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EXHIBIT 10.36
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FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
$23,500,000.00 REDUCING REVOLVING CREDIT LOAN
AMONG
SERV-TECH, INC.,
AS THE COMPANY,
THE SUBSIDIARIES OF THE COMPANY
LISTED AS GUARANTORS HEREIN
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AS THE AGENT
AND
THE BANKS NAMED HEREIN
DATED AS OF NOVEMBER 12, 1996
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION .......... 1
Section 1.01. Definitions ............................................ 1
Section 1.02. Types of Advances ...................................... 15
Section 1.03. Accounting Terms ....................................... 15
ARTICLE II THE LOANS .............................................. 15
Section 2.01. The Loans .............................................. 15
Section 2.02. The Notes .............................................. 16
Section 2.03. Notice of Advance ...................................... 16
Section 2.04. Disbursement of Funds .................................. 16
Section 2.05. Conversions and Continuances ........................... 17
Section 2.06. Voluntary Prepayments .................................. 17
Section 2.07. Mandatory Repayments and Reduction of Commitment ....... 18
Section 2.08. Method and Place of Payment ............................ 18
Section 2.09. Pro Rata Advances ...................................... 19
Section 2.10. Interest ............................................... 19
Section 2.11. Interest Periods ....................................... 20
Section 2.12. Interest Rate Not Ascertainable ........................ 21
Section 2.13. Change in Legality ..................................... 21
Section 2.14. Increased Costs, Taxes or Capital Adequacy
Requirements ........................................... 22
Section 2.15. Eurodollar Advance Prepayment and Default Penalties .... 23
Section 2.16. Voluntary Reduction of Commitment ...................... 23
Section 2.17. Tax Forms .............................................. 23
ARTICLE III LETTERS OF CREDIT ...................................... 24
Section 3.01. Letters of Credit ...................................... 24
Section 3.02. Letter of Credit Requests .............................. 25
Section 3.03. Letter of Credit Participations ........................ 25
Section 3.04. Increased Costs ........................................ 27
Section 3.05. Conflict between Applications and Agreement ............ 27
ARTICLE IV FEES ................................................... 28
Section 4.01. Fees ................................................... 28
ARTICLE V CONDITIONS PRECEDENT AND WAIVER
OF PRIOR DEFAULTS ...................................... 28
Section 5.01. Conditions Precedent to the Initial Advance ............ 28
Section 5.02. Conditions Precedent to All Credit Events .............. 31
Section 5.03. Delivery of Documents .................................. 32
Section 5.04. Waiver of Existing Known Defaults ...................... 32
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ARTICLE VI REPRESENTATIONS AND WARRANTIES ......................... 33
Section 6.01. Organization and Qualification ......................... 33
Section 6.02. Authorization and Validity ............................. 33
Section 6.03. Governmental Consents .................................. 33
Section 6.04. Conflicting or Adverse Agreements or Restrictions ...... 33
Section 6.05. Title to Assets ........................................ 34
Section 6.06. Litigation ............................................. 34
Section 6.07. Financial Statements ................................... 34
Section 6.08. Default ................................................ 34
Section 6.09. Investment Company Act. ................................ 34
Section 6.10. Public Utility Holding Company Act ..................... 34
Section 6.11. ERISA .................................................. 35
Section 6.12. Tax Returns and Payments ............................... 35
Section 6.13. Environmental Matters .................................. 35
Section 6.14. Purpose of Loans ....................................... 36
Section 6.15. Franchises and Other Rights ............................ 36
Section 6.16. Subsidiaries and Assets ................................ 36
Section 6.17. Solvency ............................................... 36
ARTICLE VII AFFIRMATIVE COVENANTS .................................. 36
Section 7.01. Information Covenants .................................. 36
Section 7.02. Books, Records and Inspections ......................... 39
Section 7.03. Insurance and Maintenance of Properties ................ 39
Section 7.04. Payment of Taxes ....................................... 39
Section 7.05. Corporate Existence .................................... 39
Section 7.06. Compliance with Statutes ............................... 40
Section 7.07. ERISA .................................................. 40
Section 7.08. Additional Subsidiaries ................................ 40
ARTICLE VIII NEGATIVE COVENANTS ..................................... 40
Section 8.01. Change in Business and Compensation Structure .......... 40
Section 8.02. Consolidation, Merger or Sale of Assets ................ 41
Section 8.03. Indebtedness ........................................... 41
Section 8.04. Liens .................................................. 42
Section 8.05. Investments ............................................ 42
Section 8.06. Restricted Payments .................................... 42
Section 8.07. Change in Accounting ................................... 43
Section 8.08. Change of Certain Indebtedness ......................... 43
Section 8.09. FINCHAA Project ........................................ 43
Section 8.10. Transactions with Affiliates ........................... 43
Section 8.11. Consolidated Net Worth ................................. 43
Section 8.12. Minimum EBITDA ......................................... 44
Section 8.13. Total Debt to Capitalization Ratio ..................... 44
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Section 8.14. Capital Expenditures ................................... 44
Section 8.15. Fixed Charge Coverage Ratio ............................ 44
ARTICLE IX GUARANTY ............................................... 44
Section 9.01. Guaranty ............................................... 44
Section 9.02. Continuing Guaranty .................................... 45
Section 9.03. Effect of Debtor Relief Laws ........................... 46
Section 9.04. Waiver of Subrogation .................................. 46
Section 9.05. Subordination .......................................... 47
Section 9.06. Waiver ................................................. 47
Section 9.07. Full Force and Effect .................................. 48
ARTICLE X EVENTS OF DEFAULT AND REMEDIES ........................ 48
Section 10.01. Events of Default ..................................... 48
Section 10.02. Primary Remedies ...................................... 50
Section 10.03. Other Remedies ........................................ 50
ARTICLE XI THE AGENT ............................................. 50
Section 11.01. Authorization and Action .............................. 50
Section 11.02. Agent's Reliance ...................................... 51
Section 11.03. Agent and Affiliates; TCB and Affiliates .............. 51
Section 11.04. Bank Credit Decision .................................. 52
Section 11.05. Agent's Indemnity ..................................... 52
Section 11.06. Successor Agent ....................................... 53
Section 11.07. Notice of Default ..................................... 53
ARTICLE XII MISCELLANEOUS ......................................... 54
Section 12.01. Amendments ............................................ 54
Section 12.02. Notices ............................................... 54
Section 12.03. No Waiver; Remedies ................................... 55
Section 12.04. Costs, Expenses and Taxes ............................. 55
Section 12.05. Release and Indemnity ................................. 56
Section 12.06. Right of Setoff ....................................... 57
Section 12.07. Governing Law ......................................... 57
Section 12.08. Interest .............................................. 57
Section 12.09. Survival of Representations and Warranties ............ 58
Section 12.10. Successors and Assigns; Participations ................ 58
Section 12.11. Confidentiality ....................................... 59
Section 12.12. Pro Rata Treatment .................................... 60
Section 12.13. Separability .......................................... 60
Section 12.14. Execution in Counterparts ............................. 60
Section 12.15. Additional Exposure ................................... 60
Section 12.16. Interpretation ........................................ 61
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Section 12.17. Submission to Jurisdiction ............................ 62
Section 12.18. Waiver of Jury Trial .................................. 62
Section 12.19. Final Agreement of the Parties ........................ 63
Exhibits and Schedules:
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Exhibit 1.01 Form of Borrowing Base Certificate
Exhibit 1.01A Administrative Questionnaire
Exhibit 2.02 Form of Revolving Credit Note
Exhibit 2.03 Form of Notice of Advance
Exhibit 2.05 Form of Notice of Conversion
Exhibit 3.02 Form of Letter of Credit Request
Exhibit 12.10 Form of Assignment and Acceptance
Exhibit 12.10(d) Form of Participation Certificate
Schedule 1.01 Eligible Accounts
Schedule 3.01(a) Existing Letters of Credit
Schedule 6.04 Agreements
Schedule 6.06 Litigation
Schedule 6.13 Exceptions to Environmental Matters
Schedule 6.16A Subsidiaries
Schedule 6.16B Material Subsidiaries
Schedule 7.03 Existing Insurance Policies
Schedule 8.03(b) Existing Indebtedness
Schedule 8.04(a) Existing Liens
Schedule 8.05(b) Investments
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First Amended and Restated Credit Agreement
INTRODUCTION
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of
November 12, 1996 (this "Agreement") is among SERV-TECH, INC., a Texas
corporation (the "Company"), the Subsidiaries of the Company listed on the
signature pages hereto as Guarantors (together with each other person who
subsequently becomes a Guarantor, collectively the "Guarantors"), the banks and
other financial institutions listed on the signature pages hereto under the
caption "Banks" (together with each other person who becomes a Bank,
collectively the "Banks") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
individually as a Bank ("TCB"), as the Issuing Bank, and as agent for the other
Banks (in such capacity together with any other Person who becomes the agent
the "Agent").
The Company, the Guarantors, the Agent and the Banks are parties
to that one certain Credit Agreement dated May 15, 1995 (as amended and
modified from time to time, the "Prior Credit Agreement") pursuant to which the
Banks extended up to a $35,000,000.00 revolving credit to the Company and the
Guarantors guaranteed same (the "Prior Indebtedness"). The Company has now
requested that the Banks provide the Company with a new credit facility,
pursuant to which the Banks will commit to make a reducing revolving credit
loan of up to $23,500,000.00 to the Company to refinance the Prior
Indebtedness, to finance permitted capital expenditures, to provide for the
issuance of Letters of Credit by the Issuing Bank, and for use as working
capital. The Company has also asked the Banks to waive certain defaults under
the Prior Credit Agreement, including defaults occasioned by the Company's
default under documentation with the Other Senior Lenders (as herein defined),
and to consent to the modification of such documentation in a manner consistent
herewith. In connection therewith, the Banks have agreed to restate the Prior
Credit Agreement and the Agent has agreed to serve as Agent for the Banks. The
Agent, the Banks and the Company hereby agree that, upon the fulfillment of the
conditions contained in Section 5.01 and the refinancing of the Prior
Indebtedness, the Prior Credit Agreement shall automatically terminate and
shall be restated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the Company, the Agent and the Banks agree to amend
and restate the Prior Credit Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"ABN AMRO" has the meaning provided in the definition of Other
Senior Lenders.
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"Accounts" means all accounts, accounts receivable or other
indebtedness owing to the Company or to a Subsidiary of the Company
which is a Guarantor as consideration for goods sold or services
rendered billed within thirty (30) days of the providing of such goods
or services or, in the case of cost-plus contracts only, for which there
is no fixed, maximum guaranteed price, results from a billing based upon
costs incurred on a project in excess of all prior ▇▇▇▇▇▇▇▇ (net of any
▇▇▇▇▇▇▇▇ in excess of such costs), if billed during the immediately
succeeding billing cycle and, in any event, not later than the end of
the month following the month in which same were incurred.
"Additional Exposure" means the additional credit exposure of
TCB, up to a maximum of $2,000,000.00, incurred due to the cash
management services and daily advances provided by TCB to the Company or
any of its Subsidiaries in addition to TCB's portion of the Commitment
and any other services described herein.
"Administrative Questionnaire" means the questionnaire attached
hereto as Exhibit 1.01A to be completed by each Bank and returned to the
Agent.
"Advance" means an advance pursuant to a Notice of Advance,
comprised of a single Type of Loan from all the Banks (or resulting from
a conversion or conversions on the same date having, in the case of
Eurodollar Rate Advances, the same Interest Period (except as otherwise
provided in this Agreement)), made by all of the Banks concurrently to
the Company.
"Advance Date" means, with respect to each Advance, the Business
Day upon which the proceeds of such Advance are to be made available to
the Company.
"Affiliate" means any other Person directly or indirectly
controlling (including all directors and officers of such Person),
controlled by, or under direct or indirect common control with such
Person, and any other Person in which such Person's direct or indirect
equity interest is 10% or more of the total outstanding equity interests
of such Person.
"Agent" has the meaning specified in the introduction to this
Agreement.
"Agent's Fee" has the meaning specified in Section 4.01(c).
"Agreement" has the meaning specified in the introduction to this
Agreement.
"Alternate Base Rate" means, for any date, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes
hereof, the term "Prime Rate" means, as of a particular date, the prime
rate most recently determined by the Agent and thereafter entered in the
minutes of its Loan and
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Discount Committee, automatically fluctuating upward and downward with
and at the time of such determination without notice to the Company or
any other Person, which prime rate may not necessarily represent the
lowest or best rate actually charged to a customer. "Federal Funds
Effective Rate" means, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from
three federal funds brokers of recognized standing selected by it. If,
for any reason, the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate, including the inability or
failure of the Agent to obtain sufficient quotations in accordance with
the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Alternate Base Rate Advance" means any Advance bearing interest
at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Applicable Lending Office" means, with respect to each Bank,
such Bank's Domestic Lending Office in the case of an Alternate Base
Rate Advance and such Bank's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance.
"Assignment and Acceptance" has the meaning specified in Section
12.10 (c).
"Bank" has the meaning provided in the introduction to this
Agreement.
"Bankruptcy Code" has the meaning specified in Section 10.01(e).
"Board" means the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrowing Base" means an amount equal to 75% of the Eligible
Accounts.
"Borrowing Base Certificate" means a certificate calculating the
Borrowing Base, substantially in the form of Exhibit 1.01.
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of Texas) on which banks
are open for business in Houston, Texas.
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"Capitalized Lease Obligations" means all lease or rental
obligations which, pursuant to GAAP, are capitalized for balance sheet
purposes.
"Change of Control" means any of (i) the acquisition by any
Person or two or more Persons acting in concert, of beneficial ownership
of 50% or more of the outstanding shares of voting stock of the Company,
(ii) a majority of the members of the Board of Directors of the Company
on any date shall not have been members of the Board of Directors of the
Company on the date 12 months prior to such date, (iii) all or
substantially all of the assets of the Company are sold in a single
transaction or series of related transactions to any Persons or (iv) the
Company merges or consolidates with or into any other Person.
"Code" means the Internal Revenue Code of 1986 and the
regulations promulgated thereunder.
"Collateral" means all, or substantially all, of the assets of
the Company and its material Subsidiaries, real and personal, tangible
and intangible, all as more fully described in the Security Documents.
"Collateral Agent" means TCB in its capacity as Collateral Agent
under the Intercreditor Agreement.
"Commercial Letter of Credit" means a letter of credit issued to
finance the purchase or shipment of goods and payable upon presentation
of appropriate documents of title and receipt in regard to said goods.
"Commitment" and "Commitments" means the obligation of the Banks
to enter into and perform this Agreement, to make available the Loans
and to issue the Letters of Credit to the Company in the amounts shown
on the signature page of each Bank hereto and all other duties and
obligations of the Banks hereunder, which Commitment shall, until June
30, 1997 include the Supplemental Commitment and shall total
$23,500,000.00 and after said date, shall total $19,500,000.00, except
as otherwise provided herein in Sections 2.01(b), 2.07(c) or elsewhere.
"Commitment Fee" has the meaning specified in Section 4.01(b).
"Company" has the meaning specified in the introduction to this
Agreement.
"Consolidated Net Worth" means total assets minus total
liabilities.
"Credit Event" means the making of any Advance, the conversion or
continuation of any Advance as a Eurodollar Rate Advance or the issuance
of any Letter of Credit.
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"Default" means the occurrence of any event which with the giving
of notice or the passage of time or both could become an Event of
Default.
"Default Rate" means the lesser of (i) the Highest Lawful Rate
and (ii) the Alternate Base Rate plus three percent (3%).
"Designated Payment Date" means the first day of each month;
provided, however, if a Designated Payment Date shall be a day which is
not a Business Day, such Designated Payment Date shall be the next
succeeding Business Day, and such extension of time shall be included in
determining the amount to be paid on such date.
"Domestic Lending Office" means, with respect to any Bank, the
office of such Bank designated from time to time as its "Domestic
Lending Office" hereunder.
"EBITDA" means, for any period, the consolidated pre-tax income
for such period, plus the aggregate amount which was deducted for such
period in determining such consolidated, pre-tax income in respect of
interest expense (including amortization of debt discount, imputed
interest and capitalized interest), plus depreciation and amortization,
plus income attributable to any minority interest in any Person, for so
long as said Person remains a Guarantor, provided, the calculations of
EBITDA for the period up to and including September 30, 1996, but not
thereafter, shall be based on consolidated, pre-tax income from
continuing operations only and shall exclude all special charges and
non-recurring write downs. For periods after September 30, 1996 such
calculations shall include all special charges and all non-continuing
operations.
"Effective Date" means the date on which all conditions to make
an Advance set forth in Section 5.01(a) are first met or waived in
accordance with Section 12.01 hereof.
"Eligible Accounts" means (a) any Account which meets all of the
following criteria on the date of determination:
(i) is owned by the Company or a Subsidiary of the
Company which is a Guarantor, free and clear of any claim,
arising in the ordinary course of business;
(ii) is not more than ninety (90) days old from the
original invoice date (120 days in the case of Accounts listed on
Schedule 1.01 hereof, which schedule is subject to change by the
Agent in its sole and absolute discretion);
(iii) does not include any amount that is held back by
any party as retainage or assurance of the future performance of
the Company unless the applicable project is fully and finally
completed and the Company is entitled to and does ▇▇▇▇ for such
retainage;
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(iv) has not been challenged by the obligor thereon;
(v) in respect of which no notice of the bankruptcy,
insolvency or dissolution of the obligor thereon is known to the
Company;
(vi) is not owed by (i) a foreign Person unless
supported by a letter of credit or other insurance satisfactory
to the Agent (including the Revolving Letter of Credit issued by
ABN AMRO for the account of the African Development Bank and all
renewals, extensions or replacements thereof), (ii) the United
States government or (iii) any Affiliate of the Company or of any
Subsidiary; and
(vii) is not owed by an obligor that has 30% or more of
its aggregate accounts payable to the Company more than 120 days
old.
(b) Notwithstanding the above, for the interim, weekly updates
only of the monthly Borrowing Base Certificate required by Section
7.01(f), (but not for the monthly Borrowing Base Certificate required by
Section 7.01(e)), Eligible Accounts may also include costs in excess of
current ▇▇▇▇▇▇▇▇ on fixed-price, maximum guaranteed contracts, subject
to the other limitations therefor contained in the definition of
Accounts.
"Eligible Assignee" means (a) any Bank; (b) a commercial bank
organized under the laws of the United States, or any state thereof, and
having total assets in excess of $1,000,000,000.00; (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 and the Majority Banks.
"Environmental Laws" means federal, state or local laws, rules or
regulations, and any judicial, arbitral or administrative
interpretations thereof, including any judicial, arbitral or
administrative order, judgment, permit, approval, decision or
determination pertaining to conservation or protection of the
environment in effect at the time in question, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Federal Water Pollution Control Act, the
Occupational Safety and Health Act, the Resource Conservation and
Recovery Act, the Safe Drinking Water Act, the Toxic Substances Control
Act, the Superfund Amendment and Reauthorization Act of 1986, the
Hazardous Materials Transportation Act, and comparable state and local
laws, and other environmental conservation and protection laws.
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"ERISA" means the Employee Retirement Income Security Act of 1974
and the regulations promulgated thereunder.
"ERISA Affiliate" means (a) any trade or business (whether or not
incorporated) which is either a member of the same "controlled group" or
under "common control," within the meaning of Section 414 of the Code
and the regulations thereunder, with the Company and (b) any Subsidiary
of the Company.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D as in effect from time to time.
"Eurodollar Lending Office" means, with respect to each Bank, the
branches or affiliates of such Bank designated as its "Eurodollar
Lending Office" from time to time hereunder.
"Eurodollar Rate" means, with respect to any Eurodollar Rate
Advance, the rate (rounded to 1/16 of 1%) at which dollar deposits
approximately equal in principal amount to the entire portion of such
Advance and for a maturity equal to the applicable Interest Period are
offered in immediately available funds to the Agent by prime banks in
whatever eurodollar interbank market may be selected by the Agent in its
sole and absolute discretion at the time of determination and in
accordance with the then usual practice in such market at approximately
10:00 a.m. (Houston, Texas time) two Business Days prior to the
commencement of such Interest Period.
"Eurodollar Rate Advance" means any Advance bearing interest at a
rate determined by reference to the Eurodollar Rate in accordance with
the provisions of Article II.
"Events of Default" has the meaning specified in Section 10.01.
"Execution Date" means the date upon which this Agreement shall
have been executed by the Company, the Guarantors and the Banks.
"Existing Letters of Credit" means all letters of credit issued
by TCB, outstanding on the Execution Date and described on Schedule
3.01(a).
"Federal Funds Effective Rate" has the meaning specified in the
definition of the term "Alternate Base Rate."
"Fees" means all amounts payable pursuant to Section 4.01.
"Financials" has the meaning specified in Section 6.07.
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"FINCHAA Project" means the construction and operation of that
certain FP-3 sugar refinery and ethanol plant, in the Republic of
Ethiopia by ▇. ▇. ▇▇▇▇▇▇▇▇, a Subsidiary of the Company.
"Funded Debt" means all indebtedness for borrowed money evidenced
by a written document and subject to periodic, required payments of
interest and/or principal.
"GAAP" means generally accepted accounting principles as in
effect from time to time as set forth in the opinions, statements and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting
Standards Board and such other Persons who shall be approved by a
significant segment of the accounting profession and concurred in by the
independent certified public accountants certifying any audited
financial statements of the Company.
"Guaranteed Obligations" has the meaning specified in Section
9.01.
"Guarantors" has the meaning provided in the introduction to this
Agreement and, except as otherwise agreed by the Banks and the Company,
shall include all of the Subsidiaries of the Company.
"Guaranty" means the document described in Section 5.01(c), and
contained in Article IX hereof.
"Hazardous Materials" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable
federal, state or local law or regulation, (b) hazardous substances, as
defined in CERCLA, or in any applicable state or local law or
regulation, (c) gasoline, or any other petroleum product or by-product,
(d) toxic substances, as defined in the Toxic Substances Control Act of
1976, or in any applicable federal, state or local law or regulation or
(e) insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any
applicable federal, state or local law or regulation, as each such Act,
statute or regulation may be amended from time to time.
"Highest Lawful Rate" means, as to any Bank, the maximum
nonusurious rate of interest that, under applicable law, may be
contracted for, taken, reserved, charged or received by such Bank on the
Loans or under the Loan Documents at any time or from time to time. If
the maximum rate of interest which, under applicable law, any of the
Banks are permitted to charge the Company on the Loans shall change
after the date hereof, to the extent permitted by applicable law, the
Highest Lawful Rate shall be automatically increased or decreased, as
the case may be, as of the effective time of such change without notice
to the Company or any other Person.
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"Indebtedness" means (a) all indebtedness for borrowed money
(whether by loan or the issuance and sale of debt securities) or for the
deferred purchase price of property or services, (b) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property, (c) all Capitalized Lease
Obligations, (d) all guaranties, hedge or swap agreements or other
contingent liabilities of any kind (including letter of credit
reimbursement obligations) and (e) all indebtedness, to the extent it
would constitute a liability on a balance sheet prepared in accordance
with GAAP or would be disclosed as a contingent liability in a footnote
to financial statements of such Person prepared in accordance with GAAP.
"Intercreditor Agreement" means that certain Intercreditor
Agreement of even date herewith, executed by the Banks, the Agent as
Collateral Agent and the Other Senior Lenders, and approved and agreed
to by the Company and the Guarantors, setting forth certain agreements
between said parties in regard to the Collateral, all as described
therein, and, among other things, establishing that the Liens in favor
of the Banks are first and prior Liens in respect of the Supplemental
Commitment and are pari passu with Liens in favor of the Other Senior
Lenders in respect of the balance of the Commitment.
"Interest Period" has the meaning specified in Section 2.11.
"Interest Rate Agreement" means an interest rate swap agreement,
interest rate cap agreement or similar arrangement entered into by the
Company and the Banks in connection with the Indebtedness evidenced by
this Agreement and the other Loan Documents.
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of the assets,
stock or other securities of any other Person, or any direct or indirect
loan, advance or capital contribution by such Person to any other
Person, and any other item which would be classified as an "investment"
on a balance sheet of such Person, including any direct or indirect
contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an
interest.
"Issuing Bank" means TCB, in its capacity as a Bank.
"▇▇▇▇▇▇▇▇ Note" means that certain promissory note to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ payable by the Company, due November, 1999, bearing interest at
8% per annum given to satisfy the Company's obligations to pay the
"short-fall" as that term is used in paragraph 17 of that certain
consulting agreement between the Company and ▇. ▇. ▇▇▇▇▇▇▇▇ dated August
9, 1995.
"Letter of Credit Fee" has the meaning specified in Section
4.01(e).
"Letter of Credit Request" has the meaning specified in Section
3.02(a).
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15
"Letters of Credit" has the meaning specified in Section 3.01(a).
"Lien" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary and whether imposed or created by
operation of law or otherwise) upon, or pledge of, any of its property
or assets, whether now owned or hereafter acquired, or any lease
intended as security, any capital lease in the nature of the foregoing,
any conditional sale agreement or other title retention agreement, in
each case, for the purpose, or having the effect, of protecting a
creditor against loss of securing the payment or performance of an
obligation.
"Loan" and "Loans" have the meaning specified in Section 2.01.
"Loan Documents" means this Agreement and the other documents
described in Article V hereof.
"Majority Banks" means Banks holding at least 66 2/3% of the
Advances outstanding under the Loan, or, if no Advances are outstanding,
Banks holding such percentage of the Commitment.
"Margin" means, (a) with respect to any Eurodollar Rate Advance
for any Margin Period, 4.09%, and (b) with respect to any Alternate Base
Rate Advance, 1.0%.
"Margin Period" means a period commencing on the date on which
the quarterly or annual financial statements of the Company are required
to be delivered pursuant to Section 7.01(a) or Section 7.01(b), as the
case may be, and ending on the next date a financial statement is
required to be delivered.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), but excluding
occurrences affecting the industry as a whole and routine cycles in the
business of the Company and its Subsidiaries, (a) a material adverse
effect on the financial condition, business or operations of the Company
and its Subsidiaries taken as a whole or (b) a material impairment of
the collective ability of the Company to make payment hereunder or under
any Note or the right of any Bank to enforce any of its remedies to
collect any amounts owing under the Loan Documents.
"Material Subsidiary" means any Subsidiary of the Company listed
on Schedule 6.16B.
"Maturity Date" means the earlier of: December 31, 1997, unless
accelerated pursuant to Section 2.07(d) or Section 10.02, provided all
sums advanced under the Supplemental Commitment shall be due on June 30,
1997, and the Supplemental Commitment shall expire on such date.
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16
"Maximum Guaranteed Amount" means for each Guarantor the maximum
amount which any Guarantor could pay under the Guaranty without having
such payment set aside as a fraudulent transfer or conveyance or similar
action under the Bankruptcy Code or any applicable state law.
"Multiemployer Plan" means any plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"Note" and "Notes" have the meaning specified in Section 2.02.
"Noteholders" has the meaning provided in the definition of Other
Senior Lenders.
"Notice of Advance" has the meaning provided in Section 2.03(a).
"Notice of Conversion" has the meaning provided in Section 2.05.
"Notice of Default" has the meaning specified in Section 10.02.
"Obligations" means all the obligations of the Company now or
hereafter existing under the Loan Documents, whether for principal,
interest, Fees, expenses, indemnification or otherwise.
"Other Activities" has the meaning specified in Section 11.03.
"Other Financings" has the meaning specified in Section 11.03.
"Other Senior Lenders" means ABN AMRO N.V., Houston Agency ("ABN
AMRO"), a banking organization organized under the laws of the
Netherlands, with an office in Houston, Texas, and the following
entities: Principal Mutual Life Insurance Company ("Principal"), having
its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, TMG Life Insurance Company, having its principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Berkshire Life Insurance Company, having its principal place of business
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Security
Mutual Life Insurance Company, having its principal place of business at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (said latter four
entities herein referred to as the "Noteholders").
"Payment Office" means the office of the Agent located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other office as the Agent
may hereafter designate in writing as such to the other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
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17
"Permitted Investments" means, as to any Person:
(a) securities issued or directly and fully guaranteed
or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not
more than twelve months from the date of acquisition thereof,
(b) time deposits and certificates of deposit with
maturities of not more than twelve months from the date of
acquisition by such Person which deposits or certificates are
either: (a) fully insured by the Federal Deposit Insurance
Corporation or (b) in any Bank or other commercial bank
incorporated in the United States or any U.S. branch of any other
commercial bank, in each case having capital, surplus and
undivided profits aggregating $100,000,000.00 or more with a
long-term unsecured debt rating of at least A- from Standard &
Poor's Ratings Group or A3 from ▇▇▇▇▇'▇ Investors Service,
(c) commercial paper issued by any Person incorporated
in the United States rated at least A2 or the equivalent thereof
by Standard & Poor's Ratings Group or at least P2 or the
equivalent thereof by ▇▇▇▇▇'▇ Investors Service and, in each
case, maturing not more than 270 days after the date of issuance,
(d) investments in money market mutual funds having
assets in excess of $2,000,000,000.00 substantially all of whose
assets are comprised of securities of the types described in
clauses (a) through (c) above, and
(e) repurchase or reverse purchase agreements
respecting obligations with a term of not more than seven days
for underlying securities of the types described in clause (a)
above entered into with any bank listed in or meeting the
qualifications specified in clause (b) above.
"Permitted Liens" shall mean: (a) Liens for taxes, assessments,
levies or other governmental charges not yet due or which are being
contested in good faith by appropriate proceedings and for which
adequate reserves are maintained in accordance with GAAP; (b) Liens in
connection with worker's compensation, unemployment insurance or other
social security, old age pension or public liability obligations not yet
due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves are maintained in accordance
with GAAP; (c) operator's, vendors', carriers', warehousemen's,
repairmen's, mechanics', workers', materialmen's or other like Liens
arising by operation of law in the ordinary course of business (or
deposits to obtain the release of any such Lien) and securing amounts
not yet due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves are maintained in accordance
with GAAP; (d) deposits to secure insurance in the ordinary course of
business; (e) deposits to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money or the
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18
deferred purchase price of goods or services), leases, licenses,
franchises, trade contracts, statutory obligations, surety and appeal
bonds and performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (f) easements, rights of
way, covenants, restrictions, reservations, exceptions, encroachments,
zoning and similar restrictions and other similar encumbrances (other
than to secure the payment of borrowed money or the deferred purchase
price of goods or services) or title defects, in each case incurred in
the ordinary course of business which, in the aggregate, are not
substantial in amount, and which do not in any case singly or in the
aggregate materially detract from the value or usefulness of the
Property subject thereto for the business conducted by the Company and
its Subsidiaries or materially interfere with the ordinary conduct of
the business of the Company and its Subsidiaries; (g) bankers' liens
arising by operation of law; (h) inchoate Liens arising under ERISA to
secure contingent liabilities of the Company and its Subsidiaries; and
(i) Liens on assets of Subsidiaries to secure indebtedness to the
Company provided same are collaterally assigned to the Collateral Agent,
provided further, such Liens may be incurred only to the extent the
underlying Indebtedness is otherwise permitted under the terms of this
Agreement.
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
foreign or domestic state or political subdivision thereof or any agency
of such state or subdivision.
"Plan" means any employee pension benefit plan (as defined in
Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of
the Code, other than a Multiemployer Plan, with respect to which the
Company or an ERISA Affiliate contributes or has an obligation or
liability to contribute, including any such plan that may have been
terminated.
"Principal" has the meaning provided in the definition of Other
Senior Lenders.
"Prior Credit Agreement" has the meaning provided in the
introduction to this Agreement.
"Prior Indebtedness" has the meaning provided in the introduction
to this Agreement.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Regulations A, D, U and X" means Regulations A, D, U and X of
the Board as the same are from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
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19
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles).
"Rents" means all payments in respect of operating leases, rental
agreements and similar agreements in regard to the lease or rental of
real or personal property.
"Reportable Event" means an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement
has not been waived by the PBGC.
"Requirements of Environmental Laws" means, as to any Person, the
requirements of any applicable Environmental Law relating to or
affecting such Person or the condition or operation of such Person's
business or its properties, both real and personal.
"Reserve Percentage" means, for any Interest Period, the reserve
percentage applicable during such Interest Period under regulations
issued from time to time by the Board (or if more than one such
percentage is so applicable, the daily average for such percentages for
those days in such Interest Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including any marginal, supplemental or emergency reserves) for such
Bank in respect of liabilities or assets consisting of or including
Eurocurrency Liabilities.
"Responsible Officer" means, with respect to the Company, the
chairman of the board of directors, president, any vice president, chief
executive officer, chief operating officer, treasurer or chief financial
officer of the Company.
"Security Documents" means the documents described in Section
5.01 (c) and (d), executed by the Company and its Subsidiaries in favor
of TCB, as Collateral Agent, for the benefit of the Banks and the Other
Senior Lenders, pursuant to the terms hereof and of the Intercreditor
Agreement.
"Standby Letter of Credit" means a letter of credit that is
issued to secure the payment or performance of an obligation and payable
upon notice of a failure or default in regard thereto and that is not a
Commercial Letter of Credit.
"Subsidiary" means and includes, with respect to any Person, (a)
any corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency)
is at the time owned by such Person, directly or indirectly and (b) any
partnership, association, joint venture or other entity
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in which such Person, directly or indirectly, has greater than 50% of
(i) the directors (or Persons performing similar functions) thereof or
(ii) the equity interest.
"Supplemental Commitment" means the $4,000,000.00 of additional
funds available over and above the basic Commitment of $19,500,000.00,
which Supplemental Commitment shall be available only until June 30,
1997, and which Supplemental Commitment shall, while existent, unless
otherwise specified, be considered a part of the Commitment.
"Unfunded Current Liability" means, with respect to any Plan, the
amount, if any, by which the present value of the accrued benefits under
the Plan as of the close of its most recent Plan year exceeds the fair
market value of the assets allocable thereto, determined in accordance
with Section 412 of the Code.
"Unutilized Commitment" at any time, means the Commitment
(including, as applicable, the Supplemental Commitment) less (i) the
outstanding Advances, (ii) any outstanding Letters of Credit, and (iii)
any unreimbursed fundings under any Letters of Credit, all as provided
in Section 3.01(c).
SECTION 1.02. Types of Advances. Advances hereunder are
distinguished by "Type". The Type of an Advance refers to the determination
whether such Advance is a Eurodollar Rate Advance or an Alternate Base Rate
Advance.
SECTION 1.03. Accounting Terms. All accounting terms not defined
herein shall be construed in accordance with GAAP, as applicable, and all
calculations required to be made hereunder and all financial information
required to be provided hereunder shall be done or prepared in accordance with
GAAP.
ARTICLE II
THE LOANS
SECTION 2.01. The Loans. (a) Subject to the terms and conditions
hereof, each Bank severally agrees at any time and from time to time on and
after the Execution Date and prior to the Maturity Date, to make and maintain a
revolving credit loan or loans (each a "Loan" and collectively, the "Loans") to
the Company up to the maximum amount of its Commitment, which Loans (i) shall,
at the option of the Company, be made and maintained pursuant to one or more
Advances comprised of Alternate Base Rate Advances or Eurodollar Rate Advances;
provided that, except as otherwise specifically provided herein, all Loans
comprising all or a portion of the same Advance shall at all times be of the
same Type, (ii) in the case of Eurodollar Rate Advances, shall be made in the
minimum amount of $500,000.00 and integral multiples thereof or in the
remaining balance of the Commitment, (iii) so long as no Default or Event of
Default exists hereunder, may be repaid and reborrowed, at the option of the
Company in accordance with the provisions hereof, (iv) shall, in the aggregate,
not exceed the lesser of the Borrowing Base or the maximum total
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amount of the Commitment (which shall, prior to June 30, 1997, but not
thereafter, include the Supplemental Commitment) and (v) shall be made under
the Supplemental Agreement only if the remainder of the Commitment is fully
advanced. There shall be no further Advances after the Maturity Date.
(b) Any mandatory repayments made pursuant to Section
2.07(a)(i) as a result of a reduction in the Commitment pursuant to Section
2.07(c) shall automatically reduce the Commitment by the amount of all such
repayments. If the Supplemental Commitment, or any portion thereof is still in
existence at the time of such payments, they shall first reduce the
Supplemental Commitment until it is fully extinguished, and, thereafter, the
remainder of the Commitment.
(c) The Loans shall be used to refinance the Prior
Indebtedness, provide working capital and for general corporate purposes,
provided none of the proceeds of the Loans shall be used in any way in
connection with the FINCHAA Project, except as specifically herein provided.
SECTION 2.02. The Notes. The Loans shall be evidenced by Notes
in favor of each Bank (individually a "Note" and collectively, the "Notes"),
substantially in the form of Exhibit 2.02 hereto.
SECTION 2.03. Notice of Advance. (a) Whenever the Company
requires an Advance, it shall give written notice thereof (a "Notice of
Advance") (or telephonic notice promptly confirmed in writing) to the Agent (i)
in the case of an Alternate Base Rate Advance, not later than 10:00 a.m.
(Houston, Texas time) on the date of such Advance and (ii) in the case of a
Eurodollar Rate Advance, not later than 11:00 a.m. (Houston, Texas time) three
Business Days prior to the date of such Advance. Each Notice of Advance shall
be irrevocable and shall be in the form of Exhibit 2.03 hereto, specifying (i)
the aggregate principal amount of the Advance to be made, (ii) the date of such
Advance (which shall be a Business Day), (iii) whether it is to be an Alternate
Base Rate Advance or a Eurodollar Rate Advance and (iv) if the proposed Advance
is to be a Eurodollar Rate Advance, the initial Interest Period to be
applicable thereto.
(b) The Agent shall promptly give the Banks written notice or
telephonic notice (promptly confirmed in writing) of each proposed Advance, of
each Bank's proportionate share thereof and of the other matters covered by
each Notice of Advance.
SECTION 2.04. Disbursement of Funds. (a) No later than 1:00 p.m.
(Houston, Texas time) on the Advance Date, each Bank shall make available its
pro rata portion of the amount of such Advance in U.S. dollars and in
immediately available funds at the Payment Office. The Agent shall credit the
amounts so received to the general deposit account of the Company maintained
with the Agent.
(b) Unless the Agent shall have been notified by any Bank
prior to disbursement of the Advance by the Agent that such Bank does not
intend to make available to the Agent such
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Bank's portion of the Advance to be made on such date, the Agent may assume
that such Bank has made such amount available to the Agent on such Advance Date
and the Agent may, in reliance upon such assumption, make available to the
Company a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank and the Agent has made available same
to the Company, the Agent shall be entitled to recover such corresponding
amount on demand from such Bank. If such Bank does not pay such corresponding
amount forthwith upon the Agent's demand therefor, the Agent shall promptly
notify the Company, and the Company shall pay such corresponding amount to the
Agent within two (2) Business Days after demand therefor. The Agent shall also
be entitled to recover from such Bank or the Company, as the case may be,
interest on such corresponding amount from the date such corresponding amount
was made available by the Agent to the Company to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to the Alternate
Base Rate or the Eurodollar Rate plus the applicable Margin, as appropriate.
Nothing herein shall be deemed to relieve any Bank from its obligation to
fulfill its Commitments hereunder or to prejudice any rights which the Company
may have against any Bank as a result of any default by such Bank hereunder.
SECTION 2.05. Conversions and Continuances. The Company shall
have the option to convert on any Business Day all or a portion of the
outstanding principal amount of one Type of Advance into another Type of
Advance, provided, no Advances may be converted into or continued as Eurodollar
Rate Advances if a Default or Event of Default is in existence on the date of
the conversion. Each such conversion shall be effected by the Company giving
the Agent written notice (each a "Notice of Conversion"), substantially in the
form of Exhibit 2.05 hereto, prior to 11:00 a.m. (Houston, Texas time) at least
(a) three (3) Business Days prior to the date of such conversion in the case of
conversion into or continuance as Eurodollar Rate Advances and (b) prior to
10:00 a.m. (Houston, Texas time) one Business Day in the case of a conversion
into Alternate Base Rate Advances, specifying each Advance (or portions
thereof) to be so converted and, if to be converted into or continued as
Eurodollar Rate Advances, the Interest Period to be initially applicable
thereto. The Agent shall thereafter promptly notify each Bank of such Notice of
Conversion.
SECTION 2.06. Voluntary Prepayments. The Company shall have the
right to voluntarily prepay Advances in whole or in part at any time on the
following terms and conditions: (a) no Eurodollar Rate Advance may be prepaid
prior to the last day of its Interest Period unless, simultaneously therewith,
the Company pays to the Agent for the benefit of the Banks, all sums necessary
to compensate the Banks for all costs and expenses resulting from such
prepayment, as reasonably determined by the Banks, including but not limited to
those costs described in Sections 2.10(f), 2.14, and 2.15 hereof; and (b) each
prepayment pursuant to this section shall be applied first, to the payment of
accrued and unpaid interest, and then, to the outstanding principal of such
Advances in the inverse order of maturity thereof.
SECTION 2.07. Mandatory Repayments and Reduction of Commitment.
(a) The Company shall repay Advances on any day on which the aggregate
outstanding principal amount of the Loans exceeds the lesser of (i) the
Commitment or, (ii) as shown by the most recent
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Borrowing Base Certificate or interim update thereof, the then current
Borrowing Base, in the amount of such excess.
(b) The Company shall repay any outstanding portion of the
Supplemental Commitment on or before June 30, 1997, and such Supplemental
Commitment shall terminate on that date.
(c) In addition to the above, the Commitment shall reduce, at
any time the Company or any of its Subsidiaries makes a payment to any of the
Other Senior Lenders, in an amount sufficient to maintain the identical ratio
between the total amount of the Commitment and the amount of Indebtedness owing
to such Other Senior Lenders, which reduction, as of the Effective Date, in
respect of the Indebtedness owing to the Noteholders, will equal a minimum of
$201,389.00 per month, payable on each Designated Payment Date, commencing July
1, 1997.
(d) The aggregate amount of all Advances under the Notes, if
not sooner paid, (and all accrued, unpaid interest) shall be due and payable,
and the Commitment shall terminate, on the Maturity Date.
SECTION 2.08. Method and Place of Payment. (a) Except as
otherwise specifically provided herein, all payments under this Agreement due
from the Company shall be made to the Agent for the benefit of the Banks not
later than 11:00 a.m. (Houston, Texas time) on the date when due and shall be
made in lawful money of the United States in immediately available funds at the
Payment Office.
(b) All of the Company's and the Subsidiaries' accounts
receivable (excluding any accounts receivable of ▇▇▇▇▇▇▇▇ required to be
deposited into any other account as agreed to by the Banks and the Other Senior
Lenders) will be deposited by the Company's and its Subsidiaries' third party
account debtors into one or more of the Company's or one or more of its
Subsidiaries lockbox and lockbox accounts maintained with the Agent, pursuant
to the Cash Management Lock Box Agreements (the "Cash Management and Lock Box
Agreements") currently in effect between the Company or one or more of its
Subsidiaries and the Agent. Said accounts shall be restricted accounts and the
Agent shall have the right, but not the obligation, and the Company hereby
grants the Agent the right, to deduct and set-off any amounts owing to the
Banks or the Other Senior Lenders under this Agreement from the collections
made pursuant to the above-referenced Cash Management and Lock Box Agreements.
All collected funds will be swept daily by the Agent and applied to reduce the
amount outstanding on the Loans. The Company irrevocably authorizes the Bank to
make, and irrevocably appoints the Bank as its attorney-in-fact (which power
shall be coupled with an interest), to make transfers of funds to and from the
Cash Management and Lock Box Account, necessary to accomplish the purposes of
the Loan Documents.
SECTION 2.09. Pro Rata Advances. All Advances under this
Agreement shall be incurred from the Banks pro rata, on the basis of their
respective Commitments. It is understood that no Bank shall be responsible for
any default by any other Bank in its obligation to make Loans
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hereunder and that each Bank shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Bank to fulfill
its commitments hereunder.
SECTION 2.10. Interest. (a) Subject to Section 12.08, the
Company agrees to pay interest on the total outstanding principal balance of
all Alternate Base Rate Advances from the date of each respective Advance to
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
Alternate Base Rate in effect from time to time plus the Margin for Alternate
Base Rate Advances. If the Alternate Base Rate is based on the Prime Rate,
interest shall be computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be. If the Alternate Base Rate
is based on the Federal Funds Effective Rate, interest shall be computed on the
basis of the actual number of days elapsed over a year of 360 days.
(b) Subject to Section 12.08, the Company agrees to pay
interest on the total outstanding principal balance of all Eurodollar Rate
Advances from the date of each respective Advance to maturity (whether by
acceleration or otherwise) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) which shall, during each
Interest Period applicable thereto, be equal to the lesser of (i) the Highest
Lawful Rate and (ii) the applicable Eurodollar Rate for such Interest Period
plus the Margin for Eurodollar Rate Advances. The applicable Eurodollar Rate
shall be fixed for each Interest Period and shall not change during said
Interest Period but the applicable Margin, which is added to said Eurodollar
Rate to determine the total interest payable to the Banks, may be adjusted, if
applicable, effective on the first day of each Margin Period, whether or not
said adjustment occurs at a time other than the beginning of an Interest
Period.
(c) Subject to Section 12.08, overdue principal and, to the
extent permitted by law, overdue interest in respect of any Advance and all
other overdue amounts owing hereunder shall bear interest for each day that
such amounts are overdue at a rate per annum equal to the Default Rate.
(d) Interest on each Advance shall accrue from and including
the date of such Advance to but excluding the date of any repayment thereof and
shall be payable (i) in respect of Eurodollar Rate Advances (A) on the last day
of the Interest Period (as defined below) applicable thereto and, in the case
of any Interest Period in excess of one month, on each Designated Payment Date
during said Interest Period and on the last day of the Interest Period and (B)
on the date of any voluntary or mandatory repayment or any conversion or
continuance, (ii) in respect of Alternate Base Rate Advances (A) on each
Designated Payment Date commencing December 1, 1996 and (B) on the date of any
voluntary or mandatory repayment and (iii) in respect of each Advance, at
maturity (whether by acceleration or otherwise) and, after maturity, on demand.
(e) The Agent, upon determining the Eurodollar Rate for any
Interest Period, shall notify the Company thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all
parties hereto. In addition, prior to the due date for the payment of
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interest on any Advances set forth in the immediately preceding paragraph, the
Agent shall notify the Company of the amount of interest due by the Company on
all outstanding Advances on the applicable due date, but any failure of the
Agent to so notify the Company shall not reduce the Company's liability for the
amount owed.
(f) The Company shall pay to the Agent for the Account of each
Bank, so long as the Banks shall be required under regulations of the Board to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each such Eurodollar Rate Advance, from the date of such Advance
until such principal amount is paid in full, at an interest rate per annum
equal at all times during the Interest Period for such Advance to the lesser of
(i) the Highest Lawful Rate and (ii) the remainder obtained by subtracting (A)
the Eurodollar Rate for such Interest Period from (B) the rate obtained by
dividing such Eurodollar Rate referred to in clause (A) above by that
percentage equal to 100% minus the Reserve Percentage of such Bank for such
Interest Period. Such additional interest shall be determined by such Bank as
incurred and shall be payable upon demand therefor by the Bank to the Company.
Each determination by such Bank of additional interest due under this Section
shall be conclusive and binding for all purposes in the absence of manifest
error.
SECTION 2.11. Interest Periods. (a) At the time the Company
gives any Notice of Advance or Notice of Conversion in respect of the making
of, or conversion into, a Eurodollar Rate Advance, the Company shall have the
right to elect, by giving the Agent on the dates and at the times specified in
Section 2.03 or Section 2.05, as the case may be, notice of the interest period
(each an "Interest Period") applicable to such Eurodollar Rate Advance, which
Interest Period shall be either a one, two, three or six month period;
provided, that:
(i) the initial Interest Period for any Eurodollar Rate
Advance shall commence on the date of such Eurodollar Rate Advance
(including the date of any conversion thereto or continuance thereof
pursuant to Section 2.05); each Interest Period occurring thereafter in
respect of such Eurodollar Rate Advance shall commence on the expiration
date of the immediately preceding Interest Period;
(ii) if any Interest Period relating to a Eurodollar
Rate Advance begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such
calendar month;
(iii) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided, that if there are no more
Business Days in that month, the Interest Period shall expire on the
preceding day; and
(iv) no Interest Period for Advances shall extend beyond
the applicable Maturity Date.
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(b) If, upon the expiration of any Interest Period applicable
to a Eurodollar Rate Advance, the Company has failed to elect a new Interest
Period to be applicable to such Advance as provided above, the Company shall be
deemed to have elected to convert such Advance into an Alternate Base Rate
Advance effective as of the expiration date of such current Interest Period.
SECTION 2.12. Interest Rate Not Ascertainable. In the event that
the Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) that on any date for
determining the Eurodollar Rate for any Interest Period, by reason of any
changes arising after the date of this Agreement affecting the eurodollar
interbank market or any Bank's position in such market, adequate and fair means
do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Eurodollar Rate, then, and in any such event,
the Agent shall forthwith give notice to the Company and to the Banks of such
determination. Until the Agent notifies the Company that the circumstances
giving rise to the suspension described herein no longer exist, the obligations
of the Banks to make Eurodollar Rate Advances shall be suspended.
SECTION 2.13. Change in Legality. (a) Notwithstanding anything
to the contrary herein contained, if any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank or
its Eurodollar Lending Office to make or maintain any Eurodollar Rate Advance
or to give effect to its obligations as contemplated hereby, then, by prompt
written notice to the Company, the Bank may:
(i) declare that Eurodollar Rate Advances will not
thereafter be made by such Bank hereunder, whereupon the Company shall
be prohibited from requesting Eurodollar Rate Advances from such Bank
hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Rate
Advances made by such Bank be converted to Alternate Base Rate Advances,
in which event (A) all such Eurodollar Rate Advances shall be
automatically converted to Alternate Base Rate Advances as of the
effective date of such notice as provided in paragraph (b) below and (B)
all payments and prepayments of principal which would otherwise have
been applied to repay the converted Eurodollar Rate Advances shall
instead be applied to repay the Alternate Base Rate Advances resulting
from the conversion of such Eurodollar Rate Advances.
(b) For purposes of this Section, a notice to the Company by
the Agent pursuant to paragraph (a) above shall be effective on the date of
receipt thereof by the Company.
SECTION 2.14. Increased Costs, Taxes or Capital Adequacy
Requirements. (a) If the application or effectiveness of any applicable law or
regulation or compliance by any Bank with any applicable guideline or request
from any central bank or governmental authority (whether or not having the
force of law) (i) shall change the basis of taxation of payments to such Bank
of the
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principal of or interest on any Eurodollar Rate Advance made by such Bank or
any other fees or amounts payable hereunder (other than taxes imposed on the
overall net income of such Bank or its Applicable Lending Office or franchise
taxes imposed upon it by the jurisdiction in which such Bank or its Applicable
Lending Office has an office, (ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, such Bank (without
duplication of any amounts paid pursuant to Section 2.10(f)) or (iii) shall
impose on such Bank any other condition affecting this Agreement or any
Eurodollar Rate Advance made by such Bank, and the result of any of the
foregoing shall be to increase the cost to such Bank of maintaining its
Commitment or of making or maintaining any Eurodollar Rate Advance or to reduce
the amount of any sum received or receivable by such Bank hereunder (whether of
principal, interest or otherwise) in respect thereof by an amount deemed in
good faith by such Bank to be material, then the Company shall pay to such Bank
such additional amount as will compensate it for such increase or reduction
upon demand.
(b) If any Bank shall have determined in good faith that any
law, rule, regulation or guideline regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof or
compliance with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency has or would have the effect of reducing the rate of return on the
capital of such Bank as a consequence of, or with reference to, such Bank's
obligations hereunder to a level below that which it could have achieved but
for such adoption, change or compliance by an amount deemed by such Bank to be
material, then, from time to time, the Company shall pay to the Agent for the
benefit of such Bank such additional amount as will reasonably compensate it
for such reduction upon demand.
(c) Each Bank will notify the Company through the Agent of any
event occurring after the date of this Agreement which will entitle it to
compensation pursuant to this Section, as promptly as practicable after it
becomes aware thereof and determines to request compensation. A certificate
setting forth in reasonable detail the amount necessary to compensate the Bank
in question as specified in paragraph (a) or (b) above, as the case may be and
the calculation of such amount under clause (a)(i), shall be delivered to the
Company and shall be conclusive absent manifest error. The Company shall pay to
the Agent for the account of such Bank the amount shown as due on any such
certificate within ten (10) days after its receipt of the same. The failure on
the part of any Bank to demand increased compensation with respect to any
Interest Period shall not constitute a waiver of the right to demand
compensation thereafter.
SECTION 2.15. Eurodollar Advance Prepayment and Default
Penalties. Subject to Section 12.08, the Company shall indemnify each Bank
against any loss or expense which it may sustain or incur as a consequence of
(a) an Advance of, or a conversion from or into, Eurodollar Rate Advances that
does not occur on the date specified therefor in a Notice of Advance or Notice
of Conversion, (b) any payment, prepayment or conversion of a Eurodollar Rate
Advance required by any other provision of this Agreement or otherwise made on
a date other than the last day of the applicable Interest Period or (c) any
default in the payment or prepayment of the principal amount of any Eurodollar
Advance or any part thereof or interest accrued thereon, as and when due and
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payable (at the due date thereof, by notice of prepayment or otherwise). Such
loss or expense shall include an amount equal to the excess determined by each
Bank of (i) its cost of obtaining the funds for the Advance being paid, prepaid
or converted or not borrowed (based on the Eurodollar Rate) for the period from
the date of such payment, prepayment or conversion or failure to borrow to the
last day of the Interest Period for such Advance (or, in the case of a failure
to borrow, the Interest Period for the Advance which would have commenced on
the date of such failure to borrow) over (ii) the amount of interest (as
determined by each Bank) that would be realized in reemploying the funds so
paid, prepaid or converted or not borrowed for such period or Interest Period,
as the case may be. The Agent, on behalf of the Banks, will notify the Company
of any loss or expense which will entitle the Banks to compensation pursuant to
this Section, as promptly as possible after it becomes aware thereof, but
failure to so notify shall not affect the Company's liability therefor. A
certificate of any Bank setting forth any amount which it is entitled to
receive pursuant to this Section shall be delivered to the Company and shall be
conclusive absent manifest error. The Company shall pay to the Agent for the
account of the Banks the amount shown as due on any certificate within ten (10)
days after its receipt of the same. Without prejudice to the survival of any
other obligations of the Company hereunder, the obligations of the Company
under this Section shall survive the termination of this Agreement and the
assignment of any of the Notes.
SECTION 2.16. Voluntary Reduction of Commitment. Upon at least
three (3) Business Days' prior written notice, the Company shall have the
right, without premium or penalty, to reduce or terminate the Commitment in
part or in whole, provided, that any reduction shall be in the amount of
$500,000.00 or integral multiples thereof and, provided, further, the Company
shall have made comparable provisions reducing the outstanding principal
balance owing on its Indebtedness owing to the Other Senior Lenders in
accordance with the terms of the Intercreditor Agreement.
SECTION 2.17. Tax Forms. With respect to each Bank which is
organized under the laws of a jurisdiction outside the United States, on the
date of the initial Advance hereunder, and from time to time thereafter if
requested by the Company or the Agent, each such Bank shall provide the Agent
and the Company with the forms prescribed by the Internal Revenue Service of
the United States certifying as to such Bank's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to such Bank hereunder or other documents satisfactory to
the Company and the Agent indicating that all payments to be made to such Bank
hereunder are subject to such tax at a rate reduced by an applicable tax
treaty. Unless the Company and the Agent 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, the Company or the Agent may withhold taxes from such payments at
the applicable statutory rate in the case of payments to or for any Bank
organized under the laws of a jurisdiction outside the United States.
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ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. Letters of Credit. (a) Subject to and upon the
terms and conditions herein set forth, the Issuing Bank agrees that it will, at
any time and from time to time on or after the Execution Date and prior to the
Maturity Date, following its receipt of a Letter of Credit Request and
Application for Letter of Credit, issue for the account of the Company or any
of the Guarantors and in support of the obligations of the Company or any of
the Guarantors, one or more irrevocable letters of credit (all such letters of
credit together with the Existing Letters of Credit collectively, the "Letters
of Credit"), up to a maximum amount outstanding at any one time for all Letters
of Credit and Existing Letters of Credit equal to $6,000,000.00, provided that
the Issuing Bank shall not issue any Letter of Credit if at the time of such
issuance: (i) the stated amount of such Letter of Credit shall be greater than
an amount which, when added to all other Letters of Credit outstanding and all
other Advances under the Notes then outstanding, would exceed the lesser of the
Borrowing Base or the Commitment; or (ii) the expiry date or, in the case of
any Letter of Credit containing an expiry date that is extendible at the option
of the Issuing Bank, the initial expiry date of such Letter of Credit is a date
that is later than the Maturity Date, unless such Letter of Credit is secured
by cash.
(b) The Issuing Bank shall neither renew nor permit the
renewal of any Letter of Credit if any of the conditions precedent to such
renewal set forth in Section 5.02 are not satisfied or, after giving effect to
such renewal, the expiry date of such Letter of Credit would be a date that is
later than twelve months after the Maturity Date.
(c) The Company, the Agent and the Banks acknowledge that TCB,
pursuant to the terms of the Prior Indebtedness, has issued for the account of
the Company, the Existing Letters of Credit. Upon the Execution Date, (i) the
Letters of Credit outstanding shall be that amount equal to the aggregate
stated amount of the Existing Letters of Credit, (ii) the amount available for
Loans and Letters of Credit under the Commitments shall be reduced by such
amount so long as said Letters of Credit are outstanding and (iii) the amount
available under each Bank's Commitment shall be reduced by such Bank's
percentage participation of such amount. If the Company or any of the
Guarantors desires to extend the existing expiry date of any Existing Letter of
Credit, or request a substitute letter of credit be issued for any reason in
respect of any Existing Letter of Credit, the Company or any of the Guarantors
shall submit to the Issuing Bank a Letter of Credit Request as provided in
Section 3.02(a).
(d) Notwithstanding anything else herein contained, the
Issuing Bank shall not be obligated to issue any Letter of Credit for, or in
support of, the FINCHAA Project in any way, directly or indirectly, and any
Letter of Credit issued to or for the account of ▇. ▇. ▇▇▇▇▇▇▇▇ shall be issued
only on the condition that it is not in support of, or in any way connected
with, the FINCHAA Project.
SECTION 3.02. Letter of Credit Requests. (a) Whenever the
Company desires that a Letter of Credit be issued for its account or that the
existing expiry date shall be extended, it shall
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give the Issuing Bank (with copies to be sent to the Agent and each other Bank)
(i) in the case of a Letter of Credit to be issued, at least five Business
Days' prior written request therefor and (ii) in the case of the extension of
the existing expiry date of any Letter of Credit, at least five days prior to
the date on which the Issuing Bank must notify the beneficiary thereof that the
Issuing Bank does not intend to extend such existing expiry date. Each such
request shall be executed by the Company and shall be in the form of Exhibit
3.02 attached hereto (each a "Letter of Credit Request") and shall be
accompanied by an application for Letter of Credit therefor, completed to the
satisfaction of the Issuing Bank, and such other certificates, documents and
other papers and information as the Issuing Bank or any Bank (through the
Agent) may reasonably request. Each Letter of Credit shall be denominated in
U.S. dollars, shall expire no later than the date specified in Section 3.01,
shall not be in an amount greater than is permitted under clauses (i) or (ii)
of Section 3.01(a) and shall be in such form as may be reasonably approved from
time to time by the Issuing Bank and the Company.
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Company that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of this Agreement. Unless the Issuing Bank has received notice from any Bank
before it issues the respective Letter of Credit or extends the existing expiry
date of a Letter of Credit that one or more of the conditions specified in
Article V are not then satisfied, or that the issuance of such Letter of Credit
would violate this Agreement, then the Issuing Bank may issue the requested
Letter of Credit for the account of the Company in accordance with the Issuing
Bank's usual and customary practices. Upon its issuance of any Letter of Credit
or the extension of the existing expiry date of any Letter of Credit, as the
case may be, the Issuing Bank shall promptly notify the Company, the Agent and
each Bank of such issuance or extension, which notice shall be accompanied by a
copy of the Letter of Credit actually issued or a copy of any amendment
extending the existing expiry date of any Letter of Credit, as the case may be.
SECTION 3.03. Letter of Credit Participations. (a) All Existing
Letters of Credit and all Letters of Credit issued subsequent hereto shall be
deemed to have been sold and transferred by the Issuing Bank to each Bank, and
each Bank shall be deemed irrevocably and unconditionally to have purchased and
received from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, (to the extent of such Bank's percentage
participation in the Commitments) in each such Letter of Credit (including
extensions of the expiry date thereof), each substitute letter of credit, each
drawing made thereunder and the obligations of the Company under this Agreement
and the other Loan Documents with respect thereto, and any security therefor or
guaranty pertaining thereto including the Guaranty.
(b) In determining whether to pay under any Letter of Credit,
the Issuing Bank shall have no obligation relative to the Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit.
(c) In the event that the Issuing Bank makes any payment under
any Letter of Credit, the same shall be considered an Alternate Base Rate
Advance without further action by any
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Person. The Issuing Bank shall promptly notify the Agent, which shall promptly
notify each Bank thereof. Each Bank shall immediately pay to the Agent for the
account of the Issuing Bank the amount of such Bank's percentage participation
of such Advance. If any Bank shall not have so made its percentage
participation available to the Agent, such Bank agrees to pay interest thereon,
for each day from such date until the date such amount is paid at the lesser of
(i) the Federal Funds Effective Rate and (ii) the Highest Lawful Rate.
(d) The Issuing Bank shall not be liable for, and the
obligations of the Company and the Banks to make payments to the Agent for the
account of the Issuing Bank with respect to Letters of Credit shall not be
subject to, any qualification or exception whatsoever, including any of the
following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Company may have at any time against a beneficiary
named in a Letter of Credit, any transferee of any Letter of Credit, the
Agent, the Issuing Bank, any Bank, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between the Company and the beneficiary named in
any such letter of credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Event of Default.
(e) The Issuing Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Bank's gross
negligence or willful misconduct. IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT THE ISSUING BANK, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SHALL BE INDEMNIFIED AND HELD HARMLESS FROM ANY ACTION TAKEN OR OMITTED BY SUCH
PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY RELATED DRAFT OR
DOCUMENT ARISING OUT OF OR RESULTING FROM SUCH PERSON'S SOLE OR CONTRIBUTORY
NEGLIGENCE. The Company agrees that any action taken or omitted by the Issuing
Bank under or in connection with any Letter of Credit or the related drafts or
documents, if done in accordance with the standards of care specified in the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No. 500 (and any subsequent
revisions thereof approved by a Congress of the International Chamber
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of Commerce and adhered to by the Issuing Bank) and, to the extent not
inconsistent therewith, the Uniform Commercial Code of the State of Texas,
shall not result in any liability of the Issuing Bank to the Company.
SECTION 3.04. Increased Costs. (a) Notwithstanding any other
provision herein, but subject to Section 12.08, if any Bank shall have
determined in good faith that any law, rule, regulation or guideline or the
application or effectiveness of any applicable law or regulation or any change
in applicable law or regulation or any change after the Execution Date in the
interpretation or administration thereof, or compliance by any Bank (or any
lending office of such Bank) with any applicable guideline or request from any
central bank or governmental authority (whether or not having the force of law)
either (i) shall impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against letters of credit issued, or
participated in, by any Bank or (ii) shall impose on any Bank any other
conditions affecting this Agreement or any Letter of Credit; and the result of
any of the foregoing is to increase the cost to any Bank of issuing,
maintaining or participating in any Letter of Credit, or reduce the amount
received or receivable by any Bank hereunder with respect to Letters of Credit,
by an amount deemed by such Bank to be material, then, from time to time, the
Company shall pay to the Agent for the account of such Bank such additional
amount or amounts as will reasonably compensate such Bank for such increased
cost or reduction by such Bank.
(b) Each Bank will notify the Company through the Agent of any
event occurring after the date of this Agreement which will entitle such Bank
to compensation pursuant to subsection (a) above, as promptly as practicable. A
certificate of a Bank setting forth in reasonable detail such amount or amounts
as shall be necessary to compensate such Bank as specified in subsection (a)
above may be delivered to the Company (with a copy to the Agent) and shall be
conclusive absent manifest error. The Company shall pay to the Agent for the
account of such Bank the amount shown as due on any such certificate within 30
days after its receipt of the same.
SECTION 3.05. Conflict between Applications and Agreement. To
the extent that any provision of any Application for Letter of Credit is
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
ARTICLE IV
FEES
SECTION 4.01. Fees. (a) The Company agrees to pay on the
Execution Date the fees described in that one certain letter agreement of even
date herewith by and between Chase Securities Inc. and the Company.
(b) The Company agrees to pay to the Agent for the account of
each Bank a commitment fee (the "Commitment Fee") for the period from and
including the Execution Date to the Maturity Date, computed at a rate equal to
.25% per annum and calculated on the basis of a 360
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day-year on the daily average Unutilized Commitment of each Bank. Commitment
Fees shall be due and payable in arrears on each Designated Payment Date
commencing on the first such date following the Execution Date and on the
Maturity Date.
(c) The Company agrees to pay to the Agent for its own account
a fee (the "Agent's Fee") of $40,000.00 per annum during the term hereof.
(d) The Company agrees to pay to the Agent for the benefit of
the Banks a fee (the "Letter of Credit Fee") in respect of all Letters of
Credit issued hereunder equal to 2% of the face amount of such Letters of
Credit of which .125% goes to the Issuing Bank and 1.875% to the Banks, pro
rata. Each such payment shall be made quarterly, in advance on each Designated
Payment Date, in respect of all Letters of Credit then outstanding and shall be
considered earned when paid and are non-refundable.
ARTICLE V
CONDITIONS PRECEDENT AND WAIVER OF PRIOR DEFAULTS
SECTION 5.01. Conditions Precedent to the Initial Advance. The
obligation of each Bank to make its initial Advance to the Company is subject
to the condition that the Agent shall have received the following, all in form
and substance satisfactory to the Agent:
(a) this Agreement executed by the Company;
(b) one Note for each Bank, each executed by the Company and
payable to the order of said Bank in the amount of its Commitment;
(c) a Guaranty, consisting of Article IX hereto, executed by
each of the Subsidiaries of the Company, except as otherwise agreed, as
Guarantors, for the benefit of the Banks;
(d) each of the following security documents (the "Security
Documents") granting a first and prior Lien or security interest on the
Collateral to the Agent for the benefit of itself and the Banks as security for
the Supplemental Commitment, pro rata, and a second lien, subordinate only to
said first and prior Lien, to the Collateral Agent for the Banks and the Other
Senior Lenders as security for the Obligations, for the Additional Exposure
owed to TCB, and for certain Indebtedness owed to the Other Senior Lenders, all
to the extent described therein:
(i) Security Agreements executed by the Company and its
domestic Subsidiaries for the benefit of the Collateral Agent covering
all personal property assets of the Company and each of such
Subsidiaries (except as otherwise agreed to by the Banks and the Other
Senior Lenders and provided therein), accompanied by all documents,
instruments
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and other items necessary to obtain and perfect a Lien thereon,
including all promissory notes, certificates of title to vehicles and
equipment, chattel paper and similar items;
(ii) Pledge Agreements executed by the Company and any
of its Subsidiaries owning stock in any other Subsidiary (except as
otherwise agreed to the Bank and the Other Senior Lenders and provided
therein) for the benefit of the Collateral Agent pledging to the
Collateral Agent all stock in any domestic Subsidiaries or Affiliates
and 65% of all stock in any foreign Subsidiaries owned by any of the
pledging parties, accompanied by original stock certificates evidencing
such shares and executed stock powers for such certificates;
(iii) Mortgages or deeds of trust executed by the Company
and its Subsidiaries for the benefit of the Collateral Agent granting to
the Collateral Agent a Lien on all real property, including owned real
estate, leases, mineral interests or similar items owned by the Company
or any of its Subsidiaries, except as otherwise agreed to by the Banks
and the Other Senior Lenders, accompanied by, if reasonably requested by
the Collateral Agent, the following, all in form, substance and amount
reasonably satisfactory to the Collateral Agent:
(x) a mortgagee's title insurance policy issued
by a company satisfactory to the Collateral Agent insuring the
Liens granted as first and prior Liens;
(y) MAI appraisals for all real estate on which
a Lien in favor of the Agent is being granted, such appraisals to
set forth the market value of each parcel and to be in compliance
with Title XI of the Financial Institutions Reform, Recovery and
Enforce Act of 1989, as amended 12 U.S.C. 3331, et seq., and The
Regulations and Statements of General Policy on Appraisals
promulgated by the Federal Deposit Insurance Corporation, 12
C.F.R. Part 32, as amended; and
(z) an environmental assessment of any parcel of
the real property owned by the Company valued in excess of
$100,000.00 on which a Lien in favor of the Collateral Agent is
being granted, conducted by an environmental engineering firm
reasonably accepted to the Collateral Agent and a Phase II
environmental audit or other supplemental data on such parcels of
land as the Collateral Agent may reasonably request based on the
information received in the environmental assessment on such
site, conducted by an environmental engineering firm reasonably
acceptable to the Collateral Agent and containing recommended
remediation measures and cost estimates associated with such
measures satisfactory to the Collateral Agent in its sole
discretion.
Failure of the Collateral Agent to request the information
contained in this paragraph prior to the Execution Date shall not
preclude it from requesting such
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information at any time thereafter, in its sole discretion,
during the time the Loan is outstanding; and
(iv) UCC-1 and UCC-3 Financing Statements and other
documents or instruments necessary to perfect the Liens granted in the
Security Documents.
(e) a Notice of Advance with respect to the initial Advance
meeting the requirements of Section 2.03(a) , which Advance may be utilized for
the sole purpose of repaying all outstanding obligations under and terminating
the Prior Indebtedness;
(f) a certificate of an officer and of the secretary or an
assistant secretary of the Company certifying, inter alia, (i) true and
complete copies of each of the articles or certificate of incorporation, as
amended and in effect of the Company and each of its Material Subsidiaries, the
bylaws, as amended and in effect, of the Company and each of its Material
Subsidiaries and the resolutions adopted by the Board of Directors of the
Company and each of its Subsidiaries (A) authorizing the execution, delivery
and performance by the Company and each of its Subsidiaries of this Agreement
and the other Loan Documents to which it is or will be a party and the Advances
to be made hereunder, (B) approving the forms of the Loan Documents to which it
is or will be a party and which will be delivered at or prior to the date of
the initial Advance and (C) authorizing officers of the Company and each of its
Subsidiaries to execute and deliver the Loan Documents to which it is or will
be a party and any related documents, including, any agreement contemplated by
this Agreement, (ii) the incumbency and specimen signatures of the officers of
the Company and each of its Subsidiaries executing any documents on its behalf
and (iii) that there has been no change in the businesses or financial
condition of the Company which could have a Material Adverse Effect since June
30, 1996;
(g) favorable, signed opinions addressed to the Agent and the
Banks from Liddell, Sapp, Zivley, Hill and ▇▇▇▇▇▇, L.L.P., counsel to the
Company and the Guarantors, and to the Collateral Agent, the Banks and the
Other Senior Lenders in form and substance satisfactory to said Persons and
their counsel;
(h) the most current, revised budget for the FINCHAA Project;
(i) the payment to the Agent and the Banks of all reasonable
fees and expenses (including the reasonable fees and disbursements of ▇▇▇▇▇▇▇ &
▇▇▇▇▇ L.L.P.) agreed upon by such parties to be paid on the Execution Date;
(j) certificates of appropriate public officials as to the
existence, good standing and qualification to do business as a foreign
corporation, as applicable, of the Company and its Subsidiaries in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualifications and where the failure to so qualify would
have a Material Adverse Effect;
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(k) certificates of insurance as contemplated by Section
7.03(a);
(l) UCC searches and other title information reasonably
requested by the Agent on the Company and each of its Material Subsidiaries;
(m) evidence satisfactory to the Agent of the repayment of the
Prior Indebtedness and termination of all parties' rights and obligations in
regard thereto;
(n) the Intercreditor Agreement executed by the Banks and the
Other Senior Lenders and approved and accepted by the Company and the
Guarantors; and
(o) evidence satisfactory to the Banks that the Company, its
relevant Subsidiaries and the Other Senior Lenders have all executed documents
resulting in the Company and such Subsidiaries being in compliance with all
documentation evidencing any Indebtedness owing to such Other Senior Lenders.
The acceptance of the benefits of the initial Credit Event shall
constitute a representation and warranty by the Company to the Agent and each
of the Banks that all of the conditions specified in this Section above shall
have been satisfied or waived as of that time.
SECTION 5.02. Conditions Precedent to All Credit Events. The
obligation of the Banks to make any Advance is subject to the further
conditions precedent that on the date of such Credit Event:
(a) The conditions precedent set forth in Section 5.01 shall
have theretofore been satisfied or waived.
(b) The representations and warranties set forth in Article VI
shall be true and correct in all material respects as of, and as if such
representations and warranties were made on, the date of the proposed Advance
(unless such representation and warranty expressly relates to an earlier date
or is no longer true and correct solely as a result of transactions permitted
by the Loan Documents), and the Company shall be deemed to have certified to
the Agent and the Banks that such representations and warranties are true and
correct in all material respects by submitting a Notice of Advance.
(c) The Company shall have complied with the provisions of
Section 2.03 hereof.
(d) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event.
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(e) No Material Adverse Effect shall have occurred since the
delivery of the most recent financial statements delivered pursuant to Section
7.01(b).
(f) Except for any foreign Subsidiaries, all Persons that have
become Subsidiaries subsequent to the Execution Date shall have executed a
Guaranty.
(g) The Agent shall have received or waived all required
Borrowing Base Certificates and all weekly interim updates thereof and the most
recently received certificate or weekly update shall indicate that such Advance
will not cause the total of outstanding Advances and issued Letters of Credit
to exceed the Borrowing Base.
(h) The Agent shall have received such other approvals,
opinions or documents as the Agent or the Banks may reasonably request.
The acceptance of the benefits of each such Credit Event shall
constitute a representation and warranty by the Company to the Agent and each
of the Banks that all of the conditions specified in this Section above exist
as of that time.
SECTION 5.03. Delivery of Documents. All of the Notes,
certificates, legal opinions and other documents and papers referred to in this
Article V, unless otherwise specified, shall be delivered to the Agent for the
account of each of the Banks and, except for the Notes, in sufficient
counterparts for each of the Banks and shall be reasonably satisfactory in form
and substance to the Banks.
SECTION 5.04. Waiver of Existing Known Defaults. The Company has
disclosed in writing to the Agent and the Banks all defaults and Events of
Default that may exist under the Prior Credit Agreement and the Loan Documents
executed in connection therewith immediately prior to closing under this
Agreement. Each of the Banks, in consideration of the agreements of the Company
hereunder, hereby waives each such default or Event of Default. The Banks
hereby represent and warrant to the Company that, as of the Execution Date,
they known of no other default or Event of Default under the Prior Credit
Agreement, or the Loan Documents executed in connection therewith, and no
default or Event of Default resulting from the execution and delivery of this
Agreement or any of the Loan Documents or any of the other documentation
executed and delivered or transactions effected as of the Execution Date. It is
specifically agreed and understood that such waivers of defaults or Events of
Default by the Banks shall not constitute a waiver of any other, similar or
future default or Event of Default under any of the Loan Documents.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to
make the Advances provided for herein, the Company, as to itself and each of
its Subsidiaries, makes, on or as of the occurrence of each Credit Event
(except to the extent such representations or warranties relate to an earlier
date or are no longer true and correct in all material respects solely as a
result of transactions permitted by the Loan Documents), the following
representations and warranties to the Agent and the Banks:
SECTION 6.01. Organization and Qualification. Each of the
Company and its Subsidiaries (a) is duly formed or organized, validly existing
and, except for Mac-TecTech, Inc., is in good standing under the laws of the
state of its organization, (b) has the power to own its property and to carry
on its business as now conducted and (c) is duly qualified to do business and
is in good standing in every jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect.
SECTION 6.02. Authorization and Validity. Each of the Company
and its Subsidiaries has the corporate power and authority to execute, deliver
and perform its obligations hereunder and under the other Loan Documents to
which it is a party and all such action has been duly authorized by all
necessary corporate proceedings on its part. The Loan Documents to which each
of the Company and its Subsidiaries is a party have been duly and validly
executed and delivered by such Person and constitute a valid and legally
binding agreement of such Person enforceable in accordance with the respective
terms thereof, except, in each case, as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting the enforcement of creditors'
rights generally, and by general principles of equity regardless of whether
such enforceability is a proceeding in equity or at law.
SECTION 6.03. Governmental Consents. No authorization, consent,
approval, license or exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is necessary for the valid execution, delivery or
performance by the Company or any Subsidiary of any Loan Document.
SECTION 6.04. Conflicting or Adverse Agreements or Restrictions.
Neither the Company nor any Subsidiary is a party to any contract or agreement
or subject to any restriction which would reasonably be expected to have a
Material Adverse Effect. All agreements of the Company relating to the lending
of money or the issuance of letters of credit by any party are described hereto
on Schedule 6.04. Neither the execution nor delivery of the Loan Documents nor
compliance with the terms and provisions hereof or thereof will be contrary to
the provisions of, or constitute a default under (a) the charter or bylaws of
the Company or any of its Subsidiaries or (b) any applicable law or any
applicable regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (c) any material agreement to which the Company
or any of its Subsidiaries is a party or by which it is bound or to which it is
subject.
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SECTION 6.05. Title to Assets. Each of the Company and its
Subsidiaries has good title to all material personalty and good and
indefeasible title to all material realty as reflected on the Company's and the
Subsidiaries' books and records as being owned by them, except for properties
disposed of in the ordinary course of business, subject to no Liens, except
those permitted hereunder. All of such assets have been and are being
maintained by the appropriate Person in good working condition in accordance
with industry standards.
SECTION 6.06. Litigation. No proceedings against or affecting
the Company or any Subsidiary are pending or, to the knowledge of the Company,
threatened before any court or governmental agency or department which involve
a reasonable material risk of having a Material Adverse Effect except those
listed on Schedule 6.06 hereof.
SECTION 6.07. Financial Statements. Prior to the Execution Date,
the Company has furnished to the Banks the audited consolidated balance sheet,
income statement and statement of cash flow for itself as of December 31, 1995
and the unaudited consolidated balance sheet, income statement and statement of
cash flows for the six (6) months ended June 30, 1996 (such financials, the
"Financials"). The Financials have been prepared in conformity with GAAP
consistently applied (except as otherwise disclosed in such financial
statements) throughout the periods involved and present fairly, in all material
respects, the consolidated financial condition of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of their
operations for the periods then ended. As of the Execution Date, no Material
Adverse Effect has occurred in the consolidated financial condition of the
Company and its consolidated Subsidiaries since June 30, 1996.
SECTION 6.08. Default. After giving effect to the transactions
on the date hereof, including the transactions with the Other Senior Lenders,
neither the Company nor any Subsidiary is in default under any material
provisions of any instrument evidencing any Indebtedness or of any agreement
relating thereto, or in default in any respect under any order, writ,
injunction or decree of any court, or in default in any respect under or in
violation of any order, injunction or decree of any governmental
instrumentality, in such manner as to cause a Material Adverse Effect.
SECTION 6.09. Investment Company Act. Neither the Company nor
any Subsidiary is, or is directly or indirectly controlled by or acting on
behalf of any Person which is, an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
SECTION 6.10. Public Utility Holding Company Act. Neither the
Company nor any Subsidiary is a non-exempt "holding company," or subject to
regulation as such, or, to the knowledge of the Company's or such Subsidiary's
officers, an "affiliate" of a "holding company" or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
SECTION 6.11. ERISA. No accumulated funding deficiency (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, exists or is expected to
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be incurred with respect to any Plan. No liability to the PBGC (other than
required premium payments) has been or is expected by the Company to be
incurred with respect to any Plan by the Company or any ERISA Affiliate.
Neither the Company nor any ERISA Affiliate has incurred any withdrawal
liability under Title IV of ERISA with respect to any Multi-Employer Plans.
SECTION 6.12. Tax Returns and Payments. Each of the Company and
its Subsidiaries has filed all federal income tax returns and other tax
returns, statements and reports (or obtained extensions with respect thereto)
which are required to be filed and has paid or deposited or made adequate
provision, in all material respects, in accordance with GAAP for the payment of
all taxes (including estimated taxes shown on such returns, statements and
reports) which are shown to be due pursuant to such returns, except for such
taxes as are being contested in good faith and by appropriate proceedings.
SECTION 6.13. Environmental Matters. Each of the Company and its
Subsidiaries (a) possesses all environmental, health and safety licenses,
permits, authorizations, registrations, approvals and similar rights necessary
under law or otherwise for the Company or such Subsidiary to conduct its
operations as now being conducted (other than those with respect to which the
failure to possess or maintain would not, individually or in the aggregate for
the Company and such Subsidiaries, have a Material Adverse Effect) and (b) each
of such licenses, permits, authorizations, registrations, approvals and similar
rights is valid and subsisting, in full force and effect and enforceable by the
Company or such Subsidiary, and each of the Company and its Subsidiaries is in
compliance with all terms, conditions or other provisions of such permits,
authorizations, registrations, approvals and similar rights except for such
failure or noncompliance that, individually or in the aggregate for the Company
and such Subsidiaries, would not have a Material Adverse Effect. Except as
disclosed on Schedule 6.13, neither the Company nor any of its Subsidiaries has
received any notices of any violation of, noncompliance with, or remedial
obligation under, Requirements of Environmental Laws (which violation or non-
compliance has not been cured, and there are no writs, injunctions, decrees,
orders or judgments outstanding, or lawsuits, claims, proceedings,
investigations or inquiries pending or, to the knowledge of the Company or any
Subsidiary, threatened, relating to the ownership, use, condition, maintenance
or operation of, or conduct of business related to, any property owned, leased
or operated by the Company or such Subsidiary or other assets of the Company or
such Subsidiary, other than those violations, instances of noncompliance,
obligations, writs, injunctions, decrees, orders, judgments, lawsuits, claims,
proceedings, investigations or inquiries that, individually or in the aggregate
for the Company and such Subsidiaries, would not have a Material Adverse
Effect. Except as disclosed on Schedule 6.13, there are no material
obligations, undertakings or liabilities arising out of or relating to
Environmental Laws to which the Company or any of its Subsidiaries has agreed,
assumed or retained, or by which the Company or any of its Subsidiaries is
adversely affected, by contract or otherwise. Except as disclosed on Schedule
6.13, neither the Company nor any of its Subsidiaries has received a written
notice or claim to the effect that such Person is or may be liable to any other
Person as the result of a Release or threatened Release of a Hazardous
Material.
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SECTION 6.14. Purpose of Loans. (a) The proceeds of the Advances
will be used to refinance existing indebtedness, to repay funding of Letters of
Credit and for working capital purposes.
(b) None of the proceeds of any Advance will be used directly
or indirectly for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation U (herein called "margin stock") or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry a margin stock.
SECTION 6.15. Franchises and Other Rights. The Company and each
of its Subsidiaries has all franchises, permits, licenses and other authority
as are necessary to enable them to carry on their respective businesses as now
being conducted where the absence of such would have a Material Adverse Effect.
To the best of its knowledge, the Company is not in default in respect of any
of such operating rights.
SECTION 6.16. Subsidiaries and Assets. The Subsidiaries listed on
Schedule 6.16A are all of the Subsidiaries of the Company as of the Execution
Date. None of said Subsidiaries, except for the Material Subsidiaries listed on
Schedule 6.16B, or Subsidiaries chartered and existing in jurisdictions outside
the United States, owns assets having an aggregate market value in excess of
$100,000.00.
SECTION 6.17. Solvency. After giving effect to the initial
Advance hereunder and all other Indebtedness of the Company, the Company and
its Subsidiaries, viewed as a consolidated entity have (a) capital sufficient
to carry on their businesses and transactions and (b) assets, the fair market
value of which exceeds their consolidated liabilities (as reflected on the
Financials or on the financial statements most recently delivered to the
Banks).
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company, as to itself and each of its Subsidiaries, covenants
and agrees that on and after the date hereof and for so long as this Agreement
is in effect and until the Commitments have terminated:
SECTION 7.01. Information Covenants. The Company will furnish to
each Bank:
(a) As soon as available, and in any event within 30 days
after the close of each month, the consolidated and consolidating balance sheet
of the Company and its Subsidiaries as of the end of such month and the related
consolidated and consolidating statements of income for such month and, within
40 days after the close of each month, statements of cash flows for such month
and in each case, also for the portion of the fiscal year ended at the end of
such month, setting forth, in each case, comparative consolidated figures for
the related periods in the prior fiscal year, all of
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which shall be certified by the chief financial officer or chief executive
officer of the Company as fairly presenting in all material respects, the
financial position of the Company and its Subsidiaries as of the end of such
period and the results of their operations for the period then ended in
accordance with GAAP, subject to changes resulting from normal year-end audit
adjustments.
(b) As soon as available, and in any event within 120 days
after the close of each fiscal year of the Company, the audited consolidated
and the unaudited consolidating balance sheets of the Company and its
Subsidiaries as at the end of such fiscal year and the related consolidated and
consolidating statements of income, stockholders equity and cash flows for such
fiscal year, setting forth, in each case, comparative figures for the preceding
fiscal year and certified by KPMG Peat Marwick or other independent certified
public accountants of recognized national standing, whose report shall be
without limitation as to the scope of the audit and reasonably satisfactory in
substance to the Banks.
(c) Immediately after any Responsible Officer of the Company
obtains knowledge thereof, notice of:
(i) any material violation of, noncompliance with, or
remedial obligations under, Requirements of Environmental Laws,
(ii) any material Release or threatened material Release
of Hazardous Materials affecting any property owned, leased or operated
by the Company or any of its Subsidiaries,
(iii) any event or condition which constitutes a Default
or an Event of Default,
(iv) any condition or event which, in the opinion of
management of the Company, would reasonably be expected to have a
Material Adverse Effect,
(v) any Person having given any written notice to the
Company or taken any other action with respect to a claimed material
default or event under any material instrument or material agreement,
and
(vi) the institution of any litigation which might
reasonably be expected in the good faith judgment of the Company either
to have a Material Adverse Effect or result in a final, non-appealable
judgment or award in excess of $500,000.00 with respect to any single
cause of action, or the institution of any litigation of any kind by any
party with whom the Company has entered into a franchise agreement;
then, a notice of such event or condition will be delivered to each Bank
specifying the nature and period of existence thereof and specifying the notice
given or action taken by such Person and the
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nature of any such claimed default, event or condition and, in the case of an
Event of Default or Default, what action has been taken, is being taken or is
proposed to be taken with respect thereto.
(d) At the time of the delivery of the financial statements
provided for in Sections 7.01(a) and 7.01(b), a certificate of a Responsible
Officer to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and extent
thereof and the action that is being taken or that is proposed to be taken with
respect thereto, which certificate shall set forth the calculations required to
establish whether the Company was in compliance with the provisions of Sections
8.11 through 8.15 as at the end of such fiscal period or year, as the case may
be.
(e) Monthly, as soon as available, and in any event within 20
days after the end of each month, (i) a Borrowing Base Certificate and (ii) a
summary report of all Accounts of the Company and its Subsidiaries and, within
30 days after the end of each month, (x) the monthly FINCHAA Project status
report,, (y) a statement of income and a balance sheet for ▇. ▇. ▇▇▇▇▇▇▇▇, and
(z) a schedule of cash flows and the then currently available monthly project
budget for the FINCHAA Project as an entity, all in form and substance
reasonably satisfactory to the Agent.
(f) Weekly, on Tuesday of each week for the week preceding the
immediately prior week:
(i) an interim update of the most recently submitted
Borrowing Base Certificate;
(ii) the listing of accounts receivable for the FINCHAA
Project; and
(iii) a summary report of the balance and activity of all
bank accounts of the Company, ▇. ▇. ▇▇▇▇▇▇▇▇ or any other Subsidiary
relating in any way to the FINCHAA Project.
(g) Promptly following request by the Agent such environmental
reports, studies and audits of the Company's procedures and policies, assets
and operations in respect of Environmental Laws as the Agent may reasonably
request.
(h) Promptly upon receipt thereof, a copy of any report or
letter submitted to the Company by its independent accountants in connection
with any regular or special audit of the Company's records.
(i) From time to time and with reasonable promptness, such
other information or documents as the Agent or any Bank through the Agent may
reasonably request.
SECTION 7.02. Books, Records and Inspections. The Company and its
Subsidiaries will maintain, and will permit, or cause to be permitted, any
Person designated by any Bank or the
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Banks to visit and inspect any of the properties of the Company and its
Subsidiaries, to examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of any such corporations with the
officers, employees and agents of the Company and its Subsidiaries and with
their independent public accountants, all at such reasonable times and as often
as the Agent or such Bank may request. Such inspections shall be made not less
often than annually and shall be at the expense of the Company.
SECTION 7.03. Insurance and Maintenance of Properties. (a) Each
of the Company and its Subsidiaries will keep reasonably adequately insured by
financially sound and reputable insurers all of its material property, which is
of a character, and in amounts and against such risks, usually and reasonably
insured by similar Persons engaged in the same or similar businesses,
including, without limitation, insurance against fire, casualty and any other
hazards normally insured against, which policies shall name the Collateral
Agent for the benefit of the Banks and the Other Senior Lenders, as a loss
payee. Each of the Company and its Subsidiaries will at all times maintain
insurance against its liability for injury to Persons or property, which
insurance shall be by financially sound and reputable insurers and in such
amounts and form as are customary for corporations of established reputation
engaged in the same or a similar business and owning and operating similar
properties and which shall name the Collateral Agent, for the benefit of the
Banks and the Other Senior Lenders, as an additional insured. The Company shall
provide the Agent a listing of all such insurance and such other certificates
and other evidence thereof, prior to the execution date hereof and annually
thereafter. A listing of all presently existing policies of the Company and its
Subsidiaries is attached hereto as Schedule 7.03.
(b) Each of the Company and its Subsidiaries will cause all of
its material properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all reasonably necessary
repairs, renewals and replacements thereof, all as in the reasonable judgment
of such Person may be reasonably necessary so that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 7.04. Payment of Taxes. Each of the Company and its
Subsidiaries will pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties attach
thereto, except for such amounts that are being contested in good faith and by
appropriate proceedings.
SECTION 7.05. Corporate Existence. Except as otherwise previously
disclosed to the Agent with respect to Serv-Tech Europe, GmbH and Refinery
Maintenance, Inc., each of the Company and its Subsidiaries will do all things
necessary to preserve and keep in full force and effect (a) the existence of
such Person, and (b) unless the failure to do so would not reasonably be
expected to have a Material Adverse Effect, the rights and franchises of each
of the Company and its Subsidiaries.
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SECTION 7.06. Compliance with Statutes. Each of the Company and
its Subsidiaries will comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except to the extent the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
SECTION 7.07. ERISA. Immediately after any Responsible Officer of
the Company or any of its Subsidiaries knows or has reason to know any of the
following items are true the Company will deliver or cause to be delivered to
the Banks a certificate of the chief financial officer of the Company setting
forth details as to such occurrence and such action, if any, the Company or its
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Company or its
ERISA Affiliate with respect thereto; that a Reportable Event has occurred or
that an application may be or has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard; that a
Multiemployer Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that any required contribution to a
Plan or Multiemployer Plan has not been or may not be timely made; that
proceedings may be or have been instituted under Section 4069(a) of ERISA to
impose liability on the Company or an ERISA Affiliate or under Section 4042 of
ERISA to terminate a Plan or appoint a trustee to administer a Plan; that the
Company or any ERISA Affiliate has incurred or may incur any liability
(including any contingent or secondary liability) on account of the termination
of or withdrawal from a Plan or a Multiemployer Plan; and that the Company or
an ERISA Affiliate may be required to provide security to a Plan under Section
401(a)(29) of the Code; or any other condition exists or may occur with respect
to one or more Plans and/or Multiemployer Plans.
SECTION 7.08. Additional Subsidiaries. The Company will
immediately cause any Person that becomes a domestic Subsidiary subsequent to
the Execution Date to execute a Guaranty and deliver same to the Agent.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees, as to itself and, except as
otherwise provided herein, each of its Subsidiaries, that on and after the date
hereof and for so long as this Agreement is in effect and until the Commitments
have terminated:
SECTION 8.01. Change in Business and Compensation Structure. The
Company will not, and will not permit any of its Subsidiaries to, engage in any
businesses not of the same general type as those conducted by the Company on
the Execution Date. The Company and its Subsidiaries, on a consolidated basis,
will not materially increase its compensation structure for its existing staff
or increase overall salary levels or bonuses for its existing staff in any year
by more than 7 1/2% in excess of the prior year's level, provided nothing
herein shall prevent the Company or
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any Subsidiary from hiring additional personnel as needed in accordance with
prudent business practice.
SECTION 8.02. Consolidation, Merger or Sale of Assets. Except as
previously disclosed to the Agent, the Company will not, and will not permit
any of its Subsidiaries to, wind up, liquidate or dissolve their affairs, or
enter into any transaction of merger or consolidation, or sell or otherwise
dispose of all or any part of their property or assets (other than sales of
inventory and surplus or obsolete assets in the ordinary course of business
provided that any disposal does not prejudice the Banks in any way), including
the capital stock of any Subsidiary, or purchase, lease or otherwise acquire
(in one or a series of related transactions) all or any part of the property or
assets of any Person or all of the capital stock of any Person.
SECTION 8.03. Indebtedness. Neither the Company nor any
Subsidiary will create, incur, assume or permit to exist any Indebtedness
except:
(a) Indebtedness existing hereunder;
(b) Indebtedness existing on the Execution Date and described
in the Financials or, if not shown, listed on Schedule 8.03(b);
(c) current accounts payable incurred in the ordinary course
of business and commercial (but not standby) letters of credit obtained for the
purpose of providing credit support for such payables;
(d) Indebtedness arising as a result of the endorsement in the
ordinary course of business of negotiable instruments in the course of
collection;
(e) guaranties of any Indebtedness of any Person not to exceed
in the aggregate $250,000.00, provided that such limitation shall not apply to
a guaranty of any Indebtedness of ▇. ▇. ▇▇▇▇▇▇▇▇, the FINCHAA Project or any
Indebtedness related thereto or the guaranty by the Subsidiaries of the
Indebtedness owing by the Company to the Noteholders as of the Execution Date;
(f) purchase money indebtedness by or for the Company or any
Subsidiary, except by ▇. ▇. ▇▇▇▇▇▇▇▇, incurred in connection with the
acquisition of tangible assets from any third party not to exceed $250,000.00
in the aggregate during the term hereof; and
(g) renewals and extensions (in the same or lesser principal
amount on similar terms and conditions) of any Indebtedness listed in
subparagraphs (b), (e) and (f) above.
SECTION 8.04. Liens. Neither the Company nor any Subsidiary will
create, incur, assume or suffer to exist any Lien upon or with respect to any
of its property or assets of any kind whether now owned or hereafter acquired
(nor will they covenant with any other Person not to grant such a Lien to the
Agent), except
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(a) Liens existing on the Execution Date and listed on
Schedule 8.04(a);
(b) Liens securing currently secured Indebtedness permitted
under Section 8.03 (b) or (f) above;
(c) Permitted Liens; and
(d) any renewal, extension or replacement of any Lien referred
to in subparagraphs (a) and (b) above; provided, that no Lien arising or
existing as a result of such extension, renewal or replacement shall be
extended to cover any property not theretofore subject to the Lien being
extended, renewed or replaced and provided further that the principal amount of
the Indebtedness secured thereby shall not exceed the principal amount of the
Indebtedness so secured at the time of such extension, renewal or replacement.
SECTION 8.05. Investments. Except as provided in Sections 8.02
and 8.09, neither the Company nor any Subsidiary will, directly or indirectly,
make or own any Investment in any Person, except:
(a) The Company and its Subsidiaries may make and own
Permitted Investments;
(b) The Company and its Subsidiaries may continue to own
Investments owned by them on the Execution Date as set forth on Schedule
8.05(b), including Investments in the Subsidiaries, direct and indirect;
(c) The Company and its Subsidiaries may make and own
Investments arising out of loans and advances for expenses, travel per diem and
similar items in the ordinary course of business to officers, directors and
employees; and
(d) The Company may make Investments permitted under Section
8.09 below.
SECTION 8.06. Restricted Payments. (a) The Company will not pay
any dividends or redeem, retire, purchase, guaranty the value of or make any
other acquisition, direct or indirect, of any shares of any class of stock of
the Company, or of any warrants, rights or options to acquire any such shares,
now or hereafter outstanding, except to the extent that the consideration
therefor consists solely of shares of stock (including warrants, rights or
options relating thereto) of the Company or except as previously disclosed to
the Agent in respect of dividends paid by ST Piping, Inc., a Subsidiary of the
Company.
(b) The Subsidiaries may declare dividends, make or repay any
loans or advances, or otherwise transfer any money or other assets to the
Company during the term hereof except in the ordinary course of business, all
such dividends, loans or transfers which represent the proceeds of any sale or
disposition of non-inventory assets, or of any divestiture of all or part of
the stock of any
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entity shall be simultaneously transferred to the Collateral Agent for the
benefit of the Banks and the Other Senior Lenders in accordance with the terms
of the Intercreditor Agreement.
SECTION 8.07. Change in Accounting. The Company will not and
will not permit any Subsidiary to, change its method of accounting except for
(a) immaterial changes permitted by GAAP in which the Company's auditors concur
or (b) changes required by GAAP. The Company shall advise the Agent in writing
promptly upon making any material change to the extent same is not disclosed in
the financial statements required under Section 7.01 hereof.
SECTION 8.08. Change of Certain Indebtedness. The Company will
not, and will not permit any of its Subsidiaries after the occurrence and
during the continuance of any Event of Default to make any voluntary
prepayments of principal or interest on any other of the Company's Indebtedness
except in accordance with the terms of the Intercreditor Agreement.
SECTION 8.09. FINCHAA Project. Except as otherwise allowed under
Section 8.03(e) and (f) hereof, neither the Company nor any Subsidiary will
invest in, lend to, guaranty Indebtedness of, transfer assets to, obtain
letters of credit for or otherwise become financially involved with the FINCHAA
Project in any manner, directly or indirectly, through ▇. ▇. ▇▇▇▇▇▇▇▇ or
otherwise in excess of a loan or capital investment to such project of a
maximum of $2,000,000.00 for all such Persons collectively, provided, the
Company may, in addition, lend to, invest in or transfer funds to ▇. ▇.
▇▇▇▇▇▇▇▇ up to an additional $1,000,000.00, provided said funds are not
utilized in the FINCHAA Project in any way.
SECTION 8.10. Transactions with Affiliates. The Company will not,
directly or indirectly, engage in any transaction with any Affiliate, including
the purchase, sale or exchange of assets or the rendering of any service,
except in the ordinary course of business or pursuant to the reasonable
requirements of its business and, in each case, upon terms that are no less
favorable than those which might be obtained in an arm's-length transaction at
the time from non-Affiliates.
SECTION 8.11. Consolidated Net Worth. The Company will not permit
its Consolidated Net Worth to be less $38,500,000.00 as of December 31, 1996,
(ii) $39,000,000.00 as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) $39,500,000.00 as of June 30,
1997, (iv) $40,000,000.00 as of September 30, 1997 and (v) $40,500,000.00 as of
December 31, 1997, and at all times thereafter during the term hereof, plus, in
all cases increasing by 100% of the value of any consideration received (other
than from the Company or any Subsidiary) in connection with the issuance of any
capital stock by the Company or any Subsidiary subsequent to the Execution Date
at any time during the term hereof.
SECTION 8.12. Minimum EBITDA. The Company will not permit its
consolidated EBITDA, computed quarterly on a rolling four quarters basis, to be
less than (i) $4,000,000.00 for the four (4) fiscal quarters ending December
31, 1996, (ii) $5,000,000.00 for the four (4) fiscal quarters ending ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇▇) $7,100,000.00 for the four (4) fiscal quarters ending June 30,
1997, (iv) $9,000,000.00 for the four (4) fiscal quarters ending September 30,
1997
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and (v) $11,000,000.00 for the four (4) fiscal quarters ending December 31,
1997, and at all times thereafter during the term hereof, provided, the special
charge taken by the Company, in regard to the ▇▇▇▇▇▇▇▇ Note, shall not be
included in making these calculations.
SECTION 8.13. Total Debt to Capitalization Ratio: The Company
will not permit the ratio of (a) its total Funded Debt to (b) the Company's
total capitalization to be greater than (i) .5 to 1.0 as of December 31, 1996,
March 31, 1997 and June 30, 1997 and (ii), .45 to 1.0 as of September 30, 1997
and December 31, 1997 and at all times thereafter.
SECTION 8.14. Capital Expenditures. The Company will not permit
total consolidated capital expenditures (including Capitalized Lease
Obligations) (i) for the fiscal quarters ending December 31, 1996, March 31,
1997 and June 30, 1997 to be greater than $250,000.00 per fiscal quarter, and
(ii) for the fiscal quarter ending September 30, 1997 and December 31, 1997, to
be greater than $500,000.00 per fiscal quarter.
SECTION 8.15. Fixed Charge Coverage Ratio. The Company will not
permit the ratio of (a) EBITDA to (b) the sum of: required principal repayments
on all Funded Debt, plus required interest payments, all calculated for the
preceding four (4) quarters on a rolling four quarter basis, to be less than
(i) 1.34 to 1.0 for the fiscal quarter ending December 31, 1996, (ii) 1.46 to
1.0 for the fiscal quarter ending ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) 2.32 to 1.0 for the
fiscal quarter ending June 30, 1997, (iv) 1.82 to 1.0 for the fiscal quarter
ending September 30, 1997 and (v) 2.5 to 1.0 for the fiscal quarter ending
December 31, 1997, provided the special charge taken by the Company in regard
to the ▇▇▇▇▇▇▇▇ Note shall not be included in making these calculations.
ARTICLE IX
GUARANTY
SECTION 9.01. Guaranty. In consideration of, and in order to
induce the Banks to make the Loans and the Issuing Bank to issue Letters of
Credit hereunder, the Guarantors hereby absolutely, unconditionally and
irrevocably, jointly and severally guarantee the punctual payment and
performance when due, whether at stated maturity, by acceleration or otherwise,
of the Obligations, and all other obligations and covenants of the Company now
or hereafter existing under this Agreement, the Notes and the other Loan
Documents whether for principal, interest (including interest accruing or
becoming owing both prior to and subsequent to the commencement of any
proceeding against or with respect to the Company under any chapter of the
Bankruptcy Code), Fees, commissions, expenses (including reasonable attorneys'
fees and expenses) or otherwise, and all reasonable costs and expenses, if any,
incurred by the Agent or any Bank in connection with enforcing any rights under
this Guaranty (all such obligations being the "Guaranteed Obligations"), and
agree to pay any and all reasonable expenses incurred by each Bank and the
Agent in enforcing this Guaranty; provided, that, anything herein or in any
other Loan Document to the contrary notwithstanding, the maximum liability of
each Guarantor hereunder and under the other Loan Documents shall in no event
exceed such Guarantor's Maximum Guaranteed Amount. This
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Guaranty is an absolute, unconditional, present and continuing guaranty of
payment and not of collectibility and is in no way conditioned upon any attempt
to collect from the Company or any other action, occurrence or circumstance
whatsoever. Each Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Guaranteed Amount of such
Guarantor without impairing this Guaranty or affecting the rights and remedies
of the Banks hereunder.
SECTION 9.02. Continuing Guaranty. Each Guarantor guarantees
that the Guaranteed Obligations will be paid strictly in accordance with the
terms of this Agreement, the Notes and the other Loan Documents. Each Guarantor
agrees that the Guaranteed Obligations and Loan Documents may be extended or
renewed, and Loans repaid and reborrowed in whole or in part, without notice to
or assent by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Obligations or Loan Documents, or any repayment and reborrowing of Loans. To
the maximum extent permitted by applicable law, the obligations of each
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms hereof under any
circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement,
compromise, waiver or release in respect of any Guaranteed Obligations;
(b) any extension, renewal, amendment, modification,
rescission, waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights or remedies with respect to, any
direct or indirect security for any Guaranteed Obligations, including the
release of any Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or
ownership of the Company, any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Company, such
Guarantor, any other Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other
rights or remedies which such Guarantor at any time may have against the
Company, or the Company or such Guarantor may have at any time against the
Agent, any Bank, any other Guarantor or any other Person, whether in connection
with this Guaranty, the Loan Documents, the transactions contemplated thereby
or any other transaction other than by the payment in full by the Company of
the Guaranteed Obligations after the termination of the Commitments of the
Banks and the expiration or termination of all Letters of Credit;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the
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Company, such Guarantor or any other Guarantor of the Guaranteed Obligations or
Loan Documents, or of any other obligation to the Agent or any Bank; or
(g) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
SECTION 9.03. Effect of Debtor Relief Laws. If after receipt of
any payment of, or proceeds of any security applied (or intended to be applied)
to the payment of all or any part of the Guaranteed Obligations, the Agent or
any Bank is for any reason compelled to surrender or voluntarily surrenders,
such payment or proceeds to any Person (a) because such payment or application
of proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or (b)
for any other reason, including (i) any judgment, decree or order of any court
or administrative body having jurisdiction over the Agent, any Bank or any of
their respective properties or (ii) any settlement or compromise of any such
claim effected by the Agent or any Bank with any such claimant (including the
Company), then the Guaranteed Obligations or part thereof intended to be
satisfied shall be reinstated and continue, and this Guaranty shall continue in
full force as if such payment or proceeds have not been received,
notwithstanding any revocation thereof or the cancellation of any Note or any
other instrument evidencing any Guaranteed Obligations or otherwise; and the
Guarantors, jointly and severally, shall be liable to pay the Agent and the
Banks, and hereby do indemnify the Agent and the Banks and hold them harmless
for the amount of such payment or proceeds so surrendered and all expenses
(including reasonable attorneys' fees, court costs and expenses attributable
thereto) incurred by the Agent or any Bank in the defense of any claim made
against it that any payment or proceeds received by the Agent or any Bank in
respect of all or part of the Guaranteed Obligations must be surrendered. The
provisions of this paragraph shall survive the termination of this Guaranty,
and any satisfaction and discharge of the Company by virtue of any payment,
court order or any federal or state law.
SECTION 9.04. Waiver of Subrogation. Notwithstanding any payment
or payments made by any Guarantor hereunder, or any set-off or application by
the Agent or any Bank of any security or of any credits or claims, no Guarantor
will assert or exercise any rights of the Agent or any Bank or of such
Guarantor against the Company to recover the amount of any payment made by such
Guarantor to the Agent or any Bank hereunder by way of any claim, remedy or
subrogation, reimbursement, exoneration, contribution, indemnity, participation
or otherwise arising by contract, by statute, under common law or otherwise,
and such Guarantor shall not have any right of recourse to or any claim against
assets or property of the Company, unless and until the Obligations of the
Company guaranteed hereby have been fully and finally satisfied. Until such
time, each Guarantor hereby expressly waives any right to exercise any claim,
right or remedy which such Guarantor may now have or hereafter acquire against
the Company that arises under this Agreement or any other Loan Document or from
the performance by any Guarantor of the Guaranty hereunder including any claim,
remedy or right of subrogation, reimbursement, exoneration, contribution,
indemnification or participation in any claim, right or remedy of the Agent or
any Bank against the Company or any Guarantor, or any security that the Agent
or any Bank now has or
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hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise. If any
amount shall be paid to a Guarantor by the Company or another Guarantor after
payment in full of the Obligations, and the Obligations shall thereafter be
reinstated in whole or in part and the Agent or any Bank forced to repay and
sums received by any of them in payment of the Obligations, this Guaranty shall
be automatically reinstated and such amount shall be held in trust for the
benefit of the Agent and the Banks and shall forthwith be paid to the Agent to
be credited and applied to the Guaranteed Obligations, whether matured or
unmatured. The provisions of this paragraph shall survive the termination of
this Guaranty, and any satisfaction and discharge of the Company by virtue of
any payment, court order or any federal or state law.
SECTION 9.05. Subordination. If any Guarantor becomes the holder
of any indebtedness payable by the Company or another Guarantor, each Guarantor
hereby subordinates all indebtedness owing to it from the Company to all
indebtedness of the Company to the Agent and the Banks, and agrees that during
the continuance of any Default or Event of Default it shall not accept any
payment on the same until payment in full of the Obligations of the Company
under this Agreement and the other Loan Documents after the termination of the
Commitments of the Banks and the termination or expiration of the Letters of
Credit, the Notes and all other Loan Documents, and shall in no circumstance
whatsoever attempt to set-off or reduce any obligations hereunder because of
such indebtedness. If any amount shall nevertheless be paid to a Guarantor by
the Company or another Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Agent
and the Banks and shall forthwith be paid to the Agent to be credited and
applied to the Guaranteed Obligations, whether matured or unmatured.
SECTION 9.06. Waiver. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand of
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the Agent or any Bank institute suit, collection
proceedings or take any other action to collect the Guaranteed Obligations,
including any requirement that the Agent or any Bank protect, secure, perfect
or insure any Lien against any property subject thereto or exhaust any right or
take any action against the Company or any other Person or any collateral (it
being the intention of the Agent, the Banks and each Guarantor that this
Guaranty is to be a guaranty of payment and not of collection). It shall not be
necessary for the Agent or any Bank, in order to enforce any payment by any
Guarantor hereunder, to institute suit or exhaust its rights and remedies
against the Company, any other Guarantor or any other Person, including others
liable to pay any Guaranteed Obligations, or to enforce its rights against any
security ever given to secure payment thereof. Each Guarantor hereby expressly
waives to the maximum extent permitted by applicable law each and every right
to which it may be entitled by virtue of the suretyship laws of the State of
Texas, including any and all rights it may have pursuant to Rule 31, Texas
Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and
Remedies Code and Chapter 34 of the Texas Business and Commerce Code. Each
Guarantor hereby waives marshaling of assets and liabilities, notice by the
Agent or any Bank of any indebtedness or liability to which such Bank applies
or may apply any amounts received by such Bank, and of the creation,
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advancement, increase, existence, extension, renewal, rearrangement or
modification of the Guaranteed Obligations. Each Guarantor expressly waives, to
the extent permitted by applicable law, the benefit of any and all laws
providing for exemption of property from execution or for valuation and
appraisal upon foreclosure.
SECTION 9.07. Full Force and Effect. This Guaranty is a
continuing guaranty and shall remain in full force and effect until all of the
Obligations of the Company under this Agreement and the other Loan Documents
and all other amounts payable under this Guaranty have been paid in full (after
the termination of the Commitments of the Banks and the termination or
expiration of the Letters of Credit). All rights, remedies and powers provided
in this Guaranty may be exercised, and all waivers contained in this Guaranty
may be enforced, only to the extent that the exercise or enforcement thereof
does not violate any provisions of applicable law which may not be waived.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default. The following events shall
constitute Events of Default ("Events of Default") hereunder:
(a) any installment of principal or payment of interest on any
Note or any payment of any Fee shall not be paid on the date on which such
payment is due; or
(b) any representation or warranty made or, for purposes of
Article VI, deemed made by the Company or any Subsidiary herein or in any of
the Loan Documents or other document, certificate or financial statement
delivered in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made
or reaffirmed, as the case may be; or
(c) the Company shall fail to perform or observe or cause any
Subsidiary to fail to perform or observe any duty or covenant contained in this
Agreement or in any of the Loan Documents; or
(d) the Company or any Subsidiary shall (i) fail to make
(whether as primary obligor or as guarantor or other surety) any principal
payment of or interest or premium, if any, on any instrument of Indebtedness
allowed hereunder (other than the Notes and Indebtedness owing to the Other
Senior Lenders) outstanding beyond any period of grace provided with respect
thereto or (ii) shall fail to duly observe, perform or comply with any
agreement with any Person or any term or condition of any instrument of
Indebtedness in excess of $500,000.00, if such failure is to cause, or to
permit the holder or holders to cause, such obligations to become due prior to
any stated maturity; or
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(e) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of the Company or any Subsidiary, or of a
substantial part of the property or assets of the Company or any Subsidiary,
under Title 11 of the United States Code, as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"), or any other federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or any Subsidiary or for a substantial part of the property or
assets of the Company or any Subsidiary or (iii) the winding-up or liquidation
of the Company or any Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering
any of the foregoing shall be entered; or
(f) the Company or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under the
Bankruptcy Code or any other federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in clause (e) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any Subsidiary or for a substantial part of
the property or assets of the Company or any Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing; or
(g) the Company shall be in default in respect of any
Indebtedness owing to any of the Other Senior Lenders; or
(h) any Person shall make any draw under or present any Letter
of Credit issued by ABN AMRO for the account of the Company, ▇. ▇. ▇▇▇▇▇▇▇▇ or
any direct or indirect Subsidiary of either, for payment in whole or in part;
or
(i) a judgment or order, which with other outstanding
judgments and orders against the Company and its Subsidiaries equal or exceed
$500,000.00 in the aggregate (to the extent not covered by insurance as to
which the respective insurer has acknowledged coverage), shall be entered
against the Company or any Subsidiary and (i) within 30 days after entry
thereof such judgment shall not have been paid or discharged or execution
thereof stayed pending appeal or, within 30 days after the expiration of any
such stay, such judgment shall not have been paid or discharged or (ii) any
enforcement proceeding shall have been commenced (and not stayed) by any
creditor or upon such judgment; or
(j) a Change of Control shall occur.
SECTION 10.02. Primary Remedies. In any such event, and at any
time after the occurrence of any of the above described events, the Agent may,
by written notice to the Company
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(a "Notice of Default") take any or all of the following actions (without
prejudice to the rights of any Bank to enforce any other rights it may have
against the Company, provided that, if an Event of Default specified in Section
10.01(e) or Section 10.01(f) shall occur, the following shall occur
automatically without the giving of any Notice of Default): (a) declare the
Commitments terminated, whereupon the Commitments shall forthwith terminate
immediately and any Commitment Fee shall forthwith become due and payable
without any other notice of any kind; (b) declare the principal of and any
accrued and unpaid interest in respect of all Advances, and all obligations
owing hereunder, to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, notice of demand or of dishonor and non-
payment, protest, notice of protest, notice of intent to accelerate,
declaration or notice of acceleration or any other notice of any kind, all of
which are hereby waived by the Company; and (c) exercise any rights or remedies
under any document securing any of the Loan Documents or under any applicable
state or federal law.
SECTION 10.03. Other Remedies. Upon the occurrence and during the
continuance of any Event of Default, the Agent may proceed to protect and
enforce its and the Banks' rights, either by suit in equity or by action at law
or both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in any other Loan Document or in aid of the
exercise of any power granted in this Agreement or in any other Loan Document;
or may proceed to enforce the payment of all amounts owing to the Banks under
the Loan Documents and any accrued and unpaid interest thereon in the manner
set forth herein or therein; it being intended that no remedy conferred herein
or in any of the other Loan Documents is to be exclusive of any other remedy,
and each and every remedy contained herein or in any other Loan Document shall
be cumulative and shall be in addition to every other remedy given hereunder
and under the other Loan Documents or now or hereafter existing at law or in
equity or by statute or otherwise.
ARTICLE XI
THE AGENT
SECTION 11.01. Authorization and Action. Each Bank hereby
irrevocably appoints and authorizes the Agent to act on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to or required of the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. The Agent may
perform any of its duties hereunder by or through its agents and employees. The
duties of the Agent shall be mechanical and administrative in nature; the Agent
shall not have by reason of this Agreement or any other Loan Documents a
fiduciary relationship in respect of any Bank; and nothing in this Agreement or
any other Loan Document, expressed or implied, is intended to, or shall be so
construed as to, impose upon the Agent any obligations in respect of this
Agreement or any other Loan Document except as expressly set forth herein or
therein. As to any matters not expressly provided for by this Agreement, the
Notes or the other Loan Documents (including enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Majority Banks, and such instructions shall be
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binding upon the Banks and all holders of Notes and the Obligations; provided,
that the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable law.
SECTION 11.02. Agent's Reliance. (a) Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, the Notes or any of the other Loan Documents (i) with the consent or
at the request of the Majority Banks or (ii) in the absence of its or their own
gross negligence or willful misconduct (IT BEING THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT THE AGENT AND ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES
SHALL HAVE NO LIABILITY FOR ACTIONS AND OMISSIONS UNDER THIS SECTION RESULTING
FROM THEIR SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE).
(b) Without limitation of the generality of the foregoing, the
Agent: (i) may treat the payee of each Note and the Obligations as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel (including counsel for the Company), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with this
Agreement, any Note or any other Loan Document; (iv) except as otherwise
expressly provided herein, shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, any Note or any other Loan Document or to inspect
the property (including the books and records) of the Company; (v) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, collectibility, genuineness, sufficiency or value of this
Agreement, any Note, any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be responsible to
any Bank for the perfection or priority of any Lien securing the Obligations;
and (vii) shall incur no liability under or in respect of this Agreement, any
Note or any other Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopier or cable)
reasonably believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 11.03. Agent and Affiliates; TCB and Affiliates. Without
limiting the right of any other Bank to engage in any business transactions
with the Company or any of its Affiliates, with respect to their Commitments,
the Loans made by them and the Notes issued to them, TCB and each other Bank
who may become the Agent shall have the same rights and powers under this
Agreement and its Notes as any other Bank and may exercise the same as though
it was not the Agent; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include TCB and any such other Bank, in their individual
capacities. TCB, each other Person who becomes the Agent and their respective
Affiliates may be engaged in, or may hereafter engage in, one or more loan,
letter of credit, leasing or other financing activity not the subject of this
Agreement (collectively, the "Other Financings") with the Company, any
Subsidiary or any of its Affiliates, or may act as trustee on behalf of, or
depositary for, or otherwise engage in other business transactions with the
Company,
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any Subsidiary or any of its Affiliates (all Other Financings and other such
business transactions being collectively, the "Other Activities") with no
responsibility to account therefor to the Banks. Without limiting the rights
and remedies of the Banks specifically set forth herein, no other Bank by
virtue of being a Bank hereunder shall have any interest in (a) any Other
Activities, (b) any present or future guaranty by or for the account of the
Company not contemplated or included herein, (c) any present or future offset
exercised by the Agent in respect of any such Other Activities, (d) any present
or future property taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the Agent which may
be or become security for the Obligations of the Company hereunder and under
the Notes by reason of the general description of indebtedness secured, or of
property contained in any other agreements, documents or instruments related to
such Other Activities; provided, however, that if any payment in respect of
such guaranties or such property or the proceeds thereof shall be applied to
reduction of the Obligations evidenced hereunder and by the Notes, then each
Bank shall be entitled to share in such application according to its pro rata
portion of such Obligations.
SECTION 11.04. Bank Credit Decision. Each Bank acknowledges and
agrees that it has, independently and without reliance upon the Agent or any
other Bank and based on the financial statements referred to in Section 7.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents.
SECTION 11.05. Agent's Indemnity. (a) The Agent shall not be
required to take any action hereunder or to prosecute or defend any suit in
respect of this Agreement, the Notes or any other Loan Document unless
indemnified to the Agent's satisfaction by the Banks against loss, cost,
liability and expense. If any indemnity furnished to the Agent shall become
impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given. In addition, the
Banks agree to indemnify the Agent (to the extent not reimbursed by the
Company), ratably according to the respective aggregate principal amounts of
the Notes then held by each of them (or if no Notes are at the time
outstanding, ratably according to the respective amounts of the Commitments),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Agent under this Agreement, the Notes and
the other Loan Documents. Without limitation of the foregoing, each Bank agrees
to reimburse the Agent promptly upon demand for its ratable share of any out-
of-pocket expenses (including reasonable counsel fees) incurred by the Agent in
connection with the preparation, execution, administration, or enforcement of,
or legal advice in respect of rights or responsibilities under, this Agreement,
the Notes and the other Loan Documents to the extent that the Agent is not
reimbursed for such expenses by the Company. The provisions of this Section
shall
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survive the termination of this Agreement, the payment of the Obligations
and/or the assignment of any of the Notes.
(b) Notwithstanding the foregoing, no Bank shall be liable
under this Section to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements due to the Agent resulting from the Agent's gross
negligence or willful misconduct. EACH BANK AGREES, HOWEVER, THAT IT EXPRESSLY
INTENDS, UNDER THIS SECTION, TO INDEMNIFY THE AGENT RATABLY AS AFORESAID FOR
ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR RESULTING
FROM THE AGENT'S SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE.
SECTION 11.06. Successor Agent. The Agent may resign at any time
by giving written notice thereof to the Banks and the Company and may be
removed as Agent under this Agreement, the Notes and the other Loan Documents
at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks, and shall have accepted such appointment, within 30 calendar
days after the retiring Agent's giving of notice of resignation or the Majority
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any state
thereof and having a combined capital and surplus of at least $50,000,000. Upon
the acceptance of any appointment as Agent hereunder and under the Notes and
the other Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement, the Notes and the other
Loan Documents. After any retiring Agent's resignation or removal as Agent
hereunder and under the Notes and the other Loan Documents, the provisions of
this Article XI shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement, the Notes and the
other Loan Documents.
SECTION 11.07. Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent shall have received notice from a Bank or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." If the Agent
receives such notice, the Agent shall give notice thereof to the Banks;
provided, however, if such notice is received from a Bank, the Agent also shall
give notice thereof to the Company. The Agent shall be entitled to take action
or refrain from taking action with respect to such Default or Event of Default
as provided in Section 11.01 and Section 11.02.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Amendments. No amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, nor consent
to any departure by the Company herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company, as to
amendments, and by the Majority Banks in all cases, and then, in any case, such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given provided, no such amendment shall be effective
unless signed by all of the Banks if it attempts to: (a) change the definition
of "Accounts", "Borrowing Base", "Commitment", "Designated Payment Date",
"Eligible Accounts", "Majority Banks", "Margin" or "Maturity Date"; (b) modify
this Section or Sections 4.01(a), (b) or (d); (c) release any Guarantor; (d) to
waive any Default under Section 10.01(a) or (e) in any other manner change the
repayment terms of the Loans, including required principal payments or amount
or time of interest payments.
SECTION 12.02. Notices. Except with respect to telephone
notifications specifically permitted pursuant to Article II, all notices,
consents, requests, approvals, demands and other communications provided for
herein shall be in writing (including telecopy communications) and mailed,
telecopied, sent by overnight courier or delivered:
(a) If to the Company:
Serv-Tech, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
(b) If to the Agent:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President
with copies to:
Loan Syndication Services
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ - M.S. 46
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
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and to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other
parties.
(c) If to any Bank, to the address specified by such Bank (or
the Agent on behalf of any Bank) to the Company.
All communications shall, when mailed, telecopied or delivered,
be effective when mailed by certified mail, return receipt requested to any
party at its address specified above, or telecopied to any party to the
telecopy number set forth above, or delivered personally to any party at its
address specified above; provided, that communications to the Agent pursuant to
Article II shall not be effective until actually received by the Agent, and
provided further that communications sent by telecopy after 5:00 P.M., Houston,
Texas time, shall be effective on the next succeeding business day.
SECTION 12.03. No Waiver; Remedies. No failure on the part of
any Bank or the Agent to exercise, and no delay in exercising, any right
hereunder, under any Note or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right, or
any abandonment or discontinuance of any steps to enforce such right, preclude
any other or further exercise thereof or the exercise of any other right. No
notice to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances. The
remedies herein are cumulative and not exclusive of any other remedies provided
by law, at equity or in any other agreement.
SECTION 12.04. Costs, Expenses and Taxes. The Company agrees to
pay on demand: (a) all reasonable out-of-pocket costs and expenses of the Agent
in connection with the preparation, execution and delivery of this Agreement,
the Notes, the other Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities under this Agreement, the Notes and the other
Loan Documents, and any modification, supplement or waiver of any of the terms
of this Agreement or any other Loan Document, (b) all reasonable costs and
expenses of any Bank and any other holder of an interest in the Notes, and the
Obligations of the Company hereunder and under the Loan Documents, including
reasonable legal fees and expenses, in connection with a default or the
enforcement of this Agreement, the Notes and the other Loan Documents and (c)
reasonable costs and expenses incurred in connection with third party
professional services required by the Agent such as appraisers,
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environmental consultants, accountants or similar Persons, provided that, prior
to any Event of Default hereunder, the Agent will first obtain the consent of
the Company to such expense, which consent shall not be unreasonably withheld.
Without prejudice to the survival of any other obligations of the Company
hereunder and under the Notes, the obligations of the Company under this
Section shall survive the termination of this Agreement or the replacement of
the Agent and each assignment of the Notes.
SECTION 12.05. Release and Indemnity. (a) The Company and each
of its Subsidiaries, for themselves, their officers, agents, successors and
assigns (the "Releasing Parties") do hereby release and forever discharge the
Agent and the Banks and each Affiliate thereof and their respective employees,
officers, directors, trustees, agents, successors, assigns or other
representatives from any and all claims (civil or criminal), demands, damages,
actions, cross-actions, causes of action, costs and expenses (including legal
expenses), of any kind or nature whatsoever, which any Releasing Party has held
or may now or in the future own or hold, whether known or unknown, for or
because of any matter or thing done, omitted or suffered to be done on or
before the Execution Date hereof by any of such Person (i) arising directly or
indirectly out of the Prior Credit Agreement or the Loan Documents or any other
documents, instruments or any other transactions relating thereto and/or (ii)
relating directly or indirectly to all transactions by and between any of the
Releasing Parties and the Agent or the Banks. Such release, waiver, acquittal
and discharge shall and does include, without limitation, any claims of usury
which may or could be asserted by the Releasing Parties. This release shall not
include a release of the Agent or the Banks from any claim by the Releasing
Parties for breach by the Agent or the Banks of this Agreement.
(b) The Company shall and hereby does indemnify the Agent and
each Bank 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 (including reasonable legal fees and
expenses) to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Company of the proceeds of any extension of credit
hereunder or any investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the foregoing or any of the
other Loan Documents, and the Company shall reimburse each Bank and each
Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including legal fees) reasonably incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified.
(C) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS OR DAMAGES: (i) ARISING OUT OF OR RESULTING FROM THE
ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON OR (ii) IMPOSED UPON
SAID PARTY UNDER ANY THEORY OF STRICT LIABILITY. Without prejudice to the
survival of any other obligations of the Company hereunder and under the other
Loan Documents,
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the obligations of the Company under this Section shall survive the termination
of this Agreement and the other Loan Documents and the payment of the
Obligations or the assignment of the Notes.
SECTION 12.06. Right of Setoff. Each Bank is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits held and other indebtedness owing by
such Bank, or any branch, subsidiary or Affiliate, to or for the credit or the
account of the Company against any and all the Obligations of the Company now
or hereafter existing under this Agreement and the other Loan Documents and
other obligations of the Company held by such Bank, irrespective of whether or
not such Bank shall have made any demand under this Agreement, its Note or the
Obligations and although the Obligations may be unmatured. The rights of each
Bank under this Section are in addition to other rights and remedies (including
other rights of setoff) which such Bank may have.
SECTION 12.07. Governing Law. This Agreement, all Notes, the
other Loan Documents and all other documents executed in connection herewith
shall be deemed to be contracts and agreements executed by the Company and each
Bank under the laws of the State of Texas and of the United States of America
and for all purposes shall be construed in accordance with, and governed by,
the laws of said state and of the United States of America. Without limitation
of the foregoing, nothing in this Agreement, or in the Notes or in any other
Loan Document shall be deemed to constitute a waiver of any rights which any
Bank may have under applicable federal legislation relating to the amount of
interest which such Bank may contract for, take, receive or charge in respect
of the Loan and the Loan Documents, including any right to take, receive,
reserve and charge interest at the rate allowed by the law of the state where
any Bank is located. The Agent, each Bank and the Company further agree that
insofar as the provisions of Article 5069-1.04, of the Revised Civil Statutes
of Texas, as amended, are applicable to the determination of the Highest Lawful
Rate with respect to the Notes and the Obligations hereunder and under the
other Loan Documents, the indicated rate ceiling of such Article shall be
applicable; provided, however, that to the extent permitted by such Article,
the Agent may from time to time by notice to the Company revise the election of
such interest rate ceiling as such ceiling affects the then current or future
balances of the Loans. The provisions of Article 5069-15.01 et. seq. do not
apply to this Agreement, any Note issued hereunder or the other Loan Documents.
SECTION 12.08. Interest. Each provision in this Agreement and
each other Loan Document is expressly limited so that in no event whatsoever
shall the amount paid, or otherwise agreed to be paid, to the Agent or any
Bank, or charged, contracted for, reserved, taken or received by the Agent or
any Bank, for the use, forbearance or detention of the money to be loaned under
this Agreement or any Loan Document or otherwise (including any sums paid as
required by any covenant or obligation contained herein or in any other Loan
Document which is for the use, forbearance or detention of such money), exceed
that amount of money which would cause the effective rate of interest to exceed
the Highest Lawful Rate, and all amounts owed under this Agreement and each
other Loan Document shall be held to be subject to reduction to the effect that
such amounts so paid or agreed to be paid, charged, contracted for, reserved,
taken or received which are for the use, forbearance or detention of money
under this Agreement or such Loan Document
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shall in no event exceed that amount of money which would cause the effective
rate of interest to exceed the Highest Lawful Rate. Anything in any Note or any
other Loan Document to the contrary notwithstanding, the Company shall not be
required to pay unearned interest on any Note and the Company shall not be
required to pay interest on the Obligations at a rate in excess of the Highest
Lawful Rate, and if the effective rate of interest which would otherwise be
payable under such Note and such Loan Documents would exceed the Highest Lawful
Rate, or if the holder of such Note shall receive any unearned interest or
shall receive monies that are deemed to constitute interest which would
increase the effective rate of interest payable by the Company under such Note
and the other Loan Documents to a rate in excess of the Highest Lawful Rate,
then (a) the amount of interest which would otherwise be payable by the Company
shall be reduced to the amount allowed under applicable law and (b) any
unearned interest paid by the Company or any interest paid by the Company in
excess of the Highest Lawful Rate shall in the first instance be credited on
the principal of the Obligations of the Company (or if all such Obligations
shall have been paid in full, refunded to the Company). It is further agreed
that, without limitation of the foregoing, all calculations of the rate of
interest contracted for, reserved, taken, charged or received by any Bank under
the Notes and the Obligations and under the other Loan Documents are made for
the purpose of determining whether such rate exceeds the Highest Lawful Rate,
and shall be made, to the extent permitted by usury laws applicable to such
Bank, by amortizing, prorating and spreading in equal parts during the period
of the full stated term of the Notes and this Agreement and all interest at any
time contracted for, charged or received by such Bank in connection therewith.
SECTION 12.09. Survival of Representations and Warranties. All
representations, warranties and covenants contained herein or made in writing
by the Company in connection herewith and the other Loan Documents shall
survive the execution and delivery of this Agreement, the Notes and the other
Loan Documents, the termination of the Commitments of the Banks and will bind
and inure to the benefit of the respective successors and assigns of the
parties hereto, whether so expressed or not, provided, that the Commitments of
the Banks shall not inure to the benefit of any successor or assign of the
Company.
SECTION 12.10. Successors and Assigns; Participations. (a) All
covenants, promises and agreements by or on behalf of the Company or the Banks
that are contained in this Agreement shall bind and inure to the benefit of
their respective permitted successors and assigns. The Company may not assign
or transfer any of its rights or obligations hereunder.
(b) Any of the Banks may assign to or sell participations to
one or more banks of all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including all or a portion of its
Commitment, the Advances and the Obligations of the Company owing to it and the
Notes); provided, that the participating banks or other entities shall be
entitled to the cost protection provisions contained in Article II and Section
12.04 and the Company shall continue to deal solely and directly with the Agent
in connection with its rights and obligations under this Agreement and the
other Loan Documents. Except with respect to cost protections provided to a
participant pursuant to this paragraph and the items listed in Section 12.01
hereof, no
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participant shall be a third party beneficiary of this Agreement nor shall it
be entitled to enforce any rights provided to the Banks against the Company
under this Agreement.
(c) A Bank may assign to any other Bank or Banks or to any
Affiliate of a Bank and, with the prior written consent of the Company and the
Agent (which consent shall not be unreasonably withheld), a Bank may assign to
one or more other Eligible Assignees all or a portion of its interests, rights,
and obligations under this Agreement and the other Loan Documents (including
all or a portion of its Commitment and the same portion of the Loans and other
Obligations of the Company at the time owing to it and the Note held by it);
provided, however, that (i) each such assignment shall be in a minimum
principal amount of not less than $5,000,000.00 (unless such assignment shall
be to another Bank) and shall be of a constant, and not a varying, percentage
of all the assigning Bank's Commitment, rights and obligations under this
Agreement, (ii) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance, an Assignment and Acceptance, substantially
in the form of Exhibit 12.10(c) hereto, in form and substance satisfactory to
the Agent (an "Assignment and Acceptance") and any Note subject to such
assignment and (iii) no assignment shall be effective until receipt by the
Agent of a reasonable service fee from the Assignee Bank in respect of said
assignment equal to $2,000.00. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date (unless otherwise agreed to by the assigning
Bank, the Eligible Assignee thereunder and the Agent) shall be at least five
Business Days after the execution thereof, (x) the Eligible Assignee thereunder
shall be a party hereto and to the other Loan Documents and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of
a Bank hereunder and under the other Loan Documents and (y) the assignor Bank
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Bank's rights and obligations under this Agreement and
the other Loan Documents, such Bank shall cease to be a party hereto).
(d) Notwithstanding any other provision herein, any Bank may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this section, (i) disclose to the assignee or
participant or proposed assignee or participant, any information relating to
the Company furnished to such Bank by or on behalf of the Company and (ii) make
any assignment or participation in order to effect the terms and requirements
of the Intercreditor Agreement. In the event of any participation under this
paragraph (d) of Section 12.10, the participation certificate utilized shall be
in the form of Exhibit 12.10(d).
SECTION 12.11. Confidentiality. Each Bank agrees to exercise its
best efforts to keep any information delivered or made available by the Company
to it which is clearly indicated to be confidential information, confidential
from anyone other than Persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (a) to any other Bank, (b) pursuant to
subpoena or upon the order of any court or administrative agency, (c) upon the
request or demand of any regulatory agency or authority having
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jurisdiction over such Bank, (d) which has been publicly disclosed, (e) to the
extent reasonably required in connection with any litigation to which the
Agent, any Bank, the Company or its respective Affiliates may be a party, (f)
to the extent reasonably required in connection with the exercise of any remedy
hereunder, (g) to such Bank's legal counsel and independent auditors and (h) to
any actual or proposed participant or assignee of all or part of its rights
hereunder which has agreed in writing to be bound by the provisions of this
Section. Each Bank will promptly notify the Company of any information that it
is required or requested to deliver pursuant to clause (b) or (c) of this
Section and, if the Company is a party to any such litigation, clause (e) of
this Section .
SECTION 12.12. Pro Rata Treatment. (a) Except as otherwise
specifically permitted hereunder, each payment or prepayment of principal, if
permitted under this Agreement, and each payment of interest with respect to an
Advance shall be made pro rata among the Banks.
(b) Each Bank agrees that if, through the exercise of a right
of banker's Lien, setoff or claim of any kind against the Company as a result
of which the unpaid principal portion of the Notes and the Obligations held by
it shall be proportionately less than the unpaid principal portion of the Notes
and Obligations held by any other Bank, it shall be deemed to have
simultaneously purchased from such other Bank a participation in the Notes and
Obligations held by such other Bank, in the amount required to render such
amounts proportional; provided, however, that if any such purchase or purchases
or adjustments shall be made pursuant to this Section and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustments restored without interest.
SECTION 12.13. Separability. Should any clause, sentence,
paragraph or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto agree that
the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom and the remainder will have
the same force and effectiveness as if such part or parts had never been
included herein.
SECTION 12.14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 12.15. Additional Exposure. The Company and its
Subsidiaries acknowledge that TCB, individually, is incurring the Additional
Exposure because of the cash management services and daylight overdraft
advances provided by TCB to the Company and its Subsidiaries on a completely
voluntary basis and without obligation to do so. The Company hereby
acknowledges and agrees that TCB may, at any time, cease to provide such
services and neither Company nor any Subsidiary shall have any claim or right
against TCB in regard to said services or TCB's decision to stop providing
same.
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SECTION 12.16. Interpretation. (a) In this Agreement, unless a
clear contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually, provided that nothing in this clause is intended to
authorize any assignment not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary
herein, reference to any agreement, document or instrument (including
this Agreement) means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms hereof, and
reference to any Note or other note includes any Note issued pursuant
hereto in extension or renewal thereof and in substitution or
replacement therefor;
(vi) unless the context indicates otherwise, reference
to any Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, except as expressly provided to the contrary, the word "from"
means "from and including" and the word "to" means "to but excluding";
and
(ix) reference to any law, rule or regulation means such
as amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
(b) The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
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(c) No provision of this Agreement shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
SECTION 12.17. SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY
BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, IN ▇▇▇▇▇▇ COUNTY OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING. THE COMPANY AND EACH GUARANTOR FURTHER IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 12.02 AND WITH
RESPECT TO ANY GUARANTOR, AT THE ADDRESS PROVIDED ON SCHEDULE 6.16 HERETO, SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(b) EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
SECTION 12.18. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND EACH
GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
ARISING FROM OR RELATING TO ANY BANKING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
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SECTION 12.19. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE
TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
BORROWER/DEBTOR:
SERV-TECH, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President of
Finance and Administration
DEBTORS/SUBSIDIARIES:
ADVANCED REFRACTORY SERVICES, INC.
AMERICAN MECHANICAL SERVICES, INC.
CASTING CONCEPTS, INC.
CON-SEAL, INC.
DM ACQUISITION CORPORATION
ENTERPRISE SERVICE CORPORATION
▇. ▇. ▇▇▇▇▇▇▇▇ & ASSOCIATES, INC.
▇▇▇▇▇▇▇ CORPORATION
▇▇▇▇▇▇▇ INDUSTRIAL SERVICES CORPORATION
HILL TECHNICAL SERVICES, INC.
MAC-TECH, INC.
ST PIPING, INC.
TOTAL REFRACTORY SYSTEMS, INC.
TURNAROUND MAINTENANCE, INC.
UNITED INDUSTRIAL MATERIALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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SECO INDUSTRIES, INC.
SERV-TECH ENGINEERS, INC.
SERV-TECH EPC, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President of
Finance and Administration
PRS HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President
DELTA MAINTENANCE, INC.
PETRO RECOVERY SYSTEMS, INC.
SERV-TECH CONSTRUCTION AND MAINTENANCE,
INC. (Formerly Serv Tech EPC -
Houston, Inc.)
SERV-TECH INTERNATIONAL SALES, INC.
SERV-TECH OF NEW MEXICO, INC.
SERV-TECH SERVICES, INC.
TERMINAL TECHNOLOGIES, INC.
TIPCO ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
President
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AGENT/SECURED PARTY:
AMOUNT OF COMMITMENT TEXAS COMMERCE BANK NATIONAL
-------------------- ASSOCIATION, as Agent and Individually,
as a Bank
$16,786,050.00
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
BANKS:
AMOUNT OF COMMITMENT BANK ONE, TEXAS, NA
--------------------
$6,713,950.00
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Vice President
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