AMENDED AND RESTATED CREDIT AGREEMENT
$6,500,000.00 LETTER OF CREDIT FACILITY
AMONG
JOINT VENTURE OPERATIONS, INC.
(FORMERLY KNOWN AS PROLER INTERNATIONAL CORP.)
AND
PROLER INTERNATIONAL CORP.,
AS BORROWERS
AND
JOINT VENTURE OPERATIONS, INC.
PROLER INDUSTRIES, INC.
PROLER STEEL, INC.
PROLER POWER MARKETING, INC.
PROLERIDE TRANSPORT SYSTEMS, INC.,
PROLER ENVIRONMENTAL SERVICES, INC.,
PROLER INTERNATIONAL CORP.
PROLER PROPERTIES, INC.
PROLER RECYCLING, INC.,
AS GUARANTORS
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
DATED EFFECTIVE AS OF FEBRUARY 28, 1996
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS.....................................................2
Section 1.01. Certain Defined Terms....................................................................2
Section 1.02. Accounting Terms........................................................................16
ARTICLE II - COMMITMENT AND TERMS OF CREDIT....................................................................16
Section 2.01. The Commitment..........................................................................16
Section 2.02. The Notes...............................................................................17
Section 2.03. Letters of Credit and Existing Letters of Credit.......................................17
Section 2.04. Interest Rate..........................................................................20
Section 2.05. Fees...................................................................................20
Section 2.06. Termination of the Commitment..........................................................20
Section 2.07. Computations; Payments on Non-Business Days............................................21
Section 2.08. Set-Off, Counterclaims and Taxes.......................................................21
Section 2.09. The Borrowers Unconditionally Liable...................................................21
Section 2.10. Reserve Requirements; Change in Circumstances..........................................21
Section 2.11. Use of Letters of Credit...............................................................23
Section 2.12. Ratification...........................................................................23
ARTICLE III - GUARANTY.........................................................................................24
Section 3.01. Guaranty................................................................................24
Section 3.02. Continuing Guaranty.....................................................................25
Section 3.03. Effect of Debtor Relief Laws............................................................26
Section 3.04. Waiver of Subrogation...................................................................26
Section 3.05. Subordination...........................................................................26
Section 3.06. Waiver..................................................................................27
Section 3.07. Full Force and Effect...................................................................27
ARTICLE IV - CONDITIONS PRECEDENT..............................................................................27
Section 4.01. Conditions Precedent to the Initial Letter of Credit....................................27
Section 4.02. Conditions Precedent to All Letters of Credit...........................................30
ARTICLE V - REPRESENTATIONS AND WARRANTIES.....................................................................31
Section 5.01. Organization............................................................................31
Section 5.02. Authority...............................................................................31
Section 5.03. No Conflict.............................................................................31
Section 5.04. Consents................................................................................31
Section 5.05. Financial Condition; No Material Adverse Change.........................................32
Section 5.06. Litigation; Material Adverse Effect.....................................................32
Section 5.07. Indebtedness............................................................................32
Section 5.08. No Margin Stock.........................................................................33
Section 5.09. Accuracy and Completeness of Information................................................33
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Section 5.10. ERISA...................................................................................33
Section 5.11. Government Regulation...................................................................33
Section 5.12. Property................................................................................34
Section 5.13. Payment of Taxes........................................................................34
Section 5.14. Insurance...............................................................................34
Section 5.15. Subsidiaries; Joint Ventures............................................................34
Section 5.16. Patents.................................................................................35
Section 5.17. Compliance with Statutes................................................................35
Section 5.18. Labor Relations; Collective Bargaining Agreements.......................................36
Section 5.19. Liabilities.............................................................................36
Section 5.20. Solvency................................................................................36
ARTICLE VI - AFFIRMATIVE COVENANTS.............................................................................37
Section 6.01. Reporting Requirements..................................................................37
Section 6.02. Existence...............................................................................39
Section 6.03. Maintenance of Properties; Insurance....................................................40
Section 6.04. Notice of Litigation....................................................................40
Section 6.05. Taxes; Claims...........................................................................40
Section 6.06. Notice of Default.......................................................................41
Section 6.07. Inspections.............................................................................41
Section 6.08. Compliance with Laws; Notices...........................................................41
Section 6.09. Books and Records; Accounting Systems and Principles....................................42
Section 6.10. Ownership of Credit Parties.............................................................42
Section 6.11. Further Assurances......................................................................42
Section 6.12. Performance of Loan Documents...........................................................42
Section 6.13. Activities of Joint Venture.............................................................42
Section 6.14. Dividends.............................................................................43
ARTICLE VII - NEGATIVE COVENANTS...............................................................................43
Section 7.01. Liens...................................................................................43
Section 7.02. Indebtedness............................................................................45
Section 7.03. Financial Covenants.....................................................................45
Section 7.04. Consolidation, Mergers and Acquisitions; Fundamental Changes............................46
Section 7.05. Transactions with Affiliates............................................................47
Section 7.06. Use of Proceeds.........................................................................47
Section 7.07. Compliance with ERISA...................................................................47
Section 7.08. Limitation on Negative Pledge Clauses...................................................47
Section 7.09. Investments.............................................................................48
Section 7.10. Sale and Leaseback......................................................................48
Section 7.11. Capital Expenditures....................................................................49
Section 7.12. Limitation on Restrictions Affecting Subsidiaries.......................................49
Section 7.13. Restricted Payments.....................................................................49
Section 7.14. Other Business..........................................................................49
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Section 7.15. Joint Venture Agreements................................................................49
Section 7.16. No Transfers to Affiliates..............................................................50
ARTICLE VIII - DEFAULT AND REMEDIES............................................................................50
Section 8.01. Events of Default.......................................................................50
Section 8.02. Set-Off in Event of Default.............................................................53
ARTICLE IX - MISCELLANEOUS.....................................................................................53
Section 9.01. Amendments..............................................................................53
Section 9.02. Notices.................................................................................53
Section 9.03. Costs, Expenses and Taxes...............................................................55
Section 9.04. Binding Effect; Successors and Assigns..................................................55
Section 9.05. Independence of Covenants...............................................................55
Section 9.06. Survival of Representations and Warranties..............................................55
Section 9.07. Separability............................................................................55
Section 9.08. No Waiver; Remedies.....................................................................56
Section 9.09. Counterparts............................................................................56
Section 9.10. Governing Law...........................................................................56
Section 9.11. Limitation on Interest..................................................................56
Section 9.12. Indemnification.........................................................................57
Section 9.13. Notice and Defense of Claims............................................................59
Section 9.14. Limitation by Law.......................................................................61
Section 9.15. Interpretation..........................................................................61
Section 9.16. Waiver of Texas Deceptive Trade Practices Act...........................................62
Section 9.17. Releases................................................................................62
Section 9.18. Final Agreement of the Parties..........................................................63
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EXHIBITS AND SCHEDULES:
Exhibit 1.01-A Borrowing Base Certificate
Exhibit 1.01-B Outstanding Letters of Credit and Acceptances
Exhibit 1.01-C Consent
Exhibit 2.02-A Note A
Exhibit 2.03 Letter of Credit Request
Exhibit 5.06 Litigation
Exhibit 5.07 Indebtedness
Exhibit 5.15 Corporations and Joint Ventures
Exhibit 5.18 Collective Bargaining Agreements
Exhibit 7.01(b) Liens
Exhibit 7.09 Investments
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AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT")
dated effective as of February 28, 1996, is entered into by and among JOINT
VENTURE OPERATIONS, INC., a Delaware corporation (formerly known as Proler
International Corp.) ("OPERATIONS") and PROLER INTERNATIONAL CORP., a Delaware
corporation ("INTERNATIONAL", each individually, a "BORROWER" and collectively,
the "BORROWERS"), PROLER STEEL, INC., a Delaware corporation, PROLER INDUSTRIES,
INC., Inc., a Delaware corporation, PROLERIDE TRANSPORT SYSTEMS, INC., a
Delaware corporation, PROLER ENVIRONMENTAL SERVICES, INC., a Delaware
corporation, and PROLER RECYCLING, INC., a Delaware corporation, PROLER
PROPERTIES, INC., a Texas corporation (collectively, together with each of
Operations and International acting in its capacity as a guarantor hereunder,
the "GUARANTORS" and together with the Borrowers collectively, the "CREDIT
PARTIES"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association (the "BANK").
PRELIMINARY STATEMENT
Joint Venture Operations, Inc., then known as Proler
International Corp., as the borrower, and certain of its subsidiaries, as
guarantors, entered into that certain Credit Agreement dated effective as of
December 11, 1995 (as same may have been amended or modified from time to time,
the "PRIOR CREDIT AGREEMENT"), which Prior Credit Agreement provided for the
Bank to make available to the borrower a line of credit up to $5,000,000.00 and
to issue letters of credit for the account of Joint Venture Operations, Inc.,
then known as Proler International Corp., up to $6,500,000.00.
Subsequent to the execution of the Prior Credit Agreement, the
entity that executed said document as Proler International Corp., effective as
of this date, has been the surviving party to a merger and has changed its name
to Joint Venture Operations, Inc., a Delaware corporation. In addition, a new
entity, Proler International Corp., a Delaware corporation, has been formed. The
new entity, Proler International Corp., owns all of the issued and outstanding
shares of two newly formed corporations, Proler Steel, Inc., a Delaware
corporation, and Proler Industries, Inc., a Delaware corporation. Proler Steel,
Inc. owns all of the issued and outstanding shares of Joint Venture Operations,
Inc., a Borrower and a Guarantor under this Agreement. Joint Venture Operations,
Inc. owns all of the issued and outstanding shares of Proleride Transport
Systems, Inc., a Delaware corporation and a Guarantor hereunder. Proler
Industries, Inc., owns all of the issued and outstanding shares of all of the
remaining Guarantors (except Proler International Corp. and Joint Venture
Operations, Inc.).
Requirements of the borrower under the Prior Credit Agreement
were, among others: (i) the pledge of all of the shares of certain subsidiaries
owned by the borrower thereunder as collateral for the obligations thereunder
and (ii) that various of the substantial subsidiaries of the
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borrower thereunder execute said agreement as guarantors. Because of the
reorganization of the borrower under said agreement, such obligations will no
longer be fulfilled.
Therefore, the parties wish to amend and restate the Prior
Credit Agreement in its entirety to carry out the intent of said document
following the corporate restructuring of the borrower thereunder. Proler
International Corp. and Joint Venture Operations, Inc. have both indicated that
each wishes to be a Borrower hereunder on the terms set forth herein. In
consideration of the foregoing and the mutual covenants and premises herein
contained, Proler International Corp. and Joint Venture Operations, Inc., each
individually as a Borrower and also as a Guarantor), the Guarantors and the Bank
do hereby agree as follows:
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants set forth herein, the Borrowers, the Guarantors and the Bank
hereby agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS
Section 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings:
"AFFILIATE" means, when used with respect to any Person, any
other Person which controls or is controlled by or is under common
control with such Person. As used in this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person (whether
through ownership of securities or partnership or ownership interests
or otherwise).
"AGREEMENT" means this Amended and Restated Credit Agreement,
as the same may from time to time be amended, supplemented, modified or
restated.
"APPLICATION" means an application, in such form as the Bank
may specify from time to time, requesting the Bank to open a Letter of
Credit.
"APPRAISAL" means, collectively, an appraisal of each of the
Mortgaged Properties in form and substance satisfactory to the Bank.
"ASSURANCE" means, as to any Person, all obligations,
contingent or otherwise, of such Person guaranteeing or in effect
guaranteeing in any manner, whether directly or indirectly, any
Indebtedness of any other Person (the "primary obligor") including,
without limitation, obligations of such Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or supply
funds for the purchase of) any direct or indirect security therefor,
(b) to purchase property, securities or services for the purpose of
assuring the owner of such
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Indebtedness of the payment of such Indebtedness, (c) to maintain
working capital, equity capital or other financial statement condition
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or otherwise to protect the owner thereof against loss in
respect thereof; PROVIDED that such obligations are entered into by
such Person directly with the primary obligee or (d) entered into for
the purpose of assuring in any manner the owner of such Indebtedness of
the payment of such Indebtedness or to protect such owner against loss
in respect thereof; PROVIDED that the term Assurance shall not include
endorsements for collection or deposit, in either case in the ordinary
course of business.
"AUTHORIZED OFFICER" means the Chief Executive Officer, Chief
Financial Officer, Controller, Chief Operating Officer or Treasurer of
the respective Credit Party or such other officer approved by the Bank
for the task indicated.
"BANK" is defined in the introduction to this Agreement.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States.
"BOARD OF DIRECTORS" means as to any Credit Party the Board of
Directors of such Credit Party.
"BORROWER" is defined in the introduction to this Agreement.
"BORROWING BASE" means, at any date of determination an amount
equal to 60% of the sum of (i) the market value, as set forth in the
Appraisals, of all of the Mortgaged Properties, plus (ii) the
outstanding principal amount of that certain promissory note dated July
26, 1995 made by Harridan Limited Partnership payable to Proler
International Corp. in the original principal amount of $4,200,000;
PLUS (iii) if such Borrowing Base for issuance of Letters of Credit is
fully utilized, an amount equal to the sum of (x) (a) 50% of the Market
Value of all Eligible Proler Inventory or Eligible Joint Venture
Inventory consisting of Processed Scrap, PLUS (b) $25.00 per Gross Ton
of all other Eligible Proler Inventory or Eligible Joint Venture
Inventory, PLUS (c) 50% of the Eligible Joint Venture Receivables, PLUS
80% of the Eligible Proler Receivables; PROVIDED, that the Borrowing
Base calculation shall be reduced by an additional 33% in respect of
any assets of any Joint Venture which becomes a Joint Venture in
accordance with the definition thereof after the Effective Date and the
Joint Venture Agreement with respect to which requires the consent of
the venture partner for the collateral assignment of the right to
receive distributions from the Joint Venture, unless and until a fully
executed original of a consent by the venture partner of the relevant
Joint Venture substantially in the form of EXHIBIT 1.01(C) hereto is
delivered to the Bank (the "CONSENT") and an appropriate amendment to
this Agreement, the Security Agreement, the UCC-1 financing statements
and such other documents as the Bank may reasonably request, granting
to the Bank a lien and security interest, consistent with the relevant
Consent, in the right to distributions of cash and profits by said
Joint Venture of the
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appropriate Credit Party is delivered to the Bank, MINUS (y) the
principal amount of Indebtedness outstanding under the Revolving Credit
Facility.
"BORROWING BASE CERTIFICATE" means a certificate in the form
of EXHIBIT 1.01-A hereto, duly completed and executed by an Authorized
Officer and accompanied by an accounts receivable aging schedule and a
description by type and amount of the inventory included in the
Borrowing Base, in each case in form and substance satisfactory to the
Bank.
"BORROWING BASE DEFICIENCY" means, at any time, the amount, if
any, by which (i) the sum of the undrawn amount of all outstanding
Letters of Credit and Existing Letters of Credit exceeds (ii) the
Borrowing Base.
"BORROWING DATE" means, when used with respect to any Letter
of Credit, the date upon which any Letter of Credit is issued.
"BORROWING REQUEST" is defined in SECTION 2.03.
"BUSINESS DAY" means a day of the year on which national
banking associations are not authorized or required to close in
Houston, Texas.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) in respect of which such
Person's obligations as lessee under such lease or rental agreement
constitute obligations which shall have been or should be, in
accordance with GAAP, capitalized on the balance sheet of such Person.
"CLAIM" is defined in SECTION 9.17.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"COMMERCIAL LETTER OF CREDIT" is defined in SECTION 2.03(a).
"COMMITMENT" means, subject to the limitations of the
Borrowing Base in respect of Letters of Credit, an amount equal to
$6,500,000.
"COMMONLY CONTROLLED ENTITY" means, with respect to any
Person, any Person which is a member of a controlled group of
corporations and trades or businesses (whether or not incorporated) (as
such term is used in ss. 414(b) or ss. 414(c) of the Code) of which
such Person is also a member.
"COMMUNICATIONS" is defined in SECTION 9.02.
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"CONSENT" is defined in the definition of Borrowing Base.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or
capitalized under Capital Leases but excluding any amount representing
capitalized interest) by International and its Subsidiaries during such
period that are required to be included in property, plant or equipment
reflected in the consolidated balance sheet of International and its
Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, at any time, the current
assets of International and its Subsidiaries determined on a
consolidated basis.
"CONSOLIDATED CURRENT LIABILITIES" means, at any time, the
current liabilities of International and its Subsidiaries determined on
a consolidated basis.
"CONSOLIDATED NET INCOME" means, for any period, the
consolidated net income (or loss) of International and its Subsidiaries
for such period taken as a single accounting period computed in
accordance with GAAP.
"CONSOLIDATED NET WORTH" means, at any date of determination
thereof, the consolidated net worth of International and its
Subsidiaries on the Effective Date computed in accordance with GAAP
plus cumulative Consolidated Net Income for the period (taken as one
accounting period) from the Effective Date to such date.
"CREDIT PARTIES" is defined in the introduction to this
Agreement.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States and all other applicable state or federal dissolution,
liquidation, conservatorship, bankruptcy, moratorium, readjustment of
debt, compromise, rearrangement, receivership, insolvency,
reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally.
"DEEDS OF TRUST" means those certain Deeds of Trust covering
the Mortgaged Properties executed by the appropriate Credit Parties
dated as of August 31, 1992 as amended and modified from time to time.
"DEFAULT" means an event which with the giving of notice or
the lapse of time or both could, unless cured or waived, become an
Event of Default.
"DEFAULT RATE" is defined in SECTION 2.04.
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"EBITDA" means, for any period, the Consolidated Net Income
for such period, before non-cash asset writedowns or impairment losses
not to exceed $10,000,000 in the aggregate during the term hereof,
interest income, interest expense, depreciation, amortization and
provision for taxes and without giving effect to any extraordinary
gains or gains from sales of assets (other than sales of inventory in
the ordinary course of business).
"EFFECTIVE DATE" means the time and Business Day on which the
conditions set forth in ARTICLE IV are satisfied or waived pursuant to
SECTION 9.01.
"ELIGIBLE INVENTORY" means, with respect to any Person at the
time any determination thereof is to be made, Inventory of such Person
consisting of Processed Scrap or Unprocessed Scrap which meets each of
the following criteria at such time:
(a) such Person shall have good title to such Inventory;
(b) the Bank shall have been granted a perfected first
priority security interest in such Inventory except for Eligible Joint
Venture Inventory, it being agreed that the Bank shall not have a
security interest therein; and
(c) such Inventory shall be within the United States or the
Virgin Islands.
"ELIGIBLE JOINT VENTURE INVENTORY" means, as to each Joint
Venture, the Eligible Inventory of such Joint Venture MULTIPLIED BY the
aggregate percentage that all Credit Parties own in the equity or, if
different, the right to the profits of such Joint Venture pursuant to
the applicable Joint Venture Agreement; PROVIDED, that the total of all
items making up a part of the Borrowing Base that consist either of
Eligible Joint Venture Inventory or Eligible Joint Venture Receivables
shall not exceed, for any Joint Venture, the maximum amount allowed to
be distributed to the Bank in any Consent executed in respect of such
Joint Venture.
"ELIGIBLE JOINT VENTURE RECEIVABLES" means, as to each Joint
Venture, the Eligible Receivables of such Joint Venture MULTIPLIED BY
the aggregate percentage that all Credit Parties own in the equity or,
if different, the right to the profits of such Joint Venture pursuant
to the applicable Joint Venture Agreement; PROVIDED, that the total of
all items making up a part of the Borrowing Base that consist either of
Eligible Joint Venture Inventory or Eligible Joint Venture Receivables
shall not exceed, for any Joint Venture, the maximum amount allowed to
be distributed to the Bank in any Consent executed in respect of such
Joint Venture.
"ELIGIBLE PROLER INVENTORY" means all of the Eligible
Inventory of International and its Subsidiaries, excluding any Joint
Venture.
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"ELIGIBLE PROLER RECEIVABLES" means all of the Eligible
Receivables of International and its Subsidiaries, excluding any Joint
Venture.
"ELIGIBLE RECEIVABLE" means, with respect to any Person at the
time any determination thereof is to be made, a Receivable of such
Person which complies with each of the following criteria at such time:
(a) which remains unpaid less than 60 days from the date of
invoice thereof, it being agreed that funds due from account debtors
and collected by ▇▇▇▇ ▇▇▇ Corporation are not deemed paid until funds
are received from ▇▇▇▇ ▇▇▇ Corporation;
(b) which is due from an account debtor whose principal place
of business is located within the United States or the Virgin Islands
unless (i) such Receivable is backed 100% by a letter of credit issued
or confirmed by a bank having a long term debt rating of at least BBB
or better by Standard & Poor's Ratings Group or Baa or better by
▇▇▇▇▇'▇ Investors Services or (ii) such account debtor has previously
been approved in a writing (which approval has not been withdrawn) by
the Bank as an eligible foreign account debtor for purposes of this
Agreement;
(c) which is not due from a Subsidiary or an Affiliate of such
Person;
(d) which is payable in U. S. Dollars;
(e) which is not due from an account debtor who is insolvent
or is the subject of any proceeding under any Debtor Relief Laws;
(f) as to which the Bank has a perfected first priority
security interest except for Eligible Joint Venture Receivables, it
being agreed that the Bank shall not have a security interest therein;
and
(g) as to which Receivable the account debtor shall have not
asserted a default on the part of such Person or otherwise indicated a
dispute or refusal to make payments on such Receivable.
"ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations (other
than internal reports prepared by International or any of its
Subsidiaries solely in the ordinary course of such Person's business
and not in response to any third party action or request of any kind)
or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter,
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"applicable claims"), including (a) any and all applicable claims by
governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all applicable claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"ENVIRONMENTAL LAWS" means any and all laws, statutes, rules,
ordinances, codes, licenses, permits, regulations, orders, approvals
authorizations, judgments, decisions or determinations of any
governmental authority pertaining to health or the environment in
effect in any and all jurisdictions in which the property of
International or any of its Subsidiaries is located, including, the
Clean Air Act, 42 U.S.C. ▇▇.▇▇. 7401-7626, the Comprehensive
Environmental, Response, Compensation, and Liability Act, 42 U.S.C.
▇▇.▇▇. 9601-9675, the Hazardous Materials Transportation Act, 49 U.S.C.
▇▇.▇▇. 1801-1813 the Occupational Safety and Health Act, 29 U.S.C.
▇▇.▇▇. 651-678, the Resource Conservation and Recovery Act, 42 U.S.C.
▇▇.▇▇. 6901-6992, the Safe Drinking Water Act, 42 U.S.C. ▇▇.▇▇. 300f-
300j, the Toxic Substances Control Act, 15 U.S.C. ▇▇.▇▇. 2601-2671, the
Superfund Amendment and Reauthorization Act of 1986 and other
environmental conservation and environmental protection laws, as any of
the same may be amended from time to time.
"ENVIRONMENTAL REPORTS" means, collectively, a Phase I
environmental audit and report of each of the Mortgaged Properties in
form and substance satisfactory to the Bank.
"ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended from time to time.
"EVENTS OF DEFAULT" is defined in SECTION 8.01.
"EXECUTION DATE" means the date of execution of this Agreement
by all of the parties hereto.
"EXISTING LETTERS OF CREDIT" means the letters of credit in
the total maximum amount of $6,166,635.00 heretofore issued by the Bank
and listed on EXHIBIT 1.01B hereto.
"EXISTING L/C OBLIGATIONS" means, at any time, an amount equal
to the sum at such time of (a) the aggregate undrawn amount of the
Existing Letters of Credit PLUS (b) the aggregate amount of drawings
under Existing Letters of Credit which have not then been reimbursed
pursuant to SECTION 2.03.
"EXTENDED TERMINATION DATE" is defined in the term
"Termination Date."
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"GAAP" means Generally Accepted Accounting Principles,
consistently applied.
"GOVERNMENT SECURITIES" means readily marketable direct full
faith and credit obligations of the United States or obligations
unconditionally guaranteed by the full faith and credit of the United
States.
"GROSS TON" means a unit of weight equal to 2,240 pounds.
"GUARANTEED OBLIGATIONS" is defined in SECTION 3.01.
"GUARANTORS" is defined in the introduction to this Agreement.
"GUARANTY" means the guaranty contained in ARTICLE III.
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain or contained electric fluid containing
polychlorinated biphenyls, and radon gas, (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law and (c) any
other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
"HIGHEST LAWFUL RATE" means, at any date, the maximum
nonusurious interest rate that may under applicable law then be
contracted for, charged, received, taken or reserved by the Bank in
connection with the Obligations.
"INDEBTEDNESS" of any Person means, without duplication: (a)
any obligation of such Person for borrowed money, including: (i) any
obligation of such Person evidenced by bonds, debentures, notes or
other similar debt instruments, (ii) any obligation of such Person in
respect of letters of credit and (iii) any obligation for borrowed
money which is non-recourse to the credit of such Person to the extent
that it is secured by any asset of such Person, (b) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (c) any obligation of
such Person for the deferred purchase price of any property or
services, except accounts payable arising in the ordinary course of
such Person's business that have been outstanding less than ninety (90)
days since the date of the related invoice or, if longer, which are, in
good faith, being disputed by the obligor, and for which appropriate
reserves have been set aside, (d) the
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present value at ten percent (10%) per annum of all Capital Leases of
such Person, (e) Assurances of such Person, (f) any Indebtedness of
another Person to the extent secured by a Lien on any asset of such
first Person, whether or not such Indebtedness is assumed by such first
Person and (g) any Indirect Indebtedness of such Person.
"INDEMNIFIED PERSONS" is defined in SECTION 9.12.
"INDIRECT INDEBTEDNESS" of a Person means (a) the Indebtedness
of a partnership in which such Person is a general partner and (b) the
amount of any liability of such Person created by the Indebtedness of a
joint venture in which such Person is a joint venturer.
"INVENTORY" means, with respect to any Person as of the date
of any determination thereof, all "inventory" (as defined in the
Uniform Commercial Code in effect in any jurisdiction) in which such
Person may now or hereafter have an interest wherever located, and
shall also mean and include all goods, merchandise, raw materials and
other materials and supplies, work in process, finished goods and any
products made or processed therefrom and all substances, if any,
commingled therewith or added thereto, and other tangible personal
property presently existing or hereafter acquired by such Person and
held for sale or lease or furnished or to be furnished under contracts
for services or used or consumed in the business of such Person.
"INVESTMENT" means any investment so classified under GAAP
made by stock purchase, capital contribution, loan or advance or by
purchase of property or otherwise.
"JOINT VENTURE AGREEMENTS" is defined in SECTION 5.15(b).
"JOINT VENTURES" means the joint ventures and corporations in
existence on the date hereof and set forth on EXHIBIT 5.15 hereof and
each other joint venture or other similar business entity in which the
Borrower or any of its wholly-owned Subsidiaries becomes a participant
from and after the Effective Date, in each case, for so long as any
such joint venture, corporation or other business entity shall remain
in existence and International or any of its Subsidiaries has an
interest therein.
"L/C FEES" means the fees described in SECTION 2.05.
"L/C OBLIGATIONS" means, at any time, an amount equal to the
sum at such time of (a) the aggregate undrawn amount of the Existing
Letters of Credit or Letters of Credit then outstanding PLUS (b) the
aggregate amount of drawings under Existing Letters of Credit or
Letters of Credit which have not then been reimbursed pursuant to
SECTION 2.03(c).
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"LETTER OF CREDIT REQUEST" is defined in SECTION 2.03(b).
"LETTERS OF CREDIT" is defined in SECTION 2.01(a).
"LIEN" means, when used with respect to any Person, any
mortgage, lien, charge, pledge, security interest or encumbrance of any
kind (whether voluntary or involuntary, affirmative or negative, and
whether imposed or created by operation of law or otherwise) upon, or
pledge of, any of its property or assets, whether now owned or
hereafter acquired, or any conditional sale agreement, Capital Lease or
other title retention agreement.
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Applications, the Security Documents and all other agreements,
instruments and documents, including security agreements, notes,
warrants, guaranties, mortgages, deeds of trust, subordination
agreements, pledges, powers of attorney, consents, assignments,
collateral assignments, letter agreements, contracts, notices, leases,
amendments, financing statements, letter of credit applications and
reimbursement agreements and all other writings heretofore, now or
hereafter executed by or on behalf of any Credit Party, any of their
respective Affiliates or any other Person in connection with or
relating to this Agreement, the Letters of Credit and the Existing
Letters of Credit.
"MARKET VALUE" means, at the time of determination, the weekly
shredded scrap price composite and the weekly steel scrap price
composite published in the most recent daily American Metal Market
publication available.
"MASTER RATIFICATION AGREEMENT" means that one certain Master
Ratification, Security and Pledge Agreement-New Credit Agreement
executed by the Company and the Guarantors in connection with the Prior
Credit Agreement dated as of December 11, 1995 granting to, and
ratifying certain liens in favor of the Bank as collateral for the
Obligations of said Prior Credit Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect
upon the business, operations, properties, assets, business prospects
or financial condition of the Credit Parties, taken as a whole, or (b)
the material impairment of the ability of the Credit Parties, taken as
a whole, to perform timely their Obligations under the Loan Documents
to which they are a party.
"MORTGAGED PROPERTIES" means the real properties described in
the Deeds of Trust which are still owned by any of the Credit Parties.
"MORTGAGEE POLICIES" is defined in SECTION 4.01(h).
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"▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" means that certain Pledge Agreement
(Amended and Restated Credit Agreement) of even date herewith executed
by the Credit Parties therein named, pledging and granting to the Bank
a lien and security interest in and to the shares in certain
subsidiaries of said Credit Parties as therein described.
"NEW SECURITY AGREEMENT" means that certain Security Agreement
(Amended and Restated Credit Agreement) of even date herewith executed
by each of the Credit Parties in favor of the Bank granting to the Bank
a lien and security interest in and to substantially all of the assets
of each of the Credit Parties as therein described.
"NOTE A" is defined in SECTION 2.02(a).
"NOTE B" means that certain Revolving Credit Note dated August
31, 1992 in the original principal amount of $10,000,000, executed by
Operations and made payable to the order of the Bank, as amended by the
Note and Deed of Trust Modification Agreement, together with all other
modifications, extensions, renewals and rearrangements thereof.
"NOTE AND DEED OF TRUST MODIFICATION AGREEMENT" means that
certain Promissory Note and Deed of Trust Modification and Extension
Agreement dated of even date herewith, executed in connection herewith
by the appropriate Credit Parties and in form and substance
satisfactory to the Bank extending and modifying Note B.
"NOTES" and "NOTE" mean, collectively, (a) Note A, and (b)
Note B and individually any of the Notes referred to in (a) and (b)
above.
"NOTICE OF CONVERSION" is defined in SECTION 2.04.
"OBLIGATIONS" means all present and future obligations of
every kind or nature of any Credit Party at any time and from time to
time owed to the Bank under the Loan Documents (including the L/C
Obligations and the Existing L/C Obligations), whether due or to become
due, matured or unmatured, liquidated or unliquidated, or contingent or
non-contingent, including obligations of performance as well as
obligations of payment, and including, to the extent permitted by
applicable Debtor Relief Laws, interest that accrues after the
commencement of any proceeding under any Debtor Relief Law by or
against any Credit Party.
"PATENT SECURITY AGREEMENT" means that certain Patent Security
Agreement dated as of August 31, 1992 by and between Proler
Environmental Services, Inc. and the Bank.
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"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERFECTION CERTIFICATE" is defined in the Security Agreement.
"PERMITTED INVESTMENTS" means, when used in connection with
any Person, the Person's Investments in:
(a) Government Securities due within one year of the making of
the Investment;
(b) readily marketable direct obligations of any state of the
United States or any political subdivision of any such state given on
the date of such investment a credit rating of at least Aa by ▇▇▇▇▇'▇
Investors Service or AA by Standard & Poor's Ratings Group, in each
case, due within one year from the making of the Investment;
(c) certificates of deposit issued by or money market deposits
with the Bank or with any other bank or trust company organized under
the laws of the United States or any state thereof or Canada and having
combined capital, surplus and undivided profits of not less than
$500,000,000 (as of the date of its most recent financial statements);
(d) commercial paper rated at least P-1 or A-1 by ▇▇▇▇▇'▇
Investors Service or Standard & Poor's Ratings Group, respectively; or
(e) mutual funds regularly traded within the United States
whose investments are limited to those described in (a) through (d),
above.
"PERMITTED LIENS" means (a) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the
Mortgagee Policies in respect thereof and found acceptable by the Bank
in its sole discretion, (b) as to any particular Mortgaged Property at
any time, such easements, encroachments, covenants, rights of way,
minor defects, irregularities or encumbrances on title which are not
unusual with respect to property similar in character to such Mortgaged
Property and which do not, in the reasonable opinion of the Bank,
materially impair such Mortgaged Property for the purpose for which it
is held by the mortgagor thereof, or the Lien held by the Bank, (c)
municipal and zoning ordinances, which are not violated by the existing
improvements and the present use made by the mortgagor thereof of the
Premises (as defined in the respective Deeds of Trust), (d) general
real estate taxes and assessments not yet delinquent, (e) Liens
permitted under SECTION 7.01 except for subparagraph (f) thereof and to
the extent and only for the period affecting the respective Mortgaged
Property or assets and (f) such other items as the Bank may consent to.
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"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
"PLAN" means any employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.
"PRIME RATE" means, as of any particular date, the prime rate
per annum most recently determined by the Bank as its prime rate of
interest per annum and thereafter entered in the minutes of the Bank's
loan and discount committee automatically fluctuating upward or
downward, as the case may be, on the day of each determination without
special notice to the Borrowers or any other Person. The Borrowers
acknowledge that the Prime Rate may not be the Bank's best or lowest
rate, or favored rate, and any statement, representation or warranty in
that regard or to that effect is hereby expressly disclaimed by the
Bank.
"PROCESSED SCRAP" means scrap metal which has been prepared,
sheared, cleaned and/or separated into its ferrous and non-ferrous
components and is available for sale in its present condition.
"RECEIVABLE" means, as to any Person as at any date of
determination thereof, the unpaid principal portion of the obligation
of any customer of such Person to pay to such Person in respect of any
services performed by such Person or Inventory purchased from and
shipped or caused to be shipped by such Person, net of any credits,
rebates or offsets owed to such customer by such Person. For purposes
hereof, a credit or rebate paid by check or draft of such Person shall
be deemed to be outstanding until such check or draft shall have been
debited to the respective account of such Person on which such check or
draft was drafted or drawn.
"REGULATION D" means Regulation D of the Board (respecting
reserve requirements), as the same is from time to time in effect, and
all official rulings and interpretations thereunder or thereof.
"REGULATION G" means Regulation G of the Board (respecting
margin credit extended by Persons other than banks, brokers and
dealers), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
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"REGULATION U" means Regulation U of the Board (respecting
margin credit extended by banks), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" means Regulation X of the Board (respecting the
borrowers who obtain margin credit) as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"RESTRICTED PAYMENT" means, with respect to any Person:
(a) the declaration of any dividend on, or the incurrence of
any liability to make any other payment or distribution in respect of,
any shares of such Person (other than one payable solely in its
shares); or
(b) (i) any payment or distribution on account of the
purchase, redemption or other retirement of any shares of such Person,
or of any warrant, option or other right to acquire such shares, or any
other payment or distribution (other than pursuant to a dividend
theretofore declared or liability theretofore incurred as specified in
subsection (a)), made in respect thereof, either directly or
indirectly, or (ii) the purchase, redemption or other retirement of
shares of such Person in exchange for, or out of the net cash proceeds
received by such Person from a substantially concurrent sale of, other
shares of such Person.
"REVOLVING CREDIT FACILITY" means that certain Fourth Amended
and Restated Credit Agreement dated this date among the Borrowers, the
Guarantors and the Bank.
"SECURITY DOCUMENTS" means the Patent Security Agreement, the
Deeds of Trust, the Master Ratification Agreement, the New Pledge
Agreement, the New Security Agreement and the Note and Deed of Trust
Modification Agreement.
"STANDBY LETTER OF CREDIT" is defined in SECTION 2.03(a).
"SUBSIDIARY" of any Person means and includes (a) any
corporation or limited liability company more than 50% of whose stock
is at the time owned by such Person directly or indirectly through its
Subsidiaries and (b) any partnership, association or other entity in
which such Person, directly or indirectly through Subsidiaries, has
more than a 50% equity interest at the time, but specifically excluding
any Joint Ventures.
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"TERMINATION DATE" means June 30, 1997 or the earlier
termination in whole of the Commitment of the Bank or its obligation to
issue Letters of Credit pursuant to SECTION 2.06 or SECTION 8.01;
PROVIDED, HOWEVER, if on June 30, 1997 any Existing Letter of Credit or
Letter of Credit outstanding on such date contains an expiration date
later than such date, the Termination Date shall be extended to the
latest expiration date of any such Letter of Credit but not later than
December 31, 1997 (such date being the "EXTENDED TERMINATION DATE")
solely for the purpose of funding drawings under SECTION 2.20(c)
hereof, paid by the Banks pursuant to any such Existing Letter of
Credit or Letter of Credit.
"UNIFORM CUSTOMS" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised from time to time.
"UNITED STATES" and "U.S." each means the United States of
America.
"UNPROCESSED SCRAP" means scrap metal which has been purchased
but has not been processed for sale in its present condition.
Section 1.02. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in SECTION 5.05. The books and records of International shall be
kept, and all financial data submitted pursuant to this Agreement shall be
prepared, in accordance with GAAP.
ARTICLE II
COMMITMENT AND TERMS OF CREDIT
Section 2.01. THE COMMITMENT. The Bank agrees, on the terms
and conditions and relying upon the representations herein set forth, to issue
additional standby or commercial letters of credit for the account of
International Operations (the "LETTERS OF CREDIT") from time to time on any one
or more Business Days during the period from the Effective Date up to the
Termination Date; PROVIDED, HOWEVER, no Letter of Credit shall be issued after
the Termination Date and all Letters of Credit shall expire on or prior to the
Extended Termination Date. Notwithstanding any other term or provision hereof,
no Letter of Credit shall be issued if after giving effect to the issuance of
such Letter of Credit the aggregate amount of all L/C Obligations would exceed
the lesser of (1) the Borrowing Base and (2) the Commitment. Pursuant to SECTION
2.03(c), fundings of any Letter of Credit by the Bank shall be reimbursed
immediately by International.
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(b) The Existing Letters of Credit and any renewals or
extensions thereof during the term hereof shall be deemed to be issued under
this Agreement and shall be a part of the Commitment. Pursuant to SECTION
2.03(c), fundings of any Existing Letter of Credit by the Bank shall be
reimbursed immediately by Operations.
(c) The expiration date of an Existing Letter of Credit shall
not be extended beyond the Extended Termination Date.
Section 2.02. THE NOTES. (a) The Obligations of International
with respect to any Letter of Credit issued for its account, if any, shall be
evidenced by a single Note dated of even date herewith (said Note, together with
all modifications, extensions, renewals and rearrangements thereof "NOTE A") of
International payable to the order of the Bank in the principal amount of the
Commitment, substantially in the form of EXHIBIT 2.02-A; PROVIDED that,
notwithstanding anything herein contained, International shall not be liable as
a maker for any amounts drawn under any Existing Letter of Credit or Letter of
Credit issued for the account of Operations or paid in respect of any such
Existing Letter of Credit or Letter of Credit, including any indebtedness
evidenced by Note B, or for any amounts that would constitute interest under
applicable law thereon, or any other amounts owing in connection therewith, but
shall be liable for any and all such amounts as a Guarantor. Any sums
outstanding under Note A shall be payable on demand.
(b) The Obligations of Operations with respect to the Existing
Letters of Credit or any Letter of Credit issued for its account, if any, shall
be evidenced by Note B; PROVIDED, that, notwithstanding anything herein
contained, Operations shall not be liable as a maker for any amounts drawn under
any Letter of Credit issued for the account of International or paid in respect
of any such Letter of Credit, including any indebtedness evidenced by Note A, or
for any amounts that would constitute interest under applicable law thereon, or
any other amounts owing in connection therewith, but shall be liable for any and
all such amounts as a Guarantor. Any sums outstanding under Note B shall be
payable on demand. It is agreed that no sums are outstanding under Note B as of
the date hereof.
Section 2.03. LETTERS OF CREDIT AND EXISTING LETTERS OF
CREDIT. (a)(i) Subject to the terms and conditions hereof, the Bank agrees to
issue Letters of Credit for the account of either Borrower on any Business Day
from the Effective Date to the Termination Date in such form as may be approved
from time to time by the Bank; PROVIDED that the Bank shall have no obligation
to issue any Letter of Credit if, after giving effect to such issuance, the L/C
Obligations would exceed the Commitment. Each Letter of Credit shall (A) be
denominated in U. S. Dollars and shall be either (1) a standby letter of credit
issued to support obligations of the Borrower or one or more of its
Subsidiaries, contingent or otherwise (a "STANDBY LETTER OF CREDIT") or (2) a
documentary letter of credit in respect of the purchase of goods or services by
the Borrower or one or more of its
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Subsidiaries in the ordinary course of business (a "COMMERCIAL LETTER OF
CREDIT") and (B) expire no later than the Extended Termination Date.
(ii) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the
State of Texas.
(iii) The Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or
cause the Bank to exceed any limits imposed by, any applicable law or
regulation.
(b) (i) Either Borrower may from time to time request that the
Bank issue a Letter of Credit by delivering to the Bank at its address for
notices specified herein a request (a "LETTER OF CREDIT REQUEST") in the form
set forth as EXHIBIT 2.03 hereof and an Application therefor, completed to the
satisfaction of the Bank, and such other certificates, documents and other
papers and information as the Bank may reasonably request. The Bank shall not be
required to issue any Letter of Credit earlier than three (3) Business Days
after its receipt of the Letter of Credit Request and related Application
therefor and all such other certificates, documents and other papers and
information relating thereto. Upon receipt of any Letter of Credit Request and
related Application from either Borrower, the Bank will process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and, upon
satisfaction of the applicable terms and conditions set forth in ARTICLE IV,
shall promptly issue the original of the Letter of Credit requested to the
beneficiary thereof or as otherwise may be agreed by the Bank and such Borrower.
The Bank shall furnish a copy of each Letter of Credit issued hereunder to each
Borrower promptly following the issuance thereof.
(ii) In respect of any Letters of Credit or Existing Letters
of Credit, if any, outstanding on the Termination Date, assuming no
Default or Event of Default has occurred, the Borrower for the account
of which any of such Letters of Credit or Existing Letters of Credit
were issued may, at its option, provide to the Bank collateral in the
form of cash or a certificate of deposit issued by the Bank in the
amount of such Letters of Credit or Existing Letters of Credit and any
expenses reasonably anticipated by the Bank in connection therewith,
whereupon, when all such Letters of Credit or Existing Letters of
Credit are so secured, the Bank shall release its Liens on all other
collateral hereunder or under any of the Loan Documents. In no event
shall any Letters of Credit or Existing Letters of Credit be
outstanding beyond the Extended Termination Date. Each Borrower shall
remain liable in respect of the Letters of Credit or Existing Letters
of Credit issued for its account on terms consistent with the terms
hereof, but for all other purposes of this Agreement and the other Loan
Documents the Obligations will be deemed paid in full and not
outstanding and the Commitment shall be deemed terminated.
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(c) Each Borrower agrees to reimburse the Bank on each date on
which the Bank notifies such Borrower of the date and amount of a draft
presented under any Existing Letter of Credit or Letter of Credit issued for its
account and paid by the Bank for the amount of (i) such draft so paid and (ii)
any taxes, fees, charges or other costs or expenses incurred by the Bank in
connection with such payment. Upon the presentment of any draft for honor under
any Existing Letter of Credit or Letter of Credit by the beneficiary thereof
which the Bank determines is in compliance with the condition for payment
thereunder, the Bank shall promptly notify the Borrower for the account of which
such Letter of Credit or Existing Letter of Credit was issued. In the event the
Bank makes any payment pursuant to a draft presented under an Existing Letter of
Credit or a Letter of Credit, the Borrower for the account of which such Letter
of Credit or Existing Letter of Credit was issued shall immediately, upon
demand, pay said amount to the Bank in cash plus any interest due thereon from
the date when due at the Default Rate as provided in SECTION 2.04. Any amounts
owing and unpaid by International shall be obligations of International
evidenced by Note A. Any amounts owing and unpaid by Operations shall be
obligations of Operations evidenced by Note B.
(d) Each Borrower's obligations under this Section shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which either Borrower may have
or have had against the Bank or any beneficiary of an Existing Letter of Credit
or a Letter of Credit. Each Borrower also agrees with the Bank that the Bank
shall not be responsible for, and such Borrower's reimbursement obligations
under SECTION 2.03(C) above shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even
through such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among either Borrower and any beneficiary of any
Existing Letter of Credit or Letter of Credit or any other party to which such
Existing Letter of Credit or Letter of Credit may be transferred or any claims
whatsoever of either Borrower against any beneficiary of such Existing Letter of
Credit or Letter of Credit or any such transferee. The Bank shall not be liable
for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Existing Letter of Credit or Letter of Credit, except for errors or omissions
caused by the Bank's gross negligence or willful misconduct. Each Borrower
agrees that any action taken or omitted by the Bank under or in connection with
any Existing Letter of Credit or Letter of Credit issued for the account of such
Borrower or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Customs and, to the extent not inconsistent therewith,
the Uniform Commercial Code of the State of Texas, shall be binding on such
Borrower and shall not result in any liability of the Bank to such Borrower.
(e) The responsibility of the Bank to a Borrower in connection
with any draft presented for payment under any Existing Letter of Credit or
Letter of Credit shall, in addition to any payment obligation expressly provided
for in such Existing Letter of Credit or Letter of Credit be limited to
determining that the documents (including each draft) delivered under such
Existing Letter
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of Credit or Letter of Credit in connection with such presentment are in
conformity with such Existing Letter of Credit or Letter of Credit.
(f) To the extent that any provision of any Application,
certificate, document or other papers related to any Existing Letter of Credit
or Letter of Credit is inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall control and no such Application, certificate,
document or other paper shall give the Bank or any Borrower any greater rights
than the Bank or such Borrower would otherwise have under this Agreement.
Section 2.04. INTEREST RATE. Any funding of any Letters of
Credit or any Existing Letter of Credit for which the Bank is not reimbursed
immediately by the Borrower owing such principal or interest shall bear interest
from the date on which such amount is due until such amount is paid in full at a
rate per annum equal at all times to the Prime Rate plus four percent (4%) per
annum but in no event to exceed the Highest Lawful Rate (the "DEFAULT RATE") and
shall be payable upon demand.
Section 2.05. FEES. (a) Each Borrower shall pay to the Bank a
letter of credit commission with respect to each Existing Letter of Credit and
Letter of Credit issued for the account of such Borrower payable in advance and
computed for the period from the Effective Date or date of such payment to the
date upon which the next such payment is due hereunder at the rate of one
percent (1%) per annum (which, in the case of Commercial Letters of Credit,
shall be calculated on the basis of one-quarter of one percent (1/4%) for each
90 day period or any part thereof) of the aggregate amount available to be drawn
under such Existing Letter of Credit and Letter of Credit on the date on which
such fee is calculated or the then minimum letter of credit insurance fee
charged by the Bank, whichever is greater; PROVIDED, HOWEVER, with respect to
each Existing Letter of Credit, the amount of such commission payable to the
Bank shall be reduced by the amount of the commissions already paid to the Bank
with respect to such Existing Letter of Credit with respect to any period from
and after the Effective Date. Such commissions shall be payable in advance on
the Effective Date and on the last day of each calendar quarter occurring
thereafter and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, each
Borrower shall pay or reimburse the Bank for such normal and customary costs and
expenses as are incurred or charged by the Bank in issuing, effecting payment
under, amending or otherwise administering any Existing Letter of Credit or any
Letter of Credit issued for the account of such Borrower.
Section 2.06. TERMINATION OF THE COMMITMENT. On the
Termination Date the Commitment shall be zero; PROVIDED, HOWEVER, if any one or
more Existing Letters of Credit or Letters of Credit outstanding on the
Termination Date have a later expiration date, then the Commitment shall reduce
to a level equal to the sum of the undrawn face amount of each of the then
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outstanding Existing Letters of Credit and Letters of Credit (reducing by the
amount of any expiring Existing Letter of Credit or Letter of Credit as it
expires) and shall, in any event, terminate in its entirety on the Extended
Termination Date.
Section 2.07. COMPUTATIONS; PAYMENTS ON NON-BUSINESS DAYS. (a)
All payments by a Borrower of principal and interest hereunder, under its Note
and the other Loan Documents shall be made in U.S. Dollars to the Bank at its
office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ in immediately available funds not
later than 12:00 Noon (Houston, Texas time) on the date when due.
(b) Interest on any amount due hereunder or under any Note
shall be computed by the Bank on the actual number of days elapsed over a year
of 365 days. Determination by the Bank of an interest rate hereunder shall be
PRIMA FACIE evidence of its accuracy.
Section 2.08. SET-OFF, COUNTERCLAIMS AND TAXES. All payments
of principal, interest, expenses, reimbursements, compensation and any other
amount from time to time due hereunder, under the Notes or any other Loan
Document shall be made by the Borrowers without set-off or counterclaim and
shall be made free and clear of and without deduction for any present or future
tax, levy, impost or any other charge, if any, of any nature whatsoever now or
hereafter imposed by any taxing authority upon either Borrower. If the making of
such payments by a Borrower is prohibited by law unless such a tax, levy, impost
or other charge is deducted or withheld therefrom, such Borrower shall pay to
the Bank, on the date of each such payment, such additional amounts as may be
necessary in order that the net amounts received by the Bank after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required; PROVIDED, HOWEVER, that all
amounts payable under this Agreement which constitute interest under applicable
law shall not exceed an amount which would result in the payment of interest at
a rate in excess of the Highest Lawful Rate.
Section 2.09. THE BORROWERS UNCONDITIONALLY LIABLE. Subject to
the provisions of SECTIONS 2.02(a) and 9.11, each Borrower shall (to the extent
set forth herein) be unconditionally liable to the Bank for the principal amount
of any and all L/C Obligations with respect to Letters of Credit issued for such
Borrower's account, interest due thereon, the L/C Fees relating thereto and all
other amounts due to the Bank from such Borrower hereunder or under any other
agreement or security document executed in connection herewith, and shall make
prompt and punctual payment when due of such amounts.
Section 2.10. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) It is understood that the cost to the Bank of making or maintaining any
Existing Letter of Credit or Letter of Credit may fluctuate as a result of the
applicability of, or changes in, reserve requirements imposed by the Board. Each
Borrower agrees to pay to the Bank from time to time, as provided in paragraph
(d) below, such amounts as shall be necessary to compensate the Bank,
prospectively from the date of
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demand, for the portion of the cost of making or maintaining any Existing Letter
of Credit or Letter of Credit made to or issued for the account of such Borrower
resulting from any such reserve requirements to the extent set forth in this
Section.
(b) Notwithstanding any other provision herein, if the
introduction of any applicable law or regulation or any change in applicable law
or regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any applicable guideline or request from
any central bank or governmental authority (whether or not having the force of
law) (i) shall change the basis of taxation of payments to the Bank of the
principal of or interest on any Existing L/C Obligations, any L/C Obligations or
any other fees or amounts payable hereunder (other than (x) taxes imposed on the
overall net income of the Bank or its applicable lending office by any
jurisdiction or by any political subdivision or taxing authority therein (or any
tax which is enacted or adopted by any such jurisdiction, political subdivision
or taxing authority as a direct substitute for any such taxes) or (y) any tax,
assessment or other governmental charge that would not have been imposed but for
the failure of the Bank to comply with any certification, information,
documentation or other reporting requirement), (ii) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, the Bank, or
(iii) shall impose on the Bank any other condition affecting this Agreement, and
the result of any of the foregoing shall be to increase the cost to the Bank of
maintaining the Commitment or of issuing or maintaining any Existing Letter of
Credit or Letter of Credit or to reduce the amount of any sum received or
receivable by the Bank hereunder (whether of principal, interest or otherwise)
in respect thereof by an amount deemed in good faith by the Bank to be material,
then each Borrower shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such increase or reduction relating to the
Commitment available to, or any Letter of Credit or Existing Letter of Credit
issued for the account of such Borrower, upon demand by the Bank.
Notwithstanding the foregoing, in no event shall the Bank be permitted to
receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(c) If the Bank shall have determined in good faith that any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 Report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards" or that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration thereof by any central bank or other
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such central
bank or governmental authority, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and that the amount of such capital is increased by or based upon the
existence of the Commitment hereunder and other commitments
-22-
of this type, then the Borrowers shall from time to time pay to the Bank upon
demand additional amounts sufficient to compensate the Bank or such corporation
in the light of such circumstances, to the extent that the Bank reasonably
determines such increase in capital to be allocable to the existence of the
Commitment hereunder.
(d) If while any Existing Letter of Credit or any Letter of
Credit is outstanding, any law, executive order or regulation is enforced,
adopted or interpreted by any central bank or other governmental authority so as
to affect any Borrower's obligations or the compensation to the Bank in respect
of the Existing Letters of Credit or the Letters of Credit or the cost to the
Bank of establishing or maintaining the Existing Letters of Credit or the
Letters of Credit, then the Borrower for the account of which any such Letter of
Credit or Existing Letter of Credit was issued shall from time to time upon
demand, reimburse or indemnify the Bank with respect thereto so that the Bank
shall be in the same position as if there had been no such enforcement, adoption
or interpretation. Notwithstanding the foregoing, in no event shall the Bank be
permitted to receive any compensation hereunder constituting interest in excess
of the Highest Lawful Rate.
(e) The Bank will notify the Borrowers of any event occurring
after the date of this Agreement which will entitle the Bank to compensation
pursuant to this SECTION 2.10. A certificate of the Bank setting forth in
reasonable detail (i) such amount or amounts as shall be necessary to compensate
the Bank as specified in paragraph (a), (b), (c) or (d) above as the case may
be, and (ii) the calculation of such amount or amounts shall be simultaneously
delivered to the Borrower owing such amount or amounts and shall be PRIMA FACIE
evidence of its accuracy. Such Borrower shall pay to the Bank the amount shown
as due on any such certificate within ten (10) days after such Borrower's
receipt of the same. The failure of the Bank to demand increased compensation
with respect to any Interest Period shall not constitute a waiver of the right
to demand compensation thereafter.
Section 2.11. USE OF LETTERS OF CREDIT. International and its
Subsidiaries will use all Letters of Credit issued hereunder for general
business purposes of International and its Subsidiaries PROVIDED, any Letter of
Credit issued in support of any Investment by Proler Environmental Services,
Inc. in any facility shall be considered an Investment subject to the
limitations of SECTION 7.09(g).
Section 2.12. RATIFICATION. Each Credit Party hereby confirms
and ratifies the terms of the Security Documents to which it is a party and the
creation of the Liens thereunder to secure the Obligations of the Borrowers to
the Bank as more fully set forth therein and further agrees and acknowledges (a)
that, except as otherwise set forth in the Note and Deed of Trust Modification
Agreement, the Liens of the Security Documents to which it is a party extend to
and expressly secure the Obligations of the Borrowers under this Agreement, the
Notes and the other Loan Documents and (b) that the Security Documents to which
it is a party and the Liens created thereunder are valid and subsisting and
shall remain enforceable against such Credit Party in accordance with their
terms
-23-
and shall not be reduced or limited or impaired by the execution of this
Agreement and the Notes; PROVIDED, HOWEVER, that nothing herein or in any other
Loan Document has granted, or shall be deemed to grant, any lien or security
interest as collateral security for any of the Obligations in any Joint Venture
interest (as defined in the Security Agreement) of any Credit Party in ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ Company or Prolerized New England Company, including, without limitation,
any right, title or interest of any Credit Party in and to distributions under
the Joint Venture Agreement of either such Joint Venture. The Bank hereby agrees
to promptly release the Liens under the Security Documents on all property and
assets of Proler Environmental Services, Inc., but not any other Credit Parties,
to the extent but only to the extent of any project financed by Indebtedness
permitted by SECTION 7.02(D), but not otherwise.
ARTICLE III
GUARANTY
Section 3.01. GUARANTY. (a) In consideration of, and in order
to induce the Bank to issue Letters of Credit hereunder, each Guarantor hereby
absolutely, unconditionally and irrevocably, jointly and severally guarantees
the punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of all obligations and covenants of each Borrower now
or hereafter existing under this Agreement, the Notes and/or any of the other
Loan Documents to which such Borrower is a party whether for principal, interest
(including interest accruing or becoming owing both prior to and subsequent to
the commencement of any proceeding against or with respect to a Borrower under
any chapter of the Bankruptcy Code of the United States (11 U.S.C. ss. 101 ET
SEQ.) or any other Debtor Relief Law, fees, commissions, expenses (including
reasonable counsel fees and expenses) or otherwise, and all reasonable costs and
expenses, if any, incurred by the Bank in connection with enforcing any rights
under this Guaranty (all such obligations being the "GUARANTEED OBLIGATIONS").
This Guaranty is an absolute, unconditional, present and continuing guaranty of
payment and not of collectibility and is in no way conditioned upon any attempt
to collect from the Borrowers or any other action, occurrence or circumstance
whatsoever. Nothing herein is intended to provide that a Borrower shall be
liable as a Guarantor for any Obligations for which such Borrower is primarily
liable, but each Borrower shall be liable as a Guarantor for any Obligations for
which such Borrower is not primarily liable.
(b) Each Guarantor hereby, jointly and severally, agrees to
pay and to indemnify the Bank harmless from and against any damage, loss, cost
or expense (including reasonable attorneys' fees) that the Bank may incur or be
subject to as a consequence, direct or indirect, of (i) any breach by such
Guarantor or any other Credit Party of any warranty, covenant, term or condition
in, or the occurrence of any default under, this Guaranty, this Agreement or any
other Loan Document, together with all reasonable expenses resulting from the
compromise or defense of any
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claims or liabilities arising as a result of any such breach or default and (ii)
any legal action commenced to challenge the validity of this Guaranty, this
Agreement or any other Loan Document.
Section 3.02. CONTINUING GUARANTY. Each Guarantor guarantees
that the Guaranteed Obligations will be paid strictly in accordance with the
terms of this Agreement, the Notes and the other Loan Documents. Each Guarantor
agrees that the Guaranteed Obligations and Loan Documents may be extended or
renewed, and that it will remain bound upon this Guaranty notwithstanding any
extension, renewal or other alteration of any Guaranteed Obligations or Loan
Documents. The obligations of each Guarantor under this Guaranty shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms hereof under any circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement,
compromise, waiver or release in respect of any Guaranteed Obligations,
including any reduction or termination of all or a portion of the Commitment;
(b) any extension, renewal, amendment, modification,
rescission, waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights or remedies with respect to, any
direct or indirect security for any Guaranteed Obligations, including the
release of any Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or
ownership of a Borrower, any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting a Borrower, such Guarantor,
any other Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other
rights or remedies which such Guarantor at any time may have against a Borrower,
or a Borrower or such Guarantor may have at any time against the Bank, any other
Guarantor or any other Person, whether in connection with this Guaranty, the
Loan Documents, the transactions contemplated thereby or any other transaction;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by a Borrower, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the Bank; or
(g) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
-25-
Section 3.03. EFFECT OF DEBTOR RELIEF LAWS. If after receipt
of any payment of, or proceeds of any security applied (or intended to be
applied) to the payment of all or any part of the Guaranteed Obligations, the
Bank is for any reason compelled to surrender or voluntarily surrenders, such
payment or proceeds to any Person (a) because such payment or application of
proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds, or (b)
for any other reason, including (i) any judgment, decree or order of any court
or administrative body having jurisdiction over the Bank or any of its
properties or (ii) any settlement or compromise of any such claim effected by
the Bank with any such claimant (including a Borrower), then the Guaranteed
Obligations or part thereof intended to be satisfied shall be reinstated and
continue, and this Guaranty shall continue in full force as if such payment or
proceeds have not been received, notwithstanding any revocation thereof or the
cancellation of any Note or any other instrument evidencing any Guaranteed
Obligations or otherwise; and the Guarantors, jointly and severally, shall be
liable to pay the Bank, and hereby do indemnify the Bank and hold it harmless
for the amount of such payment or proceeds so surrendered and all expenses
(including reasonable attorneys' fees, court costs and expenses attributable
thereto) incurred by the Bank in the defense of any claim made against it that
any payment or proceeds received by the Bank in respect of all or part of the
Guaranteed Obligations must be surrendered. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of a Borrower by virtue of any payment, court order or any federal or
state law.
Section 3.04. WAIVER OF SUBROGATION. Notwithstanding any
payment or payments made by any Guarantor hereunder, or any set-off or
application by the Bank of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the Bank or of such Guarantor
against a Borrower or any other Guarantor to recover the amount of any payment
made by such Guarantor to the Bank hereunder by way of subrogation,
reimbursement, contribution, indemnity, or otherwise arising by contract or
operation of law, until such time as the Obligations have been satisfied and the
Bank shall have no Commitment. If any amount shall nevertheless be paid to a
Guarantor by a Borrower or another Guarantor prior to payment in full of the
Guaranteed Obligations, such amount shall be held in trust for the benefit of
the Bank and shall forthwith be paid to the Bank to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
Section 3.05. SUBORDINATION. Each Guarantor hereby
subordinates all indebtedness owing to it from a Borrower to all indebtedness of
each of the Borrowers to the Bank, and agrees that it shall not accept any
payment on the same until payment in full of the obligations of each Borrower
under this Agreement, the Notes, the Letters of Credit, the Existing Letters of
Credit and all other Loan Documents, and shall in no circumstance whatsoever
attempt to set-off or reduce any obligations hereunder because of such
indebtedness. If any amount shall nevertheless be paid to a Guarantor by a
Borrower or another Guarantor prior to payment in full of the Guaranteed
-26-
Obligations, such amount shall be held in trust for the benefit of the Bank and
shall forthwith be paid to the Bank to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured.
Section 3.06. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand of
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the Bank institute suit, collection proceedings or take any
other action to collect the Guaranteed Obligations, including any requirement
that the Bank protect, secure, perfect or insure any Lien against any property
subject thereto or exhaust any right or take any action against a Borrower or
any other Person or any collateral (it being the intention of the Bank and each
Guarantor that this Guaranty is to be a guaranty of payment and not of
collection). It shall not be necessary for the Bank, in order to enforce any
payment by any Guarantor hereunder, to institute suit or exhaust its rights and
remedies against a Borrower, any other Guarantor or any other Person, including
others liable to pay any Guaranteed Obligations, or to enforce its rights
against any security ever given to secure payment thereof. Each Guarantor hereby
expressly waives each and every right to which it may be entitled by virtue of
the suretyship laws of the State of Texas, including, without limitation, any
and all rights it may have pursuant to Rule 31, Texas Rules of Civil Procedure,
Section 17.001 of the Texas Civil Practice and Remedies Code and Chapter 34 of
the Texas Business and Commerce Code. Each Guarantor hereby waives marshaling of
assets and liabilities, notice by the Bank of any indebtedness or liability to
which the Bank applies or may apply any amounts received by the Bank, and of the
creation, advancement, increase, existence, extension, renewal, rearrangement
and/or modification of the Guaranteed Obligations. Each Guarantor expressly
waives, to the extent permitted by applicable law, the benefit of any and all
laws providing for exemption of property from execution or for valuation and
appraisal upon foreclosure.
Section 3.07. FULL FORCE AND EFFECT. This Guaranty is a
continuing guaranty and shall remain in full force and effect until payment in
full of the Obligations of the Borrowers under this Agreement, the Notes and all
other Loan Documents and all other amounts payable under this Guaranty.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO THE INITIAL LETTER OF
CREDIT. The obligation of the Bank to maintain any Existing Letter of Credit or
to issue the initial Letter of Credit hereunder is subject to the conditions
precedent that the Bank shall have received on or before the Execution Date, to
the extent same have not previously been received all of the following, in form
and substance satisfactory to the Bank and in such number of counterparts as may
be reasonably requested by the Bank:
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(a) the Notes each duly executed and delivered by the relevant
Borrower;
(b) this Agreement duly executed and delivered by the Credit
Parties;
(c) the Note and Deed of Trust Modification Agreements duly
executed and delivered by the relevant Credit Parties to the Bank;
(d) the New Security Agreement duly executed and delivered by
the Credit Parties;
(e) the Patent Security Agreement duly executed and delivered
by Proler Environmental Services, Inc.;
(f) the New Pledge Agreement duly executed and delivered by
the appropriate Credit Parties party thereto;
(g) the Deeds of Trust duly executed and delivered by all of
the parties holding title to the Mortgaged Properties;
(h) Mortgagee title insurance policies issued by title
insurers satisfactory to the Bank in amounts satisfactory to the Bank (the
"MORTGAGEE POLICIES") and assuring the Bank that the Deeds of Trust in respect
of the Mortgaged Properties are valid and enforceable first priority mortgages
on the respective Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Liens. Such Mortgagee Policies shall be in form
and substance reasonably satisfactory to the Bank;
(i) Appropriate endorsements to Mortgagee Policies in form and
substance satisfactory to the Bank to reflect the extended Termination Date of
Note B and the applicability thereto of the Mortgagee Policies;
(j) the Appraisal, if required by Bank;
(k) the Environmental Reports and, depending upon the content
and conclusion thereof, additional environmental reports, Phase II Audits and
such other related information concerning the Mortgaged Properties as the Bank
may require;
(l) (i) executed financing statements for all jurisdictions as
may be necessary or, in the reasonable opinion of the Bank, desirable to perfect
the security interests created by the Security Documents and (ii) evidence that
all other actions necessary or, in the reasonable opinion of the Bank, desirable
to perfect and protect the Liens created by the Security Documents have been
taken;
-28-
(m) copies of surveys satisfactory to the Bank covering, all
together, each tract or parcel of land (including all appurtenant easements)
subject to the Deeds of Trust, satisfactory in form and substance to the Bank.
In addition, the Bank shall have received such officer's certificates and other
similar instruments relating to survey matters as the Bank may request;
(n) a Uniform Commercial Code search, tax search and judgment
report of the appropriate records of the States of Texas, Delaware, and all
other states in which a Borrower or any Joint Venture is conducting business
satisfactory in form and substance to the Bank;
(o) all of the issued and outstanding stock of the Guarantors
owned by any Credit Party together with related stock powers executed by the
pledgor of such stock;
(p) a certificate of the president or a vice president and of
the secretary or an assistant secretary of each Credit Party certifying, INTER
ALIA, (i) true and correct copies of resolutions adopted by the Board of
Directors of each such Credit Party, (A) authorizing the execution, delivery and
performance by each such Credit Party of the Loan Documents to which it is or
will be a party and, in the case of each Borrower, the borrowings thereunder,
(B) approving the forms of the Loan Documents to which it is a party and which
will be delivered at or prior to the Execution Date and (C) authorizing officers
of each such Credit Party to execute and deliver the Loan Documents to which it
is or will be a party and any related documents, (ii) true and correct copies of
the bylaws of each Credit Party that is a corporation, as amended to the date of
such certificate, (iii) the incumbency and specimen signatures of the officers
of each such Credit Party executing any documents on behalf of it, (iv) the
truth of the representations and warranties made by such Credit Party in any
Loan Document to which it is a party and which will be delivered at or prior to
the date of the initial Letter of Credit, (v) the absence of any proceedings for
the dissolution or liquidation of each such Credit Party, (vi) the absence of
the occurrence and continuance of any Default or Event of Default with respect
to each such Credit Party and (vii) that no event or condition has occurred
since January 31, 1995 that would constitute a Material Adverse Effect;
(q) the favorable, signed opinion of Mayor, Day, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., counsel for the Credit Parties, addressed to the Bank, as to
such matters as the Bank may reasonably request;
(r) a Perfection Certificate executed by an Authorized Officer
of each Credit Party;
(s) [Intentionally Omitted]
(t) payment of all reasonable fees and out-of-pocket expenses
of the Bank and of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel to the Bank, and any local
counsel retained by it;
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[(U) A BORROWING BASE CERTIFICATE FOR NOTE A AND NOTE B;]
(v) copies of certificates of good standing and existence for
each of the Credit Parties in the jurisdiction of its incorporation and
certificates of authority to conduct business in each jurisdiction in which the
failure to obtain same would constitute a Material Adverse Effect; and
(w) such other documents as the Bank may reasonably request
relating to the existence and good standing of each Credit Party, the
authorization, execution and delivery of this Agreement and the other Loan
Documents, and all other matters relevant hereto and thereto, all in form and
substance reasonably satisfactory to the Bank.
Section 4.02. CONDITIONS PRECEDENT TO ALL LETTERS OF CREDIT.
The obligation of the Bank to issue any Letter of Credit, shall be subject to
the further conditions precedent that on the date of issuance the following
statements shall be true (and each of the giving of the Letter of Credit Request
and the issuance of the Letter of Credit shall constitute a representation and
warranty by each Borrower that on the date of the issuance of any Letter of
Credit such statements are true):
(a) the Bank shall have received a Letter of Credit Request
and Application;
(b) immediately after giving effect to such issuance, the sum
of the aggregate outstanding undrawn amount of all Existing Letters of Credit
and all Letters of Credit does not exceed the lesser of (i) the Commitment or
(ii) the Borrowing Base;
(c) the representations and warranties contained in ARTICLE V
and those contained in the other Loan Documents are true and correct in all
material respects as though made on and as of such date (except for those
expressly made as of the date thereof and except for changes in International
and its Subsidiaries arising from transactions contemplated by the terms
hereof);
(d) no Default or Event of Default has occurred and is
continuing or would result from such Credit Event;
(e) the Bank shall have received the L/C Fees and all other
fees, if any, theretofore or then due and payable to it; and
(f) since the date of International's last audited financials,
no event shall have occurred and be continuing which has had or is likely to
have a Material Adverse Effect except for any matters disclosed in writing to
the Bank prior to the Effective Date.
-30-
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and
to issue the Letters of Credit, each Credit Party represents and warrants to the
Bank as to itself, and, to the extent specifically stated, as to its
Subsidiaries and each Joint Venture in which it has an interest as follows.
Section 5.01. ORGANIZATION. Each Credit Party (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (b) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which such qualification and good standing are necessary in
order for such Credit Party to conduct its business and own its properties as
conducted and owned and except where the failure to be so qualified or in good
standing would not constitute a Material Adverse Effect and (c) has all
requisite power and authority (corporate or otherwise) to conduct its business
as now conducted, to own or lease its property and assets and to execute,
deliver and perform each of the Loan Documents to which it is or may be a party.
Section 5.02. AUTHORITY. The execution, delivery and
performance by each Credit Party of this Agreement and the other Loan Documents
to which it is or may be a party and issuance of the Letters of Credit
contemplated hereby, have been duly approved by the board of directors of such
Credit Party and no other corporate proceedings on the part of such Credit Party
are necessary to issue such Letters of Credit. Each of the Loan Documents to
which such Credit Party is a party has been duly executed and delivered by such
Credit Party and constitutes the legal, valid and binding obligation of such
Credit Party, enforceable against such Credit Party in accordance with its
terms.
Section 5.03. NO CONFLICT. The execution, delivery and
performance by such Credit Party of each of the Loan Documents to which it is or
may be a party, do not and shall not, by the lapse of time, the giving of notice
or otherwise, (a) constitute a violation of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to such Credit Party or a breach of any provision contained
in such Credit Party's articles or certificate of incorporation or bylaws, or
contained in any material agreement, instrument or document to which it is a
party or by which it is bound, other than violations or breaches which would
not, individually or in the aggregate, result in a Material Adverse Effect or
(b) result in or require the creation or imposition of any Lien whatsoever upon
any of the properties or assets of such Credit Party (other than Liens permitted
by this Agreement and Liens in favor of the Bank arising pursuant to the Loan
Documents).
Section 5.04. CONSENTS. No authorization, consent, approval,
permit, license, or exemption of or filing or registration with, any
governmental agency or any other Person which has
-31-
not been obtained, was, is or will be necessary for the valid execution,
delivery or performance by any Credit Party of any of the Loan Documents to
which it is or may be a party.
Section 5.05. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.
(a) Operations delivered to the Bank the consolidated balance sheet of
Operations and its Subsidiaries as of January 31, 1995 and the related
consolidated statements of operations, cash flow and stockholders' equity for
the year then ended, including the related schedules and notes, reported on by
Coopers & ▇▇▇▇▇▇▇.
(b) The unaudited consolidated balance sheet and statement of
operations and cash flow of Operations and its Subsidiaries as at October 31,
1995, copies of which has heretofore been furnished to the Bank, are correct in
all material respects, and present fairly the consolidated financial condition
of Operations as at such date (subject to normal year-end audit adjustments).
(c) The financial statements referred to in paragraphs (a) and
(b) above, including the related schedules and notes thereto, have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved.
(d) The Borrowers have disclosed to the Bank in writing any
and all facts which would result in, or which Borrowers believe may result in, a
Material Adverse Effect and since January 31, 1995, there has been no material
adverse change in the business, operations, properties, assets, business
prospects or financial condition of International and its Subsidiaries taken as
a whole except as to those matters previously disclosed to the Bank as of the
date hereof.
Section 5.06. LITIGATION; MATERIAL ADVERSE EFFECT. (a) Except
as set forth in EXHIBIT 5.06 hereto, there are no actions, suits or proceedings
pending or, to the best of International's knowledge, threatened or probable of
assertion, against or affecting any Credit Party or any of its Subsidiaries or
any property or rights of any Credit Party or any of its Subsidiaries before any
court or any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, if determined adversely to the
Borrowers or any such Subsidiary would constitute a Material Adverse Effect.
(b) Except as otherwise disclosed to the Bank in writing,
neither the business, properties nor operations of any Credit Party nor any of
its Subsidiaries is materially and adversely affected by any fire, explosion,
accident, strike, lockout or other labor dispute, embargo, act of God or act of
a public enemy or other event, condition or casualty, provided the determination
of such effect shall include a consideration of available insurance proceeds.
Section 5.07. INDEBTEDNESS. Except as set forth in EXHIBIT
5.07 or as set forth in the financial statements referred to in SECTION 5.05,
and except for the Indebtedness represented by this
-32-
Agreement, the Notes and the other Loan Documents and any other Indebtedness
owing to the Bank, no Credit Party, nor any of its Subsidiaries has any secured
or unsecured Indebtedness.
Section 5.08. NO MARGIN STOCK. No Credit Party nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U), and no
Letter of Credit or Existing Letter of Credit will be used, directly or
indirectly, (a) to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or (b) for the
purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve any Credit Party in a violation of Regulation X.
Section 5.09. ACCURACY AND COMPLETENESS OF INFORMATION. All
written estimates, projections and forecasts furnished by or on behalf of the
Borrowers and the other Credit Parties to the Bank for purposes of or in
connection with this Agreement, or in connection with any Letter of Credit or
Existing Letter of Credit, were and will be prepared on the basis of
assumptions, data, tests or conditions believed to be reasonable, valid or to
represent industry conditions existing at the time such estimates or forecasts
were furnished. Neither this Agreement, the Notes, the other Loan Documents, the
statements and documents referred to in SECTION 5.05 nor any other document
delivered by the Borrowers or any of their respective Subsidiaries to the Bank
contains any material misstatement of fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading as of the respective date thereof. The Borrowers have not
intentionally withheld any fact known to them which has or is reasonably likely
to constitute a Material Adverse Effect which has not been set forth or referred
to in this Agreement, the Notes, the other Loan Documents or such other document
heretofore furnished to the Bank.
Section 5.10. ERISA. (a) No Reportable Event or withdrawal
from or termination, reorganization or insolvency has occurred and is continuing
with respect to any Plan that would likely constitute a Material Adverse Effect
and (b) neither the PBGC nor a Borrower nor any Commonly Controlled Entity has
instituted any proceedings or taken any other actions with respect to the
withdrawal from, or the termination, reorganization or insolvency of any Plan
that would reasonably be expected to have a Material Adverse Effect.
Section 5.11. GOVERNMENT REGULATION. No Credit Party nor any
of its Subsidiaries is (a) an "investment company" or a company directly or
indirectly controlled by or acting on behalf of any Person which is an
"investment company," as such term is defined in the Investment Company Act of
1940, (b) a "holding company" or a "subsidiary company" of a "holding company"
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, or (c) a "public utility," as such term is defined in the
Federal Power Act.
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Section 5.12. PROPERTY. Each Credit Party and each of its
Subsidiaries, as the case may be, has good record and defensible title in fee
simple to or valid leasehold interests in all its real properties and marketable
title to all its other property and assets except where the failure to so have
such title or interest would not reasonably be expected to have a Material
Adverse Effect.
Section 5.13. PAYMENT OF TAXES. The federal income tax returns
of each Borrower and other tax returns and reports of each Credit Party and its
Subsidiaries required to be filed with the appropriate governmental agencies in
all jurisdictions in which such returns and reports are required to be filed
have been filed and all of the foregoing are true, correct and complete, and
each Borrower paid all taxes and other similar charges, or made adequate
provision therefor, that are due and payable within the time prescribed for
filing and payment or an appropriate extension has been requested and obtained
for such filing or payment except where such failure would not reasonably be
expected to result in a Material Adverse Effect. Neither Borrower nor any of its
Subsidiaries has taken any reporting positions for which it does not have a
reasonable basis and no such Person anticipates any further material tax
liability with respect to the tax years for which returns have been filed.
International has no knowledge of any proposed tax assessment against
International or any of its Subsidiaries that would reasonably be expected to
have a Material Adverse Effect which is not being actively contested in good
faith.
Section 5.14. INSURANCE. Each Credit Party and each of its
Subsidiaries carries and will continue to carry insurance with reputable
insurers in respect of its properties in such amounts and against such risks as
is customarily maintained by other Persons of similar size engaged in similar
business and reasonably acceptable to the Bank.
Section 5.15. SUBSIDIARIES; JOINT VENTURES. (a) EXHIBIT 5.15
hereto lists each Subsidiary of each Credit Party and each Joint Venture in
which a Credit Party has an interest, the jurisdiction under which each such
Subsidiary and Joint Venture is incorporated or organized and the direct and
indirect ownership interest of such Credit Party therein. Each Subsidiary of a
Credit Party has been duly organized and is validly existing in good standing
under the laws of its jurisdiction of organization.
(b) The Borrowers have heretofore delivered to the Bank a copy
of the Articles or Certificate of Incorporation of each Joint Venture that is a
corporation and each agreement creating or governing the rights of the parties
to each other Joint Venture (collectively, the "JOINT VENTURE AGREEMENTS") in
existence on the date hereof, as amended to the date hereof. Each Joint Venture
Agreement is in full force and effect and as to each Joint Venture Agreement
creating each non-corporate Joint Venture is enforceable against each Credit
Party which is a party thereto in accordance with its terms.
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Section 5.16. PATENTS. Each Credit Party and each of its
Subsidiaries owns or holds a valid license to use all material patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
that are necessary for, and no restriction applicable to any such patent,
trademark, service ▇▇▇▇, trade name, copyright, license or other right would
interfere in any material respect with, the operation of its business taken as a
whole as presently conducted and as proposed to be conducted.
Section 5.17. COMPLIANCE WITH STATUTES. (a) Each Credit Party
and each of its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such non-compliance as is not
likely to, in the aggregate, have a Material Adverse Effect.
(b) Each Credit Party and each of its Subsidiaries is in
compliance with all applicable Environmental Laws governing its business for
which failure to comply is likely to have a Material Adverse Effect, and no
Credit Party nor any of its Subsidiaries is liable for any material penalties,
fines or forfeitures for failure to comply with any of the foregoing in the
manner set forth above. All licenses, permits, registrations or approvals
required for the business of each Credit Party and each of its Subsidiaries, as
conducted as of the Effective Date, under any Environmental Law have been
secured and each Credit Party and each of its Subsidiaries is in substantial
compliance therewith, except such licenses, permits, registrations or approvals
the failure to secure or to comply therewith is not likely to have a Material
Adverse Effect. No Credit Party nor any of its Subsidiaries is in noncompliance
with, breach of or default under any applicable writ, order, judgment,
injunction, or decree to which such Credit Party or such Subsidiary is a party
or which would affect the ability of such Credit Party or such Subsidiary to
operate any of its properties and no event has occurred and is continuing which,
with the passage of time or the giving of notice or both, would constitute
noncompliance, breach of or default thereunder, except in each such case, such
noncompliances, breaches or defaults as are not likely to, in the aggregate,
have a Material Adverse Effect. There are, as of the Effective Date, no
Environmental Claims pending or, to the best knowledge of any Credit Party,
threatened, which (i) question the validity, term or entitlement of such Credit
Party or any of its Subsidiaries for any permit, license, order or registration
required for the operation of any facility which such Credit Party or any of its
Subsidiaries currently operates and (ii) wherein any unfavorable decision,
ruling or finding would be reasonably likely to have a material adverse effect
on the financial viability of any facility thereof. There are no facts,
circumstances, conditions or occurrences on any real property or, to the
knowledge of the Credit Parties, on any property adjoining or in the vicinity of
any real property that could reasonably be expected (i) to form the basis of an
Environmental Claim against any Credit Party or any of its Subsidiaries or (ii)
to cause such real property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such real property under any Environmental
Law, except in each such case, such
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Environmental Claims or restrictions that individually or in the aggregate are
not reasonably likely to have a Material Adverse Effect.
(c) To the best of the Credit Parties' knowledge, Hazardous
Materials have not at any time been (i) generated, used, treated or stored on,
or transported to or from, any real property of any Credit Party or any of its
Subsidiaries or (ii) released on any real property, in each case where such
occurrence or event is reasonably likely to have a Material Adverse Effect.
Section 5.18. LABOR RELATIONS; COLLECTIVE BARGAINING
AGREEMENTS. (a) Set forth on EXHIBIT 5.18 is a list and description (including
dates of termination) of all collective bargaining or similar agreements between
or applicable to any Credit Party or any of its Subsidiaries and any union,
labor organization or other bargaining agent in respect of the employees of any
Credit Party or any of its Subsidiaries on the Effective Date.
(b) No Credit Party nor any of its Subsidiaries is engaged in
any unfair labor practice that could have a Material Adverse Effect. There is
(i) no significant unfair labor practice complaint pending against any Credit
Party or any of its Subsidiaries or, to the best knowledge of any Credit Party,
threatened against any of them before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is now pending against any Credit
Party or any of its Subsidiaries or, to the best knowledge of such Credit Party,
threatened against any of them, (ii) no significant strike, labor dispute,
slowdown or stoppage is pending against any Credit Party or any of its
Subsidiaries or, to the best knowledge of such Credit Party, threatened against
such Credit Party or any of its Subsidiaries and (iii) no union representation
question exists with respect to the employees of any Credit Party or any of its
Subsidiaries, except such as is not reasonably likely to have a Material Adverse
Effect.
Section 5.19. LIABILITIES. (a) All contingent liabilities and
direct liabilities of the Credit Parties and their respective Subsidiaries, and
all anticipated losses of the Credit Parties and their respective Subsidiaries,
which in the aggregate are material to the Credit Parties and their respective
Subsidiaries taken as a whole, are set forth in the financial statements
referred to in SECTION 5.05 to the extent required by GAAP and modified by the
footnotes to such statements and (b) all contingent liabilities and direct
liabilities of the Credit Parties and all unrealized or anticipated losses of
the Credit Parties and their respective Subsidiaries, which in the aggregate are
material to the Credit Parties and their respective Subsidiaries taken as a
whole, to the extent required by GAAP will be set forth in the financial
statements next delivered pursuant to SECTION 6.01 hereof after any of such are
incurred or anticipated, as applicable.
Section 5.20. SOLVENCY. The Credit Parties, viewing their
businesses and operations as a single consolidated entity, have capital
sufficient to carry on their businesses and transactions
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and all businesses and transactions in which they are about to engage and are
now solvent and able to pay their respective debts as they mature, and the
Credit Parties now collectively own property having a value, both at fair
valuation and at present fair salable value, greater than the amount required to
pay all existing debts of the Credit Parties.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or
outstanding or the Bank shall have any Commitment, unless the Bank shall
otherwise consent in writing, each Credit Party covenants and agrees as to
itself, and, to the extent specifically stated, as to its Subsidiaries and each
Joint Venture in which it has an interest that:
Section 6.01. REPORTING REQUIREMENTS. International shall
deliver or cause to be delivered to the Bank:
(a) ANNUAL REPORTS. Upon the earlier of 120 days after the
close of each fiscal year of International or the day following the date of
filing of International's Annual Report on Securities and Exchange Commission
Form 10-K, either (i) a copy of International's Annual Report on Form 10-K as
filed with respect to such year or (ii) consolidated and consolidating balance
sheets of International and its Subsidiaries, as at the end of such fiscal year
and the related statements of operations, cash flow and stockholders' equity for
such fiscal year, setting forth comparative figures for the preceding fiscal
year, and examined by Coopers & ▇▇▇▇▇▇▇ (or other independent certified public
accountants of recognized national standing reasonably acceptable to the Bank)
whose opinion shall not be qualified as to the scope of audit and as to the
status of International or any of its Subsidiaries as a going concern, together,
in each case, with a certificate of the accounting firm referred to above
stating that in the course of its regular audit of the business of
International, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default that has occurred and is continuing, or, if such
firm has obtained knowledge of any Default or Event of Default that has occurred
and is continuing, a statement as to the nature thereof.
(b) QUARTERLY REPORTS. Upon the earlier of 60 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of International, or the day following each date of filing of
International's Quarterly Report on Form 10-Q either (i) a copy of
International's Quarterly Report on Form 10-Q as filed with respect to such
quarterly period or (ii) consolidated and consolidating balance sheets of
International and its Subsidiaries, as at the end of such quarterly period and
the related statements of operations and cash flows for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and setting forth
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comparative figures for the related periods in the prior fiscal year, in each
case, certified by an Authorized Officer, subject to changes resulting from
audit and normal year-end audit adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event
within 30 days (45 days in the case of the last monthly accounting period of
each fiscal quarter), after the end of each monthly accounting period
(commencing with January 1996) of each fiscal year of International and each
Joint Venture, consolidated and consolidating balance sheets of International
and its Subsidiaries, as at the end of such period, and the balance sheet of any
Joint Venture that is accounted for in such month in the statements of
International or its Subsidiaries, and the related statements of operations for
such period setting forth comparative figures for the corresponding period of
the previous year, including listings and agings of all Receivables for
International and each Joint Venture, each of which shall be certified by an
Authorized Officer, subject to changes resulting from audit and normal year-end
audit adjustments.
(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statements pursuant to clauses (a), (b) and (c) above, a certificate
of an Authorized Officer demonstrating compliance by International and the other
Credit Parties with the provisions of SECTION 7.03 and stating whether any Event
of Default or Default has occurred and is continuing, and if there is any Event
of Default or Default, describing it and the steps, if any, being taken to cure
it.
(e) SEC FILINGS. Promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and reports as
International shall send to its public stockholders and copies of all
registration statements (without exhibits) and reports which it files with the
Securities and Exchange Commission.
(f) BORROWING BASE CERTIFICATE. Together with each delivery of
the monthly reports pursuant to clause (c) above and on each date on which a new
Borrowing Base Certificate is required to be delivered as provided in SECTION
2.17(B), a Borrowing Base Certificate in the form of EXHIBIT 1.01-A attached
hereto, signed by an Authorized Officer of International, including therein
information as at the end of the period covered by said certificate.
(g) ERISA FILINGS. Promptly upon the filing or making thereof,
copies of each filing and report made by International, under ERISA with the
PBGC or with the U.S. Department of Labor or which International may receive
from such Persons that, in each case, relate to a condition or event that would
likely have a Material Adverse Effect.
(h) REPORTABLE EVENTS. Forthwith upon International receiving
actual notice of the occurrence of a Reportable Event under, the termination,
insolvency or reorganization of, or the institution of steps by the PBGC,
International or any Commonly Controlled Entity with respect to the withdrawal,
termination, insolvency or reorganization of any Plan to which International may
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have any liability, written notice thereof describing the same and the steps
being taken by International with respect thereto.
(i) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy
of each other report or "management letter" submitted to International by its
independent accountants in connection with any annual, interim or special audit
made by it of the books of International, provided if said report contains
personnel information of a confidential nature, International may delete said
sections before delivery of same to the Bank.
(j) APPRAISALS. Annually, upon written request by the Bank, an
Appraisal for each of the Mortgaged Properties; provided, that the Bank shall
not request any Appraisal prior to the Termination Date.
(k) ENVIRONMENTAL REPORTS. Upon written request by the Bank,
an Environmental Report for each of the Mortgaged Properties; PROVIDED, HOWEVER,
that the Bank understands and agrees that it may not request or perform any
environmental inspection, audit or assessment of any property owned or leased by
any Credit Party unless (1) all of the obligations of International hereunder
shall have been accelerated in accordance with ARTICLE VIII hereof (and such
acceleration shall not have been rescinded), (2) International receives prior
notice of the inspection, audit or assessment and the proposed scope thereof,
(3) the Bank and the Credit Parties agree that International shall be entitled
to review any report produced from any such inspection, audit or assessment
simultaneously with its delivery to the Bank and (4) any environmental
consultant utilized in connection therewith shall be a party mutually acceptable
to the Bank and International, with the Bank and International hereby
stipulating that E.R.M. - Southwest, Inc. is mutually acceptable.
(l) OTHER REPORTS. In addition to the reports and statements
described in this Section, International shall provide the Bank: (i) such other
financial reports and information as the Bank may from time to time reasonably
request respecting the business, properties, operations or condition (financial
or otherwise) of International or any Joint Venture; and (ii) notice of any
additional Indirect Indebtedness incurred or Liens granted by any Joint Venture
in excess of $500,000.00 in any single transaction.
Section 6.02. EXISTENCE. Each Credit Party shall preserve and
maintain its and its Subsidiaries' existence, rights, franchises and privileges
in the jurisdictions of their incorporation or other organization and their
qualification and good standing in all jurisdictions in which the failure to
preserve or maintain such existence, rights, franchises, privileges,
qualification and good standing would be likely to constitute a Material Adverse
Effect.
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Section 6.03. MAINTENANCE OF PROPERTIES; INSURANCE. (a) Each
Credit Party and each of its Subsidiaries shall maintain with financially sound,
responsible and reputable insurance companies insurance against such risks and
in such amounts as are usually insured against by Persons of established
reputation engaged in the same or similar businesses and similarly situated;
PROVIDED, HOWEVER, notwithstanding the foregoing, each Credit Party and its
Subsidiaries will maintain (i) all insurance required by state statutes to be
maintained by employers for the protection of employees against work related
injuries and (ii) to the extent available at commercially reasonable rates,
comprehensive general liability coverage in such amounts as are appropriate for
the operations of such Credit Party and its Subsidiaries and (iii) all insurance
that such Credit Party and its Subsidiaries are required to maintain by law and
(iv) insurance required to be maintained by any of the Credit Parties pursuant
to the Deeds of Trust. Each policy in effect from time to time pursuant to the
terms of this Section, shall include a provision for thirty (30) days' prior
written notice to the Bank of any cancellation or expiration thereof and shall
show the Bank as an additional insured.
(b) Each Credit Party will maintain and preserve all of its
material properties necessary for the proper conduct of its business in working
order and condition, ordinary wear and tear excepted .
Section 6.04. NOTICE OF LITIGATION. International shall
promptly, upon actual notice or knowledge thereof, deliver or cause to be
delivered to the Bank notice of (a) the institution of or threat of, any action,
suit, proceeding, governmental investigation or arbitration against or affecting
any Credit Party or any of its Subsidiaries not previously disclosed in writing
to the Bank pursuant to SECTION 5.06 which, if determined adversely to such
Credit Party or such Subsidiary, would constitute a Material Adverse Effect or
(b) any material development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed, which is likely to constitute a
Material Adverse Effect.
Section 6.05. TAXES; CLAIMS. Each Credit Party and each of its
Subsidiaries shall (a) timely file all federal, state and local tax returns and
other reports which such Credit Party and such Subsidiaries are required by law
to file or obtain an appropriate extension for filing thereof, (b) maintain
adequate reserves on its books in accordance with GAAP for the payment of all
material taxes, assessments and governmental charges, and pay prior to
delinquency all such taxes, assessments and governmental charges, and (c) pay
all other material claims (including, without limitation, claims for labor,
services, materials and supplies) that have become due and payable and that by
law have or may become a Lien on International's property or assets, prior to
the time when any penalty or fine may be incurred with respect thereto, other
than any such tax, assessment, charge, levy or claim which is being contested in
good faith, by proper proceedings and with respect to which adequate reserves
have been established.
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Section 6.06. NOTICE OF DEFAULT. International shall notify
the Bank in writing within three (3) Business Days after International becomes
aware of the occurrence thereof, (a) of any condition or event that constitutes
either an Event of Default or a Default, (b) of any other default by
International or any of its Subsidiaries under any material note, indenture,
advance agreement, mortgage, lease, deed or other similar agreement to which
International or any of its Subsidiaries is a party or by which International or
any of its Subsidiaries is bound, the existence of which might reasonably be
expected to lead to a Material Adverse Effect, or (c) of any event or condition
that might reasonably be expected to constitute a Material Adverse Effect, such
notice to specify the nature and period of existence of any such condition,
event, default or potential default and what action International has taken, is
taking or proposes to take with respect thereto.
Section 6.07. INSPECTIONS. From time to time during regular
business hours and upon reasonable notice, each Credit Party will permit any
agents or representatives of the Bank to examine and make copies of and
abstracts from the records and books of account and files and visit the
properties of such Credit Party and its Subsidiaries to discuss the affairs,
finances and accounts of such Credit Party and its Subsidiaries with any of its
independent certified public accountants (with an officer or other
representative of such Credit Party present); PROVIDED, HOWEVER, that the Bank
shall keep any information obtained confidential to the extent that the Bank is
not required by law to disclose such information and such information is not
otherwise generally available to the public.
Section 6.08. COMPLIANCE WITH LAWS; NOTICES. (a) GENERAL.
International shall, and shall cause its Subsidiaries to, comply with all
material laws, rules and regulations, including, without limitation, all
Environmental Laws, and all restrictive covenants applicable to International
and its Subsidiaries, the noncompliance with which might, in any respect,
constitute a Material Adverse Effect; PROVIDED, HOWEVER, that neither
International nor any of its Subsidiaries shall be required to comply with any
such law or restrictive covenant if the applicability or validity thereof is
being contested in good faith, by proper proceedings and for which adequate
reserves have been established.
(b) ENVIRONMENTAL MATTERS. Promptly upon obtaining knowledge
thereof, International shall deliver to the Bank notice of (i) any pending or
threatened Environmental Claim against International or any of its Subsidiaries
or any real property of International or any of its Subsidiaries unless such
Environmental Claim could not, individually or when aggregated with all other
such Environmental Claims, reasonably be expected to have a Material Adverse
Effect; (ii) any condition or occurrence on any real property of International
or any of its Subsidiaries that (A) results in material noncompliance by
International or such Subsidiary with any applicable Environmental Law unless
such noncompliance could not, individually or when aggregated with all other
such non-compliance claims, reasonably be expected to have a Material Adverse
Effect; (iii) any condition or occurrence on any real property of International
that could reasonably be
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anticipated to cause such real property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such real property under any
Environmental Law unless such restrictions could not, individually or when
aggregated with all other such restrictions, reasonably be expected to have a
Material Adverse Effect; and (iv) the taking of any removal or remedial action
in response to the actual or alleged presence of any Hazardous Material on any
real property of International or any of its Subsidiaries, unless the presence
of such Hazardous Materials and the removal or remedial action in response
thereto could not, individually or when aggregated with all such other
occurrences or events, reasonably be expected to have a Material Adverse Effect.
All such notices shall describe in reasonable detail the nature, to the extent
known, of the claim, investigation, condition, occurrence or removal or remedial
action and the response thereto of International or of its applicable
Subsidiary. In addition, International will provide the Bank with copies of all
material written communications with any government or governmental agency
relating to Environmental Law, all material communications with any government
or governmental agency relating to Environmental Claims, and such detailed
reports of any Environmental Claim, in each case as they relate to the Mortgaged
Properties as may reasonably be requested in writing from time to time by the
Bank.
Section 6.09. BOOKS AND RECORDS; ACCOUNTING SYSTEMS AND
PRINCIPLES. Each Credit Party will keep adequate records and books of account in
which complete entries will be made in accordance with GAAP, reflecting all
financial transactions of such Credit Party and its Subsidiaries.
Section 6.10. OWNERSHIP OF CREDIT PARTIES. International will
at all times maintain and cause to be maintained the legal and beneficial
ownership of the shares of capital stock of the Credit Parties to be as shown on
EXHIBIT 5.15.
Section 6.11. FURTHER ASSURANCES. Each Credit Party shall at
its expense, promptly execute and deliver, or cause to be executed and
delivered, to the Bank upon reasonable request all such other and further
documents, agreements and instruments reasonably required to comply with or
accomplish the covenants and agreements of such Credit Party in the Loan
Documents to which it is a party.
Section 6.12. PERFORMANCE OF LOAN DOCUMENTS. Each Credit Party
will perform or cause to be performed all of the terms, covenants, agreements
and conditions on its part to be performed under this Agreement and each of the
other Loan Documents.
Section 6.13. ACTIVITIES OF JOINT VENTURE. Except for Liens
and Indebtedness incurred in connection with any project financing as described
in SECTIONS 7.02(d) AND 7.09(g), each of the Credit Parties will use its good
faith efforts, within the bounds of good business judgment and its legal
obligations under or in connection with the Joint Venture Agreements to which it
is a party affecting the Joint Ventures, to limit the Indebtedness that may be
incurred by, and any liens that may be granted by, said Joint Ventures. To the
extent that said Credit Parties are able to do so within
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the aforesaid bounds, they will encourage said Joint Ventures to minimize the
imposition of any of said Indebtedness or the granting of any liens.
Section 6.14. DIVIDENDS. To the extent permitted by law,
International agrees to take such actions within its power so that each of the
Credit Parties will pay, to the extent funds are legally available therefor,
dividends of an amount sufficient to allow International to make all required
payments of principal or interest due from International hereunder.
ARTICLE VII
NEGATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or
outstanding or the Bank shall have any Commitment, unless the Bank shall
otherwise consent in writing, each Credit Party covenants and agrees as to
itself, and, to the extent specifically stated, as to its Subsidiaries and each
Joint Venture in which it has an interest that:
Section 7.01. LIENS. Each Credit Party shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or permit to exist,
whether directly or indirectly, any Lien on or with respect to any of its
properties or assets, whether now held or hereafter acquired, except:
(a) Liens created pursuant to this Agreement or any other Loan
Document or other Liens in favor of the Bank;
(b) Liens existing on the Effective Date and set forth on
EXHIBIT 7.01(b);
(c) Liens imposed by law, carriers', warehousemen's or
mechanics' liens, and Liens to secure claims for labor, material or supplies
arising in the ordinary course of business, but only to the extent that payment
thereof shall not at the time be due or is being contested in good faith by
appropriate proceedings diligently conducted and with respect to which
appropriate reserves have been set aside in accordance with GAAP, and so long as
the enforcement thereof has been stayed and such Liens do not individually or in
the aggregate have a Material Adverse Effect;
(d) Deposits or pledges to enable the Credit Parties and their
Subsidiaries to exercise any privilege or license, deposits or pledges made in
connection with, or to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security, or to secure the
performance of bids, tenders, contracts (other than those relating to borrowed
money) or leases or to secure statutory obligations or surety or appeal bonds,
or to secure indemnity, performance or other similar bonds in the ordinary
course of business, or in connection with contests, so long as such Liens do not
individually or in the aggregate materially impair the value or
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materially interfere with the use of any property subject thereto or the
operation of the usual business of the Credit Party(ies) involved and do not, in
the aggregate exceed $1,000,000.00;
(e) Liens for taxes, assessments, levies or other governmental
charges not yet due or which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which appropriate reserves
have been set aside in accordance with GAAP, and so long as the enforcement
thereof has been stayed and such Liens do not individually or in the aggregate
have a Material Adverse Effect;
(f) Liens arising out of judgments or awards against a Credit
Party, or any of its Subsidiaries with respect to which such Person shall be in
good faith prosecuting an appeal or a proceeding for review, or Liens incurred
by a Credit Party, or such Subsidiary for the purpose of obtaining a stay or
discharge of any legal proceeding to which such Person is a party, PROVIDED,
HOWEVER, nothing herein is intended to waive any Event of Default that may
result from any such judgment, award or proceeding under SECTION 8.01(k);
(g) Liens consisting of encumbrances, easements or
reservations of, or rights of others for, rights-of-way, sewers, electric lines,
telegraph and telephone lines, pipelines and other similar purposes, zoning
restrictions, restrictions on the use of real property and minor defects and
irregularities in the title thereto, landlord's or lessor's Liens under leases
to which a Credit Party, or any of its Subsidiaries is a party and other similar
encumbrances, none of which has a Material Adverse Effect;
(h) Rights of collecting banks having a right of set off,
revocation, refund or chargeback with respect to money or instruments of a
Credit Party or any of its Subsidiaries on deposit with or in the possession of
such bank;
(i) [Intentionally Omitted]
(j) Liens to secure Indebtedness incurred in connection with
the purchase of equipment for use in International's day to day office
operations not to exceed, in the aggregate during the term hereof, $250,000.00;
(k) Other Permitted Liens;
(l) Liens on assets of Proler Environmental Services, Inc.
(but not any other Credit Parties) to secure Indebtedness permitted by SECTION
7.02(d) hereof; and
(m) Extensions, renewals or replacements of any Lien referred
to in the foregoing clauses; PROVIDED, HOWEVER, that no Lien arising or existing
as a result of such extension, renewal
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or replacement shall be extended to cover any property not theretofore subject
to the Lien being extended, renewed or replaced so as to violate this Agreement;
and FURTHER PROVIDED that the principal amount of Indebtedness secured thereby
shall not exceed the principal amount of Indebtedness so secured at the time of
such extension, renewal or replacement so as to violate this Agreement.
Section 7.02. INDEBTEDNESS. International shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or permit to exist
any Indebtedness as defined herein exclusive of those items described in
subparagraph (g) of such definition except:
(a) Indebtedness of the Credit Parties hereunder and under the
other Loan Documents or any other Indebtedness owing to the Bank;
(b) Indebtedness set forth in EXHIBIT 5.07 or as set forth in
the financial statements referred to in SECTION 5.05;
(c) Taxes, assessments or other governmental charges which are
not yet delinquent or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, and in respect of which adequate
reserves shall have been made therefor;
(d) Indebtedness, whether in the form of loans, Capital Leases
or other forms of Indebtedness, incurred by Proler Environmental Services, Inc.,
(but not any other Credit Party) in an aggregate original principal amount not
to exceed $20,000,000.00, in connection with project financings, PROVIDED such
Indebtedness shall be without recourse to any Credit Party other than Proler
Environmental Services, Inc.;
(e) Indebtedness of International, not to exceed
$20,000,000.00, PROVIDED such Indebtedness is subordinate and inferior in all
respects (including subsequent to the filing of any petition for relief under
the U.S. Bankruptcy Code) to the Obligations on such terms and conditions and in
such degree as the Bank shall approve in writing prior to the incurrence
thereof, such approval not to be unreasonably withheld; and
(f) Extensions, renewals and replacements (but not increases)
of any Indebtedness referred to in the foregoing clauses.
Section 7.03. FINANCIAL COVENANTS. (a) International shall not
permit the ratio of (i) Consolidated Current Assets to (ii) Consolidated Current
Liabilities to be less than 1.75 to 1.0 at the end of any fiscal quarter of
International; PROVIDED, notwithstanding the definition of "Joint Ventures," or
anything else herein contained, for purposes of this SECTION 7.03(a) only (but
not any other sections or subsections of 7.03), Consolidated Current Assets and
Consolidated Current
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Liabilities shall include that portion of the current assets and current
liabilities of the Joint Ventures equal to that portion of the Credit Parties'
ownership interest therein.
(b) International shall not permit Consolidated Net Worth as
of the end of each fiscal quarter, commencing with the fiscal quarter ending
January 31, 1996, to be less than $55,000,000.00 plus 50% of Consolidated Net
Income ( excluding any non-cash asset writedowns or impairment losses not to
exceed $10,000,000 in the aggregate at any such time) earned commencing August
1, 1995 and thereafter.
(c) International shall not permit EBITDA (i) for the period
of the four consecutive fiscal quarters ending April 30, 1996 to be less than
$1,000,000.00, (ii) for the period of the four consecutive fiscal quarters
ending July 31, 1996 to be less than $1,500,000.00, and (iii) for each fiscal
quarter ending thereafter, to be less than $1,500,000.00, based on the results
of such quarter and the prior consecutive three fiscal quarters, all measured as
of the end of each fiscal quarter.
Section 7.04. CONSOLIDATION, MERGERS AND ACQUISITIONS;
FUNDAMENTAL CHANGES. Except as otherwise provided herein, including, without
limitation, as provided in SECTION 7.09(g), International shall not, and shall
not permit any of its Subsidiaries, other than actions by Proler Environmental
Services, Inc., contemplated under SECTIONS 7.02, 7.09 or 7.11 without the prior
written consent of the Bank, to merge or consolidate with or acquire all or any
part of the outstanding capital stock or assets of any other Person (other than
purchases or other acquisitions of inventory and equipment in the ordinary
course of business) or liquidate, wind up or dissolve (or suffer any liquidation
or dissolution), or suffer a change in ownership directly or indirectly, except
that the following shall be permitted:
(a) any Credit Party (other than International) may merge into
or consolidate with any Credit Party or with any other Subsidiary of any Credit
Party, PROVIDED that a Credit Party is the survivor;
(b) any Subsidiary of a Credit Party may merge into or
consolidate with any other Subsidiary of any Credit Party, PROVIDED, that, if a
wholly-owned Subsidiary of a Credit Party is a party to such merger or
consolidation, a wholly-owned Subsidiary of a Credit Party is the survivor, and
PROVIDED, FURTHER, that if the outstanding shares of stock of a Subsidiary that
is a party to such a merger or consolidation are pledged to the Bank under the
Pledge Agreement, then the shares of such surviving Subsidiary which are held by
any Credit Party or any Subsidiary of a Credit Party shall be pledged to the
Bank under the Pledge Agreement; and
(c) the dissolution or liquidation of any of (i) Prolerized
Steel Corporation or Gulf Coast Metals, Inc. and (ii) any other Subsidiary which
is not a Credit Party if immediately after such
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dissolution or liquidation of any such other Subsidiary, International and its
consolidated Subsidiaries are not less creditworthy in the reasonable opinion of
the Bank and provided the Bank has prior written notice thereon.
Section 7.05. TRANSACTIONS WITH AFFILIATES. Subject to SECTION
7.16 hereof and the Investments allowed under SECTION 7.09(g), the Credit
Parties shall not, and shall not permit any of their Subsidiaries to, enter
into, or be a party to, any transaction with any Affiliate (including any Joint
Venture) except on terms and conditions as favorable (or more favorable) to such
Credit Party or such Subsidiary than would be obtained in a comparable arm's
length transaction between unrelated parties, PROVIDED, HOWEVER, that the Credit
Parties may deal with any Joint Venture as contemplated by SECTION 7.09(f) or
the Joint Venture Agreements or any other joint venture agreements to which they
are a party in accordance with past practice or within the bounds of good
business judgment.
Section 7.06. USE OF PROCEEDS. No proceeds of any Letter of
Credit shall be used by a Borrower for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin stock," within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System.
No Borrower shall engage principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock within the meaning of such Regulation U. No Borrower will request
the issuance of a Letter of Credit or Existing Letter of Credit for any purpose
other than as set forth herein.
Section 7.07. COMPLIANCE WITH ERISA. International shall not,
and shall not permit any of its Subsidiaries to, (a) terminate any Plan so as to
result in any liability to PBGC which could reasonably be expected to have a
Material Adverse Effect, (b) engage in any "prohibited transaction" (as defined
in Section 4975 of the Code) involving any Plan which would result in a
liability for an excise tax or civil penalty in connection therewith which could
reasonably be expected to have a Material Adverse Effect, (c) incur or suffer to
exist any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived involving any Plan which could reasonably be expected to
have a Material Adverse Effect or (d) allow or suffer to exist any event or
condition, which presents a material risk of incurring a liability to PBGC by
reason of termination of any such Plan which could reasonably be expected to
have a Material Adverse Effect.
Section 7.08. LIMITATION ON NEGATIVE PLEDGE CLAUSES. The
Credit Parties shall not, and shall not permit any of their Subsidiaries to,
enter into any agreement with any Person other than the Bank which prohibits or
limits the ability of the Credit Parties or any of their Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of their property, assets or
revenues, whether now owned or hereafter acquired, other than any such agreement
entered into by Proler Environmental Services, Inc., but not any other Credit
Party, in connection with the Indebtedness permitted by SECTION 7.02(d) hereof.
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Section 7.09. INVESTMENTS. The Credit Parties shall not, and
shall not permit any of their Subsidiaries to, directly or indirectly, make any
Investments except:
(a) Investments existing on the Effective Date and listed on
EXHIBIT 7.09;
(b) Investments on terms customary in the industry involved in
the form of accounts receivable incurred, and Investments made in settlement of
such accounts receivable, all in the ordinary course of business of the Credit
Parties and their Subsidiaries;
(c) Permitted Investments;
(d) stock or securities received in the settlement of debts
(created in the ordinary course of business);
(e) travel advances to officers and employees made in the
ordinary course of business;
(f) Investments in Joint Ventures; and
(g) Investments in the stock or assets of other Persons not to
exceed (i) $2,500,000.00 in any one Person or any single transaction, PROVIDED,
any such Investment up to $6,000,000.00 shall be permitted if made in or to
Proler Environmental Services, Inc. by any other Credit Party for the purpose of
funding the construction by Proler Environmental Services, Inc. or a non-Credit
Party Affiliate thereof of a gasification plant for which no recourse exists to
any other Credit Party or (ii) $6,000,000.00 outstanding with supplemental
Investments to maintain such level allowed so long as no more than $6,000,000.00
is invested during any twelve-month period, computed on a rolling four (4)
quarter basis, without the prior written approval of the Bank, such approval not
to be unreasonably withheld; PROVIDED, that any Investment in or to Proler
Environmental Services, Inc. referred to in clause (i) above shall be considered
an Investment under this subsection (ii) and shall not serve to increase the
total amount allowed in any twelve-month period.
Section 7.10. SALE AND LEASEBACK. International shall not, and
shall not permit any of its Subsidiaries to, enter into any arrangement with any
Person providing for the leasing by International or a Subsidiary of
International of real or personal property which has been or is to be sold or
transferred by International or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security as such property or rental obligations of International or such
Subsidiary, other than leases entered into in connection with any project
financed in whole or in part by Indebtedness permitted by SECTION 7.02(d), which
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together with all other Indebtedness incurred in respect of such project, shall
not exceed $20,000,000.00 in the aggregate.
Section 7.11. CAPITAL EXPENDITURES. International shall not
incur Consolidated Capital Expenditures (exclusive of (A) any Consolidated
Capital Expenditures attributable to capital expenditures made by International
or Proler Environmental Services, Inc. in connection with any project financed
in whole or in part by Indebtedness permitted by SECTIONS 7.02(d), 7.02(e),
7.02(f) or 7.10, which expenditures shall be a part of, and may not exceed the
amount permitted by SECTIONS 7.02(d), 7.02(e) or 7.02(f) and (B) exclusive of
Investments permitted by SECTION 7.09) in an aggregate amount in excess of
$6,000,000.00 for any twelve-month period during the term of this Agreement,
computed on a rolling four (4) quarter basis.
Section 7.12. LIMITATION ON RESTRICTIONS AFFECTING
SUBSIDIARIES. International shall not, and shall not permit any of its
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction of any kind, on the ability
of any such Subsidiary to (a) pay dividends or make any distributions on its
capital stock or joint venture or partnership interests, (b) pay any
indebtedness to International or any other Subsidiary of International, (c) make
loans or advances to International or any Subsidiary of International or (d)
transfer any of its property or assets to International or any Subsidiary of
International, other than, in the case of each of the foregoing clauses (a)
through (d), any such encumbrance or restriction created by Proler Environmental
Services, Inc. in connection with any Indebtedness permitted by SECTION 7.02(d).
Section 7.13. RESTRICTED PAYMENTS. Except as contemplated or
permitted by the Rights Agreement dated as of February 28, 1996, as amended or
modified, International shall not directly or indirectly declare, order, pay,
make or set apart any Restricted Payment; PROVIDED, that International may make
Restricted Payments in the form of dividends on, and repurchases of, its own
capital stock up to a maximum amount of $2,500,000.00 for each twelve-month
period, computed on a rolling four (4) quarter basis.
Section 7.14. OTHER BUSINESS. The Credit Parties will not
engage, and will not permit any of their Subsidiaries to engage, in any lines of
business other than the business in which they are engaged on the Effective Date
and other activities incidental or related to such business, including, without
limitation, lines of business relating to processing, treatment and disposal of
waste streams and the sale, use or marketing of products produced in connection
therewith or the licensing of technology in connection therewith.
Section 7.15. JOINT VENTURE AGREEMENTS. The Joint Venture
Agreements shall not be modified, amended, terminated or otherwise affected
without the prior written consent of the Bank.
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Section 7.16. NO TRANSFERS TO AFFILIATES. Other than as
permitted by SECTIONS 7.05 and 7.09, the Credit Parties shall not transfer to
all of their Affiliates any assets, having a value in excess of $1,000,000 in
the aggregate, during the term hereof, unless said transfer is paid for by said
Affiliate with cash as of the time of the transfer.
ARTICLE VIII
DEFAULT AND REMEDIES
Section 8.01. EVENTS OF DEFAULT. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing, namely:
(a) a Borrower shall fail to pay when due any installment of
principal of or interest owed by it on any amount due hereunder, under the Notes
or any Loan Document to which it is a party; or
(b) a Borrower shall fail to pay immediately upon demand by
the Bank, the amount paid by the Bank pursuant to a draft presented under an
Existing Letter of Credit or a Letter of Credit issued for the account of such
Borrower; or
(c) any other Credit Party shall fail to pay any amount
payable to the Bank by such Credit Party hereunder or under any other Loan
Document to which it is a party when due thereunder; or
(d) International shall fail to comply with or perform any
covenant, agreement or condition in ARTICLE VII hereof; or
(e) any Credit Party shall fail to perform any other term,
covenant or agreement contained herein or in any other Loan Document to which it
is a party which failure could reasonably be expected to have a Material Adverse
Effect and such failure shall not have been remedied within thirty (30) days
after the earlier of (i) the discovery thereof by the Credit Party or (ii) the
receipt of written notice thereof by International from the Bank; or
(f) any representation or warranty made by any Credit Party in
any Loan Document to which it is a party or in any certificate, agreement,
instrument or statement contemplated by or delivered pursuant to, or in
connection with, any Loan Document shall prove to have been incorrect in any
material respect when made; or
(g) any Credit Party shall (i) fail to pay any Indebtedness
owing to the Bank evidenced by a promissory note, credit agreement or letter of
credit application; (ii) fail to pay any
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other Indebtedness having a principal amount in excess of $250,000.00 (other
than the amounts referred to in subsections (a) and (b) of this SECTION 8.01)
owing by such Person, or any interest or premium thereon, when due (or, if
permitted by the terms of the relevant document, within any applicable grace
period), whether such Indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise; or (iii) fail to
perform any term, covenant or condition on its part to be performed under any
agreement or instrument evidencing, securing or relating to any such
Indebtedness, when required to be performed, and such failure shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such failure is to accelerate, or to permit the
holder or holders of such Indebtedness to accelerate, the maturity of such
Indebtedness; or
(h) any Loan Document shall (other than with the consent of
the Bank), at any time after its execution and delivery and for any reason,
cease to be in full force and effect or to provide the Liens contemplated
thereby, except for such provisions or Liens that the Bank determines are not
material either individually or in the aggregate, or shall be declared to be
null and void, or the validity or enforceability thereof or of the Liens
contemplated thereby shall be contested by any Credit Party to the Loan
Documents or any such Credit Party shall deny that it has any or further
liability or obligation under any Loan Document; or
(i) any Reportable Event that might constitute grounds for the
termination of any Plan, or for the appointment by an appropriate United States
district court of a trustee to administer any Plan, shall have occurred and be
continuing for at least thirty (30) days, or any Plan shall be terminated, or a
trustee shall be appointed by an appropriate United States district court to
administer any Plan, or the PBGC shall institute proceedings to terminate any
Plan or to appoint a trustee to administer any Plan, and, in any such event, the
then-current value of such Plan's benefits guaranteed under Title IV of ERISA at
the time shall exceed by more than $270,000.00 the then-current value of such
Plan's assets, allocable to such benefits at such time; or
(j) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing; or
(k) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
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appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of
90 days; or an order for relief shall be entered against such Credit Party under
the federal bankruptcy laws as now or hereafter in effect; or
(l) a final judgment or order for the payment of money in
excess of $270,000.00 (net of acknowledged, uncontested insurance coverage)
shall be rendered against any Credit Party and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) a stay of enforcement of such judgment or order by reason of a
pending appeal or otherwise, shall not be in effect for any period of thirty
(30) consecutive days; or
(m) any single Person shall in a single transaction or a
series of related transactions acquire control of more than 51% of
International's capital stock; then, (x) upon the occurrence of any Event of
Default described in SECTION 8.01(J) or SECTION 8.01(K), (i) the Commitment
shall automatically terminate and the Bank's obligation to issue Letters of
Credit shall automatically terminate and (ii) all amounts owing by the Credit
Parties under this Agreement, the Notes, the other Loan Documents and any other
agreement or security document contemplated by or delivered in connection with
this Agreement (including all L/C Obligations and Existing L/C Obligations)
shall automatically become immediately due and payable without, in any case,
presentment for payment, further demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of which
are hereby expressly waived by each Borrower, and (y) upon the occurrence of any
other Event of Default, the Bank may, by notice to International, (i) declare
the Commitment to be terminated, whereupon the same shall forthwith terminate
and (ii) declare the entire unpaid principal amount of all amounts payable by
any Credit Party under this Agreement (including all L/C Obligations and
Existing L/C Obligations), the Notes, the other Loan Documents and any other
agreement or security document contemplated by or delivered in connection with
this Agreement, to be forthwith due and payable, whereupon all such amounts
shall become and be forthwith due and payable, without presentment for payment,
further demand, protest, notice of intent to accelerate, notice of acceleration
or further notice of any kind, all of which are hereby expressly waived by each
Borrower. With respect to all Letters of Credit and Existing Letters of Credit
as to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to clause (x) or (y) above, each Borrower for the account
of which any of such Letters of Credit or Existing Letters of Credit were issued
shall at such time deposit in a cash collateral account opened by the Bank an
amount equal to the aggregate undrawn face amount of such Letters of Credit and
Existing Letters of Credit issued for its account. Amounts held in such cash
collateral account shall be applied by the Bank to the payment of drafts drawn
under such Letters of Credit and Existing Letters of Credit, and the unused
portion thereof after all such Letters of Credit and Existing Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to repay
other obligations of such Borrower hereunder and under the Notes and the other
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Loan Documents. After all such Letters of Credit and Existing Letters of Credit
shall have expired or been fully drawn upon, all L/C Obligations and Existing
L/C Obligations shall have been satisfied and all other obligations of each
Borrower hereunder and under the Notes and the other Loan Documents shall have
been paid in full, the balance, if any, in such cash collateral account shall be
returned to each Borrower that deposited such cash collateral to be applied by
the Borrowers as their interests may appear.
Section 8.02. SET-OFF IN EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, the Bank is hereby
authorized, at any time and from time to time, without notice to the Borrowers
or any other Credit Party (any such notice being expressly waived by the Credit
Party) and to the fullest extent permitted by applicable law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any branch, subsidiary or Affiliate of the Bank to or for the credit or the
account of any Credit Party against any and all of the obligations of such
Credit Party, now or hereafter existing under this Agreement (including all L/C
Obligations and Existing L/C Obligations), the Notes or the other Loan Documents
to which each such Credit Party is a party, irrespective of whether or not the
Bank shall have made any demand for satisfaction of such Obligations and
although such Obligations may be unmatured. The Bank agrees to notify
International promptly after any such set-off and application made by the Bank;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including other rights of
set-off) which the Bank may have hereunder or under any applicable law.
ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENTS. No modification, amendment or waiver
of any provision of this Agreement (including, without limitation, the
Guaranty), the Notes or any other Loan Document, or consent to any departure by
any Credit Party herefrom or therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank and each Credit Party
thereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 9.02. NOTICES. All notices, consents, requests,
approvals, demands and other communications (collectively, "COMMUNICATIONS")
provided for herein and in the other Loan Documents shall be in writing
(including telecopied communications) and mailed, telecopied or delivered as
follows:
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if to International or any other Credit Party to, or in care of--
Proler International Corp.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Mayor, Day, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Bank --
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the Bank or any Credit Party shall designate in a
Communication to each of the other parties hereto. All Communications shall be
effective, in the case of written or telecopied communications, three days after
being deposited in the mail, or upon the date sent by telecopy or (in the case
of Communications which are not mailed or telecopied) when delivered and (if a
Communication is sent by telecopy or delivered) receipt thereof is confirmed,
respectively, in each case addressed as aforesaid. Notwithstanding the
foregoing, all Borrowing Requests shall not be effective until received by the
Bank.
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Section 9.03. COSTS, EXPENSES AND TAXES. The Borrowers agree
to pay on demand all reasonable costs and expenses of the Bank in connection
with (a) the administration of the Loan Documents, the Letters of Credit and the
preparation, execution, delivery, filing, recording and administration of this
Agreement, the Notes, the Letters of Credit, the Existing Letters of Credit and
the other Loan Documents and any other agreements or security documents
delivered in connection with or pursuant to any of the Loan Documents, including
the reasonable fees and out-of-pocket expenses of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.,
counsel for the Bank and any local counsel who may be retained by such counsel,
and the cost of any and all appraisals, surveys, environmental audits or studies
subject to the limitations of SECTION 6.01(l), title insurance policies and
similar items required hereby, (b) all reasonable costs and expenses, if any,
incurred by the Bank in connection with the enforcement of this Agreement and
the other Loan Documents and any other agreements or security documents executed
in connection with or pursuant to any of the Loan Documents, including the
reasonable fees and out-of-pocket expenses of counsel for the Bank and any local
counsel who may be retained by such counsel, and (c) the reasonable costs and
expenses in connection with the custody, preservation, use or operation of, or
the sale of, or collection from, or other realization upon the collateral
covered by any of the Loan Documents. The agreements of the Borrowers contained
in this Section shall survive the termination of the Commitment and the payment
of all amounts owing by any Credit Party hereunder or under any of the other
Loan Documents.
Section 9.04. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the Credit Parties,
the Bank and their respective successors and assigns, except that no Credit
Party may assign or transfer its respective rights hereunder without the prior
written consent of the Bank.
Section 9.05. INDEPENDENCE OF COVENANTS. All covenants
contained in the Loan Documents shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that such action or condition would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 9.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement and the other Loan
Documents, or made in writing by any Credit Party in connection herewith or
therewith, shall survive the execution and delivery of this Agreement, the
Notes, any Letters of Credit, the Existing Letters of Credit and the other Loan
Documents. Any investigation by the Bank shall not diminish in any respect
whatsoever its right to rely on such representations and warranties.
Section 9.07. SEPARABILITY. Should any clause, sentence,
paragraph, subsection, Section or Article of this Agreement be judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Agreement, and the
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parties hereto agree that the part or parts of this Agreement so held to be
invalid, unenforceable or void will be deemed to have been stricken herefrom by
the parties hereto, and the remainder will have the same force and effectiveness
as if such stricken part or parts had never been included herein.
Section 9.08. NO WAIVER; REMEDIES. No failure on the part of
the Bank to exercise, and any delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies provided in this Agreement and the Notes are
cumulative and not exclusive of any remedies provided in any of the other Loan
Documents or by law.
Section 9.09. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
Section 9.10. GOVERNING LAW. This Agreement, the Notes, the
Letters of Credit, the Existing Letters of Credit and, unless otherwise
specified therein, all other Loan Documents and all other documents executed in
connection herewith or therewith, shall be deemed to be contracts and agreements
executed by Credit Parties and the Bank under the laws of the State of Texas and
of the United States and for all purposes shall be construed in accordance with,
and governed by, the laws of the ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇.
Without limitation of the foregoing, nothing in this Agreement, the Notes or any
other Loan Documents shall be deemed to constitute a waiver of any rights which
the Bank may have under federal legislation relating to the rate of interest
which the Bank may contract for, take, receive, reserve or charge in respect of
the Obligations. The Bank and the Borrowers further agree that insofar as the
provisions of Article 1.04, Subtitle 1, Title 79, of the Revised Civil Statutes
of Texas, 1925, as amended, are applicable to the determination of the Highest
Lawful Rate with respect to the Obligations, the indicated (weekly) rate ceiling
computed from time to time pursuant to Section (a) of such Article shall apply
to the Obligations; PROVIDED, HOWEVER, that to the extent permitted by such
Article, the Bank may from time to time by notice from the Bank to the Borrowers
revise the election of such interest rate ceiling as such ceiling affects the
then current or future balances outstanding under the Notes. The provisions of
Chapter 15 of Subtitle 3 of the said Title 79 do not apply to this Agreement,
the Notes or any transactions contemplated by any Loan Document.
Section 9.11. LIMITATION ON INTEREST. Each provision in this
Agreement, the Notes, the Letters of Credit, the Existing Letters of Credit and
each other Loan Document is expressly limited so that in no event whatsoever
shall the amount paid, or otherwise agreed to be paid, to the Bank for the use,
forbearance or detention of the money to be advanced under this Agreement, the
Notes or any other Loan Document or otherwise (including any sums paid as
required by any
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covenant or obligation contained herein or in any other Loan Document which is
for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the Highest
Lawful Rate, and all amounts owed under this Agreement and each other Loan
Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid which are for the use, forbearance or
detention of money under this Agreement or such Loan Document shall in all
events be less than that amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate. Anything in this Agreement, the
Notes, the Letters of Credit, the Existing Letters of Credit or any other Loan
Document to the contrary notwithstanding, no Borrower shall ever be required to
pay unearned interest on the Obligations or ever be required to pay interest on
the Obligations at a rate in excess of the Highest Lawful Rate, or if the holder
of any of the Obligations shall receive any unearned interest or shall receive
monies that are deemed to constitute interest which would increase the effective
rate of interest payable by either or both Borrowers under this Agreement, the
Notes and the other Loan Documents to a rate in excess of the Highest Lawful
Rate, then (a) the amount of interest which would otherwise be payable by the
Borrowers under this Agreement, the Notes and other Loan Documents shall be
reduced to the amount allowed under applicable law and (b) any unearned interest
paid by a Borrower or any interest paid by a Borrower in excess of the Highest
Lawful Rate shall be in the first instance credited on the principal of the
applicable Note with the excess thereof, if any, refunded to such Borrower. It
is further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, charged or received by the Bank under the
Notes, this Agreement, the Letters of Credit, the Existing Letters of Credit or
the other Loan Documents, are made for the purpose of determining whether such
rate exceeds the Highest Lawful Rate, and shall be made, to the extent permitted
by usury laws applicable to the Bank (now or hereafter enacted), by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the Obligations evidenced by the Notes all interest at any time
contracted for, charged or received by the Bank in connection therewith. If at
any time and from time to time, (x) the amount of interest payable to the Bank
on any date shall be computed at the Highest Lawful Rate pursuant to this
Section and (y) in respect of any subsequent interest computation period the
amount of interest otherwise payable to the Bank would be less than the amount
of interest payable to the Bank computed at the Highest Lawful Rate, then to the
extent permitted by applicable usury law, the amount of interest payable to the
Bank in respect of such subsequent interest computation period shall continue to
be computed at the Highest Lawful Rate until the total amount of interest
payable to the Bank shall equal the total amount of interest which would have
been payable to the Bank if the total amount of interest had been computed
without giving effect to this Section.
Section 9.12. INDEMNIFICATION. (a) Each of the Borrowers and
each other Credit Party agrees to indemnify, defend and hold the Bank, as well
as its officers, employees, agents, directors, shareholders, counsels and
Affiliates (collectively, "INDEMNIFIED PERSONS") harmless from and against any
and all loss, liability, damage, judgment, claim, deficiency, penalty, fine,
response
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and remediation cost, stabilization cost, encapsulation cost, treatment, storage
or disposal cost, groundwater monitoring or environmental sampling cost or any
other reasonable cost or expense (including interest, penalties, reasonable
attorneys', experts' or consultants' fees, and disbursements in connection with
any investigative, administrative or judicial proceeding and amounts paid in
settlement) (collectively, "INDEMNIFIED LIABILITIES") incurred by or asserted
against any Indemnified Person arising out of, in any way connected with, or as
a result of (i) the execution and delivery of this Agreement and the other Loan
Documents, the performance by the parties hereto and thereto of their respective
obligations hereunder and thereunder (including the making of the Commitment of
the Bank) and consummation of the transactions contemplated hereby and thereby,
(ii) the actual or proposed use of the Letters of Credit or the Existing Letters
of Credit, (iii) any past, present or future violation by a Borrower, any of its
respective Subsidiaries, any operator who is not an Indemnified Person of the
Mortgaged Properties, or any other Person (other than any Indemnified Person) of
any requirement of law, including Environmental Laws, with regard to the
ownership, operation, use or occupancy of the Mortgaged Properties occurring at
any time prior to the repayment in full of the Obligations, (iv) solely insofar
as any of the following arises out of any Mortgaged Property, the past, present
or future treatment, storage, disposal, generation, use, transport, movement,
migration, presence, release, spill or emission of any pollutants, contaminants,
Hazardous Materials, or hazardous or toxic substances or wastes into or onto
soil, land, surface water, ground water, watercourses, publicly-owned treatment
works, drains, sewer systems, wetlands or septic systems occurring at any time
prior to the repayment in full of the Obligations, (v) ownership by the Bank of
any real or personal property following rightful foreclosure under the Security
Documents, to the extent such losses, liabilities, damages, judgments, claims,
deficiencies or expenses arise out of or result from the presence or release of
any Hazardous Materials in, on or under such property during the period owned,
leased or operated by a Borrower or any of its respective Subsidiaries,
including, without limitation, losses, liabilities, damages, judgments, claims,
deficiencies or expenses which are imposed under Environmental Laws upon Persons
by virtue of their ownership, (vi) foreseeable consequential or punitive damages
incurred as a result of any matter or claim described above or (vii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Person is a party thereto.
(b) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS BUT IN ALL EVENTS SUBJECT TO SUBPARAGRAPH (C) OF THIS
SECTION 9.12, IT IS THE EXPRESS INTENTION OF EACH BORROWER AND THE OTHER CREDIT
PARTIES THAT EACH INDEMNIFIED PERSON SHALL BE INDEMNIFIED AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DEFICIENCIES, JUDGMENTS OR
REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE
(WHETHER SOLE OR CONTRIBUTORY) OF SUCH INDEMNIFIED PERSON. THE OBLIGATIONS OF
EACH BORROWER AND THE OTHER CREDIT PARTIES UNDER
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THIS SECTION 9.12 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE
COMMITMENT AND THE REPAYMENT OF THE OBLIGATIONS.
(c) Notwithstanding any other provision of this Agreement or
any other Loan Document or any other document or instrument, in no event shall
any Credit Party be liable in any manner with respect to any or all Indemnified
Liabilities to the extent arising from any acts or omissions constituting gross
negligence or willful misconduct on the part of any Indemnified Person.
(d) With respect to all Indemnified Liabilities relating to
any Mortgaged Property or any Hazardous Material or any Environmental Law,
notwithstanding any other provision of this Agreement or any other Loan Document
or any other document or instrument, no Credit Party shall be liable (x) for any
acts of any Indemnified Person or of any Person acting on behalf of or at the
direction of any Indemnified Person, or (y) in the event that any Indemnified
Person, or any Person acting on behalf of or at the direction of any Indemnified
Person, is judicially or administratively determined to be a Person having
management participation or otherwise exercising control within the meaning of
the Environmental Laws in effect on the date of this Agreement, for any omission
of any Indemnified Person or any omission of any Person acting on behalf of, or
at the direction of any Indemnified Person, or (z) for any act or omission of
any Person occurring from and after the date on which none of the Credit Parties
holds title to such Mortgaged Property; PROVIDED, HOWEVER, that this clause (z)
shall not release any Credit Party from any liability which it would otherwise
have under this subparagraph (d) for conditions arising prior to said date as to
which any Indemnified Liability is asserted subsequent to said date.
Section 9.13. NOTICE AND DEFENSE OF CLAIMS. (a) The Credit
Parties shall give prompt notice to the Bank of:
(i) their receipt of any correspondence, demand, notice,
order, complaint, notice of violation, assessment, claim or request for
information issued pursuant to or under color of any Environmental Laws
or which refers to any Hazardous Materials from any federal, state or
local governmental authority or from any private party or organization
with respect to the Mortgaged Properties, any operator of the Mortgaged
Properties or any Credit Party, which, in the reasonable good faith
judgment of the Credit Parties, is likely to result in a Material
Adverse Effect;
(ii) the institution of any claim, suit, action, investigation
or administrative or judicial proceeding or action (formal or informal)
of which the Credit Parties are aware, brought with regard to the
condition, use, ownership, operation, occupancy or maintenance of the
Mortgaged Properties under the Environmental Laws or relating to
Hazardous Materials which claim, suit, action, investigation or
administrative or judicial proceeding or
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action, in the reasonable good faith judgment of the Credit Parties, is
likely to result in a Material Adverse Effect; and
(iii) the discovery or detection, of which the Credit Parties
are aware, by any Person, of Hazardous Materials on the Mortgaged
Properties which, in the reasonable good faith judgment of the Credit
Parties, is likely to result in a Material Adverse Effect.
(b) The Credit Parties shall retain the exclusive right, at
their option, to compromise, settle or defend, at their expense and with their
own counsel, any Indemnified Liabilities; PROVIDED, HOWEVER, that the Credit
Parties shall provide the Bank with all such copies of documents and pleadings
relating to such Indemnified Liabilities as the Bank may reasonably request;
PROVIDED, FURTHER, that in the case of any action in which any Indemnified
Person is a named party thereto, such counsel retained by the Credit Parties
shall be reasonably acceptable to such Indemnified Person. In the case of any
such action in which an Indemnified Person is a named party thereto, the Credit
Parties, at the request of such Indemnified Person, shall keep such Indemnified
Person apprised of all matters relevant to such action and such Indemnified
Person shall have the full right, at its own expense, to participate, through
counsel or otherwise, in all meetings and proceedings with adverse parties or
governmental authorities (other than any confidential meetings unrelated to
claims against such Indemnified Person); PROVIDED, HOWEVER, that if any of the
Credit Parties give notice in writing to such Indemnified Person that the Credit
Parties do not intend, for whatever reason, to defend any such action, then such
Indemnified Person may prosecute its own defense or response with its own
counsel and the reasonable fees of such counsel shall be at the expense of the
Credit Parties for that portion of the action relating to any Indemnified
Liabilities if: (x) such Indemnified Person shall prosecute such defense or
response diligently and in an appropriate manner and (y) such Indemnified
Person, at the request of any of the Credit Parties, shall keep the Credit
Parties apprised of all matters relevant to such action; PROVIDED, FURTHER, that
in the event that such Indemnified Person does not consent to any settlement or
compromise proposed by the parties to such action and acceptable to the Credit
Parties, then the liability of the Credit Parties under SECTIONS 9.12 and 9.13
of this Agreement for any Indemnified Liabilities shall not exceed that
liability which the Credit Parties would have had if such Indemnified Person had
consented to such settlement or compromise.
(c) Upon the occurrence of any of the events contemplated by
subsection (a) above relating to any Mortgaged Property, the Bank shall have
(but need not exercise) the right to retain, at its own expense, consultants and
specialists of the Bank's choice to assess the necessity for and appropriateness
of the investigation, removal, remediation, encapsulation or other treatment of
any Hazardous Materials found on the Mortgaged Properties. If the Bank
reasonably determines that any such activities are necessary and appropriate to
prevent the occurrence of a Material Adverse Effect, it shall deliver written
notice to the Credit Parties of the basis of such determination, describing such
activities with reasonable specificity. Upon receipt of such notice, and if such
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activities are required by law, the Credit Parties will diligently, and in a
reasonable manner, undertake and complete such activities to the Bank's
reasonable satisfaction, at the Credit Parties' sole expense.
(d) The Indemnified Persons shall give prompt written notice
to the Credit Parties of any claim against the Indemnified Persons which might
give rise to a claim by the Indemnified Persons against the Credit Parties under
SECTION 9.12.
Section 9.14. LIMITATION BY LAW. All rights, remedies and
powers provided in this Agreement and the other Loan Documents may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Agreement and the other Loan
Documents are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement or any other Loan Document invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
Section 9.15. INTERPRETATION. (a) In this Agreement, unless a
clear contrary intention appears:
(i) the singular number includes the plural number and VICE
VERSA;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
PROVIDED that nothing in this clause (iv) is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) reference to any agreement, document or instrument means
such agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof, and reference to any Note
includes any note issued pursuant hereto in extension or renewal
thereof and in substitution or replacement therefor;
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(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section
hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, the word "from" means "from and including" and the word "to"
means "to but excluding";
(ix) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time; and
(x) whenever any accounting computation is required to be
made, for purposes hereof, such computation shall be made in accordance
with GAAP.
(b) The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
Section 9.16. WAIVER OF TEXAS DECEPTIVE TRADE PRACTICES ACT.
EACH CREDIT PARTY HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS, DEMANDS AND CAUSES
OF ACTION BASED UPON OR RELATED TO THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT AS DESCRIBED IN SECTION 17.41 ET SEQ. OF THE TEXAS BUSINESS &
COMMERCE CODE, AS THE SAME PERTAINS OR MAY PERTAIN TO ANY OF THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, TO THE MAXIMUM EXTENT THAT SUCH
RIGHTS, ETC. MAY LAWFULLY AND EFFECTIVELY BE WAIVED. IN FURTHERANCE OF THIS
WAIVER, EACH UNDERSIGNED OBLIGOR UNDER THE LOAN DOCUMENTS HEREBY REPRESENTS AND
WARRANTS THAT (A) EACH SUCH CREDIT PARTY HAS ASSETS OF $5,000,000.00 OR GREATER
ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
GAAP AND HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT
ENABLE IT TO EVALUATE THE MERITS AND RISKS OF A TRANSACTION, (B) EACH SUCH
CREDIT PARTY IS REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE NEGOTIATION,
EXECUTION AND DELIVERY OF THE LOAN DOCUMENTS AND (C) NO SUCH CREDIT PARTY
CONSIDERS ITSELF TO BE IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH
RESPECT TO THE LOAN DOCUMENTS.
Section 9.17. RELEASES. EACH CREDIT PARTY HEREBY RELEASES,
DISCHARGES AND ACQUITS FOREVER THE BANK AND ITS OFFICERS, DIRECTORS, TRUSTEES,
AGENTS, EMPLOYEES AND COUNSEL (IN EACH CASE, PAST, PRESENT OR FUTURE) FROM ANY
AND ALL CLAIMS EXISTING AS OF THE DATE HEREOF (OR THE DATE OF ACTUAL EXECUTION
HEREOF BY THE APPLICABLE PERSON OR ENTITY, IF LATER). AS USED ▇▇▇▇▇▇,
-▇▇-
▇▇▇ ▇▇▇▇ "CLAIM" SHALL MEAN ANY AND ALL LIABILITIES, CLAIMS, DEFENSES, DEMANDS,
ACTIONS, CAUSES OF ACTION, JUDGMENTS, DEFICIENCIES, INTEREST, LIENS, COSTS OR
EXPENSES (INCLUDING COURT COSTS, PENALTIES, ATTORNEYS' FEES AND DISBURSEMENTS
AND AMOUNTS PAID IN SETTLEMENT) OF ANY KIND AND CHARACTER WHATSOEVER, INCLUDING
CLAIMS FOR USURY, BREACH OF CONTRACT, BREACH OF COMMITMENT, NEGLIGENT
MISREPRESENTATION OR FAILURE TO ACT IN GOOD FAITH, IN EACH CASE WHETHER NOW
KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED OR PRIMARY OR
CONTINGENT, AND WHETHER ARISING OUT OF WRITTEN DOCUMENTS, UNWRITTEN
UNDERTAKINGS, COURSE OF CONDUCT, TORT, VIOLATIONS OF LAWS OR REGULATIONS OR
OTHERWISE ARISING OUT OF THIS TRANSACTION, THE TRANSACTION CONTEMPLATED BY ANY
PRIOR AGREEMENTS, AND ALL RELATED DOCUMENTS, TRANSACTIONS AND EVENTS.
Section 9.18. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BORROWERS:
PROLER INTERNATIONAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇
Vice President - Finance
JOINT VENTURE OPERATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇
Vice President - Finance
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GUARANTORS:
PROLER INTERNATIONAL CORP.
JOINT VENTURE OPERATIONS, INC.
PROLER POWER MARKETING, INC.
PROLER STEEL, INC.
PROLER INDUSTRIES, INC.
PROLERIDE TRANSPORT SYSTEMS, INC.
PROLER RECYCLING, INC.
PROLER ENVIRONMENTAL SERVICES, INC.
PROLER PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇
Vice President - Finance
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BANK:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
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