WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO BORROWER SECURITY AGREEMENT
EXHIBIT
10(i)
WAIVER
AND SECOND AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO BORROWER
SECURITY AGREEMENT
THIS
WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO BORROWER
SECURITY AGREEMENT (this “Amendment”) is entered into
as of September 19, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ RESOURCES, INC., a Texas
corporation (“Borrower”), and BANK OF AMERICA, N.A., a
national banking association
(“Lender”). Capitalized terms used but not
defined in this Amendment have the meaning given them in the Credit Agreement
(defined below).
RECITALS
A. Borrower
and Lender entered into that certain Credit Agreement dated as of May 25, 2006
(as amended by that certain Waiver and First Amendment to Credit Agreement
dated
as of December 31, 2006, and as further, restated or supplemented, the
“Credit Agreement”), under which Lender agreed to
provide to Borrower, subject to the terms and conditions contained therein,
a
revolving credit facility.
B. To
secure Borrower’s obligations and indebtedness under the Credit Agreement and
the other Loan Documents, Borrower executed and delivered that certain Security
Agreement dated as of even date with the Credit Agreement covering the
collateral identified therein (as amended, restated or otherwise modified from
time to time, the “Borrower Security
Agreement”).
C. A
certain Default has occurred as a result of TOCCO’s failure to comply with the
maximum Unfinanced Capital Expenditure covenant for the period ended March
31,
2007 pursuant to Section 10.3 of the Credit Agreement
(the “Existing Default”).
D. Borrower
has requested that Lender waive the Existing Default, make the Term Loan
available to Borrower pursuant to Section 5.2(b) of
the Credit Agreement (before giving effect to this Amendment), and amend the
Borrower Security Agreement, and Lender has agreed to waive the Existing
Default, make the Term Loan available to Borrower pursuant to
Section 5.2(b) of the Credit Agreement (before giving
effect to this Amendment) and to make other amendments to the Credit Agreement,
and amend the Borrower Security Agreement, in each case subject to the terms
and
conditions of this Amendment.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are acknowledged, the undersigned hereby agree as follows:
1. Waiver
of Existing Default. Subject to the conditions set out in this
Amendment, Lender hereby (a) waives any violation of, or noncompliance with,
any
provision of any Loan Document caused solely by the Existing Default, and (b)
agrees not to exercise any of its Rights available under the Loan Documents
solely as a result of any such violation or noncompliance described in
clause (a) of this Section
1. Except as set out in the immediately preceding
sentence, Borrower hereby agrees that such waiver does not constitute a waiver
of any present or future violation of or noncompliance with any provision of
any
Loan Document or a waiver of Lender’s right to insist upon strict compliance
with each term, covenant, condition, and provision of the Loan
Documents.
2. Amendments
to Credit Agreement. The Credit Agreement is hereby amended
as follows:
(a) The
Recitals to the Credit Agreement are hereby deleted in their entirety and
replaced with the following Recitals:
“A. Borrower
has requested that Lender extend credit to Borrower (i) in the maximum principal
amount of $12,000,000 in the form of a revolving credit facility that includes
a
$3,000,000 subfacility for Swap Contracts, and a $9,000,000 subfacility for
the
issuance of LCs, and (ii) in the maximum principal amount of up to $10,000,000
in the form of an advancing term loan facility to finance the Subject Expansion
(as defined below).
B. Lender
is willing to extend the revolving credit facility, extend the Swap Contract
subfacility, extend the letter of credit subfacility, and extend the termloan
facility, in each case on the terms and conditions of this
Agreement.
Accordingly,
Borrower and Lender agree as follows:”
(b) Section
1.1 of the Credit Agreement is hereby amended to delete the
defined terms “Permitted Liens”, “Security Documents”, “Term Committed Amount”,
“Term Loan Date”, and “Term Loan Maturity Date”, and replaced them with the
defined terms as follows:
“Permitted
Liens means (a) Liens securing the Obligation, (b) Liens existing
on the Closing Date and described on Schedule 2,
(c) Liens listed on Exhibit B to the Deed of Trust, (d) Liens which secure
purchase money Debt and capital lease obligations permitted under
clause (c) of the definition of Permitted Debt, (e) easements,
rights-of-way, encumbrances and other restrictions on the use of real property
which do not materially impair the use thereof, (f) Liens for Taxes;
provided that, (i) no amounts are due and payable and no Lien has
been filed or agreed to, or (ii) the validity or amount thereof is being
contested in good faith by lawful proceedings diligently conducted, and reserve
or other provision required by GAAP has been made, (g) judgments and attachments
permitted by Section 11.4, (h) pledges or deposits
made to secure payment of workers’ compensation, unemployment insurance or other
forms of governmental insurance or benefits or to participate in any fund in
connection with workers’ compensation, unemployment insurance, pensions or other
social security programs, (i) rights of offset or statutory banker’s Lien
arising in the ordinary course of business in favor of commercial banks;
provided that, any such Lien shall only extend to deposits and property in
possession of such commercial bank and its Affiliates, (j) good-faith pledges
or
deposits made in the ordinary course of business to secure (i) performance
of bids, tenders, trade contracts (other than for the repayment of
borrowed money) or leases, (ii) statutory obligations, or (iii) surety or
appeal bonds, or indemnity, performance or other similar bonds, which, in the
aggregate under this clause (j), do not exceed $250,000 at any time,
and (k) Liens (other than for Taxes) imposed by operation of law
(including Liens of mechanics, materialmen, warehousemen, carriers and landlords
and similar Liens); provided that, (i) the validity or amount
thereof is being contested in good faith by lawful proceedings diligently
conducted, (ii) reserve or other provision required by GAAP has been made,
and (iii) within 60 days after the entry hereof, levy and execution thereon
have been (and continue to be) stayed or payment thereof is covered in full
by
insurance (subject to the customary deductible).
Security
Documents means all Security Agreements, all Deeds of Trust, all
Assignments of Contracts, and all other documents executed in connection
therewith to create or perfect a Lien on the Collateral.
Term
Committed Amount means the lesser of (a) the aggregate
amount of all invoices paid with the proceeds of the Term Loan for the Subject
Expansion, and (b) $10,000,000.
Term
Loan Date means the effective date of the Second Amendment to this
Agreement.
Term
Loan Maturity Date means October
31, 2018.”
(c) Section
1.1 of the Credit Agreement is hereby amended to add the following
defined terms in their appropriate alphabetical order as follows:
“Appraisal
means a written appraisal of the Subject Property prepared on
an
“as-completed” basis by an independent MAI appraiser reasonably acceptable to
Lender and properly certified by the State of Texas in accordance with Title
XI
of the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
or,
at Lender’s option, by Lender’s “in-house” appraiser. Such Appraisal
shall be ordered by Lender directly and shall be in Proper Form.
Assignment
of Contracts means the Assignment of Rights under Construction
Contracts, Permits, Plans and Contracts executed by Borrower to Lender in
connection with this Agreement in Proper Form.
construction
and constructed means, as applicable, the development,
demolition, construction, erection and installation of any Improvements on
the
Subject Property pertaining to the Subject Expansion.
Construction
Contracts means all construction contracts between Borrower and
any contractor or subcontractor for the construction of any Improvements to
the
Subject Property pertaining to the Subject Expansion, contracts between any
contractor and any subcontractor, and contracts between any of the foregoing
and
any other person or entity relating to rendering of services or furnishing
of
materials in connection with the construction of such Improvements.
Conversion
Date is the date the Term Loan converts from a multiple advance
loan to a “mini-perm” term loan which is the date that all of the conditions
precedent in Section 5.5 below have been satisfied;
provided, that, the Conversion Date may not
occur after
December 1, 2008.
Force
Majeure means any event or circumstance, or combination of events
or circumstances, that is beyond the control of the party hereto claiming force
majeure, which materially and adversely affects the ability of such party to
perform its obligations under or pursuant to this Agreement, including, without
limitation, (a) any explosions, implosions, fires, conflagrations, accidents,
epidemics, contamination, (b) floods, hail, tornadoes, hurricanes, (c) acts
of
war (whether declared or not declared), blockade or embargo, (d) acts of public
enemy, acts of terrorism, riot, public disorder or violent demonstrations,
and
(e) strikes or failure of supply of materials, labor, fuel, power, equipment,
supplies or transportation.
Impositions
means all Taxes, including: real estate and personal property ad valorem Taxes;
water, gas, sewer, electricity and other utility rates and charges; charges
imposed pursuant to any subdivision, planned unit development, or condominium
declaration or restrictions; charges for any easement, license, or agreement
maintained for the benefit of the Subject Property; and all other Taxes, standby
fees, charges, and assessments and any interest, costs, or penalties of any
kind
with respect to the Subject Property which may be assessed, levied, or imposed
upon the Subject Property or the ownership, use, occupancy, or enjoyment
thereof.
Improvements
means all buildings, structures, open parking areas, amenities, and other
improvements and any and all accessions, additions, replacements, substitutions,
or alterations thereof or appurtenances thereto, currently or subsequently
situated, placed, or constructed upon the Subject Property, or any part
thereof.
Insurance
Policies means (a) owner’s policies of comprehensive general
public liability insurance, including worker’s compensation insurance if
required by law; (b) hazard insurance against all risks of loss, including
fire,
water damage, or collapse, in an amount not less than the full replacement
cost
of all Improvements, including the cost of debris removal, with annual agreed
amount endorsement (or waiver of co-insurance clause) and which is sufficient
at
all times to prevent Borrower from becoming a co-insurer; (c) if the Property
is
in a “Flood Hazard Area,” a flood insurance policy, or binder therefor, in an
amount equal to the Term Loan Committed Amount, or the maximum amount available
under the Flood Disaster Protection Act of 1973 and regulations issued
pursuant thereto, as amended from time to time, whichever is less, in form
complying with the “insurance purchase requirement” of such Act; and (d) such
other insurance, if any, as Lender may reasonably require, including but not
limited to broad form boiler and machinery insurance on all equipment and
objects customarily covered thereby if there are pressure fired vehicles within
the Subject Property. All Insurance Policies shall (i) be issued and
maintained in form, of types and amounts (with co-insurance and deductibles)
as
is customary in the case of similar businesses, and by companies satisfactory
to
Lender, (ii) contain a mortgagee clause (without contribution) in favor of
Lender with loss proceeds payable to Lender as its interest may appear, (iii)
require not less than 30 days prior written notice to Lender of any cancellation
or change of coverage, and (iv) provide that no act of the insured or any
occupant, and no occupancy or use of the Subject Property for purposes more
hazardous than permitted by the terms of the policy, will affect the validity
or
enforceability of the insurance as respects Lender.
Subject
Expansion means, collectively, the development, construction,
equipping and installation of certain Improvements on the Subject Property
to
expand Borrower’s penhex manufacturing capacity as disclosed to Lender in
connection with Lender’s underwriting and credit approval of the Term
Loan.
Termination
Date means the final date that Loans may be made under the Term
Loan, which date shall be the earlier of (a) the Conversion Date, and
(b) the occurrence of a Default.
Title
Company means the title insurance company, reasonably acceptable
to Lender, issuing the Title Insurance Policy.
Title
Insurance Policy means a mortgagee title insurance policy, as
Lender may require, issued in favor of Lender by the Title Company on behalf
of
the Title Company’s underwriter, on a coinsurance or reinsurance basis (with
direct access in Texas) if and as required by Lender in an amount equal to
one
hundred one hundred percent (100%) of the face amount of the Term Note, in
such
form as may be prescribed by applicable Governmental Requirements and as shall
be satisfactory to Lender, certifying that good and indefeasible fee title
to
the Subject Property is vested in Borrower, and that Lender’s Lien on the
Subject Property is a first priority lien thereon, subject only to a pending
disbursements clause and exceptions acceptable to Lender and required by
applicable state title insurance regulations.
(d) Section
2.1 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 2.1 as follows:
“2.1 Term
Loan. Subject to the terms and conditions of this Agreement,
including without limitation, the loan procedures set out in Section
2.3 below, Lender agrees to lend to Borrower multiple Loans under
the Term Loan which Borrower may borrow, and prepay but which may not be
re-borrowed under this Agreement (collectively, the “Term
Loan”).”
(e) Section
2.3 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 2.3 as follows:
“2.3 Loan
Procedures.
(a) Subject
to compliance with Section 5, Borrower may
request a Loan under the Revolving Credit Facility by submitting a Loan Request
to Lender. A Loan Request is irrevocable and binding on
Borrower. Each Loan Request must be received by Lender no later than
10:00 a.m. on (a) the third Business Day preceding the proposed Loan Date
for a LIBOR Loan and (b) the proposed Loan Date for a Base Rate
Loan. Loans may be outstanding as either Base Rate Loans or LIBOR
Loans. Each Loan under the Revolving Credit Facility is subject to
the following conditions:
(i) each
Loan must occur on a Business Day and no later than the Business Day immediately
preceding the Revolving Credit Termination Date;
(ii) each
Loan (unless the remaining amount under clause (c) below is less) must
be in an amount not less than $100,000 (if a Base Rate Loan) or
$100,000 (if a LIBOR Loan) or a greater integral multiple of
$10,000;
(iii) no
Loan may exceed an amount equal to the lesser of (a) the excess of the
Revolving Committed Amount over the Revolving Credit Exposure and (b) the excess
of the Borrowing Base over the Revolving Credit Exposure; and
(iv) after
giving effect to any Loan, the aggregate Revolving Credit Exposure may not
exceed the Revolving Credit Limit.
(b) Subject
to compliance with Section 5, Borrower may
request a Loan under the Term Loan by submitting a Loan Request to
Lender. A Loan Request is irrevocable and binding on
Borrower. Each Loan Request must be received by Lender no later than
10:00 a.m. on (a) the third Business Day preceding the proposed Loan Date
for a LIBOR Loan and (b) the proposed Loan Date for a Base Rate
Loan. Loans may be outstanding as either Base Rate Loans or LIBOR
Loans. Each Loan under the Term Loan is subject to the following
conditions:
(i) Each
Loan
under the Term Loan must occur on a Business Day and no later than the Business
Day immediately preceding the Conversion Date;
(ii) Each
Loan (unless the remaining amount under clause (d) below is less) must
be in the amount shown on the accompanied invoice submitted for payment with
the
proceeds of such Loan but in any event no Loan may be for less than
$10,000;
(iii) Each
Loan Request shall be accompanied by the invoice or invoices submitted for
payment therefore, and no Loan under the Term Loan may exceed the aggregate
amount of such invoice or invoices;
(iv) No
more than one Loan under the Term Loan may be made during a one month period;
and
(v) The
Principal Debt may not exceed the Term Loan Committed Amount after giving effect
to each Loan under the Term Loan.”
(f) Section
2.4(c) of the Credit Agreement is hereby deleted in its entirety
and replaced with Section 2.4(c) as
follows:
“(c) If
the Term Principal Debt ever exceeds the Term Loan Committed Amount, then
Borrower shall promptly prepay the Term Principal Debt in an amount equal to
the
excess, together with all accrued and unpaid interest on the principal amount
prepaid.”
(g) Section
3.2 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 3.2 as follows:
“3.2
Payments
(a) Interest
Payments. Accrued and unpaid interest on each Loan in respect of
the Principal Debt is due and payable in arrears on the first Business Day
of
each month beginning with the first Business Day of June 2006, and continuing
on
the first Business Day of each month thereafter through the Revolving Credit
Termination Date.
(b) Principal
Payments; Swap Contracts.
(i) On
the Conversion Date, the Term Principal Debt shall amortize based on a ten
year
commercial style amortization method and installments of the Term
Principal Debt shall be due and payable on the first Business Day of each
January, April, July, and October commencing with the first such date following
the Conversion Date.
(ii) The
Revolving Principal Debt is due and payable on the Revolving Credit Termination
Date.
(iii) The
Swap Termination Value (if any) owing by Borrower when such Swap Contract has
been closed out or otherwise terminated shall be due and payable in full on
the
date of such closing out or termination and otherwise in accordance with the
terms and conditions of the Swap Contract.”
(h) Section
3.4 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 3.4 as follows:
“3.4
Interest and Default Rate.
(a) Except
as otherwise provided in this Agreement, Loans under the Revolving Credit
Facility shall accrue interest at an annual rate equal to the lesser of
(i) at Borrower’s option (A) for a Base Rate Loan, the sum of the Base
Rate plus the Applicable Margin for Base Rate Loans, or (B) for a LIBOR
Loan, the sum of LIBOR plus the Applicable Margin for LIBOR
Loans, and (ii) the Maximum Rate. Each change in the Base Rate,
LIBOR, or the Maximum Rate is effective as of the effective date of such change
without notice to Borrower or any other Person.
(b) Except
as otherwise provided in this Agreement, Loans under the Term Loan shall accrue
interest at an annual rate equal to the lesser of (i) at
Borrower’s option (A) for a Base Rate Loan, the sum of the Base Rate plus
the Applicable Margin for Base Rate Loans, or (B) for a LIBOR Loan, the
sum of LIBOR plus the Applicable Margin for LIBOR Loans, and
(ii) the Maximum Rate. Each change in the Base Rate, LIBOR, or
the Maximum Rate is effective as of the effective date of such change without
notice to Borrower or any other Person. Notwithstanding anything to the contrary
herein, the Applicable Margin for Loans under the Term Loan shall be based
on
Level III until Lender receives the Compliance Certificate and Current
Financials for the period ending September 30, 2007.
(c) To
the extent permitted by Law, while a Default exists, the Obligation shall accrue
interest at the lesser of (i) the Default Rate and (ii) the
Maximum Rate, until all past due amounts are paid (whether payment is made
before or after entry of a judgment or the Default is otherwise cured or
waived). Subject to Section 3.7, if a
Default exists, Lender may, in its sole discretion, to the extent permitted
by
Law, add accrued and unpaid interest to the Principal Debt and such amount
will
accrue interest until paid at the applicable interest rate.”
(i) Section
3.6(a) of the Credit Agreement is hereby deleted in its entirety
and replaced with Section 3.6(a) as
follows:
“(a) When
Borrower requests any LIBOR Loan, Borrower may elect an Interest Period of,
at
Borrower’s option, one, two, three or six months, subject to the following
conditions: (i) no Interest Period may extend beyond the Revolving
Credit Termination Date (in respect of Loans under the Revolving Credit
Facility) or the Term Loan Maturity Date (in respect of Loans under the Term
Loan); and (ii) no more than 3 Interest Periods may be in effect at any time
under the Revolving Credit Facility and no more than 3 Interest Period may
be in
effect at any time under the Term Loan.”
(j) Section
5.2 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 5.2 as follows:
“5.2 Conditions
to all Credit Extensions
. Lender
will not be obligated to make any Credit Extension unless on the applicable
Loan
Date or date of such Credit Extension (and after giving effect to the requested
Loan, LC, or Swap Contract, as the case may be): (a) Lender has
timely received a Loan Request, LC Application, or Swap Contract, as the case
may be, (b) all of the representations and warranties of the Companies in
the Loan Documents are true and correct in all material respects (except to
the
extent that the representations and warranties speak to a specific date),
(c) Lender has received and continues to maintain evidence of insurance as
set out in Section 8.6 (including certificates
and endorsements); (d) no Material Adverse Event exists, (e) no
Default or Potential Default exists or will result from such Credit Extension;
and (f) in respect of any Loan under the Term Loan, Borrower shall procure
and
deliver to Lender releases or waivers of mechanic’s liens, and invoices, or paid
receipts if requesting reimbursements, of each party who has furnished materials
or services or performed labor of any kind in connection with the construction
of any of the Improvements and, in each case, whose aggregate invoices exceed
$100,000; such lien waivers shall be in Proper Form.
Each
Loan
Request, LC Application, or Swap Contract delivered to Lender constitutes the
representation and warranty by the Companies that the statements in clauses
(b), (c),(d) and (e) above are true and correct in all
material respects.”
(k) A
new Section 5.5 of the Credit Agreement is hereby
added to the Credit Agreement in its numerical order as follows:
“5.5 Condition
to Conversion to Mini “Perm” Loan
. Lender
will have no obligation to convert the Term Loan to a “mini- perm” loan on the
Conversion Date unless on or before the Conversion Date the following additional
conditions shall have been satisfied, to the extent required by
Lender:
(a) Borrower
shall have certified to Lender that construction has been completed in a good
and workmanlike manner, in compliance in all material respects with applicable
requirements of all Governmental Authorities and substantially in accordance
with the Plans and Specifications;
(b) To
the extent required by applicable Governmental Authorities for the use and
occupancy of the Improvements, evidence of code compliance and other applicable
permits and releases shall have been issued to Lender in Proper Form with
respect to the construction of the Improvements and copies thereof have been
furnished to Lender;
(c) Lender
shall have received an “as-built” survey in Proper Form showing the location of
the Improvements and other matters reasonably requested by Lender;
(d) Lender
shall have received a final affidavit from the contractor and full and complete
releases of lien from the contractor and each subcontractor of and supplier
to
the contractor with respect to work performed and/on materials supplied in
the
construction of the Improvements, all of such documentation to be in Proper
Form;
(e) A
valid notice of completion shall have been recorded in the real property records
of the county where the Subject Property is located;
(f) Lender
shall have received a satisfactory endorsement to its Title Insurance Policy;
and
(g) A
certificate from Borrower to Lender that the statements in clauses (b),
(c),(d) and (e) of Section 5.2
above are true and correct.”
(l) Section
6.1 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 6.1 as follows:
“6.1
Collateral. The complete payment and performance of the
Obligation shall be secured by all of the items and types of property
(collectively, the “Collateral”) described as
collateral in the Security Agreement, and “Mortgaged Property” in the Deed of
Trust. Each Company shall execute all applicable Security Documents
necessary to grant in favor of Lender a Lien upon all of the Collateral it
owns.”
(m) Section
6.5 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 6.5 as follows:
“6.5
[Intentionally Omitted.]”
(n) Section
7.13 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 7.13 as follows:
“7.13 Purpose
of Credit Facilities. Borrower will use the proceeds of the Term Loan as
disclosed in writing to Lender and for no other purpose. Borrower
will use the proceeds of the Revolving Credit Facility for its working capital
and general corporate purposes and to refinance certain Debt as disclosed to
Lender. Borrower will use the proceeds of the Term Loan for the
Subject Expansion and no other purpose. No part of the proceeds of
the Term Loan or the Revolving Credit Facility will be used, directly or
indirectly, for a purpose that violates any Law, including the provisions of
Regulation U.”
(o) New
Sections 7.20 through 7.22
of the Credit Agreement are hereby added to the Credit Agreement in their
appropriate numerical order as follows:
“7.20 Permits
and Restrictions
. On
or before the date construction commences on the Improvements for the Subject
Expansion and thereafter, all utility, building, health, and operating permits
(if any) required for the construction and operation of the Subject Expansion
will have been obtained and will be in effect. There are no deed
restrictions which have not been effectively waived which would prohibit, limit,
or interfere with Borrower’s use of the Subject Property or Borrower’s operation
of the Subject Property, before and after giving effect to the Subject
Expansion.
7.21 Sufficient
Funds
. Sufficient
funds are available to Borrower in addition to proceeds of the Term Loan to
pay
all costs of the Subject Expansion.
7.22 Other
Liens
. Prior
to the recordation of the Deed of Trust, no work of any kind (including
destruction or removal of any existing improvements, site work, clearing,
grading, grubbing, draining or fencing of the Subject Property) has been or
will
be commenced or performed on the Subject Property relative to the Subject
Expansion or any other ongoing construction work thereon, no equipment or
material has been or will be delivered to or placed upon the Subject Property
for any purpose whatsoever, and no contract (or memorandum or affidavit thereof)
for the supplying of labor, materials, or services for the design or
construction of the Improvements relative to the Subject Expansion, or the
surveying of the Subject Property or Improvements, nor any affidavit or notice
of commencement of construction of the Improvements, has been or will be
executed or recorded, which could cause a mechanic’s or materialman’s Lien or
similar Lien to achieve priority over the Deed of Trust or the rights of Lender
thereunder.”
(p) New
Sections 8.14 through 8.19
of the Credit Agreement are hereby added to the Credit Agreement in their
appropriate numerical order as follows:
“8.14. Appraisal. From
time to time after the Closing Date, Lender may obtain an Appraisal of the
Subject Property at Borrower’s sole cost and expense; provided that, as
long as no Default has occurred, Lender will not obtain at Borrower’s cost and
expense, or request Borrower to obtain, an Appraisal more often than annually,
unless required more frequently by any Governmental Authority.
8.15 Storage
of Materials
. Borrower
shall cause all materials supplied for, or intended to be used in, the
construction of the Improvements, but not affixed to or incorporated into the
Improvements or the Subject Property, to be stored on the Subject Property
or at
such other location upon notice to Lender in writing prior to storage in such
other location, with adequate safeguards, as commercially reasonable, to prevent
loss, theft, damage, or commingling with other materials or
projects.
8.16 No
Liability of Lender
. Lender
shall have no liability, obligation, or responsibility whatsoever with respect
to the construction of the Improvements except to make Loans under the Term
Loan
subject to the terms and provisions of this Agreement. Lender shall
not be obligated to inspect the Subject Property or the construction of the
Improvements, nor be liable for the performance or default of Borrower, the
general contractor, or any other party, or for any failure to construct,
complete, protect, or insure the Improvements, or for the payment of costs
of
labor, materials, or services supplied for the construction of the Improvements,
or for the performance of any obligation of Borrower
whatsoever. Nothing, including without limitation any Loan under the
Term Loan or acceptance of any document or instrument, shall be construed as
a
representation or warranty, express or implied, to any party by
Lender.
8.17 No
Conditional Sale Contracts, Etc
. No
materials, equipment, or fixtures shall be supplied, purchased, or installed
for
the construction or operation of the Improvements pursuant to security
agreements, conditional sale contracts, lease agreements, or other arrangements
or understandings whereby a security interest or title is retained by any party
or the right is reserved or accrues to any party to remove or repossess any
materials, equipment, or fixtures intended to be used in the construction or
operation of the Improvements, except in favor of Lender or as otherwise
permitted pursuant to clause (c) of the definition of “Permitted Liens”
in this Agreement.
8.18 Payment
of Claims
. Borrower
shall promptly pay or cause to be paid when due all costs and expenses incurred
in connection with the Subject Property and the construction of the Improvements
for the Subject Expansion, and Borrower shall keep the Subject Property free
and
clear of any Liens other than Liens approved in writing by
Lender. Notwithstanding anything to the contrary contained in this
Agreement or the Loan Documents, Borrower (a) may contest the validity or amount
of any claim of any contractor, consultant, or other person providing labor,
materials, or services with respect to the Property, (b) may contest any tax
or
special assessments levied by any Governmental Authority, and (c) may contest
the enforcement of or compliance with any Governmental Requirements, and such
contest on the part of Borrower shall not be a Default hereunder and shall
not
release Lender from its obligations to make Loans under the Term Loan hereunder,
provided that, during the pendency of any such contest, Borrower shall
set aside adequate reserves being established in accordance with GAAP and shall
pay any amount adjudged by a court of competent jurisdiction to be due, with
all
costs, interest, and penalties thereon, before such judgment becomes a lien
on
the Subject Property.
8.19 Use
of Loans Under Term Loan
. Borrower
shall promptly disburse all Loans under the Term Loan for payment of costs
and
expenses incurred for the Subject Expansion, and as most recently requested
on a
Loan Request, and for no other purpose.”
(q) Section
9.9 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 9.9 as
follows:
“9.9 Sale
of Assets
. No
Company may make any Disposition or enter into any agreement to make any
Disposition, except (a) Dispositions of surplus, obsolete or worn out or no
longer used assets in the ordinary course of business, (b) Dispositions of
Inventory in the ordinary course of business, (c) the Disposition of
delinquent accounts receivable in the ordinary course of business for purposes
of collection, (d) Dispositions of property by any Company to another Company
or
to a wholly-owned Subsidiary; provided that, if the transferor of such
property is the Borrower or a Guarantor, the transferee thereof must either
be
the Borrower or a Guarantor and must comply with Section
6, (e) to the extent permitted by Section 9.6,
and (f) without duplication of clauses (a) through
(e) of this Section
9.9, Dispositions of
personal property assets up to $150,000 individually and up to $500,000 in
the
aggregate during the term of this Agreement.”
(r) Section
10.3 of the Credit Agreement is hereby deleted and replaced with
Section 10.3 as follows:
“10.3 “Maximum
Unfinanced Capital Expenditures
. All
Unfinanced Capital Expenditures for TOCCO may not exceed $4,000,000
in the aggregate in any calendar year, commencing with the calendar year ended
December 31, 2007.”
(s) New
Sections 11.13 through 11.19
of the Credit Agreement
are hereby added to the Credit Agreement
in their appropriate numerical order as follows:
“11.13 Foreclosure
of Other Liens
. The
holder of any Lien on the Subject Property other than a Lender Lien (without
implying Lender’s consent to the existence, placing, creating, or permitting of
any lien or security interest) institutes foreclosure or other proceedings
for
the enforcement of its remedies thereunder and those proceedings are not stayed
within ten (10) days after notice to Borrower.
11.14 Title
. Borrower’s
title to any or all of the Subject Property shall be challenged in
writing or endangered by any Person whatsoever and the same (a) is not dismissed
or cured within ten (10) days and (b) is considered by Lender in its sole
reasonable discretion to present a material threat to the
Collateral.
11.15 Project
Requirements
. Borrower
shall knowingly default or breach any Governmental Requirements pertaining
to
the Subject Expansion that results in a significant or material impairment
of
the value of the Subject Property.
11.16 Cease
Construction
. Borrower
ceases the construction of the Improvements for the Subject Expansion for more
than thirty (30) days (for reasons other than Force Majeure) without
Lender’s prior written consent, which shall not be unreasonably withheld or
delayed.
11.17 Permits
. Borrower
fails to (a) keep in full force and effect any required permit or approval
from
any appropriate Governmental Authority with respect to the construction of
the
Improvements and such failure continues for thirty (30) days after Borrower
receives notice of, or has actual knowledge of, such failure, or (b) obtain
a
certificate of completion by the general contractor on or before fifteen (15)
months after the date of the initial Loan under the Term Loan.
11.18 Survey
Matters
. Any
Survey required by Lender shows any matter not existing as of the date of the
survey delivered on or prior to the initial Loan under the Term Loan which
is
unsatisfactory to Lender in its reasonable credit judgment, and such matter
is
not removed within a period of thirty (30) days after notice thereof by Lender
to Borrower.
11.19 Contractor
Default
. The
general contractor or any subcontractor defaults under any Construction Contract
in a manner which Lender deems to be material, and, unless otherwise agreed
in
writing by Lender, Borrower fails promptly to exercise its rights and remedies
under such Construction Contract with respect to such default.”
(t) New
Sections 12.6 through 12.7
are hereby added to the Credit Agreement in their appropriate numerical order
as
follows:
“12.6
Complete Construction
. Upon
the occurrence of a Default, Lender may, but shall not be obligated to: (a)
perform all work necessary to complete the construction and equipping of the
Improvements for the Subject Expansion in accordance with the Governmental
Requirements; (b) do anything necessary or desirable in Lender’s sole judgment
to fulfill the obligation of Borrower, including the right to avail itself
of
and procure performance of the Construction Contract and subcontractors or
to
let new or additional contracts with the contractor or the same subcontractors
or to others; and (c) employ watchmen and other safeguards to protect the
Subject Property and the Subject Expansion.
Without
restricting the generality of the foregoing, Borrower hereby appoints Lender
as
the attorney-in-fact of Borrower, with full power of substitution, and in the
name of Borrower, if Lender elects to do so, after the occurrence of a Default
and in respect of the Term Loan, to (a) use such sums as are necessary,
including any proceeds of the Term Loan, to make such changes or corrections
in
the plans and specifications for the Subject Expansion, and employ such
engineers, inspectors, rental agents, managers and contractors as may be
required for the purpose of completing the construction of the Improvements
substantially in the manner contemplated by such plans and specifications and
Governmental Requirements, (b) execute all applications and certificates in
the
name of Borrower which may be required for completion of construction of the
Improvements for the Subject Expansion, (c) endorse the name of Borrower on
any
checks or drafts representing proceeds of the Insurance Policies, or other
checks or installments payable to Borrower with respect to the Subject Property,
(d) do every act with respect to the construction of the Improvements for the
Subject Expansion which Borrower may do, (e) prosecute or defend any action
or
proceeding incident to the Subject Property, (f) to do all things necessary
in
Lender’s sole judgment, to complete construction, finishing and equipping of the
Improvements for the Subject Expansion and to rent, operate and manage the
Improvements, and to pay operating costs and expenses, including any applicable
management fees, of every kind and nature in connection therewith so that the
same shall be operational and usable for its intended purpose, all in the name
of Borrower, Lender or both, (g) to pay interest when due on all amounts
disbursed hereunder (either by adding such interest to the principal balance
of
the Term Loan or paying the same in cash), (h) to pay, settle or compromise
all
existing bills and claims which may be or become liens or security interests,
or
to avoid such bills and claims becoming liens against the Subject Property
or
against fixtures or equipment, or as may be necessary or desirable for the
completion of construction or for the equipping and operation of the
Improvements for the Subject Expansion, and (i) to prosecute and defend all
actions or proceedings in connection with the Subject Property or any equipment
or fixtures. Lender shall have no obligation to undertake any of the foregoing
actions, and if Lender should do so, it shall have no liability to Borrower
for
the sufficiency or adequacy of any such actions taken by Lender. All
cost and expenses, including all reasonable attorneys’ fees (based on standard
rates for hours actually worked by outside counsel) in connection with the
matters contemplated in this Section 12.6 shall
be payable by Borrower on demand, and if not promptly paid, shall be part of
the
Obligation and shall be secured by all of the Loan Documents. The
power-of-attorney granted hereby is a power coupled with an interest and
irrevocable by action of Borrower without the joinder of
Lender. Lender shall have no obligation to undertake any of the
foregoing actions, and if Lender should do so, it shall have no liability to
Borrower for the sufficiency or adequacy of any such actions taken by
Lender.
12.7 Cessation
of Loans under the Term Loan
. Upon
the occurrence of a Default, the obligation of Lender to make any Loans under
the Term Loan and all other obligations of Lender hereunder and under the Loan
Documents shall at Lender’s option, immediately cease during any applicable cure
period upon the failure of which Lender’s obligations to make Loans under the
Term Loan shall, at Lender’s option, immediately terminate; provided
that, nothing in this Section 12.7 shall be
deemed to limit the other provisions of this Agreement setting forth the
conditions precedent to Lender’s obligation to make any Loans under the Term
Loan or the conditions under which Lender may refuse to make further
disbursements or to limit Lender’s option to make further Loans under the Term
Loan at Lender’s sole option notwithstanding the occurrence of one or more
Defaults.”
(u) Section
13.8 of the Credit Agreement is hereby deleted in its entirety and
replaced with Section 13.8 as follows:
“13.8 Discharge
Only Upon Payment in Full; Reinstatement in Certain
Circumstances
. Each
Company’s obligations under the Loan Documents remain in full force and effect
until the commitment for the Revolving Credit Facility is terminated, the
commitment for the Term Loan is terminated, and the Obligation is paid in full
(except for provisions under the Loan Documents which by their terms expressly
survive payment of the Obligation and termination of the Loan
Documents). If at any time any payment of the principal of or
interest on any Note or any other amount payable by any Company or any other
obligor on the Obligation under any Loan Document is rescinded or must be
restored or returned upon the insolvency, bankruptcy or reorganization of
Borrower or otherwise, the obligations of each Company under the Loan Documents
with respect to that payment shall be reinstated as though the payment had
been
due but not made at that time.”
(v) Exhibit
C to the Credit Agreement is hereby deleted in its entirety and
replaced with Exhibit C attached to this
Amendment.
3. First
Amendment to Borrower Security Agreement. The Borrower Security
Agreement is hereby amended as follows:
(a) Section
3 of the Borrower Security Agreement is hereby amended to add
the
following at the end of such Section 3:
“Notwithstanding
anything to the contrary herein or in any other Loan Document, the Collateral
(as defined herein) shall not include the tolling product or other property
as
processed by Borrower for its customers located from time to time in Borrower’s
tanks located on Borrower’s property as such tanks and tolling product or other
property are more particularly described on attached Exhibit
“A” (as such Exhibit “A” may be replaced
revised, updated, amended or otherwise modified from time to time with Secured
Party’s consent, not to be unreasonably withheld or delayed).”
(b) Exhibit
“A” attached to this Amendment is hereby added as
Exhibit “A” at the end of the Borrower Security
Agreement.
4. Conditions. This
Amendment shall be effective once each of the following have been delivered
to
Lender in Proper Form:
(a) this
Amendment executed by Borrower and Lender, together with Guarantors’ Consent and
Agreement attached to this Amendment executed by such Guarantors;
(b) the
Term
Note executed by Borrower;
(c) a
Deed of
Trust covering the Subject Property;
(d) an
Assignment of Construction Contracts;
(e) a
survey
of the Subject Property;
(f) a
final
commitment for mortgagee’s title insurance on the foregoing Deed of Trust (with
a mortgagee’s policy of title insurance to be delivered to Lender promptly after
execution and delivery of this Amendment);
(g) an
Appraisal of the Subject Property;
(h) an
Officer’s Certificate of Borrower (with attachments thereto required by Lender);
and
(i) such
other documents and information as Lender may reasonably request.
5. Representations
and Warranties. Borrower represents and warrants to Lender that
(a) it possesses all requisite power and authority to execute, deliver and
comply with the terms of this Amendment, (b) this Amendment has been duly
authorized and approved by all requisite corporate action on the part of
Borrower, (c) no other consent of any Person (other than Lender) is required
for
this Amendment to be effective, (d) the execution and delivery of this Amendment
does not violate its organizational documents, (e) the representations and
warranties in each Loan Document to which it is a party are true and correct
in
all material respects on and as of the date of this Amendment as though made
on
the date of this Amendment after giving effect to this Amendment
(except to the extent that such representations and warranties speak to
a specific date), (f) it is in full compliance with all covenants and agreements
contained in each Loan Document to which it is a party other than in
respect of the Existing Default (before giving effect to this Amendment), and
(g) after giving effect to this Amendment, to the best of Borrower’s knowledge
after due inquiry and investigation, no Potential Default or Default has
occurred and is continuing. No investigation by Lender is required
for Lender to rely on the representations and warranties in this
Amendment.
6. Scope
of Amendment; Reaffirmation; Release. All references to the
Credit Agreement shall refer to the Credit Agreement as affected by this
Amendment. Except as affected by this Amendment, the Loan Documents
are unchanged and continue in full force and effect. However, in the
event of any inconsistency between the terms of the Credit Agreement (as
affected by this Amendment) and any other Loan Document, the terms of the Credit
Agreement (as affected by this Amendment) shall control and such other document
shall be deemed to be amended to conform to the terms of the Credit Agreement
(as amended by this Amendment). Borrower hereby reaffirms its
obligations under the Loan Documents to which it is a party and agrees that
all
Loan Documents to which it is a party remain in full force and effect and
continue to be legal, valid, and binding obligations enforceable in accordance
with their terms (as the same are affected by this Amendment).
7. Miscellaneous.
(a) No
Waiver of Defaults. This Amendment does not constitute (i) a
waiver of, or a consent to, (A) any provision of the Credit Agreement or any
other Loan Document not expressly referred to in this Amendment, or (B) any
present or future violation of, or default under, any provision of the Loan
Documents other than the Existing Default, or (ii) a waiver of Lender’s right to
insist upon future compliance with each term, covenant, condition and provision
of the Loan Documents.
(b) Headings. The
headings and captions used in this Amendment are for convenience only and will
not be deemed to limit, amplify or modify the terms of this Amendment, the
Credit Agreement, or the other Loan Documents.
(c) Costs,
Expenses and Attorneys’ Fees. Borrower agrees to pay or reimburse
Lender on demand for all its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation, and execution of
this
Amendment, including, without limitation, the reasonable fees and disbursements
of Lender’s counsel.
(d) Successors
and Assigns. This Amendment shall be binding upon and inure to
the benefit of each of the undersigned and their respective successors and
permitted assigns.
(e) Multiple
Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute
one and the same instrument. This Amendment may be transmitted and
signed by facsimile. The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect
as
manually signed originals and shall be binding on Borrower and
Lender.
(f) Governing
Law. This Amendment and the other Loan Documents must be
construed, and their performance enforced, under Texas law.
(g) Arbitration. Upon
the demand of any party to this Amendment, any dispute shall be resolved by
binding arbitration as provided for in Section 13.9 of
the Credit Agreement.
(h) Entirety. THE
LOAN DOCUMENTS (AS AMENDED HEREBY) REPRESENT THE FINAL AGREEMENT BETWEEN
BORROWER AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[Signatures
appear on the following page.]
This
Amendment is executed as of the
date set out in the preamble to this Amendment.
BORROWER
SOUTH
HAMPTON RESOURCES, INC.
By:
/s/ N
▇▇▇▇▇▇
Name:▇▇▇▇
▇▇▇▇▇▇
Title: President
LENDER
BANK
OF AMERICA, N.A.
By:
/s/ ▇▇▇▇
▇▇▇▇
Name:
▇▇▇▇ ▇.
▇▇▇▇
Title:
Vice
President
Signature
Page to Waiver and Second Amendment to Credit Agreement
and
First
Amendment to Borrower Security Agreement
GUARANTORS’
CONSENT AND AGREEMENT TO
WAIVER
AND SECOND AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO BORROWER
SECURITY AGREEMENT
As
an
inducement to Lender to execute, and in consideration of Lender’s execution of,
the Waiver and Second Amendment to Credit Agreement and First Amendment to
Borrower Security Agreement (the “Amendment”), the
undersigned hereby consent to the Amendment (including without limitation,
the
provision by Lender of the Term Loan to Borrower) and agree that the Amendment
shall in no way release, diminish, impair, reduce or otherwise adversely affect
the obligations and liabilities of the undersigned under the Guaranty executed
by the undersigned in connection with the Credit Agreement, or under any Loan
Documents, agreements, documents or instruments executed by the undersigned
to
create liens, security interests or charges to secure any of the Obligations
(as
defined in the Credit Agreement), all of which are in full force and effect.
The
undersigned hereby agree that the obligations and indebtedness guaranteed by
the
undersigned under the Guaranty, include without limitation, the obligations
and
indebtedness under the Term Loan. The undersigned further represent and warrant
to Lender that (a) the representations and warranties in each Loan Document
to
which it is a party are true and correct in all material respects on and as
of
the date of this Amendment as though made on the date of this Amendment (except
to the extent that such representations and warranties speak to a specific
date), (b) they are in full compliance with all covenants and agreements
contained in each Loan Document to which they are a party, and (c) no Default
or
Potential Default has occurred and is continuing. Guarantors hereby
release Lender from any liability for actions or omissions in connection with
the Loan Documents prior to the date of this Amendment. This
Guarantors’ Consent and Agreement shall be binding upon the undersigned and
their respective successors and assigns, and shall inure to the benefit of
Lender and its successors and assigns.
GUARANTOR:
GULF
STATE PIPE LINE
COMPANY, INC.
By:
/s/
N
▇▇▇▇▇▇
Name: ▇▇▇▇
▇▇▇▇▇▇
Title: President
TEXAS
OIL & CHEMICAL CO.
II, INC.
By:
/s/ N
▇▇▇▇▇▇
Name:
▇▇▇▇
▇▇▇▇▇▇
Title:
President
EXHIBIT
C (TO CREDIT AGREMENT)
LOAN
REQUEST
______________,
20___
Bank
of
America, N.A.
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇. ▇▇▇▇
Reference
is made to the Credit Agreement dated as of May 25, 2006 (as amended,
supplemented or restated from time to time, the “Credit
Agreement”), between the undersigned and Bank of America, N.A., a
national banking association
(“Lender”). Capitalized terms used but not
defined in this Loan Request shall have the meanings given such terms in the
Credit Agreement. The undersigned hereby gives you notice pursuant to
Section 2.3 of the Credit Agreement that it
requests a Loan under the Credit Agreement on the following terms:
(A) Loan
Date (a Business
Day)
(B) [Revolving
Loan][Term
Loan]
(C) Principal
Amount of Loan*
(D) Type
of Loan**
(E) For
LIBOR Loans, Interest Period
and
the last day thereof***
Borrower
hereby certifies that the following statements are true and correct on the
date
this Loan Request, and will be true and correct on the Loan Date specified
above
after giving effect to such Loan: (a) all of the representations and
warranties in the Loan Documents are true and correct in all material respects
(except to the extent that they speak to a specific date); (b) no Material
Adverse Event has occurred; and (c) no Default or Potential Default
exists.
VERY
TRULY YOURS,
BORROWER:
SOUTH
HAMPTON RESOURCES,
INC.
BY:
NAME:
TITLE:
|
*
|
Not
less than $100,000 or a greater integral multiple of $10,000 (if
a Base
Rate Loan); not less than $100,000 or a greater integral multiple
of
$10,000 (if a LIBOR Loan)
|
|
***
|
LIBOR
Loan — 1, 2, 3 or 6 months. In no event may the Interest Period
end after the Revolving Credit Termination Date in respect of the
Revolving Credit Facility or the Term Loan Maturity Date in respect
of the
Term Loan.
|
**** Must
be a Responsible Officer