EXHIBIT 10.1
LOAN AGREEMENT
($15,000,000 REVOLVING LOAN FACILITY)
DATED AS OF JUNE 30, 2003
AMONG
HYDRIL COMPANY,
AS BORROWER,
BANC ONE CAPITAL MARKETS, INC.,
AS LEAD ARRANGER AND SOLE BOOK MANAGER,
BANK ONE, NA,
AS ADMINISTRATIVE AGENT AND SWINGLINE LENDER
AND
THE FINANCIAL INSTITUTIONS NAMED HEREIN AS THE LENDERS
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS.........................................................1
1.01 Defined Terms.........................................................................................1
1.02 Accounting Terms.....................................................................................15
1.03 Computation of Time Periods..........................................................................15
1.04 Miscellaneous........................................................................................15
ARTICLE II COMMITMENTS AND LOANS.................................................................................15
2.01 Commitments..........................................................................................15
2.02 Swingline Loans......................................................................................15
2.03 Letters of Credit....................................................................................16
2.04 Terminations or Reductions of Commitments...........................................................19
2.05 Commitment Fees......................................................................................19
2.06 Several Obligations..................................................................................19
2.07 Notes................................................................................................20
ARTICLE III BORROWINGS, PREPAYMENTS AND INTEREST OPTIONS.........................................................20
3.01 Borrowing............................................................................................20
3.02 Prepayments..........................................................................................21
3.03 Interest Options.....................................................................................21
3.04 No Discrimination....................................................................................26
ARTICLE IV PAYMENTS, PRO RATA TREATMENT, COMPUTATIONS............................................................26
4.01 Payments.............................................................................................26
4.02 Pro Rata Treatment...................................................................................28
4.03 Non-Receipt of Funds by Agent........................................................................28
4.04 Sharing of Payments, Etc.............................................................................29
ARTICLE V CONDITIONS PRECEDENT...................................................................................29
5.01 Initial Loans and Letters of Credit..................................................................29
5.02 All Loans and Letters of Credit......................................................................31
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................................31
6.01 Organization.........................................................................................31
6.02 Financial Conditions; No Material Adverse Change.....................................................31
6.03 Enforceable Obligations; Authorization...............................................................32
6.04 Litigation...........................................................................................32
6.05 Taxes................................................................................................32
6.06 Regulations U and X..................................................................................32
6.07 Subsidiaries.........................................................................................33
6.08 No Untrue or Misleading Statements...................................................................33
6.09 Investment Company Act...............................................................................33
i
6.10 Public Utility Holding Company Act...................................................................33
6.11 Compliance...........................................................................................33
6.12 Use of Proceeds......................................................................................33
6.13 Reportable Transaction...............................................................................33
6.14 Defaults.............................................................................................34
ARTICLE VII AFFIRMATIVE COVENANTS................................................................................34
7.01 Taxes, Existence, Regulations, Property, Etc.........................................................34
7.02 Financial Statements and Information.................................................................34
7.03 Financial Tests......................................................................................35
7.04 Inspection...........................................................................................35
7.05 Further Assurances...................................................................................35
7.06 Books and Records....................................................................................35
7.07 Insurance............................................................................................35
7.08 Notice of Certain Matters............................................................................35
7.09 New Subsidiaries.....................................................................................36
7.10 Change of Control....................................................................................36
ARTICLE VIII NEGATIVE COVENANTS..................................................................................36
8.01 Borrowed Money Indebtedness..........................................................................36
8.02 Liens................................................................................................37
8.03 Mergers, Consolidations and Dispositions of Assets...................................................37
8.04 Redemption, Dividends and Distributions..............................................................37
8.05 Nature of Business...................................................................................38
8.06 Transactions with Related Parties....................................................................38
8.07 Loans and Investments................................................................................38
8.08 Organizational Documents.............................................................................38
8.09 Negative Pledges.....................................................................................38
ARTICLE IX DEFAULTS AND REMEDIES.................................................................................38
9.01 Events of Default....................................................................................38
9.02 Right of Setoff......................................................................................41
9.03 Collateral Account...................................................................................41
9.04 Remedies Cumulative..................................................................................41
ARTICLE X AGENT..................................................................................................42
10.01 Appointment, Powers and Immunities................................................................42
10.02 Reliance..........................................................................................43
10.03 Defaults..........................................................................................43
10.04 Material Written Notices..........................................................................43
10.05 Rights as a Lender................................................................................43
10.06 Indemnification...................................................................................44
10.07 Non-Reliance on Agent and Other Lenders...........................................................44
10.08 Failure to Act....................................................................................44
10.09 Resignation or Removal of Agent...................................................................45
ii
10.10 No Partnership....................................................................................45
ARTICLE XI MISCELLANEOUS.........................................................................................45
11.01 Waiver............................................................................................45
11.02 Notices...........................................................................................46
11.03 Expenses, Etc.....................................................................................46
11.04 Indemnification...................................................................................47
11.05 Amendments, Etc...................................................................................47
11.06 Successors and Assigns............................................................................48
11.07 Limitation of Interest............................................................................50
11.08 Survival..........................................................................................51
11.09 Captions..........................................................................................51
11.10 Counterparts......................................................................................51
11.11 Governing Law.....................................................................................51
11.12 Severability......................................................................................51
11.13 Tax Forms.........................................................................................51
11.14 Conflicts Between This Agreement and the Other Loan Documents.....................................52
11.15 Disclosure to Other Persons; Confidentiality......................................................52
11.16 Final Agreement...................................................................................53
EXHIBITS
1.01A Investment Policy
1.01B Rate Designation Notice
1.01C Request for Extension of Credit
2.07A Revolving Note
2.07B Swingline Note
6.07 Subsidiaries
7.02 Compliance Certificate
8.2 Liens
8.4 Noteholder Letter
11.06(b) Assignment and Acceptance
iii
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of June 30, 2003 (the
"Closing Date"), by and among HYDRIL COMPANY, a Delaware corporation (together
with its permitted successors, herein called the "Borrower"), BANK ONE, NA, a
national banking association ("Bank One"), as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"Agent") and as Swingline Lender ( in such capacity, together with its
successors in such capacity (the "Swingline Lender") and the banks and other
financial institutions listed on the signature page hereof under the caption
"Lenders" (together with each other person that becomes a Lender pursuant to
Section 11.06, collectively, the "Lenders"). In consideration of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS
1.01 Defined Terms. Unless a particular term, word or phrase is
otherwise defined or the context otherwise requires, capitalized terms, words
and phrases used herein or in the Loan Documents (as hereinafter defined) have
the following meanings (all definitions that are defined in this Agreement in
the singular have the same meanings when used in the plural and vice versa):
"Additional Interest" means the aggregate of all amounts accrued or
paid pursuant to the Notes or any of the other Loan Documents (other than
interest on the Notes at the Stated Rate) which, under applicable laws, are or
may be deemed to constitute interest on the indebtedness evidenced by the Notes.
"Adjusted LIBOR" means, with respect to each Interest Period applicable
to a LIBOR Borrowing, a rate per annum equal to the quotient, expressed as a
percentage, of (a) LIBOR with respect to such Interest Period divided by (b) 1.0
minus the Eurodollar Reserve Requirement in effect on the first day of such
Interest Period.
"Affiliate" means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"Agreement" means this Loan Agreement, as it may from time to time be
amended, modified, restated or supplemented.
"Annual Financial Statements" means the annual financial statements of
a Person, including all notes thereto, which statements shall include a balance
sheet as of the end of such fiscal year and an income statement and a statement
of cash flows for such fiscal year, all setting forth in comparative form the
corresponding figures from the previous fiscal year, all prepared in conformity
with GAAP in all material respects, and accompanied by the opinion of
independent certified public accountants of recognized national standing, which
shall state that such financial statements present fairly in all material
respects the financial position of such Person and, if such
Person has any Subsidiaries, its consolidated Subsidiaries as of the date
thereof and the results of its operations for the period covered thereby in
conformity with GAAP. Such statements of Borrower shall be accompanied by a
certificate of such accountants that in making the appropriate audit and/or
investigation in connection with such report and opinion, such accountants did
not become aware of any Default relating to the financial tests set forth in
Section 7.03 hereof or, if in the opinion of such accountants any such Default
exists, a description of the nature and status thereof. Annual Financial
Statements shall also include unaudited consolidating financial statements for
the applicable Person, in Proper Form, certified by the chief financial officer
or other authorized officer of such Person as true, correct and complete in all
material respects.
"Applications" means all applications and agreements for Letters of
Credit, or similar instruments or agreements, in Proper Form, now or hereafter
executed by any Person in connection with any Letter of Credit now or hereafter
issued or to be issued under the terms hereof at the request of any Person.
"Assignment and Acceptance" shall have the meaning ascribed to such
term in Section 11.06 hereof.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended,
and any successor statute.
"Base Rate" means for any day a rate per annum equal to the lesser of
(a) the Prime Rate for that day minus the applicable Margin Percentage from time
to time in effect or (b) the Ceiling Rate.
"Base Rate Borrowing" means that portion of the principal balance of
the Loans at any time bearing interest at the Base Rate.
"Borrowed Money Indebtedness" means, with respect to any Person,
without duplication, (i) all obligations of such Person for borrowed money
(other than the endorsement of negotiable instruments in the ordinary course of
business), (ii) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such Person under
conditional sale or other title retention agreements relating to Property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such Person to creditors incurred in the ordinary course of such Person's
business), (v) all capital lease obligations of such Person, (vi) all
obligations of others secured by any lien on property or assets owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (vii) Interest Rate Risk Indebtedness of such Person, (viii) all
obligations of such Person in respect of outstanding letters of credit issued
for the account of such Person securing obligations described in clauses (i)
through (vii) above and (ix) all guarantees of such Person of obligations
described in the foregoing clauses (i) through (viii) above.
"Business Day" means any day other than a day on which commercial banks
are authorized or required to close in Houston, Texas.
2
"Capital Stock" means any class of capital stock, share capital and
similar equity interest of a Person.
"Ceiling Rate" means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas (or
any jurisdiction whose usury laws are deemed to apply to the Notes or any other
Loan Documents despite the intention and desire of the parties to apply the
usury laws of the State of Texas) laws permits the higher interest rate, stated
as a rate per annum. On each day, if any, that Texas law establishes the Ceiling
Rate, the Ceiling Rate shall be the "weekly ceiling" (as defined in Section 303
of the Texas Finance Code (the "Texas Finance Code")) for that day. Agent may
from time to time, as to current and future balances, implement any other
ceiling under the Texas Finance Code by notice to Borrower, if and to the extent
permitted by the Texas Finance Code. Without notice to Borrower or any other
person or entity, the Ceiling Rate shall automatically fluctuate upward and
downward as and in the amount by which such maximum nonusurious rate of interest
permitted by applicable law fluctuates.
"Change of Control" means an event or series of events by which (a) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") as in effect on the Closing Date) or
related persons constituting a "group" (as such term is used in Rule 13d-5 under
the Exchange Act in effect on the Closing Date), other than the Initial
Stockholder Affiliates, is or becomes or has the absolute, unconditional right
to become the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, as in effect on the date of the Closing Date), directly or
indirectly, of 25% or more of the total voting power of the Voting Stock of the
Borrower unless at the time in question and all relevant times subsequent
thereto, the Initial Stockholder Affiliates are the beneficial owners of a
greater percentage of such total voting power than such "person" or "group"; (b)
the Borrower consolidates with or merges into another Person or conveys,
transfers or leases all or substantially all of its assets to any Person, or any
Person consolidates with, or merges into, the Borrower in a transaction not
otherwise permitted hereunder; (c) the Borrower conveys, transfers or leases all
or substantially all of its assets to any Person; (d) the stockholders of the
Borrower approve any plan of liquidation or dissolution of the Borrower; or (e)
during any period of twelve consecutive months, individuals who, at the
beginning of such period, constituted the board of directors of the Borrower
(together with any new directors whose election by the Borrower's board of
directors or whose nomination for election by the Borrower's stockholders was
approved by a vote of at least a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason (other
than due to death or disability) to constitute a majority of the board of
directors of the Borrower then in office.
"Closing Date" has the meaning set forth in the Preamble hereof.
"Commitment" means, with respect to each Lender, the Commitment of such
Lender to make Revolving Loans and Swingline Loans and to acquire participations
in Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Outstanding Credit Exposure hereunder. The
initial amount of each Lender's Commitment is set forth opposite such Lender's
name on the signature pages hereof under the
3
Caption "Commitment" or otherwise provided for in the applicable Assignment and
Acceptance Agreement.
"Commitment Fee Percentage" means the applicable per annum percentage
set forth at the appropriate intersection in the table contained in the
definition of Margin Percentage based on the Leverage Ratio as of the last day
of the most recently ended fiscal quarter of Borrower calculated by the Agent as
soon as practicable after receipt by the Agent of all financial reports required
under this Agreement with respect to such fiscal quarter (including a Compliance
Certificate); provided, however, that if the Commitment Fee Percentage is
increased as a result of the reported Leverage Ratio, such increase shall be
retroactive to the date that Borrower was obligated to deliver such financial
reports to the Agent pursuant to the terms of this Agreement; provided further,
however, that if the Commitment Fee Percentage is decreased as a result of the
reported Leverage Ratio, and such financial reports are delivered to the Agent
not more than ten (10) calendar days after the date required to be delivered
pursuant to the terms of this Agreement, such decrease shall be retroactive to
the date that Borrower was obligated to deliver such financial reports to the
Agent pursuant to the terms of this Agreement.
"Commitment Percentage" means, with respect to any Lender, the
percentage of the total Commitment represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Commitment Percentages shall be
determined based on the Commitments most recently in effect, giving effect to
any assignments.
"Compliance Certificate" has the meaning set forth in Section 7.02
hereof.
"Confidential Information" has the meaning set forth in Section 11.15.
"Corporation" means any corporation, limited liability company,
partnership, joint venture, joint stock association, business trust and other
business entity.
"Cover" shall be effected by paying to Agent immediately available
funds, to be held by Agent in a collateral account maintained by Agent at its
Principal Office and collaterally assigned as security for the financial
accommodations extended pursuant to this Agreement using documentation
reasonably satisfactory to Agent, in the amount required by any applicable
provision hereof. Such amount shall be retained by Agent in such collateral
account until such time as in the case of the Cover being provided pursuant to
Section 2.03(a), 3.02(b), 9.01 or 9.03 hereof, the applicable Letter of Credit
shall have expired and the Reimbursement Obligations, if any, with respect
thereto shall have been fully satisfied; provided, however, that at such time if
a Default or Event of Default has occurred and is continuing, Agent shall not be
required to release such amount in such collateral account until such Default or
Event of Default shall have been cured or waived.
"Credit Transactions" has the meaning set forth in Section 11.15.
"Default" means an Event of Default or an event which with notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
"Dollars" and "$" means lawful money of the United States of America.
4
"Domestic Subsidiary" has the meaning set forth in Section 7.09 hereof.
"EBITDA" means, without duplication, for any period the consolidated
net earnings (excluding any extraordinary gains or losses) of Borrower plus, to
the extent deducted in calculating consolidated net income, depreciation,
amortization, other non-cash items, Interest Expense, and federal and state
income and franchise tax expense and minus, to the extent added in calculating
consolidated net income, any non-cash items.
"Effective Date" means the date upon which all of the conditions
described in Section 5.01 have been completed to the reasonable satisfaction of
the Agent.
"Eligible Assignee" means (a) any Lender, (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $250,000,000.00; (c) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development or any successor organization, or a political
subdivision of any such country, and having total assets in excess of
$1,000,000,000.00; provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the Organization for Economic Cooperation and Development or any
successor organization; (d) the central bank of any country which is a member of
the Organization for Economic Cooperation and Development or any successor
organization; and (e) any other bank or similar financial institution approved
by the Agent, the Majority Lenders and the Borrower, which consent of the
Borrower shall not be unreasonably withheld.
"Eurodollar Rate" means for any day during an Interest Period for a
LIBOR Borrowing a rate per annum equal to the lesser of (a) the sum of (1) the
Adjusted LIBOR in effect on the first day of such Interest Period plus (2) the
applicable Margin Percentage in effect on the first day of such Interest Period
and (b) the Ceiling Rate. Each Eurodollar Rate is subject to adjustments for
reserves, insurance assessments and other matters as provided for in Section
3.03(c) hereof.
"Eurodollar Reserve Requirement" means, on any day, that percentage
(expressed as a decimal fraction and rounded, if necessary, to the next highest
one ten thousandth [.0001]) which is in effect on such day for determining all
reserve requirements (including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to "Eurocurrency liabilities," as
currently defined in Regulation D. Each determination of the Eurodollar Reserve
Requirement by Agent shall be prima facie evidence of the correctness thereof,
and may be computed using any reasonable averaging and attribution method.
"Event of Default" has the meaning set forth in Article IX hereof.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any such day which is a
Business Day, the average of the quotations for such day on such transactions
received by
5
Agent from three Federal funds brokers of recognized standing selected by Agent
in its sole and absolute discretion.
"Foreign Subsidiary" has the meaning set forth in Section 7.09 hereof.
"Funding Loss" means, with respect to (a) Borrower's payment of
principal of a LIBOR Borrowing on a day other than the last day of the
applicable Interest Period; (b) Borrower's failure to borrow a LIBOR Borrowing
on the date specified by Borrower; (c) Borrower's failure to make any prepayment
of the Loans (other than Base Rate Borrowings) on the date specified by
Borrower; or (d) any cessation of a Eurodollar Rate to apply to the Loans or any
part thereof pursuant to Section 3.03, in each case whether voluntary or
involuntary, any loss, expense, penalty, premium or liability actually incurred
by any Lender (including but not limited to any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
any Lender to fund or maintain a Loan).
"GAAP" means, as to a particular Person, such accounting practice as,
in the opinion of independent certified public accountants of recognized
national standing regularly retained by such Person, conforms at the time to
generally accepted accounting principles, consistently applied for all periods
after the Closing Date (except for any such change with which such accountants
concur, pursuant to the following sentence) so as to present fairly the
financial condition, and results of operations and cash flows, of such Person.
If any change in any accounting principle or practice is required by the
Financial Accounting Standards Board, all reports and financial statements
required hereunder may be prepared in accordance with such change so long as
Borrower provides to Agent such disclosures of the impact of such change as
Agent may reasonably require. No such change in any accounting principle or
practice shall, in itself, cause a Default or Event of Default hereunder (but
Borrower, Agent and Lenders shall negotiate in good faith to replace any
financial covenants hereunder to the extent such financial covenants are
affected by such change in accounting principle or practice).
"Governmental Authority" means any foreign governmental authority, the
United States of America, any State of the United States, and any political
subdivision of any of the foregoing, and any central bank, agency, department,
commission, board, bureau, court or other tribunal having jurisdiction over
Agent, any Lender, any Obligor or their respective Property.
"Guaranties" means, collectively, any and all guaranties hereafter
executed in favor of Agent, for the benefit of Lenders, relating to the
Obligations, as any of them may from time to time be amended, modified, restated
or supplemented.
"Guarantors" means Hydril General LLC, Hydril Limited LLC, Hydril
Company LP and, all other Domestic Subsidiaries of the Borrower, for which a
guaranty is requested by Agent in accordance with Section 7.09 hereof.
"Hazardous Substance" means petroleum products, and any hazardous or
toxic waste or substance defined or regulated as such from time to time by any
law, rule, regulation or order described in the definition of "Requirements of
Environmental Law."
"Indebtedness" means, without duplication, (a) all items which in
accordance with GAAP would be included in the liability section of a balance
sheet (other than trade accounts payable
6
and accrued expenses (other than Interest Expense) arising in the ordinary
course of business) on the date as of which Indebtedness is to be determined
(excluding, to the extent applicable, capital stock, surplus, surplus reserves
and deferred taxes and other credits); (b) all guaranties, letter of credit
contingent reimbursement obligations and other contingent obligations in respect
of, or any obligations to purchase or otherwise acquire, Indebtedness of others
(other than endorsements for collection in the ordinary course of business); and
(c) all Indebtedness secured by any Lien existing on any interest of the Person
with respect to which Indebtedness is being determined in Property owned subject
to such Lien whether or not the Indebtedness secured thereby shall have been
assumed; provided, that the term "Indebtedness" shall not mean or include any
Indebtedness in respect of which monies sufficient to pay and discharge the same
in full (either on the expressed date of maturity thereof or on such earlier
date as such Indebtedness may be duly called for redemption and payment) shall
be deposited with a depository, agency or trustee reasonably acceptable to Agent
in trust for the payment thereof.
"Initial Stockholder" means and includes ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Initial Stockholder Affiliates" means (a) any Initial Stockholder; (b)
a spouse, child, lineal descendant, parent or sibling of an Initial Stockholder
and any of their estates and legal representatives (each a "Related Person");
(c) any trust or charitable organization of which any Related Person is a
trustee, director, beneficiary or grantor; and (d) a corporation, partnership,
limited liability company or other similar business entity of which more than
50% of the Voting Stock thereof is controlled, directly or indirectly, by any
Person described in clause (a) or clause (b) of this definition.
"Interest Expense" means, for any period, total interest expense
(including interest expense attributable to capitalized leases and net costs
under interest rate swap, collar, cap or similar agreements providing interest
rate protection), determined in accordance with GAAP.
"Interest Options" means the Base Rate and each Eurodollar Rate, and
"Interest Option" means any of them.
"Interest Payment Date" means (a) for Base Rate Borrowings, the last
day of each month prior to the Maturity Date, and the Maturity Date; and (b) for
LIBOR Borrowings, the end of the applicable Interest Period (and if such
Interest Period exceeds three months' duration, the 90th day of such Interest
Period and the Maturity Date.
"Interest Period" means, for each LIBOR Borrowing, in respect of any
Loan, other than a Swingline Loan, a period commencing on the date such LIBOR
Borrowing began and ending on the numerically corresponding day which is,
subject to availability as set forth in Section 3.03(c)(iii), 1, 3 or 6 months
thereafter, as Borrower shall elect in accordance herewith; provided, (1) unless
Agent and, in connection with Interest Periods in respect of Swingline Loans,
the Swingline Lender, shall otherwise consent, no Interest Period with respect
to a LIBOR Borrowing shall commence on a date earlier than three (3) Business
Days after this Agreement shall have been fully executed; (2) any Interest
Period with respect to a LIBOR Borrowing which would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next succeeding LIBOR
Business Day, unless such LIBOR Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
7
LIBOR Business Day; (3) any Interest Period with respect to a LIBOR Borrowing
which begins on the last LIBOR Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last LIBOR Business Day of the
appropriate calendar month; (4) no Interest Period for a Loan shall ever extend
beyond the Maturity Date; and (5) Interest Periods shall be selected by Borrower
in such a manner that the Interest Period with respect to any portion of the
Loans which shall become due shall not extend beyond such due date. All Interest
Periods for LIBOR Borrowings in respect of Swingline Loans shall be of one (1)
month duration.
"Interest Rate Risk Agreement" means an interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar
arrangement entered into by a Person for the purpose of reducing such Person's
exposure to interest rate fluctuations and not for speculative purposes, with a
counterparty reasonably acceptable to Agent, as such agreement may from time to
time be amended, modified, restated or supplemented.
"Interest Rate Risk Indebtedness" means all obligations and
Indebtedness of a Person with respect to the program for the hedging of interest
rate risk provided for in any Interest Rate Risk Agreement.
"Investment" means the purchase or other acquisition of any securities
or Indebtedness of, or the making of any loan, advance, transfer of Property
(other than transfers in the ordinary course of business) or capital
contribution to, or the incurring of any liability (other than trade accounts
payable arising in the ordinary course of business), contingently or otherwise,
in respect of the Indebtedness of, any Person.
"Issuer" means the issuer (or, where applicable, each issuer) of a
Letter of Credit under this Agreement.
"Legal Requirement" means any law, statute, ordinance, decree,
requirement, order, judgment, rule, or regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, whether presently existing or arising in the future.
"Letter of Credit" has the meaning set forth in Section 2.03 hereof.
"Letter of Credit Liabilities" means, at any time and in respect of any
Letter of Credit, the sum of (i) the amount available for drawings under such
Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement
Obligations at the time due and payable in respect of previous drawings made
under such Letter of Credit. For the purpose of determining at any time the
amount described in clause (i), in the case of any Letter of Credit payable in a
currency other than Dollars, such amount shall be converted by Agent to Dollars
by any reasonable method, and such converted amount shall be prima facie
evidence of the correctness thereof.
"Leverage Ratio" means, as of any day, the ratio of (a) Borrowed Money
Indebtedness to (b) EBITDA for the most recently completed four (4) consecutive
fiscal quarters.
"LIBOR" means, for each Interest Period for any LIBOR Borrowing, the
rate per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%)
equal to the average of the offered
8
quotations appearing on Dow ▇▇▇▇▇ Market Service (formerly Telerate) Page 3750
(or if such Page shall not be available, any successor or similar service as may
be selected by Agent and Borrower) as of 10:00 a.m., Houston, Texas time (or as
soon thereafter as practicable) on the day two LIBOR Business Days prior to the
first day of such Interest Period for deposits in United States dollars having a
term comparable to such Interest Period and in an amount comparable to the
principal amount of the LIBOR Borrowing to which such Interest Period relates.
If none of such Page 3750 nor any successor or similar service is available,
then "LIBOR" shall mean, with respect to any Interest Period for any applicable
LIBOR Borrowing, the rate of interest per annum, rounded upwards, if necessary,
to the nearest 1/16th of 1%, quoted by Agent at or before 10:00 a.m., Houston,
Texas time (or as soon thereafter as practicable), on the date two LIBOR
Business Days before the first day of such Interest Period, to be the arithmetic
average of the prevailing rates per annum at the time of determination and in
accordance with the then existing practice in the applicable market, for the
offering to Agent by one or more prime banks selected by Agent in its sole
discretion, in the London interbank market, of deposits in United States dollars
for delivery on the first day of such Interest Period and having a maturity
equal to the length of such Interest Period and in an amount equal (or as nearly
equal as may be) to the LIBOR Borrowing to which such Interest Period relates.
Each determination by Agent of LIBOR shall be prima facie evidence of the
correctness thereof, and may be computed using any reasonable averaging and
attribution method.
"LIBOR Borrowing" means each portion of the principal balance of the
Loans at any time bearing interest at a Eurodollar Rate.
"LIBOR Business Day" means a Business Day on which transactions in
United States dollar deposits between lenders may be carried on in the London
interbank market.
"Lien" means any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract, and
shall include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions and other title exceptions.
"Loans" means the Revolving Loans and Swingline Loans made by the
Lenders to the Borrower pursuant to this Agreement.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Pledge Agreement, the Guaranties, all instruments, certificates and agreements
now or hereafter executed or delivered by any Obligor to Agent or any Lender
pursuant to any of the foregoing or in connection with the Obligations or any
commitment regarding the Obligations, and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing.
"Majority Lenders" means Lenders having (i) prior to the Revolving Loan
Termination Date, greater than 66-2/3% of the Total Revolving Loan Commitment
and (ii) on and after the Revolving Loan Termination Date, greater than 66-2/3%
of the aggregate amount of outstanding Obligations.
9
"Margin Percentage" means the applicable per annum percentage set forth
at the appropriate intersection in the table shown below, based on the Leverage
Ratio as of the last day of the most recently ended fiscal quarter of Borrower
calculated by the Agent as soon as practicable after receipt by the Agent of all
financial reports required under this Agreement with respect to such fiscal
quarter (including a Compliance Certificate) (provided, that if the Margin
Percentage is increased as a result of the reported Leverage Ratio, such
increase shall be retroactive to the date that Borrower was obligated to deliver
such financial reports to the Agent pursuant to the terms of this Agreement and
provided further, that if the Margin Percentage is decreased as a result of the
reported Leverage Ratio, and such financial reports are delivered to the Agent
not more than ten (10) calendar days after the date required to be delivered
pursuant to the terms of this Agreement, such decrease shall be retroactive to
the date that Borrower was obligated to deliver such financial reports to the
Agent pursuant to the terms of this Agreement) regardless, in each case, of
whether such date occurs during an existent interest period:
LIBOR Base Rate Commitment Fee
Leverage Ratio Margin Margin Percentage (unused)
< 1.25 x plus 0.85% minus 1.15% .20%
= 1.25 x < 1.75 x plus 1.20% minus .80% .20%
= 1.75 x < 2.25 x plus 1.40% minus .60% .20%
"Maturity Date" means June 30, 2005.
"Minimum Advance" means $500,000 or an integral multiple of $100,000 in
excess thereof.
"Net Worth" means, as to the Borrower and its Subsidiaries, on a
consolidated basis, at any date of determination thereof, the sum of (a) the par
value or stated value of its Capital Stock, plus (b) capital in excess of par or
stated value of shares of its Capital Stock plus (or minus in the case of a
deficit), retained earnings or accumulated deficit, as the case may be plus (c)
any other account which, in accordance with GAAP, constitutes stockholders'
equity.
"Notes" shall have the meaning set forth in Section 2.07 hereof.
"Obligations" means, as at any date of determination thereof, the sum
of the following: (i) the aggregate principal amount of Loans outstanding
hereunder on such date, plus (ii) the aggregate amount of the outstanding Letter
of Credit Liabilities hereunder on such date, plus (iii) all other outstanding
liabilities, obligations and indebtedness of any Obligor under any Loan Document
on such date.
"Obligors" means Borrower and each Person now or hereafter executing a
Guaranty.
"Organizational Documents" means, with respect to a corporation, the
certificate of incorporation or articles of incorporation (as applicable) and
bylaws of such corporation; with respect to a partnership, the partnership
agreement establishing such partnership; with respect to a trust, the instrument
establishing such trust, and with respect to any other business entity, the
documents relating to its formation, organization and governance; in each case
including any and
10
all modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof.
"Outstanding Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans, its Letter of Credit Liabilities and its Swingline Exposure at such time.
"Past Due Rate" means, on any day, a rate per annum equal to the lesser
of (i) the Ceiling Rate for that day or (ii) the Base Rate plus two percent
(2%).
"Permitted Investments" means (a) investments made by the Borrower and
its Subsidiaries in accordance with the Investment Policy attached hereto as
Exhibit 1.01A, together with any amendments or replacements to such Investment
Policy as are approved by Agent in writing and (b) other investments by Borrower
and its Subsidiaries not exceeding one percent (1%) of cash and cash equivalents
then on hand, as shown on Borrower's most recent Quarterly Financial Statement,
not subject to any lien, security interest or setoff, and not exceeding
$1,000,000 in the aggregate at any one time.
"Permitted Liens" means each of the following: (a) artisans' or
mechanics' Liens arising in the ordinary course of business, and Liens for
taxes, but only to the extent that payment thereof shall not at the time be due
or if due, the payment thereof is being diligently contested in good faith and
adequate reserves computed in accordance with GAAP have been set aside therefor;
(b) Liens in effect on the Closing Date and listed on Exhibit 8.02; (c) normal
encumbrances and restrictions on title which do not secure Borrowed Money
Indebtedness and which do not have a material adverse effect on the value or
utility of the applicable Property; (d) Liens in favor of Agent or any Lender
under the Loan Documents, including, without limitation, Liens securing Interest
Rate Risk Indebtedness owed to one or more of the Lenders (but not to any Person
which is not, at such time, a Lender); (e) Liens incurred or deposits made in
the ordinary course of business (1) in connection with workmen's compensation,
unemployment insurance, social security and other like laws, or (2) to secure
insurance in the ordinary course of business, the performance of bids, tenders,
contracts, leases, licenses, statutory obligations, surety, appeal and
performance bonds and other similar obligations incurred in the ordinary course
of business, not, in any of the cases specified in this clause (2), incurred in
connection with the borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of Property; (f) attachments, judgments and other
similar Liens arising in connection with court proceedings, provided that the
execution and enforcement of such Liens are effectively stayed and the claims
secured thereby are being actively contested in good faith with adequate
reserves made therefor in accordance with GAAP and would not otherwise cause a
Default or an Event of Default; (g) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and vendors' liens, incurred in good
faith in the ordinary course of business and securing obligations which are not
yet due or which are being contested in good faith by appropriate proceedings if
adequate reserves with respect thereto are maintained in accordance with GAAP;
(h) zoning restrictions, easements, licenses, reservations, provisions,
covenants, conditions, waivers, and restrictions on the use of Property, and
which do not in any case singly or in the aggregate materially impair the
present use or value of the Property subject to any such restriction or
materially interfere with the ordinary conduct of the business of any Obligor;
(i) Liens securing purchase money Indebtedness permitted under
11
Section 8.01 hereof and covering the Property so purchased and improvements or
accessions thereto; (j) capital leases and sale/leaseback transactions permitted
under the other provisions of this Agreement; and (k) extensions, renewals and
replacements of Liens referred to in clauses (a) through (j) of this definition;
provided that any such extension, renewal or replacement Lien shall be limited
to the Property or assets covered by the Lien extended, renewed or replaced and
that the Borrowed Money Indebtedness secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the amount of the
Indebtedness secured by the Lien extended, renewed or replaced.
"Person" means any individual, Corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity.
"Pledge Agreement" means the Pledge Agreement dated of even date
herewith and executed by the Borrower and the Agent for the benefit of the
Lenders pledging to the Agent not less than 65% of the Capital Stock of each
Subsidiary of Borrower that is not a Domestic Subsidiary.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent, changing when and as said
prime rate changes. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate or a favored rate, and Bank One, Agent and
each Lender disclaims any statement, representation or warranty to the contrary.
Bank One, Agent or any Lender may make commercial loans or other loans at rates
of interest at, above or below the Prime Rate.
"Principal Office" means the principal office of Agent, presently
located at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Proper Form" means in form and substance reasonably satisfactory to
Agent.
"Property" means any interest in any kind of property or asset, whether
read, personal or mixed, tangible or intangible.
"Quarterly Dates" means the last day of each March, June, September and
December, provided that if any such date is not a Business Day, then the
relevant Quarterly Date shall be the immediately preceding Business Day.
"Quarterly Financial Statements" means the quarterly financial
statements of a Person, which statements shall include a balance sheet as of the
end of such fiscal quarter and an income statement and a statement of cash flows
for such fiscal quarter and for the fiscal year to date, subject to normal
year-end adjustments, all setting forth in comparative form the corresponding
figures as of the end of and for the corresponding fiscal quarter of the
preceding year, prepared in accordance with GAAP in all material respects except
that such statements are condensed and exclude detailed footnote disclosures and
certified by the chief financial officer or other authorized officer of such
Person as fairly presenting, in all material respects, the financial condition
of such person as of such date. Quarterly Financial Statements shall also
include unaudited consolidating financial statements for the applicable Person,
in Proper Form, certified by the chief financial officer or other authorized
officer of such Person as true, correct and complete in all material respects.
12
"Rate Designation Time" means (a) in the case of Base Rate Borrowings,
11:00 a.m., Houston, Texas time, on the date of such borrowing and (b) in the
case of LIBOR Borrowings, 11:00 a.m., Houston, Texas time, on the date three
LIBOR Business Days preceding the first day of any proposed Interest Period.
"Rate Designation Notice" means a written notice substantially in the
form of Exhibit 1.01B.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and includes any successor or
other regulation relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Reimbursement Obligations" means, as at any date, the obligations of
Borrower then outstanding, or which may thereafter arise, in respect of Letters
of Credit under this Agreement, to reimburse the Issuer for the amount paid by
Issuer in respect of any drawing under such Letters of Credit, which obligations
shall at all times be payable in Dollars notwithstanding any such Letter of
Credit being payable in a currency other than Dollars.
"Request for Extension of Credit" means a request for extension of
credit duly executed on behalf of Borrower, appropriately completed and
substantially in the form of Exhibit 1.01C attached hereto.
"Requirements of Environmental Law" means all requirements imposed by
any law (including for example and without limitation The Resource Conservation
and Recovery Act and The Comprehensive Environmental Response, Compensation, and
Liability Act), rule, regulation, or order of any federal, state or local
executive, legislative, judicial, regulatory or administrative agency, board or
authority in effect at the applicable time which relate to (i) noise; (ii)
pollution, protection or clean-up of the air, surface water, ground water or
land; (iii) solid, gaseous or liquid waste generation, treatment, storage,
disposal or transportation; (iv) exposure to Hazardous Substances; (v) the
safety or health of employees; or (vi) regulation of the manufacture,
processing, distribution in commerce, use, discharge or storage of Hazardous
Substances by Borrower or any of its Subsidiaries.
"Revolving Loan" means a Loan made pursuant to Section 2.01.
"Revolving Loan Availability Period" means the period from and
including the Closing Date to (but not including) the Revolving Loan Termination
Date.
"Revolving Loan Termination Date" means the earlier of (a) the Maturity
Date or (b) the date specified by Agent in accordance with Section 9.01 hereof.
"Revolving Note" means a Note from the Borrower payable to the order of
each Lender in a principal amount equal to the Commitment of such Lender, in
substantially the form of Exhibit 2.07A.
"Secretary's Certificate" means a certificate, in Proper Form, of the
Secretary or an Assistant Secretary of a Corporation as to (a) the resolutions
of the Board of Directors of such Corporation authorizing the execution,
delivery and performance of the documents to be
13
executed by such Corporation; (b) the incumbency and signature of the officer of
such Corporation executing such documents on behalf of such Corporation; and (c)
the Organizational Documents of such Corporation.
"Stated Rate" means the effective weighted per annum rate of interest
applicable to the Loans; provided, that if on any day such rate shall exceed the
Ceiling Rate for that day, the Stated Rate shall be fixed at the Ceiling Rate on
that day and on each day thereafter until the total amount of interest accrued
at the Stated Rate on the unpaid principal balances of the Notes plus the
Additional Interest equals the total amount of interest which would have accrued
if there had been no Ceiling Rate. Without notice to Borrower or any other
Person, the Stated Rate shall automatically fluctuate upward and downward in
accordance with the provisions of this definition.
"Subsidiary" means, as to a particular parent, any entity of which more
than 50% of the equity rights (whether outstanding capital stock or otherwise)
is at the time directly or indirectly owned by, such parent.
"Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Commitment Percentage of the total Swingline
Exposure at such time.
"Swingline Loan" means a Loan made available to the Borrower by the
Swingline Lender pursuant to Section 2.02.
"Swingline Note" means a Note from the Borrower payable to the order of
the Swingline Lender, in substantially the form of Exhibit 2.07B.
"Tangible Net Worth" shall mean Net Worth, less all determined in
accordance with GAAP. The term "intangibles" shall include, without limitation,
(1) deferred charges; (2) the amount of any write-up in the book value of any
assets contained in any balance sheet resulting from revaluation thereof or any
write-up in excess of the cost of such assets acquired; and (3) the aggregate of
all amounts appearing on the assets side of any such balance sheet for
franchises, licenses, permits, patents, patent applications, copyrights,
trademarks, trade names, service marks, goodwill, treasury stock, experimental
or organizational expenses and other like intangibles.
"Taxes" shall have the meaning set forth in Section 4.01(d).
"Total Capitalization" means the sum of, without duplication, the
Borrowed Money Indebtedness of Borrower and its Subsidiaries, on a consolidated
basis, and preferred stock and the stockholders' equity (including paid-in
capital and retained earnings) of Borrower and its Subsidiaries, determined on a
consolidated basis and in accordance with GAAP.
"Total Revolving Loan Commitment" means the total of the Commitments of
each Lender to make Revolving Loans, which as of the Closing Date, equals
$15,000,000.
"UK Loan Agreement" means that certain Loan Agreement dated as of
September 25, 2001 among Hydril U.K. Limited, as Borrower, Bank One, NA (London
Branch), as Agent,
14
Issuer and as a Lender, and any other Lenders now or hereafter parties thereto,
as such may be amended, modified, restated or supplemented from time to time.
"Voting Stock" means, with respect to any Person, Capital Stock of any
class or classes of a corporation, an association or another business entity the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote in the election of corporate directors (or individuals performing similar
functions) of such Person or which permit the holders thereof to control the
management of such Person, including general partnership interests in a
partnership and membership interests in a limited liability company.
1.02 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in each case in accordance with GAAP as in effect on
the date of this Agreement.
1.03 Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, unless
otherwise indicated, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
1.04 Miscellaneous. The words "hereof," "herein," and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
ARTICLE II
COMMITMENTS AND LOANS
2.01 Commitments. Each Lender severally agrees, subject to all of the
terms and conditions of this Agreement (including, without limitation, Article V
hereof), from time to time on or after the Closing Date and during the Revolving
Loan Availability Period, to make Revolving Loans to Borrower in an aggregate
principal amount at any one time outstanding up to but not exceeding the maximum
amount that will not result in (a) such Lender's Outstanding Credit Exposure
exceeding such Lender's Commitment or (b) the total Outstanding Credit Exposures
exceeding the Total Revolving Loan Commitment. Subject to the conditions in this
Agreement, any such Revolving Loan repaid prior to the Revolving Loan
Termination Date may be reborrowed pursuant to the terms of this Agreement;
provided, that any and all such Revolving Loans shall be due and payable in full
at the end of the Revolving Loan Availability Period. The aggregate of all
Revolving Loans to be made by the Lenders in connection with a particular
borrowing shall be equal to a Minimum Advance.
2.02 Swingline Loans. Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from
time to time during the Revolving Loan Availability Period, in an aggregate
principal amount up to but not exceeding the maximum amount that will not result
in (i) the aggregate principal amount of outstanding Swingline Loans exceeding
$2,500,000 or (ii) the total Outstanding Credit Exposures exceeding the total
Commitments; provided, the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan. Subject to the terms
of this Agreement, the Borrower may borrow, repay and reborrow Swingline Loans
at any time prior to the Revolving Loan Termination Date. All Swingline Loans
shall bear interest at the Eurodollar Rate as determined by the Swingline Lender
in its sole discretion on the first day of the month in
15
which the applicable Swingline Loan is made, whether or not a LIBOR Borrowing is
actually made or in effect on that date.
(b) Each Swingline Loan shall be paid in full by the Borrower on or
before the seventh (7th) Business Day following the date upon which the
Swingline Loan is made. In addition, the Swingline Lender may by written notice
given to the Agent not later than 10:00 a.m. Houston time on any Business Day
require each Lender (including the Swingline Lender) to acquire participations
on such Business Day in all or a portion of the Swingline Loans outstanding.
Such notice shall specify the aggregate amount of the Swingline Loans in which
Lenders will participate. Promptly upon receipt of such notice, the Agent will
give notice thereof to each Lender, specifying in such notice such Lender's pro
rata percentage of such Swingline Loan or Loans. Each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
the Agent, for the account of the Swingline Lender, such Lender's pro rata
percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 3.01 with
respect to Loans made by such Lender (and Section 3.01 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Lenders. The Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Agent and not to the
Swingline Lender. Any amounts received by the Swingline Lender from the Borrower
(or other party on behalf of the Borrower) in respect of a Swingline Loan after
receipt by the Swingline Lender of the proceeds of a sale of participations
therein shall be promptly remitted to the Agent; any such amounts received by
the Agent shall be promptly remitted by the Agent to the Lenders that shall have
made their payments pursuant to this paragraph and to the Swingline Lender, as
their interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the
payment thereof.
2.03 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, and on the condition that aggregate Letter of Credit Liabilities
shall never exceed $2,500,000, Borrower shall have the right to, in addition to
Loans provided for in Sections 2.01 and 2.02 hereof, utilize the Commitments
from time to time during the Revolving Loan Availability Period by obtaining the
issuance of standby letters of credit for the account of Borrower or one of its
Subsidiaries if Borrower shall so request in the notice referred to in Section
2.03(b) hereof (such standby letters of credit as any of them may be amended,
supplemented, extended or confirmed from time to time, being herein collectively
called the "Letters of Credit"). Upon the date of the issuance of a Letter of
Credit, the Issuer shall be deemed, without further action by any party hereto,
to have sold to each Lender, and each such Lender shall be deemed, without
further action by any party hereto, to have purchased from the Issuer, a
participation, to the extent of such Lender's Commitment Percentage, in such
Letter of Credit and the related Letter of Credit Liabilities,
16
which participation shall terminate on the earlier of the expiration date of
such Letter of Credit or the Revolving Loan Termination Date. Any Letter of
Credit that shall have an expiration date after the end of the Revolving Loan
Availability Period shall be subject to Cover or backed by a standby letter of
credit in form and substance, and issued by a Person, acceptable to Issuer and
Agent in each of their sole discretion. Bank One or, with the prior approval of
Borrower and Agent, another Lender shall be the Issuer of each Letter of Credit.
(b) Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:
(i) To obtain a Letter of Credit, Borrower shall give Agent and
Issuer notice requesting such Letter of Credit hereunder as provided in
Section 3.01(c) hereof and shall furnish such additional information
regarding such transaction as Agent may reasonably request. Upon
receipt of such notice, Agent shall promptly notify each Lender of the
contents thereof and of such Lender's Commitment Percentage of the
amount of such proposed Letter of Credit.
(ii) No Letter of Credit may be issued if after giving effect
thereto the sum of (A) the aggregate outstanding principal amount of
Loans plus (B) the aggregate Letter of Credit Liabilities would exceed
the Total Revolving Loan Commitment. On each day during the period
commencing with the issuance of any Letter of Credit and until such
Letter of Credit shall have expired or been terminated, the Commitment
of each Lender shall be deemed to be utilized for all purposes hereof
in an amount equal to such Lender's Commitment Percentage of the amount
then available for drawings under such Letter of Credit (or any
unreimbursed drawings under such Letter of Credit).
(iii) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment thereunder, Borrower shall be irrevocably and
unconditionally obligated forthwith to reimburse Issuer for the amount
paid upon drawing, immediately upon request. Such reimbursement may,
subject to satisfaction of the conditions in Sections 5.01 and 5.02
hereof and to the Total Revolving Loan Commitment (after adjustment in
the same to reflect the elimination of the corresponding Letter of
Credit Liability), be made by the borrowing of Loans.
(iv) If Borrower has not so reimbursed Issuer as provided above,
Issuer shall promptly notify Agent, Borrower and each Lender as to the
amount to be paid as a result of such demand and each Lender will pay
to Agent, for distribution to Issuer, immediately upon demand by
Issuer, an amount equal to such Lender's Commitment Percentage of such
payment, together with interest thereon for each day from the date of
demand to the date of payment at a rate of interest per annum equal to
the Federal Funds Rate for such period.
(v) Borrower will pay to Agent at the Principal Office:
(1) for the account of the Issuer all administrative charges
and expenses customarily charged by it for the issuance,
amendment,
17
maintenance or modification of a Letter of Credit upon
demand by Issuer;
(2) for the account of each Lender a letter of credit fee with
respect to each Letter of Credit equal to the Margin
Percentage for LIBOR Borrowings per annum, never to exceed
1.75% per annum, multiplied by the daily average amount
available for drawings under each Letter of Credit (and
computed on the basis of the actual number of days elapsed
in a year composed of 360 days), in each case for the period
from and including the date of issuance of such Letter of
Credit to and including the date of expiration or
termination thereof, such fee to be due and payable in
advance on the date of the issuance thereof. Agent will pay
to each Lender, promptly after receiving any payment in
respect of letter of credit fees referred to in this clause
(v), an amount equal to the product of such Lender's
Commitment Percentage times the amount of such fees; and
(3) for the account of Issuer, in advance on the date of the
issuance of the applicable Letter of Credit, a fee in an
amount equal to 1/8% of the face amount of the applicable
Letter of Credit (such fee to be retained by Issuer for its
own account).
(vi) The issuance by the Issuer of each Letter of Credit shall, in
addition to the conditions precedent set forth in Article V hereof, be
subject to the conditions precedent (A) that such Letter of Credit
shall be in such form and contain such terms as shall be reasonably
satisfactory to Agent, and (B) that Borrower shall have executed and
delivered such Applications and other instruments and agreements
relating to such Letter of Credit as Agent shall have reasonably
requested and are not inconsistent with the terms of this Agreement. In
the event of a conflict between the terms of this Agreement and the
terms of any Application, the terms hereof shall control.
(vii) Issuer will send to Borrower, Agent and each Lender,
immediately upon issuance of any Letter of Credit issued by Issuer or
any amendment thereto, a true and correct copy of such Letter of Credit
or amendment.
(c) Indemnification; Release. Borrower hereby indemnifies and holds
harmless Agent, each Lender and Issuer from and against any and all claims and
damages, losses, liabilities, costs or expenses which Agent, such Lender or
Issuer may incur (or which may be claimed against Agent, such Lender or Issuer
by any Person whatsoever), REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY
THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, in connection with the
execution and delivery of any Letter of Credit or transfer of or payment or
failure to pay under any Letter of Credit; provided that Borrower shall not be
required to indemnify any party seeking indemnification for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (i) the willful misconduct or gross negligence of the party seeking
indemnification, or (ii) the failure by the party seeking indemnification to pay
under any Letter of Credit after the
18
presentation to it of a request required to be paid under applicable law.
Borrower agrees not to hold Agent, each Lender and Issuer that has performed its
obligations hereunder for any claim, cause of action, damage, loss, liability,
reasonable costs or expenses which may now exist or may hereafter arise,
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE
INDEMNIFIED PARTIES, by reason of or in connection with the failure of any other
Lender to fulfill or comply with its obligations to Agent, such Lender or
Issuer, as the case may be, hereunder (but nothing herein contained shall affect
any rights Borrower may have against such defaulting Lender). Nothing in this
Section 2.03(c) is intended to limit the obligations of Borrower under any other
provision of this Agreement or the obligations of Agent and each Lender under
the last sentence of Section 11.04 hereof.
2.04 Terminations or Reductions of Commitments.
(a) Mandatory. On the Revolving Loan Termination Date, all Commitments
shall be terminated in their entirety.
(b) No Reinstatement. No termination or reduction of the Commitments
may be reinstated without the written approval of Agent and the Lenders.
2.05 Commitment Fees.
(a) Borrower shall pay to Agent for the account of each Lender
commitment fees for the period from the Closing Date to and including the
Revolving Loan Termination Date at a rate per annum equal to the Commitment Fee
Percentage. Such commitment fees shall be computed (on the basis of the actual
number of days elapsed in a year composed of 360 days) on each day and shall be
based on the excess of (x) the aggregate amount of each Lender's Commitment for
such day over (y) the sum of (i) the aggregate unpaid principal balance of such
Lender's Note on such day plus (ii) such Lender's Commitment Percentage of the
aggregate Letter of Credit Liabilities for such day. Accrued commitment fees
shall be payable in arrears on the Quarterly Dates prior to the Revolving Loan
Termination Date and on the Revolving Loan Termination Date.
(b) All past due fees payable under this Section 2.05 shall bear
interest at the Past Due Rate.
2.06 Several Obligations. The failure of any Lender to make any Loan to
be made by it on the date specified therefor shall not relieve any other Lender
of its obligation to make its Loan on such date, but neither Agent nor any
Lender shall be responsible or liable for the failure of any other Lender to
make a Loan to be made by such other Lender or to participate in, or co-issue,
any Letter of Credit. Notwithstanding anything contained herein to the contrary,
(a) no Lender shall be required to make or maintain Loans at any time
outstanding if as a result the total Obligations to such Lender shall exceed
such Lender's Commitment Percentage of the Total Revolving Loan Commitment and
(b) if a Lender fails to make a Loan as and when required hereunder, then upon
each subsequent event which would otherwise result in funds being paid to the
defaulting Lender, the amount which would have been paid to the defaulting
Lender shall be divided among the non-defaulting Lenders ratably according to
their respective shares of the outstanding Commitment Percentages until the
Obligations of each Lender (including the defaulting Lender) are equal to such
Lender's Commitment Percentage of the total Obligations.
19
2.07 Notes. The Revolving Loans made by each Lender shall be evidenced
by a Revolving Note payable to the order of such Lender in a principal amount
equal to the Commitment of such Lender, and the Swingline Loans shall be
evidenced by a Swingline Note payable to the order of the Swingline Lender in a
principal amount equal to $2,500,000. The Revolving Notes and the Swingline
Notes described in this Section are each, together with all renewals,
extensions, modifications and replacements thereof and substitutions therefor,
called a "Note" and collectively called the "Notes". Each Lender is hereby
authorized by Borrower to endorse on the schedule (or a continuation thereof)
that may be attached to each Note of such Lender, to the extent applicable, the
date, amount, type of and the applicable period of interest for each Loan made
by such Lender to Borrower hereunder, and the amount of each payment or
prepayment of principal of such Loan received by such Lender, provided, that any
failure by such Lender to make any such endorsement shall not affect the
obligations of Borrower under such Note or hereunder in respect of such Loan.
ARTICLE III
BORROWINGS, PREPAYMENTS AND INTEREST OPTIONS
3.01 Borrowing. (a) Revolving Loan and Letter of Credit Notice. To
obtain a Loan (other than a Swingline Loan), or the issuance of a Letter of
Credit, Borrower shall deliver to Agent a Request for Extension of Credit to be
made hereunder and Agent shall promptly notify each Lender of such request. Not
later than 11:00 a.m. Houston time on the date specified in such request for
Extension of Credit for each such borrowing hereunder, each Lender shall make
available the amount of the Loan, if any, to be made by it on such date to Agent
at its Principal Office, in immediately available funds, for the account of
Borrower. Such amounts received by Agent will be held in an account maintained
by Borrower with Agent. The amounts so received by Agent shall, subject to the
terms and conditions of this Agreement, be made available to Borrower by wiring
or otherwise transferring, in immediately available funds, such amount to an
account reasonably designated by Borrower.
(b) Swingline Notice. To obtain a Swingline Loan, Borrower shall
deliver to Agent and Swingline Lender a Request for Extension of Credit, not
later than 11:00 a.m. Houston time on the day of a proposed Swingline Loan. Each
such notice shall be irrevocable and shall specify the requested date (which
date shall be a Business Day), and the amount of the requested Swingline Loan
which shall be an amount not less than $100,000. Swingline Lender shall make
available the Swingline Loan to the Borrower at the Principal Office by 2:00
p.m. on the day requested.
(c) Notice Periods. Notices to Agent of any termination or reduction of
Commitments and of borrowings and optional prepayments of Loans and requests for
issuances of Letters of Credit shall be irrevocable and shall be effective only
if received by Agent not later than 11:00 a.m. Houston time on the number of
Business Days prior to the date of the relevant termination, reduction,
borrowing and/or prepayment specified below:
Number of Business Days
Prior Notice
------------
Termination or Reduction of Commitments 5
Loan repayment Same day
20
Borrowing at the Base Rate Same day
Letter of Credit issuance 2
Prepayments required pursuant to Section 3.02(b) Same day
Borrowing at or conversion to Eurodollar Rate 3 LIBOR Business Days
(d) Notice Requirements. Each such notice of termination or reduction
shall specify the amount of the applicable Commitment to be terminated or
reduced. Each such notice of borrowing or prepayment shall specify the amount of
the Loans to be borrowed or prepaid and the date of borrowing or prepayment
(which shall be a Business Day) and, in the case of Revolving Loans, whether the
Base Rate or the Eurodollar Rate shall apply to the borrowing. Agent shall
promptly notify the affected Lenders of the contents of each such notice.
3.02 Prepayments.
(a) Optional Prepayments. Except Loans bearing interest at the
Eurodollar Rate and except as provided in Section 3.03 hereof, Borrower shall
have the right to prepay, on any Business Day, in whole or in part, without the
payment of any penalty or fee, any Loans at any time or from time to time,
provided that Borrower shall give Agent notice of each such prepayment as
provided in Section 3.01(c) hereof, and, provided further, Borrower may prepay
Swingline Loans at any time without premium or penalty. With respect to Loans
bearing interest at the Eurodollar Rate, other than Swingline Loans, Borrower
shall not prepay such Loans prior to the end of the applicable Interest Period.
Each optional prepayment on a Loan shall be in an amount equal to a Minimum
Advance or, if less, the outstanding principal amount of such Loan.
(b) Cover. Borrower shall from time to time on demand by Agent prepay
the Loans, provide Cover or both, as Borrower may elect in such amounts as shall
be necessary so that at all times the aggregate outstanding amount of all
Obligations (excluding Letter of Credit Liabilities which are subject to Cover)
shall be less than or equal to the Total Revolving Loan Commitment.
(c) Interest Payments. Accrued and unpaid interest on the unpaid
principal balance of the Loans shall be due and payable on the Interest Payment
Dates.
(d) Payments and Interest on Reimbursement Obligations. Borrower will
pay to Agent for the account of each Lender the amount of each Reimbursement
Obligation on the date on which Agent notifies Borrower of the date and amount
of the applicable payment by the Issuer of any drawing under a Letter of Credit.
The amount of any Reimbursement Obligation may, if the applicable conditions
precedent specified in Article V hereof have been satisfied, be paid with the
proceeds of Loans. Subject to Section 11.07 hereof, Borrower will pay to Agent
for the account of each Lender interest at the applicable Past Due Rate on any
Reimbursement Obligation and on any other amount payable by Borrower hereunder
to or for the account of such Lender (but, if such amount is interest, only to
the extent legally allowed), which shall not be paid in full within five (5)
days after the date due (whether at stated maturity, by acceleration or
otherwise), for the period commencing on the expiration of such five (5) day
period until the same is paid in full.
3.03 Interest Options.
21
(a) Options Available. The outstanding principal balance of the Notes
other than the Swingline Note (which is covered by Section 2.02(a)), shall bear
interest at the Base Rate or the Eurodollar Rate, as elected by Borrower in
accordance with the terms hereof; provided, that in respect of all Notes,
including the Swingline Note, (1) all past due amounts, both principal and
accrued interest, which are not paid in full within five (5) days after the date
due (whether at stated maturity, by acceleration or otherwise) shall bear
interest at the Past Due Rate for the period commencing on the expiration of
such five (5) day period until the same is paid in full, and (2) subject to the
provisions hereof, Borrower shall have the option of having all or any portion
of the principal balances of the Notes from time to time outstanding bear
interest at a Eurodollar Rate. The records of Agent and each of the Lenders with
respect to Interest Options, Interest Periods and the amounts of Loans to which
they are applicable shall be prima facie evidence of the correctness thereof.
Interest on the Loans shall be calculated at the Base Rate except where it is
expressly provided pursuant to this Agreement that a Eurodollar Rate or the Past
Due Rate is to apply. Interest on the amount of each advance against the Notes
shall be computed on the amount of that advance and from the date it is made.
Notwithstanding anything in this Agreement to the contrary, for the full term of
the Notes the interest rate produced by the aggregate of all sums paid or agreed
to be paid to the holders of the Notes for the use, forbearance or detention of
the debt evidenced thereby (including all interest on the Notes at the Stated
Rate plus the Additional Interest) shall not exceed the Ceiling Rate.
(b) Designation and Conversion. Borrower shall have the right to
designate or convert its Interest Options in accordance with the provisions
hereof. So long as no Event of Default has occurred and is continuing and
subject to the last sentence of Section 3.03(a) and the provisions of Section
3.03(c), Borrower may elect to have a Eurodollar Rate apply or continue to apply
to all or any portion of the principal balance of the Revolving Notes. Each
change in Interest Options shall be a conversion of the rate of interest
applicable to the specified portion of the Loans, but such conversion shall not
change the respective outstanding principal balances of the Revolving Notes. The
Interest Options shall be designated or converted in the manner provided below:
(i) Borrower shall give Agent telephonic notice, promptly
confirmed by a Rate Designation Notice (and Agent shall promptly inform
each Lender thereof). Each such telephonic and written notice shall
specify the amount of the Loan which is the subject of the designation;
the amount of borrowings into which such borrowings are to be converted
or for which an Interest Option is designated; the proposed date for
the designation or conversion and the Interest Period or Periods, if
any, selected by Borrower. Such telephonic notice shall be irrevocable
and shall be given to Agent no later than the applicable Rate
Designation Time.
(ii) No more than five (5) LIBOR Borrowings shall be in effect
with respect to the Loans at any time.
(iii) Each designation or conversion of a LIBOR Borrowing shall
occur on a LIBOR Business Day.
22
(iv) Except as provided in Section 3.03(c) hereof, no LIBOR
Borrowing shall be converted to a Base Rate Borrowing or another LIBOR
Borrowing on any day other than the last day of the applicable Interest
Period.
(v) Each request for a LIBOR Borrowing shall be in the amount
equal to a Minimum Advance.
(vi) Each designation of an Interest Option with respect to the
Notes shall apply to all of the Revolving Notes ratably in accordance
with their respective outstanding principal balances. If any Lender
assigns an interest in any of its Notes when any LIBOR Borrowing is
outstanding with respect thereto, then such assignee shall have its
ratable interest in such LIBOR Borrowing.
(c) Special Provisions Applicable to LIBOR Borrowings.
(i) Options Unlawful. If the adoption of any applicable Legal
Requirement after the Closing Date or any change after the Closing Date
in any applicable Legal Requirement or in the interpretation or
administration thereof by any Governmental Authority or compliance by
any Lender with any request or directive (whether or not having the
force of law) issued after the Closing Date by any central bank or
other Governmental Authority shall at any time make it unlawful or
impossible for any Lender to permit the establishment of or to maintain
any LIBOR Borrowing, the commitment of such Lender to establish or
maintain such LIBOR Borrowing shall forthwith be canceled and Borrower
shall forthwith, upon demand by Agent to Borrower, (1) convert the
LIBOR Borrowing of such Lender with respect to which such demand was
made to a Base Rate Borrowing; (2) pay all accrued and unpaid interest
to date on the amount so converted; and (3) pay any amounts required to
compensate each Lender for any additional cost or expense which any
Lender may incur as a result of such adoption of or change in such
Legal Requirement or in the interpretation or administration thereof
and any Funding Loss which any Lender may incur as a result of such
conversion. If, when Agent so notifies Borrower, Borrower has given a
Rate Designation Notice specifying a LIBOR Borrowing but the selected
Interest Period has not yet begun, as to the applicable Lender such
Rate Designation Notice shall be deemed to be of no force and effect,
as if never made, and the balance of the Loans made by such Lender
specified in such Rate Designation Notice shall bear interest at the
Base Rate until a different available Interest Option shall be
designated in accordance herewith.
(ii) Increased Cost of Borrowings. If the adoption, after the
Closing Date, of any applicable Legal Requirement or any change after
the Closing Date in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority
or compliance by any Lender with any request or directive (whether or
not having the force of law) issued after the Closing Date by any
central bank or Governmental Authority shall at any time as a result of
any portion of the principal balances of the Notes being maintained on
the basis of a Eurodollar Rate:
(1) subject any Lender to any Taxes, or any deduction or
withholding for any Taxes, on or from any payment due under
any LIBOR
23
Borrowing or other amount due hereunder, other than income
and franchise taxes (or taxes in lieu thereof) of the
United States or its political subdivisions or such other
jurisdiction in which the applicable Lender has its
principal office or applicable lending office; or
(2) change the basis of taxation of payments due from Borrower
to any Lender under any LIBOR Borrowing (otherwise than by a
change in the rate of taxation of the overall net income of
such Lender); or
(3) impose, modify, increase or deem applicable any reserve
requirement (excluding that portion of any reserve
requirement included in the calculation of the applicable
Eurodollar Rate), special deposit requirement or similar
requirement (including, but not limited to, state law
requirements and Regulation D) against assets of any Lender,
or against deposits with any Lender, or against loans made
by any Lender, or against any other funds, obligations or
other property owned or held by any Lender; or
(4) impose on any Lender any other condition regarding any LIBOR
Borrowing;
and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such LIBOR Borrowing, or
reduce the amount of principal or interest received by any Lender, then, within
15 Business Days after demand by Agent (accompanied by a statement setting forth
in reasonable detail the applicable Lender's basis therefor), which demand must
be made not later than ninety (90) days after such loss or increased cost was
paid by any such Lender, Borrower shall pay to Agent additional amounts which
shall compensate each Lender for such increased cost or reduced amount. The
determination by any Lender of the amount of any such increased cost, increased
reserve requirement or reduced amount shall be prima facie evidence of the
correctness thereof. Borrower shall have the right, if it receives from Agent
any notice referred to in this paragraph, upon three Business Days' notice to
Agent (which shall notify each affected Lender), either (i) to repay in full
(but not in part) any borrowing with respect to which such notice was given,
together with any accrued interest thereon, or (ii) to convert the LIBOR
Borrowing which is the subject of the notice to a Base Rate Borrowing; provided,
that any such repayment or conversion shall be accompanied by payment of (x) the
amount required to compensate each Lender for the increased cost or reduced
amount referred to in the preceding paragraph; (y) all accrued and unpaid
interest to date on the amount so repaid or converted; and (z) any Funding Loss
which any Lender may incur as a result of such repayment or conversion. Each
Lender will notify Borrower through Agent of any event occurring after the date
of this Agreement which will entitle such Lender to compensation pursuant to
this Section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and (if so requested by Borrower
through Agent) will designate a different lending office of such Lender for the
applicable LIBOR Borrowing or will take such other action as Borrower may
reasonably request if such designation or action is consistent with the internal
policy of such Lender and legal and
24
regulatory restrictions, will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender.
(iii) Inadequacy of Pricing and Rate Determination. If, for any
reason with respect to any Interest Period, Agent (or, in the case of
clause 3 below, the applicable Lender) shall have determined (which
determination shall be prima facie evidence of the correctness thereof)
that:
(1) Agent is unable through its customary general practices to
determine any applicable Eurodollar Rate, or
(2) by reason of circumstances affecting the applicable market,
generally, Agent is not being offered deposits in United
States dollars in such market, for the applicable Interest
Period and in an amount equal to the amount of any
applicable LIBOR Borrowing requested by Borrower, or
(3) as a result of LIBOR market conditions generally, any
applicable Eurodollar Rate will not adequately and fairly
reflect the cost to any Lender of making and maintaining
such LIBOR Borrowing hereunder for any proposed Interest
Period,
then Agent shall give Borrower notice thereof and thereupon, (A) any Rate
Designation Notice previously given by Borrower designating the applicable LIBOR
Borrowing which has not commenced as of the date of such notice from Agent shall
be deemed for all purposes hereof to be of no force and effect, as if never
given, and (B) until Agent shall notify Borrower that the circumstances giving
rise to such notice from Agent no longer exist, each Rate Designation Notice
requesting the applicable Eurodollar Rate shall be deemed a request for a Base
Rate Borrowing, and any applicable LIBOR Borrowing then outstanding shall be
converted, without any notice to or from Borrower, upon the termination of the
Interest Period then in effect with respect to it, to a Base Rate Borrowing.
(iv) Funding Losses. Borrower shall indemnify each Lender against
and hold each Lender harmless from any Funding Loss. This indemnity
shall survive the payment of the Notes. A certificate of such Lender
(explaining in reasonable detail the amount and calculation of the
amount claimed) as to any additional amounts payable pursuant to this
paragraph submitted to Borrower shall be prima facie evidence of the
correctness thereof.
(d) Funding Offices; Adjustments Automatic; Calculation Year. Any
Lender may, if it so elects, fulfill its obligation as to any LIBOR Borrowing by
causing a branch or affiliate of such Lender to make such Loan and may transfer
and carry such Loan at, to or for the account of any branch office or affiliate
of such Lender; provided, that in such event for the purposes of this Agreement
such Loan shall be deemed to have been made by such Lender and the obligation of
Borrower to repay such Loan shall nevertheless be to such Lender and shall be
deemed held by it for the account of such branch or affiliate. Without notice to
Borrower or any other Person, each rate required to be calculated or determined
under this Agreement shall automatically fluctuate
25
upward and downward in accordance with the provisions of this Agreement.
Interest at the Prime Rate shall be computed on the basis of the actual number
of days elapsed in a year consisting of 365 or 366 days, as the case may be. All
other interest required to be calculated or determined under this Agreement
shall be computed on the basis of the actual number of days elapsed in a year
consisting of 360 days, unless the Ceiling Rate would thereby be exceeded, in
which event, to the extent necessary to avoid exceeding the Ceiling Rate, the
applicable interest shall be computed on the basis of the actual number of days
elapsed in the applicable calendar year in which accrued.
(e) Funding Sources. Notwithstanding any provision of this Agreement to
the contrary, each Lender shall be entitled to fund and maintain its funding of
all or any part of the Loans in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all determinations hereunder
shall be made as if each Lender had actually funded and maintained each LIBOR
Borrowing during each Interest Period through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the Eurodollar Rate for such Interest Period.
(f) If any Lender elects to pass through to Borrower any material
charge or cost under Section 3.03(c) or elects to terminate the availability of
LIBOR Borrowings for any material period of time, Borrower may, within 60 days
after the date of such event and so long as no Default shall have occurred and
be continuing, elect to terminate such Lender as a party to this Agreement;
provided that, concurrently with such termination Borrower shall (i) if Agent
and each of the other Lenders shall consent, pay that Lender all principal,
interest and fees and other amounts owed to such Lender through such date of
termination or (ii) have arranged for another financial institution approved by
Agent (such approval not to be unreasonably withheld) as of such date, to become
a substitute Lender for all purposes under this Agreement in the manner provided
in Section 11.06; provided further that, prior to substitution for any Lender,
Borrower shall have given written notice to Agent of such intention and the
Lenders (other than such terminated Lenders) shall have the option, but no
obligation, for a period of 60 days after receipt of such notice, to increase
their Commitments in order to replace such terminated Lender in lieu of such
substitution.
3.04 No Discrimination. Anything in Section 2.03(c), or in Section
3.03(c) notwithstanding, none of the Lenders shall be permitted to pass through
to Borrower charges and costs under such Sections on a discriminatory basis
(i.e., which are not also passed through by such Lender to other customers of
such Lender similarly situated where such customer is subject to documents
providing for such pass through).
ARTICLE IV
PAYMENTS, PRO RATA TREATMENT, COMPUTATIONS
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts to be made by
Borrower hereunder, under the Notes and under the other Loan Documents shall be
made in Dollars, in immediately available funds, to Agent at the Principal
Office (or in the case of a successor Agent, at the principal office
26
of such successor Agent in the United States), not later than 11:00 a.m. Houston
time on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Agent, or any Lender for whose account any such
payment is made, may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit account of
Borrower with Agent or such Lender, as the case may be, in the event that
Borrower has not otherwise paid Agent all amounts that are due.
(b) Borrower shall, at the time of making each payment hereunder, under
any Note or under any other Loan Document, specify to Agent the Loans or other
amounts payable by Borrower hereunder or thereunder to which such payment is to
be applied. Each payment received by Agent hereunder, under any Note or under
any other Loan Document for the account of a Lender shall be paid promptly to
such Lender, in immediately available funds. If Agent fails to send to any
Lender the applicable amount by the close of business on the date any such
payment is received by Agent if such payment is received prior to 11:00 a.m.
Houston time (or on the next succeeding Business Day with respect to payments
which are received after 11:00 a.m. Houston time), Agent shall pay to the
applicable Lender interest on such amount from such date at the Federal Funds
Rate. Borrower, the Lenders and Agent acknowledge and agree that this provision
and each other provision of this Agreement or any of the other Loan Documents
relating to the application of amounts in payment of the Obligations shall be
subject to the provisions of Section 4.02 regarding pro rata application of
amounts after an Event of Default shall have occurred and be continuing.
(c) If the due date of any payment hereunder or under any Note falls on
a day which is not a Business Day, the due date for such payments (except as
otherwise provided in Section 3.03 hereof) shall be extended to the next
succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension.
(d) All payments by Borrower hereunder or under any other Loan Document
shall be made free and clear of and without deduction for or on account of any
present or future income, stamp, or other taxes, fees, duties, withholding or
other charges of any nature whatsoever imposed by any taxing authority excluding
in the case of each Lender taxes imposed on or measured by its net income or
franchise taxes (or taxes in lieu thereof) imposed by the jurisdiction in which
it is organized or through which it acts for purposes of this Agreement (such
non-excluded items being hereinafter referred to as "Taxes"). If as a result of
any change in law (or the interpretation thereof having the force of law) after
the date that the applicable Lender became a "Lender" under this Agreement any
withholding or deduction from any payment to be made to, or for the account of,
a Lender by Borrower hereunder or under any other Loan Document is required in
respect of any Taxes pursuant to any applicable law, rule, or regulation, then
Borrower will (i) pay to the relevant authority the full amount required to be
so withheld or deducted; (ii) to the extent available, promptly forward to Agent
an official receipt or other documentation reasonably satisfactory to Agent
evidencing such payment to such authority; and (iii) pay to Agent, for the
account of each affected Lender, such additional amount or amounts as are
necessary to ensure that the net amount actually received by such Lender will
equal the full amount such Lender would have received had no such withholding or
deduction been required. Each Lender shall determine such additional amount or
amounts payable to it (which determination shall be prima facie evidence of the
correctness thereof). If a Lender
27
becomes aware that any such withholding or deduction from any payment to be made
by Borrower hereunder or under any other Loan Document is required, then such
Lender shall promptly notify Agent and Borrower thereof stating the reasons
therefor and the additional amount required to be paid under this Section. Each
Lender shall execute and deliver to Agent and Borrower such forms as it may be
required to execute and deliver pursuant to Section 11.13 hereof. To the extent
that any such withholding or deduction results from the failure of a Lender to
provide a form required by Section 11.13 hereof (unless such failure is due to
some prohibition under applicable Legal Requirements), Borrower shall have no
obligation to pay the additional amount required by clause (iii) above. Anything
in this Section notwithstanding, if any Lender elects to require payment by
Borrower of any material amount under this Section, Borrower may, within 60 days
after the date of receiving notice thereof and so long as no Default shall have
occurred and be continuing, elect to terminate such Lender as a party to this
Agreement; provided that, concurrently with such termination Borrower shall (i)
if Agent and each of the other Lenders shall consent, pay that Lender all
principal, interest and fees and other amounts owed to such Lender through such
date of termination or (ii) have arranged for another financial institution
approved by Agent (such approval not to be unreasonably withheld) as of such
date, to become a substitute Lender for all purposes under this Agreement in the
manner provided in Section 11.06; provided, further, that, prior to substitution
for any Lender, Borrower shall have given written notice to Agent of such
intention, and the Lenders (other than such terminated Lenders) shall have the
option, but no obligation, for a period of 60 days after receipt of such notice,
to increase their Commitments in order to replace such terminated Lender in lieu
of such substitution.
(e) All Loans, including all outstanding principal, any accrued unpaid
interest, and all fees, shall be due and payable in full on the Revolving Credit
Termination Date.
4.02 Pro Rata Treatment. Except to the extent otherwise provided herein
(including, without limitation, those provisions dealing with the Swingline
Lender, the Issuer and the Agent): (a) each Loan shall be made ratably from the
Lenders in accordance with their respective Commitments; (b) each payment of
commitment fees shall be made for the account of the Lenders, and each
termination or reduction of the Commitments of the Lenders under Section 2.04
hereof shall be applied, pro rata, according to the Lenders' respective
Commitments; (c) each payment by Borrower of principal of or interest on the
Loans shall be made to Agent for the account of the Lenders pro rata in
accordance with the respective unpaid principal amounts of such Loans held by
the Lenders; and (d) the Lenders (other than the Issuer) shall purchase from the
Issuer participations in each Letter of Credit to the extent of their respective
Commitment Percentages.
4.03 Non-Receipt of Funds by Agent. Unless Agent shall have been
notified by a Lender or Borrower (the "Payor") prior to the date on which such
Lender is to make payment to Agent of the proceeds of a Loan (or funding of a
drawing under a Letter of Credit or reimbursement with respect to any drawing
under a Letter of Credit) to be made by it hereunder or Borrower is to make a
payment to Agent for the account of one or more of the Lenders, as the case may
be (such payment being herein called the "Required Payment"), which notice shall
be effective upon receipt, that the Payor does not intend to make the Required
Payment to Agent, Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended
28
recipient on such date and, if the Payor has not in fact made the Required
Payment to Agent, the recipient of such payment (or, if such recipient is the
beneficiary of a Letter of Credit, Borrower and, if Borrower fails to pay the
amount thereof to Agent forthwith upon demand, the Lenders ratably in proportion
to their respective Commitment Percentages) shall, on demand, pay to Agent the
amount made available by Agent, together with interest thereon in respect of the
period commencing on the date such amount was so made available by Agent until
the date Agent recovers such amount at a rate per annum equal to the Federal
Funds Rate for such period.
4.04 Sharing of Payments, Etc. If a Lender shall obtain payment of any
principal of or interest on any Loan made by it under this Agreement, on any
Reimbursement Obligation or on any other Obligation then due to such Lender
hereunder, through the exercise of any right of set-off (including, without
limitation, any right of setoff or lien granted under Section 9.02 hereof),
banker's lien, counterclaim or similar right, or otherwise, it shall promptly
purchase from the other Lenders participations in the Loans made, or
Reimbursement Obligations or other Obligations held, by the other Lenders in
such amounts, and make such other adjustments from time to time as shall be
equitable to the end that all the Lenders shall share the benefit of such
payment (net of any expenses which may be incurred by such Lender in obtaining
or preserving such benefit) pro rata in accordance with the unpaid Obligations
then due to each of them. To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
Lender so purchasing a participation in the Loans made, or Reimbursement
Obligations or other Obligations held, by other Lenders may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans, or
Reimbursement Obligations or other Obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Initial Loans and Letters of Credit. The obligation of each Lender
or Issuer to make its initial Loans or issue or participate in a Letter of
Credit (if such Letter of Credit is issued prior to the funding of the initial
Loans) hereunder is subject to the following conditions precedent, each of which
shall have been fulfilled or waived to the reasonable satisfaction of Agent.
(a) Authorization and Status. Agent shall have received from the
appropriate Governmental Authorities certified copies of the Certificate of
Incorporation or Articles of Incorporation, as applicable (or equivalent charter
document) of each Obligor, and evidence satisfactory to Agent of all action
taken by each Obligor authorizing the execution, delivery and performance of the
Loan Documents and all other documents related to this Agreement to which it is
a party (including, without limitation, a certificate of the secretary of each
such party which is a corporation setting forth the resolutions of its Board of
Directors authorizing the transactions contemplated thereby and attaching a copy
of its bylaws), together with such certificates as may be appropriate to
demonstrate the qualification and good standing of and payment of taxes by
29
each Obligor in the jurisdiction of its organization and in each other
jurisdiction where the failure in which to qualify would have a material adverse
effect on the business, condition (financial or otherwise), operations or
Properties of Borrower and its Subsidiaries taken as a whole.
(b) Incumbency. Each Obligor shall have delivered to Agent a
certificate in respect of the name and signature of each of the officers (i) who
is authorized to sign on its behalf the applicable Loan Documents related to any
Loan or the issuance of any Letter of Credit and (ii) who will, until replaced
by another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with any Loan or the issuance of any Letter
of Credit. Agent and each Lender may conclusively rely on such certificates
until they receive notice in writing from the applicable Obligor to the
contrary.
(c) Notes. Agent shall have received (i) the Revolving Notes duly
completed and executed, issued by Borrower to (1) Bank One, in the original
principal amount of $10,000,000, and (2) Southwest Bank of Texas in the original
principal amount of $5,000,000 and (ii) the Swingline Note duly completed and
executed, issued by Borrower to the Swingline Lender, in the original principal
amount of $2,500,000.
(d) Loan Documents. Each Obligor shall have duly executed and delivered
the other Loan Documents to which it is a party (including the execution of a
Guaranty by each Guarantor) in such number of copies as Agent shall have
requested. Each such Loan Document shall be in substantially the form furnished
to the Lenders prior to their execution of this Agreement, together with such
changes therein as Agent may approve.
(e) Fees and Expenses. Borrower shall have paid to Agent all unpaid
fees in the amounts previously agreed upon in writing among Borrower and Agent;
and shall have in addition paid to Agent all amounts payable under Section 11.03
hereof, on or before the date of this Agreement, except for amounts which Agent,
in its sole discretion, agrees may be paid at a later date.
(f) Insurance. Borrower shall have delivered to Agent certificates of
insurance reasonably satisfactory to Agent evidencing the existence of all
insurance required to be maintained by each Obligor by this Agreement.
(g) Opinions of Counsel. Agent shall have received such opinions of
counsel to Obligors as Agent shall reasonably request with respect to Obligors
and the Loan Documents.
(h) Consents. Agent shall have received evidence satisfactory to the
Lenders that all material consents of each Governmental Authority and of each
other Person, if any, reasonably required in connection with (a) the Loans and
the Letters of Credit and (b) the execution, delivery and performance of this
Agreement and the other Loan Documents have been satisfactorily obtained.
(i) Other Documents. Agent shall have received such other documents
consistent with the terms of this Agreement and relating to the transactions
contemplated hereby as Agent may reasonably request.
30
5.02 All Loans and Letters of Credit. The obligation of each Lender to
make any Loan to be made by it hereunder or to issue or participate in any
Letter of Credit is subject to (a) the accuracy, in all material respects, on
the date of such Loan or such issuance, of all representations and warranties of
each Obligor contained in this Agreement and the other Loan Documents (other
than those which relate specifically to an earlier date or became inaccurate
because of transactions permitted under the Loan Documents and consummated after
the date of the relevant representation); (b) Agent shall have received the
following, all of which shall be duly executed and in Proper Form: (1) a Request
for Extension of Credit as to the Loan or the Letter of Credit, as the case may
be, no later than 11:00 a.m. Houston time on the Business Day on which such
Request for Extension of Credit must be given under Section 3.01(c) hereof, (2)
in the case of a Letter of Credit, an Application, and (3) such other documents
as Agent may reasonably require; (c) prior to the making of such Loan or the
issuance of such Letter of Credit, there shall have occurred no material adverse
change in the assets, liabilities, financial condition, business or affairs of
Borrower and the Obligors, on a consolidated basis; (d) no Default or Event of
Default shall have occurred and be continuing; (e) the making of such Loan or
the issuance of such Letter of Credit shall not be illegal or prohibited by any
Legal Requirement; and (f) Borrower shall have paid all fees and expenses of the
type described in Section 11.03 hereof and all other fees owed to Agent or any
Lender under the Loan Documents which are due and payable, in each case, prior
to or on the date of such Loan or such issuance. The submission by Borrower of a
Request for Extension of Credit shall be deemed to be a representation and
warranty that the conditions precedent to the applicable Loan or Letter of
Credit have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Loans and issue or participate in the Letters of Credit, Borrower represents and
warrants (such representations and warranties to survive any investigation and
the making of the Loans and the issuance of any Letters of Credit) to the
Lenders and Agent as follows:
6.01 Organization. Each Obligor (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization; (b)
has all necessary power and authority to conduct its business as presently
conducted, and (c) is duly qualified to do business and in good standing in the
jurisdiction of its organization and in all jurisdictions in which the failure
to so qualify would reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations or Properties of
Borrower and its Subsidiaries taken as a whole.
6.02 Financial Conditions; No Material Adverse Change. (a) Borrower has
furnished to Agent (i) audited financial statements (including a balance sheet)
as to Borrower which fairly present in all material respects, in accordance with
GAAP, the consolidated financial condition and the results of operations of
Borrower as at the end of Borrower's fiscal year ended December 31, 2002, (ii)
unaudited consolidating financial statements
31
(including a balance sheet) as to Borrower which fairly present in all material
respects, in accordance with GAAP, the financial condition and the results of
operations of Borrower, on a consolidating basis, as at the end of Borrower's
fiscal year ended December 31, 2002 and (iii) unaudited financial statements
(including a balance sheet) as to Borrower which fairly present in all material
respects, in accordance with GAAP, the consolidated financial condition and the
results of operations of Borrower as at the end of Borrower's fiscal quarter
ended March 31, 2003. No events, conditions or circumstances have occurred from
the date that the financial statements were delivered to Agent through the
Closing Date which would cause said financial statements to be misleading in any
material respect. There are no material instruments or liabilities which should
be reflected in such financial statements provided to Agent which are not so
reflected.
(b) Since March 31, 2003, there has been no material adverse change in
the business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole.
6.03 Enforceable Obligations; Authorization. The Loan Documents are
legal, valid and binding obligations of each applicable Obligor, enforceable in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency and other similar laws and judicial decisions affecting creditors'
rights generally and by general equitable principles. The execution, delivery
and performance of the Loan Documents by the Obligors party thereto (a) have all
been duly authorized by all necessary action on the part of the Obligors; (b)
are within the power and authority of each applicable Obligor; (c) do not and
will not contravene or violate any Legal Requirement applicable to any
applicable Obligor or the Organizational Documents of any applicable Obligor,
the contravention or violation of which would reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise),
operations or Properties of Borrower and its Subsidiaries taken as a whole; (d)
do not and will not result in the breach of, or constitute a default under, any
material agreement or instrument by which any Obligor or any of its Property may
be bound; and (e) do not and will not result in the creation of any Lien upon
any Property of any Obligor, except in favor of Agent or as expressly
contemplated therein. All necessary permits, registrations and consents for such
execution, delivery and performance of the Loan Documents by the Obligors party
thereto have been obtained.
6.04 Litigation. There is no litigation or administrative proceeding,
to the knowledge of any executive officer of any Obligor, pending or threatened
against, nor any outstanding judgment, order or decree against, any Obligor
before or by any Governmental Authority which does or would reasonably be
expected to have a material adverse effect on (a) the business, condition
(financial or otherwise), operations or Properties of Borrower and its
Subsidiaries taken as a whole; or (b) the ability of any Obligor to perform its
respective obligations under any Loan Document to which it is a party. Neither
Borrower nor its Subsidiaries are in default with respect to any judgment, order
or decree of any Governmental Authority where such default would have a material
adverse effect on the business, condition (financial or otherwise), operations
or Properties of Borrower and its Subsidiaries taken as a whole.
6.05 Taxes. Borrower and each of its Subsidiaries has filed all tax
returns required to have been filed and paid all taxes shown thereon to be due,
except those for which extensions have been obtained or those which are being
contested in good faith.
6.06 Regulations U and X. None of the proceeds of any Loan will be used
for the purpose of purchasing or carrying directly or indirectly any margin
stock or for any other
32
purpose would constitute this transaction a "purpose credit" within the meaning
of Regulations U and X of the Board of Governors of the Federal Reserve System,
as any of them may be amended from time to time.
6.07 Subsidiaries. As of the Closing Date, Borrower has no Subsidiaries
other than those set forth on Exhibit 6.07 hereto.
6.08 No Untrue or Misleading Statements. Taken as a whole, the written
information, statements, exhibits, certificates, documents and reports furnished
to the Lenders (or any of them) by the Borrower or any other Obligor in
connection with the negotiation of this Agreement did not contain any material
misstatement of fact or omit to state a material fact (of which any executive
officer of any Obligor has knowledge) or any fact (of which any executive
officer of any Obligor has knowledge) necessary to make the statement contained
therein not materially misleading in the light of the circumstances in which
made and with respect to the Borrower and its Subsidiaries taken as a whole.
6.09 Investment Company Act. No Obligor is an investment company within
the meaning of the Investment Company Act of 1940, as amended, or, directly or
indirectly, controlled by or acting on behalf of any Person which is an
investment company, within the meaning of said Act.
6.10 Public Utility Holding Company Act. No Obligor is an "affiliate"
or a "subsidiary company" of a "public utility company," or a "holding company,"
or an "affiliate" or a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
6.11 Compliance. Each Obligor is in compliance with all Legal
Requirements applicable to it, except to the extent that the failure to comply
therewith would not reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations or Properties of
Borrower and its Subsidiaries taken as a whole or the ability of any Obligor to
perform its obligations under this Agreement or the Loan Documents to which it
is a party. Each Subsidiary of Borrower is in compliance with all Legal
Requirements applicable to it, except to the extent that the failure to comply
therewith would not reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations or Properties of
Borrower and its Subsidiaries taken as a whole.
6.12 Use of Proceeds. The proceeds of the Loans shall be used to
support the issuance of Letters of Credit, for working capital and general
corporate purposes and for acquisitions and capital expenditures. Neither Agent
nor any Lender shall have any responsibility as to the use of any Letter of
Credit or any proceeds of the Loans. The Borrower represents and warrants to the
Lenders and the Agent that all Loans will be for business, commercial,
investment or other similar purpose and not primarily for personal, family,
household or agricultural use, as such terms are used in the Texas Finance Code.
6.13 Reportable Transaction. The Borrower does not intend to treat the
Loans and related transactions as being a "reportable transaction" (within the
meaning of Treasury
33
Regulation Section 1.6011-4). In the event the Borrower determines to take any
action inconsistent with such intention, it will promptly notify the Agent
thereof.
6.14 Defaults. No Event of Default has occurred and is continuing.
ARTICLE VII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees with Agent and the Lenders that prior to
the termination of this Agreement it will do or cause to be done, and cause each
of its Subsidiaries (unless limited by the language of the applicable provision
to less than all of such Subsidiaries) to do or cause to be done, each and all
of the following:
7.01 Taxes, Existence, Regulations, Property, Etc. At all times,
Borrower will, and will cause its Subsidiaries to (a) pay when due all taxes and
governmental charges of every kind upon it or against its income, profits or
Property, unless and only to the extent that the same shall be contested
diligently in good faith and adequate reserves in accordance with GAAP have been
established therefor; (b) do all things necessary to preserve its existence,
qualifications, rights and franchises in all jurisdictions where such failure to
qualify would reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations or Properties of
Borrower and its Subsidiaries taken as a whole; (c) comply with all applicable
Legal Requirements (including without limitation Requirements of Environmental
Law) in respect of the conduct of its business and the ownership of its
Property, the noncompliance with which would reasonably be expected to have a
material adverse effect on (1) the business, condition (financial or otherwise),
operations or Properties of Borrower and its Subsidiaries taken as a whole, or
(2) the ability of any Obligor to perform its obligations under any Loan
Document to which it is a party; and (d) cause its Property to be protected,
maintained and kept in good repair and make all replacements and additions to
such Property as may be reasonably necessary to conduct its business properly
and efficiently.
7.02 Financial Statements and Information. Borrower will furnish or
cause to be furnished to Agent and each Lender each of the following: as soon as
available and in any event within 120 days after the end of each applicable
fiscal year, beginning with the fiscal year ending on December 31, 2003, Annual
Financial Statements of Borrower; as soon as available and in any event within
45 days after the end of each fiscal quarter (other than the last fiscal
quarter) of each applicable fiscal year, Quarterly Financial Statements of
Borrower; (c) concurrently with the financial statements provided for in
Sections 7.02(a) and 7.02(b) hereof, such schedules, computations and other
information, in reasonable detail, as may be required by Agent to demonstrate
compliance with the covenants set forth herein or reflecting any non-compliance
therewith as of the applicable date, all certified and signed by the president,
the chief financial officer or the treasurer of Borrower (or other authorized
officer approved by Agent) as true and correct in all material respects to the
best knowledge of such officer and, commencing with the quarterly financial
statement prepared as of June 30, 2003, a compliance certificate ("Compliance
Certificate") in the form of Exhibit 7.02 hereto, duly executed by such
authorized officer; (d) by January 31 of each fiscal year, Borrower's annual
business plan for such fiscal year (including its balance sheet and income and
cash flow projections for such fiscal year); and (e) such other information
relating to the condition (financial or otherwise), operations, prospects
34
or business of Borrower or any of its Subsidiaries as from time to time may be
reasonably requested by Agent.
7.03 Financial Tests. Borrower will have and maintain:
(a) Tangible Net Worth. Tangible Net Worth, as of the last date of any
of the periods covered by the financial statements required to be delivered to
Agent pursuant to Sections 7.02(a) or 7.02(b), of not less than $100,000,000.
(b) Leverage Ratio. A Leverage Ratio of not greater than 2.25 to 1.0 as
of the last date of any of the periods covered by the financial statements
required to be delivered to Agent pursuant to Sections 7.02(a) or 7.02(b).
7.04 Inspection. Subject to Section 11.15 hereof, Borrower will permit
and will cause its Subsidiaries to permit Agent and each Lender upon 3 days'
prior notice (unless a Default or an Event of Default has occurred which is
continuing, in which case no prior notice is required) to inspect its Property,
to examine its files, books and records, except privileged communication with
legal counsel and classified governmental material, and make and take away
copies thereof, and to discuss its affairs with its officers and accountants,
all during normal business hours and at such intervals and to such extent as
Agent or such Lender may reasonably desire.
7.05 Further Assurances. Borrower will and will cause its Subsidiaries
to promptly execute and deliver, at Borrower's expense, any and all other and
further instruments which may be reasonably requested by Agent to cure any
defect in the execution and delivery of any Loan Document in order to effectuate
the transactions contemplated by the Loan Documents.
7.06 Books and Records. Borrower will and will cause its Subsidiaries
to maintain books of record and account which permit financial statements to be
prepared in accordance with GAAP.
7.07 Insurance. Borrower will and will cause each of its Subsidiaries
to maintain insurance with such insurers, on such of its Property, with
responsible companies in such amounts, with such deductibles and against such
risks as are usually carried by owners of similar businesses and properties in
the same general areas in which the applicable Corporation operates or as Agent
may otherwise reasonably require, and furnish Agent satisfactory evidence
thereof promptly upon request therefor.
7.08 Notice of Certain Matters. Borrower will furnish or cause to be
furnished to Agent written notice of the following promptly after any executive
officer of Borrower shall become aware of the same:
(a) the issuance by any court or governmental agency or authority of
any injunction, order or other restraint prohibiting, or having the effect of
prohibiting, the performance of this Agreement, any other Loan Document, or the
making of the Loans or the initiation of any litigation, or any claim or
controversy which would reasonably be expected to result in the initiation of
any litigation, seeking any such injunction, order or other restraint;
35
(b) the filing or commencement of any action, suit or proceeding,
whether at law or in equity or by or before any court or any Governmental
Authority involving claims in excess of $5,000,000 against Borrower or any of
its Subsidiaries or which may reasonably be expected to result in a Default
hereunder; and
(c) any Event of Default or Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with the respect
thereto.
Borrower will also notify Agent in writing at least 30 days prior to the date
that Borrower changes its jurisdiction of organization.
7.09 New Subsidiaries. Borrower will promptly notify the Agent of the
creation of any Subsidiary of Borrower under the laws of the United States or
any state or territory thereof ("Domestic Subsidiary") and any Subsidiary under
the laws of any foreign jurisdiction ("Foreign Subsidiary"), and will: (i) in
the case of any Foreign Subsidiary, deliver to the Agent a stock certificate and
stock power evidencing, or a security agreement and financing statement pledging
sixty-five percent (65%) of the ownership of such Foreign Subsidiary held by
Borrower (or any of Borrower's other Subsidiaries) and (ii) execute such
additional documents (including a pledge agreement in substantially the form of
the Pledge Agreement) or modifications to the Loan Documents as required to
insure Agent holds a perfected security interest in such 65% ownership interest.
In the case of any Domestic Subsidiary, Borrower will cause, upon request by
Agent, such Domestic Subsidiary to execute a Guaranty guarantying the
Obligations.
7.10 Change of Control. Upon a Change of Control, all Obligations shall
become immediately due and payable and Agent and Lender shall be entitled to
exercise any rights and remedies under Article IX.
ARTICLE VIII
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired (or Cover or a standby letter of credit
provided therefor, as contemplated by the penultimate sentence of Section
2.03(a)and all disbursements made pursuant to all Letters of Credit shall have
been reimbursed, the Borrower covenants and agrees with the Agent and the
Lenders that:
8.01 Borrowed Money Indebtedness. The Borrower will not, and will not
suffer or permit any of its Subsidiaries to create, incur, suffer or permit to
exist, or assume or guarantee, directly or indirectly, or become or remain
liable with respect to any Borrowed Money Indebtedness, whether direct,
indirect, absolute, contingent or otherwise, except the following: (a)
Indebtedness under this Agreement and the other Loan Documents, (b) Indebtedness
under the UK Loan Agreement additional Indebtedness not to exceed $75,000,000 of
which up to $10,000,000 may be purchase money Indebtedness; provided, however,
that the Obligations shall rank in right of payment senior to or pari passu with
the Indebtedness (other than purchase money Indebtedness) allowed under Section
8.01(c).
36
8.02 Liens. The Borrower will not, and will not suffer or permit any of
its Subsidiaries to create or suffer to exist any Lien upon any of its Property
now owned or hereafter acquired, or acquire any Property upon any conditional
sale or other title retention device or arrangement or any purchase money
security agreement; or in any manner directly or indirectly sell, assign, pledge
or otherwise transfer any of its rights to income or revenues not yet received;
provided, however, that Borrower and any of its Subsidiaries may create or
suffer to exist Permitted Liens, and may grant Liens to secure the $10,000,000
purchase money indebtedness permitted under Section 8.01 above.
8.03 Mergers, Consolidations and Dispositions of Assets. The Borrower
will not, and will not suffer or permit any of its Subsidiaries to, in any
single transaction or series of transactions, directly or indirectly, wind up,
liquidate or dissolve its affairs, or effect any merger or consolidation, sell,
lease or otherwise dispose of all or any part of its Property or assets (other
than sales of inventory in the ordinary course of business), or purchase, lease
or otherwise acquire all or any part of the Capital Stock of any Person, or
agree to do any of the foregoing at any future time, except that this Section
8.03 shall not prohibit any of the following transactions, or any agreement to
effect the same:
(a) the purchase, lease or sale of inventory or the acquisition of
facilities, equipment and other assets, in each case, by either Borrower or any
of its Subsidiaries in the ordinary course of business;
(b) dispositions of assets, having an aggregate net book value (such
net book value being determined immediately after the consummation of each such
disposition) during the then current fiscal year of the Borrower of no more than
15% of the Total Capitalization of the Borrower and its Subsidiaries minus all
intangibles, as such term is defined in the definition of Tangible Net Worth;
(c) dispositions of assets in connection with the obsolescence or
replacement thereof, and
(d) the merger or consolidation of any other Person with and into the
Borrower provided that (i) the Borrower is the surviving entity, (ii) the
Borrower shall be in compliance, on a pro forma basis after giving effect to
such transaction, with the covenants contained in Section 7.03 recomputed on a
trailing twelve (12) month basis, (iii) immediately after giving effect and pro
forma effect thereto, all representations and warranties made herein (other than
those which relate specifically to an earlier date or which become inaccurate
because of transactions permitted under the Loan Documents) shall be true and
correct and no event shall occur or be continuing that constitutes either a
Default or an Event of Default, and (iv) Agent is given at least ten (10) days'
prior notice of such merger or consolidation.
8.04 Redemption, Dividends and Distributions. Borrower will not, and
will not permit any of its Subsidiaries to, at any time, declare or make, or
incur any liability to declare or make, any dividend, distribution, redemption,
payment or similar item in respect of any of its shareholders or holders of its
Indebtedness unless, immediately after giving effect to such action, no Default
or Event of Default would exist (including, without limitation, under Section
7.03 hereof).
37
8.05 Nature of Business. The Borrower will not, and will not suffer or
permit any of its Subsidiaries to change the nature of its business in any
substantial respect or enter into any business which is substantially different
from the business in which it is presently engaged.
8.06 Transactions with Related Parties. The Borrower will not, and will
not suffer or permit any of its Subsidiaries to enter into any transaction or
agreement with any officer, director or holder of any equity interest in
Borrower or any of its Subsidiaries (or any Affiliate of any such Person) other
than transactions among Obligors, unless the same is upon terms substantially
similar to (or more favorable to the relevant Obligor than) those obtainable
from wholly unrelated sources (to the best knowledge of the executive officers
of the applicable Corporation or Affiliate, after making reasonable inquiry of
the personnel and records of the applicable Corporation or Affiliate).
8.07 Loans and Investments. The Borrower will not, and will not suffer
or permit any of its Subsidiaries to make any loan, advance, extension of credit
or capital contribution to, or make or have any Investment in, any Person, or
make any commitment to make any such extension of credit or Investment except
(a) Permitted Investments; (b) Investments in any Obligor; (c) advances to
Subsidiaries which are not Obligors, but the aggregate of such advances may not
exceed $8,000,000 at any one time outstanding; and (d) normal and reasonable
advances in the ordinary course of business to directors, officers and
employees.
8.08 Organizational Documents. The Borrower will not, and will not
suffer or permit any of its Subsidiaries to amend, modify, restate or supplement
any of its Organizational Documents if such action would reasonably be expected
to materially and adversely affect any Loan or Obligation or the abilities of
Borrower to perform its Obligations under any Loan Document, unless such action
shall be consented to in writing by Agent.
8.09 Negative Pledges. The Borrower will not, and will not suffer or
permit any of its Subsidiaries to enter into any agreement or contract (other
than the UK Loan Agreement) which in any way (except pursuant to (i) the terms
of a transaction creating a Lien permitted pursuant to clause (h), (i) or (j) of
the definition of Permitted Encumbrances or (ii) customary limitations and
restrictions constituting negative pledges contained in, and limited to,
specific leases, licenses, joint venture and similar agreements) prohibits or
limits the ability of the Borrower or any of its Subsidiaries to grant Cover or
to create, incur, assume or suffer to exist any Lien upon any of its assets,
rights, revenue or Property, whether now owned or hereafter acquired.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur, then Agent may (and at the
direction of the Majority Lenders, shall) do any or all of the following: (1)
without notice to Borrower or any other Person, declare the Commitments
terminated (whereupon all Commitments shall be terminated) and/or accelerate the
Revolving Loan Termination Date to a date as early as the date of termination of
the Commitments; (2) terminate any Letter of Credit allowing for such
termination, by sending a notice of termination as provided therein and require
Borrower to provide Cover for outstanding Letters of Credit; (3) declare the
principal amount then outstanding of and the unpaid accrued
38
interest on the Loans and Reimbursement Obligations and all fees and all other
amounts payable hereunder, under the Notes and under the other Loan Documents to
be forthwith due and payable, whereupon such amounts shall be and become
immediately due and payable, without notice (including, without limitation,
notice of acceleration and notice of intent to accelerate), presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by Borrower; provided that in the case of the occurrence of an Event of
Default with respect to any Obligor referred to in clause (f), (g) or (h) of
this Section 9.01, the Commitments shall be automatically terminated and the
principal amount then outstanding of and unpaid accrued interest on the Loans
and the Reimbursement Obligations and all fees and all other amounts payable
hereunder, under the Notes and under the other Loan Documents shall be and
become automatically and immediately due and payable, without notice (including,
without limitation, notice of acceleration and notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by Borrower; and (4) exercise any or all other rights
and remedies available to Agent or any of the Lenders under the Loan Documents,
at law or in equity:
(a) Payments - (i) any Obligor shall fail to make any payment or
required prepayment of any installment of principal on the Loans or any
Reimbursement Obligation payable under the Notes, this Agreement or the other
Loan Documents when due or (ii) any Obligor fails to make any payment or
required prepayment of interest with respect to the Loans, any Reimbursement
Obligation or any other fee or amount under the Notes, this Agreement or the
other Loan Documents when due and such failure to pay continues unremedied for a
period of five (5) days; or
(b) Other Obligations - Borrower or any of its Subsidiaries shall
default in the payment when due of any principal of or interest on any
Indebtedness having an outstanding principal amount of at least $5,000,000
(other than the Loans and Reimbursement Obligations) including, without
limitation, the UK Loan Agreement and such default shall continue beyond any
applicable period of grace; or any event or condition shall occur which results
in the acceleration of the maturity of any such Indebtedness or enables (or,
with the giving of notice or lapse of time or both, would enable) the holder of
any such Indebtedness or any Person acting on such holder's behalf to accelerate
the maturity thereof and such event or condition shall not be cured within any
applicable period of grace; or
(c) Representations and Warranties - any representation or warranty
made or deemed made by or on behalf of any Obligor in this Agreement or any
other Loan Document or in any certificate furnished or made by any Obligor to
Agent or the Lenders in connection herewith or therewith shall prove to have
been incorrect, false or misleading in any material respect as of the date
thereof or as of the date as of which the facts therein set forth were stated or
certified or deemed stated or certified; or
(d) Affirmative Covenants - (i) default shall be made in the due
observance or performance of any of the covenants or agreements contained in
Sections 7.03 and 7.10 hereof, (ii) default shall be made in the due observance
or performance of any of the covenants or agreements contained in Sections 7.02,
7.04, 7.07 or 7.08 hereof and, in each case, such default continues unremedied
for a period of 20 days after (x) notice thereof is given by Agent to Borrower
or (y) such default otherwise becomes known to any executive officer of
Borrower,
39
whichever is earlier, or (iii) default is made in the due observance or
performance of any of the other covenants and agreements contained in Article
VII hereof or any other affirmative covenant of any Obligor contained in this
Agreement or any other Loan Document and such default continues unremedied for a
period of 30 days after (x) notice thereof is given by Agent to Borrower or (y)
such default otherwise becomes known to any executive officer of Borrower,
whichever is earlier; or
(e) Negative Covenants - default is made in the due observance or
performance by Borrower of any of the other covenants or agreements contained in
Article VIII of this Agreement or of any other negative covenant of any Obligor
contained in this Agreement or any other Loan Document; or
(f) Involuntary Bankruptcy or Receivership Proceedings - a receiver,
conservator, liquidator or trustee of Borrower or any of its Subsidiaries or of
any of their respective Property is appointed by the order or decree of any
court or agency or supervisory authority having jurisdiction, and such decree or
order remains in effect for more than 60 days; or Borrower or any of its
Subsidiaries is adjudicated bankrupt or insolvent; or any of such Person's
Property is sequestered by court order and such order remains in effect for more
than 60 days; or a petition is filed against Borrower or any of its Subsidiaries
under any state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment or debt, dissolution, liquidation or receivership law or any
jurisdiction, whether now or hereafter in effect, and is not dismissed within 60
days after such filing; or
(g) Voluntary Petitions or Consents - Borrower or any of its
Subsidiaries commences a voluntary case or other proceeding or order seeking
liquidation, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or other relief with respect to itself or its debts or
other liabilities 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 consents 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 fails generally to, or cannot, pay its debts generally
as they become due or takes any corporate action to authorize or effect any of
the foregoing; or
(h) Assignments for Benefit of Creditors or Admissions of Insolvency -
Borrower or any of its Subsidiaries makes an assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee, or liquidator
of such Corporation or of all or any substantial part of its Property; or
(i) Undischarged Judgments - a final non-appealable judgment or
judgments for the payment of money exceeding, in the aggregate, $2,000,000
(exclusive of amounts covered by insurance or indemnity) is rendered by any
court or other governmental body against Borrower or any if its Subsidiaries and
such Corporation does not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof within 30 days
from the date of entry thereof; or
40
(j) Concealment - Borrower or any of its Subsidiaries shall have
concealed, removed, or permitted to be concealed or removed, any part of its
Property, with intent to hinder, delay or defraud its creditors or any of them,
or shall have made any transfer of its Property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid;
or
(k) Ownership Change or Encumbrance - any Person other than Borrower or
another Guarantor shall own more than fifty percent (50%) of the outstanding
equity interest in any Guarantor (other than directors' qualifying shares
mandated by applicable law) or any Person shall acquire any Lien (other than
Liens contemplated hereunder) on Borrower's interest in and to the equity
interest in any Subsidiary of Borrower; or
9.02 Right of Setoff. Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time and from time
to time, without notice to any Obligor (any such notice being expressly waived
by Borrower and the other Obligors), to setoff and apply any and all deposits
(general or special, time or demand, provisional or final, but excluding the
funds held in accounts clearly designated as escrow or trust accounts held by
Borrower or any other Obligor for the benefit of Persons which are not
Affiliates of any Obligor, whether or not such setoff results in any loss of
interest or other penalty, and including without limitation all certificates of
deposit) at any time held, and any other funds or Property at any time held, and
other Indebtedness at any time owing by such Lender to or for the credit or the
account of Borrower or any other Obligor against any and all of the Obligations
irrespective of whether or not such Lender or Agent will have made any demand
under this Agreement, the Notes or any other Loan Document. Should the right of
any Lender to realize funds in any manner set forth hereinabove be challenged
and any application of such funds be reversed, whether by court order or
otherwise, the Lenders shall make restitution or refund to Borrower pro rata in
accordance with their Commitments. Each Lender agrees to promptly notify
Borrower and Agent after any such setoff and application, provided that the
failure to give such notice will not affect the validity of such setoff and
application. The rights of Agent and the Lenders under this Section are in
addition to other rights and remedies (including without limitation other rights
of setoff) which Agent or the Lenders may have. This Section is subject to the
terms and provisions of Sections 4.04 and 11.07 hereof.
9.03 Collateral Account. Borrower hereby agrees, in addition to the
provisions of Section 9.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by Agent or the
Majority Lenders (through Agent), pay to Agent an amount in immediately
available funds equal to the then aggregate amount available for drawings under
all Letters of Credit issued for the account of Borrower, which funds shall be
held by Agent as Cover; Agent shall release such Cover upon Borrower's request
if (a) no Default or Event of Default then exists and (b) the release of such
Cover would not give Agent the right to demand a prepayment pursuant to Section
3.02(b) hereof.
9.04 Remedies Cumulative. To the maximum extent not prohibited by
applicable law, no remedy, right or power conferred upon Agent or any Lender is
intended to be exclusive of any other remedy, right or power given hereunder or
now or hereafter existing at law, in equity, or otherwise, and all such
remedies, rights and powers shall be cumulative.
41
23
ARTICLE X
AGENT
10.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent hereunder, under
the Letters of Credit and under the other Loan Documents with such powers as are
specifically delegated to Agent by the terms hereof and thereof, together with
such other powers as are reasonably incidental thereto. Any Loan Documents
executed in favor of Agent shall be held by Agent for the ratable benefit of the
Lenders. Agent ("Agent" as used in this Article X shall include reference to its
Affiliates and its own and its Affiliates' respective officers, shareholders,
directors, employees and agents) (a) shall not have any duties or
responsibilities except those expressly set forth in this Agreement, the Letters
of Credit, and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Lender;
(b) shall not be responsible to any Lender for any recitals, statements,
representations or warranties contained in this Agreement, the Letters of Credit
or any other Loan Document, or in any certificate or other document referred to
or provided for in, or received by any of them under, this Agreement, the
Letters of Credit or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, execution, filing, registration,
collectibility, recording, perfection, existence or sufficiency of this
Agreement, the Letters of Credit, or any other Loan Document or any other
document referred to or provided for herein or therein or any Property covered
thereby or for any failure by any Obligor or any other Person to perform any of
its obligations hereunder or thereunder, and shall not have any duty to inquire
into or pass upon any of the foregoing matters; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under
the Letters of Credit or any other Loan Document except to the extent requested
by the Majority Lenders; (d) shall not be responsible for any mistake of law or
fact or any action taken or omitted to be taken by it hereunder or under the
Letters or Credit or any other Loan Document or any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, including, without limitation, pursuant to its own negligence, except
for its own gross negligence or willful misconduct; (e) shall not be bound by or
obliged to recognize any agreement among or between Borrower and any Lender to
which Agent is not a party, regardless of whether Agent has knowledge of the
existence of any such agreement or the terms and provisions thereof; (f) shall
not be charged with notice or knowledge of any fact or information not herein
set out or provided to Agent in accordance with the terms of this Agreement or
any other Loan Document; (g) shall not be responsible for any delay, error,
omission or default of any mail, telegraph, cable or wireless agency or
operator; and (h) shall not be responsible for the acts or edicts of any
Governmental Authority. Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Without in any way
limiting any of the foregoing, each Lender acknowledges that Agent shall have no
greater responsibility in the operation of the Letters of Credit than is
specified in the Uniform Customs and Practice for Documentary Credits (1993
Revision, International Chamber of Commerce Publication No. 500). In any
foreclosure proceeding concerning any collateral, each holder of an Obligation
if bidding for its own account or for its own account and the accounts of other
Lenders is prohibited from including in the amount of its bid an amount to be
applied as a credit against the Obligations held by it or the Obligations held
by the other Lenders; instead, such holder must bid in cash only. However, in
any such foreclosure proceeding, Agent may (but shall not be obligated to)
submit a bid for all Lenders (including itself) in the form of a credit against
the
42
Obligations, and Agent or its designee may (but shall not be obligated to)
accept title to such collateral for and on behalf of all Lenders.
10.02 Reliance. Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (which may be counsel for Borrower), independent
accountants and other experts selected by Agent. Agent shall not be required in
any way to determine the identity or authority of any Person delivering or
executing the same. As to any matters not expressly provided for by this
Agreement, the Letters of Credit, or any other Loan Document, Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions of the Majority Lenders, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. If any order, writ, judgment or decree shall be made or entered by any
court affecting the rights, duties and obligations of Agent under this Agreement
or any other Loan Document, then and in any of such events Agent is authorized,
in its sole discretion, to rely upon and comply with such order, writ, judgment
or decree which it is advised by legal counsel of its own choosing is binding
upon it under the terms of this Agreement, the relevant Loan Document or
otherwise; and if Agent complies with any such order, writ, judgment or decree,
then it shall not be liable to any Lender or to any other Person by reason of
such compliance even though such order, writ, judgment or decree may be
subsequently reversed, modified, annulled, set aside or vacated.
10.03 Defaults. Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the non-payment of principal of or interest
on Loans or Reimbursement Obligations) unless Agent has received notice from a
Lender or Borrower specifying such Default and stating that such notice is a
"Notice of Default." In the event that Agent receives such a Notice of Default,
Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such non-payment). Agent shall (subject to Section
10.07 hereof) take such action with respect to such Notice of Default as shall
be directed by the Majority Lenders and within its rights under the Loan
Documents and at law or in equity, provided that, unless and until Agent shall
have received such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, permitted hereby with respect
to such Notice of Default as it shall deem advisable in the best interests of
the Lenders and within its rights under the Loan Documents, at law or in equity.
10.04 Material Written Notices. In the event that Agent receives any
written notice of a material nature from Borrower or any Obligor under the Loan
Documents, Agent shall promptly inform each of the Lenders thereof.
10.05 Rights as a Lender. With respect to its Commitments and the Loans
made and Letter of Credit Liabilities, Bank One in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting in its agency capacity,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity. Agent may (without having
to account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust, letter of credit, agency or
other business with Borrower (and any of its Affiliates) as if it were not
acting as Agent, and Agent may accept fees and other consideration
43
from Borrower (in addition to the fees heretofore agreed to between Borrower and
Agent) for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
10.06 Indemnification. The Lenders agree to indemnify Agent (to the
extent not reimbursed under Section 2.03(c), Section 11.03 or Section 11.04
hereof, but without limiting the obligations of Borrower under said Sections
2.03(c), 11.03 and 11.04), ratably in accordance with the sum of the Lenders'
respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN
PART BY THE NEGLIGENCE OF ANY INDEMNIFIED PARTIES, which may be imposed on,
incurred by or asserted against Agent in any way relating to or arising out of
this Agreement, the Letters of Credit or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which Borrower is obligated to pay under Sections 2.03(c), 11.03 and
11.04 hereof, interest, penalties, attorneys' fees and amounts paid in
settlement, but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified. The obligations of the
Lenders under this Section 10.06 shall survive the termination of this Agreement
and the repayment of the Obligations.
10.07 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has received current financial information with respect to Borrower and each
other Obligor that it has, independently and without reliance on Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and each other Obligor and
decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. Agent shall not be required to keep itself
informed as to the performance or observance by any Obligor of this Agreement,
the Letters of Credit or any of the other Loan Documents or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Obligor. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder, under the Letters of Credit or the other Loan Documents, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of any
Obligor (or any of their affiliates) which may come into the possession of
Agent.
10.08 Failure to Act. Except for action expressly required of Agent
hereunder, under the Letters of Credit or under the other Loan Documents, Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction by
the Lenders of their indemnification obligations under Section
44
10.06 hereof against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
10.09 Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving notice thereof to the Lenders and Borrower, and Agent may be removed
at any time with or without cause by the Majority Lenders; provided, that Agent
shall continue as Agent until such time as any successor shall have accepted
appointment as Agent hereunder. Upon any such resignation or removal, (i) the
Majority Lenders without the consent of Borrower shall have the right to appoint
a successor Agent so long as such successor Agent is also a Lender at the time
of such appointment and (ii) the Majority Lenders shall have the right to
appoint a successor Agent that is not a Lender at the time of such appointment
so long as Borrower consents to such appointment (which consent shall not be
unreasonably withheld). If no successor Agent shall have been so appointed by
the Majority Lenders and accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent. Any successor Agent shall be a bank which
has an office in the United States and a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under any other Loan Documents. Such successor Agent shall
promptly specify by notice to Borrower its Principal Office. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article X shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
10.10 No Partnership. Neither the execution and delivery of this
Agreement nor any of the other Loan Documents nor any interest the Lenders,
Agent or any of them may now or hereafter have in all or any part of the
Obligations shall create or be construed as creating a partnership, joint
venture or other joint enterprise between the Lenders or among the Lenders and
Agent. The relationship between the Lenders, on the one hand, and Agent, on the
other, is and shall be that of principals and agent only, and nothing in this
Agreement or any of the other Loan Documents shall be construed to constitute
Agent as trustee or other fiduciary for any Lender or to impose on Agent any
duty, responsibility or obligation other than those expressly provided for
herein and therein.
ARTICLE XI
MISCELLANEOUS
11.01 Waiver. No waiver of any Default or Event of Default shall be a
waiver of any other Default or Event of Default. No failure on the part of Agent
or any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law or in equity.
45
11.02 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy
(confirmed by mail), cable or other writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof (or
provided for in an Assignment and Acceptance); or, as to any party hereto, at
such other address as shall be designated by such party in a notice (given in
accordance with this Section) (i) as to Borrower, to Agent, (ii) as to Agent, to
Borrower and to each Lender, and (iii) as to any Lender, to Borrower and Agent.
Except as otherwise provided in this Agreement, all such notices or
communications shall be deemed to have been duly given when (i) transmitted by
telex or telecopier or delivered to the telegraph or cable office, (ii)
personally delivered, (iii) one Business Day after deposit with an overnight
mail or delivery service, postage prepaid or (iv) three Business Days after
deposit in a receptacle maintained by the United States Postal Service, postage
prepaid, registered or certified mail, return receipt requested, in each case
given or addressed as aforesaid.
11.03 Expenses, Etc. Whether or not any Loan is ever made or any Letter
of Credit ever issued, Borrower shall pay or reimburse within 30 days after
written demand (a) Agent for paying the reasonable fees and expenses of legal
counsel to Agent, together with the reasonable fees and expenses of each local
counsel to Agent, in connection with the preparation, negotiation, execution and
delivery of this Agreement (including the exhibits and schedules hereto) and the
other Loan Documents and the making of the Loans and the issuance of Letters of
Credit hereunder, and any modification, supplement or waiver of any of the terms
of this Agreement, the Letters of Credit or any other Loan Document; (b) Agent
for any lien search fees incurred in connection with the transactions
contemplated hereby; (c) Agent for reasonable out-of-pocket expenses incurred in
connection with the preparation, documentation, administration and syndication
of the Loans or any of the Loan Documents (including, without limitation, the
advertising, marketing, printing, publicity, duplicating, mailing and similar
expenses) of the Loans and Letter of Credit Liabilities; (d) Agent for paying
all transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement,
any Letter of Credit or any other Loan Document or any other document referred
to herein or therein; (e) Agent for paying all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any Lien contemplated by this Agreement
or any document referred to herein; and (f) following the occurrence and during
the continuation of an Event of Default, any Lender or Agent for paying all
amounts reasonably expended, advanced or incurred by such Lender or Agent to
satisfy any obligation of any Obligor under this Agreement, to collect the
Obligations or to enforce, protect, preserve or defend the rights of the Lenders
or Agent under this Agreement or any other Loan Document, including, without
limitation and to the maximum extent not prohibited by applicable law,
reasonable fees and expenses incurred in connection with such Lender's or
Agent's participation as a member of a creditor's committee in a case commenced
under the Bankruptcy Code or other similar law, fees and expenses incurred in
connection with lifting the automatic stay prescribed in ss. 362 of the
Bankruptcy Code and fees and expenses incurred in connection with any action
pursuant to ss. 1129 of the Bankruptcy Code and all other customary
out-of-pocket expenses incurred by such Lender or Agent in connection with such
matters, together with interest thereon at the Past Due Rate on each such amount
until the date of reimbursement to such Lender or Agent; but the performance by
the Agent or any Lender of an agreement, covenant or obligation of the Borrower
under any Loan Document
46
which the Borrower has not performed shall not be considered or constitute a
cure of such default or a waiver of the Agent's or any Lender's right at any
time after an Event of Default to exercise its rights and remedies under the
Loan Documents and applicable law.
11.04 Indemnification. Borrower shall indemnify each of Agent, the
Lenders, and each affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY
INDEMNIFIED PARTIES, insofar as such losses, liabilities, claims or damages
arise out of or result from any (i) actual or proposed use by Borrower of the
proceeds of any extension of credit (whether a Loan or a Letter of Credit) by
any Lender hereunder; (ii) breach by any Obligor of this Agreement or any other
Loan Document; (iii) violation by any Obligor of any Legal Requirement; (iv)
investigation, litigation or other proceeding relating to any of the foregoing,
and Borrower shall reimburse Agent, each Lender, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon demand for any
reasonable expenses (including reasonable legal fees) incurred in connection
with any such investigation or proceeding; or (v) taxes (excluding income taxes
and franchise taxes) payable or ruled payable by any Governmental Authority in
respect of the Obligations or any Loan Document, together with interest and
penalties (other than interest or penalties resulting from the failure of the
applicable indemnified party to pay any such taxes when due), if any; provided,
however, that Borrower shall not have any obligations pursuant to this Section
with respect to any losses, liabilities, claims, damages or expenses incurred by
the Person seeking indemnification by reason of the gross negligence or willful
misconduct of that Person or with respect to any disputes between or among any
and all of Agent, Lenders and Issuers. Nothing in this Section is intended to
limit the obligations of Borrower under any other provision of this Agreement.
Agent and each Lender, respectively, shall indemnify Borrower and hold Borrower
harmless from and against the gross negligence or willful misconduct of Agent or
such Lender, as the case may be.
11.05 Amendments, Etc. No amendment or modification of this Agreement,
the Notes or any other Loan Document shall in any event be effective against
Borrower unless the same shall be agreed or consented to in writing by Borrower.
No amendment, modification or waiver of any provision of this Agreement, the
Notes or any other Loan Document, nor any consent to any departure by Borrower
therefrom, shall in any event be effective against the Lenders unless the same
shall be agreed or consented to in writing by the Majority Lenders, and each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, that no amendment, modification,
waiver or consent shall, unless in writing and signed by each Lender affected
thereby, do any of the following: (a) increase any Commitment of any of the
Lenders; (b) reduce the principal of, or interest on, any Loan, Reimbursement
Obligation or fee payable to such Lender hereunder; (c) postpone or extend the
Maturity Date, the Revolving Loan Termination Date, the Revolving Loan
Availability Period or any scheduled date fixed for any payment of principal of,
or interest on, any Loan, Reimbursement Obligation, fee or other sum to be paid
hereunder or waive any Event of Default described in Section 9.01(a) hereof; (d)
change the percentage of any of the Commitments or of the aggregate unpaid
principal amount of any of the Loans and Letter of Credit Liabilities, or the
percentage of Lenders, which shall be required for the Lenders or any of them to
take any action under this Agreement; (e) change any provision contained in
Sections 2.03(c), 11.03 or 11.04
47
hereof or this Section 11.05; (f) release any Person from liability under a
Guaranty; or (g) modify the provisions of Sections 4.01(b) or 4.02 hereof
regarding pro rata application of amounts after an Event of Default shall have
occurred and be continuing. Notwithstanding anything in this Section 11.05 to
the contrary, no amendment, modification, waiver or consent shall be made with
respect to matters affecting the Issuer or the Agent, without the consent of
said parties.
11.06 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrower, Agent and the Lenders and their respective successors and assigns;
provided, however, that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of all of the Lenders,
and any such assignment or transfer without such consent shall be null and void.
Each Lender may sell participations to any Person in all or part of any Loan, or
all or part of its Notes, Commitments or interests in Letters of Credit, in
which event, without limiting the foregoing, the provisions of the Loan
Documents shall inure to the benefit of each purchaser of a participation;
provided, however, the pro rata treatment of payments, as described in Section
4.02 hereof, shall be determined as if such Lender had not sold such
participation. Any Lender that sells one or more participations to any Person
shall not be relieved by virtue of such participation from any of its
obligations to Borrower under this Agreement relating to the Loans. In the event
any Lender shall sell any participation, such Lender shall retain the sole right
and responsibility to enforce the obligations of Borrower relating to the Loans,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement other than amendments,
modifications or waivers with respect to (i) any fees payable hereunder to the
Lenders and (ii) the amount of principal or the rate of interest payable on, or
the dates fixed for the scheduled repayment of principal of, the Loans.
(b) Each Lender may assign to one or more Lenders or any Eligible
Assignee all or a portion of its interests, rights and obligations under this
Agreement; provided, however, that (i) the aggregate amount of the Commitments
of the assigning Lender subject to each such assignment shall in no event be
less than $5,000,000; (ii) other than in the case of an assignment to another
Lender (that is, at the time of the assignment, a party hereto) or to an
Affiliate of such Lender or to a Federal Reserve Bank, Agent and, so long as no
Event of Default shall have occurred and be continuing, Borrower, must each give
its prior written consent to any such assignment, which consent shall not be
unreasonably withheld; and (iii) the parties to each such assignment shall
execute and deliver to Agent, for its acceptance an Assignment and Acceptance in
the form of Exhibit 11.06(b) hereto (each an "Assignment and Acceptance") with
blanks appropriately completed, together with any Note or Notes subject to such
assignment and a processing and recording fee of $3,000 paid by the assignee
(for which Borrower will have no liability). Upon such execution, delivery and
acceptance, from and after the effective date specified in each Assignment and
Acceptance (A) the assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) the Lender thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto except in respect of provisions of this Agreement which survive payment
of the Obligations and termination of the Commitments). Notwithstanding anything
contained in this
48
Agreement to the contrary, any Lender may at any time assign all or any portion
of its rights under this Agreement and the Notes issued to it as collateral to a
Federal Reserve Bank; provided that no such assignment shall release such Lender
from any of its obligations hereunder.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such Lender assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance or observance by Borrower of
any of its obligations under this Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 6.02 hereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon Agent, such Lender
assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents;
(v) such assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all obligations that by the terms
of this Agreement and the other Loan Documents are required to be performed by
it as a Lender.
(d) The entries in the records of Agent as to each Assignment and
Acceptance delivered to it and the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time shall be conclusive, in the absence of manifest error, and
Borrower, Agent and the Lenders may treat each Person the name of which is
recorded in the books and records of Agent as a Lender hereunder for all
purposes of this Agreement and the other Loan Documents.
(e) Upon Agent's receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee thereunder, together with any Note or Notes
subject to such assignment and the written consent to such assignment (to the
extent consent is required), Agent shall, if such Assignment and Acceptance has
been completed with blanks appropriately filled, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in its records and
(iii) give prompt notice thereof to Borrower. Within five Business Days after
receipt of notice, Borrower, at its own expense, shall execute and deliver to
Agent in exchange for the surrendered Notes new Notes to the order of such
assignee in an amount equal to the Commitments assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained Commitments
hereunder, new Notes to the order of the assigning Lender in an amount equal to
49
the Commitment retained by it hereunder. Such new Notes shall be in an aggregate
maximum principal amount equal to the aggregate maximum principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the respective
Note. Thereafter, such surrendered Notes shall be marked renewed and substituted
and the originals thereof delivered to Borrower (with copies, certified by
Borrower as true, correct and complete, to be retained by Agent).
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 11.06 but
subject to Section 11.15 hereof, disclose to the assignee or participant or
proposed assignee or participant, any information relating to Borrower furnished
to such Lender by or on behalf of Borrower.
11.07 Limitation of Interest. Borrower and the Lenders intend to
strictly comply with all applicable federal and Texas laws, including applicable
usury laws (or the usury laws of any jurisdiction whose usury laws are deemed to
apply to the Notes or any other Loan Documents despite the intention and desire
of the parties to apply the usury laws of the State of Texas). Accordingly, the
provisions of this Section 11.07 shall govern and control over every other
provision of this Agreement or any other Loan Document which conflicts or is
inconsistent with this Section, even if such provision declares that it
controls. As used in this Section, the term "interest" includes the aggregate of
all charges, fees, benefits or other compensation which constitute interest
under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal parts during the full term of the Obligations. In
no event shall Borrower or any other Person be obligated to pay, or any Lender
have any right or privilege to reserve, receive or retain, (a) any interest in
excess of the maximum amount of nonusurious interest permitted under the laws of
the State of Texas or the applicable laws (if any) of the United States or of
any other jurisdiction, or (b) total interest in excess of the amount which such
Lender could lawfully have contracted for, reserved, received, retained or
charged had the interest been calculated for the full term of the Obligations at
the Ceiling Rate. The daily interest rates to be used in calculating interest at
the Ceiling Rate shall be determined by dividing the applicable Ceiling Rate per
annum by the number of days in the calendar year for which such calculation is
being made. None of the terms and provisions contained in this Agreement or in
any other Loan Document (including, without limitation, Section 9.01 hereof)
which directly or indirectly relate to interest shall ever be construed without
reference to this Section 11.07, or be construed to create a contract to pay for
the use, forbearance or detention of money at an interest rate in excess of the
Ceiling Rate. If the term of any Obligation is shortened by reason of
acceleration of maturity as a result of any Default or by any other cause, or by
reason of any required or permitted prepayment, and if for that (or any other)
reason any Lender at any time, including but not limited to, the stated
maturity, is owed or receives (and/or has received) interest in excess of
interest calculated at the Ceiling Rate, then and in any such event all of any
such excess interest shall be canceled automatically as of the date of such
acceleration, prepayment or other event which produces the excess, and, if such
excess interest has been paid to such Lender, it shall be credited pro tanto
against the then-outstanding principal balance of Borrower's obligations to such
Lender, effective as of the date or dates when the event occurs which causes it
to be excess interest, until such excess is exhausted or all of such principal
has been fully paid
50
and satisfied, whichever occurs first, and any remaining balance of such excess
shall be promptly refunded to its payor. The Borrower, the Lenders and the Agent
expressly agree, pursuant to Chapter 346 ("Chapter 346") of the Texas Finance
Code, that Chapter 346 (which relates to open-end line of credit revolving loan
accounts) shall not apply to any Loan Document or to any Obligation, and that
none of them shall be governed by Chapter 346 or subject to its provisions in
any manner whatsoever.
11.08 Survival. The obligations of Borrower under Sections 2.03(c),
11.03 and 11.04 hereof and all other obligations of Borrower in any other Loan
Document (to the extent stated therein), and the obligations of the Lenders
under Sections 10.05 and 11.07 hereof, shall, notwithstanding anything herein to
the contrary, survive the repayment of the Loans and Reimbursement Obligations
and the termination of the Commitments and the Letters of Credit.
11.09 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.11 Governing Law. THIS AGREEMENT AND (EXCEPT AS THEREIN PROVIDED)
THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM
TIME TO TIME IN EFFECT.
11.12 Severability. Whenever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of any Loan Document shall be invalid, illegal
or unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions of such Loan Document shall not
be affected or impaired thereby.
11.13 Tax Forms. Each Lender which is organized under the laws of a
jurisdiction outside the United States shall, on the day of the initial
borrowing from each such Lender hereunder and from time to time thereafter if
requested by Borrower or Agent, provide Agent and Borrower with the forms
prescribed by the Internal Revenue Service of the United States certifying as to
such Lender's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Lender
hereunder or other documents satisfactory to such Lender, Borrower and Agent
indicating that all payments to be made to such Lender hereunder are not subject
to United States withholding tax or are subject to such tax at a rate reduced by
an applicable tax treaty. Unless Borrower and Agent shall have received such
forms or such documents indicating that payments hereunder are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, Borrower or Agent shall withhold taxes from such payments
at the applicable statutory rate.
51
11.14 Conflicts Between This Agreement and the Other Loan Documents. In
the event of any conflict between the terms of this Agreement and the terms of
any of the other Loan Documents, the terms of this Agreement shall control.
11.15 Disclosure to Other Persons; Confidentiality. (a) Agent and each
Lender agree that it may deliver copies of any financial statements and other
documents or information delivered to it and disclose any other information
disclosed to it by or on behalf of Borrower or any Subsidiary of Borrower in
connection with or pursuant to this Agreement and the other Loan Documents only
to:
(i) its directors, officers, employees and professional
consultants, but only in connection with extensions of credit and
proposed extensions of credit to the Borrower and/or some or all of its
Subsidiaries (collectively, "Credit Transactions");
(ii) any other Lender, but only in connection with Credit
Transactions;
(iii) any Person to which such Lender offers to sell its Note or
any part thereof, provided that each such Person agrees in writing
before such disclosure to observe the confidentiality standards
described in this Section (including but not limited to the restriction
on the use of Confidential Information only in connection with Credit
Transactions);
(iv) any Person to which such Lender sells or offers to sell a
participation in all or any part of its Note, provided that each such
Person agrees in writing before such disclosure to observe the
confidentiality standards described in this Section (including but not
limited to the restriction on the use of Confidential Information only
in connection with Credit Transactions);
(v) any federal or state regulatory authority having jurisdiction
over it;
(vi) any other Person to which such delivery or disclosure may be
necessary or reasonably appropriate in response to any subpoena or
other legal process or investigative demand; and
(vii) any other Person in connection with any litigation involving
any obligation, right or remedy of Agent or any Lender under the Loan
Documents.
(b) Subject to the foregoing, each Agent and each Lender hereby agrees
to use its best efforts to hold in confidence and not to disclose any
Confidential Information; provided, that such Person will be free, after notice
to Borrower, to correct any false or misleading information which may become
public concerning its relationship to Borrower. For the purpose of this Section,
the term "Confidential Information" shall mean information about Borrower or any
Subsidiary of Borrower furnished by Borrower or any such Subsidiary, but does
not include any information which (i) is publicly known, or otherwise known to
such holder, at the time of disclosure; (ii) subsequently becomes publicly
known, but not through any act or omission by such holder; or (iii) otherwise
becomes known to such holder other than through disclosure by Borrower, any
Subsidiary of Borrower, Agent or any Lender.
52
(c) The Borrower shall be entitled to equitable relief by way of
injunction if the Agent, any Lender, any transferee of a Note or a participation
therein or any representative of the Agent, any Lender or any such transferee
breaches or threatens to breach any of the provisions of this Section.
(d) Notwithstanding anything herein to the contrary, confidential
information shall not include, and each Lender (and each employee,
representative or other agent of any Lender) may disclose to any and all
Persons, without limitation of any kind, the "tax treatment" and "tax structure"
(in each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are to have been provided to such Lender
relating to such tax treatment or tax structure; provided that with respect to
any document or similar item that in either case contains information concerning
such tax treatment or tax structure of the transactions contemplated hereby as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to such tax treatment or tax structure.
11.16 Final Agreement. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
OF 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 OF THE PARTIES.
[The remainder of this page is intentionally left blank.]
53
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Closing Date.
HYDRIL COMPANY,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President & CFO
---------------------------------
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Treasurer
---------------------------------
Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Treasurer
Telecopy No. : (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: $10,000,000 BANK ONE, NA, a national banking
association, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No. : (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: $5,000,000 Southwest Bank of Texas
By: /s/ ▇.▇. ▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇.▇. ▇▇▇▇, ▇▇.
---------------------------------
Title: Senior Vice President
---------------------------------
Address for Notices:
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. : (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇