston, Massachusetts 02110
Eurodollar Lending Office
The First National Bank of Boston
100 Federal Street 01-21-01
Boston, Massachusetts 02110
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
Name:
Title:
Address: 301 South College Street
One First Union Center
Charlotte, NC 28288
Telecopy No.: (704) 374-2802
Domestic Lending Office
First Union National Bank of North
Carolina
301 South College Street
One First Union Center
Charlotte, North Carolina 28288
Eurodollar Lending Office
First Union National Bank of North
Carolina
301 South College Street
One First Union Center
Charlotte, North Carolina 28288
<PAGE>
Commitment: Banks
----------- -----
$10,000,000 MELLON BANK, N.A.
By:
Name:
Title:
Address: One Mellon Bank Center,
Room 4535
Pittsburgh, Pennsylvania
15258-0001
Telecopy No.: (412) 234-5049 or
(412) 236-2027
Domestic Lending Office
Mellon Bank, N.A.
Three Mellon Bank Center
23rd Floor
Pittsburgh, Pennsylvania 15259
Attention: Loan Administration
Eurodollar Lending Office
Three Mellon Bank Center
23rd Floor
Pittsburgh, Pennsylvania 15259
Attention: Loan Administration
<PAGE>
Commitment: Banks
----------- -----
$15,000,000 NATIONAL WESTMINSTER BANK, Plc
New York Branch
By:
Name:
Title:
NATIONAL WESTMINSTER BANK, Plc
Nassau Branch
By:
Name:
Title:
Telecopy No.: (212) 602-4118
Domestic Lending Office
NATIONAL WESTMINSTER BANK, Plc
New York Branch
175 Water Street
New York, New York 10038
Eurodollar Lending Office
NATIONAL WESTMINSTER BANK, Plc
Nassau Branch
175 Water Street
New York, New York 10038
<PAGE>
Commitment: Banks
----------- -----
$15,000,000 NATIONSBANK OF TEXAS, N.A.
By:
Name:
Title:
Address: 500 West Seventh Street
Fort Worth, Texas 76113-2260
Telecopy No.: (817) 390-6545
Domestic Lending Office
NationsBank of Texas, N.A.
500 West Seventh Street
Fort Worth, Texas 76113-2260
Eurodollar Lending Office
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
<PAGE>
Commitment: Banks
----------- -----
$10,000,000 SOCIETE GENERALE, SOUTHWEST AGENCY
By:
Name:
Title:
Address: 2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Telecopy No.: (214) 979-1104
Domestic Lending Office
Societe Generale, Southwest Agency
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Eurodollar Lending Office
Societe Generale, Southwest Agency
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
<PAGE>
Commitment: Banks
----------- -----
$ 7,500,000 THE SUMITOMO BANK, LIMITED
HOUSTON AGENCY
By:
Name:
Title:
Address: NationsBank Center
700 Louisiana, Suite 1750
Houston, Texas 77002
Telecopy No.: (713) 759-0020
Domestic Lending Office
The Sumitomo Bank, Limited
Houston Agency
NationsBank Center
The Sumitomo Bank, Limited Houston
Agency
700 Louisiana, Suite 1750
Houston, Texas 77002
Eurodollar Lending Office
The Sumitomo Bank, Limited
Houston Agency
NationsBank Center
The Sumitomo Bank, Limited Houston
Agency
700 Louisiana, Suite 1750
Houston, Texas 77002
<PAGE>
Commitment: Banks
----------- -----
$20,000,000 TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By:
Name:
Title:
Address: 201 Main Street
Fort Worth, Texas 76102
Telecopy No.: (817) 878-7591
Domestic Lending Office
Texas Commerce Bank National
Association
201 Main Street
Fort Worth, Texas 76102
Eurodollar Lending Office
Texas Commerce Bank National
Association
712 Main Street
Houston, Texas 77002
<PAGE>
Commitment: Banks
----------- -----
$10,000,000 TORONTO DOMINION (TEXAS), INC.
By:
Name:
Title:
Address: 909 Fannin, Suite 1700
Houston, Texas 77010
Telecopy No.: (713) 951-9921
Domestic Lending Office
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Eurodollar Lending Office
The Toronto-Dominion Bank Houston
Agency
909 Fannin, Suite 1700
Houston, Texas 77010
