UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 23, 2006
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Pre-Paid Legal Services, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Oklahoma
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(State or Other Jurisdiction of Incorporation)
001-09293 73-1016728
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(Commission File Number) (IRS Employer Identification No.)
One Pre-Paid Way
Ada, OK 74820
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(Address of Principal Executive Offices) (Zip Code)
(580) 436-1234
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On June 23, 2006, Pre-Paid Legal Services, Inc. ("we" or "us") received $80
million of senior, secured financing (the "Senior Loan") from Wells Fargo
Foothill, Inc. ("Wells Fargo") consisting of a $75 million five year term loan
facility (the "Term Facility") and a $5 million five year revolving credit
facility (the "Revolving Facility"). The proceeds will be used primarily to fund
further share repurchases, including a planned tender offer for 1 million shares
at $35 per share, to refinance $15.3 million of existing bank indebtedness and
general working capital purposes. After payment of an origination fee of 1%,
lender costs and other debt, the net proceeds of the Term Facility we received
were $58.8 million.
The Term Facility was fully funded on June 23, 2006 and provides for a
five-year maturity and amortizes in monthly installments of $1.25 million
commencing August 31, 2006, with interest on the outstanding balances under the
Term Facility and the Revolving Facility payable, at our option, at a rate equal
to Wells Fargo base rate plus 150 basis points or at the LIBO Rate plus 250
basis points. We are also obligated to make additional quarterly payments equal
to 50% of our "excess cash flow" (as defined in the Senior Loan agreement) if
our Leverage Ratio is greater than or equal to 1 to 1 at the end of a quarter.
We expect to be able to repay the facilities with cash flow from operations. We
have the right to prepay the Term Facility in whole or in part, subject to a
prepayment premium of 1% in the first year, 0.5% in the second year and none
thereafter, with a reduction of 50% of the prepayment premium if the prepayment
is from the proceeds of another loan provided by Wells Fargo.
The Senior Loan is guaranteed by our non-regulated subsidiaries and is
secured by all of our tangible and intangible personal property (other than
aircraft), including stock in all of our direct subsidiaries, and a mortgage on
a building we recently acquired in Duncan, Oklahoma which we are remodeling to
relocate and expand our existing customer service facility in Duncan.
In addition to customary covenants for loans of a similar type, the
principal covenants for the Senior Loan are:
o a limitation on incurring any indebtedness in excess of the
remaining existing bank indebtedness outstanding and $2.3 million in
permitted capitalized leases or purchase money debt;
o a limitation on our ability pay dividends or make stock purchases,
other than with the net proceeds of the Term Loan, unless we meet certain
cash flow tests;
o a prohibition on prepayment of other debt;
o a requirement to maintain consolidated EBITDA for the nine month
period ending September 30, 2006 of at least $60 million ($55 million for
us and our top tier direct subsidiaries) and for the twelve month period
ending each quarter thereafter of at least $80 million ($75 million for us
and our top tier direct subsidiaries);
o a requirement to maintain a quarterly fixed charge coverage ratio
(EBITDA(with certain adjustments) divided by the sum of interest expense,
income taxes and scheduled principal payments) of at least 1.1 to 1;
o a requirement to maintain at least 1.3 million members; and
o a requirement to maintain a Leverage Ratio (funded indebtedness as
of the end of each quarter divided by EBITDA for the trailing twelve
months) of no more than 1.5 to 1
In addition to customary events of default, it is an event of default if
Harland Stonecipher ceases to be our Chairman and Chief Executive Officer for a
period of 120 days unless replaced with a person approved by Wells Fargo.
We used the proceeds of the Term Facility to repay in full the $5.3
remaining balance of our existing stock loan with Bank of Oklahoma, N.A., First
United Bank and Trust and Comerica Bank, which was originated in 2003 and the
$10 million we borrowed from Bank of Oklahoma, N. A. earlier in June 2006. The
related loan agreements were thereby terminated and the associated collateral
was released. As a part of the transaction, we also amended our existing real
estate loan which we incurred in 2002 to finance our new headquarters building
in Ada, Oklahoma to extend the final maturity from September, 2008 to August
2011. This loan, which has a balance of $14.3 million, remains secured by a
mortgage on our headquarters, but the additional security interest in our
membership contracts was released. We will continue to be required to make the
same monthly payments on this loan of $191,000 plus interest with the balance of
approximately $2.3 million due at maturity. The real estate loan was also
amended to conform the financial covenants to those under the new Senior Loan.
Our aircraft purchase loan originated in 2005 with an outstanding balance
of $11 million remains outstanding.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant.
See Item 1.01 above.
Item 8.01 Other Events
As a part of the use of proceeds of the new Term Facility, we announced on
June 26 our intention to commence a tender offer for 1 million shares of our
common stock during the first week of July 2006 at a purchase price of $35 per
share.
Item 9.01 Financial Statements and Exhibits.
See Exhibit Index attached.
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.
Pre-Paid Legal Services, Inc.
By: /s/ Steve Williamson
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Steve Williamson, Chief Financial Officer
Date: June 26, 2006
Exhibit Index
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|No. Description |
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|10.1 Credit Agreement dated June 23, 2006 among Pre-Paid Legal Services, |
| Inc, the lenders signatory thereto and Wells Fargo Foothill, Inc. as|
| Arranger and Administrative Agent and Bank of Oklahoma, N.A. |
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|10.2 Security Agreement dated June 23, 2006 between Pre-Paid Legal |
| Services, Inc and certain of its subsidiaries and Wells Fargo |
| Foothill, Inc., as Agent |
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|10.3 Guaranty Agreement dated June 23, 2006 between certain subsidiaries |
| of Pre-Paid Legal Services, Inc. and Wells Fargo Foothill, Inc., as |
| Agent |
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|10.4 Mortgage, Assignment of Rents and Leases and Security Agreement by |
| Pre-Paid Legal Services, Inc. in favor of Wells Fargo Foothill, Inc |
| as Agent |
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|10.5 First Amendment to Loan Agreement dated June 23, 2006 between |
| Pre-Paid Legal Services, Inc. and Bank of Oklahoma, N.A. |
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|99 Press Release dated June 26, 2006 |
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Exhibit 10.1 Credit Agreement
CREDIT AGREEMENT
by and among
PRE-PAID LEGAL SERVICES, INC.
as Borrower,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
WELLS FARGO FOOTHILL, INC.
as the Arranger and Administrative Agent
Dated as of June 23, 2006
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), is entered into as of June 23, 2006,
by and among the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and permitted assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders"),
WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, "Agent"), and PRE-PAID LEGAL SERVICES,
INC., an Oklahoma corporation ("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis determined in accordance with GAAP, unless the context
clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and that are not required by the provisions of
this Agreement to be repaid or cash collateralized. Any reference herein to any
Person shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and during the
term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrower in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to the Maximum Revolver Amount less the Letter
of Credit Usage at such time.
(b) Anything to the contrary in this Section 2.1 notwithstanding, Agent
shall have the right to establish reserves against the Maximum Revolver Amount
with respect to (i) sums that Borrower or its Subsidiaries are required to pay
under any Section of this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay, (ii) amounts
owing by Borrower or its Subsidiaries to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than a Permitted Lien),
which Lien or trust, in the Permitted Discretion of Agent likely would have a
priority superior to the Agent's Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral, and (iii) if a Default or Event of Default shall have occurred and
be continuing, any other matters, as Agent in its Permitted Discretion shall
deem necessary or appropriate.
(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement. The outstanding principal amount of the
Advances, together with interest accrued thereon, shall be due and payable on
the earlier of (i) the Maturity Date, or (ii) the date of the acceleration of
the Advances in accordance with Section 8.1(a).
2.2 Term Loan. Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan") to Borrower in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The principal of the Term Loan shall be repaid in equal
monthly installments in the amount of $1,250,000 payable on the first day of
each month commencing on August 1, 2006. The outstanding unpaid principal
balance and all accrued and unpaid interest on the Term Loan shall be due and
payable on the earlier of (i) the Maturity Date, and (ii) the date of the
acceleration of the Term Loan in accordance with Section 8.1(a). All principal
of, interest on, and other amounts payable in respect of the Term Loan shall
constitute Obligations.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent. Unless Swing Lender
is not obligated to make a Swing Loan pursuant to Section 2.3(b) below, such
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day that is the requested Funding Date specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; provided, however, that if Swing Lender is not obligated to make a Swing
Loan as to a requested Borrowing, such notice must be received by Agent no later
than 10:00 a.m. (California time) on the Business Day prior to the date that is
the requested Funding Date. At Agent's election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrower
agrees that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.
(b) Making of Swing Loans. In the case of a request for an Advance and so
long as either (i) the aggregate amount of Swing Loans made since the last
Settlement Date plus the amount of the requested Advance does not exceed
$2,500,000, or (ii) Swing Lender, in its sole discretion, shall agree to make a
Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make an
Advance in the amount of such Borrowing (any such Advance made solely by Swing
Lender pursuant to this Section 2.3(b) being referred to as a "Swing Loan" and
such Advances being referred to collectively as "Swing Loans") available to
Borrower on the Funding Date applicable thereto by transferring immediately
available funds to Borrower's Designated Account. Each Swing Loan shall be
deemed to be an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that all payments on any Swing
Loan shall be payable to Swing Lender solely for its own account. Subject to the
provisions of Section 2.3(d)(ii), Swing Lender shall not make and shall not be
obligated to make any Swing Loan if Swing Lender has actual knowledge that (i)
one or more of the applicable conditions precedent set forth in Section 3 will
not be satisfied on the requested Funding Date for the applicable Borrowing, or
(ii) the requested Borrowing would exceed the Availability on such Funding Date.
Swing Lender shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the Funding
Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be
secured by the Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base Rate
Loans.
(c) Making of Loans.
(i) In the event that Swing Lender is not obligated to make a Swing
Loan, then promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount
of such Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent's Account, not later than
10:00 a.m. (California time) on the Funding Date applicable thereto. After
Agent's receipt of the proceeds of such Advances, Agent shall make the
proceeds thereof available to Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds received by
Agent to the Designated Account; provided, however, that, subject to the
provisions of Section 2.3(d)(ii), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance if Agent
shall have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender prior to 9:00 a.m.
(California time) on the date of a Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the account of
Borrower the amount of that Lender's Pro Rata Share of the Borrowing, Agent
may assume that each Lender has made or will make such amount available to
Agent in immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make available
to Borrower on such date a corresponding amount. If and to the extent any
Lender shall not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances has made
available to Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to Agent, together
with interest at the Defaulting Lender Rate for each day during such
period. A notice submitted by Agent to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest error. If
such amount is so made available, such payment to Agent shall constitute
such Lender's Advance on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the Business
Day following the Funding Date, Agent will notify Borrower of such failure
to fund and, upon demand by Agent, Borrower shall pay such amount to Agent
for Agent's account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the interest
rate applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an Advance on
such Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on any
Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrower to Agent for the Defaulting Lender's benefit,
and, in the absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments (but only to
the extent that such Defaulting Lender's Advance was funded by the other
members of the Lender Group) or, if so directed by Borrower and if no
Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower. Subject to the foregoing, Agent may
hold and, in its Permitted Discretion, re-lend to Borrower for the account
of such Defaulting Lender the amount of all such payments received and
retained by Agent for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a "Lender" and
such Lender's Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders, Agent, and
Borrower shall have waived such Defaulting Lender's default in writing, or
(z) the Defaulting Lender makes its Pro Rata Share of the applicable
Advance and pays to Agent all amounts owing by Defaulting Lender in respect
thereof. The operation of this Section shall not be construed to increase
or otherwise affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrower
of its duties and obligations hereunder to Agent or to the Lenders other
than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Borrower at its option, upon written notice to
Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees
to execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to
being repaid its share of the outstanding Obligations (other than Bank
Product Obligations, but including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any
kind whatsoever; provided, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a
waiver of any of the Lender Groups' or Borrower's rights or remedies
against any such Defaulting Lender arising out of or in relation to such
failure to fund.
(d) Protective Advances and Optional Overadvances.
(i) Agent hereby is authorized by Borrower and the Lenders, from time
to time in Agent's sole discretion, (A) after the occurrence and during the
continuance of a Default or an Event of Default, or (B) at any time that
any of the other applicable conditions precedent set forth in Section 3 are
not satisfied, to make Advances to Borrower on behalf of the Lenders that
Agent, in its Permitted Discretion deems necessary or desirable (1) to
preserve or protect the Collateral, or any portion thereof, (2) to enhance
the likelihood of repayment of the Obligations (other than the Bank Product
Obligations), or (3) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement, including Lender Group Expenses
and the costs, fees, and expenses described in Section 9 (any of the
Advances described in this Section 2.3(d)(i) shall be referred to as
"Protective Advances"), so long as after giving effect to such Advances
(including any Overadvances pursuant to Section 2.3(d)(ii)), the
outstanding Revolver Usage (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) does not exceed
the Maximum Revolver Amount.
(ii) Any contrary provision of this Agreement notwithstanding, the
Lenders hereby authorize Agent or Swing Lender, as applicable, and either
Agent or Swing Lender, as applicable, may, but is not obligated to,
knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrower notwithstanding that an Overadvance exists or thereby
would be created, so long as after giving effect to such Advances
(including any outstanding Protective Advances pursuant to Section
2.3(d)(ii)), the outstanding Revolver Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Revolver Amount. In the event Agent
obtains actual knowledge that the Revolver Usage exceeds the amounts
permitted by the immediately foregoing provisions, regardless of the amount
of, or reason for, such excess, Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account
for interest, fees, or Lender Group Expenses) unless Agent determines that
prior notice would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall be
implemented with Borrower intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower to an amount
permitted by the preceding paragraph. In such circumstances, if any Lender
with a Revolver Commitment objects to the proposed terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the Required
Lenders. Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in Section 2.3(e) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(d)(ii), and any Overadvances resulting from the charging to the
Loan Account of interest, fees, or Lender Group Expenses.
(iii) Each Protective Advance and each Overadvance shall be deemed to
be an Advance hereunder, except that no Protective Advance or Overadvance
shall be eligible to be a LIBOR Rate Loan and all payments on the
Protective Advances shall be payable to Agent solely for its own account.
The Protective Advances and Overadvances shall be repayable on demand,
secured by the Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base
Rate Loans. The provisions of this Section 2.3(d) are for the exclusive
benefit of Agent, Swing Lender, and the Lenders and are not intended to
benefit Borrower in any way.
(e) Settlement. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the
Advances, the Swing Loans, and the Protective Advances shall take place on a
periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the Lenders on
a weekly basis, or on a more frequent basis if so determined by Agent (1)
on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2)
for itself, with respect to the outstanding Protective Advances, and (3)
with respect to the Loan Parties' Collections received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Advances, Swing Loans, and
Protective Advances for the period since the prior Settlement Date. Subject
to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender's balance of the Advances (including Swing
Loans and Protective Advances) exceeds such Lender's Pro Rata Share of the
Advances (including Swing Loans and Protective Advances) as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. (California time) on
the Settlement Date, transfer in immediately available funds to a Deposit
Account of such Lender (as such Lender may designate), an amount such that
each such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing Loans
and Protective Advances), and (z) if a Lender's balance of the Advances
(including Swing Loans and Protective Advances) is less than such Lender's
Pro Rata Share of the Advances (including Swing Loans and Protective
Advances) as of a Settlement Date, such Lender shall no later than 12:00
p.m. (California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances (including Swing Loans and Protective
Advances). Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Swing Loans or Protective Advances and, together with the
portion of such Swing Loans or Protective Advances representing Swing
Lender's Pro Rata Share thereof, shall constitute Advances of such Lenders.
If any such amount is not made available to Agent by any Lender on the
Settlement Date applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account such amount on
demand from such Lender together with interest thereon at the Defaulting
Lender Rate.
(ii) In determining whether a Lender's balance of the Advances, Swing
Loans, and Protective Advances is less than, equal to, or greater than such
Lender's Pro Rata Share of the Advances, Swing Loans, and Protective
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually received
in good funds by Agent with respect to principal, interest, fees payable by
Borrower and allocable to the Lenders hereunder, and proceeds of
Collateral. To the extent that a net amount is owed to any such Lender
after such application, such net amount shall be distributed by Agent to
that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Protective
Advances or Swing Loans are outstanding, may pay over to Swing Lender any
payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections of Borrower or its Subsidiaries received since
the then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent for
the accounts of the Lenders, and Agent shall pay to the Lenders, to be
applied to the outstanding Advances of such Lenders, an amount such that
each Lender shall, upon receipt of such amount, have, as of such Settlement
Date, its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Protective Advances, and each Lender (subject to the effect of
agreements between Agent and individual Lenders) with respect to the
Advances other than Swing Loans and Protective Advances, shall be entitled
to interest at the applicable rate or rates payable under this Agreement on
the daily amount of funds employed by Swing Lender, Agent, or the Lenders,
as applicable.
(f) Notation. Agent shall record on its books the principal amount of the
Advances owing to each Lender, including the Swing Loans owing to Swing Lender,
and Protective Advances owing to Agent, and the interests therein of each
Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate.
(g) Lenders' Failure to Perform. All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
2.4 Payments.
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein, all payments by
Borrower shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 11:00
a.m. (California time) on the date specified herein. Any payment received
by Agent later than 11:00 a.m. (California time) shall be deemed to have
been received on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the date on
which any payment is due to the Lenders that Borrower will not make such
payment in full as and when required, Agent may assume that Borrower has
made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due
date an amount equal to the amount then due such Lender. If and to the
extent Borrower does not make such payment in full to Agent on the date
when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment and Application.
(i) So long as no Event of Default has occurred and is continuing and
except as otherwise provided with respect to Defaulting Lenders, all
principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to
which such payments relate held by each Lender) and all payments of fees
and expenses (other than fees or expenses that are for Agent's separate
account) shall be apportioned ratably among the Lenders having a Pro Rata
Share of the type of Commitment or Obligation to which a particular fee or
expense relates. All payments to be made hereunder by Borrower shall be
remitted to Agent and all (subject to Section 2.4(b)(iv) hereof) such
payments, and all proceeds of Collateral received by Agent, shall be
applied, so long as no Event of Default has occurred and is continuing, to
reduce the balance of the Advances outstanding and, thereafter, to Borrower
(to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) At any time that an Event of Default has occurred and is
continuing and except as otherwise provided with respect to Defaulting
Lenders, all payments remitted to Agent and all proceeds of Collateral
received by Agent shall be applied as follows:
(A) first, to pay any Lender Group Expenses (including cost or
expense reimbursements) or indemnities then due to Agent under the
Loan Documents, until paid in full,
(B) second, to pay any fees or premiums then due to Agent under
the Loan Documents until paid in full,
(C) third, to pay interest due in respect of all Protective
Advances until paid in full,
(D) fourth, to pay the principal of all Protective Advances until
paid in full,
(E) fifth, ratably to pay any Lender Group Expenses (including
cost or expense reimbursements) or indemnities then due to any of the
Lenders under the Loan Documents, until paid in full,
(F) sixth, ratably to pay any fees or premiums then due to any of
the Lenders under the Loan Documents until paid in full,
(G) seventh, ratably to pay interest due in respect of the
Advances (other than Protective Advances), the Swing Loans, and the
Term Loan until paid in full,
(H) eighth, ratably (i) to pay the principal of all Swing Loans
until paid in full, (ii) to pay the principal of all Advances until
paid in full, (iii) to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the Letter
of Credit Usage, (iv) to Agent, to be held by Agent, for the benefit
of the Bank Product Providers, as cash collateral in an amount up to
the amount of the Bank Product Reserve established prior to the
occurrence of, and not in contemplation of, the subject Event of
Default, and (v) to pay the outstanding principal balance of the Term
Loan (in the inverse order of the maturity of the installments due
thereunder) until the Term Loan is paid in full,
(I) ninth, to pay any other Obligations (including the provision
of amounts to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount
determined by Agent in its Permitted Discretion as the amount
necessary to secure Borrower's and its Subsidiaries' obligations in
respect of Bank Products), and
(J) tenth, to Borrower (to be wired to the Designated Account) or
such other Person entitled thereto under applicable law.
(iii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(e).
(iv) In each instance, so long as no Event of Default has occurred and
is continuing, Section 2.4(b)(i) shall not apply to any payment made by
Borrower to Agent and specified by Borrower to be for the payment of
specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(v) For purposes of Section 2.4(b)(ii), "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees, interest
(and specifically including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not any of the foregoing would be or is allowed
or disallowed in whole or in part in any Insolvency Proceeding.
(vi) In the event of a direct conflict between the priority provisions
of this Section 2.4 and any other provision contained in any other Loan
Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of
this Section 2.4 shall control and govern.
(c) Prepayments.
(i) Borrower may, upon at least 5 Business Days prior written notice
to Agent, prepay the principal of the Term Loan in whole or in part, which
payments shall be applied in accordance with Section 2.4(d)(i). Each
partial prepayment of the Term Loan shall be in a minimum amount of
$1,000,000 and integral multiples of $100,000 in excess thereof.
(ii) Immediately upon the receipt by Borrower or any of its
Subsidiaries of the proceeds of any voluntary or involuntary sale or
disposition by Borrower or any of its Subsidiaries of property or assets
(including casualty losses or condemnations but excluding sales or
dispositions which qualify as Permitted Dispositions under clauses (a),
(b), (c), or (d) of the definition of Permitted Dispositions), Borrower
shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(d)(ii) in an amount equal to 100% of the Net
Cash Proceeds (including condemnation awards and payments in lieu thereof)
received by such Person in connection with such sales or dispositions;
provided that, so long as (A) no Default or Event of Default shall have
occurred and is continuing, (B) Borrower shall have given Agent prior
written notice of Borrower's intention to apply such monies to the costs of
replacement of the properties or assets that are the subject of such sale
or disposition or the cost of purchase or construction of other assets
useful in the business of Borrower or its Subsidiaries, (C) the monies are
held in a cash collateral account in which Agent has a perfected
first-priority security interest, and (D) Borrower or its Subsidiaries, as
applicable, complete such replacement, purchase, or construction within 180
days after the initial receipt of such monies, Borrower and its
Subsidiaries shall have the option to apply such monies to the costs of
replacement of the property or assets that are the subject of such sale or
disposition or the costs of purchase or construction of other assets useful
in the business of Borrower and its Subsidiaries unless and to the extent
that such applicable period shall have expired without such replacement,
purchase or construction being made or completed, in which case, any
amounts remaining in the cash collateral account shall be paid to Agent and
applied in accordance with Section 2.4(d)(ii); provided further that in the
case of a voluntary or involuntary sale or disposition by a Regulated
Subsidiary, the Net Cash Proceeds of such sale or disposition shall not be
required to be used to prepay the Obligations if (x) such Regulated
Subsidiary is prohibited by applicable law or regulation from distributing
such Net Cash Proceeds to a Loan Party, or (y) distributing such Net Cash
Proceeds to Loan Party would cause such Regulated Subsidiary to be out of
compliance with any reserve requirements applicable to it under applicable
law or regulation. Nothing contained in this Section 2.4(c)(ii) shall
permit Borrower or any of its Subsidiaries to sell or otherwise dispose of
any property or assets other than in accordance with Section 6.4.
(iii) Immediately upon the receipt by Borrower or any of its
Subsidiaries of any Extraordinary Receipts, Borrower shall prepay the
outstanding principal amount of the Obligations in accordance with Section
2.4(d)(ii) in an amount equal to 100% of such Extraordinary Receipts, net
of any reasonable expenses incurred in collecting such Extraordinary
Receipts; provided that in the case of any Extraordinary Receipts received
by a Regulated Subsidiary, such Extraordinary Receipts shall not be
required to be used to prepay the Obligations if (A) such Regulated
Subsidiary is prohibited by applicable law or regulation from distributing
such Extraordinary Receipts to a Loan Party, or (B) distributing such
Extraordinary Receipts to a Loan Party would cause such Regulated
Subsidiary to be out of compliance with any reserve requirements applicable
to it under applicable law or regulation.
(iv) Immediately upon the issuance or incurrence by Borrower or any of
its Subsidiaries of any Indebtedness (other than Indebtedness permitted
under Section 6.1(a), (b), (c), (d), (e), (f), or (g) or the issuance by
Borrower or any of its Subsidiaries of any shares of its or their Stock
(other than in the event that Borrower or any Subsidiary of Borrower forms
any Subsidiary in accordance with the terms hereof, the issuance by such
Subsidiary of Stock to Borrower or such Subsidiary, as applicable),
Borrower shall prepay the outstanding principal amount of the Obligations
in accordance with Section 2.4(d)(ii) in an amount equal to 100% of the Net
Cash Proceeds received by such Person in connection with such issuance or
incurrence; provided that in the case of any issuance or incurrence by any
Regulated Subsidiary of any Indebtedness or the issuance by any Regulated
Subsidiary of any shares of its Stock, the Net Cash Proceeds of such
issuance or incurrence shall not be required to be used to prepay the
Obligations if (A) such Regulated Subsidiary is prohibited by applicable
law or regulation from distributing such Net Cash Proceeds to a Loan Party,
or (B) distributing such Net Cash Proceeds to a Loan Party would cause such
Regulated Subsidiary to be out of compliance with any reserve requirements
applicable to it under applicable law or regulation. The provisions of this
Section 2.4(c)(iv) shall not be deemed to be implied consent to any such
issuance or incurrence otherwise prohibited by the terms and conditions of
this Agreement.
(v) (A) Within 10 days of delivery to Agent of quarterly financial
statements pursuant to Section 5.3, commencing with the delivery to Agent
of the financial statements for Borrower's fiscal quarter ended September
30, 2006 (or, if such financial statements are not delivered to Agent on
the date such statements are required to be delivered pursuant to Section
5.3, 10 days after the date such statements are required to be delivered to
Agent pursuant to Section 5.3), Borrower shall, if such financial
statements demonstrate that the Leverage Ratio was greater than or equal to
1.00:1.00 as of the end of such fiscal quarter, prepay the outstanding
principal amount of the Obligations in accordance with Section 2.4(d)(ii)
in an amount equal to the result of (x) 50% of the Excess Cash Flow of
Borrower and its Subsidiaries for such fiscal quarter minus (y) the amount
of all voluntary prepayments of the Term Loan made during such fiscal
quarter pursuant to Section 2.4(c)(i); provided that solely for the
purposes of this Section 2.4(c)(v)(A), the Leverage Ratio for the fiscal
quarter ended September 30, 2006 shall be equal to (1) the amount of
Borrower's Funded Indebtedness as of such date minus the amount of
Borrower's Qualified Cash as of such date divided by (2) Borrower's EBITDA
for the 12 month period ended as of such date, and
(B) within 10 days of delivery to the Agent of the audited annual
financial statements pursuant to Section 5.3, commencing with the delivery
to Agent of the financial statements for the fiscal year ended December 31,
2006 (or, if such financial statements are not delivered to Agent on the
date such statements are required to be delivered pursuant to Section 5.3,
within 10 days of the date such statements are required to be delivered to
Agent pursuant to Section 5.3), Borrower shall, if such financial
statements demonstrate that Borrower's Leverage Ratio was greater than or
equal to 1.00:1.00 as of the end of such fiscal year, prepay the
outstanding Obligations in an amount equal to the result of (x) the result
of (1) 50% of the Excess Cash Flow of Borrower and its Subsidiaries for
such fiscal year minus (2) the amount of all voluntary prepayments of the
Term Loan made during such fiscal year pursuant to Section 2.4(c)(i) minus
(y) the amount of all prepayments made during such fiscal year pursuant to
Section 2.4(c)(v)(A); provided that solely for the fiscal year ended
December 31, 2006, Excess Cash Flow of Borrower and its Subsidiaries for
such fiscal year shall be equal to the result of (I) Excess Cash Flow of
Borrower and its Subsidiaries for such fiscal year as demonstrated by
Borrower's annual audited financial statements delivered for such fiscal
year minus (II) Excess Cash Flow of Borrower and its Subsidiaries for the
first two fiscal quarters of such fiscal year as demonstrated by Borrower's
quarterly financial statements for such fiscal quarters.
(d) Application of Payments.
(i) Each prepayment pursuant to Section 2.4(c)(i) shall be accompanied
by the payment of accrued interest to the date of such payment on the
amount prepaid and applied against the remaining installments of principal
of the Term Loan in the inverse order of their maturity.
(ii) Each prepayment pursuant to Section 2.4(c)(ii), 2.4(c)(iii),
2.4(c)(iv), or 2.4(c)(v) above shall be without premium or penalty and
shall be applied (A) so long as no Event of Default shall have occurred and
be continuing, first, to the outstanding principal amount of the Term Loan
until paid in full, second, to the outstanding principal amount of the
Advances (with a corresponding permanent reduction in the Maximum Revolver
Amount) until paid in full, and third, to cash collateralize the Letters of
Credit in an amount equal to 105% of the then extant Letter of Credit Usage
(with a corresponding permanent reduction in the Maximum Revolver Amount),
and (B) if an Event of Default shall have occurred and be continuing, shall
be applied in the manner set forth in Section 2.4(b)(ii). Each such
prepayment of the Term Loan shall be applied against the remaining
installments of principal of the Term Loan in the inverse order of
maturity.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lender Group pursuant to Section 2.1 or
Section 2.12 is greater than any of the limitations set forth in Section 2.1 or
Section 2.12, as applicable (an "Overadvance"), Borrower immediately shall pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). Borrower promises to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full on the Maturity Date or,
if earlier, on the date on which the Obligations are declared due and payable
pursuant to the terms of this Agreement.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit and except for Bank Product Obligations)
that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof as follows (i) if the relevant
Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate
plus the LIBOR Rate Margin, (ii) if the relevant Obligation is a Base Rate Loan,
at a per annum rate equal to the Base Rate plus the Base Rate Margin, and (iii)
otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.
(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit
of the Lenders with a Revolver Commitment, subject to any agreements between
Agent and individual Lenders), a Letter of Credit fee (in addition to the
charges, commissions, fees, and costs set forth in Section 2.12(e)) which shall
accrue at a rate equal to 2.50% per annum times the Daily Balance of the undrawn
amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of an
Event ofDefault (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 2.0 percentage points above the per
annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for in Section 2.6(b) shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Except as provided to the contrary in Section 2.11 or Section
2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time
that Obligations or Commitments are outstanding. Borrower hereby authorizes
Agent, from time to time without prior notice to Borrower, to charge all
interest and fees (when due and payable), all Lender Group Expenses (as and when
incurred), all charges, commissions, fees, and costs provided for in Section
2.12(e) (as and when accrued or incurred), all fees and costs provided for in
Section 2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loan and including any amounts due and payable
to the Bank Product Providers in respect of Bank Products up to the amount of
the Bank Product Reserve) to the Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans. Any interest not paid when due
shall be compounded by being charged to the Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans.
(e) Computation. All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360 day year for the actual number of days
elapsed. In the event the Base Rate is changed from time to time hereafter, the
rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
(a) Borrower shall and shall cause each of the other Loan Parties to (i)
establish and maintain cash management services of a type and on terms
satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a)
(each a "Cash Management Bank"), and shall request in writing and otherwise take
such reasonable steps to ensure that all of its and its Subsidiaries' Account
Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in any
event no later than the first Business Day after the date of receipt thereof,
all of their Collections (including those sent directly by their Account Debtors
to Borrower or one of the other Loan Parties) into one or more bank accounts
(each, a "Cash Management Account") at one or more of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Control
Agreements with Agent and Borrower. Each such Control Agreement shall provide,
among other things, that (i) the Cash Management Bank will comply with any
instructions originated by Agent directing the disposition of the funds in such
Cash Management Account without further consent by Borrower or its Subsidiaries,
as applicable, (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account
other than for payment of its service fees and other charges directly related to
the administration of such Cash Management Account and for returned checks or
other items of payment (including payments made by electronic fund transfer,
including ACH Transactions), and (iii) upon the instruction of Agent, the Cash
Management Bank will forward, by daily sweep, all amounts in the applicable Cash
Management Account to the Agent's Account; provided, however, that Agent hereby
agrees that no such instruction shall be given pursuant to clause (i) or clause
(ii) of this Section unless an Event of Default has occurred and is continuing.
(c) So long as no Event of Default has occurred and is continuing, Borrower
may amend Schedule 2.7(a) to add or replace a Cash Management Bank or Cash
Management Account; provided, however, that (i) such prospective Cash Management
Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of
the opening of such Cash Management Account, Borrower (or its Subsidiary, as
applicable) and such prospective Cash Management Bank shall have executed and
delivered to Agent a Control Agreement. Borrower (or its Subsidiaries, as
applicable) shall close any of its Cash Management Accounts (and establish
replacement cash management accounts in accordance with the foregoing sentence)
promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Control Agreement
with such Cash Management Bank is no longer acceptable in Agent's reasonable
judgment.
(d) Each Cash Management Account shall be a cash collateral account subject
to a Control Agreement.
2.8 Crediting Payments. The receipt of any payment item by Agent (whether
from transfers to Agent by the Cash Management Banks pursuant to the Control
Agreements with respect thereto or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time).
2.9 Designated Account. Agent is authorized to make the Advances and the
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person or, without instructions, if
pursuant to Section 2.6(d). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance,
Protective Advance, or Swing Loan requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with the Term Loan, all Advances (including
Protective Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders
to Borrower or for Borrower's account, the Letters of Credit issued by Issuing
Lender for Borrower's account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Agent from Borrower or for Borrower's account, including all amounts
received in the Agent's Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrower and the Lender Group unless, within 30 days
after receipt thereof by Borrower, Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.
2.11 Fees. Borrower shall pay to Agent, as and when due and payable under
the terms of the Fee Letter, the fees set forth in the Fee Letter.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrower (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Wells Fargo) for the account of Borrower.
Each request for the issuance of a Letter of Credit, or the amendment, renewal,
or extension of any outstanding Letter of Credit, shall be made in writing by an
Authorized Person and delivered to the Issuing Lender and Agent via hand
delivery, telefacsimile, or other electronic method of transmission reasonably
in advance of the requested date of issuance, amendment, renewal, or extension.
Each such request shall be in form and substance satisfactory to the Issuing
Lender in its Permitted Discretion and shall specify (i) the amount of such
Letter of Credit, (ii) the date of issuance, amendment, renewal, or extension of
such Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv)
the name and address of the beneficiary thereof (or the beneficiary of the
Underlying Letter of Credit, as applicable), and (v) such other information
(including, in the case of an amendment, renewal, or extension, identification
of the outstanding Letter of Credit to be so amended, renewed, or extended) as
shall be necessary to prepare, amend, renew, or extend such Letter of Credit. If
requested by the Issuing Lender, Borrower also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to
issue a Letter of Credit if after giving effect to the issuance of such
requested Letter of Credit, the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the outstanding amount of Advances less the Bank Product
Reserve, and less the aggregate amount of reserves, if any, established by Agent
under Section 2.1(b).
Borrower and the Lender Group acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit, if applicable) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, initially, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans. To the extent an L/C Disbursement is deemed
to be an Advance hereunder, Borrower's obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance, and no
Default or Event of Default shall arise from such discharge of Borrower's
reimbursement obligation. Promptly following receipt by Agent of any payment
from Borrower pursuant to this paragraph, Agent shall distribute such payment to
the Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(b) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro
Rata Share of any Advance deemed made pursuant to the foregoing subsection on
the same terms and conditions as if Borrower had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitments, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrower on the date due as provided in Section 2.12(a), or of any
reimbursement payment required to be refunded to Borrower for any reason. Each
Lender with a Revolver Commitment acknowledges and agrees that its obligation to
deliver to Agent, for the account of the Issuing Lender, an amount equal to its
respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender
pursuant to this Section 2.12(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3. If any such Lender fails to make available to Agent the amount of
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
in respect of such Letter of Credit as provided in this Section, such Lender
shall be deemed to be a Defaulting Lender and Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Borrower agrees to be bound by
the Underlying Issuer's regulations and interpretations of any Underlying Letter
of Credit or by Issuing Lender's interpretations of any L/C issued by Issuing
Lender to or for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and agrees that the
Lender Group shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrower's instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the L/C Undertakings may require
Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrower against such Underlying Issuer.
Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
harmless with respect to any loss, cost, expense (including reasonable attorneys
fees), or liability incurred by the Lender Group under any L/C Undertaking as a
result of the Lender Group's indemnification of any Underlying Issuer; provided,
however, that Borrower shall not be obligated hereunder to indemnify for any
loss, cost, expense, or liability to the extent that it is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group. Borrower hereby acknowledges and agrees that neither the
Lender Group nor the Issuing Lender shall be responsible for delays, errors, or
omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.
(d) Borrower hereby authorizes and directs any Underlying Issuer to deliver
to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all issuance charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the undrawn amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change after the Closing Date in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the Lender
Group any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto, and the result of the foregoing is
to increase, directly or indirectly, the cost to the Lender Group of
issuing, making, guaranteeing, or maintaining any Letter of Credit or to
reduce the amount receivable in respect thereof by the Lender Group, then,
and in any such case, Agent may, at any time within a reasonable period
after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional
cost or reduced receipt, together with interest on such amount from the
date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting
forth the calculation thereof in reasonable detail, shall, in the absence
of manifest or demonstrable error, be final and conclusive and binding on
all of the parties hereto.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having interest charged
at the rate based upon the Base Rate, Borrower shall have the option (the "LIBOR
Option") to have interest on all or a portion of the Advances or the Term Loan
be charged (whether at the time when made (unless otherwise provided herein),
upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation
of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the
LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i)
the last day of the Interest Period applicable thereto, (provided, however,
that, subject to the following clauses (ii) and (iii), in the case of any
Interest Period greater than 3 months in duration, interest shall be payable at
3 month intervals after the commencement of the applicable Interest Period and
on the last day of such Interest Period), (ii) the date on which all or any
portion of the Obligations are accelerated pursuant to the terms hereof, or
(iii) the date on which this Agreement is terminated pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances or the Term Loan bear interest at
a rate based upon the LIBOR Rate and Agent shall have the right to convert the
interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to
Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time, so long as no
Event of Default has occurred and is continuing, elect to exercise the
LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the proposed Interest
Period (the "LIBOR Deadline"). Notice of Borrower's election of the LIBOR
Option for a permitted portion of the Advances or the Term Loan and an
Interest Period pursuant to this Section shall be made by delivery to Agent
of a LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be
confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to
5:00 p.m. (California time) on the same day). Promptly upon its receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each of the
affected Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding on Borrower.
In connection with each LIBOR Rate Loan, Borrower shall indemnify, defend,
and hold Agent and the Lenders harmless against any loss, cost, or expense
incurred by Agent or any Lender as a result of (A) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(B) the conversion of any LIBOR Rate Loan other than on the last day of the
Interest Period applicable thereto, or (C) the failure to borrow, convert,
continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR
Notice delivered pursuant hereto (such losses, costs, or expenses, "Funding
Losses"). Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount determined by Agent or such Lender to be the
excess, if any, of (1) the amount of interest that would have accrued on
the principal amount of such LIBOR Rate Loan had such event not occurred,
at the LIBOR Rate that would have been applicable thereto, for the period
from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert, or
continue, for the period that would have been the Interest Period
therefor), minus (2) the amount of interest that would accrue on such
principal amount for such period at the interest rate which Agent or such
Lender would be offered were it to be offered, at the commencement of such
period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Borrower
setting forth any amount or amounts that Agent or such Lender is entitled
to receive pursuant to this Section 2.13 shall be conclusive absent
manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in effect
at any given time. Borrower only may exercise the LIBOR Option for LIBOR
Rate Loans of at least $1,000,000 and integral multiples of $500,000 in
excess thereof.
(c) Conversion. Borrower may convert LIBOR Rate Loans to Base Rate Loans at
any time; provided, however, that in the event that LIBOR Rate Loans are
converted or prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Agent of proceeds of Borrower's and its
Subsidiaries' Collections in accordance with Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, Borrower shall indemnify, defend, and hold Agent and the Lenders and
their Participants harmless against any and all Funding Losses in accordance
with Section 2.13 (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender
on a prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar deposits or
increased costs, in each case, due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed
by the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding or maintaining loans bearing interest at the
LIBOR Rate. In any such event, the affected Lender shall give Borrower and
Agent notice of such a determination and adjustment and Agent promptly
shall transmit the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Borrower may, by notice to such affected
Lender (y) require such Lender to furnish to Borrower a statement setting
forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any
amounts due under Section 2.13(b)(ii)).
(ii) In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date
hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Rate Loans or to
continue such funding or maintaining, or to determine or charge interest
rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Borrower and Agent promptly shall transmit the
notice to each other Lender and (y) in the case of any LIBOR Rate Loans of
such Lender that are outstanding, the date specified in such Lender's
notice shall be deemed to be the last day of the Interest Period of such
LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate
Loans, and (z) Borrower shall not be entitled to elect the LIBOR Option
until such Lender determines that it would no longer be unlawful or
impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary contained
herein notwithstanding, neither Agent, nor any Lender, nor any of their
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The obligation
of each Lender to make its initial extension of credit provided for hereunder,
is subject to the fulfillment, to the satisfaction of Agent and each Lender of
each of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent ).
3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:
(a) the representations and warranties of Borrower contained in this
Agreement or in the other Loan Documents shall be true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on and as of the date of such
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof;
(c) no injunction, writ, restraining order, or other order of any nature
restricting or prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Agent, or any Lender; and
(d) no Material Adverse Change shall have occurred since March 31, 2006.
3.3 Conditions Subsequent. The obligation of the Lender Group (or any
member thereof) to continue to make Advances (or to cause to be issued any
Letters of Credit or to otherwise extend credit hereunder) is subject to the
fulfillment, to the satisfaction of the Agent and each Lender, or waiver thereof
in writing, on or before the date applicable thereto, of each of the following
conditions subsequent (the failure by Borrowers to so perform or cause to be
performed constituting an Event of Default):
(a) Within 5 days of the Closing Date, Agent shall have received additional
insured and loss payable endorsements, in form and substance reasonably
satisfactory to Agent, relating to the insurance coverage required by Section
5.8.
(b) Within 5 days of the Closing Date, Agent shall have received (i) an
original re-issued stock certificate representing all of the Stock of Pre-Paid
Legal Access, Inc., an Oklahoma corporation, accompanied by an undated stock
power executed in blank (all in form and substance reasonably satisfactory to
Agent (including with respect to the legend on the back of such stock
certificate)), and (ii) an original undated stock power executed in blank for
the stock certificate representing all of the Stock of PPL Agency, Inc., an
Oklahoma corporation, in form and substance satisfactory to Agent. 3.4 Term.
This Agreement shall continue in full force and effect for a term ending on June
23, 2011 (the "Maturity Date"). The foregoing notwithstanding, the Lender Group,
upon the election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
3.4 Term. This Agreement shall continue in full force and effect for a term
ending on June 23, 2011 (the "Maturity Date"). The foregoing notwithstanding,
the Lender Group, upon the election of the Required Lenders, shall have the
right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations). No termination of this
Agreement, however, shall relieve or discharge the Loan Parties of their duties,
Obligations, or covenants hereunder or under any other Loan Document and the
Agent's Liens in the Collateral shall remain in effect until all Obligations
have been paid in full and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been paid in full and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrower's sole expense, execute and
deliver any termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 Early Termination by Borrower. Borrower has the option, at any time
upon 10 days prior written notice to Agent, to terminate this Agreement and
terminate the Commitments hereunder by paying to Agent, in cash, the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations), in full. If Borrower
has sent a notice of termination pursuant to the provisions of this Section,
then the Commitments shall terminate and Borrower shall be obligated to repay
the Obligations (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of the
Bank Product Providers with respect to the Bank Product Obligations), in full,
on the date set forth as the date of termination of this Agreement in such
notice.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, Borrower makes
the following representations and warranties to the Lender Group which shall be
true, correct, and complete, in all material respects, as of the date hereof,
and shall be true, correct, and complete, in all material respects, as of the
Closing Date and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
4.1 No Encumbrances. Borrower and its Subsidiaries have good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property, in each case, free and clear of Liens except for Permitted Liens.
4.2 [Intentionally Omitted].
4.3 [Intentionally Omitted].
4.4 Equipment. Each material item of Equipment of Borrower and its
Subsidiaries is used or held for use in their business and is in good working
order, ordinary wear and tear and damage by casualty excepted.
4.5 Location of Inventory and Equipment. The Inventory and Equipment (other
than vehicles or Equipment out for repair) of Borrower and its Subsidiaries are
not stored with a bailee, warehouseman, or similar party and are located only
at, or in-transit between, the locations identified on Schedule 4.5 (as such
Schedule may be updated pursuant to Section 5.9).
4.6 Inventory Records. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.
4.7 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.
(a) The name of (within the meaning of Section 9-503 of the Code) and
jurisdiction of organization of Borrower and each of its Subsidiaries is set
forth on Schedule 4.7(a) (as such Schedule may be updated from time to time to
reflect changes permitted to be made under Section 6.5).
(b) The chief executive office of Borrower and each of its Subsidiaries is
located at the address indicated on Schedule 4.7(b) (as such Schedule may be
updated from time to time to reflect changes permitted to be made under Section
5.9).
(c) Borrower's and each of its Subsidiaries' tax identification numbers and
organizational identification numbers, if any, are identified on Schedule 4.7(c)
(as such Schedule may be updated from time to time to reflect changes permitted
to be made under Section 6.5).
(d) As of the Closing Date, Borrower and its Subsidiaries do not hold any
commercial tort claims, except as set forth on Schedule 4.7(d).
4.8 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good standing under the
laws of the jurisdiction of its organization and qualified to do business in any
state where the failure to be so qualified reasonably could be expected to
result in a Material Adverse Change.
(b) Set forth on Schedule 4.8(b) (as such Schedule may be updated from time
to time to reflect changes permitted to be made under Section 5.16), is a
complete and accurate description of the authorized capital Stock of Borrower,
by class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described on
Schedule 4.8(b), there are no subscriptions, options, warrants, or calls
relating to any shares of Borrower's capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Borrower is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital Stock or any
security convertible into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 4.8(c) (as such Schedule may be updated from time
to time to reflect changes permitted to be made under Section 5.16), is a
complete and accurate list of Borrower's direct and indirect Subsidiaries,
showing: (i) the jurisdiction of their organization, (ii) the number of shares
of each class of common and preferred Stock authorized for each of such
Subsidiaries, and (iii) the number and the percentage of the outstanding shares
of each such class owned directly or indirectly by Borrower. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.
(d) Except as set forth on Schedule 4.8(c), there are no subscriptions,
options, warrants, or calls relating to any shares of Borrower's Subsidiaries'
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower's Subsidiaries'
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
4.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower of this Agreement
and the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of this Agreement
and the other Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to Borrower, the Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation of Borrower,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than Permitted
Liens, or (iv) require any approval of Borrower's interestholders or any
approval or consent of any Person under any material contractual obligation of
Borrower, other than consents or approvals that have been obtained and that are
still in force and effect.
(c) Other than the filing of financing statements, and other filings or
actions necessary to perfect Liens granted to Agent in the Collateral, and
post-Closing Date filings as may be required under the Exchange Act, the
execution, delivery, and performance by Borrower of this Agreement and the other
Loan Documents to which Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority, other than consents or approvals that have
been obtained and that are still in force and effect.
(d) This Agreement and the other Loan Documents to which Borrower is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected (other than (i) in
respect of motor vehicles and (ii) any Deposit Accounts and Securities Accounts
not subject to a Control Agreement as permitted by Section 6.12, and subject
only to the filing of financing statements), and first priority Liens, subject
only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party do not and will not (i) violate any provision
of federal, state, or local law or regulation applicable to such Guarantor, the
Governing Documents of such Guarantor, or any order, judgment, or decree of any
court or other Governmental Authority binding on such Guarantor, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor's interestholders or any
approval or consent of any Person under any material contractual obligation of
such Guarantor, other than consents or approvals that have been obtained and
that are still in force and effect.
(h) Other than the filing of financing statements, the recordation of the
Mortgage, and other filings or actions necessary to perfect Liens granted to
Agent in the Collateral, the execution, delivery, and performance by each
Guarantor of the Loan Documents to which such Guarantor is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than consents or
approvals that have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Guarantor will be the legally valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
4.10 Litigation. Other than those matters disclosed on Schedule 4.10, there
are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower or any of its Subsidiaries, that (a) if
adversely determined, could reasonably be expected to result in a Material
Adverse Change, or (b) relates to this Agreement or any other Loan Document or
any transaction contemplated hereby or thereby.
4.11 No Material Adverse Change. All financial statements relating to
Borrower and its Subsidiaries that have been delivered by Borrower to the Lender
Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrower's and its Subsidiaries' financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrower and its Subsidiaries since March 31,
2006.
4.12 Fraudulent Transfer.
(a) Each of Borrower and each of its Subsidiaries is Solvent.
(b) No transfer of property is being made by Borrower or its Subsidiaries
and no obligation is being incurred by Borrower or its Subsidiaries in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or its Subsidiaries.
4.13 Employee Benefits. Neither Borrower, nor any of its Subsidiaries, nor
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
4.14 Environmental Condition. Except as set forth on Schedule 4.14, (a) to
Borrower's knowledge, none of Borrower's or its Subsidiaries' properties or
assets has ever been used by Borrower, its Subsidiaries, or by previous owners
or operators in the disposal of, or to produce, store, handle, treat, release,
or transport, any Hazardous Materials, where such use, production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of any applicable Environmental Law, (b) to Borrower's knowledge, none
of Borrower's or its Subsidiaries' properties or assets has ever been designated
or identified in any manner pursuant to any environmental protection statute as
a Hazardous Materials disposal site, (c) neither Borrower nor any of its
Subsidiaries has received notice that a Lien arising under any Environmental Law
has attached to any revenues or to any Real Property owned or operated by
Borrower or its Subsidiaries, and (d) neither Borrower nor its Subsidiaries has
received a summons, citation, notice, or directive from the United States
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower or its Subsidiaries
resulting in the releasing or disposing of Hazardous Materials into the
environment.
4.15 Intellectual Property. Borrower and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted, and attached hereto as Schedule 4.15 (as updated from time to time)
is a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which Borrower or one of its Subsidiaries is the owner or is
an exclusive licensee; provided, however, that Borrower may amend Schedule 4.15
to add additional property so long as such amendment occurs by written notice to
Agent not less than 10 days before the date on which Borrower or any Subsidiary
of Borrower acquires any such property after the Closing Date.
4.16 Leases. Borrower and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and all of such material leases are
valid and subsisting and no material default by Borrower or its Subsidiaries
exists under any of them.
4.17 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17
is a listing of all of the Loan Parties' Deposit Accounts and Securities
Accounts, including, with respect to each bank or securities intermediary (a)
the name and address of such Person, and (b) the account numbers of the Deposit
Accounts or Securities Accounts maintained with such Person.
4.18 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Subsidiaries in writing to Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrower or its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Borrower's good faith estimate of
its and its Subsidiaries future performance for the periods covered thereby
based upon assumptions believed by Borrower to be reasonable at the time of the
delivery thereof to Agent (it being understood that such projections and
forecasts are subject to uncertainties and contingencies, many of which are
beyond the control of Borrower and its Subsidiaries and no assurances can be
given that such projections or forecasts will be realized).
4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list
of all Indebtedness of Borrower and its Subsidiaries (other than Indebtedness
permitted by Section 6.1 (other than clause (b) thereof)) outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately sets forth the aggregate principal
amount of such Indebtedness and the principal terms thereof.
5. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations, Borrower shall and shall cause each of
its Subsidiaries to do all of the following:
5.1 Accounting System. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent.
5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with
copies for each Lender) with each of the reports set forth on Schedule 5.2 at
the times specified therein.
5.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
sufficient copies for each Lender, each of the financial statements, reports, or
other items set forth on Schedule 5.3 at the times specified therein. In
addition, Borrower agrees that no Subsidiary of Borrower will have a fiscal year
different from that of Borrower.
5.4 Guarantor Reports. Cause each Guarantor to deliver its annual financial
statements at the time when Borrower provides its audited financial statements
to Agent, but only to the extent such Guarantor's financial statements are not
consolidated with Borrower's financial statements.
5.5 Inspection. Permit Agent, each Lender, and each of their duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such reasonable times
and intervals as Agent or any such Lender may designate and, so long as no
Default or Event of Default exists, with reasonable prior notice to Borrower.
5.6 Maintenance of Properties. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear, tear, and casualty excepted (and
except where the failure to do so could not be expected to result in a Material
Adverse Change), and comply at all times with the provisions of all material
leases to which it is a party as lessee, so as to prevent any loss or forfeiture
thereof or thereunder.
5.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower,
its Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower will and will cause its Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of it and
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Agent with proof satisfactory to Agent indicating that Borrower
and its Subsidiaries have made such payments or deposits.
5.8 Insurance.
(a) At Borrower's expense, maintain insurance respecting its and its
Subsidiaries' assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent. Borrower
shall deliver copies of all such policies (other than the policies respecting
the Headquarters and the Aircraft) to Agent with an endorsement naming Agent as
the sole loss payee (under a satisfactory lender's loss payable endorsement) or
additional insured, as appropriate. Each policy of insurance (other than the
policies respecting the Headquarters and the Aircraft) or endorsement shall
contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss exceeding $500,000
covered by such policies of insurance (other than the policies respecting the
Headquarters and the Aircraft). So long as no Event of Default has occurred and
is continuing, Borrower shall have the exclusive right to adjust any losses
payable under any such insurance policies which are less than $1,000,000.
Following the occurrence and during the continuation of an Event of Default, or
in the case of any losses payable under such insurance exceeding $1,000,000,
Agent shall have the exclusive right to adjust any losses payable under any such
insurance policies, without, except in the case of gross negligence or willful
misconduct by Agent, any liability to Borrower whatsoever in respect of such
adjustments.
5.9 Location of Inventory and Equipment. Keep Borrower's and its
Subsidiaries' Inventory and Equipment (other than vehicles and Equipment out for
repair) only at the locations identified on Schedule 4.5 and their chief
executive offices only at the locations identified on Schedule 4.7(b); provided,
however, that Borrower may amend Schedule 4.5 or Schedule 4.7 so long as such
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which such Inventory or Equipment is moved to such new location or such
chief executive office is relocated, so long as such new location is within the
continental United States.
5.10 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
5.11 Leases. Pay when due all rents and other amounts payable under any
material leases to which Borrower or any of its Subsidiaries is a party or by
which Borrower's or any such Subsidiaries' properties and assets are bound,
unless such payments are the subject of a Permitted Protest.
5.12 Existence. At all times preserve and keep in full force and effect
Borrower's and its Subsidiaries, valid existence and good standing and, except
as could not reasonably be expected to result in a Material Adverse Change, any
rights, franchises, permits, licenses, accreditations, authorizations, or other
approvals material to their businesses.
5.13 Environmental. (a) Keep any property either owned or operated by
Borrower or its Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower or its Subsidiaries and take any Remedial Actions required
to abate said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly, but in any event within 5 days of its
receipt thereof, provide Agent with written notice of any of the following: (i)
notice that an Environmental Lien has been filed against any of the real or
personal property of Borrower or its Subsidiaries, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Borrower or its Subsidiaries, and (iii) notice of a violation, citation,
or other administrative order which reasonably could be expected to result in a
Material Adverse Change.
5.14 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.
5.15 Control Agreements. Take all reasonable steps in order for Agent to
obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107
of the Code with respect to (subject to the proviso contained in Section 6.12)
all of the Loan Parties' Securities Accounts, Deposit Accounts, electronic
chattel paper, investment property, and letter-of-credit rights.
5.16 Formation of Subsidiaries. At the time that Borrower or any Guarantor
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date, in each case which is not a Regulated
Subsidiary, Borrower or such Guarantor shall (a) cause such new Subsidiary to
provide to Agent a joinder to the Guaranty and the Security Agreement, together
with such other security documents (including mortgages with respect to any Real
Property of such new Subsidiary), as well as appropriate financing statements
(and with respect to all property subject to a mortgage, fixture filings), all
in form and substance satisfactory to Agent (including being sufficient to grant
Agent a first priority Lien (subject to Permitted Liens) in and to the assets of
such newly formed or acquired Subsidiary), (b) provide to Agent a pledge
agreement and appropriate certificates and powers or financing statements,
hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in form and substance satisfactory to Agent, and (c) provide to
Agent all other documentation, including one or more opinions of counsel
satisfactory to Agent, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 5.16 shall be a Loan Document.
5.17 Further Assurances. At any time upon the request of Agent, Borrower
shall execute or deliver to Agent, and shall cause the other Loan Parties to
execute or deliver to Agent, any and all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, mortgages, deeds of trust, opinions of counsel, and all other documents
(collectively, the "Additional Documents") that Agent may request in form and
substance reasonably satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in all of the properties and
assets of the Loan Parties (whether now owned or hereafter arising or acquired,
tangible or intangible, real or personal), to create and perfect Liens in favor
of Agent in any Real Property acquired by the Loan Parties after the Closing
Date, and in order to fully consummate all of the transactions contemplated
hereby and under the other Loan Documents. To the maximum extent permitted by
applicable law, Borrower authorizes Agent to execute any such Additional
Documents in any Loan Party's name, as applicable, and authorizes Agent to file
such executed Additional Documents in any appropriate filing office.
5.18 Canadian Subsidiary. At any time upon the request of Agent, Borrower
shall cause the Canadian Subsidiary to execute or deliver to Agent within 20
days of Agent's request (i) a guaranty, which guaranty shall be in form and
substance reasonably satisfactory to Agent (including being governed by the laws
of the jurisdiction of organization of the Canadian Subsidiary), and (ii) a
security agreement, which security agreement shall be in form and substance
reasonably satisfactory to Agent (including being governed by the laws of the
jurisdiction of organization of the Canadian Subsidiary), and (iii) all other
documentation, including one or more opinions of counsel reasonably satisfactory
to Agent, that is, in the opinion of Agent, appropriate with respect to the
execution and delivery of such guaranty and security agreement.
5.19 Surplus Requirements. Cause the Regulated Subsidiaries to comply with
any surplus requirement applicable to them under applicable law or regulation.
5.20 Regulation U Compliance. By action of its board of directors either
before or as soon as practicable after any purchases of shares of Borrower's
Stock, cause any and all such shares to be cancelled and retired to the status
of authorized but unissued Stock of Borrower.
6. NEGATIVE COVENANTS.
Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations, Borrower will not and will not permit
any of its Subsidiaries to do any of the following:
6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit,
(b) Indebtedness set forth on Schedule 4.19 and any Refinancing
Indebtedness in respect of such Indebtedness,
(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness
in respect of such Indebtedness,
(d) endorsement of instruments or other payment items for deposit, and
(e) Indebtedness composing Permitted Investments.
6.2 Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
6.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock; provided that (i) Borrower may effect
a reverse split or a reverse/forward split of its common Stock, and (ii) (A) any
Loan Party may merge with and into any other Loan Party so long (v) no Default
or Event of Default shall have occurred or be continuing either before or after
giving effect to such merger, (w) no other provision of this Agreement would be
violated thereby, (x) Borrower gives Agent at least 15 days prior written notice
of such merger, (y) the Lender Group's rights in all or any portion of the
Collateral, including without limitation, the existence, perfection, and
priority of any Lien thereon, are not adversely affected by such merger, and (z)
in the case of a merger involving the Borrower, the Borrower is the continuing
or surviving Person, and (B) any Subsidiary of a Loan Party that is not a Loan
Party may merge with and into any other Subsidiary of a Loan Party that is not a
Loan Party so long (x) no Default or Event of Default shall have occurred or be
continuing either before or after giving effect to such merger, (y) the
regulated status, if any, of the continuing or surviving Person is not adversely
affected by such merger, and (z) in the case of a merger involving a Top Tier
Regulated Subsidiary, the Top Tier Regulated Subsidiary is the continuing or
surviving Person.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or
(c) Suspend or go out of a substantial portion of its or their business;
provided that the Loan Parties may suspend or go out of a portion of their
business so long as the revenues from such business for the 12 month period
ending on the last day of the most recent fiscal quarter (together with the
revenues from any other business suspended, terminated, or discontinued since
the Closing Date for the 12 month period ending on the last day of the fiscal
quarter immediately preceding such suspension, termination, or discontinuation)
represent less than 5% of Borrower's consolidated revenues for such 12 month
period.
6.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of (or enter into an
agreement to convey, sell, lease, license, assign, transfer, or otherwise
dispose of) any of Borrower's or its Subsidiaries assets.
6.5 Change Name. Change any Loan Party's name, organizational
identification number, state of organization or organizational identity;
provided, however, that any Loan Party may change its name upon at least 30 days
prior written notice to Agent of such change and so long as, at the time of such
written notification, such Loan Party provides any financing statements
necessary to perfect and continue perfected the Agent's Liens.
6.6 Nature of Business. Make any change in the nature of its or their
business as described in Schedule 6.6 or acquire any properties or assets that
are not reasonably related to the conduct of such business activities.
6.7 Prepayments and Amendments. Except in connection with Refinancing
Indebtedness permitted by Section 6.1,
(a) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower or its Subsidiaries, other than the Obligations in
accordance with this Agreement,
(b) make any payment on account of Indebtedness that has been contractually
subordinated in right of payment if such payment is not permitted at such time
under the subordination terms and conditions, or
(c) directly or indirectly, amend, modify, alter, increase, or change any
of the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Section
6.1(b).
6.8 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
6.9 Consignments. Consign any of its or their Inventory or sell any of its
or their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale.
6.10 Distributions. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding; provided that so long as (a) no Default or Event of
Default exists at the time of such purchase or payment or would result
therefrom, and (b) the sum of Excess Availability plus Qualified Cash is greater
than or equal to $10,000,000 both before and after giving effect to such
purchase or payment, Borrower may purchase its Stock or pay dividends on its
common Stock, in each case (i) using the proceeds of the Term Loan in an
aggregate amount not to exceed $58,758,466.40, or (ii) during the fiscal quarter
immediately following either (A) a fiscal quarter for which an Excess Cash Flow
Certificate is delivered, or (B) a fiscal year for which an Excess Cash Flow
Certificate is delivered (the "Prior Fiscal Period"), using cash from operations
in an amount not to exceed the amount of the Excess Cash Flow Surplus for the
Prior Fiscal Period; provided further that, with respect to any such purchase by
Borrower of its Stock (x) Borrower and its agents and representatives comply
with all laws, rules, regulations and requirements applicable thereto,
including, without limitation, all federal and state securities laws and all
rules and regulations promulgated thereunder, the corporate laws of the State of
Oklahoma and all requirements of all regulatory agencies and authorities having
jurisdiction over the Borrower and it agents and representatives, including the
New York Stock Exchange and the National Association of Securities Dealers, (y)
such purchase does not and will not trigger any right of first refusal,
preemptive right or similar right of any Person or result in the Borrower or any
of its Affiliates having any liability thereunder, and (z) such purchase does
not and will not violate or result in any breach of any charter document of
Borrower or result in any breach of, constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any right of termination,
amendment, acceleration, suspension, revocation or cancellation of, any material
note, bond, mortgage or indenture, contract, agreement, lease, license, permit
or other material instrument or arrangement to which Borrower or any of its
Affiliates is a party or by which any of them is bound.
6.11 Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrower's or its Subsidiaries' accounting records
without said accounting firm or service bureau agreeing to provide Agent
information regarding Borrower's and its Subsidiaries' financial condition.
6.12 Investments. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrower and the other Loan Parties shall not have Permitted Investments in
Deposit Accounts or Securities Accounts in an aggregate amount in excess of
$250,000 at any one time unless Borrower or the other Loan Party, as applicable,
and the applicable securities intermediary or bank have entered into Control
Agreements governing such Permitted Investments in order to perfect (and further
establish) the Agent's Liens in such Permitted Investments to the extent that
they exceed $250,000 in the aggregate. Subject to the foregoing proviso,
Borrower shall not and shall not permit the other Loan Parties to establish or
maintain any Deposit Account or Securities Account unless Agent shall have
received a Control Agreement in respect of such Deposit Account or Securities
Account.
6.13 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower or any of its
Subsidiaries except for:
(a) transactions (other than the payment of management, consulting,
monitoring, or advisory fees) between Borrower or its Subsidiaries, on the one
hand, and any Affiliate of Borrower or its Subsidiaries, on the other hand, so
long as such transactions (i) are upon fair and reasonable terms, (ii) are fully
disclosed to Agent if they involve one or more payments by Borrower or its
Subsidiaries in excess of $100,000 for any single transaction or series of
transactions, and (iii) are no less favorable to Borrower or its Subsidiaries,
as applicable, than would be obtained in an arm's length transaction with a
non-Affiliate; provided that anything to the contrary in the foregoing
notwithstanding, (A) Borrower's Subsidiaries may pay management fees to Borrower
consistent with past practices so long as the payment of such management fees
has been, to the extent required, approved by any applicable Governmental
Authority, and (B) Borrower and its Subsidiaries may enter into or permit to
exist any transaction between Borrower, on the one hand, and any of Borrower's
Subsidiaries, on the other hand, if such transaction is otherwise expressly
permitted by the Loan Documents;
(b) the payment of reasonable fees, compensation, or employee benefit
arrangements to, and any indemnity provided for the benefit of, employees,
officers, or directors of Borrower or its Subsidiaries in the ordinary course of
business.
6.14 Use of Proceeds. Use the proceeds of the Advances and the Term Loan
for any purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Existing Lenders under the Existing Loan Agreements, and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
6.15 Inventory and Equipment with Bailees. Store the Inventory or Equipment
of Borrower or its Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party.
6.16 Financial Covenants.
(a) Minimum EBITDA. Fail to achieve EBITDA, measured on a fiscal
quarter-end basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:
----------------------------------------------- ----------------------------------------------------------------------
| Applicable Amount | Applicable Period |
----------------------------------------------- ----------------------------------------------------------------------
| | |
| $60,000,000 | For the 9 month period |
| | ending September 30, 2006 |
----------------------------------------------- ----------------------------------------------------------------------
| | |
$80,000,000 | For each 12 month period ending |
| on the last day of each fiscal quarter thereafter |
----------------------------------------------- ----------------------------------------------------------------------
(b) Minimum Subset EBITDA. Fail to achieve Subset EBITDA, measured on a
fiscal quarter-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:
----------------------------------------------- ----------------------------------------------------------------------
| | |
| Applicable Amount | Applicable Period |
| | |
----------------------------------------------- ----------------------------------------------------------------------
| | |
| $55,000,000 | For the 9 month period |
| | ending September 30, 2006 |
----------------------------------------------- ----------------------------------------------------------------------
| | |
| $75,000,000 | For each 12 month period ending |
| | on the last day of each fiscal quarter thereafter |
----------------------------------------------- ----------------------------------------------------------------------
(c) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio,
measured on a fiscal quarter-end basis, less than the required amount set forth
in the following table for the applicable period set forth opposite thereto:
----------------------------------------------- ----------------------------------------------------------------------
| | |
| Applicable Ratio | Applicable Period |
----------------------------------------------- ----------------------------------------------------------------------
| | |
| 1.1:1.0 | For the 9 month period |
| | ending September 30, 2006 |
----------------------------------------------- ----------------------------------------------------------------------
| | |
| 1.1:1.0 | For each 12 month period ending |
| | on the last day of each fiscal quarter thereafter |
----------------------------------------------- ----------------------------------------------------------------------
(d) Minimum Number of Members. Fail to have at least 1,300,000 Members as
of the last day of any fiscal month.
(e) Leverage Ratio. Have a Leverage Ratio, measured on a fiscal quarter-end
basis, more than the applicable ratio set forth in the following table for the
applicable date set forth opposite thereto:
----------------------------------------------- ----------------------------------------------------------------------
| | |
| Applicable Ratio | Applicable Date |
----------------------------------------------- ----------------------------------------------------------------------
| | |
| 1.5:1.0 | For the 12 month period |
| | ending September 30, 2006 and for each 12 month period ending |
| | on the last day of each fiscal quarter thereafter |
----------------------------------------------- ----------------------------------------------------------------------
(f) Capital Expenditures. Make Capital Expenditures in any fiscal year in
excess of $10,000,000.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of default
(each, an "Event of Default") under this Agreement:
7.1 If Borrower fails to pay when due and payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of interest, fees,
or charges due the Lender Group, reimbursement of Lender Group Expenses, or
other amounts (other than any portion thereof constituting principal)
constituting Obligations (including any portion thereof that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all or any
portion of the principal of the Obligations;
7.2 If Borrower or any of its Subsidiaries:
(a) fails to perform or observe any covenant or other agreement contained
in any of Sections 2.7, 5.4, 5.5, 5.8, 5.12, 5.14, 5.16, 5.17 and 6.1 through
6.16 of this Agreement or Section 6 of the Security Agreement;
(b) fails to perform or observe any covenant or other agreement contained
in any of Sections 5.2 and 5.3 of this Agreement and such failure continues for
a period of 5 days after the earlier of (i) the date on which such failure shall
first become known to any officer of Borrower or (ii) written notice thereof is
given to Borrower by Agent;
(c) fails to perform or observe any covenant or other agreement contained
in any of Sections 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of this Agreement and such
failure continues for a period of 10 days after the earlier of (i) the date on
which such failure shall first become known to any officer of Borrower or (ii)
written notice thereof is given to Borrower by Agent; or
(d) fails to perform or observe any covenant or other agreement contained
in this Agreement, or in any of the other Loan Documents, in each case, other
than any such covenant or agreement that is the subject of another provision of
this Section 7 (in which event such other provision of this Section 7 shall
govern), and such failure continues for a period of 20 days after the earlier of
(i) the date on which such failure shall first become known to any officer of
Borrower or (ii) written notice thereof is given to Borrower by Agent;
7.3 If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any third Person and the same is
not discharged before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such property or asset is subject to forfeiture
by Borrower or the applicable Subsidiary;
7.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
7.5 If an Insolvency Proceeding is commenced against Borrower or any of its
Subsidiaries and any of the following events occur: (a) Borrower or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Borrower or any of its Subsidiaries, or (e) an order
for relief shall have been issued or entered therein;
7.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;
7.7 (a) If one or more judgments, orders, or awards (other than the Booth
Verdict) involving an aggregate amount of $1,000,000, or more (except to the
extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing) shall be entered or filed against Borrower or any
of its Subsidiaries or with respect to any of their respective assets, and the
same is not released, discharged, bonded against, or stayed pending appeal
before the earlier of 30 days after the date it first arises or 5 days prior to
the date on which such asset is subject to being forfeited by Borrower or the
applicable Subsidiary; or (b) if the Booth Verdict shall be entered or filed
against Borrower or Harland C. Stonecipher as a final, appealable judgment, and
the same is not released, discharged, bonded against, or stayed pending appeal
before 30 days after such entry or file date;
7.8 If there is a default in one or more agreements to which Borrower or
any of its Subsidiaries is a party with one or more third Persons relative to
Borrower's or any of its Subsidiaries' Indebtedness involving an aggregate
amount of $1,000,000 or more, and such default (i) occurs at the final maturity
of the obligations thereunder, or (ii) results in a right by such third
Person(s), irrespective of whether exercised, to accelerate the maturity of
Borrower's or the applicable Subsidiary's obligations thereunder;
7.9 If any warranty, representation, statement, or Record made herein or in
any other Loan Document or delivered to Agent or any Lender in connection with
this Agreement or any other Loan Document proves to be untrue in any material
respect (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor, or any such Guarantor
becomes the subject of an Insolvency Proceeding;
7.11 If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;
7.12 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower or its Subsidiaries, or a proceeding shall be commenced by
Borrower or its Subsidiaries, or by any Governmental Authority having
jurisdiction over Borrower or its Subsidiaries, seeking to establish the
invalidity or unenforceability thereof, or Borrower or its Subsidiaries shall
deny that Borrower or its Subsidiaries has any liability or obligation purported
to be created under any Loan Document; or
7.13 Harland C. Stonecipher shall ever cease to hold the title of Chairman
and Chief Executive Officer or comparable title or position of Borrower for a
period of 120 consecutive days, unless replaced prior to that date with a person
approved by the Agent (which approval shall not be unreasonably withheld or
delayed).
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group):
(a) Declare all or any portion of the Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting any of
the Agent's Liens in the Collateral and without affecting the Obligations; and
(d) The Lender Group shall have all other rights and remedies available at
law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any
Event of Default described in Section 7.4 or Section 7.5, in addition to the
remedies set forth above, without any notice to Borrower or any other Person or
any act by the Lender Group, the Commitments shall automatically terminate and
the Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrower.
8.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
9. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to Borrower, may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves against the Maximum Revolver
Amount as Agent deems necessary to protect the Lender Group from the exposure
created by such failure, or (c) in the case of the failure to comply with
Section 5.8 hereof, obtain and maintain insurance policies of the type described
in Section 5.8 and take any action with respect to such policies as Agent deems
prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses
and any such payments shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
10. WAIVERS; INDEMNIFICATION.
10.1 Demand; Protest; etc. Borrower waives demand, protest, notice of
protest, notice of default (except as otherwise required to be given hereunder)
or dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group on which Borrower may
in any way be liable.
10.2 The Lender Group's Liability for Collateral. Borrower hereby agrees
that: (a) so long as Agent complies with its obligations, if any, under the
Code, the Lender Group shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrower's and its
Subsidiaries' compliance with the terms of the Loan Documents, (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto, and (c) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned, leased or operated by
Borrower or any of its Subsidiaries or any Environmental Actions, Environmental
Liabilities and Costs or Remedial Actions related in any way to any such assets
or properties of Borrower or any of its Subsidiaries (each and all of the
foregoing, the "Indemnified Liabilities"). The foregoing to the contrary
notwithstanding, Borrower shall have no obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by Borrower
or Agent to the other relating to this Agreement or any other Loan Document
shall be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, electronic mail (at such email
addresses as Borrower or Agent, as applicable, may designate to each other in
accordance herewith), or telefacsimile to Borrower or Agent, as the case may be,
at its address set forth below:
If to Borrower: PRE-PAID LEGAL SERVICES, INC.
One Pre-Paid Way
Ada, OK 74821
Attention: Steve Williamson, Chief Financial
Officer
Fax No.: 580-436-7410
with copies to: CROWE & DUNLEVY
1800 Mid-America Tower
20 N. Broadway
Oklahoma City, OK
Attention: Michael M. Stewart, Esq.
Fax No.: 405-272-5238
If to Agent: WELLS FARGO FOOTHILL, INC.
2450 Colorado Avenue Suite 3000 West
Santa Monica, California 90404
Attention: Business Finance Division Manager
Fax No.: 310-453-7413
with copies to: PAUL, HASTINGS, JANOFSKY & WALKER LLP
515 South Flower Street
Los Angeles, CA 90071
Attention: John Francis Hilson, Esq.
Fax No.: 213-996-3300
Agent and Borrower may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, other
than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 12(b).
(c) BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER OF THE LENDER
GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 Assignments and Participations.
(a) Any Lender may assign and delegate to one or more assignees (each an
"Assignee") that are Eligible Transferees all or any portion of the Obligations,
the Commitments and the other rights and obligations of such Lender hereunder
and under the other Loan Documents, in a minimum amount (unless waived by the
Agent) of $5,000,000 (except such minimum amount shall not apply to (x) an
assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each
other or a fund or account managed by any such new Lender or an Affiliate of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); provided, however, that Borrower and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower and Agent
by such Lender and the Assignee, (ii) such Lender and its Assignee have
delivered to Borrower and Agent an Assignment and Acceptance and Agent has
notified the assigning Lender of its receipt thereof in accordance with Section
13.1(b), and (iii) unless waived by the Agent, the assigning Lender or Assignee
has paid to Agent for Agent's separate account a processing fee in the amount of
$3,500. Anything contained herein to the contrary notwithstanding, the payment
of any fees shall not be required and the Assignee need not be an Eligible
Transferee if such assignment is in connection with any merger, consolidation,
sale, transfer, or other disposition of all or any substantial portion of the
business or loan portfolio of the assigning Lender.
(b) From and after the date that Agent notifies the assigning Lender (with
a copy to Borrower) that it has received an executed Assignment and Acceptance
and, if applicable, payment of the required processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 10.3 hereof) and be released from any future obligations
under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be
a party hereto and thereto), and such assignment shall effect a novation among
Borrower, the assigning Lender, and the Assignee; provided, however, that
nothing contained herein shall release any assigning Lender from obligations
that survive the termination of this Agreement, including such assigning
Lender's obligations under Section 15 and Section 16.7(a) of this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
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 Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (v) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (vi) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to Section
13.1(b), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a "Participant") participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the "Originating Lender") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Lender shall remain a "Lender" for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrower hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrower, the Collections of Borrower or its Subsidiaries, the Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may, subject to the provisions of Section
16.7, disclose all documents and information which it now or hereafter may have
relating to Borrower and its Subsidiaries and their respective businesses.
(g) Any other provision in this Agreement notwithstanding, any Lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR ss.203.24, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
13.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder to
an Eligible Transferee pursuant to Section 13.1 hereof and, except as expressly
required pursuant to Section 13.1 hereof, no consent or approval by Borrower is
required in connection with any such assignment.
14. AMENDMENTS; WAIVERS.
14.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Borrower and then any such waiver or consent shall be effective,
but only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all of the Lenders directly affected thereby and Borrower,
do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the Pro Rata Share that is required to take any action
hereunder,
(e) amend or modify this Section or any provision of this Agreement
providing
for consent or other action by all Lenders,
(f) other than as permitted by Section 15.12, release Agent's Lien in and
to any of the Collateral,
(g) change the definition of "Required Lenders" or "Pro Rata Share",
(h) contractually subordinate any of the Agent's Liens,
(i) other than in connection with a merger, liquidation, dissolution or
sale of such Person expressly permitted by the terms hereof or the other Loan
Documents, release Borrower or any Guarantor from any obligation for the payment
of money,
(j) amend any of the provisions of Section 2.4(b)(i) or (ii),
(k) change the definition of "Maximum Revolver Amount" or "Term Loan
Amount", or
change Section 2.1(b),
(l) change the definition of "Bank Product Reserve",
(m) amend any of the provisions of Section 2.3(d), or
(n) amend any of the provisions of Section 15.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
14.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
one or more Lenders (each, a "Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to any Holdout Lender, may permanently replace such Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
such Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace a Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance,
subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever.
If the Holdout Lender shall refuse or fail to execute and deliver any such
Assignment and Acceptance prior to the effective date of such replacement, the
Holdout Lender shall be deemed to have executed and delivered such Assignment
and Acceptance. The replacement of any Holdout Lender shall be made in
accordance with the terms of Section 13.1. Until such time as the Replacement
Lenders shall have acquired all of the Obligations, the Commitments, and the
other rights and obligations of the Holdout Lender hereunder and under the other
Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender's Pro Rata Share of Advances and to purchase a participation in each
Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
15. AGENT; THE LENDER GROUP.
15.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 15. The
provisions of this Section 15 (other than the proviso to Section 15.11(a)) are
solely for the benefit of Agent, and the Lenders, and Borrower and its
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrower and its Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrower, the
Obligations, the Collateral, the Collections of Borrower and its Subsidiaries,
or otherwise related to any of same as provided in the Loan Documents, and (g)
incur and pay such Lender Group Expenses as Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Loan Documents.
15.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
15.3 Liability of Agent. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Borrower or the
books or records or properties of any of Borrower's Subsidiaries or Affiliates.
15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
15.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 15.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 8; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
15.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrower. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower and any
other Person party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrower and any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons.
15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrower and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses by Borrower or its Subsidiaries, each Lender hereby agrees that it is
and shall be obligated to pay to Agent such Lender's Pro Rata Share thereof.
Whether or not the transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrower and without limiting the obligation of
Borrower to do so), according to their Pro Rata Shares, from and against any and
all Indemnified Liabilities; provided, however, that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's Pro Rata Share of any costs or out of pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrower or its Affiliates and any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders (unless such notice is waived by the Required Lenders). If Agent resigns
under this Agreement, the Required Lenders shall appoint a successor Agent for
the Lenders. If no successor Agent is appointed prior to the effective date of
the resignation of Agent, Agent may appoint, after consulting with the Lenders,
a successor Agent. If Agent has materially breached or failed to perform any
material provision of this Agreement or of applicable law, the Required Lenders
may agree in writing to remove and replace Agent with a successor Agent from
among the Lenders. In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers, and duties of the retiring Agent and the term "Agent" shall mean such
successor Agent and the retiring Agent's appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor Agent has accepted appointment as Agent by the date
which is 45 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.
15.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with
Borrower and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Borrower or its
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them. With respect to the Swing Loans and Protective
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
15.11 Withholding Taxes.
(a) All payments made by Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, Borrower shall comply with the
penultimate sentence of this Section 15.11(a). "Taxes" shall mean, any taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but excluding
any tax imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein measured by or based on the net income or net
profits of any Lender) and all interest, penalties or similar liabilities with
respect thereto. If any Taxes are so levied or imposed, Borrower agrees to pay
the full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 15.11(a) after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided, however, that Borrower shall not be
required to increase any such amounts if the increase in such amount payable
results from Agent's or such Lender's own willful misconduct or gross negligence
(as finally determined by a court of competent jurisdiction). Borrower will
furnish to Agent as promptly as possible after the date the payment of any Tax
is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by Borrower.
(b) If a Lender claims an exemption from United States withholding tax,
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent:
(i) if such Lender claims an exemption from United States withholding
tax pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of
Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III)
a controlled foreign corporation related to Borrower within the meaning of
Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS
Form W-8BEN, before receiving its first payment under this Agreement and at
any other time reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed and
executed IRS Form W-8BEN before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or Borrower;
(iii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Borrower; or
(iv) such other form or forms, including IRS Form W-9, as may be
required under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding or backup
withholding tax before receiving its first payment under this Agreement and
at any other time reasonably requested by Agent or Borrower.
Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from withholding tax in a jurisdiction
other than the United States, Lender agrees with and in favor of Agent and
Borrower, to deliver to Agent any such form or forms, as may be required under
the laws of such jurisdiction as a condition to exemption from, or reduction of,
foreign withholding or backup withholding tax before receiving its first payment
under this Agreement and at any other time reasonably requested by Agent or
Borrower.
Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims exemption from, or reduction of, withholding tax
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrower to such Lender, such Lender
agrees to notify Agent and Borrower of the percentage amount in which it is no
longer the beneficial owner of Obligations of Borrower to such Lender. To the
extent of such percentage amount, Agent and Borrower will treat such Lender's
documentation provided pursuant to Sections 15.11(b) or 15.11(c) as no longer
valid. With respect to such percentage amount, Lender may provide new
documentation, pursuant to Sections 15.11 (b) or 15.11(c), if applicable.
(e) If any Lender is entitled to a reduction in the applicable withholding
tax, Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (b) or (c)
of this Section 15.11 are not delivered to Agent, then Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender due to a failure on the part of
the Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section 15.11,
together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of Agent.
15.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option and in
its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under Section 6.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower or its Subsidiaries owned no interest at the time the Agent's
Lien was granted nor at any time thereafter, or (iv) constituting property
leased to Borrower or its Subsidiaries under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Borrower at any time,
the Lenders will confirm in writing Agent's authority to release any such Liens
on particular types or items of Collateral pursuant to this Section 15.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of Borrower in respect of) all interests retained by
Borrower, including, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Borrower or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
15.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
written consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the written request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrower or any deposit
accounts of Borrower now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
15.14 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
15.15 Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.
15.16 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
15.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
(each a "Report" and collectively, "Reports") prepared by or at the request of
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon Borrower's and its Subsidiaries' books and
records, as well as on representations of Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public information
regarding Borrower and its Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 16.7, and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
15.18 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
15.19 Bank Product Providers. Each Bank Product Provider shall be deemed a
party hereto for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
16. GENERAL PROVISIONS.
16.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
16.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
16.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
16.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
16.5 Counterparts; Electronic Execution. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.6 Revival and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by Borrower or Guarantor or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (each, a "Voidable Transfer"), and if the Lender Group is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of Borrower or Guarantors
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
16.7 Confidentiality.
(a) Agent and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding Borrower and
its Subsidiaries, their operations, assets, and existing and contemplated
business plans shall be treated by Agent and the Lenders in a confidential
manner, and shall not be disclosed by Agent and the Lenders to Persons who are
not parties to this Agreement, except: (i) to attorneys for and other advisors,
accountants, auditors, and consultants to any member of the Lender Group, (ii)
to Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 16.7, (iii) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (iv) as may be agreed to in advance
by Borrower or as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, (v) as to any such information that is
or becomes generally available to the public (other than as a result of
prohibited disclosure by Agent or the Lenders), (vi) in connection with any
assignment, participation or pledge of any Lender's interest under this
Agreement, provided that any such assignee, participant, or pledgee shall have
agreed in writing to receive such information hereunder subject to the terms of
this Section, and (vii) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section
16.7(a) shall survive for 2 years after the payment in full of the Obligations.
(b) Anything in this Agreement to the contrary notwithstanding, Agent may
provide information concerning the terms and conditions of this Agreement and
the other Loan Documents to loan syndication and pricing reporting services.
16.8 Lender Group Expenses. Borrower agrees to pay any and all Lender Group
Expenses promptly after demand therefor by Agent and agrees that its obligations
contained in this Section 16.8 shall survive payment or satisfaction in full of
all other Obligations.
16.9 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.
PRE-PAID LEGAL SERVICES, INC.
an Oklahoma corporation
By: /s/ Harland C. Stonecipher
----------------------------------------
CEO and Chairman of the Board
WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and
as a Lender
By: /s/ Jackie Hermie
----------------------------------------
Vice President
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions
1.2 Accounting Terms
1.3 Code
1.4 Construction
1.5 Schedules and Exhibits
2. LOAN AND TERMS OF PAYMENT
2.1 Revolver Advances
2.2 Term Loan
2.3 Borrowing Procedures and Settlements
2.4 Payments
2.5 Overadvances
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments,
and Calculations
2.7 Cash Management
2.8 Crediting Payments; Clearance Charge
2.9 Designated Account
2.10 Maintenance of Loan Account; Statements of Obligations
2.11 Fees
2.12 Letters of Credit
2.13 LIBOR Option
2.14 Capital Requirements
3. CONDITIONS; TERM OF AGREEMENT
3.1 Conditions Precedent to the Initial Extension of Credit
3.2 Conditions Precedent to all Extensions of Credit
3.3 Term
3.4 Effect of Termination
3.5 Early Termination by Borrower
4. REPRESENTATIONS AND WARRANTIES
4.1 No Encumbrances
4.2 [Intentionally Omitted]
4.3 [Intentionally Omitted]
4.4 Equipment
4.5 Location of Inventory and Equipment
4.6 Inventory Records
4.7 Jurisdiction of Organization; Location of Chief Executive
Office; Organizational Identification Number; Commercial
Tort Claims
4.8 Due Organization and Qualification; Subsidiaries
4.9 Due Authorization; No Conflict
4.10 Litigation
4.11 No Material Adverse Change
4.12 Fraudulent Transfer
4.13 Employee Benefits
4.14 Environmental Condition
4.15 Intellectual Property
4.16 Leases
4.17 Deposit Accounts and Securities Accounts
4.18 Complete Disclosure
4.19 Indebtedness
5. AFFIRMATIVE COVENANTS
5.1 Accounting System
5.2 Collateral Reporting
5.3 Financial Statements, Reports, Certificates
5.4 Guarantor Reports
5.5 Inspection
5.6 Maintenance of Properties
5.7 Taxes
5.8 Insurance
5.9 Location of Inventory and Equipment
5.10 Compliance with Laws
5.11 Leases
5.12 Existence
5.13 Environmental
5.14 Disclosure Updates
5.15 Control Agreements
5.16 Formation of Subsidiaries
5.17 Further Assurances
6. NEGATIVE COVENANTS
6.1 Indebtednes
6.2 Liens
6.3 Restrictions on Fundamental Changes
6.4 Disposal of Assets
6.5 Change Name
6.6 Nature of Business
6.7 Prepayments and Amendment
6.8 Change of Control
6.9 Consignments
6.10 Distributions
6.11 Accounting Methods
6.12 Investments
6.13 Transactions with Affiliates
6.14 Use of Proceeds
6.15 Inventory and Equipment with Bailees
6.16 Financial Covenants
7. EVENTS OF DEFAULT
8. THE LENDER GROUP'S RIGHTS AND REMEDIES
8.1 Rights and Remedies
8.2 Remedies Cumulative
9. TAXES AND EXPENSES
10. WAIVERS; INDEMNIFICATION
10.1 Demand; Protest; etc
10.2 The Lender Group's Liability for Collateral
10.3 Indemnification.
11. NOTICES
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS
13.1 Assignments and Participations
13.2 Successors
14. AMENDMENTS; WAIVERS
14.1 Amendments and Waivers
14.2 Replacement of Holdout Lender
14.3 No Waivers; Cumulative Remedies
15. AGENT; THE LENDER GROUP
15.1 Appointment and Authorization of Agent
15.2 Delegation of Duties
15.3 Liability of Agent
15.4 Reliance by Agent
15.5 Notice of Default or Event of Default
15.6 Credit Decision
15.7 Costs and Expenses; Indemnification
15.8 Agent in Individual Capacity
15.9 Successor Agent
15.10 Lender in Individual Capacity
15.11 Withholding Taxes
15.12 Collateral Matters
15.13 Restrictions on Actions by Lenders; Sharing of Payments
15.14 Agency for Perfection
15.15 Payments by Agent to the Lenders
15.16 Concerning the Collateral and Related Loan Documents
15.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information
15.18 Several Obligations; No Liability
15.19 Bank Product Providers
16. GENERAL PROVISIONS
16.1 Effectiveness
16.2 Section Headings
16.3 Interpretation
16.4 Severability of Provisions
16.5 Counterparts; Electronic Execution
16.6 Revival and Reinstatement of Obligations
16.7 Confidentiality
16.8 Lender Group Expenses
16.9 Integration
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit E-1 Form of Excess Cash Flow Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule P-1 Permitted Holders
Schedule P-2 Permitted Liens
Schedule P-3 Investments
Schedule R-1 Real Property Collateral
Schedule 1.1 Definitions
Schedule 2.7(a) Cash Management Banks
Schedule 3.1 Conditions Precedent
Schedule 4.5 Locations of Inventory and Equipment
Schedule 4.7(a) States of Organization
Schedule 4.7(b) Chief Executive Offices
Schedule 4.7(c) Organizational Identification Numbers
Schedule 4.7(d) Commercial Tort Claims
Schedule 4.8(b) Capitalization of Borrower
Schedule 4.8(c) Capitalization of Borrower's Subsidiaries
Schedule 4.10 Litigation
Schedule 4.14 Environmental Matters
Schedule 4.15 Intellectual Property
Schedule 4.17 Deposit Accounts and Securities Accounts
Schedule 4.19 Permitted Indebtedness
Schedule 5.2 Collateral Reporting
Schedule 5.3 Financial Statements, Reports, Certificates
Schedule 1.1
As used in the Agreement, the following terms shall have the following
definitions:
"Account" means an account (as that term is defined in the Code).
"Account Debtor" means any Person who is obligated on an Account, chattel paper,
or a general intangible.
"ACH Transactions" means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the
direct Federal Reserve Fedline system) provided by a Bank Product Provider for
the account of Borrower or its Subsidiaries.
"Additional Documents" has the meaning specified therefor in Section 5.17.
"Advances" has the meaning specified therefor in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 6.13 of the Agreement: (a) any Person which owns directly or indirectly
10% or more of the Stock having ordinary voting power for the election of
directors or other members of the governing body of a Person or 10% or more of
the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed an Affiliate of such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership in which a Person is a
general partner shall be deemed an Affiliate of such Person.
"Agent" has the meaning specified therefor in the preamble to the Agreement.
"Agent-Related Persons" means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent identified on Schedule A-1.
"Agent's Liens" means the Liens granted by Borrower or its Subsidiaries to Agent
under the Loan Documents.
"Agreement" means the Credit Agreement to which this Schedule 1.1 is attached.
"Aircraft" means the "Aircraft" as defined in the Aircraft Loan Agreement as of
the date hereof.
"Aircraft Loan Agreement" means that certain Loan Agreement, dated as of
November 30, 2005, by and between Borrower and Bank of Oklahoma, N.A., as agent.
"Aircraft Loan Documents" means (a) the Aircraft Loan Agreement and (b) and the
other "Loan Documents" as such term is defined in the Aircraft Loan Agreement.
"Assignee" has the meaning specified therefor in Section 13.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of Borrower.
"Availability" means, as of any date of determination, the amount that Borrower
is entitled to borrow as Advances under Section 2.1 of the Agreement (after
giving effect to all then outstanding Obligations (other than Bank Product
Obligations) and all sublimits and reserves then applicable hereunder).
"Bank Product" means any financial accommodation extended to Borrower or its
Subsidiaries by a Bank Product Provider (other than pursuant to the Agreement)
including: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) transactions under Hedge
Agreements.
"Bank Product Agreements" means those agreements entered into from time to time
by Borrower or its Subsidiaries with a Bank Product Provider in connection with
the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Borrower or its
Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that Borrower or its
Subsidiaries are obligated to reimburse to Agent or any member of the Lender
Group as a result of Agent or such member of the Lender Group purchasing
participations from, or executing indemnities or reimbursement obligations to, a
Bank Product Provider with respect to the Bank Products provided by such Bank
Product Provider to Borrower or its Subsidiaries.
"Bank Product Provider" means Wells Fargo or any of its Affiliates or any
Lender.
"Bank Product Reserve" means, as of any date of determination, the lesser of (a)
$2,500,000, and (b) the amount of reserves that Agent has established (based
upon Wells Fargo's reasonable determination of the credit exposure of Borrower
and its Subsidiaries in respect of Bank Products) in respect of Bank Products
then provided by Wells Fargo or any of its Affiliates or outstanding and
previously provided by Wells Fargo or any of its Affiliates.
"Bankruptcy Code" means title 11 of the United States Code, as in effect from
time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in accordance
with its customary procedures, and utilizing such electronic or other quotation
sources as it considers appropriate, to be the rate at which Dollar deposits
(for delivery on the first day of the requested Interest Period) are offered to
major banks in the London interbank market 2 Business Days prior to the
commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by
Borrower in accordance with the Agreement, which determination shall be
conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced, from time to time, within
Wells Fargo at its principal office in San Francisco as its "prime rate", with
the understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo may designate.
"Base Rate Loan" means the portion of the Advances or the Term Loan that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 1.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35) of
ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has
been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
"Board of Directors" means the board of directors (or comparable managers) of
Borrower or any committee thereof duly authorized to act on behalf of the board
of directors (or comparable managers).
"Booth Verdict" means the November 15, 2005 jury trial award for $9,900,000 in
punitive damages against Borrower and Harland C. Stonecipher in the case
entitled Barbara Booth v. Pre-Paid Legal Services, Inc., Civil Action No.
2002-214, which is pending in the Circuit Court for Holmes County, Mississippi.
"Borrower" has the meaning specified therefor in the preamble to the Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances made on the same
day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case
of a Swing Loan, or by Agent in the case of a Protective Advance.
"Business Day" means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the states of New York,
California, or Illinois, except that, if a determination of a Business Day shall
relate to a LIBOR Rate Loan, the term "Business Day" also shall exclude any day
on which banks are closed for dealings in Dollar deposits in the London
interbank market.
"Canadian Subsidiary" means PPL Legal Care of Canada Corporation, a
Nova Scotia unlimited liability company.
"Capital Expenditures" means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed.
"Capitalized Lease Obligation" means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.
"Capital Lease" means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning specified therefor in Section 2.7(a).
"Cash Management Bank" has the meaning specified therefor in Section 2.7(a).
"Change of Control" means that (a) Permitted Holders fail to own and control,
directly or indirectly, 25%, or more, of the Stock of Borrower having the right
to vote for the election of members of the Board of Directors, (b) any "person"
or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act),
other than Permitted Holders, becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 20%, or more, of the
Stock of Borrower having the right to vote for the election of members of the
Board of Directors, or (c) a majority of the members of the Board of Directors
do not constitute Continuing Directors.
"Closing Date" means the date of the making of the initial Advance (or other
extension of credit) hereunder.
"Code" means the New York Uniform Commercial Code, as in effect from time to
time.
"Collateral" means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Borrower or its Subsidiaries in or upon which a
Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Borrower's or its Subsidiaries' books and records, Equipment, or Inventory,
in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds and tax refunds).
"Commitment" means, with respect to each Lender, its Revolver Commitment, its
Term Loan Commitment, or its Total Commitment, as the context requires, and,
with respect to all Lenders, their Revolver Commitments, their Term Loan
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder, as such amounts may be reduced
or increased from time to time pursuant to assignments made in accordance with
the provisions of Section 13.1.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.
"Continuing Director" means (a) any member of the Board of Directors who was a
director (or comparable manager) of Borrower on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower and whose initial assumption of office resulted from such contest or
the settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).
"Copyright Security Agreement" has the meaning specified therefor in the
Security Agreement.
"Daily Balance" means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.
"Default" means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on the date that it
is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to Advances that are Base Rate Loans (inclusive of the Base
Rate Margin applicable thereto).
"Deposit Account" means any deposit account (as that term is defined in the
Code).
"Designated Account" means the Deposit Account of Borrower identified on
Schedule D-1.
"Designated Account Bank" has the meaning specified therefor in Schedule D-1.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Borrower's consolidated net
earnings (or loss), minus extraordinary gains, plus interest expense, income
taxes, and depreciation and amortization for such period, in each case,
determined on a consolidated basis in accordance with GAAP.
"Eligible Transferee" means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, financial institution, or fund that is engaged in making, purchasing,
or otherwise investing in commercial loans in the ordinary course of its
business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Borrower (which approval of Borrower shall not be
unreasonably withheld, delayed, or conditioned), and (f) during the continuation
of an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower, its Subsidiaries, or any of their predecessors in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Borrower, its Subsidiaries, or
any of their predecessors in interest.
"Environmental Law" means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, in each case as amended
from time to time.
"Environmental Liabilities" means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts, or consultants, and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, or Remedial Action required, by any Governmental Authority or any third
party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental Authority for
Environmental Liabilities.
"Equipment" means equipment (as that term is defined in the Code).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).
"Event of Default" has the meaning specified therefor in Section 7.
"Excess Availability" means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables of
Borrower and its Subsidiaries aged in excess of historical levels with respect
thereto and all book overdrafts of Borrower and its Subsidiaries in excess of
historical practices with respect thereto, in each case as determined by Agent
in its Permitted Discretion.
"Excess Cash Flow" means, with respect to any fiscal period and with respect to
Borrower determined on a consolidated basis in accordance with GAAP (a) EBITDA
for such fiscal period, minus (b) the sum of (i) the cash portion of Interest
Expense paid during such fiscal period, (ii) the cash portion of income taxes
paid during such period, (iii) all scheduled principal payments made in respect
of the Term Loan (excluding any voluntary payments of the Term Loan made
pursuant to Section 2.4(c)(i) during such period), Indebtedness permitted under
Section 6.1(b), or Capitalized Lease Obligations permitted hereunder during such
period, and (iv) the cash portion of Capital Expenditures (net of (y) any
proceeds reinvested in accordance with the proviso to Section 2.4(c)(ii) of the
Agreement, and (z) any proceeds of related financings with respect to such
expenditures) made during such period.
"Excess Cash Flow Certificate" means a certificate substantially in the form of
Exhibit E-1 delivered by the chief financial officer of Borrower to Agent.
"Excess Cash Flow Surplus" means, (a) with respect to any of the first 3 fiscal
quarters of any fiscal year, the amount of Excess Cash Flow of Borrower and its
Subsidiaries for such fiscal quarter that is not required to be used to prepay
the Obligations in accordance with Section 2.4(c)(v)(A), and (b) with respect to
any fiscal year, an amount equal to the result of (i) Excess Cash Flow of
Borrower and its Subsidiaries for such fiscal year as demonstrated by Borrower's
annual audited financial statements minus (ii) Excess Cash Flow of Borrower and
its Subsidiaries for the first three fiscal quarters of such fiscal year as
demonstrated by Borrower's quarterly financial statements for such fiscal
quarters minus (iii) the amount of Excess Cash Flow of Borrower and its
Subsidiaries for such fiscal year that is required to be used to prepay the
Obligations in accordance with Section 2.4(c)(v)(B).
"Exchange Act" means the Securities Exchange Act of 1934, as in effect from time
to time.
"Existing Agent" means Bank of Oklahoma, N.A., as agent under the Loan
Agreement, dated as of September 19, 2003, among Borrower, Bank of Oklahoma,
N.A., Comerica Bank, and First United Bank & Trust.
"Existing Lenders" means each "Bank" as such term is defined in the Existing
Loan Agreements.
"Existing Loan Agreements" means the Loan Agreement, dated as of June 6, 2006,
between Borrower and Bank of Oklahoma, N.A. and the Loan Agreement, dated as of
September 19, 2003, among Borrower, Bank of Oklahoma, N.A., Comerica Bank, and
First United Bank & Trust.
"Extraordinary Receipts" means any cash received by Borrower or any of its
Subsidiaries not in the ordinary course of business in excess of $250,000,
including (a) foreign, United States, state or local tax refunds, (b) pension
plan reversions, (c) proceeds of insurance (including key man life insurance and
business interruption insurance, but excluding any casualty insurance), (d)
judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action, (e) indemnity payments, and (f) any
purchase price adjustment received in connection with any purchase agreement.
"Fee Letter" means that certain fee letter between Borrower and Agent, in form
and substance satisfactory to Agent.
"Fixed Charges" means, with respect to any fiscal period and with respect to
Borrower determined on a consolidated basis in accordance with GAAP, the sum,
without duplication, of (a) Interest Expense accrued during such period, (b)
principal payments in respect of Indebtedness that are required to be paid
during such period, and (c) all federal, state, and local income taxes accrued
during such period.
"Fixed Charge Coverage Ratio" means, with respect to Borrower for any period,
the ratio of (a) EBITDA for such period minus the sum of (i) income taxes paid
(to the extent not already incurred in a prior period) or incurred during such
period, (ii) Capital Expenditures made (to the extent not already incurred in a
prior period) or incurred during such period, (iii) dividends paid by Borrower
on its common Stock during such period in accordance with Section 6.10 (but
excluding dividends paid with identifiable proceeds of the Term Loan), and (iv)
purchases made by Borrower of its Stock during such period in accordance with
Section 6.10 (but excluding purchases made with identifiable proceeds of the
Term Loan) to (b) Fixed Charges for such period.
"Funded Indebtedness" means all secured Indebtedness for borrowed money or
letters of credit of such Person, determined on a consolidated basis in
accordance with GAAP, which by its terms matures more than one year after the
date of calculation, and any such Indebtedness maturing within one year from
such date which is renewable or extendable at the option of such Person to a
date more than one year from such date, including, in any event, but without
duplication, with respect to Borrower and its Subsidiaries, the Advances, the
Term Loan, the Indebtedness outstanding under the Real Estate Loan Agreement,
the Indebtedness outstanding under the Aircraft Loan Agreement, and the amount
of their Capitalized Lease Obligations.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning specified therefor in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.
"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
"Governmental Authority" means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.
"Guarantors" means each Subsidiary of Borrower other than (a) the Regulated
Subsidiaries and (b) unless Agent has requested that Borrower or one of the Loan
Parties take the actions described in Section 5.18, the Canadian Subsidiary, and
"Guarantor" means any one of them.
"Guaranty" means that certain general continuing guaranty executed and delivered
by each Guarantor in favor of Agent, for the benefit of the Lender Group and the
Bank Product Providers, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Headquarters" means the "Mortgaged Premises" as defined in the Construction
Mortgage with Power of Sale and Security Agreement, dated as of June 11, 2002,
between Borrower and Bank of Oklahoma, N.A.
"Hedge Agreement" means any and all agreements or documents now existing or
hereafter entered into by Borrower or any of its Subsidiaries that provide for
an interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Borrower's or any of its Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security, or currency valuations or commodity prices.
"Holdout Lender" has the meaning specified therefor in Section 14.2(a).
"Indebtedness" means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under Capital Leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in accordance
with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning specified therefor in Section 10.3.
"Indemnified Person" has the meaning specified therefor in Section 10.3.
"Insolvency Proceeding" means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
"Intercompany Subordination Agreement" means a subordination agreement executed
and delivered by the Loan Parties and Agent, the form and substance of which is
satisfactory to Agent.
"Interest Expense" means, for any period, the aggregate of the interest expense
of Borrower for such period, determined on a consolidated basis in accordance
with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, 3, or 6 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period which
will end after the Maturity Date.
"Inventory" means inventory (as that term is defined in the Code).
"Investment" means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers, employees, or independent contractors of such
Person made in the ordinary course of business, and (b) bona fide Accounts
arising in the ordinary course of business consistent with past practice),
purchases or other acquisitions of Indebtedness, Stock, or all or substantially
all of the assets of such other Person (or of any division or business line of
such other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to time.
"Issuing Lender" means WFF or any other Lender that, at the request of Borrower
and with the consent of Agent, agrees, in such Lender's sole discretion, to
become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings
pursuant to Section 2.12.
"L/C" has the meaning specified therefor in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning specified therefor in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the preamble to
the Agreement, and shall include any other Person made a party to the Agreement
in accordance with the provisions of Section 13.1.
"Lender Group" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower or its Subsidiaries under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) fees or charges paid or incurred by Agent in connection with the
Lender Group's transactions with Borrower or its Subsidiaries, including, fees
or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office, the
copyright office, or, if applicable, the department of motor vehicles), filing,
recording, publication, appraisal (including periodic collateral appraisals or
business valuations to the extent of the fees and charges (and up to the amount
of any limitation) contained in the Agreement or the Fee Letter), and real
estate title policies and endorsements, (c) costs and expenses incurred by Agent
in the disbursement of funds to Borrower or other members of the Lender Group
(by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting
from the dishonor of checks, (e) reasonable costs and expenses paid or incurred
by the Lender Group to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to any inspections or
audits to the extent of the fees and charges (and up to the amount of any
limitation) contained in the Agreement or the Fee Letter, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group's
relationship with Borrower or any its Subsidiaries, (h) Agent's and each
Lender's reasonable costs and expenses (including attorneys fees) incurred in
advising, structuring, drafting, reviewing, administering, syndicating
(including rating the Term Loan), or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning Borrower or its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender, together
with such Lender's Affiliates, officers, directors, employees, attorneys, and
agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context requires.
"Letter of Credit Usage" means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.
"Leverage Ratio" means, as of any date of determination (a) the amount of
Borrower's Funded Indebtedness as of such date, divided by (b) Borrower's EBITDA
for the 12 month period ended as of such date.
"LIBOR Deadline" has the meaning specified therefor in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning specified therefor in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Agent (rounded upwards or downwards to the nearest
1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b)
100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance or the Term Loan that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 2.50 percentage points.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.
"Loan Account" has the meaning specified therefor in Section 2.10.
"Loan Documents" means the Agreement, the Bank Product Agreements, the Mortgage,
the Control Agreements, the Copyright Security Agreement, the Fee Letter, the
Guaranty, the Intercompany Subordination Agreement, applications for Letters of
Credit, the Patent Security Agreement, the Security Agreement, the Trademark
Security Agreement, any note or notes executed by Borrower in connection with
the Agreement and payable to a member of the Lender Group, and any other
agreement entered into, now or in the future, by any Loan Party, and the Lender
Group in connection with the Agreement.
"Loan Party" means Borrower or any Guarantor.
"Material Adverse Change" means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, (b)
a material impairment of Borrower's and its Subsidiaries ability to perform
their obligations under the Loan Documents to which they are parties or of the
Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent's Liens with respect to the Collateral as a result of an action or
failure to act on the part of Borrower or its Subsidiaries.
"Maturity Date" has the meaning specified therefor in Section 3.4.
"Maximum Revolver Amount" means $5,000,000.
"Member" means a Person enrolled in one of Borrower's or its Subsidiaries'
pre-paid legal expense plans.
"Moody's" has the meaning specified therefor in the definition of Cash
Equivalents.
"Mortgage Policy" has the meaning specified therefor in Schedule 3.1(v).
"Mortgage" means the Mortgage, Assignment of Rents and Leases, and Security
Agreement executed and delivered by Borrower in favor of Agent, in form and
substance satisfactory to Agent, which encumbers the Real Property Collateral.
"Net Cash Proceeds" means:
(a) with respect to any sale or disposition by Borrower or any of its
Subsidiaries of property or assets, the amount of cash proceeds received
(directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on
behalf of Borrower or its Subsidiaries, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or
any Lender under the Agreement or the other Loan Documents and (B)
Indebtedness assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such sale or disposition, (ii)
reasonable fees, commissions, and expenses related thereto and required to
be paid by Borrower or such Subsidiary in connection with such sale or
disposition and (iii) taxes paid or payable to any taxing authorities by
Borrower or such Subsidiary in connection with such sale or disposition, in
each case to the extent, but only to the extent, that the amounts so
deducted are, at the time of receipt of such cash, actually paid or payable
to a Person that is not an Affiliate of Borrower or any of its
Subsidiaries, and are properly attributable to such transaction; and
(b) with respect to the issuance or incurrence of any Indebtedness by
Borrower or any of its Subsidiaries, or the issuance by Borrower or any of
its Subsidiaries of any shares of its Stock, the aggregate amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred
consideration) by or on behalf of Borrower or such Subsidiary in connection
with such issuance or incurrence, after deducting therefrom only (i)
reasonable fees, commissions, and expenses related thereto and required to
be paid by Borrower or such Subsidiary in connection with such issuance or
incurrence, (ii) taxes paid or payable to any taxing authorities by
Borrower or such Subsidiary in connection with such issuance or incurrence,
in each case to the extent, but only to the extent, that the amounts so
deducted are, at the time of receipt of such cash, actually paid or payable
to a Person that is not an Affiliate of Borrower or any of its
Subsidiaries, and are properly attributable to such transaction.
"Obligations" means (a) all loans (including the Term Loan), Advances, debts,
principal, interest (including any interest that accrues after the commencement
of an Insolvency Proceeding, regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrower's Loan Account
pursuant to the Agreement), obligations (including indemnification obligations),
fees (including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
lease payments, guaranties, covenants, and duties of any kind and description
owing by Borrower to the Lender Group pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all other
expenses or other amounts that Borrower is required to pay or reimburse by the
Loan Documents or by law or otherwise in connection with the Loan Documents, and
(b) all Bank Product Obligations. Any reference in the Agreement or in the Loan
Documents to the Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.
"Originating Lender" has the meaning specified therefor in Section 13.1(e).
"Overadvance" has the meaning specified therefor in Section 2.5.
"Patent Security Agreement" has the meaning specified therefor in the Security
Agreement.
"Participant" has the meaning specified therefor in Section 13.1(e).
"Permitted Discretion" means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions of Equipment that
is substantially worn, damaged, or obsolete in the ordinary course of business,
(b) sales of Inventory to buyers in the ordinary course of business, (c) the use
or transfer of money or Cash Equivalents in a manner that is not prohibited by
the terms of the Agreement or the other Loan Documents, and (d) the licensing,
on a non-exclusive basis, of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business.
"Permitted Holder" means the Person identified on Schedule P-1.
"Permitted Investments" means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments received in settlement of amounts due to Borrower or
any of its Subsidiaries effected in the ordinary course of business or owing to
Borrower or any of its Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of Borrower or its Subsidiaries, (e) Investments set forth on Schedule
P-3, (f) Investments by (i) any Loan Party in any other Loan Party, (ii) any
non-Loan Party in any other non-Loan Party, (iii) Borrower in any Regulated
Subsidiary (A) to the extent necessary for such Regulated Subsidiary to meet the
minimum capital or reserve requirements applicable to it under applicable law or
regulation, or (B) in the ordinary course of business and consistent with past
practices, and (iv) any Regulated Subsidiary in Borrower in the ordinary course
of business and consistent with past practices, and (g) Investments by the
Regulated Subsidiaries in investment securities that are recognized as admitted
assets by the applicable Governmental Authorities with jurisdiction over such
Regulated Subsidiaries.
"Permitted Liens" means (a) Liens held by Agent to secure the Obligations, (b)
Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over the
Agent's Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests, (c) judgment Liens that do not constitute an
Event of Default under Section 7.7 of the Agreement, (d) Liens set forth on
Schedule P-2, provided that any such Lien only secures the Indebtedness that it
secures on the Closing Date and any Refinancing Indebtedness in respect thereof,
(e) the interests of lessors under operating leases, (f) purchase money Liens or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as (i) such
Lien attaches only to the asset purchased or acquired and the proceeds thereof,
and (ii) such Lien only secures the Indebtedness that was incurred to acquire
the asset purchased or acquired or any Refinancing Indebtedness in respect
thereof, (g) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (h) Liens on amounts deposited in connection
with obtaining worker's compensation or other unemployment insurance, (i) Liens
on amounts deposited in connection with the making or entering into of bids,
tenders, or leases in the ordinary course of business and not in connection with
the borrowing of money, (j) Liens on amounts deposited as security for surety or
appeal bonds in connection with obtaining such bonds in the ordinary course of
business, (k) with respect to any Real Property, easements, rights of way, title
defects, and zoning restrictions that do not materially interfere with or impair
the use or operation thereof, (l) deposits and pledges of cash required for any
Regulated Subsidiary to conduct business in any jurisdiction, and (m) deposits
and pledges of cash in an aggregate amount not to exceed $250,000 required for
any Loan Party to conduct business in any jurisdiction.
"Permitted Protest" means the right of Borrower or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Borrower's or its Subsidiaries' books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or its Subsidiary, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of determination,
Purchase Money Indebtedness in an aggregate principal amount outstanding at any
one time not in excess of $2,300,000.
"Person" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Projections" means Borrower's forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a)with respect to a Lender's obligation to make Advances and right to
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender's
Revolver Commitment, by (z) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender's
Advances by (z) the aggregate outstanding principal amount of all Advances,
(b)with respect to a Lender's obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and right to receive payments of
fees with respect thereto, (i) prior to the Revolver Commitments being
terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments of
all Lenders, and (ii) from and after the time that the Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender's
Advances by (z) the aggregate outstanding principal amount of all Advances,
(c)with respect to a Lender's obligation to make the Term Loan and
right to receive payments of interest, fees, and principal with respect
thereto, (i) prior to the making of the Term Loan, the percentage obtained
by dividing (y) such Lender's Term Loan Commitment, by (z) the aggregate
amount of all Lenders' Term Loan Commitments, and (ii) from and after the
making of the Term Loan, the percentage obtained by dividing (y) the
principal amount of such Lender's portion of the Term Loan by (z) the
principal amount of the Term Loan, and
(d)with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 15.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment plus
the outstanding principal amount of such Lender's portion of the Term Loan,
by (ii) the aggregate amount of Revolver Commitments of all Lenders plus
the outstanding principal amount of the Term Loan; provided, however, that
in the event the Revolver Commitments have been terminated or reduced to
zero, Pro Rata Share under this clause shall be the percentage obtained by
dividing (A) the outstanding principal amount of such Lender's Advances
plus such Lender's ratable portion of the Risk Participation Liability with
respect to outstanding Letters of Credit plus the outstanding principal
amount of such Lender's portion of the Term Loan, by (B) the outstanding
principal amount of all Advances plus the aggregate amount of the Risk
Participation Liability with respect to outstanding Letters of Credit plus
the outstanding principal amount of the Term Loan.
"Protective Advances" has the meaning specified therefor in Section 2.3(d)(i).
"Purchase Money Indebtedness" means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
20 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries that is
in Deposit Accounts or in Securities Accounts, or any combination thereof, and
which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.
"Real Estate Loan Agreement" means that certain Loan Agreement, dated as of June
11, 2002, by and between Borrower and Bank of Oklahoma, N.A., as amended by that
certain First Amendment to Loan Agreement, dated as of June __, 2006, by and
between Borrower and Bank of Oklahoma, N.A.
"Real Estate Loan Documents" means (a) the Real Estate Loan Agreement and (b)
and the other "Loan Documents" as such term is defined in the Real Estate Loan
Agreement.
"Real Property" means any estates or interests in real property now owned or
hereafter acquired by Borrower or its Subsidiaries and the improvements thereto.
"Real Property Collateral" means the Real Property identified on Schedule R-1.
"Record" means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
"Refinancing Indebtedness" means refinancings, renewals, or extensions of
Indebtedness so long as: (a) such refinancings, renewals, or extensions do not
result in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended, (b) such refinancings, renewals, or extensions do not
result in an increase in the interest rate with respect to the Indebtedness so
refinanced, renewed, or extended, (c) such refinancings, renewals, or extensions
do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive
to Borrower, (d) if the Indebtedness that is refinanced, renewed, or extended
was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and
(e) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.
"Regulated Subsidiaries" means Pre-Paid Legal Casualty, Inc., an Oklahoma
corporation, Legal Service Plans of Virginia, Inc., a Virginia corporation,
Pre-Paid Legal Services of Florida, Inc., a Florida corporation, Pre-Paid Legal
Services of Tennessee, Inc., a Tennessee corporation, National Pre-Paid Legal
Services of Mississippi, Inc., a Georgia corporation, and any other regulated
Subsidiary of a Loan Party formed or acquired after the Closing Date, and
"Regulated Subsidiary" means any one of them.
"Remedial Action" means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.
"Replacement Lender" has the meaning specified therefor in Section 14.2(a).
"Report" has the meaning specified therefor in Section 15.17.
"Required Availability" means that the sum of (a) Excess Availability, plus (b)
Qualified Cash exceeds $5,000,000.
"Required Lenders" means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (d) of the definition of Pro Rata Shares) exceed 50%.
"Reserve Percentage" means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as "eurocurrency liabilities") of that Lender, but so long as such Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1.
"Revolver Usage" means, as of any date of determination, the sum of (a) the
amount of outstanding Advances, plus (b) the amount of the Letter of Credit
Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Securities Account" means a securities account (as that term is defined in the
Code).
"Security Agreement" means a security agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower and Guarantors to
Agent.
"Settlement" has the meaning specified therefor in Section 2.3(e)(i).
"Settlement Date" has the meaning specified therefor in Section 2.3(e)(i).
"Solvent" means, with respect to any Person on a particular date, that, at fair
valuation, the sum of such Person's assets is greater than all of such Person's
debts.
"S&P" has the meaning specified therefor in the definition of Cash Equivalents.
"Stock" means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).
"Subset EBITDA" means, for any fiscal period, net earnings (or loss) of the Loan
Parties and the Top Tier Regulated Subsidiaries, minus extraordinary gains of
such Persons, plus interest expense, income taxes, and depreciation and
amortization of such Persons for such period, in each case, determined in
accordance with GAAP.
"Subsidiary" of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.
"Swing Lender" means WFF or any other Lender that, at the request of Borrower
and with the consent of Agent agrees, in such Lender's sole discretion, to
become the Swing Lender under Section 2.3(b).
"Swing Loan" has the meaning specified therefor in Section 2.3(b).
"Taxes" has the meaning specified therefor in Section 15.11(a).
"Term Loan" has the meaning specified therefor in Section 2.2.
"Term Loan Amount" means $75,000,000.
"Term Loan Commitment" means, with respect to each Lender, its Term Loan
Commitment, and, with respect to all Lenders, their Term Loan Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1.
"Top Tier Regulated Subsidiaries" means Pre-Paid Legal Casualty, Inc., an
Oklahoma corporation, Legal Service Plans of Virginia, Inc., a Virginia
corporation, and Pre-Paid Legal Services of Florida, Inc., a Florida
corporation, and "Top Tier Regulated Subsidiary" means any one of them.
"Total Commitment" means, with respect to each Lender, its Total Commitment,
and, with respect to all Lenders, their Total Commitments, in each case as such
Dollar amounts are set forth beside such Lender's name under the applicable
heading on Schedule C-1 attached hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1.
"Trademark Security Agreement" has the meaning specified therefor in the
Security Agreement.
"TTM EBITDA" means, as of any date of determination, EBITDA of Borrower
determined on a consolidated basis in accordance with GAAP, for the 12 month
period most recently ended.
"Underlying Issuer" means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been issued by
an Underlying Issuer.
United States" means the United States of America.
"Voidable Transfer" has the meaning specified therefor in Section 16.6.
"Wells Fargo" means Wells Fargo Bank, National Association, a national banking
association.
"WFF" means Wells Fargo Foothill, Inc., a California corporation.
Schedule 3.1
The obligation of each Lender to make its initial extension of credit
provided for in the Agreement is subject to the fulfillment, to the satisfaction
of each Lender (the making of such initial extension of credit by any Lender
being conclusively deemed to be its satisfaction or waiver of the following), of
each of the following conditions precedent:
(a) the Closing Date shall occur on or before June 26, 2006;
(b) Agent shall have received a letter duly executed by Borrower and each
Guarantor authorizing Agent to file appropriate financing statements in such
office or offices as may be necessary or, in the opinion of Agent, desirable to
perfect the security interests to be created by the Loan Documents;
(c) Agent shall have received evidence that appropriate financing
statements have been duly filed in such office or offices as may be necessary
or, in the opinion of Agent, desirable to perfect the Agent's Liens in and to
the Collateral, and Agent shall have received searches reflecting the filing of
all such financing statements;
(d) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed, and each such document shall be
in full force and effect:
(i) the Control Agreements,
(ii) the Security Agreement,
(iii) a disbursement letter executed and delivered by Borrower to
Agent regarding the extensions of credit to be made on the Closing Date,
the form and substance of which is satisfactory to Agent,
(iv) the Fee Letter,
(v) the Guaranty,
(vi) the Intercompany Subordination Agreement,
(vii) the Mortgage,
(viii) the Trademark Security Agreement,
(ix) the Copyright Security Agreement,
(x) a letter, in form and substance satisfactory to Agent, from
Existing Agent and Existing Lenders to Agent respecting the amount
necessary to repay in full all of the obligations of Borrower and its
Subsidiaries owing to Existing Lenders under the Existing Loan Agreements
and obtain a release of all of the Liens existing in favor of Existing
Agent or Existing Lenders in and to the assets of Borrower and its
Subsidiaries (other than the Headquarters and the Aircraft), together with
termination statements and other documentation evidencing the termination
by Existing Agent and Existing Lenders of their Liens in and to the
properties and assets of Borrower and its Subsidiaries (other than the
Headquarters and the Aircraft), and
(xi) [list additional documents required];
(e) Agent shall have received a certificate from the Secretary of Borrower
(i) attesting to the resolutions of Borrower's Board of Directors authorizing
its execution, delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party, (ii) authorizing specific officers of
Borrower to execute the same, and (iii) attesting to the incumbency and
signatures of such specific officers of Borrower;
(f) Agent shall have received copies of Borrower's Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of Borrower;
(g) Agent shall have received a certificate of status with respect to
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(h) Agent shall have received certificates of status with respect to
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(i) Agent shall have received a certificate from the Secretary of each
Guarantor (i) attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party, (ii) authorizing specific officers
of such Guarantor to execute the same and (iii) attesting to the incumbency and
signatures of such specific officers of Guarantor;
(j) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
(k) Agent shall have received a certificate of status with respect to each
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(l) Agent shall have received certificates of status with respect to each
Guarantor, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(m) Agent shall have received certificates of insurance as are required by
Section 5.8, the form and substance of which shall be satisfactory to Agent;
(n) Borrower shall have the Required Availability after giving effect to
the initial extensions of credit hereunder and the payment of all fees and
expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;
(o) Agent shall have received an opinion of Borrower's counsel in form and
substance satisfactory to Agent;
(p) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrower's and its
Subsidiaries books and records and verification of Borrower's representations
and warranties to Lender Group, the results of which shall be satisfactory to
Agent, and (ii) a quality of earnings examination;
(q) Agent shall have received completed reference checks with respect to
Borrower's senior management, the results of which are satisfactory to Agent in
its sole discretion;
(r) Agent shall have received a certificate from the Secretary of Borrower
certifying as to (i) the amount of the surplus requirement for each Regulated
Subsidiary as of March 31, 2006, and (ii) the amount of the surplus that each
such Regulated Subsidiary has as of March 31, 2006;
(s) Agent shall have received a set of Projections of Borrower for the 3
year period following the Closing Date (on a year by year basis, and for the 1
year period following the Closing Date, on a month by month basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent;
(t) Borrower shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(u) [Intentionally Omitted];
(v) [Intentionally Omitted];
(w) Agent shall have received a mortgagee title insurance policies for the
Real Property Collateral issued by a title insurance company satisfactory to
Agent (the "Mortgage Policy") in amounts satisfactory to Agent assuring Agent
that the Mortgage on such Real Property Collateral is valid and enforceable
first priority mortgage Lien on such Real Property Collateral free and clear of
all defects and encumbrances except Permitted Liens, and the Mortgage Policy
otherwise shall be in form and substance satisfactory to Agent;
(x) Agent shall have received copies of each of the Real Estate Loan
Documents and the Aircraft Loan Documents, together with a certificate of the
Secretary of Borrower certifying each such document as being a true, correct,
and complete copy thereof;
(y) Borrower and each of its Subsidiaries shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower or its Subsidiaries of
the Loan Documents or with the consummation of the transactions contemplated
thereby; and
(z) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
Schedule 5.2
Provide Agent (and if so requested by Agent, with sufficient copies for
each Lender) with each of the documents set forth below at the following times
in form satisfactory to Agent:
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|Monthly (not later than |(a) a detailed report regarding Borrower and its |
|the 10th day of each |Subsidiaries' cash and Cash Equivalents including an |
|month |indication of which amounts constitute Qualified |
| |Cash, |
| | |
| |(b) a summary roll-forward, in a format reasonably |
| |acceptable to Agent, of Borrower's and its |
| |Subsidiaries' Members. |
-------------------------------------------------------------------------------|
|Upon request by Agent |(b) such other reports as to the Collateral or the |
| |financial condition of Borrower and its Subsidiaries,|
| |as Agent may reasonably request. |
--------------------------------------------------------------------------------
Schedule 5.3
Deliver to Agent, with sufficient copies for each Lender, each of the
financial statements, reports, or other items set forth set forth below at the
following times in form satisfactory to Agent:
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| | |
|as soon as available, |(a) an unaudited consolidated and consolidating |
|but in any event |balance sheet, income statement, and statement of |
|within 45 days of the |cash flow covering the Borrower's and its |
|end of the first 3 |Subsidiaries' operations during period. |
|fiscal quarters during | |
|each of Borrower's |(b) a Compliance Certificate, and |
|fiscal years | |
| |(c) an Excess Cash Flow Certificate. |
| | |
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| | |
|as soon as available, |(d) consolidated and consolidating financial |
|but in any event |statements of Borrower and its Subsidiaries for each |
|within 75 days after |such fiscal year, audited by independent certified |
|the end of each of |public accountants reasonably acceptable to Agent and|
|Borrower's fiscal years |certified, without any qualifications (including any |
| |(A) "going concern" or like qualification or |
| |exception, (B) qualification or exception as to the |
| |scope of such audit, or (C) qualification which |
| |relates to the treatment or classification of any |
| |item and which, as a condition to the removal of such|
| |qualification, would require an adjustment to such |
| |item, the effect of which would be to cause any |
| |noncompliance with the provisions of Section 6.16 |
| |of the Agreement), by such accountants to have been |
| |prepared in accordance with GAAP (such audited |
| |financial statements to include a balance sheet, |
| |income statement, and statement of cash flow and, |
| |if prepared, such accountants' letter to management),|
| | |
| |(e) a Compliance Certificate, and |
| | |
| |(f) an Excess Cash Flow Certificate. |
| | |
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| | |
|as soon as available, |(g) copies of Borrower's Projections, in form and |
|but in any event |substance (including as to scope and underlying |
|within 30 days prior |assumptions) satisfactory to Agent, in its Permitted |
|to the start of each of |Discretion, for the forthcoming 3 years, year by |
|Borrower's fiscal |year, and for the forthcoming fiscal year, month by |
|years, |month, certified by the chief financial officer of |
| |Borrower as being such officer's good faith years, |
| |estimate of the financial performance of Borrower |
| |during the period covered thereby. |
| | |
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| | |
|if and when filed by |(h) Form 10-Q quarterly reports, Form 10-K annual |
|Borrower, |reports, and Form 8-K current reports, |
| | |
| |(i) any other filings made by Borrower with the |
| |SEC, and |
| | |
| |(j) any other information that is provided by |
| |Borrower to its shareholders generally. |
| | |
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| | |
|promptly, but in any |(k) notice of such event or condition and a |
|event within 5 days |statement of the curative action that Borrower |
| |proposes to take with respect thereto. |
| | |
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| | |
|promptly after the |(l) notice of all actions, suits, or proceedings |
|commencement thereof, |brought by or against Borrower or any of its |
|but in any event within |Subsidiaries before any Governmental Authority which |
|5 days after the |reasonably could be expected to result in a Material |
|service of process with |Adverse Change. |
|with respect thereto on | |
|Borrower or any of its | |
|Subsidiaries, | |
| | |
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| | |
|promptly after the |(m) notice of any termination or cancellation of any |
|termination or | material contract which is filed as an exhibit to |
|cancellation thereof, |Borrower's reports under the Exchange Act. |
|but in any event | |
|within 5 days of | |
|termination or | |
|cancellation, | |
| | |
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| | |
|upon the request of |(n) any other information reasonably requested |
|Agent, |relating to the financial condition of Borrower or |
| |its Subsidiaries. |
| | |
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made this 23rd day of June,
2006, among Grantors listed on the signature pages hereof and those additional
entities that hereafter become parties hereto by executing the form of
Supplement attached hereto as Annex 1 (collectively, jointly and severally,
"Grantors" and each individually "Grantor"), and WELLS FARGO FOOTHILL, INC., in
its capacity as administrative agent for the Lender Group and the Bank Product
Provider (together with its successors, "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time,
including all schedules thereto, the "Credit Agreement") among PRE-PAID LEGAL
SERVICES, INC., an Oklahoma corporation, as borrower ("Borrower"), the lenders
party thereto as "Lenders" ("Lenders"), and Agent, the Lender Group is willing
to make certain financial accommodations available to Borrower from time to time
pursuant to the terms and conditions thereof, and
WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group
and the Bank Product Provider in connection with the transactions contemplated
by this Agreement, and
WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement
and the other Loan Documents and to induce the Lender Group to make financial
accommodations to Borrower as provided for in the Credit Agreement, Grantors
have agreed to grant a continuing security interest in and to the Collateral in
order to secure the prompt and complete payment, observance and performance of,
among other things, (a) all of the present and future obligations of Grantors
arising from this Agreement, the Credit Agreement, or the other Loan Documents,
including under any Guaranty, (b) all Bank Product Obligations, and (c) all
Obligations of Borrower, including, in the case of each of clauses (a), (b) and
(c), reasonable attorneys fees and expenses and any interest, fees or expenses
that accrue after the filing of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any Insolvency Proceeding
(clauses (a), (b), and (c) being hereinafter referred to as the "Secured
Obligations"), and
NOW, THEREFORE, for and in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Credit Agreement. Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein or in the Credit Agreement; provided, however,
that to the extent that the Code is used to define any term herein and such term
is defined differently in different Articles of the Code, the definition of such
term contained in Article 9 of the Code shall govern. In addition to those terms
defined elsewhere in this Agreement, as used in this Agreement, the following
terms shall have the following meanings:
(a) "Account" means an account (as that term is defined in the Code).
(b) "Account Debtor" means any Person who is obligated on an Account,
chattel paper, or a general intangible.
(c) "Agent's Lien" has the meaning specified therefor in the Credit
Agreement.
(d) "Bank Product Obligations" has the meaning specified therefor in
the Credit Agreement.
(e) "Bank Product Provider" has the meaning specified therefor in the
Credit Agreement.
(f) "Books" means books and records (including each Grantor's Records
indicating, summarizing, or evidencing such Grantor's assets (including the
Collateral) or liabilities, each Grantor's Records relating to such
Grantor's business operations or financial condition, and each Grantor's
goods or General Intangibles related to such information).
(g) "Borrower" has the meaning specified therfor in the recitals to
this Agreement.
(h) "Cash Equivalents" has the meaning specified therefor in the
Credit Agreement.
(i) "Chattel Paper" means chattel paper (as that term is defined in
the Code) and includes tangible chattel paper and electronic chattel paper.
(j) "Code" means the New York Uniform Commercial Code, as in effect
from time to time; provided, however, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection,
priority, or remedies with respect to Agent's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies.
(k) "Collateral" has the meaning specified therefor in Section 2.
(l) "Commercial Tort Claims" means commercial tort claims (as that
term is defined in the Code), and includes those commercial tort claims
listed on Schedule 1 attached hereto ("Commercial Tort Claims").
(m) "Copyrights" means copyrights and copyright registrations,
including the copyright registrations and recordings thereof and all
applications in connection therewith listed on Schedule 2 attached hereto
and made a part hereof, and (i) all reissues, continuations, extensions or
renewals thereof, (ii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and
payments for past or future infringements or dilutions thereof, (iii) the
right to sue for past, present and future infringements and dilutions
thereof, (iv) the goodwill of each Grantor's business symbolized by the
foregoing and connected therewith, and (v) all of each Grantor's rights
corresponding thereto throughout the world.
(n) "Copyright Security Agreement" means each Copyright Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the
Lender Group and the Bank Product Provider, in substantially the form of
Exhibit A attached hereto, pursuant to which Grantors have granted to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a
security interest in all their respective Copyrights.
(o) "Credit Agreement" has the meaning specified therefor in the
recitals to this Agreement.
(p) "Deposit Account" means any deposit account (as that term is
defined in the Code).
(q) "Equipment" means equipment (as that term is defined in the Code).
(r) "Event of Default" has the meaning specified therefor in Section 7
of the Credit Agreement.
(s) "General Intangibles" means general intangibles (as that term is
defined in the Code) and, in any event, including payment intangibles,
contract rights, rights to payment, rights arising under common law,
statutes, or regulations, choses or things in action, goodwill (including
the goodwill associated with any Trademark, Patent, or Copyright), Patents,
Trademarks, Copyrights, URLs and domain names, industrial designs, other
industrial or Intellectual Property or rights therein or applications
therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies
due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, including
Intellectual Property Licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature,
reports, catalogs, pension plan refunds, pension plan refund claims,
insurance premium rebates, tax refunds, and tax refund claims,
uncertificated securities, and any other personal property other than
commercial tort claims, money, Accounts, Chattel Paper, Deposit Accounts,
goods, Investment Related Property, Negotiable Collateral, and oil, gas, or
other minerals before extraction.
(t) "Grantor" and "Grantors" has the meaning specified therefor in the
recitals to this Agreement.
(u) "Guaranty" has the meaning specified therefor in the Credit
Agreement.
(v) "Insolvency Proceeding" has the meaning specified therefor in the
Credit Agreement.
(w) "Intellectual Property" means any and all Intellectual Property
Licenses, Patents, Copyrights, Trademarks, the goodwill associated with
such Trademarks, trade secrets and customer lists.
(x) "Intellectual Property Licenses" means rights under or interest in
any patent, trademark, copyright or other intellectual property, including
software license agreements with any other party, whether the applicable
Grantor is a licensee or licensor under any such license agreement (but
excluding any off-the-shelf software license agreement), including the
license agreements listed on Schedule 3 attached hereto and made a part
hereof, and the right to use the foregoing in connection with the
enforcement of the Lender Group's rights under the Loan Documents,
including the right to prepare for sale and sell any and all Inventory and
Equipment now or hereafter owned by any Grantor and now or hereafter
covered by such licenses.
(y) "Inventory" means inventory (as that term is defined in the Code).
(z) "Investment Related Property" means (i) investment property (as
that term is defined in the Code), and (ii) all of the following regardless
of whether classified as investment property under the Code: all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership
Agreements.
(aa) "Lender Group" has the meaning specified therefor in the Credit
Agreement.
(bb) "Loan Document" has the meaning specified therefor in the Credit
Agreement.
(cc) "Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts and documents (as that term
is defined in the Code).
(dd) "Obligations" has the meaning specified therefor in the Credit
Agreement.
(ee) "Patents" means patents and patent applications, including the
patents and patent applications listed on Schedule 4 attached hereto and
made a part hereof, and (i) all renewals thereof, (ii) all income,
royalties, damages and payments now and hereafter due or payable under and
with respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iii) the right to sue for past,
present and future infringements and dilutions thereof, and (iv) all of
each Grantor's rights corresponding thereto throughout the world.
(ff) "Patent Security Agreement" means each Patent Security Agreement
among Grantors, or any of them, and Agent, for the benefit of the Lender
Group and the Bank Product Provider, in substantially the form of Exhibit B
attached hereto, pursuant to which Grantors have granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, a security
interest in all their respective Patents.
(gg) "Permitted Liens" has the meaning specified therefor in the
Credit Agreement.
(hh) "Person" has the meaning specified therefor in the Credit
Agreement.
(ii) "Pledged Companies" means, each Person listed on Schedule 5
hereto as a "Pledged Company", together with each other Person, all or a
portion of whose Stock, is acquired or otherwise owned by a Grantor after
the Closing Date.
(jj) "Pledged Interests" means all of each Grantor's right, title and
interest in and to all of the Stock now or hereafter owned by such Grantor,
regardless of class or designation, including, in each of the Pledged
Companies, and all substitutions therefor and replacements thereof, all
proceeds thereof and all rights relating thereto, including any
certificates representing the Stock, the right to request after the
occurrence and during the continuation of an Event of Default that such
Stock be registered in the name of Agent or any of its nominees, the right
to receive any certificates representing any of the Stock and the right to
require that such certificates be delivered to Agent together with undated
powers or assignments of investment securities with respect thereto, duly
endorsed in blank by such Grantor, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect
thereof and of all dividends, distributions of income, profits, surplus, or
other compensation by way of income or liquidating distributions, in cash
or in kind, and cash, instruments, and other property from time to time
received, receivable, or otherwise distributed in respect of or in addition
to, in substitution of, on account of, or in exchange for any or all of the
foregoing.
(kk) "Pledged Interests Addendum" means a Pledged Interests Addendum
substantially in the form of Exhibit C to this Agreement.
(ll) "Pledged Operating Agreements" means all of each Grantor's
rights, powers, and remedies under the limited liability company operating
agreements of each of the Pledged Companies that are limited liability
companies.
(mm) "Pledged Partnership Agreements" means all of each Grantor's
rights, powers, and remedies under the partnership agreements of each of
the Pledged Companies that are partnerships.
(nn) "Proceeds" has the meaning specified therefor in Section 2.
(oo) "Real Property" means any estates or interests in real property
now owned or hereafter acquired by any Grantor and the improvements
thereto.
(pp) "Records" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.
(qq) "Security Interest" has the meaning specified therefor in Section
2.
(rr) "Secured Obligations" has the meaning specified in the recitals
to this Agreement.
(ss) "Securities Account" means a securities account (as that term is
defined in the Code).
(tt) "Stock" has the meaning specified therefor in the Credit
Agreement
(uu) "Supporting Obligations" means Supporting Obligations (as such
term is defined in the Code), and includes letters of credit and guaranties
issued in support of Accounts, Chattel Paper, documents, General
Intangibles, instruments, or Investment Related Property.
(vv) "Trademarks" means trademarks, trade names, registered
trademarks, trademark applications, service marks, registered service marks
and service mark applications, including the trade names, registered
trademarks, trademark applications, registered service marks and service
mark applications listed on Schedule 6 attached hereto and made a part
hereof, and (i) all renewals thereof, (ii) all income, royalties, damages
and payments now and hereafter due or payable under and with respect
thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or
dilutions thereof, (iii) the right to sue for past, present and future
infringements and dilutions thereof, (iv) the goodwill of each Grantor's
business symbolized by the foregoing and connected therewith, and (v) all
of each Grantor's rights corresponding thereto throughout the world.
(ww) "Trademark Security Agreement" means each Trademark Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the
Lender Group and the Bank Product Provider, in substantially the form of
Exhibit D attached hereto, pursuant to which Grantors have granted to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a
security interest in all their respective Trademarks.
(xx) "URL" means "uniform resource locator," an internet web address.
2. Grant of Security. Each Grantor hereby unconditionally grants, assigns
and pledges to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing security interest (hereinafter referred to as the
"Security Interest") in all personal property of such Grantor whether now owned
or hereafter acquired or arising and wherever located, including such Grantor's
right, title, and interest in and to the following, whether now owned or
hereafter acquired or arising and wherever located (the "Collateral"):
(a) all of such Grantor's Accounts;
(b) all of such Grantor's Books;
(c) all of such Grantor's Chattel Paper;
(d) all of such Grantor's interest with respect to any Deposit
Account;
(e) all of such Grantor's Equipment and fixtures;
(f) All of such Grantor's General Intangibles;
(g) all of such Grantor's Inventory;
(h) all of such Grantor's Investment Related Property;
(i) all of such Grantor's Negotiable Collateral;
(j) all of such Grantor's rights in respect of Supporting Obligations;
(k) all of such Grantor's interest with respect to any Commercial Tort
Claims;
(l) all of such Grantor's money, Cash Equivalents, or other assets of
each such Grantor that now or hereafter come into the possession, custody,
or control of Agent or any other member of the Lender Group;
(m) all of the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance or commercial tort
claims covering or relating to any or all of the foregoing, and any and all
Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral,
Supporting Obligations, money, or other tangible or intangible property
resulting from the sale, lease, license, exchange, collection, or other
disposition of any of the foregoing, the proceeds of any award in
condemnation with respect to any of the property of Grantors, any rebates
or refunds, whether for taxes or otherwise, and all proceeds of any such
proceeds, or any portion thereof or interest therein, and the proceeds
thereof, and all proceeds of any loss of, damage to, or destruction of the
above, whether insured or not insured, and, to the extent not otherwise
included, any indemnity, warranty, or guaranty payable by reason of loss or
damage to, or otherwise with respect to any of the foregoing Collateral
(the "Proceeds"). Without limiting the generality of the foregoing, the
term "Proceeds" includes whatever is receivable or received when Investment
Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and
includes proceeds of any indemnity or guaranty payable to any Grantor or
Agent from time to time with respect to any of the Investment Related
Property.
Anything contained in this Agreement to the contrary notwithstanding,
the term "Collateral" shall not include (i) the Real Property (as defined
in the Real Estate Loan Agreement), (ii) the Aircraft (as defined in the
Credit Agreement), and (iii) any goods (and any accessions, fixtures, and
attachments thereto) that are purchased or acquired with proceeds of, and
subject to a Lien in favor of the provider of, Permitted Purchase Money
Indebtedness to the extent that (A) the contract for such Permitted
Purchase Money Indebtedness expressly prohibits the grant of a security
interest or Lien (other than the security interest or Lien securing such
Permitted Purchase Money Indebtedness) on such goods (and any accessions,
fixtures, and attachments thereto) and (B) such prohibition has not been
waived or the consent of the provider of such Permitted Purchase Money
Indebtedness has not been obtained; provided, that the foregoing exclusion
(1) shall not apply when such prohibition is no longer in effect, and (2)
shall not limit, impair, or otherwise affect the Agent's continuing
security interests in and Liens upon any rights or interests of any Grantor
in or to any proceeds, substitutions, or replacements of such goods (and
any accessions, fixtures, and attachments thereto), to the extent not
covered, or to the extent permitted if covered, by the Lien securing such
Permitted Purchase Money Indebtedness.
3. Security for Obligations. This Agreement and the Security Interest
created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Secured Obligations and would be owed by Grantors,
or any of them, to Agent, the Lender Group, the Bank Product Provider or any of
them, but for the fact that they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.
4. Grantors Remain Liable. Anything herein to the contrary notwithstanding,
(a) each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Agent or any other member of the Lender Group of any of the
rights hereunder shall not release any Grantor from any of its duties or
obligations under such contracts and agreements included in the Collateral, and
(c) none of the members of the Lender Group shall have any obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the members of the Lender Group be
obligated to perform any of the obligations or duties of any Grantors thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder. Until an Event of Default shall occur and be continuing, except as
otherwise provided in this Agreement, the Credit Agreement, or other Loan
Documents, Grantors shall have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of their respective
businesses, subject to and upon the terms hereof and of the Credit Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, it
is the intention of the parties hereto that record and beneficial ownership of
the Pledged Interests, including all voting, consensual, and dividend rights,
shall remain in the applicable Grantor until the occurrence of an Event of
Default and until Agent shall notify the applicable Grantor of Agent's exercise
of voting, consensual, or dividend rights with respect to the Pledged Interests
pursuant to Section 15 hereof.
5. Representations and Warranties. Each Grantor hereby represents and
warrants as follows:
(a) The exact legal name of each of the Grantors is set forth on the
signature pages of this Agreement or a written notice provided to Agent
pursuant to Section 6.5 of the Credit Agreement.
(b) Schedule 7 attached hereto sets forth all Real Property owned by
Grantors as of the Closing Date.
(c) As of the Closing Date, no Grantor has any interest in, or title
to, any Copyrights, Intellectual Property Licenses, Patents, or Trademarks
except as set forth on Schedules 2, 3, 4 and 6, respectively, attached
hereto. This Agreement is effective to create a valid and continuing Lien
on such Copyrights, Intellectual Property Licenses, Patents and Trademarks
and, upon filing of the Copyright Security Agreement with the United States
Copyright Office and filing of the Patent Security Agreement and the
Trademark Security Agreement with the United State Patent and Trademark
Office, and the filing of appropriate financing statements in the
jurisdictions listed on Schedule 8 hereto, all action necessary or
desirable to protect and perfect the Security Interest in and to on each
Grantor's Patents, Trademarks, or Copyrights has been taken and such
perfected Security Interests are enforceable as such as against any and all
creditors of and purchasers from any Grantor. No Grantor has any interest
in any Copyright that is necessary in connection with the operation of such
Grantor's business, except for those Copyrights identified on Schedule 2
attached hereto which have been registered with the United States Copyright
Office.
(d) This Agreement creates a valid security interest in the Collateral
of each of Grantors, to the extent a security interest therein can be
created under the Code, securing the payment of the Secured Obligations.
Except to the extent a security interest in the Collateral cannot be
perfected by the filing of a financing statement under the Code, all
filings and other actions necessary or desirable to perfect and protect
such security interest have been duly taken or will have been taken upon
the filing of financing statements listing each applicable Grantor, as a
debtor, and Agent, as secured party, in the jurisdictions listed next to
such Grantor's name on Schedule 8 attached hereto. Upon the making of such
filings, Agent shall have a first priority perfected security interest in
the Collateral of each Grantor to the extent such security interest can be
perfected by the filing of a financing statement. All action by any Grantor
necessary to protect and perfect such security interest on each item of
Collateral has been duly taken.
(e) (i) Except for the Security Interest created hereby, each Grantor
is and will at all times be the sole holder of record and the legal and
beneficial owner, free and clear of all Liens other than Permitted Liens,
of the Pledged Interests indicated on Schedule 5 as being owned by such
Grantor and, when acquired by such Grantor, any Pledged Interests acquired
after the Closing Date; (ii) all of the Pledged Interests are duly
authorized, validly issued, fully paid and nonassessable and the Pledged
Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies of such Grantor identified on
Schedule 5 hereto as supplemented or modified by any Pledged Interests
Addendum or any Supplement to this Agreement; (iii) such Grantor has the
right and requisite authority to pledge, the Investment Related Property
pledged by such Grantor to Agent as provided herein; (iv) all actions
necessary or desirable to perfect, establish the first priority of, or
otherwise protect, Agent's Liens in the Investment Related Collateral, and
the proceeds thereof, have been duly taken, (A) upon the execution and
delivery of this Agreement; (B) upon the taking of possession by Agent of
any certificates constituting the Pledged Interests, to the extent such
Pledged Interests are represented by certificates, together with undated
powers endorsed in blank by the applicable Grantor; (C) upon the filing of
financing statements in the applicable jurisdiction set forth on Schedule 8
attached hereto for such Grantor with respect to the Pledged Interests of
such Grantor that are not represented by certificates, and (D) with respect
to any Securities Accounts, upon the delivery of Control Agreements with
respect thereto; and (v) each Grantor has delivered to and deposited with
Agent (or, with respect to any Pledged Interests created or obtained after
the Closing Date, will deliver and deposit in accordance with Sections 6(a)
and 8 hereof) all certificates representing the Pledged Interests owned by
such Grantor to the extent such Pledged Interests are represented by
certificates, and undated powers endorsed in blank with respect to such
certificates. None of the Pledged Interests owned or held by such Grantor
has been issued or transferred in violation of any securities registration,
securities disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject.
(f) No consent, approval, authorization, or other order or other
action by, and no notice to or filing with, any Governmental Authority or
any other Person is required (i) for the grant of a Security Interest by
such Grantor in and to the Collateral pursuant to this Agreement or for the
execution, delivery, or performance of this Agreement by such Grantor, or
(ii) for the exercise by Agent of the voting or other rights provided for
in this Agreement with respect to the Investment Related Property or the
remedies in respect of the Collateral pursuant to this Agreement, except as
may be required in connection with such disposition of Investment Related
Property by laws affecting the offering and sale of securities generally.
6. Covenants. Each Grantor, jointly and severally, covenants and agrees
with Agent and the Lender Group that from and after the date of this Agreement
and until the date of termination of this Agreement in accordance with Section
23 hereof:
(a) Possession of Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Investment Related Property, or Chattel Paper, and if and to the extent
that perfection or priority of Agent's Security Interest is dependent on or
enhanced by possession, the applicable Grantor, immediately upon the
request of Agent and in accordance with Section 8 hereof, shall execute
such other documents and instruments as shall be requested by Agent or, if
applicable, endorse and deliver physical possession of such Negotiable
Collateral, Investment Related Property, or Chattel Paper to Agent,
together with such undated powers endorsed in blank as shall be requested
by Agent; provided that Grantors shall have no obligation to comply with
the foregoing with respect to the Living Word Missionary Baptist Church
bonds with a nominal value of $57,500 in the aggregate held by Borrower as
of the Closing Date.
(b) Chattel Paper.
(i) Each Grantor shall take all steps reasonably necessary to
grant Agent control of all electronic Chattel Paper in accordance with
the Code and all "transferable records" as that term is defined in
Section 16 of the Uniform Electronic Transaction Act and Section 201
of the federal Electronic Signatures in Global and National Commerce
Act as in effect in any relevant jurisdiction;
(ii) If any Grantor retains possession of any Chattel Paper or
instruments (which retention of possession shall be subject to the
extent permitted hereby and by the Credit Agreement), promptly upon
the request of Agent, such Chattel Paper and instruments shall be
marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the Security Interest of
Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender
Group and the Bank Product Provider";
(c) Control Agreements.
(i) To the extent required by the Credit Agreement, each Grantor
shall obtain an authenticated Control Agreement, from each bank
holding a Deposit Account for such Grantor;
(ii) To the extent required by the Credit Agreement, each Grantor
shall obtain authenticated Control Agreements, from each issuer of
uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to
or for any Grantor;
(d) Letter of Credit Rights. Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly (and in any event within 2
Business Days after becoming a beneficiary), notify Agent thereof and, upon
the request by Agent, enter into a tri-party agreement with Agent and the
issuer or confirmation bank with respect to letter-of-credit rights (as
that term is defined in the Code) assigning such letter-of-credit rights to
Agent and directing all payments thereunder to Agent's Account, all in form
and substance satisfactory to Agent;
(e) Commercial Tort Claims. Each Grantor shall promptly (and in any
event within 2 Business Days of receipt thereof), notify Agent in writing
upon incurring or otherwise obtaining a Commercial Tort Claim after the
date hereof against any third party and, upon request of Agent, promptly
amend Schedule 1 to this Agreement, authorize the filing of additional
financing statements or amendments to existing financing statements and do
such other acts or things deemed necessary or desirable by Agent to give
Agent a first priority, perfected security interest in any such Commercial
Tort Claim;
(f) Government Contracts. If any Account or Chattel Paper arises out
of a contract or contracts with the United States of America or any
department, agency, or instrumentality thereof, Grantors shall promptly
(and in any event within 2 Business Days of the creation thereof) notify
Agent thereof in writing and execute any instruments or take any steps
reasonably required by Agent in order that all moneys due or to become due
under such contract or contracts shall be assigned to Agent, for the
benefit of the Lender Group and the Bank Product Provider, and notice
thereof given under the Assignment of Claims Act or other applicable law;
(g) Intellectual Property.
(i) Upon request of Agent, in order to facilitate filings with
the United States Patent and Trademark Office and the United States
Copyright Office, each Grantor shall execute and deliver to Agent one
or more Copyright Security Agreements, Trademark Security Agreements,
or Patent Security Agreements to evidence Agent's Lien on such
Grantor's Patents, Trademarks, or Copyrights, and the General
Intangibles of such Grantor relating thereto or represented thereby;
(ii) Each Grantor shall have the duty, to the extent necessary or
economically desirable in the operation of such Grantor's business,
(A) to promptly sue for infringement, misappropriation, or dilution
and to recover any and all damages for such infringement,
misappropriation, or dilution, (B) to prosecute diligently any
trademark application or service mark application that is part of the
Trademarks pending as of the date hereof or hereafter until the
termination of this Agreement, (C) to prosecute diligently any patent
application that is part of the Patents pending as of the date hereof
or hereafter until the termination of this Agreement, and (D) to take
all reasonable and necessary action to preserve and maintain all of
such Grantor's Trademarks, Patents, Copyrights, Intellectual Property
Licenses, and its rights therein, including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings. Each Grantor
shall promptly file an application with the United States Copyright
Office for any Copyright that has not been registered with the United
States Copyright Office if such Copyright is necessary in connection
with the operation of such Grantor's business. Any expenses incurred
in connection with the foregoing shall be borne by the appropriate
Grantor. Each Grantor further agrees not to abandon any Trademark,
Patent, Copyright, or Intellectual Property License that is necessary
or economically desirable in the operation of such Grantor's business
without the prior written consent of Agent;
(iii) Grantors acknowledge and agree that the Lender Group shall
have no duties with respect to the Trademarks, Patents, Copyrights, or
Intellectual Property Licenses. Without limiting the generality of
this Section 6(g), Grantors acknowledge and agree that no member of
the Lender Group shall be under any obligation to take any steps
necessary to preserve rights in the Trademarks, Patents, Copyrights,
or Intellectual Property Licenses against any other Person, but any
member of the Lender Group may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all
expenses incurred in connection therewith (including reasonable fees
and expenses of attorneys and other professionals) shall be for the
sole account of Borrower and shall be chargeable to the Loan Account;
(iv) In no event shall any Grantor, either itself or through any
agent, employee, licensee, or designee, file an application for the
registration of any Patent, Trademark, or Copyright with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency without giving Agent prior written
notice thereof. Promptly upon any such filing, each Grantor shall
comply with Section 6(g)(i) hereof;
(h) Investment Related Property.
(i) If any Grantor shall receive or become entitled to receive
any Pledged Interests after the Closing Date, it shall promptly (and
in any event within 2 Business Days of receipt thereof) deliver to
Agent a duly executed Pledged Interests Addendum identifying such
Pledged Interests;
(ii) Upon the occurrence and during the continuance of a Default
or Event of Default, all sums of money and property paid or
distributed in respect of the Investment Related Property which are
received by any Grantor shall be held by the Grantors in trust for the
benefit of Agent segregated from such Grantor's other property, and
such Grantor shall deliver it forthwith to Agent's in the exact form
received;
(iii) Each Grantor shall promptly deliver to Agent a copy of each
notice or other communication received by it in respect of any Pledged
Interests;
(iv) No Grantor shall make or consent to any amendment or other
modification or waiver with respect to any Pledged Interests, Pledged
Operating Agreement, or Pledged Partnership Agreement, or enter into
any agreement or permit to exist any restriction with respect to any
Pledged Interests other than pursuant to the Loan Documents;
(v) Each Grantor agrees that it will cooperate with Agent in
obtaining all necessary approvals and making all necessary filings
under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or
transfer thereof;
(vi) As to all limited liability company or partnership
interests, issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, each Grantor hereby represents, warrants and
covenants that the Pledged Interests issued pursuant to such agreement
(A) are not and shall not be dealt in or traded on securities
exchanges or in securities markets, (B) do not and will not constitute
investment company securities, and (C) are not and will not be held by
such Grantor in a securities account. In addition, none of the Pledged
Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any
Pledged Operating Agreement or Pledged Partnership Agreement, provide
or shall provide that such Pledged Interests are securities governed
by Article 8 of the Uniform Commercial Code as in effect in any
relevant jurisdiction;
(i) Real Property; Fixtures. Each Grantor covenants and agrees that
upon the acquisition of any fee interest in Real Property (other than the
Headquarters) it will promptly (and in any event within 2 Business Days of
acquisition) notify Agent of the acquisition of such Real Property and will
grant to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a first priority Mortgage on each fee interest in Real Property
now or hereafter owned by such Grantor and shall deliver such other
documentation and opinions, in form and substance satisfactory to Agent, in
connection with the grant of such Mortgage as Agent shall request in its
Permitted Discretion, including title insurance policies, financing
statements, fixture filings and environmental audits and such Grantor shall
pay all recording costs, intangible taxes and other fees and costs
(including reasonable attorneys fees and expenses) incurred in connection
therewith. Each Grantor acknowledges and agrees that, to the extent
permitted by applicable law, all of the Collateral shall remain personal
property regardless of the manner of its attachment or affixation to real
property.
(j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Collateral, except expressly permitted by the
Credit Agreement, or (ii) create or permit to exist any Lien upon or with
respect to any of the Collateral of any of Grantors, except for Permitted
Liens. The inclusion of Proceeds in the Collateral shall not be deemed to
constitute Agent's consent to any sale or other disposition of any of the
Collateral except as expressly permitted in this Agreement or the other
Loan Documents; and
(k) Other Actions as to Any and All Collateral. Each Grantor shall
promptly (and in any event within 2 Business Days of acquiring or obtaining
such Collateral) notify Agent in writing upon (i) acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Trademarks,
Patents, Copyrights, Intellectual Property Licenses, Investment Related
Property, Chattel Paper (electronic, tangible or otherwise), documents (as
defined in Article 9 of the Code), promissory notes (as defined in the
Code, or instruments (as defined in the Code) or (ii) any amount payable
under or in connection with any of the Collateral being or becoming
evidenced after the date hereof by any Chattel Paper, documents, promissory
notes, or instruments and, in each such case upon the request of Agent and
in accordance with Section 8 hereof, promptly execute such other documents,
or if applicable, deliver such Chattel Paper, other documents or
certificates evidencing any Investment Related Property in accordance with
Section 6 hereof and do such other acts or things deemed necessary or
desirable by Agent to protect Agent's Security Interest therein; and
(l) Motor Vehicles. Upon request of Agent, with respect to all motor
vehicles owned by any Grantor, Grantor shall deliver to Agent, a
certificate of title for all such motor vehicles and shall cause those
title certificates to be filed (with the Agent's Lien noted thereon) in the
appropriate state motor vehicle filing office; provided that Grantors shall
have no obligation to comply with this Section 6(l) until the aggregate
fair market value of all motor vehicles owned by Grantors exceeds $200,000.
7. Relation to Other Security Documents. The provisions of this Agreement
shall be read and construed with the other Loan Documents referred to below in
the manner so indicated.
(a) Credit Agreement. In the event of any conflict between any
provision in this Agreement and a provision in the Credit Agreement, such
provision of the Credit Agreement shall control.
(b) Patent, Trademark, Copyright Security Agreements. The provisions
of the Copyright Security Agreements, Trademark Security Agreements, and
Patent Security Agreements are supplemental to the provisions of this
Agreement, and nothing contained in the Copyright Security Agreements,
Trademark Security Agreements, or the Patent Security Agreements shall
limit any of the rights or remedies of Agent hereunder.
8. Further Assurances.
(a) Each Grantor agrees that from time to time, at its own expense,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or that Agent
may reasonably request, in order to perfect and protect any Security
Interest granted or purported to be granted hereby or to enable Agent to
exercise and enforce its rights and remedies hereunder with respect to any
of the Collateral.
(b) Each Grantor authorizes the filing by Agent financing or
continuation statements, or amendments thereto, and such Grantor will
execute and deliver to Agent such other instruments or notices, as may be
necessary or as Agent may reasonably request, in order to perfect and
preserve the Security Interest granted or purported to be granted hereby.
(c) Each Grantor authorizes Agent at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements and
amendments (i) describing the Collateral as "all personal property of
debtor" or "all assets of debtor" or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater
detail, or (iii) that contain any information required by part 5 of Article
9 of the Code for the sufficiency or filing office acceptance. Each Grantor
also hereby ratifies any and all financing statements or amendments
previously filed by Agent in any jurisdiction.
(d) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to
any financing statement filed in connection with this Agreement without the
prior written consent of Agent, subject to such Grantor's rights under
Section 9-509(d)(2) of the Code.
9. Agent's Right to Perform Contracts. Upon the occurrence and during the
continuance of an Event of Default, Agent (or its designee) may proceed to
perform any and all of the obligations of any Grantor contained in any contract,
lease, or other agreement and exercise any and all rights of any Grantor therein
contained as fully as such Grantor itself could.
10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints Agent its attorney-in-fact, with full authority in the place and stead
of such Grantor and in the name of such Grantor or otherwise, at such time as an
Event of Default has occurred and is continuing under the Credit Agreement, to
take any action and to execute any instrument which Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Accounts or any other Collateral of such Grantor;
(b) to receive and open all mail addressed to such Grantor and to
notify postal authorities to change the address for the delivery of mail to
such Grantor to that of Agent;
(c) to receive, indorse, and collect any drafts or other instruments,
documents, Negotiable Collateral or Chattel Paper;
(d) to file any claims or take any action or institute any proceedings
which Agent may deem necessary or desirable for the collection of any of
the Collateral of such Grantor or otherwise to enforce the rights of Agent
with respect to any of the Collateral;
(e) to repair, alter, or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any Person obligated to such Grantor
in respect of any Account of such Grantor;
(f) to use any labels, Patents, Trademarks, trade names, URLs, domain
names, industrial designs, Copyrights, advertising matter or other
industrial or intellectual property rights, in advertising for sale and
selling Inventory and other Collateral and to collect any amounts due under
Accounts, contracts or Negotiable Collateral of such Grantor; and
(g) Agent on behalf of the Lender Group shall have the right, but
shall not be obligated, to bring suit in its own name to enforce the
Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if
Agent shall commence any such suit, the appropriate Grantor shall, at the
request of Agent, do any and all lawful acts and execute any and all proper
documents reasonably required by Agent in aid of such enforcement.
To the extent permitted by law, each Grantor hereby ratifies all that
such attorney-in-fact shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall be
irrevocable until this Agreement is terminated.
11. Agent May Perform. If any of Grantors fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Agent incurred in connection therewith
shall be payable, jointly and severally, by Grantors.
12. Agent's Duties. The powers conferred on Agent hereunder are solely to
protect Agent's interest in the Collateral, for the benefit of the Lender Group
and the Bank Product Provider, and shall not impose any duty upon Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it
hereunder, Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its actual possession
if such Collateral is accorded treatment substantially equal to that which Agent
accords its own property.
13. Collection of Accounts, General Intangibles and Negotiable Collateral.
At any time upon the occurrence and during the continuation of an Event of
Default, Agent or Agent's designee may (a) notify Account Debtors of any Grantor
that the Accounts, General Intangibles, Chattel Paper or Negotiable Collateral
have been assigned to Agent, for the benefit of the Lender Group and the Bank
Product Provider, or that Agent has a security interest therein, and (b) collect
the Accounts, General Intangibles and Negotiable Collateral directly, and any
collection costs and expenses shall constitute part of such Grantor's Secured
Obligations under the Loan Documents.
14. Disposition of Pledged Interests by Agent. None of the Pledged
Interests existing as of the date of this Agreement are, and none of the Pledged
Interests hereafter acquired on the date of acquisition thereof will be,
registered or qualified under the various federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. Each Grantor understands that in connection with such
disposition, Agent may approach only a restricted number of potential purchasers
and further understands that a sale under such circumstances may yield a lower
price for the Pledged Interests than if the Pledged Interests were registered
and qualified pursuant to federal and state securities laws and sold on the open
market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to
the terms of this Agreement, sell or cause the Pledged Interests or any portion
thereof to be sold at a private sale, Agent shall have the right to rely upon
the advice and opinion of any nationally recognized brokerage or investment firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that Agent has
handled the disposition in a commercially reasonable manner.
15. Voting Rights.
(a) Upon the occurrence and during the continuation of an Event of
Default, (i) Agent may, at its option, and with 2 Business Days prior
notice to any Grantor, and in addition to all rights and remedies available
to Agent under any other agreement, at law, in equity, or otherwise,
exercise all voting rights, and all other ownership or consensual rights in
respect of the Pledged Interests owned by such Grantor, but under no
circumstances is Agent obligated by the terms of this Agreement to exercise
such rights, and (ii) if Agent duly exercises its right to vote any of such
Pledged Interests, each Grantor hereby appoints Agent, such Grantor's true
and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged
Interests in any manner Agent deems advisable for or against all matters
submitted or which may be submitted to a vote of shareholders, partners or
members, as the case may be. The power-of-attorney granted hereby is
coupled with an interest and shall be irrevocable.
(b) For so long as any Grantor shall have the right to vote the
Pledged Interests owned by it, such Grantor covenants and agrees that it
will not, without the prior written consent of Agent, vote or take any
consensual action with respect to such Pledged Interests which would
materially adversely affect the rights of Agent and the other members of
the Lender Group or the value of the Pledged Interests.
16. Remedies. Upon the occurrence and during the continuance of an Event of
Default:
(a) Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein, in the other Loan Documents,
or otherwise available to it, all the rights and remedies of a secured
party on default under the Code or any other applicable law. Without
limiting the generality of the foregoing, each Grantor expressly agrees
that, in any such event, Agent without demand of performance or other
demand, advertisement or notice of any kind (except a notice specified
below of time and place of public or private sale) to or upon any of
Grantors or any other Person (all and each of which demands, advertisements
and notices are hereby expressly waived to the maximum extent permitted by
the Code or any other applicable law), may take immediate possession of all
or any portion of the Collateral and (i) require Grantors to, and each
Grantor hereby agrees that it will at its own expense and upon request of
Agent forthwith, assemble all or part of the Collateral as directed by
Agent and make it available to Agent at one or more locations where such
Grantor regularly maintains Inventory, and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Agent's offices or elsewhere,
for cash, on credit, and upon such other terms as Agent may deem
commercially reasonable. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least 10 days notice to any of Grantors
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification and
specifically such notice shall constitute a reasonable "authenticated
notification of disposition" within the meaning of Section 9-611 of the
Code. Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Agent is hereby granted a license or other right to use, without
liability for royalties or any other charge, each Grantor's labels,
Patents, Copyrights, rights of use of any name, trade secrets, trade names,
Trademarks, service marks and advertising matter, URLs, domain names,
industrial designs, other industrial or intellectual property or any
property of a similar nature, whether owned by any of Grantors or with
respect to which any of Grantors have rights under license, sublicense, or
other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and each Grantor's rights
under all licenses and all franchise agreements shall inure to the benefit
of Agent.
(c) Any cash held by Agent as Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied against
the Secured Obligations in the order set forth in the Credit Agreement. In
the event the proceeds of Collateral are insufficient to satisfy all of the
Secured Obligations in full, each Grantor shall remain jointly and
severally liable for any such deficiency.
(d) Each Grantor hereby acknowledges that the Secured Obligations
arose out of a commercial transaction, and agrees that if an Event of
Default shall occur and be continuing Agent shall have the right to an
immediate writ of possession without notice of a hearing. Agent shall have
the right to the appointment of a receiver for the properties and assets of
each of Grantors, and each Grantor hereby consents to such rights and such
appointment and hereby waives any objection such Grantors may have thereto
or the right to have a bond or other security posted by Agent.
17.Pledged Companies that are Regulated Subsidiaries. Anything to the
contrary contained herein notwithstanding, with respect to any Pledged Company
that is a Regulated Subsidiary, all rights, remedies, and powers provided in
this Agreement are subject to any mandatory provision of applicable law that
relates to the acquisition and control of such Pledged Company. Each Grantor
agrees that, upon the occurrence of and during the continuance of an Event of
Default and at Agent's request, it will, and will cause each of its Subsidiaries
to, promptly cooperate with Agent's efforts to comply with such mandatory
provisions of applicable law.
18. Remedies Cumulative. Each right, power, and remedy of Agent as provided
for in this Agreement or in the other Loan Documents or now or hereafter
existing at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Agent, of any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Agent of any or all such other rights, powers, or remedies.
19. Marshaling. Agent shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or
other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights and remedies hereunder and in respect of
such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To
the extent that it lawfully may, each Grantor hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause delay
in or impede the enforcement of Agent's rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by
which any of the Secured Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.
20. Indemnity and Expenses.
(a) Each Grantor agrees to indemnify Agent and the other members of
the Lender Group from and against all claims, lawsuits and liabilities
(including reasonable attorneys fees) growing out of or resulting from this
Agreement (including enforcement of this Agreement) or any other Loan
Document to which such Grantor is a party, except claims, losses or
liabilities resulting from the gross negligence or willful misconduct of
the party seeking indemnification as determined by a final non-appealable
order of a court of competent jurisdiction. This provision shall survive
the termination of this Agreement and the Credit Agreement and the
repayment of the Secured Obligations.
(b) Grantors, jointly and severally, shall, upon demand, pay to Agent
(or Agent, may charge to the Loan Account) all the Lender Group Expenses
which Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or, upon an
Event of Default, the sale of, collection from, or other realization upon,
any of the Collateral in accordance with this Agreement and the other Loan
Documents, (iii) the exercise or enforcement of any of the rights of Agent
hereunder or (iv) the failure by any of Grantors to perform or observe any
of the provisions hereof.
21. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. No waiver of any provision of this Agreement, and no consent to any
departure by any of Grantors herefrom, shall in any event be effective unless
the same shall be in writing and signed by Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by Agent and each of
Grantors to which such amendment applies.
22. Addresses for Notices. All notices and other communications provided
for hereunder shall be given in the form and manner and delivered to Agent at
its address specified in the Credit Agreement, and to any of the Grantors at
their respective addresses specified in the Credit Agreement or Guaranty, as
applicable, or, as to any party, at such other address as shall be designated by
such party in a written notice to the other party.
23. Continuing Security Interest: Assignments under Credit Agreement. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in cash in accordance with the provisions of the Credit Agreement and
the Commitments have expired or have been terminated, (b) be binding upon each
of Grantors, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Agent, and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any the
Lender may, in accordance with the provisions of the Credit Agreement, assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such the
Lender herein or otherwise. Upon payment in full in cash of the Obligations in
accordance with the provisions of the Credit Agreement and the expiration or
termination of the Commitments, the Security Interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantors or any other
Person entitled thereto. At such time, Agent will authorize the filing of
appropriate termination statements to terminate such Security Interests. No
transfer or renewal, extension, assignment, or termination of this Agreement or
of the Credit Agreement, any other Loan Document, or any other instrument or
document executed and delivered by any Grantor to Agent nor any additional
Advances or other loans made by any the Lender to Borrower, nor the taking of
further security, nor the retaking or re-delivery of the Collateral to Grantors,
or any of them, by Agent, nor any other act of the Lender Group or the Bank
Product Provider, or any of them, shall release any of Grantors from any
obligation, except a release or discharge executed in writing by Agent in
accordance with the provisions of the Credit Agreement. Agent shall not by any
act, delay, omission or otherwise, be deemed to have waived any of its rights or
remedies hereunder, unless such waiver is in writing and signed by Agent and
then only to the extent therein set forth. A waiver by Agent of any right or
remedy on any occasion shall not be construed as a bar to the exercise of any
such right or remedy which Agent would otherwise have had on any other occasion.
24. Governing Law.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR
RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL
OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. AGENT AND EACH GRANTOR WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 24(b).
(c) AGENT AND EACH GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW OR STATUTORY CLAIMS. AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
25. New Subsidiaries. Pursuant to Section 5.16 of the Credit Agreement, any
new direct or indirect Subsidiary (whether by acquisition or creation) of
Grantor is required to enter into this Agreement by executing and delivering in
favor of Agent a supplement to this Agreement in the form of Annex 1 attached
hereto. Upon the execution and delivery of Annex 1 by such new Subsidiary, such
Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any
instrument adding an additional Grantor as a party to this Agreement shall not
require the consent of any Grantor hereunder. The rights and obligations of each
Grantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor hereunder.
26. Agent. Each reference herein to any right granted to, benefit conferred
upon or power exercisable by the "Agent" shall be a reference to Agent, for the
benefit of the Lender Group and the Bank Product Provider.
27. Miscellaneous.
(a) This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when
taken together, shall constitute but one and the same Agreement. Delivery
of an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery
of an original executed counterpart of this Agreement. Any party delivering
an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other
Loan Document mutatis mutandis.
(b) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in
that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall
not beused in connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either
gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.
(e) Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms "includes" and
"including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The
words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Loan Document, as the case may
be. Section, subsection, clause, schedule, and exhibit references herein
are to this Agreement unless otherwise specified. Any reference in this
Agreement or in any other Loan Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall
mean the repayment in full in cash (or cash collateralization in accordance
with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations
that, at such time, are allowed by the applicable Bank Product Provider to
remain outstanding and that are not required by the provisions of the
Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record and any Record
so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.
GRANTORS: PRE-PAID LEGAL SERVICES, INC.,
an Oklahoma corporation
By: /s/ Steve Williamson
------------------------------------------
Name: Steve Williamson
----------------------------------------
Title: Chief Financial Officer
---------------------------------------
AMERICAN LEGAL SERVICES, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
ADA TRAVEL SERVICE, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
PRE-PAID LEGAL ACCESS, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
PRE-PAID CANADIAN HOLDINGS, L.L.C.,
an Oklahoma limited liability company
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
PPL AGENCY, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
AGENT: WELLS FARGO FOOTHILL, INC., as Agent
By: /s/ Jackie Hermie
------------------------------------------
Name: Jackie Hermie
----------------------------------------
Title: Vice President
---------------------------------------
Exhibit 10.2 Security Agreement
ANNEX 1 TO SECURITY AGREEMENT
FORM OF SUPPLEMENT
Supplement No. ____ (this "Supplement") dated as of _______________, 20__, to
the Security Agreement of even date herewith (as amended, restated, supplemented
or otherwise modified from time to time, the "Security Agreement") by each of
the parties listed on the signature pages thereto and those additional entities
that thereafter become parties thereto (collectively, jointly and severally,
"Grantors" and each individually "Grantor") and WELLS FARGO FOOTHILL, INC. in
its capacity as Agent for the Lender Group and the Bank Product Provider
(together with the successors, "Agent").
W I T N E S S E T H:
- - - - - - - - - - -
WHEREAS, pursuant to that certain Credit Agreement dated as of June 23, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among PRE-PAID LEGAL SERVICES, INC., an Oklahoma
corporation, as borrower ("Borrower"), the lenders party thereto as "Lenders"
("Lenders"), and Agent, the Lender Group is willing to make certain financial
accommodations available to Borrower from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement or the Credit
Agreement; and
WHEREAS, Grantors have entered into the Security Agreement in order to induce
the Lender Group to make certain financial accommodations to Borrower; and
WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or
indirect Subsidiaries of Borrower, must execute and deliver certain Loan
Documents, including the Security Agreement, and the execution of the Security
Agreement by the undersigned new Grantor or Grantors (collectively, the "New
Grantors") may be accomplished by the execution of this Supplement in favor of
Agent, for the benefit of the Lender Group and the Bank Product Provider;
NOW, THEREFORE, for and in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:
1. In accordance with Section 24 of the Security Agreement, each New
Grantor, by its signature below, becomes a "Grantor" under the Security
Agreement with the same force and effect as if originally named therein as a
"Grantor" and each New Grantor hereby (a) agrees to all of the terms and
provisions of the Security Agreement applicable to it as a "Grantor" thereunder
and (b) represents and warrants that the representations and warranties made by
it as a "Grantor" thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, each New Grantor, as security for the payment
and performance in full of the Secured Obligations, does hereby grant, assign,
and pledge to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a security interest in and security title to all assets of such New
Grantor including, all property of the type described in Section 2 of the
Security Agreement to secure the full and prompt payment of the Secured
Obligations, including, any interest thereon, plus reasonable attorneys' fees
and expenses if the Secured Obligations represented by the Security Agreement
are collected by law, through an attorney-at-law, or under advice therefrom.
Schedule 1, "Commercial Tort Claims", Schedule 2, "Copyrights", Schedule 3,
"Intellectual Property Licenses", Schedule 4, "Patents", Schedule 5, "Pledged
Companies", Schedule 6, "Trademarks", Schedule 7, "Owned Real Property," and
Schedule 8, "List of Uniform Commercial Code Filing Jurisdictions", and attached
hereto supplement Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule 5,
Schedule 6, Schedule 7, and Schedule 8 respectively, to the Security Agreement
and shall be deemed a part thereof for all purposes of the Security Agreement.
Each reference to a "Grantor" in the Security Agreement shall be deemed to
include each New Grantor. The Security Agreement is incorporated herein by
reference.
2. Each New Grantor represents and warrants to Agent, the Lender Group and
the Bank Product Provider that this Supplement has been duly executed and
delivered by such New Grantor and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws affecting creditors'
rights generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
3. This Supplement may be executed in multiple counterparts, each of which
shall be deemed to be an original, but all such separate counterparts shall
together constitute but one and the same instrument. Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as effective
as delivery of a manually executed counterpart hereof.
4. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.
5. This Supplement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this
Supplement to the Security Agreement as of the day and year first above written.
NEW GRANTORS: [Name of New Grantor]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
[Name of New Grantor]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
AGENT: WELLS FARGO FOOTHILL, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Copyright Security Agreement") is made
this ___ day of ___________, 20__, among Grantors listed on the signature pages
hereof ( collectively, jointly and severally, "Grantors" and each individually
"Grantor"), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the
Lender Group and the Bank Product Provider (together with its successors, the
"Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Credit Agreement dated as of June 23, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among PRE-PAID LEGAL SERVICES, INC., an Oklahoma
corporation, as borrower ("Borrower"), the lenders party thereto as "Lenders"
("Lenders"), and Agent, the Lender Group is willing to make certain financial
accommodations available to Borrower from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Credit Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement of even date herewith (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the "Security Agreement");
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Agent, for the benefit of the Lender Group and the Bank Product
Provider, this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the Credit
Agreement.
2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority security interest in all of such Grantor's
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the "Copyright
Collateral"):
(a) all of such Grantor's Copyrights and Copyright Intellectual
Property Licenses to which it is a party including those referred to on
Schedule I hereto;
(b) all reissues, continuations or extensions of the foregoing; and
(c) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement
or dilution of any Copyright or any Copyright licensed under any
Intellectual Property License.
3. SECURITY FOR OBLIGATIONS. This Copyright Security Agreement and the
Security Interest created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Copyright Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
4. SECURITY AGREEMENT. The security interests granted pursuant to this
Copyright Security Agreement are granted in conjunction with the security
interests granted to Agent, for the benefit of the Lender Group and the Bank
Product Provider, pursuant to the Security Agreement. Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
5. AUTHORIZATION TO SUPPLEMENT. Grantors shall give Agent prompt notice in
writing of any additional United States copyright registrations or applications
therefor after the date hereof. Grantors hereby authorize Agent unilaterally to
modify this Agreement by amending Schedule I to include any future United States
registered copyrights or applications therefor of Grantors. Notwithstanding the
foregoing, no failure to so modify this Copyright Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Agent's
continuing security interest in all Collateral, whether or not listed on
Schedule I.
6. COUNTERPARTS. This Copyright Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Copyright Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
7. CONSTRUCTION. Unless the context of this Copyright Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Copyright Security Agreement or any other Loan Document refer to this Copyright
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Copyright Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Copyright Security Agreement unless
otherwise specified. Any reference in this Copyright Security Agreement or in
any other Loan Document to any agreement, instrument, or document shall include
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and that are not required by the provisions of
the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
IN WITNESS WHEREOF, each Grantor has caused this Copyright Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ACCEPTED AND ACKNOWLEDGED BY:
WELLS FARGO FOOTHILL, INC., as Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SCHEDULE I
TO
COPYRIGHT SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
| Grantor | Country | Copyright | Registration No. | Registration Date |
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
| | | | | |
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
| | | | | |
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
| | | | | |
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
| | | | | |
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
| | | | | |
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
| | | | | |
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| | | | | |
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------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Copyright Licenses
EXHIBIT B
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Patent Security Agreement") is made
this ___ day of ___________, 20__, among the Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and WELLS FARGO FOOTHILL, INC., in its capacity as
administrative agent for the Lender Group and the Bank Product Provider
(together with its successors, "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Credit Agreement dated as of June 23,
2006 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among PRE-PAID LEGAL SERVICES, INC., an Oklahoma
corporation, as borrower ("Borrower"), the lenders party thereto as "Lenders"
("Lenders"), and Agent, the Lender Group is willing to make certain financial
accommodations available to Borrower from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, the members of Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Credit Agreement, but only
upon the condition, among others, that the Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement of even date herewith (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the "Security Agreement");
WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Agent, for the benefit of the Lender Group and the Bank
Product Provider, this Patent Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the Credit
Agreement.
2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority security interest in all of such Grantor's
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the "Patent
Collateral"):
(a) all of its Patents and Patent Intellectual Property Licenses to
which it is a party including those referred to on Schedule I hereto;
(b) all reissues, continuations or extensions of the foregoing; and
(c) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement
or dilution of any Patent or any Patent licensed under any Intellectual
Property License.
3. SECURITY FOR OBLIGATIONS. This Patent Security Agreement and the
Security Interest created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Patent Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
4. SECURITY AGREEMENT. The security interests granted pursuant to this
Patent Security Agreement are granted in conjunction with the security interests
granted to Agent, for the benefit of the Lender Group and the Bank Product
Provider, pursuant to the Security Agreement. Each Grantor hereby acknowledges
and affirms that the rights and remedies of Agent with respect to the security
interest in the Patent Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any
new patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. Grantors shall give prompt notice in writing to Agent with respect to
any such new patent rights. Without limiting Grantors' obligations under this
Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement
by amending Schedule I to include any such new patent rights of Grantors.
Notwithstanding the foregoing, no failure to so modify this Patent Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Agent's continuing security interest in all Collateral, whether or not
listed on Schedule I.
6. COUNTERPARTS. This Patent Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Patent Security Agreement or any other Loan Document
in any judicial proceedings, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom such enforcement
is sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.
7. CONSTRUCTION. Unless the context of this Patent Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Patent Security Agreement or any other Loan Document refer to this Patent
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Patent Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Patent Security Agreement unless
otherwise specified. Any reference in this Patent Security Agreement or in any
other Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and that are not required by the provisions of
the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement
to be executed and delivered by its duly authorized officer as of the date first
set forth above.
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ACCEPTED AND ACKNOWLEDGED BY:
WELLS FARGO FOOTHILL, INC., as Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EXHIBIT C
PLEDGED INTERESTS ADDENDUM
This Pledged Interests Addendum, dated as of _________ ___, 20___, is delivered
pursuant to Section 6 of the Security Agreement referred to below. The
undersigned hereby agrees that this Pledged Interests Addendum may be attached
to that certain Security Agreement, dated as of June 23, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the "Security
Agreement"), made by the undersigned, together with the other Grantors named
therein, to Wells Fargo Foothill, Inc., as Agent. Initially capitalized terms
used but not defined herein shall have the meaning ascribed to such terms in the
Security Agreement or the Credit Agreement. The undersigned hereby agrees that
the additional interests listed on this Pledged Interests Addendum as set forth
below shall be and become part of the Pledged Interests pledged by the
undersigned to the Agent in the Security Agreement and any pledged company set
forth on this Pledged Interests Addendum as set forth below shall be and become
a "Pledged Company" under the Security Agreement, each with the same force and
effect as if originally named therein. The undersigned hereby certifies that the
representations and warranties set forth in Section 4 of the Security Agreement
of the undersigned are true and correct as to the Pledged Interests listed
herein on and as of the date hereof. [-------------------]
By:
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Name:
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Title:
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| | | Number of | Class of | Percentage of | Certificate |
| Name of Pledgor | Name of Pledged Company | Shares/Units | Interests | Class Owned | Nos. |
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EXHIBIT D
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is made
this ___ day of ___________, 20__, among Grantors listed on the signature pages
hereof (collectively, jointly and severally, "Grantors" and each individually
"Grantor"), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the
Lender Group and the Bank Product Provider (together with its successors,
"Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of June 23, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among PRE-PAID LEGAL SERVICES, INC., an Oklahoma
corporation, as borrower ("Borrower"), the lenders party thereto as "Lenders"
("Lenders"), and Agent, the Lender Group is willing to make certain financial
accommodations available to Borrower from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Credit Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of Lender Group and the Bank Product
Provider, that certain Security Agreement dated of even date herewith (including
all annexes, exhibits or schedules thereto, as from time to time amended,
restated, supplemented or otherwise modified, the "Security Agreement");
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Agent, for the benefit of Lender Group and the Bank Product
Provider, this Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the Credit
Agreement.
2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority security interest in all of such Grantor's
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the "Trademark
Collateral"):
(a) all of its Trademarks and Trademark Intellectual Property Licenses
to which it is a party including those referred to on Schedule I hereto;
(b) all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
other General Intangibles with respect to the foregoing;
(c) all reissues, continuations or extensions of the foregoing;
(d) all goodwill of the business connected with the use of, and
symbolized by, each Trademark and each Trademark Intellectual Property
License; and
(e) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future (i)
infringement or dilution of any Trademark or any Trademark licensed under
any Intellectual Property License or (ii) injury to the goodwill associated
with any Trademark or any Trademark licensed under any Intellectual
Property License.
3. SECURITY FOR OBLIGATIONS. This Trademark Security Agreement and the
Security Interest created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Trademark Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
4. SECURITY AGREEMENT. The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Agent, for the benefit of the Lender Group and the Bank
Product Provider, pursuant to the Security Agreement. Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any
new trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. Grantors shall give prompt notice in writing to
Agent with respect to any such new trademarks or renewal or extension of any
trademark registration. Without limiting Grantors' obligations under this
Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement
by amending Schedule I to include any such new trademark rights of Grantors.
Notwithstanding the foregoing, no failure to so modify this Trademark Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Agent's continuing security interest in all Collateral, whether or not
listed on Schedule I.
6. COUNTERPARTS. This Trademark Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Trademark Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
7. CONSTRUCTION. Unless the context of this Trademark Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Trademark Security Agreement or any other Loan Document refer to this Trademark
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Trademark Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Trademark Security Agreement or in any other Loan Document
to any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall mean
the repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at
such time, are allowed by the applicable Bank Product Provider to remain
outstanding and that are not required by the provisions of the Credit Agreement
to be repaid or cash collateralized. Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of a
writing contained herein or in any other Loan Document shall be satisfied by the
transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
N WITNESS WHEREOF, each Grantor has caused this Trademark Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
--------------------------------------------
By:
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Name:
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Title:
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By:
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Name:
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Title:
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ACCEPTED AND ACKNOWLEDGED BY:
WELLS FARGO FOOTHILL, INC., as Agent
By:
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Name:
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Title:
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SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
Trademark Registrations/Applications
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Trade Names
Common Law Trademarks
Trademarks Not Currently In Use
Trademark Licenses
Exhibit 10.3 Guaranty Agreement
GENERAL CONTINUING GUARANTY
This GENERAL CONTINUING GUARANTY (this "Guaranty"), dated as of June 23, 2006,
is executed and delivered by Persons listed on the signature pages hereof and
those additional entities that hereafter become parties hereto by executing a
joinder hereto (each, a "Guarantor", and individually and collectively, jointly
and severally, the "Guarantors"), in favor of WELLS FARGO FOOTHILL, INC., a
California corporation, as arranger and administrative agent for the below
defined Lenders and the Bank Product Provider (in such capacity, together with
its successors and assigns, if any, in such capacity, "Agent"), in light of the
following:
WHEREAS, Pre-Paid Legal Services, Inc., an Oklahoma corporation ("Borrower"),
the below defined Lenders, and Agent have entered into that certain Credit
Agreement dated as of June 23, 2006 (as amended, restated, modified, renewed or
extended from time to time, the "Credit Agreement");
WHEREAS, each Guarantor is a subsidiary of Borrower and, as such, will benefit
by virtue of the financial accommodations extended to Borrower by the Lender
Group; and
WHEREAS, in order to induce the Lender Group to extend and continue to extend
the financial accommodations to Borrower pursuant to the Credit Agreement, and
in consideration thereof, and in consideration of any loans or other financial
accommodations heretofore or hereafter extended by the Lender Group and the Bank
Product Provider to Borrower, each Guarantor has agreed to guarantee the
Guarantied Obligations.
NOW, THEREFORE, in consideration of the foregoing, each Guarantor hereby agrees
as follows:
1. Definitions and Construction.
(a) Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Credit
Agreement. The following terms, as used in this Guaranty, shall have the
following meanings:
"Agent" has the meaning set forth in the preamble to this Guaranty.
"Borrower" has the meaning set forth in the preamble to this Guaranty.
"Credit Agreement" has the meaning set forth in the recitals to this
Guaranty.
"Guarantied Obligations" means (a) the due and punctual payment of the
principal of, and interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued) on, any and
all premium on, and any and all fees, costs, indemnities, and expenses
incurred in connection with, the Indebtedness owed by Borrower to any
member of the Lender Group or any Bank Product Provider pursuant to the
terms of the Credit Agreement or any other Loan Document and (b) the due
and punctual payment of all other present or future Indebtedness owing by
Borrower to any member of the Lender Group or any Bank Product Provider
pursuant to the Loan Documents.
"Guarantor" and "Guarantors" have the respective meanings set forth in
the preamble to this Guaranty.
"Guaranty" has the meaning set forth in the preamble to this Guaranty.
"Indebtedness" means any and all obligations (including the
Obligations), indebtedness, or liabilities of any kind or character arising
directly or indirectly out of or in connection with the Credit Agreement or
any other Loan Document, including all such obligations, indebtedness, or
liabilities, whether for principal, interest (including any interest which,
but for the provisions of the Bankruptcy Code, would have accrued on such
amounts), premium, reimbursement obligations, fees, costs, expenses
(including attorneys' fees), or indemnity obligations, whether heretofore,
now, or hereafter made, incurred, or created, whether voluntarily or
involuntarily made, incurred, or created, whether secured or unsecured (and
if secured, regardless of the nature or extent of the security), whether
absolute or contingent, liquidated or unliquidated, or determined or
indeterminate, whether individual or joint liability, and, to the maximum
extent permitted by applicable law, whether recovery is or hereafter
becomes unenforceable for any reason whatsoever (other than as a result of
the running of any statute of limitations), including any act or failure to
act by any member of the Lender Group or any Bank Product Provider.
"Lenders" means, individually and collectively, each of the lenders
identified on the signature pages to the Credit Agreement, and shall
include any other Person made a party to the Credit Agreement in accordance
with the provisions of Section 13.1 thereof (together with their respective
successors and assigns).
"Lender Group" means, individually and collectively, each of the
Lenders and Agent.
"Voidable Transfer" has the meaning set forth in Section 9 of this
Guaranty.
(b) Construction. Unless the context of this Guaranty clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms "includes" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Guaranty refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty. Section, subsection, clause, schedule, and exhibit references
herein are to this Guaranty unless otherwise specified. Any reference in
this Guaranty to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). To the maximum
extent permitted by applicable law, neither this Guaranty nor any
uncertainty or ambiguity herein shall be construed against the Lender Group
or Borrower, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words
used so as to accomplish fairly the purposes and intentions of all parties
hereto. Any reference herein to the satisfaction or payment in full of the
Guarantied Obligations shall mean the payment in full in cash (or cash
collateralization in accordance with the terms of the Credit Agreement) of
all Guarantied Obligations other than contingent indemnification Guarantied
Obligations and other than any Bank Product Obligations that, at such time,
are allowed by the applicable Bank Product Provider to remain outstanding
and are not required to be repaid or cash collateralized pursuant to the
provisions of the Credit Agreement and the full and final termination of
all commitments to extent any financial accommodations under the Credit
Agreement and any other Loan Document. Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
2. Guarantied Obligations. Each Guarantor hereby irrevocably and
unconditionally guaranties to Agent, for the benefit of the Lender Group and the
Bank Product Providers, as and for its own debt, until final payment in full
thereof has been made, (a) the payment of the Guarantied Obligations, when and
as the same shall become due and payable, whether at maturity, pursuant to a
mandatory prepayment requirement, by acceleration, or otherwise; it being the
intent of such Guarantor that the guaranty set forth herein shall be a guaranty
of payment and not a guaranty of collection; and (b) the punctual and faithful
performance, keeping, observance, and fulfillment by Borrower of all of the
agreements, conditions, covenants, and obligations of Borrower contained in the
Credit Agreement and under each of the other Loan Documents.
3. Continuing Guaranty. To the maximum extent permitted by applicable law,
this Guaranty includes Guarantied Obligations arising under successive
transactions continuing, compromising, extending, increasing, modifying,
releasing, or renewing the Guarantied Obligations, changing the interest rate,
payment terms, or other terms and conditions thereof, or creating new or
additional Guarantied Obligations after prior Guarantied Obligations have been
satisfied in whole or in part. To the maximum extent permitted by law, each
Guarantor hereby waives any right to revoke this Guaranty as to future
Indebtedness incurred in accordance with the Loan Documents. If such a
revocation is effective notwithstanding the foregoing waiver, to the maximum
extent permitted by applicable law, each Guarantor acknowledges and agrees that
(a) no such revocation shall be effective until written notice thereof has been
received by Agent, (b) no such revocation shall apply to any Guarantied
Obligations in existence on such date (including any subsequent continuation,
extension, or renewal thereof, or change in the interest rate, payment terms, or
other terms and conditions thereof), (c) no such revocation shall apply to any
Guarantied Obligations made or created after such date to the extent made or
created pursuant to a legally binding commitment of Agent or the Lenders in
existence on the date of such revocation, (d) no payment by any Guarantor,
Borrower, or from any other source, prior to the date of such revocation shall
reduce the maximum obligation of any Guarantor hereunder to an amount less than
the full outstanding amount of the Guarantied Obligations (except for the full
and final payment of the Guarantied Obligations after the termination of the
Commitments), and (e) any payment by Borrower or from any source other than a
Guarantor subsequent to the date of such revocation shall first be applied to
that portion of the Guarantied Obligations as to which the revocation is
effective and which are not, therefore, guarantied hereunder, and to the extent
so applied shall not reduce the maximum obligation of any Guarantor hereunder.
4. Performance Under this Guaranty. In the event that Borrower fails to
make any payment of any Guarantied Obligations, on or prior to the due date
thereof, or if Borrower shall fail to perform, keep, observe, or fulfill any
other obligation referred to in clause (b) of Section 2 of this Guaranty in the
manner provided in the Credit Agreement or any other Loan Document, each
Guarantor immediately shall cause, as applicable, such payment to be made or
such obligation to be performed, kept, observed, or fulfilled.
5. Primary Obligations. This Guaranty is a primary and original obligation
of each Guarantor, is not merely the creation of a surety relationship, and is
an absolute, unconditional, and continuing guaranty of payment and performance
which shall remain in full force and effect without respect to future changes in
financial or other conditions of Borrower. Each Guarantor hereby agrees that it
is directly, jointly and severally with each other Guarantor and any other
guarantor of the Guarantied Obligations, liable to Agent, for the benefit of the
Lender Group and the Bank Product Providers, that the obligations of such
Guarantor hereunder are independent of the obligations of Borrower or any other
guarantor, and that a separate action may be brought against such Guarantor,
whether such action is brought against Borrower or any other guarantor or
whether Borrower or any other guarantor is joined in such action. Each Guarantor
hereby agrees that its liability hereunder shall be immediate and shall not be
contingent upon the exercise or enforcement by any member of the Lender Group or
any Bank Product Provider of whatever remedies they may have against Borrower or
any other guarantor, or the enforcement of any lien or realization upon any
security by any member of the Lender Group or any Bank Product Provider. Each
Guarantor hereby agrees that any release which may be given by Agent to Borrower
or any other guarantor shall not release any Guarantor. Each Guarantor consents
and agrees that no member of the Lender Group nor any Bank Product Provider
shall be under any obligation to marshal any property or assets of Borrower or
any other guarantor in favor of any Guarantor, or against or in payment of any
or all of the Guarantied Obligations.
6. Waivers.
(a) To the fullest extent permitted by applicable law, each Guarantor
hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or
other financial accommodations made or extended under the Credit Agreement,
or the creation or existence of any Guarantied Obligations pursuant to the
Loan Documents; (iii) notice of the amount of the Guarantied Obligations,
subject, however, to such Guarantor's right to make inquiry of Agent to
ascertain the amount of the Guarantied Obligations at any reasonable time;
(iv) notice of any adverse change in the financial condition of Borrower or
of any other fact that might increase such Guarantor's risk hereunder; (v)
notice of presentment for payment, demand, protest, and notice thereof as
to any instrument among the Loan Documents; (vi) notice of any Default or
Event of Default under the Credit Agreement; and (vii) all other notices
(except if such notice is specifically required to be given to such
Guarantor under this Guaranty or any other Loan Documents to which such
Guarantor is a party) and demands to which such Guarantor might otherwise
be entitled.
(b) To the fullest extent permitted by applicable law, each Guarantor
hereby waives the right by statute or otherwise to require any member of
the Lender Group or any Bank Product Provider, to institute suit against
Borrower or to exhaust any rights and remedies which any member of the
Lender Group or any Bank Product Provider, has or may have against
Borrower. In this regard, each Guarantor agrees that it is bound to the
payment of each and all Guarantied Obligations, whether now existing or
hereafter arising, as fully as if the Guarantied Obligations were directly
owing to Agent, the Lender Group, or the Bank Product Providers, as
applicable, by such Guarantor. To the fullest extent permitted by
applicable law, each Guarantor further waives any defense arising by reason
of any disability or other defense (other than the defense that the
Guarantied Obligations shall have been performed and paid in cash, to the
extent of any such payment) of Borrower or by reason of the cessation from
any cause whatsoever of the liability of Borrower in respect thereof.
(c) To the fullest extent permitted by applicable law, each Guarantor
hereby waives: (i) any right to assert against any member of the Lender
Group or any Bank Product Provider, any defense (legal or equitable),
set-off, counterclaim, or claim which such Guarantor may now or at any time
hereafter have against Borrower or any other party liable to any member of
the Lender Group or any Bank Product Provider; (ii) any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or
indirectly from the present or future lack of perfection, sufficiency,
validity, or enforceability of the Guarantied Obligations or any security
therefor; and (iii) any right or defense arising by reason of any claim or
defense based upon an election of remedies by any member of the Lender
Group or any Bank Product Provider.
(d) Each Guarantor hereby waives (i) any right of subrogation such
Guarantor has or may have as against Borrower with respect to the
Guarantied Obligations; (ii) any right to proceed against Borrower or any
other Person, now or hereafter, for contribution, indemnity, reimbursement,
or any other suretyship rights and claims (irrespective of whether direct
or indirect, liquidated or contingent), with respect to the Guarantied
Obligations; and (iii) any right to proceed or to seek recourse against or
with respect to any property or asset of Borrower.
(e) To the maximum extent permitted by applicable law, if any of the
Guarantied Obligations or the obligations of any Guarantor under this
Guaranty at any time are secured by a mortgage or deed of trust upon real
property, any member of the Lender Group or any Bank Product Provider may
elect, in its sole discretion, upon a default with respect to the
Guarantied Obligations or the obligations of any Guarantor under this
Guaranty, to foreclose such mortgage or deed of trust judicially or
nonjudicially in any manner permitted by law, before or after enforcing
this Guaranty, without diminishing or affecting the liability of any
Guarantor hereunder. Each Guarantor understands that (a) by virtue of the
operation of antideficiency law applicable to nonjudicial foreclosures, an
election by any member of the Lender Group or any Bank Product Provider to
nonjudicially foreclose on such a mortgage or deed of trust probably would
have the effect of impairing or destroying rights of subrogation,
reimbursement, contribution, or indemnity of any Guarantor against Borrower
or other guarantors or sureties, and (b) absent the waiver given by each
Guarantor herein, such an election would estop the Lender Group and the
Bank Product Providers from enforcing this Guaranty against Guarantors. To
the maximum extent permitted by applicable law, understanding the
foregoing, and understanding that each Guarantor hereby is relinquishing a
defense to the enforceability of this Guaranty, such Guarantor hereby
waives any right to assert against any member of the Lender Group or any
Bank Product Provider any defense to the enforcement of this Guaranty,
whether denominated "estoppel" or otherwise, based on or arising from an
election by any member of the Lender Group or any Bank Product Provider to
nonjudicially foreclose on any such mortgage or deed of trust. Each
Guarantor understands that the effect of the foregoing waiver may be that
such Guarantor may have liability hereunder for amounts with respect to
which such Guarantor may be left without rights of subrogation,
reimbursement, contribution, or indemnity against Borrower or other
guarantors or sureties.
(f) Without limiting the generality of any other waiver or other
provision set forth in this Guaranty, each Guarantor, to the maximum extent
permitted by applicable law, waives all rights and defenses that such
Guarantor may have if all or part of the Guarantied Obligations are secured
by real property. This means, among other things:
(i) Any member of the Lender Group or any Bank Product Provider
may collect from such Guarantor without first foreclosing on any real
or personal property collateral that may be pledged by any Guarantor,
Borrower, or any other guarantor.
(ii) If any member of the Lender Group or any Bank Product
Provider forecloses on any real property collateral that may be
pledged by any Guarantor, Borrower or any other guarantor:
(1) The amount of the Guarantied Obligations or any obligations
of Guarantors in respect thereof may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
(2) Agent may collect from such Guarantor even if any member of
the Lender Group or any Bank Product Provider, by foreclosing on the
real property collateral, has destroyed any right Guarantors may have
to collect from Borrower or any other guarantor.
This is an unconditional and irrevocable waiver of any rights and defenses
each Guarantor may have if all or part of the Guarantied Obligations are secured
by real property.
(g) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS GUARANTY, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT
OF AN ELECTION OF REMEDIES BY ANY MEMBER OF THE LENDER GROUP OR ANY BANK
PRODUCT PROVIDER, EVEN THOUGH SUCH ELECTION OF REMEDIES, SUCH AS A
NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE GUARANTIED
OBLIGATIONS, HAS DESTROYED GUARANTORS' RIGHTS OF SUBROGATION AND
REIMBURSEMENT AGAINST BORROWER BY THE OPERATION OF APPLICABLE LAW.
(h) Without limiting the generality of any other waiver or other
provision set forth in this Guaranty, to the maximum extent permitted by
applicable law, each Guarantor hereby agrees as follows:
(i) Agent's right to enforce this Guaranty is absolute and is not
contingent upon the genuineness, validity or enforceability of any of
the Loan Documents. Each Guarantor agrees that Agent's rights under
this Guaranty shall be enforceable even if Borrower had no liability
at the time of execution of the Loan Documents or Borrower later
ceases to be liable.
(ii) Each Guarantor agrees that Agent's rights under the Loan
Documents will remain enforceable even if the amount secured by the
Loan Documents is larger in amount and more burdensome than that for
which Borrower is responsible. The enforceability of this Guaranty
against each Guarantor shall continue until all sums due under the
Loan Documents have been paid in full and shall not be limited or
affected in any way by any impairment or any diminution or loss of
value of any security or collateral for Borrower's obligations under
the Loan Documents, from whatever cause, the failure of any security
interest in any such security or collateral or any disability or other
defense of Borrower, any other guarantor of Borrower's obligations
under any other Loan Document, any pledgor of collateral for any
person's obligations to Agent or any other person in connection with
the Loan Documents.
(iii) Each Guarantor waives the right to require Agent to (A)
proceed against Borrower, any guarantor of Borrower's obligations
under any Loan Document, any other pledgor of collateral for any
person's obligations to Agent or any other person in connection with
the Guarantied Obligations, (B) proceed against or exhaust any other
security or collateral Agent may hold, or (C) pursue any other right
or remedy for such Guarantor's benefit, and, to the maximum extent
permitted by applicable law, agrees that Agent may exercise its right
under this Guaranty without taking any action against Borrower, any
other guarantor of Borrower's obligations under the Loan Documents,
any pledgor of collateral for any person's obligations to Agent or any
other person in connection with the Guarantied Obligations, and
without proceeding against or exhausting any security or collateral
Agent holds.
(i) To the maximum extent permitted by law, each Guarantor agrees that
any act which shall defer or delay the operation of any statute of
limitations applicable to the Guarantied Obligations shall similarly
operate to defer or delay the operation of such statute of limitations
applicable to such Guarantor's liability hereunder. Notwithstanding
anything to the contrary contained in this Guaranty, it is understood and
agreed that such Guarantor is not waiving, as a defense to any suit to
enforce this Guaranty, the running of any applicable statute of
limitations.
(j) The provisions in Sections 6(e), 6(f), 6(h)(ii) and 8 are included
in this Guaranty solely out of an abundance of caution and shall not be
construed to mean that any of the provisions of California law described
therein are in any way applicable to this Guaranty.
7. Releases. To the maximum extent permitted by applicable law, each
Guarantor consents and agrees that, without notice to or by any Guarantor and
without affecting or impairing the obligations of any Guarantor hereunder, any
member of the Lender Group or any Bank Product Provider may, by action or
inaction, compromise or settle, extend the period of duration or the time for
the payment, or discharge the performance of, or may refuse to, or otherwise not
enforce, or may, by action or inaction, release all or any one or more parties
to, any one or more of the terms and provisions of the Credit Agreement or any
other Loan Document or may grant other indulgences to Borrower in respect
thereof, or may amend or modify in any manner and at any time (or from time to
time) any one or more of the Credit Agreement or any other Loan Document, or
may, by action or inaction, release or substitute any other guarantor, if any,
of the Guarantied Obligations, or may enforce, exchange, release, or waive, by
action or inaction, any security for the Guarantied Obligations or any other
guaranty of the Guarantied Obligations, or any portion thereof.
8. No Election. The Lender Group and the Bank Product Providers shall have
the right to seek recourse against each Guarantor to the fullest extent provided
for herein and no election by any member of the Lender Group or any Bank Product
Provider to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of the Lender Group's or any
Bank Product Provider's right to proceed in any other form of action or
proceeding or against other parties unless Agent, on behalf of the Lender Group
or the Bank Product Providers, has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, to the
maximum extent permitted by applicable law, no action or proceeding by the
Lender Group or the Bank Product Providers under any document or instrument
evidencing the Guarantied Obligations shall serve to diminish the liability of
any Guarantor under this Guaranty except to the extent that the Lender Group and
the Bank Product Providers finally and unconditionally shall have realized
payment in full of the Guarantied Obligations by such action or proceeding.
9. Revival and Reinstatement. If the incurrence or payment of the
Guarantied Obligations or the obligations of any Guarantor under this Guaranty
by any Guarantor or the transfer by any Guarantor to Agent of any property of
any Guarantor should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, to the maximum extent
permitted by applicable law, the liability of Guarantors automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
10. Financial Condition of Borrower. Each Guarantor represents and warrants
to the Lender Group and the Bank Product Providers that it is currently informed
of the financial condition of Borrower and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor further represents and warrants to the
Lender Group and the Bank Product Providers that it has read and understands the
terms and conditions of the Credit Agreement and each other Loan Document. Each
Guarantor hereby covenants that it will continue to keep itself informed of
Borrower's financial condition, the financial condition of other guarantors, if
any, and of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Guarantied Obligations.
11. Payments; Application. All payments to be made hereunder by any
Guarantor shall be made in Dollars, in immediately available funds, and without
deduction (whether for taxes or otherwise) or offset and shall be applied to the
Guarantied Obligations in accordance with the terms of the Credit Agreement.
12. Attorneys Fees and Costs. Each Guarantor agrees to pay, on demand, all
reasonable attorneys fees and all other costs and expenses which may be incurred
by Agent or the Lender Group in connection with the enforcement of this Guaranty
or in any way arising out of, or consequential to, the protection, assertion, or
enforcement of the Guarantied Obligations (or any security therefor),
irrespective of whether suit is brought.
13. Notices. All notices and other communications hereunder to Agent shall
be in writing and shall be mailed, sent, or delivered in accordance Section 11
of the Credit Agreement. All notices and other communications hereunder to any
Guarantor shall be in writing and shall be mailed, sent, or delivered in care of
Borrower in accordance with Section 11 of the Credit Agreement.
14. Cumulative Remedies. No remedy under this Guaranty, under the Credit
Agreement, or any other Loan Document is intended to be exclusive of any other
remedy, but each and every remedy shall be cumulative and in addition to any and
every other remedy given under this Guaranty, under the Credit Agreement, or any
other Loan Document, and those provided by law. No delay or omission by the
Lender Group or Agent on behalf thereof to exercise any right under this
Guaranty shall impair any such right nor be construed to be a waiver thereof. No
failure on the part of the Lender Group or Agent on behalf thereof to exercise,
and no delay in exercising, any right under this Guaranty shall operate as a
waiver thereof; nor shall any single or partial exercise of any right under this
Guaranty preclude any other or further exercise thereof or the exercise of any
other right.
15. Severability of Provisions. Each provision of this Guaranty shall be
severable from every other provision of this Guaranty for the purpose of
determining the legal enforceability of any specific provision.
16. Entire Agreement; Amendments. This Guaranty constitutes the entire
agreement between Guarantors and the Lender Group pertaining to the subject
matter contained herein. This Guaranty may not be altered, amended, or modified,
nor may any provision hereof be waived or noncompliance therewith consented to,
except by means of a writing executed by each Guarantor and Agent, on behalf of
the Lender Group. Any such alteration, amendment, modification, waiver, or
consent shall be effective only to the extent specified therein and for the
specific purpose for which given. No course of dealing and no delay or waiver of
any right or default under this Guaranty shall be deemed a waiver of any other,
similar or dissimilar, right or default or otherwise prejudice the rights and
remedies hereunder.
17. Successors and Assigns. This Guaranty shall be binding upon each
Guarantor and its successors and assigns and shall inure to the benefit of the
successors and assigns of the Lender Group and the Bank Product Providers;
provided, however, no Guarantor shall assign this Guaranty or delegate any of
its duties hereunder without Agent's prior written consent and any unconsented
to assignment shall be absolutely void. In the event of any assignment or other
transfer of rights by the Lender Group or the Bank Product Providers, the rights
and benefits herein conferred upon the Lender Group and the Bank Product
Providers shall automatically extend to and be vested in such assignee or other
transferee.
18. No Third Party Beneficiary. This Guaranty is solely for the benefit of
each member of the Lender Group, each Bank Product Provider, and each of their
successors and assigns and may not be relied on by any other Person.
19. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS GUARANTY SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR AND EACH MEMBER
OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
19.
EACH GUARANTOR, EACH MEMBER OF THE LENDER GROUP AND THE BANK PRODUCT
PROVIDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GUARANTOR AND
EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, IN THE EVENT OF LITIGATION, A COPY OF THIS GUARANTY MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
20. Counterparts; Telefacsimile Execution. This Guaranty may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Guaranty. Delivery of an executed counterpart of this Guaranty by telefacsimile
or other electronic transmission shall be equally as effective as delivery of an
original executed counterpart of this Guaranty. Any party delivering an executed
counterpart of this Guaranty by telefacsimile or other electronic transmission
also shall deliver an original executed counterpart of this Guaranty but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Guaranty.
21. Agreement to be Bound. Each Guarantor hereby agrees to be bound by each
and all of the terms and provisions of the Credit Agreement. Without limiting
the generality of the foregoing, by its execution and delivery of this Guaranty,
each Guarantor hereby: (a) makes to the Lender Group each of the representations
and warranties set forth in the Credit Agreement applicable to such Guarantor
fully as though such Guarantor were a party thereto, and such representations
and warranties are incorporated herein by this reference, mutatis mutandis; and
(b) agrees and covenants (i) to do each of the things set forth in the Credit
Agreement that Borrower agrees and covenants to cause its Subsidiaries and/or
any Guarantor to do, and (ii) to not do each of the things set forth in the
Credit Agreement that Borrower agrees and covenants to cause its Subsidiaries
and/or any Guarantor not to do, in each case, fully as though such Guarantor was
a party thereto, and such agreements and covenants are incorporated herein by
this reference, mutatis mutandis.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guaranty as of the date first written above.
AMERICAN LEGAL SERVICES, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
ADA TRAVEL SERVICE, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
-----------------------------------------
PRE-PAID LEGAL ACCESS, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
-----------------------------------------
PRE-PAID CANADIAN HOLDINGS, L.L.C.,
an Oklahoma limited liability company
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
PPL AGENCY, INC.,
an Oklahoma corporation
By: /s/ Kathleen S. Pinson
------------------------------------------
Name: Kathleen S. Pinson
----------------------------------------
Title: Secretary
---------------------------------------
Exhibit 10.4 Mortgage, Assignment of Rents and Leases and Security Agreement
MORTGAGE, ASSIGNMENT OF
RENTS AND LEASES, AND SECURITY AGREEMENT
(Oklahoma)
THIS MORTGAGE, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT (this
"Mortgage") is dated as of June 23, 2006, by and from PRE-PAID LEGAL SERVICES,
INC., an Oklahoma corporation ("Mortgagor"), whose address is One-Pre-Paid Way,
Ada, Oklahoma 74821, to WELLS FARGO FOOTHILL, INC., a California corporation, in
its capacity as administrative agent (the "Agent") for the "Lenders" pursuant to
the Credit Agreement (as defined below), having an address at 2450 Colorado
Avenue, Suite 3000 West, Santa Monica, California 90404 (Agent, together with
its successors and assigns, is referred to herein as "Mortgagee").
RECITALS:
WHEREAS, Mortgagor is the fee owner of the real property and improvements
described in Exhibit A attached hereto.
WHEREAS, Mortgagor, Agent and the Lenders (as defined in the Credit Agreement)
have entered into that certain Credit Agreement dated as of June 23, 2006 (as
amended, supplemented or otherwise modified heretofore or hereinafter from time
to time, the "Credit Agreement"), which Credit Agreement provides for a
revolving loan, a term loan and other extensions of credit in the principal
amount as specified in said Credit Agreement. Agent and the Lenders are
unwilling to enter into the Credit Agreement and make available to Mortgagor the
credit facilities provided therein unless Mortgagor, among other things, secures
the obligations of Mortgagor under the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement) by delivering this Mortgage.
WHEREAS, Mortgagor is receiving a good and valuable benefit, the sufficiency and
receipt of which is hereby acknowledged, from Agent and Lenders entering into
the Credit Agreement with Mortgagor.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. All capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Credit
Agreement. As used herein, the following terms shall have the following
meanings:
(a) "Event of Default": shall have the meaning ascribed to such term
in Article 4 hereof.
(b) "Indebtedness": All obligations of Mortgagor to Mortgagee arising
under or in connection with the Credit Agreement or any Bank Product
Agreements, including, without limitation, (1) the repayment of all amounts
outstanding from time to time under the Credit Agreement and the other Loan
Documents, with such indebtedness maturing on the Maturity Date (as defined
in the Credit Agreement), including principal, interest and other amounts
which may now or hereafter be advanced as Advances or under the Term Loan,
(2) the full and prompt performance of any and all repayment, fee, and
reimbursement obligations with respect to any Letters of Credit, (3) fees,
costs, expenses, charges and indemnification obligations accrued, incurred
or arising in connection with the Credit Agreement or any other Loan
Document, (4) any and all future advances made pursuant to the terms of the
Credit Agreement, and (5) all other payment Obligations. The Credit
Agreement provides for a revolving credit facility that permits Mortgagor
to borrow certain principal amounts, repay all or a portion of such
principal amounts, and reborrow the amounts previously paid to Mortgagee,
all upon satisfaction of certain conditions stated in the Credit Agreement,
and this Mortgage secures, among other things, all Advances and re-advances
under the revolving credit feature of the Credit Agreement.
(c) "Obligations": All of the agreements, covenants, conditions,
warranties, representations and other obligations of Mortgagor and
Mortgagor under the Credit Agreement and the other Loan Documents,
including, but not limited to, the "Obligations", as defined under the
Credit Agreement, but specifically excluding "Bank Product Obligations", as
defined under the Credit Agreement.
(d) "Mortgaged Property": All of Mortgagor's interest in (1) the fee
interest in the real property described in Exhibit A attached hereto and
incorporated herein by this reference, together with any greater estate
therein as hereafter may be acquired by Mortgagor (the "Land"), (2) all
improvements now owned or hereafter acquired by Mortgagor, now or at any
time situated, placed or constructed upon the Land (the "Improvements"; the
Land and Improvements are collectively referred to herein as the
"Premises"), (3) all materials, supplies, equipment, apparatus and other
items of personal property now owned or hereafter acquired by Mortgagor and
now or hereafter attached to or installed in any of the Improvements or the
Land, and water, gas, electrical, telephone, storm and sanitary sewer
facilities and all other utilities whether or not situated in easements
(the "Fixtures"), (4) all existing and future leases, subleases, licenses,
concessions, occupancy agreements or other agreements (written or oral, now
or at any time in effect) which grant to any Person a possessory interest
in, or the right to use or occupy, all or any part of the Mortgaged
Property, whether made before or after the filing by or against Mortgagor
of any petition for relief under the Bankruptcy Code, together with any
extension, renewal or replacement of the same and together with all related
security and other deposits (the "Leases"), (5) all of the rents,
additional rents, revenues, royalties, income, proceeds, profits, early
termination fees or payments, security and other types of deposits, and
other benefits paid or payable by parties to the Leases for using, leasing,
licensing, possessing, operating from, residing in, selling or otherwise
enjoying the Mortgaged Property or any part thereof, whether paid or
accruing before or after the filing by or against Mortgagor of any petition
for relief under the Bankruptcy Code (the "Rents"), (6) all other
agreements, such as construction contracts, architects' agreements,
engineers' contracts, utility contracts, maintenance agreements, management
agreements, service contracts, listing agreements, guaranties, warranties,
permits, licenses, certificates and entitlements in any way relating to the
construction, use, occupancy, operation, maintenance, enjoyment or
ownership of the Mortgaged Property (the "Property Agreements"), (7) all
rights, privileges, tenements, hereditaments, rights-of-way, easements,
appendages and appurtenances appertaining to the foregoing, (8) all
property tax refunds, utility refunds and rebates, earned or received at
any time (the "Tax Refunds"), (9) all accessions, replacements and
substitutions for any of the foregoing and all proceeds thereof (the
"Proceeds"), (10) all insurance policies, unearned premiums therefor and
proceeds from such policies covering any of the above property now or
hereafter acquired by Mortgagor (the "Insurance"), (11) all of Mortgagor's
right, title and interest in and to any awards, damages, remunerations,
reimbursements, settlements or compensation heretofore made or hereafter to
be made by any governmental authority pertaining to the Land, Improvements
or Fixtures (the "Condemnation Awards"), (12) all of Mortgagor's rights to
appear and defend any action or proceeding brought with respect to the
Mortgaged Property and to commence any action or proceeding to protect the
interest of Mortgagor in the Mortgaged Property, and (13) all rights,
powers, privileges, options and other benefits of Mortgagor as lessor under
the Leases, including, without limitation, the immediate and continuing
right to claim for, receive, collect and receive all Rents payable or
receivable under the Leases or pursuant thereto (and to apply the same to
the payment of the Indebtedness and the Obligations), and to do all other
things which Mortgagor or any lessor is or may become entitled to do under
the Leases. As used in this Mortgage, the term "Mortgaged Property" shall
mean all or, where the context permits or requires, any portion of the
above or any interest therein. THE TERM "MORTGAGED PROPERTY" IS INTENDED TO
EXCLUDE ALL ITEMS OF PERSONAL PROPERTY IN WHICH MORTGAGEE HAS OBTAINED
AND/OR PERFECTED A SECURITY INTEREST UNDER SEPARATE INSTRUMENTS.
(e) "Permitted Liens": shall have the meaning ascribed to such term in
the Credit Agreement.
(f) "UCC": The Uniform Commercial Code of the state in which the Land
is located or, if the creation, perfection and enforcement of any security
interest herein granted is governed by the laws of a state other than the
state in which the Land is located, then, as to the matter in question, the
Uniform Commercial Code in effect in that state.
ARTICLE 2
GRANT
Section 2.1 Grant. For and in consideration of good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged, and
in order to secure the indebtedness and other obligations of Mortgagor herein
set forth, to secure the full and timely payment of the Indebtedness and the
full and timely performance of the Obligations, Mortgagor MORTGAGES, GRANTS,
BARGAINS, ASSIGNS, SELLS, WARRANTS and CONVEYS, to Mortgagee the Mortgaged
Property, subject, however, to the Permitted Liens, TO HAVE AND TO HOLD the
Mortgaged Property and all parts, rights and appurtenances thereof, to
Mortgagee, and Mortgagor does hereby bind itself, its successors and assigns to
WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Mortgagee.
TO HAVE AND TO HOLD, the Mortgaged Property, together with all and singular
the parts, rights, privileges, hereditaments, and appurtenances thereto in any
ways belonging or appertaining, to the use, benefit, and behoof of Mortgagee,
its successors and assigns, forever. Notwithstanding anything to the contrary
contained in the immediately preceding sentence, Mortgagor hereby agrees and
acknowledges that the Indebtedness secured by this Mortgage includes a revolving
loan and is intended to secure future advances; accordingly, this Mortgage shall
not be canceled by the full and complete repayment of the Indebtedness, so long
as the Credit Agreement and the Commitments thereunder remain in force and
effect.
ARTICLE 3
WARRANTIES, REPRESENTATIONS AND COVENANTS
Mortgagor warrants, represents and covenants to Mortgagee as follows:
Section 3.1 Title to Mortgaged Property and Lien of this Instrument.
Mortgagor (i) has a good and indefeasible title to the Mortgaged Property, in
fee simple, (to the extent that the Mortgaged Property constitutes real
property), free and clear of any liens, claims or interests, except the
Permitted Liens and (ii) has full power and lawful authority to encumber the
Mortgaged Property in the manner and form set forth in this Mortgage. This
Mortgage creates valid, enforceable first priority liens and security interests
against the Mortgaged Property, subject only to Permitted Liens.
Section 3.2 First Lien Status. Mortgagor shall preserve and protect the
first lien and security interest status of this Mortgage. If any lien or
security interest other than the Permitted Liens is asserted against the
Mortgaged Property, Mortgagor shall promptly, and at its expense, (a) give
Mortgagee a detailed written notice of such lien or security interest (including
origin, amount and other terms), and (b) pay the underlying claim in full or
take such other action so as to cause it to be released or contest the same in
compliance with the requirements of the Credit Agreement (including the
requirement of providing a bond or other security satisfactory to Mortgagee).
Section 3.3 Payment and Performance. Mortgagor shall pay the Obligations
when due under the Loan Documents and shall perform or cause Mortgagor to
perform the Obligations in full when they are required to be performed.
Section 3.4 Replacement of Fixtures. Mortgagor shall not, without the prior
written consent of Mortgagee, permit any of the Fixtures to be removed at any
time from the Land or Improvements, unless the removed item is removed
temporarily for maintenance and repair or, if removed permanently, is obsolete
and is replaced by an article of equal or better suitability and value, owned by
Mortgagor subject to the liens and security interests of this Mortgage and the
other Loan Documents, and free and clear of any other lien or security interest
except such as may be permitted under the Credit Agreement or first approved in
writing by Mortgagee.
Section 3.5 Inspection. Mortgagor shall permit Mortgagee and its agents,
representatives and employees to inspect the Mortgaged Property and all books
and records of Mortgagor located thereon, and to conduct such environmental and
engineering studies as Mortgagee may require. Provided that no Event of Default
exists, all such testing and investigation shall be conducted at reasonable
times and upon reasonable prior notice to Mortgagor. Mortgagee shall restore the
Mortgaged Property to the condition it was in immediately prior to such testing
and investigation.
Section 3.6 Other Covenants. All of the covenants in the Credit Agreement
are incorporated herein by reference and, together with covenants in this
Article 3, shall, to the extent applicable, be covenants running with the land.
Section 3.7 Condemnation Awards and Insurance Proceeds.
(a) Condemnation Awards. Mortgagor, immediately upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Premises or any portion thereof, will notify Mortgagee of the pendency of
such proceedings. Except as set forth in the Credit Agreement, Mortgagee
may participate in any such proceedings and Mortgagor from time to time
will deliver to Mortgagee all instruments requested by it to permit such
participation. Mortgagor assigns all awards and compensation to which it is
entitled for any condemnation or other taking, or any purchase in lieu
thereof, to Mortgagee and authorizes Mortgagee to collect and receive such
awards and compensation and to give proper receipts and acquittances
therefor, subject to the terms of the Credit Agreement. Mortgagor hereby
waives all rights to such awards and compensation described in the
foregoing sentence. Mortgagor, upon request by Mortgagee, shall make,
execute and deliver any and all instruments requested for the purpose of
confirming the assignment of the aforesaid awards and compensation to
Mortgagee free and clear of any liens, charges or encumbrances of any kind
or nature whatsoever.
(b) Insurance Proceeds. Mortgagor assigns to Mortgagee all proceeds of
any insurance policies insuring against loss or damage to the Mortgaged
Property. Except as set forth in the Credit Agreement, Mortgagor authorizes
Mortgagee to collect and receive such proceeds and authorizes and directs
the issuer of each of such insurance policies to make payment for all such
losses directly to Mortgagee, instead of to Mortgagor and Mortgagee
jointly, as more specifically described in the Credit Agreement. In the
event that the issuer of such insurance policy fails to disburse directly
or solely to the Mortgagee but disburses instead either solely to Mortgagor
or to Mortgagor and Mortgagee, jointly, Mortgagor shall immediately endorse
and transfer such proceeds to Mortgagee. Upon Mortgagor's failure to do so,
Mortgagee may execute such endorsements or transfers from and in the name
of Mortgagor, and Mortgagor hereby irrevocably appoints Mortgagee as
Mortgagor's agent and attorney-in-fact so to do.
Section 3.8 Costs of Defending and Upholding the Lien. If any action or
proceeding is commenced to which action or proceeding Mortgagee is made a party
or in which it becomes necessary for Mortgagee to defend or uphold the lien of
this Mortgage, including any extensions, renewals, amendments or modifications
thereof, Mortgagor shall, on demand, reimburse Mortgagee for all expenses
(including, without limitation, reasonable attorneys' fees and reasonable
appellate attorneys' fees) incurred by Mortgagee in any such action or
proceeding and all such expenses shall be secured by this Mortgage. In any
action or proceeding to foreclose this Mortgage or to recover or collect the
Indebtedness, the provisions of law relating to the recovering of costs,
disbursements and allowances shall prevail unaffected by this covenant.
Section 3.9 TRANSFER OF THE SECURED PROPERTY. EXCEPT AS EXPRESSLY PERMITTED
PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT, MORTGAGOR SHALL NOT SELL,
TRANSFER, PLEDGE, ENCUMBER, CREATE A SECURITY INTEREST IN, GROUND LEASE, OR
OTHERWISE HYPOTHECATE, ALL OR ANY PORTION OF THE MORTGAGED PROPERTY WITHOUT THE
PRIOR WRITTEN CONSENT OF MORTGAGEE. THE CONSENT BY MORTGAGEE TO ANY SALE,
TRANSFER, PLEDGE, ENCUMBRANCE, CREATION OF A SECURITY INTEREST IN, GROUND LEASE,
OR OTHER HYPOTHECATION OF, ANY PORTION OF THE MORTGAGED PROPERTY SHALL NOT BE
DEEMED TO CONSTITUTE A NOVATION OR A CONSENT TO ANY FURTHER SALE, TRANSFER,
PLEDGE, ENCUMBRANCE, CREATION OF A SECURITY INTEREST IN, GROUND LEASE OR OTHER
HYPOTHECATION, OR TO WAIVE THE RIGHT OF MORTGAGEE, AT ITS OPTION, TO DECLARE THE
INDEBTEDNESS SECURED HEREBY IMMEDIATELY DUE AND PAYABLE, WITHOUT NOTICE TO
MORTGAGOR OR ANY OTHER PERSON OR ENTITY, UPON ANY SUCH SALE, TRANSFER, PLEDGE,
ENCUMBRANCE, CREATION OF A SECURITY INTEREST, GROUND LEASE, OR OTHER
HYPOTHECATION TO WHICH MORTGAGOR SHALL NOT HAVE CONSENTED.
Section 3.10 SECURITY DEPOSITS. To the extent required by law, or after an
Event of Default has occurred and during its continuance, if required by
Mortgagee, all security deposits of tenants of the Mortgaged Property shall be
treated as trust funds not to be commingled with any other funds of Mortgagor.
Within twenty (20) days after request by Mortgagee, Mortgagor shall furnish
satisfactory evidence of compliance with this Section 3.10, as necessary,
together with a statement of all security deposits deposited by the tenants and
copies of all Leases not theretofore delivered to Mortgagee, as requested
thereby, certified by Mortgagor.
ARTICLE 4
DEFAULT
Section 4.1 Events of Default. The occurrence of any of the following
events shall constitute an event of default under this Mortgage (each an "Event
of Default"):
(a) an "Event of Default" (as such term is defined in the Credit
Agreement) shall have occurred;
(b) Mortgagor's breach of any of the covenants set forth in this
Mortgage and failure of Mortgagor to cure such breach within fifteen (15)
days after the earlier of (i) the date on which such breach shall first
become known to any officer of Mortgagor or (ii) written notice thereof is
given to Mortgagor by Mortgagee; or
(c) if any misstatement or misrepresentation exists now or hereafter
in any warranty or representation set forth in Article 3 hereof and failure
of Mortgagor to cure such misstatement or misrepresentation within fifteen
(15) days after the earlier of (i) the date on which such misstatement or
misrepresentation shall first become known to any officer of Mortgagor or
(ii) written notice thereof is given to Mortgagor by Mortgagee.
ARTICLE 5
DEFAULT AND FORECLOSURE
Section 5.1 Remedies. If an Event of Default exists, Mortgagee may, at
Mortgagee's election, exercise any or all of the following rights, remedies and
recourses:
(a) To the extent permitted under the Credit Agreement, declare the
Indebtedness to be immediately due and payable, without further notice,
presentment, protest, notice of intent to accelerate, notice of
acceleration, demand or action of any nature whatsoever (each of which
hereby is expressly waived by Mortgagor), whereupon the same shall become
immediately due and payable.
(b) Notify all tenants of the Premises and all others obligated on
leases of any part of the Premises that all rents and other sums owing on
leases have been assigned to Mortgagee and are to be paid directly to
Mortgagee, and to enforce payment of all obligations owing on leases, by
suit, ejectment, cancellation, releasing, reletting or otherwise, whether
or not Mortgagee has taken possession of the Premises, and to exercise
whatever rights and remedies Mortgagee may have under any assignment of
rents and leases.
(c) As and to the extent permitted by law, enter the Mortgaged
Property, either personally or by its agents, nominees or attorneys, and
take exclusive possession thereof and thereupon, Mortgagee may (i) use,
operate, manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Premises and conduct business thereat;
(ii) complete any construction on the Premises in such manner and form as
Mortgagee deems advisable in the reasonable exercise of its judgment; (iii)
exercise all rights and power of Mortgagor with respect to the Premises,
whether in the name of Mortgagor, or otherwise, including, without
limitation, the right to make, cancel, enforce or modify leases, obtain and
evict tenants, and demand, sue for, collect and receive all earnings,
revenues, rents, issues, profits and other income of the Premises and every
part thereof, which rights shall not be in limitation of Mortgagee's rights
under any assignment of rents and leases securing the Indebtedness; and
(iv) pursuant to the provisions of the Credit Agreement, apply the receipts
from the Premises to the payment of the Indebtedness, after deducting
therefrom all expenses (including attorneys' fees) incurred in connection
with the aforesaid operations and all amounts necessary to pay the taxes,
assessments, insurance and other charges in connection with the Mortgaged
Property, as well as just and reasonable compensation for the services of
Mortgagee, its counsel, agents and employees.
(d) Hold, lease, develop, manage, operate or otherwise use the
Mortgaged Property upon such terms and conditions as Mortgagee may deem
reasonable under the circumstances (making such repairs, alterations,
additions and improvements and taking other actions, from time to time, as
Mortgagee deems necessary or desirable), and apply all Rents and other
amounts collected by Mortgagee in connection therewith in accordance with
the provisions of Section 5.7 hereof.
(e) Require Mortgagor to assemble any collateral under the UCC and
make it available to Mortgagee, at Mortgagor's sole risk and expense, at a
place or places to be designated by Mortgagee, in its sole discretion.
(f) Institute proceedings for the complete foreclosure of this
Mortgage, either by judicial action or by power of sale, in which case the
Mortgaged Property may be sold for cash or credit in accordance with
applicable law in one or more parcels as Mortgagee may determine. Except as
otherwise required by applicable law, with respect to any notices required
or permitted under the UCC, Mortgagor agrees that ten (10) days' prior
written notice shall be deemed commercially reasonable. At any such sale by
virtue of any judicial proceedings, power of sale, or any other legal
right, remedy or recourse, the title to and right of possession of any such
property shall pass to the purchaser thereof, and to the fullest extent
permitted by law, Mortgagor shall be completely and irrevocably divested of
all of its right, title, interest, claim, equity, equity of redemption, and
demand whatsoever, either at law or in equity, in and to the property sold
and such sale shall be a perpetual bar both at law and in equity against
Mortgagor, and against all other Persons claiming or to claim the property
sold or any part thereof, by, through or under Mortgagor. Mortgagee or any
of the Lenders may be a purchaser at such sale. If Mortgagee is the highest
bidder, Mortgagee may credit the portion of the purchase price that would
be distributed to Mortgagee against the Indebtedness in lieu of paying
cash. In the event this Mortgage is foreclosed by judicial action,
appraisement and valuation of the Mortgaged Property is waived. In the
event of any sale made under or by virtue of this Article 5 (whether made
by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale) the entire Indebtedness, if not previously due and payable,
immediately thereupon shall become due and payable. The failure to make any
such tenants of the Premises party to any such foreclosure proceedings and
to foreclose their rights will not be, nor be asserted to be by Mortgagor,
a defense to any proceedings instituted by Mortgagee to collect the sums
secured hereby.
(g) With or without entry, to the extent permitted and pursuant to the
procedures provided by applicable law, institute proceedings for the
partial foreclosure of this Mortgage for the portion of the Indebtedness
then due and payable (if Mortgagee shall have elected not to declare the
entire Indebtedness to be immediately due and owing), subject to the
continuing lien of this Mortgage for the balance of the Indebtedness not
then due; or (1) as and to the extent permitted by law, sell for cash or
upon credit the Mortgaged Property or any part thereof and all estate,
claim, demand, right, title and interest of Mortgagor therein, pursuant to
power of sale or otherwise, at one or more sales, as an entity or in
parcels, at such time and place, upon such terms and after such notice
thereof as may be required or permitted by law, and in the event of a sale,
by foreclosure or otherwise, of less than all of the Mortgaged Property,
this Mortgage shall continue as a lien on the remaining portion of the
Mortgaged Property; or (2) institute an action, suit or proceeding in
equity for the specific performance of any covenant, condition or agreement
contained herein or in any Loan Document; or (3) to the extent permitted by
applicable law, recover judgment on the Credit Agreement either before,
during or after any proceedings for the enforcement of this Mortgage.
(h) Make application to a court of competent jurisdiction for, and
obtain from such court as a matter of strict right and without notice to
Mortgagor or regard to the adequacy of the Mortgaged Property for the
repayment of the Indebtedness, the appointment of a receiver of the
Mortgaged Property, and Mortgagor irrevocably consents to such appointment.
Any such receiver shall have all the usual powers and duties of receivers
in similar cases, including the full power to rent, maintain and otherwise
operate the Mortgaged Property upon such terms as may be approved by the
court, and shall apply such Rents in accordance with the provisions of
Section 5.7 hereof.
(i) Exercise all other rights, remedies and recourses granted under
the Loan Documents or otherwise available at law or in equity.
Section 5.2 Separate Sales. The Mortgaged Property may be sold in one or
more parcels and in such manner and order as Mortgagee in its sole discretion
may elect; the right of sale arising out of any Event of Default shall not be
exhausted by any one or more sales.
Section 5.3 Remedies Cumulative, Concurrent and Nonexclusive. Mortgagee
shall have all rights, remedies and recourses granted in the Loan Documents and
available at law or equity (including the UCC), which rights (a) shall be
cumulated and concurrent, (b) may be pursued separately, successively or
concurrently against Mortgagor or others obligated under the Loan Documents, or
against the Mortgaged Property, or against any one or more of them, at the sole
discretion of Mortgagee, as the case may be, (c) may be exercised as often as
occasion therefor shall arise, and the exercise or failure to exercise any of
them shall not be construed as a waiver or release thereof or of any other
right, remedy or recourse, and (d) are intended to be, and shall be,
nonexclusive. No action by Mortgagee in the enforcement of any rights, remedies
or recourses under the Loan Documents or otherwise at law or equity shall be
deemed to cure any Event of Default.
Section 5.4 Release of and Resort to Collateral. Mortgagee may release,
regardless of consideration and without the necessity for any notice to or
consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interest
created in or evidenced by the Loan Documents or their status as a first and
prior lien and security interest in and to the Mortgaged Property. For payment
of the Indebtedness, Mortgagee may resort to any other security in such order
and manner as Mortgagee may elect.
Section 5.5 Waiver of Redemption, Notice and Marshalling of Assets. To the
fullest extent permitted by law, Mortgagor hereby irrevocably and
unconditionally waives and releases (a) all benefit that might accrue to
Mortgagor by virtue of any present or future statute of limitations or law or
judicial decision exempting the Mortgaged Property from attachment, levy or sale
on execution or providing for any stay of execution, exemption from civil
process, redemption or extension of time for payment, (b) all notices of any
Event of Default or of any election by Mortgagee to exercise or the actual
exercise of any right, remedy or recourse provided for under the Loan Documents,
and (c) any right to a marshalling of assets or a sale in inverse order of
alienation.
Section 5.6 Discontinuance of Proceedings. If Mortgagee shall have
proceeded to invoke any right, remedy or recourse permitted under the Loan
Documents and shall thereafter elect to discontinue or abandon it for any
reason, Mortgagee shall have the unqualified right to do so and, in such an
event, Mortgagor and Mortgagee shall be restored to their former positions with
respect to the Indebtedness, the Obligations, the Loan Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and powers of
Mortgagee, shall continue as if the right, remedy or recourse had never been
invoked, but no such discontinuance or abandonment shall waive any Event of
Default which may then exist or the right of Mortgagee, thereafter to exercise
any right, remedy or recourse under the Loan Documents for such Event of
Default.
Section 5.7 Application of Proceeds. The proceeds of any sale made under or
by virtue of this Article 5, together with any Rents and other amounts generated
by the holding, leasing, management, operation or other use of the Mortgaged
Property, shall be applied by Mortgagee (or the receiver, if one is appointed)
in the following order unless otherwise required by applicable law:
(a) to the payment of the costs and expenses of taking possession of
the Mortgaged Property and of holding, using, leasing, repairing, improving
and selling the same, including, without limitation (1) trustee's and
receiver's fees and expenses, including the repayment of the amounts
evidenced by any receiver's certificates, (2) court costs, (3) attorneys'
and accountants' fees and expenses, and (4) costs of advertisement;
(b) to the payment of the Indebtedness and performance of the
Obligations in such manner and order of preference as set forth in the
Credit Agreement; and
(c) the balance, if any, to the payment of the Persons legally
entitled thereto.
Section 5.8 Occupancy After Foreclosure. Except as otherwise required by
applicable law, any sale of the Mortgaged Property or any part thereof in
accordance with Section 5.1(e) or Section 5.1(f) hereof will divest all right,
title and interest of Mortgagor in and to the property sold. Subject to
applicable law, any purchaser at a foreclosure sale will receive immediate
possession of the property purchased. If Mortgagor retains possession of such
property or any part thereof subsequent to such sale, Mortgagor will be
considered a tenant at sufferance of the purchaser, and will, if Mortgagor
remains in possession after demand to remove, be subject to eviction and
removal, forcible or otherwise, with or without process of law.
Section 5.9 Additional Advances and Disbursements; Costs of Enforcement.
(a) If any Event of Default exists, Mortgagee shall have the right,
but not the obligation, to cure such Event of Default in the name and on
behalf of Mortgagor. All sums advanced and expenses incurred at any time by
Mortgagee under this Section 5.9, or otherwise under this Mortgage or any
of the other Loan Documents or applicable law, shall bear interest from the
date that such sum is advanced or expense incurred, to and including the
date of reimbursement, computed at the rate or rates at which interest is
then computed on the Indebtedness, and all such sums, together with
interest thereon, shall be secured by this Mortgage.
(b) Mortgagor shall pay all expenses (including reasonable attorneys'
fees and expenses and all costs and expenses related to legal work,
research and litigation) of or incidental to the perfection and enforcement
of this Mortgage and the other Loan Documents, or the enforcement,
compromise or settlement of the Indebtedness or any claim under this
Mortgage and the other Loan Documents, and for the curing thereof, or for
defending or asserting the rights and claims of Mortgagee in respect
thereof, by litigation or otherwise.
Section 5.10 No Mortgagee in Possession. Neither the enforcement of any of
the remedies under this Article 5, the assignment of the Rents and Leases under
Article 6, the security interests under Article 7, nor any other remedies
afforded to Mortgagee under the Loan Documents, at law or in equity shall cause
Mortgagee to be deemed or construed to be a mortgagee in possession of the
Mortgaged Property, to obligate Mortgagee to lease the Mortgaged Property or
attempt to do so, or to take any action, incur any expense, or perform or
discharge any obligation, duty or liability whatsoever under any of the Leases
or otherwise.
Section 5.11 WAIVER OF MORTGAGOR'S RIGHTS. BY EXECUTION OF THIS MORTGAGE,
MORTGAGOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF MORTGAGEE TO ACCELERATE THE
INDEBTEDNESS EVIDENCED BY THE CREDIT AGREEMENT OR OTHER LOAN DOCUMENTS UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT; (B) TO THE EXTENT ALLOWED BY APPLICABLE LAW,
WAIVES ANY AND ALL RIGHTS WHICH MORTGAGOR MAY HAVE UNDER THE CONSTITUTION OF THE
UNITED STATES, THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY MORTGAGEE OF ANY RIGHT OR REMEDY HEREIN
PROVIDED TO MORTGAGEE; (C) ACKNOWLEDGES THAT MORTGAGOR HAS READ THIS MORTGAGE
AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO MORTGAGOR AND MORTGAGOR HAS
CONSULTED WITH LEGAL COUNSEL OF MORTGAGOR'S CHOICE PRIOR TO EXECUTING THIS
MORTGAGE; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF
MORTGAGOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY MORTGAGOR AS
PART OF A BARGAINED FOR LOAN TRANSACTION.
ARTICLE 6
ASSIGNMENT OF RENTS AND LEASES
Section 6.1 Assignment. In furtherance of and in addition to the assignment
made by Mortgagor in Section 2.1 of this Mortgage, Mortgagor hereby absolutely
and unconditionally assigns, sells, transfers and conveys to Mortgagee all of
its right, title and interest in and to all Leases, whether now existing or
hereafter entered into, and all of its right, title and interest in and to all
Rents. This assignment is an absolute assignment and not an assignment for
additional security only. So long as no Event of Default shall have occurred and
be continuing and to the extent not prohibited by the Credit Agreement,
Mortgagor shall have a revocable license from Mortgagee to exercise all rights
extended to the landlord under the Leases, including the right to receive and
collect all Rents and to hold the Rents in trust for use in the payment and
performance of the Obligations and to otherwise use the same. The foregoing
license is granted subject to the conditional limitation that no Event of
Default shall have occurred and be continuing. Upon the occurrence and during
the continuance of an Event of Default, whether or not legal proceedings have
commenced, and without regard to waste, adequacy of security for the Obligations
or solvency of Mortgagor, the license herein granted shall automatically expire
and terminate, without notice by Mortgagee (any such notice being hereby
expressly waived by Mortgagor).
Section 6.2 Perfection Upon Recordation. Mortgagor acknowledges that
Mortgagee has taken all actions necessary to obtain, and that upon recordation
of this Mortgage, Mortgagee shall have, to the extent permitted under applicable
law, a valid and fully perfected, first priority, present assignment of the
Rents arising out of the Leases and all security for such Leases. Mortgagor
acknowledges and agrees that upon recordation of this Mortgage, Mortgagee's
interest in the Rents shall be deemed to be fully perfected, "choate" and
enforced as to Mortgagor and all third parties, including, without limitation,
any subsequently appointed trustee in any case under Title 11 of the United
States Code (the "Bankruptcy Code"), without the necessity of commencing a
foreclosure action with respect to this Mortgage, making formal demand for the
Rents, obtaining the appointment of a receiver or taking any other affirmative
action.
Section 6.3 Bankruptcy Provisions. Without limitation of the absolute
nature of the assignment of the Rents hereunder, Mortgagor and Mortgagee agree
that (a) this Mortgage shall constitute a "security agreement" for purposes of
Section 552(b) of the Bankruptcy Code, (b) the security interest created by this
Mortgage extends to property of Mortgagor acquired before the commencement of a
case in bankruptcy and to all amounts paid as Rents and (c) such security
interest shall extend to all Rents acquired by the estate after the commencement
of any case in bankruptcy.
Section 6.4 No Merger of Estates. So long as part of the Indebtedness and
the Obligations secured hereby remain unpaid and undischarged, the fee and
leasehold estates to the Mortgaged Property shall not merge, but shall remain
separate and distinct, notwithstanding the union of such estates either in
Mortgagor, Mortgagee, any tenant or any third party by purchase or otherwise.
ARTICLE 7
SECURITY AGREEMENT
Section 7.1 Security Interest. This Mortgage constitutes a "security
agreement" on personal property within the meaning of the UCC and other
applicable law and with respect to the Fixtures, Leases, Rents, Property
Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards. To this
end, Mortgagor grants to Mortgagee a first and prior security interest in the
Fixtures, Leases, Rents, Property Agreements, Tax Refunds, Proceeds, Insurance
and Condemnation Awards and all other Mortgaged Property which is personal
property to secure the payment of the Indebtedness and performance of the
Obligations, and agrees that Mortgagee shall have all the rights and remedies of
a secured party under the UCC with respect to such property. Any notice of sale,
disposition or other intended action by Mortgagee with respect to the Fixtures,
Leases, Rents, Property Agreements, Tax Refunds, Proceeds, Insurance and
Condemnation Awards sent to Mortgagor at least five (5) days prior to any action
under the UCC shall constitute reasonable notice to Mortgagor. THE TERM
"MORTGAGED PROPERTY" IS INTENDED TO EXCLUDE ALL ITEMS OF PERSONAL PROPERTY IN
WHICH MORTGAGEE HAS OBTAINED AND/OR PERFECTED A SECURITY INTEREST UNDER SEPARATE
INSTRUMENTS.
Section 7.2 Financing Statements. Mortgagor shall execute and deliver to
Mortgagee, in form and substance satisfactory to Mortgagee, such financing
statements and such further assurances as Mortgagee may, from time to time,
reasonably consider necessary to create, perfect and preserve Mortgagee's
security interest hereunder and Mortgagee may cause such statements and
assurances to be recorded and filed, at such times and places as may be required
or permitted by law to so create, perfect and preserve such security interest.
Mortgagor's chief executive office is in the State of StateplaceOklahoma.
Section 7.3 Fixture Filing. This Mortgage shall also constitute a "fixture
filing" for the purposes of the UCC against all of the Mortgaged Property which
is or is to become fixtures. Information concerning the security interest herein
granted may be obtained at the address of Debtor (Mortgagor) and Secured Party
(Mortgagee) as set forth in the first paragraph of this Mortgage.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Notices. Any notice required or permitted to be given under
this Mortgage shall be given in accordance with Section 11 of the Credit
Agreement.
Section 8.2 Covenants Running with the Land. All covenants, agreements and
undertakings of Mortgagor contained in this Mortgage are intended by Mortgagor
and Mortgagee to be, and shall be construed as, covenants running with the
Mortgaged Property. As used herein, "Mortgagor" shall refer to the party named
in the first paragraph of this Mortgage and to any subsequent owner of all or
any portion of the Mortgaged Property. All Persons who may have or acquire an
interest in the Mortgaged Property shall be deemed to have notice of, and be
bound by, the terms of the Credit Agreement and the other Credit Documents;
however, no such party shall be entitled to any rights thereunder without the
prior written consent of Mortgagee.
Section 8.3 Attorney-in-Fact. Mortgagor hereby irrevocably appoints
Mortgagee and its successors and assigns, as its attorney-in-fact, which agency
is coupled with an interest and with full power of substitution, (a) to execute
and/or record any notices of completion, cessation of labor or any other notices
that Mortgagee deems appropriate to protect Mortgagee's interest, if Mortgagor
shall fail to do so within ten (10) days after written request by Mortgagee, (b)
upon the issuance of a deed pursuant to the foreclosure of this Mortgage or the
delivery of a deed in lieu of foreclosure, to execute all instruments of
assignment, conveyance or further assurance with respect to the Leases, Rents,
Property Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards in
favor of the grantee of any such deed and as may be necessary or desirable for
such purpose, (c) to prepare, execute and file or record financing statements,
continuation statements, applications for registration and like papers necessary
to create, perfect or preserve Mortgagee's security interests and rights in or
to any of the Mortgaged Property, and (d) while any Event of Default exists, to
perform any obligation of Mortgagor hereunder, however: (1) Mortgagee shall not
under any circumstances be obligated to perform any obligation of Mortgagor; (2)
any sums advanced by Mortgagee in such performance shall be added to and
included in the Indebtedness and shall bear interest at the rate or rates at
which interest is then computed on the Indebtedness; (3) Mortgagee as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Mortgagee; and (4) Mortgagee shall not be liable to Mortgagor or any
other person or entity for any failure to take any action which it is empowered
to take under this Section 8.3. Notwithstanding the foregoing, Mortgagee shall
be liable for its gross negligence, willful misconduct, and bad faith in
connection with exercising its rights hereunder.
Section 8.4 Successors and Assigns. This Mortgage shall be binding upon and
inure to the benefit of Mortgagee and Mortgagor and their respective successors
and assigns. Mortgagor shall not, without the prior written consent of
Mortgagee, assign any rights, duties or obligations hereunder.
Section 8.5 No Waiver. Any failure by Mortgagee to insist upon strict
performance of any of the terms, provisions or conditions of the Loan Documents
shall not be deemed to be a waiver of same, and Mortgagee shall have the right
at any time to insist upon strict performance of all such terms, provisions and
conditions.
Section 8.6 Credit Agreement. If any conflict or inconsistency exists
between this Mortgage and the Credit Agreement, the Credit Agreement shall
govern.
Section 8.7 Release or Reconveyance. Upon payment in full of the
Indebtedness and performance in full of the Indebtedness, Mortgagee, at
Mortgagor's expense, shall release the liens and security interests created by
this Mortgage. Mortgagee shall also release Mortgagee's lien and security
interest created by this Mortgage upon the satisfaction of the release
conditions contained in Section 3.5 or elsewhere in the Credit Agreement.
Section 8.8 Waiver of Stay, Moratorium and Similar Rights. Mortgagor
agrees, to the full extent that it may lawfully do so, that it will not at any
time insist upon or plead or in any way take advantage of any stay, marshalling
of assets, extension, redemption or moratorium law now or hereafter in force and
effect so as to prevent or hinder the enforcement of the provisions of this
Mortgage or the Indebtedness secured hereby, or any agreement between Mortgagor
and Mortgagee or any rights or remedies of Mortgagee.
Section 8.9 Applicable Law. The provisions of this Mortgage regarding the
creation, perfection and enforcement of the liens and security interests herein
granted shall be governed by and construed under the laws of the state in which
the Mortgaged Property is located. All other provisions of this Mortgage shall
be governed by the laws of the State of New York, without regard to conflicts of
law principles.
Section 8.10 Headings. The Article, Section and Subsection titles hereof
are inserted for convenience of reference only and shall in no way alter, modify
or define, or be used in construing, the text of such Articles, Sections or
Subsections.
Section 8.11 Entire Agreement. This Mortgage and the other Loan Documents
embody the entire agreement and understanding between Mortgagor and Mortgagee
and supersede all prior agreements and understandings between such parties
relating to the subject matter hereof and thereof. Accordingly, the Loan
Documents may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
Section 8.12 Mortgagee as Agent; Successor Agents.
(a) Agent has been appointed to act as Agent hereunder by the Lender
Group. Agent shall have the right hereunder to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release
or substitution of the Mortgaged Property) in accordance with the terms of
the Credit Agreement, any related agency agreement among Agent and the
Lender Group (collectively, as amended, supplemented or otherwise modified
or replaced from time to time, the "Agency Documents") and this Mortgage.
Mortgagor and all other persons shall be entitled to rely on releases,
waivers, consents, approvals, notifications and other acts of Agent,
without inquiry into the existence of required consents or approvals of the
Lender Group therefor.
(b) Mortgagee shall at all times be the same Person that is Agent
under the Agency Documents. Written notice of resignation by Agent pursuant
to the Agency Documents shall also constitute notice of resignation as
Agent under this Mortgage. Removal of Agent pursuant to any provision of
the Agency Documents shall also constitute removal as Agent under this
Mortgage. Appointment of a successor Agent pursuant to the Agency Documents
shall also constitute appointment of a successor Agent under this Mortgage.
Upon the acceptance of any appointment as Agent by a successor Agent under
the Agency Documents, that successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring or removed Agent as the Mortgagee under this Mortgage, and the
retiring or removed Agent shall promptly (i) assign and transfer to such
successor Agent all of its right, title and interest in and to this
Mortgage and the Mortgaged Property, and (ii) execute and deliver to such
successor Agent such assignments and amendments and take such other
actions, as may be necessary or appropriate in connection with the
assignment to such successor Agent of the liens and security interests
created hereunder, whereupon such retiring or removed Agent shall be
discharged from its duties and obligations under this Mortgage. After any
retiring or removed Agent's resignation or removal hereunder as Agent, the
provisions of this Mortgage and the Agency Documents shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Mortgage while it was the Agent hereunder.
(c) Each reference herein to any right granted to, benefit conferred
upon or power exercisable, exercised or action taken by the "Mortgagee"
shall be deemed to be a reference to or be deemed to have been so taken, as
the case may be, by Mortgagee in its capacity as Agent pursuant to the
Credit Agreement for the benefit of the Lender Group and for the benefit of
the issuer or supplier of the Bank Product Obligations (as defined in the
Credit Agreement), all as more fully set forth in the Credit Agreement.
ARTICLE 9
LOCAL LAW PROVISIONS
Section 9.1 Conflicts. In the event of a conflict between the terms of this
Article 9 and any provision of this Mortgage or any other Loan Document, the
terms of this Article 9 will control with respect to the Mortgaged Property.
Section 9.2 Power of Sale Disclosure. The following disclosure is
incorporated as part of this Mortgage:
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY
ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.
Section 9.3 Mortgage Amount. The maximum amount of Indebtedness secured by
this Mortgage is limited to $1,000,000.00.
Section 9.4 Mortgage Maturity. This Agreement shall become effective upon
the execution and delivery hereof by Mortgagor, Agent and the Lender Group and
shall continue in full force and effect until the Indebtedness has been paid and
satisfied in full. The Maturity Date of the Obligations is June 23, 2011.
Section 9.5 Foreclosure. On the occurrence of an Event of Default, the
Mortgagee may: (i) declare the principal of the Indebtedness, all interest
accrued thereon and all other sums hereby secured, without deduction and without
notice, to be immediately due, and the Mortgagee will be entitled to foreclose
the liens created by this Mortgage by judicial proceedings; or (ii) after any
notice to the Mortgagor required by the Oklahoma Power of Sale Mortgage
Foreclosure Act, declare the principal of the Indebtedness, all interest accrued
thereon and all other sums hereby secured, without deduction, to be immediately
due, and the Mortgagee will be entitled to foreclose the liens created by this
Mortgage by power of sale pursuant to the provisions of the Oklahoma Power of
Sale Mortgage Foreclosure Act. The Mortgagor hereby confers on the Mortgagee and
grants to Mortgagee the power to sell the Mortgaged Property. On the occurrence
of an Event of Default, the Mortgagee will be entitled to exercise all further
and additional remedies as might now or hereafter be accorded to the Mortgagee
at law or in equity. Whether the Mortgagee elects to foreclose the liens created
by this Mortgage by judicial proceedings or by power of sale, the Mortgagee
will, immediately on the occurrence of an Event of Default, be entitled to the
possession of the Mortgaged Property and the rents and profits thereof and, in
any action or proceeding to foreclose this Mortgage (whether by judicial
proceedings or by exercise of the power of sale, will be entitled to have a
receiver appointed to take possession of the Mortgaged Property without notice
(which notice the Mortgagor hereby expressly waives) and without the obligation
of the Mortgagee to demonstrate cause for such appointment of a receiver,
notwithstanding anything contained in this Mortgage, and the other Loan
Documents or any law heretofore or hereafter enacted.
Section 9.6 Appraisement. Appraisement of the Mortgaged Property is hereby
expressly waived, or not, at the option of the Mortgagee, with such option to be
exercised at the time judgment is entered in any judicial proceeding foreclosing
the lien granted by this Mortgage or at any time prior thereto.
IN WITNESS WHEREOF, Mortgagor has on the date set forth in the acknowledgement
hereto, effective as of the date first above written, caused this instrument to
be duly EXECUTED AND DELIVERED by authority duly given.
MORTGAGOR:
PRE-PAID LEGAL SERVICES, INC.,
an Oklahoma corporation
By: /s/ Steve Williamson
------------------------------------------
Name: Steve Williamson
----------------------------------------
Its: Chief Financial Officer
-----------------------------------------
STATE OF Oklahoma )
-----------------------
) ss.
COUNTY OF Pontotoc )
----------------------
This instrument was acknowledged before me this 21 day of June, 2006, by
Kathleen S. Pinson, as Secretary of Pre-Paid Legal Services, Inc., an Oklahoma
corporation.
WITNESS my hand and official seal.
Lolita Frederick
----------------------------------
Notary Public
Print or Type Name:
My Commission No. 0006721
-------
My Commission Expires: May 29, 2008
------------
(SEAL)
EXHIBIT A
See Attached.
PREPARED BY, RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street, 25th Floor
Los Angeles, California 90071
Attention: John Hilson, Esq.
MORTGAGE, ASSIGNMENT OF RENTS AND
LEASES, AND SECURITY AGREEMENT
by and from
PRE-PAID LEGAL SERVICES, INC.,
"Mortgagor"
to
WELLS FARGO FOOTHILL, INC.,
in its capacity as administrative agent, "Mortgagee"
Dated as of June 23, 2006
Location: 1520 Plato Road
Municipality: Duncan
County: Stephens
State: Oklahoma
Mortgage tax affidavit is unnecessary since there is only one property.
Exhibit 10.5 First Amendment to Loan Agreement
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made effective
as of the 23 day of June, 2006, by and between PRE-PAID LEGAL SERVICES, INC., an
Oklahoma corporation (the "Borrower") and BANK OF OKLAHOMA, N.A., a national
banking association ("Bank").
W I T N E S S E T H:
WHEREAS, on June 11, 2002, Borrower and Bank agreed to an extension of
credit in the principal amount of Thirty Million and No/100 Dollars
($30,000,000.00) from the Bank to the Borrower consisting of: (i) a $10,000,000
term loan for the primary purpose of purchasing Borrower's shares of stock in
the open market, as evidenced by promissory note in a like amount; and (ii) a
$20,000,000 term loan for the purpose of financing construction costs attendant
to Borrower's new corporate headquarters in Ada, Oklahoma (the "Loan"), as
evidenced by a promissory note in a like amount (the "Note"), all as described
in that certain Loan Agreement dated as of such date (the "Agreement").
WHEREAS, the $10,000,000.00 term loan for the stock acquisition has since
be repaid and the Bank has no commitment to make Advances thereunder;
WHEREAS, the Borrower's obligations pursuant to the Agreement and Note
described therein are secured by certain collateral as described in the
Agreement;
WHEREAS, the collateral securing the indebtedness evidenced by or described
in the Agreement and the Note consisting of the real estate and other property
described in the Mortgage shall continue to secure the indebtedness described in
the Agreement, as hereby amended;
WHEREAS, all capitalized terms not otherwise defined herein shall have
those meanings assigned to such terms in the Agreement; and
WHEREAS, Borrower and Bank desire to amend the Agreement for the first time
in order to, among other things not specifically set forth in this recital,
extend the maturity date, modify the financial covenants, and such other changes
as are more specifically set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for such other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
CHANGES TO THE LOAN AGREEMENT
Borrower and Bank have agreed to modify, supplement and amend certain
portions and/or terms of the Agreement. The Agreement is hereby amended as
follows:
1.1 The definitions of the terms "Debt Coverage Ratio" set forth as Secton
1.08 of the Agreement, "Funded Debt" set forth at Section 1.11 of the Agreement,
and "Security Agreement" set forth at Section 1.36 of the Agreement are hereby
deleted from the Agreement, Defined Terms, in their entirety and the phrase
"Intentionally Deleted" is substituted in their place.
1.2 The definitions of the terms "Loan", "Loan Documents, "Material Adverse
Affect" and "Real Estate Note Maturity Date" set forth at Sections 1.17, 1.18,
1.19 and 1.32 of the Agreement are hereby amended and restated in its entirety
as follows:
1.17 Loan. The term "Loan" shall mean the Real Estate Loan which is
evidenced by the Note, and is evidenced and secured by the Loan Documents.
1.18 Loan Documents. The term "Loan Documents" shall collectively mean
this Agreement, the Note, Mortgage, all financing statements and all other
security documents and instruments executed and delivered in connection
with the Loan described herein which secure the obligations of the Borrower
to the Bank and any renewals, amendments, supplements or modifications
thereof or thereto.
1.19 "Material Adverse Affect" means (a) a material adverse change in
the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, (b) a material impairment of Borrower's and
its Subsidiaries ability to perform their obligations under the Loan
Documents to which they are parties or of the Bank's ability to enforce the
Indebtedness or realize upon the Collateral, or (c) a material impairment
of the enforceability or priority of the Bank's Liens with respect to the
Collateral as a result of an action or failure to act on the part of
Borrower or its Subsidiaries.
1.32 Real Estate Note Maturity Date. The term "Real Estate Note
Maturity Date" shall mean August 31, 2011.
1.3 The following definitions for the terms "Capital Expenditures",
"EBITDA", "Fixed Charges", "Fixed Charge Coverage Ratio", "Funded Indebtedness",
"Interest Expense", "Leverage Ratio", "Loan Party", "Member", "Regulated
Subsidiaries", "Regulated Subsidiaries EBITDA", "Top Tier Regulated
Subsidiaries" "Wells Fargo Loan", "Wells Fargo Credit Agreement", Permitted
Purchase Money Indebtedness", "Refinancing Indebtedness" and "Purchase Money
Indebtedness" shall be added to Article 1 of the Agreement, CERTAIN DEFINITIONS,
as Sections 1.43, 1.44, 1.45, 1.46, 1.47, 1.48, 1.49, 1.50, 1.51, 1.52, 1.53,
1.54, and 1.55, 1.56, 1.57, 1.58 and 1.59, respectively:
1.43 "Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its
Subsidiaries during such period that are capital expenditures as determined
in accordance with GAAP, whether such expenditures are paid in cash or
financed.
1.44 "EBITDA" means, with respect to any fiscal period, Borrower's
consolidated net earnings (or loss), minus extraordinary gains, plus
interest expense, income taxes, and depreciation and amortization for such
period, in each case, determined on a consolidated basis in accordance with
GAAP.
1.45 "Fixed Charges" means, with respect to any fiscal period and with
respect to Borrower determined on a consolidated basis in accordance with
GAAP, the sum, without duplication, of (a) Interest Expense accrued during
such period, (b) principal payments in respect of indebtedness that are
required to be paid during such period, and (c) all federal, state, and
local income taxes accrued during such period.
1.46 "Fixed Charge Coverage Ratio" means, with respect to Borrower for
any period, the ratio of (a) EBITDA for such period minus the sum of (i)
income taxes paid (to the extent not already incurred in a prior period) or
incurred during such period, (ii) Capital Expenditures made (to the extent
not already incurred in a prior period) or incurred during such period, and
(iii) dividends paid by Borrower on its common Stock during such period in
accordance with Section 6.10 of the Wells Fargo Credit Agreement (but
excluding dividends paid with identifiable proceeds of loans made pursuant
to the Wells Fargo Credit Agreement), and (iv) purchases made by Borrower
of its Stock during such period in accordance with Section 6.10 of the
Wells Fargo Credit Agreement (but excluding purchases made with
identifiable proceeds of loans made pursuant to the Wells Fargo Credit
Agreement) to (b) Fixed Charges for such period.
1.47 "Funded Indebtedness" means all secured indebtedness for borrowed
money or letters of credit of such Person, determined on a consolidated
basis in accordance with GAAP, which by its terms matures more than one
year after the date of calculation, and any such indebtedness maturing
within one year from such date which is renewable or extendable at the
option of such Person to a date more than one year from such date,
including, in any event, but without duplication, with respect to Borrower
and its Subsidiaries, this Agreement, the advances and loans made under the
Wells Fargo Loan, the indebtedness outstanding under the aircraft loan
agreement between Borrower and Bank, and the amount of their capitalized
lease obligations.
1.48 "Interest Expense" means, for any period, the aggregate of the
interest expense of Borrower for such period, determined on a consolidated
basis in accordance with GAAP.
1.49 "Leverage Ratio" means, as of any date of determination (a) the
amount of Borrower's Funded Indebtedness as of such date, divided by (b)
Borrower's EBITDA for the 12 month period ended as of such date.
1.50 "Loan Party" means the Borrower and any Subsidiary of the
Borrower which is not a Regulated Subsidiary that has executed a guaranty
of the Borrower's obligations pursuant to the Wells Fargo Credit Agreement.
1.51 "Member" means a Person enrolled in one of Borrower's or its
Subsidiaries' pre-paid legal expense plans.
1.52 "Regulated Subsidiaries" means Pre-Paid Legal Casualty, Inc., an
Oklahoma corporation, Legal Service Plans of Virginia, Inc., a Virginia
corporation, Pre-Paid Legal Services of Florida, Inc., a Florida
corporation, Pre-Paid Legal Services of Tennessee, Inc., a Tennessee
corporation, National Pre-Paid Legal Services of Mississippi, Inc., a
Georgia corporation, and any other regulated Subsidiary of a Loan Party
formed or acquired after the Closing Date, and "Regulated Subsidiary" means
any one of them.
1.53 "Subset EBITDA" means, for any fiscal period, net earnings (or
loss) of the Loan Parties and the Top Tier Regulated Subsidiaries, minus
extraordinary gains of such Persons, plus interest expense, income taxes,
and depreciation and amortization of such Persons for such period, in each
case, determined in accordance with GAAP.
1.54 "Top Tier Regulated Subsidiaries" means Pre-Paid Legal Casualty,
Inc., an Oklahoma corporation, Legal Service Plans of Virginia, Inc., a
Virginia corporation, and Pre-Paid Legal Services of Florida, Inc., a
Florida corporation.
1.55 "Wells Fargo Loan" means those certain loan transactions arising
under the Wells Fargo Credit Agreement and the other Loan Documents (as
defined in the Wells fargo Credit Agreement).
1.56 "Wells Fargo Credit Agreement" means that certain Credit
Agreement dated June 23, 2006 among Borrower, the lenders described
therein, and Wells Fargo Foothill, Inc., a California corporation, as the
arranger and administrative agent for such lenders.
1.57 "Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness in an aggregate principal amount
outstanding at any one time not in excess of $2,300,000.
1.58 "Refinancing Indebtedness" means refinancings, renewals, or
extensions of indebtedness so long as: (a) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of the
indebtedness so refinanced, renewed, or extended, (b) such refinancings,
renewals, or extensions do not result in an increase in the interest rate
with respect to the indebtedness so refinanced, renewed, or extended, (c)
such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity of the indebtedness so refinanced, renewed,
or extended, nor are they on terms or conditions that, taken as a whole,
are materially more burdensome or restrictive to Borrower, (d) if the
indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Loan, then the terms and conditions of the
refinancing, renewal, or extension must include subordination terms and
conditions that are at least as favorable to the Bank as those that were
applicable to the refinanced, renewed, or extended indebtedness, and (e)
the indebtedness that is refinanced, renewed, or extended is not recourse
to any Person that is liable on account of the Loan other than those
Persons which were obligated with respect to the indebtedness that was
refinanced, renewed, or extended.
1.59."Purchase Money Indebtedness" means indebtedness (other than the
obligations under this Loan, but including capitalized lease obligations),
incurred at the time of, or within 20 days after, the acquisition of any
fixed assets for the purpose of financing all or any part of the
acquisition cost thereof.
1.4 The text of Section 3.2 and 3.3 of the Agreement, Security Interest, is
hereby deleted and replaced with the phrase "INTENTIONALLY DELETED".
1.5 Section 5.11 of the Agreement, Debt, is hereby amended and restated in
its entirety as follows:
5.11 Debt. Schedule 5.11 to this Amendment together with the Wells
Fargo Credit Agreement and this Agreement contain a complete and correct
list of all credit agreements, indentures, purchase agreements, guaranties,
capital leases, and other investments, agreements, and arrangements
presently in effect, other than inter-company obligations between or among
Borrower and any Subsidiary, providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters
of credit or for acceptance financing) in respect of which the Borrower or
any Subsidiary is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, outstanding or
to be outstanding.
1.6 Section 5.16 of the Agreement, Principal Office, is hereby amended and
restated as follows in order to provide for the current address:
5.16 Principal Office. The principal place of business of Borrower in
Oklahoma is at One Pre-Paid Way, Ada, Oklahoma 74820.
1.7 Section 6.4 of the Agreement, Notice of Litigation, is hereby amended
and restated in its entirety as follows:
6.4 Notice of Litigation. Borrower shall deliver within five (5) days
after the occurrence thereof notice of any actions, suits, and proceedings
involving Borrower or any Subsidiary of Borrower which arise after the date
hereof and which could reasonably be expected to have a Material Adverse
Effect.
1.8 The text of Section 6.12 of the Agreement, Payment of Liabilities, is
hereby deleted from the Agreement in its entirety and the phrase "INTENTIONALLY
OMITTED" is substituted in its place.
1.9 Section 7.1 of the Agreement, Negative Pledge, is hereby amended and
restated in its entirety as follows:
7.1 Negative Pledge. Except as provided herein, Borrower not shall
create, incur, assume, or permit to exist Lien, or other encumbrances of
any kind upon in, on, or to the Real Property except: (a) liens for taxes
or assessments or other governmental charges being contested in good faith
and by appropriate proceedings, (b) liens in connection with workers
compensation, unemployment insurance, or other social security obligations,
(c) mechanic's, workmen's, materialmen's, landlord's, carrier's, or other
like liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith,
(d) any lien or other encumbrance permitted and accepted by Bank and set
forth on the ALTA 1970-B, as revised, title insurance policy, and (e)
judgment and other similar liens arising in connection with court
proceedings, provided the execution or other enforcement of such liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings.
1.10 Section 7.3 of the Agreement, Additional Indebtedness, is hereby
amended and restated in its entirety as follows:
7.3 Additional Indebtedness. Borrower will not incur, create, assume,
suffer to exist or in any manner become or be liable in respect of any
indebtedness, nor will Borrower guarantee or otherwise in any manner become
or be liable in respect of any indebtedness, liabilities or other
obligations of any other person or entity, whether by agreement to purchase
the indebtedness of any other person or entity or agreement for the
furnishing of funds to any other person or entity through the purchase or
lease of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging the
indebtedness of any other person or entity, or otherwise, except that the
foregoing restrictions shall not apply to: (i) the Note and any renewal or
increase thereof, or other indebtedness of the Borrower heretofore
disclosed to Bank in the Borrower's Financial Statements or on Schedule
"5.11" hereto; or (ii) indebtedness evidenced by the Wells Fargo Loan; or
(iii) taxes, assessments or other government charges which are not yet due
or are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as shall be required by
GAAP shall have been made therefor and levy and execution thereon have been
stayed and continue to be stayed; or (iv) indebtedness (other than in
connection with a loan or lending transaction) incurred in the ordinary
course of business; or (v) Permitted Purchase Money Indebtedness and any
Refinancing Indebtedness (as such terms are defined in the Wells Fargo
Credit Agreement) in respect of such indebtedness or; (v) any renewals or
extensions (but not increases in) of any of the foregoing.
1.11 The text of Section 7.6 of the Agreement, Dividends and Distributions,
and Section 7.8 of the Agreement, Discontinuance of Business Lines, are hereby
deleted from the Agreement in their entirety and the phrase "INTENTIONALLY
DELETED" is inserted in their place.
1.12 Section 7.9 of the Agreement, Mergers and Acquisitions, is hereby
amended and restated in its entirety as follows:
7.9 Mergers and Acquisitions. Borrower will not, and will not permit
any Subsidiary to:
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its stock; provided that (i) any Loan
Party may effect a reverse split or a reverse/forward split of its
common stock, and (ii) (A) any Loan Party may merge with and into any
other Loan Party so long (v) no Default or Event of Default shall have
occurred or be continuing either before or after giving effect to such
merger, (w) no other provision of this Agreement would be violated
thereby, (x) Borrower gives Bank at least 15 days prior written notice
of such merger, (y) the Bank's rights in all or any portion of the
Collateral, including without limitation, the existence, perfection,
and priority of any Lien thereon, are not adversely affected by such
merger, and (z) in the case of a merger involving the Borrower, the
Borrower is the continuing or surviving Person, and (B) any Subsidiary
of a Loan Party that is not a Loan Party may merge with and into any
other Subsidiary of a Loan Party that is not a Loan Party so long (x)
no Default or Event of Default shall have occurred or be continuing
either before or after giving effect to such merger, (y) the regulated
status, if any, of the continuing or surviving Person is not adversely
affected by such merger, and (z) in the case of a merger involving a
Top Tier Regulated Subsidiary, the Top Tier Regulated Subsidiary is
the continuing or surviving Person.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), or
(c) Suspend or go out of a substantial portion of its or their
business; provided that the Loan Parties may suspend or go out of a
portion of their business so long as the revenues from such business
for the 12 month period ending on the last day of the most recent
fiscal quarter (together with the revenues from any other business
suspended, terminated, or discontinued since the date hereof for the
12 month period ending on the last day of the fiscal quarter
immediately preceding such suspension, termination, or
discontinuation) represent less than 5% of Borrower's consolidated
revenues for such 12 month period
1.13 Section 7.10 of the Agreement, Transactions With Affiliates, is hereby
amended and restated in its entirety as follows: we are awaiting new language
from Wells on this covenant
7.10 Transactions With Affiliates.Borrower will not, and will not
permit any Subsidiary to, directly or indirectly enter into or permit to
exist any transaction with any Affiliate of Borrower or any of its
Subsidiaries except for:
(a) transactions (other than the payment of management,
consulting, monitoring, or advisory fees) between Borrower or its
Subsidiaries, on the one hand, and any Affiliate of Borrower or its
Subsidiaries, on the other hand, so long as such transactions (i) are
upon fair and reasonable terms, (ii) are fully disclosed to Bank if
they involve one or more payments by Borrower or its Subsidiaries in
excess of $100,000 for any single transaction or series of
transactions, and (iii) are no less favorable to Borrower or its
Subsidiaries, as applicable, than would be obtained in an arm's length
transaction with a non-Affiliate; provided that anything to the
contrary in the foregoing notwithstanding, (A) Borrower's Subsidiaries
may pay management fees to Borrower consistent with past practices so
long as the payment of such management fees has been, to the extent
required, approved by any applicable governmental authority, and (B)
Borrower and its Subsidiaries may enter into or permit to exist any
transaction between Borrower, on the one hand, and any of Borrower's
Subsidiaries, on the other hand, if such transaction is in the
ordinary course of business consistent with past practice; and
(b)the payment of reasonable fees, compensation, or employee
benefit arrangements to, and any indemnity provided for the benefit
of, employees, officers, or directors of Borrower or its Subsidiaries
in the ordinary course of business.
1.14 Article 9 of the Agreement, FINANCIAL COVENANTS, is hereby amended and
restated in its entirety as follows:
Prior to the payment in full of the Note and any renewals and extensions
thereof, the Borrower agrees that, unless the Bank otherwise gives its prior
consent in writing, the Borrower will perform or permit to be performed (or not
perform or not permit to be performed, as the case may be) any of the following
acts:
9.1 Financial Covenants.
(a) Minimum EBITDA. Fail to achieve EBITDA, measured on a fiscal
quarter-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:
----------------------------------- --------------------------------------------------------------
| | |
| Applicable Amount | Applicable Period |
| | |
----------------------------------- --------------------------------------------------------------
| | |
| $60,000,000 | For the 9 month period |
| | ending September 30, 2006 |
| | |
----------------------------------- --------------------------------------------------------------
| | |
| $80,000,000 | For the 12 month period ending |
| | on the last day of each fiscal quarter thereafter |
| | |
----------------------------------- --------------------------------------------------------------
(b) Minimum Subset EBITDA. Fail to achieve Subset EBITDA, measured on
a fiscal quarter-end basis, of at least the required amount set forth in
the following table for the applicable period set forth opposite thereto:
----------------------------------- --------------------------------------------------------------
| | |
| Applicable Amount | Applicable Period |
| | |
----------------------------------- --------------------------------------------------------------
| | |
| $55,000,000 | For the 9 month period |
| | ending September 30, 2006 |
| | |
----------------------------------- --------------------------------------------------------------
| | |
| $75,000,000 | For the 12 month period ending |
| | on the last day of each fiscal quarter thereafter |
| | |
----------------------------------- --------------------------------------------------------------
(c) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio,
measured on a fiscal quarter-end basis, less than the required amount set
forth in the following table for the applicable period set forth opposite
thereto:
------------------------------------ --------------------------------------------------------------
| | |
| Applicable Ratio | Applicable Period |
| | |
------------------------------------ --------------------------------------------------------------
| | |
| 1.1:1.0 | For the 9 month period |
ending September 30, 2006 |
| | |
------------------------------------ --------------------------------------------------------------
| | |
| 1.1:1.0 | For the 12 month period ending |
| | on the last day of each fiscal quarter thereafter |
| | |
------------------------------------ --------------------------------------------------------------
(d) Minimum Number of Members. Fail to have at least 1,300,000 members
as of the last day of any fiscal month.
(e) Leverage Ratio. Have a Leverage Ratio, measured on a fiscal
quarter-end basis, more than the applicable ratio set forth in the
following table for the applicable date set forth opposite thereto; divided
by (i) Borrower's EBITDA for the 12 month period ended as of such date:
-------------------------------------------------- ------------------------------------------------
| | |
| Applicable Ratio | Applicable Date |
| | |
-------------------------------------------------- ------------------------------------------------
| | |
| 1.5:1.0 | For the 12 month period |
| | ending September 30, 2006 |
| | |
-------------------------------------------------- ------------------------------------------------
| | |
| 1.5:1.0 | For the 12 month period ending |
| | on the last day of each fiscal quarter |
| | thereafter |
| | |
-------------------------------------------------- ------------------------------------------------
(f) Capital Expenditures. Make Capital Expenditures in any fiscal year
in excess of $10,000,000.
1.15 The phrase "delivered to the Bank in connection with this Agreement"
is hereby added to the end of the last sentence of Section 10.3 of the
Agreement, Other Nonpayment.
1.16 The Event of Default set forth in Section 10.10 of the Agreement,
Monetary Judgments, is hereby amended and restated in its entirety as follows:
10.10 Monetary Judgments.(a) If one or more judgments, orders, or
awards (other than the Booth Verdict as defined in the Wells Fargo Credit
Agreement) involving an aggregate amount of $1,000,000, or more (except to
the extent fully covered by insurance pursuant to which the insurer has
accepted liability therefor in writing) shall be entered or filed against
Borrower or any of its Subsidiaries or with respect to any of their
respective assets, and the same is not released, discharged, bonded
against, or stayed pending appeal before the earlier of 30 days after the
date it first arises or 5 days prior to the date on which such asset is
subject to being forfeited by Borrower or the applicable Subsidiary; or (b)
if the Booth Verdict shall be entered or filed against Borrower or Harland
C. Stonecipher as a final, appealable judgment, and the same is not
released, discharged, bonded against, or stayed pending appeal before 30
days after such entry or file date.
1.17 Section 10.12 of the Agreement is hereby amended and restated in its
entirety as follows:
10.12 Harland Stonecipher.Harland C. Stonecipher shall ever cease to
hold the title of Chairman and Chief Executive Officer or comparable title
or position of Borrower for a period of 120 consecutive days, unless
replaced prior to that date with a person approved by the Bank (which
approval shall not be unreasonably withheld or delayed).
1.18 A new Section 10.13 is hereby added to read in its entirety as
follows:
10.13 Other Obligations. If there is a default in one or more
agreements to which Borrower or any of its Subsidiaries is a party with one
or more third Persons relative to Borrower's or any of its Subsidiaries'
indebtedness involving an aggregate amount of $1,000,000 or more, and such
default (i) occurs at the final maturity of the obligations thereunder, or
(ii) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of Borrower's or the applicable
Subsidiary's obligations thereunder.
1.19 To evidence the Borrower's continuing obligation to repay the Loan,
the Borrower shall make and deliver to the Banks an Amended and Restated
Promissory Note in the form of Annex "1" hereto attached (the "Replacement
Note"), which such Replacement Note shall substitute and replace in its entirety
the Notes referred to in the Agreement, without cancellation, novation or
payment.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 This Amendment, when duly executed and delivered, will constitute the
legal, valid and binding obligation of Borrower, enforceable in accordance with
its terms.
2.2 All balance sheets, income statements and other financial data which
have been or are hereafter furnished to Agent by the Borrower to induce the
Banks to make or extend the loans hereunder due, and as to subsequent financial
statements will, fairly represent Borrower's financial condition as of the dates
for which the same are furnished. All such financial statements, reports, papers
and other data furnished to Agent are and will be, when furnished, accurate and
correct in all material respects and complete insofar as completeness may be
necessary to give the Banks a true and accurate knowledge of the subject matter
and, since the date of such financial statements, no material adverse change has
occurred in the operations or condition, financial or otherwise, of Borrower.
2.3 With the exception of Section 5.5 of the Agreement, all of the
Borrower's representations and warranties set forth in Section 5 of the
Agreement, REPRESENTATIONS AND WARRANTIES, as amended hereby, are true and
correct on and as of the date hereof after giving effect to this Amendment with
the same effect as though made and repeated by Borrower as of the date hereof.
ARTICLE 3
CONDITIONS PRECEDENT TO AMENDMENT
Banks' obligations pursuant to this Amendment are subject to the following
conditions:
3.1 Banks and Borrower shall have executed and delivered this Amendment.
3.2 Borrower shall have executed and delivered to Bank a Replacement Note.
3.3 Borrower shall have executed and delivered to Bank any amendments to
the other Loan Documents (other than the Agreement) as required by Bank.
3.4 Bank shall be satisfied that all obligations to the Bank other than the
Loan and what is referred to as the "Aircraft Loan" is paid off.
3.5 The Borrower's representations and warranties set forth in Article 2
hereof shall be true and correct on and as of the date hereof.
3.6 As of the date hereof, no Event of Default nor any event which, with
the giving of notice or lapse of time, would constitute an Event of Default
shall have occurred and be continuing.
ARTICLE 4
OTHER COVENANTS AND MISCELLANEOUS TERMS
4.1 Except as expressly amended and supplemented hereby, the Agreement
shall remain unchanged and in full force and effect, and the same is hereby
ratified and extended.
4.2 The indebtedness described in the Agreement, including but not limited
to the indebtedness or exposure evidenced by the Note, shall continue to be
secured by the Collateral, without interruption or impairment of any kind.
4.3 This Amendment shall be construed in accordance with and governed by
the laws of the State of Oklahoma, and shall be binding on and inure to the
benefit of the Borrower and Bank, and their respective successors and assigns.
All obligations of the Borrower under the Agreement and all rights of Bank and
any other holder of the Note, whether expressed herein or in any Note, shall be
in addition to and not in limitation of those provided by applicable law.
Borrower and Bank irrevocably agree that all suits or proceedings arising from
or related to the Agreement, as amended, or the Note shall be litigated in
courts (whether State or Federal) sitting in Oklahoma City, Oklahoma, and the
Borrower and Bank hereby irrevocably waive any objection to such jurisdiction
and venue.
4.4 This Amendment may be executed in as many counterparts as are deemed
necessary or convenient, and it shall not be necessary for the signature of more
than any one party to appear on any single counterpart. Each counterpart shall
be deemed an original, but all shall be construed together as one and the same
instrument. The failure of any party to sign shall not affect or limit the
liability of any party executing any such counterpart.
Executed effective as of the date first above written.
BORROWER: PRE-PAID LEGAL SERVICES, INC.,
an Oklahoma Corporation:
By: /s/ Steve Williamson
----------------------------------------
Name: Steve Williamson
Title: Chief Financial Officer
BANK: BANK OF OKLAHOMA, N.A.
By: /s/ Laura Christofferson
----------------------------------------
Name Laura Christofferson
Title: Senior Vice President
ANNEX NO. 1
RESTATED REAL ESTATE NOTE
$20,000,000.00 June 23, 2006
1.Payment Schedule and Maturity Date. FOR VALUE RECEIVED, the undersigned
Borrower (herein called the "Borrower,") hereby promises to pay to the order of
BANK OF OKLAHOMA, N.A., a national banking association ("Lender"), without
offset, in immediately available funds in lawful money of the United States of
America, at 201 Robert S. Kerr Ave., Oklahoma City, Oklahoma 73102 the principal
sum of Twenty Million and no/100 Dollars ($20,000,000.00) (or the unpaid balance
of all principal advanced against this Note, if that amount is less), together
with interest on the unpaid principal balance of this Note from day to day
outstanding as hereinafter provided, as follows:
Until such time as all amounts owing by Borrower under this Note have been
repaid to Lender in their entirety, continuing on June 30, 2006 and on the last
day of each month thereafter through August 31, 2011, Borrower shall make a
payment of all accrued but unpaid interest on the Real Estate Note together with
a principal payment calculated pursuant to the terms of the Agreement. All
outstanding principal plus all accrued but unpaid interest is due and payable in
full on the Real Estate Note Maturity Date.
This Note shall mature (the "Maturity Date" or the "Real Estate Note Maturity
Date") and the entire principal balance of this Note, together with all accrued
and unpaid interest thereon, unless accelerated, shall be due on August 31,
2011.
2.Security; Loan Documents. The security for the Indebtedness (hereinafter
defined) evidenced by this Note by Borrower to Lender dated of even date
herewith includes, inter alia, a Construction Mortgage With Power Of Sale and
Security Agreement (which, as it may be amended, restated, modified or
supplemented from time to time, is herein called the "Mortgage") dated July 23,
2002 from Borrower to Lender, covering certain real property and improvements
located in Pontotoc County, Oklahoma, described therein (the "Real Property").
The Note, the Mortgage, the Loan Agreement between Borrower and Bank dated June
11, 2002 (which, as it may be amended, restated, modified or supplemented from
time to time, is called the "Loan Agreement") and all other documents now or
hereafter securing or guaranteeing the loan evidenced by this Note, are, as the
same have been or may be amended, restated, modified or supplemented from time
to time, herein sometimes called individually a "Loan Document" and together the
"Loan Documents."
3.Interest Rate. The interest rate shall be as set forth in Section 2.2.2 of the
Loan Agreement.
The interest rate for any sum payable hereunder which is not paid when due,
other than the payment of principal due on the Stock Note Maturity Date shall be
as set forth in Section 2.6 of the Loan Agreement.
4.Prepayment. Borrower's right to prepay this Note shall be as set forth in
Section 2.4 of the Loan Agreement.
5.Certain Provisions Regarding Payments. All payments made as scheduled on this
Note shall be applied, to the extent thereof, to late charges, to accrued but
unpaid interest, unpaid principal, and any other sums due and unpaid to Lender
under the Loan Documents, in such manner and order as Lender may elect in its
discretion. All prepayments on this Note shall be applied, to the extent
thereof, to accrued but unpaid interest on the amount prepaid, to the remaining
principal installments, and any other sums due and unpaid to Lender under the
Loan Documents, in such manner and order as Lender may elect in its discretion,
including but not limited to application to principal installments in the
inverse order of maturity. Except to the extent that specific provisions are set
forth in this Note or another Loan Document with respect to application of
payments, all payments received by the holder hereof shall be applied, to the
extent thereof, to the indebtedness secured by the Mortgage in such manner and
order as Lender may elect in its discretion, any instructions from Borrower or
anyone else to the contrary notwithstanding. Remittances in payment of any part
of the indebtedness other than in the required amount in immediately available
Dollars shall not, regardless of any receipt or credit issued therefor,
constitute payment until the required amount is actually received by the holder
hereof in immediately available Dollars and shall be made without offset,
demand, counterclaim, deduction, or recoupment (each of which is hereby waived)
and accepted subject to the condition that any check or draft may be handled for
collection in accordance with the practice of the collecting bank or banks. For
purposes hereof, "Dollars" means legal tender issued by the United States of
America. Acceptance by the holder hereof of any payment in an amount less than
the amount then due on any indebtedness shall be deemed an acceptance on account
only and shall not in any way excuse the existence of a Default (as defined in
the Loan Agreement).
6.Defaults. Events of default and remedies shall be as set forth in Section 10
of the Loan Agreement. No failure by the holder hereof to exercise, nor delay in
exercising any right, including but not limited to the right to accelerate the
maturity of this Note, shall be construed as a waiver of any default or as a
waiver of the right. Without limiting the generality of the foregoing
provisions, the acceptance by the holder hereof from time to time of any payment
under this Note which is past due or which is less than the payment in full of
all amounts due and payable at the time of such payment, shall not (i)
constitute a waiver of or impair or extinguish the right of the holder hereof to
accelerate the maturity of this Note or to exercise any other right at the time
or at any subsequent time, or nullify any prior exercise of any such right, or
(ii) constitute a waiver of the requirement of punctual payment and performance
or a novation in any respect.
7.Commercial Purpose. Borrower warrants that the loan evidenced by this Note is
being made solely to acquire or carry on a business or commercial enterprise,
and/or the Borrower is a business or commercial organization. Borrower further
warrants that all of the proceeds of this Note shall be used for commercial
purposes and stipulates that the loan evidenced by this Note shall be construed
for all purposes as a commercial loan, and is made for other than personal,
family or household purposes.
8.WAIVER OF JURY TRIAL. BORROWER WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH BORROWER AND LENDER MAY BE PARTIES, ARISING OUT OF, IN
CONNECTION WITH OR IN ANY WAY PERTAINING TO, THIS NOTE, THE DEED OF TRUST OR ANY
OF THE OTHER LOAN DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTION OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS NOTE. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER,
AND BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE
BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY
WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER REPRESENTS AND WARRANTS THAT
IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT
IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
9.General Provisions. If more than one person or entity executes this Note as
Borrower, all of said parties shall be jointly and severally liable for payment
of the indebtedness evidenced hereby. Borrower and all sureties, endorsers,
guarantors and any other party now or hereafter liable for the payment of this
Note in whole or in part, hereby severally (a) waive demand, presentment for
payment, notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notices
(except any notices which are specifically required by this Note or any other
Loan Document), filing of suit and diligence in collecting this Note or
enforcing any of the security herefor; (b) agree to any substitution,
subordination, exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (c) agree that the holder hereof
shall not be required first to institute suit or exhaust its remedies hereon
against Borrower or others liable or to become liable hereon or to perfect or
enforce its rights against them or any security herefor; (d) consent to any
extensions or postponements of time of payment of this Note for any period or
periods of time and to any partial payments, before or after maturity, and to
any other indulgences with respect hereto, without notice thereof to any of
them; and (e) submit (and waive all rights to object) to non-exclusive personal
jurisdiction of and venue in the U.S. District Court for the Western District of
Oklahoma, and any state court sitting in the State of Oklahoma, for any suit,
action or proceeding arising out of, or relating to, the enforcement of any and
all obligations under this Note and the Loan Documents; (f) waive the benefit of
all homestead and similar exemptions as to this Note; (g) agree that their
liability under this Note shall not be affected or impaired by any determination
that any security interest or lien taken by Lender to secure this Note is
invalid or unperfected; and (h) hereby subordinate any and all rights against
Borrower and any of the security for the payment of this Note, whether by
subrogation, agreement or otherwise, until this Note is paid in full.
A determination that any provision of this Note is unenforceable or invalid
shall not affect the enforceability or validity of any other provision and the
determination that the application of any provision of this Note to any person
or circumstance is illegal or unenforceable shall not affect the enforceability
or validity of such provision as it may apply to other persons or circumstances.
This Note may not be amended except in a writing specifically intended for such
purpose and executed by the party against whom enforcement of the amendment is
sought. The holder of this Note may, from time to time, sell or offer to sell
the loan evidenced by this Note, or interests therein, to one or more assignees
or participants and is hereby authorized to disseminate any information it has
pertaining to the loan evidenced by this Note, including, without limitation,
any security for this Note and credit information on Borrower, any of its
principals and any guarantor of this Note, to any such assignee or participant
or prospective assignee or prospective participant, and to the extent, if any,
specified in any such assignment or participation, such assignee(s) or
participant(s) shall have the rights and benefits with respect to this Note and
the other Loan Documents as such person(s) would have if such person(s) were
Lender hereunder. The terms, provisions, covenants and conditions hereof shall
be binding upon Borrower and the heirs, devisees, representatives, successors
and assigns of Borrower. Captions and headings in this Note are for convenience
only and shall be disregarded in construing it. THIS NOTE, AND ITS VALIDITY,
ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
OKLAHOMA (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE
UNITED STATES FEDERAL LAW.
Any capitalized terms not defined herein shall the meaning ascribed to such term
in the Loan Agreement.
10.Notices; Time. All notices, requests, consents, approvals or demands
(collectively, "Notice") required or permitted by this Note to be given by any
party to any other party hereunder shall be given in the manner set forth in
Section 12.3 of the Loan Agreement.
11.No Usury. It is expressly stipulated and agreed to be the intent of Borrower
and Lender at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Lender to contract for,
charge, take, reserve, or receive a greater amount of interest than under state
law) and that this section shall control every other covenant and agreement in
this Note and the other Loan Documents. If applicable state or federal law
should at any time be judicially interpreted so as to render usurious any amount
called for under this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Loan,
or if any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by applicable law, then it is Lender's express intent
that all excess amounts theretofore collected by Lender shall be credited on the
principal balance of this Note and all other indebtedness and the provisions of
this Note and the other Loan Documents shall immediately be deemed reformed and
the amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new documents, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder or thereunder. All sums paid or agreed to be paid to Lender
for the use, forbearance, or detention of the Loan shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the maximum
lawful rate from time to time in effect and applicable to the Loan for so long
as the Loan is outstanding.
12.Amendment and Restatement. The purpose of this Restated Real Estate Note is
to amend and restate the terms of that certain Real Estate Note dated as of June
2, 2002 in order to evidence an extension of the maturity date. It is expressly
not the intent hereof to pay off any outstanding indebtedness.
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above written.
PRE-PAID LEGAL SERVICES, INC.
an Oklahoma corporation
/s/ Steve Williamson
--------------------------------------
By: Steve Williamson
Title: Chief Financial Officer
Schedule 5.11
1. Aircraft Loan from Bank of Oklahoma, n.a., secured by LearJet 60 aircraft
pursuant to Loan Agreement and Aircraft Chattel Mortgage, each dated
November 30, 2005, with a balance outstanding as of May 31, 2006, of
$10,939,250.
2. Real Estate Lease with Purchase Option dated May 4, 2001, between Antlers
Industrial Authority and Borrower relating to Antlers, Oklahoma, office
with a balance outstanding as of May 31, 2006, of $282,392.
3. IBM System Unit Lease dated December 31, 2004, between Borrower and IBM
Credit, LLC with a balance outstanding as of May 31, 2006, of $319,462.
4. Power Module Lease and Load Management Agreement dated September 17, 2002,
between Borrower and Peoples Electric Cooperative with a balance
outstanding as of May 31, 2006, of $594,719.
5. UPS Lease Agreement dated January 2, 2004, between Borrower and Peoples
Electric Cooperative with a balance outstanding as of May 31, 2006, of
$114,763.
99 Press Release
For Release 8:30 a.m. Eastern Company Steve Williamson
Monday, June 26, 2006 Contact: (580) 436-1234
Pre-Paid Legal Announces Completion of $80 Million Financing
ADA, OK, June 26, 2006 - Pre-Paid Legal Services, Inc. (NYSE:PPD) announced that
it has received financing from Wells Fargo Foothill, Inc. ("Wells Fargo") for
$80 million of senior, secured financing consisting of a $75 million five year
term loan facility (the "Term Facility") and a $5 million five year revolving
credit facility (the "Revolving Facility"). The proceeds will be used primarily
to fund a 1 million share tender offer, to refinance approximately $15.3 million
in existing bank indebtedness and to fund further share repurchases.
The Term Facility is fully funded and provides for a five-year maturity and
amortizes in monthly installments of $1.25 million, with interest on the
outstanding balances under the Term Facility and the Revolving Facility payable,
at our option, at a rate equal to Wells Fargo base rate plus 150 basis points or
at the LIBO Rate plus 250 basis points. We expect to be able to repay the
facilities with cash flow from operations.
We expect to commence a one million share fixed-price self-tender offer the
first week of July 2006 at $35.00 per share with an anticipated August 2, 2006
closing date.
We have not yet commenced the tender offer described above. Upon commencement of
the tender offer, we will file with the Securities and Exchange Commission
(the"SEC"), a Schedule TO and related exhibits, including an Offer to Purchase
and Letter of Transmittal and other related documents (the"Offer Documents"),
which will be delivered to all shareholders. Shareholders are strongly
encouraged and advised to read all of the Offer Documents when these documents
become available because they will contain important information about the
offer. The Offer Documents will also be made available without charge at our
website at www.prepaidlegal.com as well as the SEC website at www.sec.gov. This
press release does not constitute an offer to offer to buy any securities. The
offer will be made only by the Offer Documents and will not be made in any
jurisdiction in which such offer would be unlawful.
About Pre-Paid Legal Services
We believe our products are one of a kind, life events legal service plans. Our
plans provide for legal service benefits provided through a network of more than
50 independent law firms across the U.S. and Canada, and include unlimited
attorney consultation, will preparation, traffic violation defense,
automobile-related criminal charges defense, letter writing, document
preparation and review and a general trial defense benefit. We have an identity
theft restoration product we think is also one of a kind due to the combination
of our identity theft restoration partner and our provider law firms. More
information about us and our products can be found at our homepage at
http://www.prepaidlegal.com.
Forward-Looking Statements
Statements in this press release, other than purely historical information,
regarding our future plans and objectives and expected operating results,
dividends and share repurchases and statements of the assumptions underlying
such statements, constitute forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. The forward-looking
statements contained herein are based on certain assumptions that may not be
correct. They are subject to risks and uncertainties incident to our business
that could cause actual results to differ materially from those described in the
forward-looking statements. These risks and uncertainties are described in the
reports and statements filed by us with the Securities and Exchange Commission,
including (among others) those listed in our Form 10-K, Form 10-Q and Form 8-K,
and include the risks that our membership persistency or renewal rates may
decline, that we may not be able to continue to grow our memberships and
earnings, that we are dependent on the continued active participation of our
principal executive officer, that pending or future litigation may have a
material adverse effect on us if resolved unfavorably to us, that we could be
adversely affected by regulatory developments, that competition could adversely
affect us, that we are substantially dependent on our marketing force, that our
stock price may be affected by short sellers, that we have been unable to
increase our employee group membership sales and that our active premium in
force is not indicative of future revenue as a result of changes in active
memberships from cancellations and additional membership sales. Please refer to
pages 14 and 15 of our 2005 Form 10-K and pages 7 through 9 of our March 31,
2006 Form 10-Q for a more complete description of these risks. We undertake no
duty to update any of the forward-looking statements in this release.