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EXHIBIT 10.7
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
($25,000,000 REVOLVING LOAN FACILITY)
DATED AS OF AUGUST 25, 2000
AMONG
HYDRIL COMPANY,
AS BORROWER,
BANK ONE, TEXAS, N.A.,
AS AGENT, ISSUER AND AS A LENDER,
AND
THE OTHER LENDERS NOW OR HEREAFTER
PARTIES HERETO
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TABLE OF CONTENTS
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1. Definitions.............................................................................................1
1.1 Certain Defined Terms..........................................................................1
1.2 Miscellaneous.................................................................................20
2. Commitments and Loans..................................................................................20
2.1 Loans.........................................................................................20
2.2 Letters of Credit.............................................................................21
2.3 Terminations or Reductions of Commitments....................................................24
2.4 Commitment Fees...............................................................................24
2.5 Several Obligations...........................................................................24
2.6 Notes.........................................................................................24
2.7 Use of Proceeds...............................................................................25
3. Borrowings, Payments, Prepayments and Interest Options.................................................25
3.1 Borrowings....................................................................................25
3.2 Prepayments...................................................................................25
3.3 Interest Options..............................................................................26
4. Payments; Pro Rata Treatment; Computations, Etc........................................................31
4.1 Payments......................................................................................31
4.2 Pro Rata Treatment............................................................................32
4.3 Certain Actions, Notices, Etc.................................................................33
4.4 Non-Receipt of Funds by Agent.................................................................33
4.5 Sharing of Payments, Etc......................................................................34
5. Conditions Precedent...................................................................................34
5.1 Initial Loans and Letters of Credit...........................................................34
5.2 All Loans and Letters of Credit...............................................................36
6. Representations and Warranties.........................................................................36
6.1 Organization..................................................................................36
6.2 Financial Statements..........................................................................37
6.3 Enforceable Obligations; Authorization........................................................37
6.4 Other Debt....................................................................................37
6.5 Litigation....................................................................................38
6.6 Title.........................................................................................38
6.7 Taxes.........................................................................................38
6.8 Regulations G, U and X........................................................................38
6.9 Subsidiaries..................................................................................38
6.10 No Untrue or Misleading Statements............................................................38
6.11 ERISA.........................................................................................39
6.12 Investment Company Act........................................................................39
6.13 Public Utility Holding Company Act............................................................39
6.14 Solvency......................................................................................39
6.15 Fiscal Year...................................................................................39
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6.16 Compliance....................................................................................39
6.17 Environmental Matters.........................................................................39
7. Affirmative Covenants..................................................................................41
7.1 Taxes, Existence, Regulations, Property, Etc..................................................41
7.2 Financial Statements and Information..........................................................41
7.3 Financial Tests...............................................................................42
7.4 Inspection....................................................................................43
7.5 Further Assurances............................................................................43
7.6 Books and Records.............................................................................43
7.7 Insurance.....................................................................................43
7.8 Notice of Certain Matters.....................................................................43
7.9 Capital Adequacy..............................................................................44
7.10 ERISA Information and Compliance..............................................................44
7.11 New Subsidiaries..............................................................................45
8. Negative Covenants.....................................................................................45
8.1 Borrowed Money Indebtedness...................................................................45
8.2 Liens.........................................................................................46
8.3 Contingent Liabilities........................................................................46
8.4 Mergers, Consolidations and Dispositions of Assets............................................46
8.5 Redemption, Dividends and Distributions.......................................................47
8.6 Nature of Business............................................................................47
8.7 Transactions with Related Parties.............................................................47
8.8 Loans and Investments.........................................................................47
8.9 Intentionally omitted.........................................................................47
8.10 Organizational Documents......................................................................48
8.11 Unfunded Liabilities..........................................................................48
8.12 Operating Lease Expenses......................................................................48
8.13 Subordinated Indebtedness.....................................................................48
8.14 Negative Pledges..............................................................................48
8.15 Amendment to Long Term Debt...................................................................48
9. Defaults and Remedies..................................................................................48
9.1 Events of Default.............................................................................48
9.2 Right of Setoff...............................................................................51
9.3 Collateral Account............................................................................52
9.4 Preservation of Security for Unmatured Reimbursement Obligations..............................52
9.5 Remedies Cumulative...........................................................................52
10. Agent ..............................................................................................53
10.1 Appointment, Powers and Immunities............................................................53
10.2 Reliance......................................................................................54
10.3 Defaults......................................................................................54
10.4 Material Written Notices......................................................................54
10.5 Rights as a Lender............................................................................55
10.6 Indemnification...............................................................................55
10.7 Non-Reliance on Agent and Other Lenders.......................................................55
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10.8 Failure to Act................................................................................56
10.9 Resignation or Removal of Agent...............................................................56
10.10 No Partnership................................................................................56
11. Miscellaneous..........................................................................................57
11.1 Waiver........................................................................................57
11.2 Notices.......................................................................................57
11.3 Expenses, Etc.................................................................................57
11.4 Indemnification...............................................................................58
11.5 Amendments, Etc...............................................................................59
11.6 Successors and Assigns........................................................................59
11.7 Limitation of Interest........................................................................62
11.8 Survival......................................................................................62
11.9 Captions......................................................................................63
11.10 Counterparts..................................................................................63
11.11 Governing Law.................................................................................63
11.12 Severability..................................................................................63
11.13 Tax Forms.....................................................................................63
11.14 Conflicts Between This Agreement and the Other Loan Documents.................................63
11.15 Limitation on Charges; Substitute Lenders; Non-Discrimination.................................63
11.16 Disclosure to Other Persons; Confidentiality..................................................64
11.17 Conditional Release of Collateral.............................................................65
11.18 Final Agreement...............................................................................66
EXHIBITS
1.01A Rate Designation Notice
1.01B Request for Extension of Credit
2.6 Note
6.9 Subsidiaries
7.2 Compliance Certificate
8.2 Liens
8.4 Noteholder Letter
11.6(b) Assignment and Acceptance
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SECOND AMENDED AND RESTATED
LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT is made and entered
into as of August 25, 2000 (the "Closing Date"), by and among HYDRIL COMPANY, a
Delaware corporation (together with its permitted successors, herein called the
"Borrower"), each of the lenders which is or may from time to time become a
party hereto (individually, a "Lender" and, collectively, the "Lenders"), and
BANK ONE, TEXAS, N.A., a national banking association ("Bank One"), as agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "Agent").
The Borrower, the Lenders and the Agent executed and delivered the
Amended and Restated Loan Agreement dated March 23, 1998 (as amended, restated,
modified or supplemented from time to time, the "1998 Loan Agreement"), which
1998 Loan Agreement was a restatement of that certain Loan Agreement dated as of
June 30, 1997. The parties desire that the 1998 Loan Agreement be amended and
restated in its entirety. While this Agreement shall replace the 1998 Loan
Agreement and the Borrower will issue new Notes, any Loan outstanding on the
date hereof under the 1998 Loan Agreement shall automatically be considered a
Loan outstanding hereunder, either as a "LIBOR Borrowing" with the same
"Interest Period" or as a "Base Rate Borrowing," as the case may be, and
evidenced by the new Notes, and all Letters of Credit outstanding on the date
hereof under the 1998 Loan Agreement shall automatically be considered a Letter
of Credit hereunder; provided, however, that any increase in the Margin
Percentage with respect to any outstanding Loan shall be effective on the
Closing Date. Any Obligation incurred under the 1998 Loan Agreement shall
automatically be considered an Obligation hereunder.
The parties hereto agree to amend and restate the 1998 Loan Agreement
in its entirety as follows:
1. Definitions.
1.1 Certain Defined Terms.
Unless a particular term, word or phrase is otherwise defined or the
context otherwise requires, capitalized terms, words and phrases used herein or
in the Loan Documents (as hereinafter defined) have the following meanings (all
definitions that are defined in this Agreement in the singular have the same
meanings when used in the plural and vice versa):
Accounts, Equipment, General Intangibles and Inventory shall have the
respective meanings assigned to them in the Uniform Commercial Code enacted in
the State of Texas in force on the Closing Date.
Additional Interest means the aggregate of all amounts accrued or paid
pursuant to the Notes or any of the other Loan Documents (other than interest on
the Notes at the Stated Rate) which,
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under applicable laws, are or may be deemed to constitute interest on the
indebtedness evidenced by the Notes.
Adjusted LIBOR means, with respect to each Interest Period applicable
to a LIBOR Borrowing, a rate per annum equal to the quotient, expressed as a
percentage, of (a) LIBOR with respect to such Interest Period divided by (b)
1.0000 minus the Eurodollar Reserve Requirement in effect on the first day of
such Interest Period.
Affiliate means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
Agreement means this Second Amended and Restated Loan Agreement, as it
may from time to time be amended, modified, restated or supplemented.
Annual Financial Statements means the annual financial statements of a
Person, including all notes thereto, which statements shall include a balance
sheet as of the end of such fiscal year and an income statement and a statement
of cash flows for such fiscal year, all setting forth in comparative form the
corresponding figures from the previous fiscal year, all prepared in conformity
with GAAP in all material respects, and accompanied by the opinion of
independent certified public accountants of recognized national standing, which
shall state that such financial statements present fairly in all material
respects the financial position of such Person and, if such Person has any
Subsidiaries, its consolidated Subsidiaries as of the date thereof and the
results of its operations for the period covered thereby in conformity with
GAAP. Such statements of Borrower shall be accompanied by a certificate of such
accountants that in making the appropriate audit and/or investigation in
connection with such report and opinion, such accountants did not become aware
of any Default relating to the financial tests set forth in Section 7.3 hereof
or, if in the opinion of such accountants any such Default exists, a description
of the nature and status thereof. Annual Financial Statements shall also include
unaudited consolidating financial statements for the applicable Person, in
Proper Form, certified by the chief financial officer or other authorized
officer of such Person as true, correct and complete in all material respects.
Applications means all applications and agreements for Letters of
Credit, or similar instruments or agreements, in Proper Form, now or hereafter
executed by any Person in connection with any Letter of Credit now or hereafter
issued or to be issued under the terms hereof at the request of any Person.
Assignment and Acceptance shall have the meaning ascribed to such term
in Section 11.6 hereof.
Bankruptcy Code means the United States Bankruptcy Code, as amended,
and any successor statute.
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Base Rate means for any day a rate per annum equal to the lesser of (a)
the applicable Margin Percentage from time to time in effect plus the greater of
(1) the Prime Rate for that day and (2) the Federal Funds Rate for that day plus
2 of 1% or (b) the Ceiling Rate. If for any reason Agent shall have determined
(which determination shall be prima facie evidence of the correctness thereof)
that it is unable to ascertain the Federal Funds Rate for any reason beyond its
reasonable control, including, without limitation, the inability or failure of
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Base Rate shall, until the circumstances giving rise to such inability no longer
exist, be the lesser of (a) the Prime Rate plus the applicable Margin Percentage
from time to time in effect or (b) the Ceiling Rate.
Base Rate Borrowing means that portion of the principal balance of the
Loans at any time bearing interest at the Base Rate.
Borrowed Money Indebtedness means, with respect to any Person, without
duplication, (i) all obligations of such Person for borrowed money (other than
the endorsement of negotiable instruments in the ordinary course of business),
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (iii) all obligations of such Person under conditional sale
or other title retention agreements relating to Property purchased by such
Person, (iv) all obligations of such Person issued or assumed as the deferred
purchase price of property or services (excluding obligations of such Person to
creditors incurred in the ordinary course of such Person's business), (v) all
capital lease obligations of such Person, (vi) all obligations of others secured
by any lien on property or assets owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (vii) Interest Rate Risk
Indebtedness of such Person, (viii) all obligations of such Person in respect of
outstanding letters of credit issued for the account of such Person securing
obligations described in clauses (i) through (vii) above and (ix) all guarantees
of such Person of obligations described in the foregoing clauses (i) through
(viii) above.
Business Day means any day other than a day on which commercial banks
are authorized or required to close in Houston, Texas.
Capital Expenditures means, with respect to any Person for any period,
expenditures in respect of fixed or capital assets by such Person, including
capital lease obligations incurred during such period (to the extent not already
included), which would be reflected as additions to Property, plant or equipment
on a balance sheet of such Person and its consolidated Subsidiaries, if any,
prepared in accordance with GAAP; but excluding expenditures during such period
for the repair or replacement of any fixed or capital asset which was destroyed
or damaged, in whole or in part, to the extent financed by (a) the proceeds of
an insurance policy maintained by such Person; (b) condemnation proceeds
actually received by such Person; or (c) payments actually received by such
Person from a non-Affiliate of such Person.
Capital Stock means any class of capital stock, share capital and
similar equity interest of a Person.
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Ceiling Rate means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas (or
any jurisdiction whose usury laws are deemed to apply to the Notes or any other
Loan Documents despite the intention and desire of the parties to apply the
usury laws of the State of Texas) laws permits the higher interest rate, stated
as a rate per annum. On each day, if any, that Texas law establishes the Ceiling
Rate, the Ceiling Rate shall be the "weekly ceiling" (as defined in Section 303
of the Texas Finance Code (the "Texas Finance Code") and Chapter 1D ("Chapter
1D") of Title 79, Tex. Rev. Civ. Stats. 1925, as amended, respectively) for that
day. Agent may from time to time, as to current and future balances, implement
any other ceiling under the Texas Finance Code or Chapter 1D by notice to
Borrower, if and to the extent permitted by the Texas Finance Code or Chapter
1D. Without notice to Borrower or any other person or entity, the Ceiling Rate
shall automatically fluctuate upward and downward as and in the amount by which
such maximum nonusurious rate of interest permitted by applicable law
fluctuates.
Change of Control means an event or series of events by which (a) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act
as in effect on the Closing Date) or related persons constituting a "group" (as
such term is used in Rule 13d-5 under the Exchange Act in effect on the date of
the Closing Date), other than the Initial Stockholder Affiliates, is or becomes
or has the absolute, unconditional right to become the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, as in effect on the
date of the Closing Date), directly or indirectly, of 25% or more of the total
voting power of the Voting Stock of the Borrower unless at the time in question
and at all relevant times subsequent thereto, the Initial Stockholder Affiliates
are the beneficial owners of a greater percentage of such total voting power
than such "person" or "group"; (b) the Borrower consolidates with or merges into
another Person or conveys, transfers or leases all or substantially all of its
assets to any Person, or any Person consolidates with, or merges into, the
Borrower in a transaction not otherwise permitted hereunder; (c) the Borrower
conveys, transfers or leases all or substantially all of its assets to any
Person; (d) the stockholders of the Borrower approve any plan of liquidation or
dissolution of the Borrower; or (e) during any period of twelve consecutive
months, individuals who, at the beginning of such period, constituted the board
of directors of the Borrower (together with any new director whose election by
the Borrower's board of directors or whose nomination for election by the
Borrower's stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason (other than due to death or disability) to
constitute a majority of the board of directors of the Borrower then in office.
Closing Date means August 25, 2000.
Code means the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.
Collateral means all Property, tangible or intangible, real, personal
or mixed, now or hereafter subject to the Security Documents.
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Collateral Agency Agreement means that one certain Collateral Agency
and Intercreditor Agreement dated as of June 25, 1998 by and among the Agent as
Collateral Agent, the parties named therein as Lenders, and the Company, setting
forth the rights and duties of each of said Persons in regard to the Collateral,
as therein defined.
Commitment Fee Percentage means the applicable per annum percentage set
forth at the appropriate intersection in the table contained in the definition
of Margin Percentage, subject to the proviso contained at the end of said
definition, based on the Leverage Ratio as of the last day of the most recently
ended fiscal quarter of Borrower calculated by the Agent as soon as practicable
after receipt by the Agent of all financial reports required under this
Agreement with respect to such fiscal quarter (including a Compliance
Certificate) (provided, however, that if the Commitment Fee Percentage is
increased as a result of the reported Leverage Ratio, such increase shall be
retroactive to the date that Borrower was obligated to deliver such financial
reports to the Agent pursuant to the terms of this Agreement and provided
further, however, that if the Commitment Fee Percentage is decreased as a result
of the reported Leverage Ratio, and such financial reports are delivered to the
Agent not more than ten (10) calendar days after the date required to be
delivered pursuant to the terms of this Agreement, such decrease shall be
retroactive to the date that Borrower was obligated to deliver such financial
reports to the Agent pursuant to the terms of this Agreement.
Compliance Certificate shall have the meaning given to it in Section
7.2 hereof.
Controlled Group means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414 of the Code.
Corporation means any corporation, limited liability company,
partnership, joint venture, joint stock association, business trust and other
business entity.
Cover for Letter of Credit Liabilities shall be effected by paying to
Agent immediately available funds, to be held by Agent in a collateral account
maintained by Agent at its Principal Office and collaterally assigned as
security for the financial accommodations extended pursuant to this Agreement
using documentation reasonably satisfactory to Agent, in the amount required by
any applicable provision hereof. Such amount shall be retained by Agent in such
collateral account until such time as in the case of the Cover being provided
pursuant to Section 2.2(a) or 9.3 hereof, the applicable Letter of Credit shall
have expired and the Reimbursement Obligations, if any, with respect thereto
shall have been fully satisfied; provided, however, that at such time if a
Default or Event of Default has occurred and is continuing, Agent shall not be
required to release such amount in such collateral account until such Default or
Event of Default shall have been cured or waived.
Debt Service means, with respect to any Person for any period, the sum
of (i) Interest Expense for such period and (ii) scheduled principal payments on
Borrowed Money Indebtedness for such period.
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Debt to Capitalization Ratio means, as of any day, the ratio of (a)
Borrowed Money Indebtedness as of such date to (b) Total Capitalization as of
such date; provided, however, that for purposes of determining Borrowed Money
Indebtedness for purposes of calculating this ratio guaranty obligations shall
not be considered to be debt.
Deed of Trust means that certain Deed of Trust and Security Agreement
(with Assignment of Rents) dated March 23, 1998 from the Borrower to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, trustee for the benefit of the Agent, upon and covering real estate in
▇▇▇▇▇▇ County, Texas and securing the Obligations, as amended by the Appointment
of Substitute Trustee dated June 25, 1998, the Modification of Deed of Trust and
Extension Agreement dated June 25, 1998 and the Modification of Deed of Trust
and Extension Agreement dated of even date herewith.
Default means an Event of Default or an event which with notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
Dollars and $ means lawful money of the United States of America.
EBITDA means, without duplication, for any period the consolidated net
earnings (excluding any extraordinary gains or losses) of Borrower plus, to the
extent deducted in calculating consolidated net income, depreciation,
amortization, other non-cash items, Interest Expense, and federal and state
income tax expense and minus, to the extent added in calculating consolidated
net income, any non-cash items.
Effective Date shall mean the date upon which all of the conditions
described in Section 5.1 have been completed to the reasonable satisfaction of
the Agent.
Eligible Assignee means (a) any Lender, (b) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000.00; (c) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development or any successor organization, or a political
subdivision of any such country, and having total assets in excess of
$1,000,000,000.00; provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the Organization for Economic Cooperation and Development or any
successor organization; (d) the central bank of any country which is a member of
the Organization for Economic Cooperation and Development or any successor
organization; and (e) any other bank or similar financial institution approved
by the Agent, the Majority Lenders and the Borrower, which consent of the
Borrower shall not be unreasonably withheld.
Environmental Claim means any third party (including Governmental
Authorities and employees) action, lawsuit, claim or proceeding (including
claims or proceedings at common law or under the Occupational Safety and Health
Act or similar laws relating to safety of employees) which seeks to impose
liability for (i) noise; (ii) pollution or contamination of the air, surface
water, ground water or land or the clean-up of such pollution or contamination;
(iii) solid, gaseous or liquid
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waste generation, handling, treatment, storage, disposal or transportation; (iv)
exposure to Hazardous Substances; (v) the safety or health of employees; or (vi)
the manufacture, processing, distribution in commerce or use of Hazardous
Substances. An "Environmental Claim" includes, but is not limited to, a common
law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit, or to adopt or amend a regulation to the extent that such
a proceeding attempts to redress violations of an applicable permit, license, or
regulation as alleged by any Governmental Authority.
Environmental Liabilities includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including but not limited to:
remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property or injuries to persons, and any other related
costs, expenses, losses, damages, penalties, fines, liabilities and obligations,
and all costs and expenses necessary to cause the issuance, reissuance or
renewal of any Environmental Permit including reasonable attorneys' fees and
court costs.
Environmental Permit means any permit, license, approval or other
authorization under any applicable Legal Requirement relating to pollution or
protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants or hazardous substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or Hazardous Substances.
Environmental Risk Agreement means that certain Environmental Risk
Agreement of even date herewith between the Borrower and the Agent.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the U.S. Department
of Labor thereunder.
Eurodollar Rate means for any day during an Interest Period for a LIBOR
Borrowing a rate per annum equal to the lesser of (a) the sum of (1) the
Adjusted LIBOR in effect on the first day of such Interest Period plus (2) the
applicable Margin Percentage in effect on the first day of such Interest Period
and (b) the Ceiling Rate. Each Eurodollar Rate is subject to adjustments for
reserves, insurance assessments and other matters as provided for in Section
3.3(c) hereof.
Eurodollar Reserve Requirement means, on any day, that percentage
(expressed as a decimal fraction and rounded, if necessary, to the next highest
one ten thousandth [.0001]) which is in effect on such day for determining all
reserve requirements (including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to "Eurocurrency liabilities," as
currently defined in Regulation D. Each determination of the Eurodollar Reserve
Requirement by Agent shall
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be prima facie evidence of the correctness thereof, and may be computed using
any reasonable averaging and attribution method.
Event of Default shall have the meaning assigned to it in Section 9
hereof.
Federal Funds Rate means, for any day, a fluctuating interest rate per
annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any such day which is a
Business Day, the average of the quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by Agent in its sole and absolute discretion.
Financing Statements means all such Uniform Commercial Code financing
statements as the Agent or any Lender shall require, in Proper Form, duly
executed the Borrower to give notice of and to perfect or continue perfection of
the Agent's security interest in the Collateral.
Funding Loss means, with respect to (a) Borrower's payment of principal
of a LIBOR Borrowing on a day other than the last day of the applicable Interest
Period; (b) Borrower's failure to borrow a LIBOR Borrowing on the date specified
by Borrower; (c) Borrower's failure to make any prepayment of the Loans (other
than Base Rate Borrowings) on the date specified by Borrower; or (d) any
cessation of a Eurodollar Rate to apply to the Loans or any part thereof
pursuant to Section 3.3, in each case whether voluntary or involuntary, any
loss, expense, penalty, premium or liability actually incurred by any Lender
(including but not limited to any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Lender to
fund or maintain a Loan).
GAAP means, as to a particular Person, such accounting practice as, in
the opinion of independent certified public accountants of recognized national
standing regularly retained by such Person, conforms at the time to generally
accepted accounting principles, consistently applied for all periods after the
Closing Date (except for any such change with which such accountants concur,
pursuant to the following sentence) so as to present fairly the financial
condition, and results of operations and cash flows, of such Person. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board, all reports and financial statements required
hereunder may be prepared in accordance with such change so long as Borrower
provides to Agent such disclosures of the impact of such change as Agent may
reasonably require. No such change in any accounting principle or practice
shall, in itself, cause a Default or Event of Default hereunder (but Borrower,
Agent and Lenders shall negotiate in good faith to replace any financial
covenants hereunder to the extent such financial covenants are affected by such
change in accounting principle or practice).
Governmental Authority means any foreign governmental authority, the
United States of America, any State of the United States, and any political
subdivision of any of the foregoing, and
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any central bank, agency, department, commission, board, bureau, court or other
tribunal having jurisdiction over Agent, any Lender, any Obligor or their
respective Property.
Guaranties means, collectively, any and all guaranties hereafter
executed in favor of Agent, for the benefit of Lenders, relating to the
Obligations, as any of them may from time to time be amended, modified, restated
or supplemented.
Guarantors means all domestic Subsidiaries of the Borrower, for which a
guaranty is requested by Agent in accordance with Section 7.11 hereof.
Hazardous Substance means petroleum products, and any hazardous or
toxic waste or substance defined or regulated as such from time to time by any
law, rule, regulation or order described in the definition of "Requirements of
Environmental Law."
Indebtedness means, without duplication, (a) all items which in
accordance with GAAP would be included in the liability section of a balance
sheet (other than trade accounts payable and accrued expenses (other than
Interest Expense) arising in the ordinary course of business) on the date as of
which Indebtedness is to be determined (excluding, to the extent applicable,
capital stock, surplus, surplus reserves and deferred taxes and other credits);
(b) all guaranties, letter of credit contingent reimbursement obligations and
other contingent obligations in respect of, or any obligations to purchase or
otherwise acquire, Indebtedness of others (other than endorsements for
collection in the ordinary course of business); and (c) all Indebtedness secured
by any Lien existing on any interest of the Person with respect to which
Indebtedness is being determined in Property owned subject to such Lien whether
or not the Indebtedness secured thereby shall have been assumed; provided, that
the term "Indebtedness" shall not mean or include any Indebtedness in respect of
which monies sufficient to pay and discharge the same in full (either on the
expressed date of maturity thereof or on such earlier date as such Indebtedness
may be duly called for redemption and payment) shall be deposited with a
depository, agency or trustee reasonably acceptable to Agent in trust for the
payment thereof.
Initial Stockholder means and includes ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
Initial Stockholder Affiliates means (a) any Initial Stockholder; (b) a
spouse, child, lineal descendant, parent or sibling of an Initial Stockholder
and any of their estates and legal representatives (each a "Related Person");
(c) any trust or charitable organization of which any Related Person is a
trustee, director, beneficiary or grantor; and (d) a corporation, partnership,
limited liability company or other similar business entity of which more than
50% of the Voting Stock thereof is controlled, directly or indirectly, by any
Person described in clause (a) or clause (b) of this definition.
Insurance Requirements Agreement means that certain Insurance
Requirements Agreement of even date herewith between the Borrower and the Agent.
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Intercreditor Agreement means that certain Intercreditor Agreement
dated as of June 25, 1998, between the Agent, the Banks, and Noteholder and
approved by the Borrower as amended from time to time.
Interest Coverage Ratio means the ratio of EBITDA to, without
duplication, cash Interest Expense plus Rent Expense in each case for the four
(4) full fiscal quarters ending on the last day of any fiscal quarter; provided
book losses associated with the sale or disposal of discontinued business lines
occurring on or prior to December 31, 2000, up to a maximum of $5,000,000.00 in
the aggregate, shall not be taken into account in calculating EBITDA.
Interest Expense means, for any period, total interest expense
(including interest expense attributable to capitalized leases and net costs
under interest rate swap, collar, cap or similar agreements providing interest
rate protection), determined in accordance with GAAP.
Interest Options means the Base Rate and each Eurodollar Rate, and
"Interest Option" means any of them.
Interest Payment Date means (a) for Base Rate Borrowings, the last day
of each month prior to the Revolving Loan Maturity Date, and the Revolving Loan
Maturity Date; and (b) for LIBOR Borrowings, the end of the applicable Interest
Period (and if such Interest Period exceeds three months' duration, quarterly,
commencing on the first quarterly anniversary of the first day of such Interest
Period) and the Revolving Loan Maturity Date.
Interest Period means, for each LIBOR Borrowing, a period commencing on
the date such LIBOR Borrowing began and ending on the numerically corresponding
day which is, subject to availability as set forth in Section 3.3(c)(iii), 1, 3
or 6 months thereafter, as Borrower shall elect in accordance herewith;
provided, (1) unless Agent shall otherwise consent, no Interest Period with
respect to a LIBOR Borrowing shall commence on a date earlier than three (3)
Business Days after this Agreement shall have been fully executed; (2) any
Interest Period with respect to a LIBOR Borrowing which would otherwise end on a
day which is not a LIBOR Business Day shall be extended to the next succeeding
LIBOR Business Day, unless such LIBOR Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding LIBOR
Business Day; (3) any Interest Period with respect to a LIBOR Borrowing which
begins on the last LIBOR Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last LIBOR Business Day of the
appropriate calendar month; (4) no Interest Period for a Loan shall ever extend
beyond the Revolving Loan Maturity Date; and (5) Interest Periods shall be
selected by Borrower in such a manner that the Interest Period with respect to
any portion of the Loans which shall become due shall not extend beyond such due
date.
Interest Rate Risk Agreement means an interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar
arrangement entered into by Borrower for the purpose of reducing Borrower's
exposure to interest rate fluctuations and not for speculative
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purposes, with a counterparty reasonably acceptable to Agent, as such agreement
may from time to time be amended, modified, restated or supplemented.
Interest Rate Risk Indebtedness means all obligations and Indebtedness
of Borrower with respect to the program for the hedging of interest rate risk
provided for in any Interest Rate Risk Agreement.
Investment means the purchase or other acquisition of any securities or
Indebtedness of, or the making of any loan, advance, transfer of Property (other
than transfers in the ordinary course of business) or capital contribution to,
or the incurring of any liability (other than trade accounts payable arising in
the ordinary course of business), contingently or otherwise, in respect of the
Indebtedness of, any Person.
Issuer means the issuer (or, where applicable, each issuer) of a Letter
of Credit under this Agreement.
Legal Requirement means any law, statute, ordinance, decree,
requirement, order, judgment, rule, or regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, whether presently existing or arising in the future.
Letter of Credit shall have the meaning assigned to such term in
Section 2.2 hereof.
Letter of Credit Liabilities means, at any time and in respect of any
Letter of Credit, the sum of (i) the amount available for drawings under such
Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement
Obligations at the time due and payable in respect of previous drawings made
under such Letter of Credit. For the purpose of determining at any time the
amount described in clause (i), in the case of any Letter of Credit payable in a
currency other than Dollars, such amount shall be converted by Agent to Dollars
by any reasonable method, and such converted amount shall be prima facie
evidence of the correctness thereof.
Leverage Ratio means, as of any day, the ratio of (a) Borrowed Money
Indebtedness to (b) EBITDA for the most recently completed four (4) consecutive
fiscal quarters.
LIBOR means, for each Interest Period for any LIBOR Borrowing, the rate
per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%) equal to
the average of the offered quotations appearing on Telerate Page 3750 (or if
such Telerate Page shall not be available, any successor or similar service as
may be selected by Agent and Borrower) as of 10:00 a.m., Houston, Texas time (or
as soon thereafter as practicable) on the day two LIBOR Business Days prior to
the first day of such Interest Period for deposits in United States dollars
having a term comparable to such Interest Period and in an amount comparable to
the principal amount of the LIBOR Borrowing to which such Interest Period
relates. If none of such Telerate Page 3750 nor any successor or similar service
is available, then "LIBOR" shall mean, with respect to any Interest Period for
any applicable LIBOR Borrowing, the rate of interest per annum, rounded upwards,
if necessary, to the nearest 1/16th of 1%, quoted by Agent at or before 10:00
a.m., Houston, Texas time (or as soon
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thereafter as practicable), on the date two LIBOR Business Days before the first
day of such Interest Period, to be the arithmetic average of the prevailing
rates per annum at the time of determination and in accordance with the then
existing practice in the applicable market, for the offering to Agent by one or
more prime banks selected by Agent in its sole discretion, in the London
interbank market, of deposits in United States dollars for delivery on the first
day of such Interest Period and having a maturity equal to the length of such
Interest Period and in an amount equal (or as nearly equal as may be) to the
LIBOR Borrowing to which such Interest Period relates. Each determination by
Agent of LIBOR shall be prima facie evidence of the correctness thereof, and may
be computed using any reasonable averaging and attribution method.
LIBOR Borrowing means each portion of the principal balance of the
Loans at any time bearing interest at a Eurodollar Rate.
LIBOR Business Day means a Business Day on which transactions in United
States dollar deposits between lenders may be carried on in the London interbank
market.
Lien means any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract, and
shall include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions and other title exceptions.
Loans means the loans provided for by Section 2.1 hereof.
Loan Documents means, collectively, this Agreement, the Notes, the
Security Documents, the Guaranties, the Master Ratification, Security and Pledge
Agreement dated June 25, 1998, the Master Ratification, Security and Pledge
Agreement effective of even date herewith, the Deed of Trust, the Second Lien
Deed of Trust, all Applications, all instruments, certificates and agreements
now or hereafter executed or delivered by any Obligor to Agent or any Lender
pursuant to any of the foregoing or in connection with the Obligations or any
commitment regarding the Obligations, and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing including, without limitation, the Master Ratification,
Security and Pledge Agreement dated of even date herewith.
Long Term Debt means the Indebtedness owing by the Borrower pursuant to
the Note Agreement and the Senior Notes and any renewals, extensions,
refundings, amendments or modifications from time to time.
Majority Lenders means Lenders having (i) prior to the Revolving Loan
Termination Date, greater than 66-2/3% of the aggregate amount of Revolving Loan
Commitments and (ii) on and after the Revolving Loan Termination Date, greater
than 66-2/3% of the aggregate amount of outstanding Obligations.
Margin Percentage means the applicable per annum percentage set forth
at the appropriate intersection in the table shown below, based on the Leverage
Ratio as of the last day of the most
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recently ended fiscal quarter of Borrower calculated by the Agent as soon as
practicable after receipt by the Agent of all financial reports required under
this Agreement with respect to such fiscal quarter (including a Compliance
Certificate) (provided, that if the Margin Percentage is increased as a result
of the reported Leverage Ratio, such increase shall be retroactive to the date
that Borrower was obligated to deliver such financial reports to the Agent
pursuant to the terms of this Agreement and provided further, that if the Margin
Percentage is decreased as a result of the reported Leverage Ratio, and such
financial reports are delivered to the Agent not more than ten (10) calendar
days after the date required to be delivered pursuant to the terms of this
Agreement, such decrease shall be retroactive to the date that Borrower was
obligated to deliver such financial reports to the Agent pursuant to the terms
of this Agreement) regardless, in each case, of whether such date occurs during
an existent interest period:
Commitment Fee
Leverage Ratio LIBOR Margin Base Rate Margin Percentage (unused)
< 1.0 x 1.25% 0% .25%
> or = to 1.0 x < 1.5 x 1.50% 0% .375%
> or = to 1.5 x < 2.0 x 1.75% 0% .375%
> or = to 2.0 x < 2.5 x 2.00% 0% .50%
> or = to 2.5 x 2.25% .25% .50%
and provided still further that, if, at any time, total borrowings outstanding
hereunder plus all Letter of Credit Liabilities is less than fifty percent (50%)
of the Revolving Loan Commitment, the Commitment Fee Percentage shall equal
.50%.
Minimum Advance means $500,000 or an integral multiple of $100,000 in
excess thereof.
Note Agreement has the meaning ascribed to it in the definition of
Noteholder below.
Noteholder means, collectively, the holders from time to time of the
6.85% Senior Secured Notes due June 30, 2003 (the "Senior Notes"), issued by the
Borrower pursuant to the Note Purchase Agreement or Agreements dated June 25,
1998 between the Borrower and the purchasers named therein (collectively, as
amended from time to time, the "Note Agreement").
Notes shall have the meaning assigned to such term in Section 2.6
hereof.
Obligations means, as at any date of determination thereof, the sum of
the following: (i) the aggregate principal amount of Loans outstanding hereunder
on such date, plus (ii) the aggregate amount of the outstanding Letter of Credit
Liabilities hereunder on such date, plus (iii) all other outstanding
liabilities, obligations and indebtedness of any Obligor under any Loan Document
on such date.
Obligors means Borrower and each Person now or hereafter executing a
Guaranty.
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Organizational Documents means, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a trust, the instrument
establishing such trust, and with respect to any other business entity, the
documents relating to its formation, organization and governance; in each case
including any and all modifications thereof as of the date of the Loan Document
referring to such Organizational Document and any and all future modifications
thereof.
Past Due Rate means, on any day, a rate per annum equal to the lesser
of (i) the Ceiling Rate for that day or (ii) the Base Rate plus five percent
(5%).
PBGC means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
Permitted Investments means: (a) readily marketable securities issued
or fully guaranteed by the United States of America with maturities of not more
than one year; (b) commercial paper rated "Prime 1" by ▇▇▇▇▇'▇ Investors
Service, Inc. or AA-1" by Standard and Poor's Ratings Services with maturities
of not more than 180 days; (c) participation interests in Borrowed Money
Indebtedness acquired through a program provided by any Lender, if the maturity
of any such interest does not exceed 180 days, and (d) certificates of deposit
or repurchase obligations issued by (1) any Lender; (2) any U.S. domestic bank
having capital surplus of at least $100,000,000; or (3) any other financial
institution acceptable to Agent, all of the foregoing not having a maturity of
more than one year from the date of issuance thereof.
Permitted Liens means each of the following: (a) artisans' or
mechanics' Liens arising in the ordinary course of business, and Liens for
taxes, but only to the extent that payment thereof shall not at the time be due
or if due, the payment thereof is being diligently contested in good faith and
adequate reserves computed in accordance with GAAP have been set aside therefor;
(b) Liens in effect on the Closing Date and disclosed to the Lenders in the
financial statements delivered on or prior to the Closing Date pursuant to
Section 6.2 hereof or otherwise in writing before the date hereof, provided that
neither the principal amount of Borrowed Money Indebtedness secured thereby nor
the Property covered thereby shall increase after the Closing Date without the
prior written consent of the Majority Lenders; (c) normal encumbrances and
restrictions on title which do not secure Borrowed Money Indebtedness and which
do not have a material adverse effect on the value or utility of the applicable
Property; (d) Liens in favor of Agent or any Lender under the Loan Documents,
including, without limitation, Liens securing Interest Rate Risk Indebtedness
owed to one or more of the Lenders (but not to any Person which is not, at such
time, a Lender) and Liens securing the Long Term Debt on a pari passu basis with
the Obligations; (e) Liens incurred or deposits made in the ordinary course of
business (1) in connection with workmen's compensation, unemployment insurance,
social security and other like laws, or (2) to secure insurance in the ordinary
course of business, the performance of bids, tenders, contracts, leases,
licenses, statutory obligations, surety, appeal and performance bonds and other
similar obligations incurred in the ordinary course of business, not, in any of
the cases specified in this clause (2), incurred in
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connection with the borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of Property; (f) attachments, judgments and other
similar Liens arising in connection with court proceedings, provided that the
execution and enforcement of such Liens are effectively stayed and the claims
secured thereby are being actively contested in good faith with adequate
reserves made therefor in accordance with GAAP and would not otherwise cause a
Default or an Event of Default; (g) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and vendors' liens, incurred in good
faith in the ordinary course of business and securing obligations which are not
yet due or which are being contested in good faith by appropriate proceedings if
adequate reserves with respect thereto are maintained in accordance with GAAP;
(h) zoning restrictions, easements, licenses, reservations, provisions,
covenants, conditions, waivers, and restrictions on the use of Property, and
which do not in any case singly or in the aggregate materially impair the
present use or value of the Property subject to any such restriction or
materially interfere with the ordinary conduct of the business of any Obligor;
(i) Liens securing purchase money Indebtedness permitted under Section 8.1
hereof and covering the Property so purchased and improvements or accessions
thereto; (j) capital leases and sale/leaseback transactions permitted under the
other provisions of this Agreement; and (k) extensions, renewals and
replacements of Liens referred to in clauses (a) through (j) of this definition;
provided that any such extension, renewal or replacement Lien shall be limited
to the Property or assets covered by the Lien extended, renewed or replaced and
that the Borrowed Money Indebtedness secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the amount of the
Indebtedness secured by the Lien extended, renewed or replaced.
Permitted Liens on Collateral means each of the following: (a)
artisans' or mechanics' Liens arising in the ordinary course of business, and
Liens for taxes, but only to the extent that payment thereof shall not at the
time be due or if due, the payment thereof is being diligently contested in good
faith and adequate reserves computed in accordance with GAAP have been set aside
therefor; (b) Liens expressly described in the relevant Security Document; (c)
Liens in favor of Agent or any Lender under the Loan Documents, including,
without limitation, Liens securing Interest Rate Risk Indebtedness owed to one
or more of the Lenders (but not to any Person which is not, at such time, a
Lender); and (d) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business and securing obligations which are not yet due or
which are being contested in good faith by appropriate proceedings if adequate
reserves with respect thereto are maintained in accordance with GAAP.
Person means any individual, Corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity.
Plan means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code and is either (a) maintained by Borrower or any member of the Controlled
Group for employees of Borrower or any member of the Controlled Group or (b)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
Borrower or any member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.
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Pledge means the security agreement, in Proper Form, in favor of the
Agent in connection with the Obligations, covering the investment securities
described therein.
Prime Rate means, on any day, the prime rate for that day as determined
from time to time by Bank One. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate or a favored rate, and Bank One,
Agent and each Lender disclaims any statement, representation or warranty to the
contrary. Bank One, Agent or any Lender may make commercial loans or other loans
at rates of interest at, above or below the Prime Rate.
Principal Office means the principal office of Agent, presently located
at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Proper Form means in form and substance reasonably satisfactory to
Agent.
Property means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
Quarterly Dates means the last day of each March, June, September and
December, provided that if any such date is not a Business Day, then the
relevant Quarterly Date shall be the immediately preceding Business Day.
Quarterly Financial Statements means the quarterly financial statements
of a Person, which statements shall include a balance sheet as of the end of
such fiscal quarter and an income statement and a statement of cash flows for
such fiscal quarter and for the fiscal year to date, subject to normal year-end
adjustments, all setting forth in comparative form the corresponding figures as
of the end of and for the corresponding fiscal quarter of the preceding year,
prepared in accordance with GAAP in all material respects except that such
statements are condensed and exclude detailed footnote disclosures and certified
by the chief financial officer or other authorized officer of such Person as
fairly presenting, in all material respects, the financial condition of such
person as of such date. Quarterly Financial Statements shall also include
unaudited consolidating financial statements for the applicable Person, in
Proper Form, certified by the chief financial officer or other authorized
officer of such Person as true, correct and complete in all material respects.
Rate Designation Date means that Business Day which is (a) in the case
of Base Rate Borrowings, 11:00 a.m., Houston, Texas time, on the date of such
borrowing and (b) in the case of LIBOR Borrowings, 11:00 a.m., Houston, Texas
time, on the date three LIBOR Business Days preceding the first day of any
proposed Interest Period.
Rate Designation Notice means a written notice substantially in the
form of Exhibit 1.01A.
Regulation D means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and includes any successor or
other regulation relating to reserve requirements applicable to member banks of
the Federal Reserve System.
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Reimbursement Obligations means, as at any date, the obligations of
Borrower then outstanding, or which may thereafter arise, in respect of Letters
of Credit under this Agreement, to reimburse the applicable Issuers for the
amount paid by such Issuers in respect of any drawing under such Letters of
Credit, which obligations shall at all times be payable in Dollars
notwithstanding any such Letter of Credit being payable in a currency other than
Dollars.
Rent Expense means, for any period, any rental or lease expense of
Borrower and its Subsidiaries (other than any such expense in respect of any
capitalized lease) computed on a consolidated basis in accordance with GAAP.
Request for Extension of Credit means a request for extension of credit
duly executed on behalf of Borrower, appropriately completed and substantially
in the form of Exhibit 1.01B attached hereto.
Requirements of Environmental Law means all requirements imposed by any
law (including for example and without limitation The Resource Conservation and
Recovery Act and The Comprehensive Environmental Response, Compensation, and
Liability Act), rule, regulation, or order of any federal, state or local
executive, legislative, judicial, regulatory or administrative agency, board or
authority in effect at the applicable time which relate to (i) noise; (ii)
pollution, protection or clean-up of the air, surface water, ground water or
land; (iii) solid, gaseous or liquid waste generation, treatment, storage,
disposal or transportation; (iv) exposure to Hazardous Substances; (v) the
safety or health of employees; or (vi) regulation of the manufacture,
processing, distribution in commerce, use, discharge or storage of Hazardous
Substances by Borrower or any of its Subsidiaries.
Revolving Loan Availability Period means, for each Loan Lender, the
period from and including the Closing Date to (but not including) the Revolving
Loan Termination Date.
Revolving Loan Commitment means $25,000,000.00.
Revolving Loan Commitment Percentage means, as to any Lender, the
percentage set forth opposite such Lender's name on the signature pages hereof
under the caption "Revolving Loan Commitment Percentage" or otherwise provided
for in an Assignment and Acceptance Agreement.
Revolving Loan Maturity Date means March 31, 2003.
Revolving Loan Termination Date means the earlier of (a) the Revolving
Loan Maturity Date or (b) the date specified by Agent in accordance with Section
9.1 hereof.
Second Lien Deed of Trust means that certain Second Lien Deed of Trust
and Security Agreement (With Assignment of Rents) dated June 25, 1998 from the
Borrower to ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, trustee for the benefit of the Agent, upon
and covering the same real property described in
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the Deed of Trust, as amended by the Modification of Deed of Trust and Extension
Agreement dated of even date herewith.
Secretary's Certificate means a certificate, in Proper Form, of the
Secretary or an Assistant Secretary of a corporation as to (a) the resolutions
of the Board of Directors of such corporation authorizing the execution,
delivery and performance of the documents to be executed by such corporation;
(b) the incumbency and signature of the officer of such corporation executing
such documents on behalf of such corporation; and (c) the Organizational
Documents of such corporation.
Security Agreement means the security agreement, in Proper Form, in
favor of the Agent in connection with the Obligations, covering the Borrower's
Accounts, Equipment, Inventory, certain General Intangibles and the other
Property described therein.
Security Documents means this Agreement, the Deed of Trust, the
Environmental Risk Agreement, the Security Agreement, the Pledge, the Insurance
Requirements Agreement and any and all other agreements, deed of trust,
mortgages, chattel mortgages, security agreements, pledges, guaranties,
assignments of production or proceeds of production, assignments of income,
assignments of contract rights, assignments of partnership interest, assignments
of royalty interests, assignments of performance, completion or surety bonds,
standby agreements, subordination agreements, undertakings and other instruments
and Financing Statements now or hereafter executed and delivered by any Person
(other than solely by the Lender and/or any other creditor participating in the
Obligation or any collateral or security therefor) in connection with, or as
security for the payment or performance of any Obligation.
Senior Notes has the meaning ascribed to it in the definition of
Noteholder.
Stated Rate means the effective weighted per annum rate of interest
applicable to the Loans; provided, that if on any day such rate shall exceed the
Ceiling Rate for that day, the Stated Rate shall be fixed at the Ceiling Rate on
that day and on each day thereafter until the total amount of interest accrued
at the Stated Rate on the unpaid principal balances of the Notes plus the
Additional Interest equals the total amount of interest which would have accrued
if there had been no Ceiling Rate. Without notice to Borrower or any other
Person, the Stated Rate shall automatically fluctuate upward and downward in
accordance with the provisions of this definition.
Subordinated Indebtedness means all Indebtedness of a Person which has
been subordinated on terms and conditions reasonably satisfactory to the
Majority Lenders, in their sole discretion, to all Indebtedness of such Person
to Lenders, whether now existing or hereafter incurred. Indebtedness shall not
be considered as "Subordinated Indebtedness" unless and until Agent shall have
received copies of the documentation evidencing or relating to such Indebtedness
together with a subordination agreement, in Proper Form, duly executed by the
holder or holders of such Indebtedness and evidencing the terms and conditions
of subordination reasonably required by the Majority Lenders.
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Subsidiary means, as to a particular parent, any entity of which more
than 50% of the equity rights (whether outstanding capital stock or otherwise)
is at the time directly or indirectly owned by, such parent.
Tangible Net Worth shall mean total assets (valued at cost less normal
depreciation), less (a) all intangibles and (b) all liabilities (excluding
contingent and indirect liabilities), all determined in accordance with GAAP.
The term "intangibles" shall include, without limitation, (1) deferred charges;
(2) the amount of any write-up in the book value of any assets contained in any
balance sheet resulting from revaluation thereof or any write-up in excess of
the cost of such assets acquired; and (3) the aggregate of all amounts appearing
on the assets side of any such balance sheet for franchises, licenses, permits,
patents, patent applications, copyrights, trademarks, trade names, service
marks, goodwill, treasury stock, experimental or organizational expenses and
other like intangibles. The term "liabilities" shall include, without
limitation, (1) Indebtedness secured by Liens on Property of the Person with
respect to which Tangible Net Worth is being computed, whether or not such
Person is liable for the payment thereof; (2) deferred liabilities; and (3)
capital lease obligations.
Taxes shall have the meaning ascribed to it in Section 4.1(d).
Title Insurance Policies means policies of title insurance, each in
Proper Form, in a face amount satisfactory to the Agent, issued in favor of the
Agent by a title insurance company satisfactory to the Agent and insuring that
title to some or all of the real estate (as designated by the Agent) covered by
the Deed of Trust is vested in the Borrower, free and clear of any material
Lien, objection, exception or requirement, and that the relevant Deed of Trust
creates a valid first and prior Lien on all of the real estate covered thereby,
subject only to such exceptions as may be reasonably acceptable to the Agent.
Each such policy shall (a) contain a complete and accurate description of the
relevant Deed of Trust; (b) specify the recording and filing information
applicable to it; and (c) describe the real estate covered thereby identically
to the description thereof in such Deed of Trust.
Total Capitalization means the sum of, without duplication, the
Borrowed Money Indebtedness of Borrower and its Subsidiaries, on a consolidated
basis, and preferred stock and the stockholders' equity (including paid-in
capital and retained earnings) of Borrower and its Subsidiaries, determined on a
consolidated basis and in accordance with GAAP.
Unfunded Liabilities means, with respect to any Plan, at any time, the
amount (if any) by which (a) the present value of all benefits under such Plan
exceeds (b) the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent actuarial valuation report for such
Plan, but only to the extent that such excess represents a potential liability
of any member of the Controlled Group to the PBGC or a Plan under Title IV of
ERISA. With respect to multi-employer Plans, the term "Unfunded Liabilities"
shall also include contingent liability for withdrawal liability under Section
4201 of ERISA to all multi-employer Plans to which Borrower or any member of a
Controlled Group for employees of Borrower contributes in the event of complete
withdrawal from such plans.
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Voting Stock means, with respect to any Person, Capital Stock of any
class or classes of a corporation, an association or another business entity the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote in the election of corporate directors (or individuals performing similar
functions) of such Person or which permit the holders thereof to control the
management of such Person, including general partnership interests in a
partnership and membership interests in a limited liability company.
Wholly-Owned Subsidiary means any Subsidiary to the extent (i) all of
the ownership interests in such Subsidiary, other than any director's qualifying
shares mandated by applicable law, is owned directly or indirectly by Borrower
or (ii) such Subsidiary is organized in a foreign jurisdiction and is required
by the applicable laws and regulations of such foreign jurisdiction to be
partially owned by the government of such foreign jurisdiction or individual or
corporate citizens of such foreign jurisdiction in order for such Subsidiary to
transact business in such foreign jurisdiction, provided that Borrower, directly
or indirectly, owns the remaining ownership interest in such Subsidiary.
1.2 Miscellaneous. The words "hereof," "herein," and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
2. Commitments and Loans.
2.1 Loans. Each Lender severally agrees, subject to all of the terms
and conditions of this Agreement (including, without limitation, Sections 5.1
and 5.2 hereof), from time to time on or after the Closing Date and during the
Revolving Loan Availability Period, to make Loans to Borrower in an aggregate
principal amount at any one time outstanding up to but not exceeding such
Lender's Revolving Loan Commitment Percentage of the Revolving Loan Commitment
minus such Lender's percentage of all then-outstanding Letter of Credit
Liabilities (excluding Letter of Credit Liabilities which are subject to Cover).
Subject to the conditions in this Agreement, any such Loan repaid prior to the
Revolving Loan Termination Date may be reborrowed pursuant to the terms of this
Agreement; provided, that any and all such Loans shall be due and payable in
full at the end of the Revolving Loan Availability Period. The aggregate of all
Loans to be made by the Lenders in connection with a particular borrowing shall
be equal to a Minimum Advance.
2.2 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, and on the condition that aggregate Letter of Credit Liabilities
shall never exceed $5,000,000, Borrower shall have the right to, in addition to
Loans provided for in Section 2.1 hereof, utilize the Revolving Loan Commitments
from time to time during the Revolving Loan Availability Period by obtaining the
issuance of standby letters of credit for the account of Borrower if Borrower
shall so request in the notice referred to in Section 2.2(b)(i) hereof (such
standby letters of credit as any of them may be amended, supplemented, extended
or confirmed from time to time, being herein collectively called
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the "Letters of Credit"). Upon the date of the issuance of a Letter of Credit,
the applicable Issuer shall be deemed, without further action by any party
hereto, to have sold to each Lender, and each such Lender shall be deemed,
without further action by any party hereto, to have purchased from the
applicable Issuer, a participation, to the extent of such Lender's Revolving
Loan Commitment Percentage, in such Letter of Credit and the related Letter of
Credit Liabilities, which participation shall terminate on the earlier of the
expiration date of such Letter of Credit or the Revolving Loan Termination Date.
Any Letter of Credit that shall have an expiration date after the end of the
Revolving Loan Availability Period shall be subject to Cover or backed by a
standby letter of credit in form and substance, and issued by a Person,
acceptable to Agent in its sole discretion. Bank One or, with the prior approval
of Borrower and Agent, another Lender shall be the Issuer of each Letter of
Credit.
(b) Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:
(i) Borrower shall give Agent notice requesting each issuance
of a Letter of Credit hereunder as provided in Section 4.3 hereof and
shall furnish such additional information regarding such transaction as
Agent may reasonably request. Upon receipt of such notice, Agent shall
promptly notify each Lender of the contents thereof and of such
Lender's Revolving Loan Commitment Percentage of the amount of such
proposed Letter of Credit.
(ii) No Letter of Credit may be issued if after giving effect
thereto the sum of (A) the aggregate outstanding principal amount of
Loans plus (B) the aggregate Letter of Credit Liabilities would exceed
the Revolving Loan Commitment. On each day during the period commencing
with the issuance of any Letter of Credit and until such Letter of
Credit shall have expired or been terminated, the Revolving Loan
Commitment of each Lender shall be deemed to be utilized for all
purposes hereof in an amount equal to such Lender's Revolving Loan
Commitment Percentage of the amount then available for drawings under
such Letter of Credit (or any unreimbursed drawings under such Letter
of Credit).
(iii) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment thereunder, Agent shall promptly
notify Borrower and each Lender as to the amount to be paid as a result
of such demand and the payment date therefor. If at any time prior to
the earlier of the expiration date of a Letter of Credit or the
Revolving Loan Termination Date any Issuer shall have made a payment to
a beneficiary of a Letter of Credit in respect of a drawing under such
Letter of Credit, each Lender will pay to Agent immediately upon demand
by such Issuer at any time during the period commencing after such
payment until reimbursement thereof in full by Borrower, an amount
equal to such Lender's Revolving Loan Commitment Percentage of such
payment, together with interest on such amount for each day from the
date of demand for such payment (or, if such demand is made after 11:00
a.m. Houston time on such date, from the next succeeding Business Day)
to the date of payment by such Lender of such amount at a rate of
interest per annum equal to the Federal Funds Rate for such period. To
the extent that it is ultimately determined that Borrower is
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relieved of its obligation to reimburse the applicable Issuer because
of such Issuer's gross negligence or willful misconduct in determining
that documents received under any applicable Letter of Credit comply
with the terms thereof or otherwise, the applicable Issuer shall be
obligated to refund to the paying Lenders all amounts paid to such
Issuer to reimburse Issuer for the applicable drawing under such Letter
of Credit.
(iv) Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse Agent, on the date on which Agent
notifies Borrower of the date and amount of any payment by the Issuer
of any drawing under a Letter of Credit, for the amount paid by any
Issuer upon such drawing, without presentment, demand, protest or other
formalities of any kind, all of which are hereby waived. Such
reimbursement may, subject to satisfaction of the conditions in
Sections 5.1 and 5.2 hereof and to the Revolving Loan Commitment (after
adjustment in the same to reflect the elimination of the corresponding
Letter of Credit Liability), be made by the borrowing of Loans. Agent
will pay to each Lender such Lender's Revolving Loan Commitment
Percentage of all amounts received from Borrower for application in
payment, in whole or in part, of the Reimbursement Obligation in
respect of any Letter of Credit, but only to the extent such Lender has
made payment to Agent in respect of such Letter of Credit pursuant to
clause (iii) above.
(v) Borrower will pay to Agent at the Principal Office for the
account of each Lender a letter of credit fee with respect to each
Letter of Credit equal to the greater of (x) $250 or (y) the Margin
Percentage for LIBOR Borrowings per annum, never to exceed 1.75% per
annum, multiplied by the daily average amount available for drawings
under each Letter of Credit (and computed on the basis of the actual
number of days elapsed in a year composed of 360 days), in each case
for the period from and including the date of issuance of such Letter
of Credit to and including the date of expiration or termination
thereof, such fee to be due and payable in advance on the date of the
issuance thereof. Agent will pay to each Lender, promptly after
receiving any payment in respect of letter of credit fees referred to
in this clause (v), an amount equal to the product of such Lender's
Revolving Loan Commitment Percentage times the amount of such fees. In
addition to and cumulative of the above described fees, Borrower shall
pay to Agent, for the account of the applicable Issuer, in advance on
the date of the issuance of the applicable Letter of Credit, a fee in
an amount equal to 1/8% of the face amount of the applicable Letter of
Credit (such fee to be retained by the applicable Issuer for its own
account).
(vi) The issuance by the applicable Issuer of each Letter of
Credit shall, in addition to the conditions precedent set forth in
Section 5 hereof, be subject to the conditions precedent (A) that such
Letter of Credit shall be in such form and contain such terms as shall
be reasonably satisfactory to Agent, and (B) that Borrower shall have
executed and delivered such Applications and other instruments and
agreements relating to such Letter of Credit as Agent shall have
reasonably requested and are not inconsistent with the terms of this
Agreement. In the event of a conflict between the terms of this
Agreement and the terms of any Application, the terms hereof shall
control.
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(vii) Issuer will send to Borrower and each Lender,
immediately upon issuance of any Letter of Credit issued by Issuer or
any amendment thereto, a true and correct copy of such Letter of Credit
or amendment.
(c) Indemnification; Release. Borrower hereby indemnifies and holds
harmless Agent, each Lender and each Issuer from and against any and all claims
and damages, losses, liabilities, costs or expenses which Agent, such Lender or
such Issuer may incur (or which may be claimed against Agent, such Lender or
such Issuer by any Person whatsoever), REGARDLESS OF WHETHER CAUSED IN WHOLE OR
IN PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, in connection with
the execution and delivery of any Letter of Credit or transfer of or payment or
failure to pay under any Letter of Credit; provided that Borrower shall not be
required to indemnify any party seeking indemnification for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (i) the willful misconduct or gross negligence of the party seeking
indemnification, or (ii) the failure by the party seeking indemnification to pay
under any Letter of Credit after the presentation to it of a request required to
be paid under applicable law. Borrower agrees not to hold Agent, each Lender and
each Issuer that has performed its obligations hereunder for any claim, cause of
action, damage, loss, liability, reasonable costs or expenses which may now
exist or may hereafter arise, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART
BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, by reason of or in
connection with the failure of any other Lender to fulfill or comply with its
obligations to Agent, such Lender or such Issuer, as the case may be, hereunder
(but nothing herein contained shall affect any rights Borrower may have against
such defaulting Lender). Nothing in this Section 2.2(c) is intended to limit the
obligations of Borrower under any other provision of this Agreement or the
obligations of Agent and each Lender under the last sentence of Section 11.4
hereof.
2.3 Terminations or Reductions of Commitments.
(a) Mandatory. On the Revolving Loan Termination Date, all Revolving
Loan Commitments shall be terminated in their entirety.
(b) No Reinstatement. No termination or reduction of the Revolving Loan
Commitments may be reinstated without the written approval of Agent and the
Lenders.
2.4 Commitment Fees.
(a) Borrower shall pay to Agent for the account of each Lender
revolving loan commitment fees for the period from the Closing Date to and
including the Revolving Loan Termination Date at a rate per annum equal to the
Commitment Fee Percentage. Such revolving loan commitment fees shall be computed
(on the basis of the actual number of days elapsed in a year composed of 360
days) on each day and shall be based on the excess of (x) the aggregate amount
of each Lender's Revolving Loan Commitment for such day over (y) the sum of (i)
the aggregate unpaid principal balance of such Lender's Note on such day plus
(ii) such Lender's Revolving Loan Percentage of the aggregate Letter of Credit
Liabilities for such day. Accrued revolving loan
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commitment fees shall be payable in arrears on the Quarterly Dates prior to the
Revolving Loan Termination Date and on the Revolving Loan Termination Date.
(b) All past due fees payable under this Section shall bear interest at
the Past Due Rate.
2.5 Several Obligations. The failure of any Lender to make any Loan to
be made by it on the date specified therefor shall not relieve any other Lender
of its obligation to make its Loan on such date, but neither Agent nor any
Lender shall be responsible or liable for the failure of any other Lender to
make a Loan to be made by such other Lender or to participate in, or co-issue,
any Letter of Credit. Notwithstanding anything contained herein to the contrary,
(a) no Lender shall be required to make or maintain Loans at any time
outstanding if as a result the total Obligations to such Lender shall exceed the
lesser of (1) such Lender's Revolving Loan Commitment Percentage of all
Obligations and (2) such Lender's Revolving Loan Commitment Percentage of the
Revolving Loan Commitment and (b) if a Lender fails to make a Loan as and when
required hereunder, then upon each subsequent event which would otherwise result
in funds being paid to the defaulting Lender, the amount which would have been
paid to the defaulting Lender shall be divided among the non-defaulting Lenders
ratably according to their respective shares of the outstanding Revolving Loan
Commitment Percentages until the Obligations of each Lender (including the
defaulting Lender) are equal to such Lender's Revolving Loan Commitment
Percentage of the total Obligations.
2.6 Notes. The Loans made by each Lender shall be evidenced by a single
Note of Borrower in substantially the form of Exhibit 2.6 hereto payable to the
order of such Lender in a principal amount equal to the Revolving Loan
Commitment of such Lender, and otherwise duly completed. The promissory notes
described in this Section are each, together with all renewals, extensions,
modifications and replacements thereof and substitutions therefor, called a
"Note" and collectively called the "Notes". Each Lender is hereby authorized by
Borrower to endorse on the schedule (or a continuation thereof) that may be
attached to each Note of such Lender, to the extent applicable, the date,
amount, type of and the applicable period of interest for each Loan made by such
Lender to Borrower hereunder, and the amount of each payment or prepayment of
principal of such Loan received by such Lender, provided, that any failure by
such Lender to make any such endorsement shall not affect the obligations of
Borrower under such Note or hereunder in respect of such Loan.
2.7 Use of Proceeds. The proceeds of the Loans shall be used to
refinance Indebtedness outstanding under the 1998 Loan Agreement, support the
issuance of Letters of Credit, for working capital and general corporate
purposes. Neither Agent nor any Lender shall have any responsibility as to the
use of any Letter of Credit or any proceeds of the Loans. The Borrower
represents and warrants to the Lenders and the Agent that all Loans will be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use, as such terms are used in
Chapter 1D or in the Texas Finance Code.
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3. Borrowings, Payments, Prepayments and Interest Options.
3.1 Borrowings. Borrower shall give Agent a Request for Extension of
Credit to be made hereunder as provided in Section 4.3 hereof and Agent shall
promptly notify each Lender of such request. Not later than 11:00 a.m. Houston
time on the date specified for each such borrowing hereunder, each Lender shall
make available the amount of the Loan, if any, to be made by it on such date to
Agent at its Principal Office, in immediately available funds, for the account
of Borrower. Such amounts received by Agent will be held in an account
maintained by Borrower with Agent. The amounts so received by Agent shall,
subject to the terms and conditions of this Agreement, be made available to
Borrower by wiring or otherwise transferring, in immediately available funds,
such amount to an account reasonably designated by Borrower.
3.2 Prepayments.
(a) Optional Prepayments. Except as provided in Section 3.3 hereof,
Borrower shall have the right to prepay, on any Business Day, in whole or in
part, without the payment of any penalty or fee, any Loans at any time or from
time to time, provided that Borrower shall give Agent notice of each such
prepayment as provided in Section 4.3 hereof. Each optional prepayment on a Loan
shall be in an amount equal to a Minimum Advance.
(b) Borrower shall from time to time on demand by Agent prepay the
Loans, provide Cover for Letter of Credit Liabilities or both in such amounts as
shall be necessary so that at all times the aggregate outstanding amount of all
Obligations (excluding Letter of Credit Liabilities which are subject to Cover)
shall be less than or equal to the Revolving Loan Commitment.
(c) Interest Payments. Accrued and unpaid interest on the unpaid
principal balance of the Loans shall be due and payable on the Interest Payment
Dates.
(d) Payments and Interest on Reimbursement Obligations. Borrower will
pay to Agent for the account of each Lender the amount of each Reimbursement
Obligation on the date on which Agent notifies Borrower of the date and amount
of the applicable payment by the Issuer of any drawing under a Letter of Credit.
The amount of any Reimbursement Obligation may, if the applicable conditions
precedent specified in Sections 5.1 and 5.2 hereof have been satisfied, be paid
with the proceeds of Loans. Subject to Section 11.7 hereof, Borrower will pay to
Agent for the account of each Lender interest at the applicable Past Due Rate on
any Reimbursement Obligation and on any other amount payable by Borrower
hereunder to or for the account of such Lender (but, if such amount is interest,
only to the extent legally allowed), which shall not be paid in full within five
(5) days after the date due (whether at stated maturity, by acceleration or
otherwise), for the period commencing on the expiration of such five (5) day
period until the same is paid in full.
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3.3 Interest Options
(a) Options Available. The outstanding principal balance of the Notes
shall bear interest at the Base Rate; provided, that (1) all past due amounts,
both principal and accrued interest, shall bear interest at the Past Due Rate,
and (2) subject to the provisions hereof, Borrower shall have the option of
having all or any portion of the principal balances of the Notes from time to
time outstanding bear interest at a Eurodollar Rate. The records of Agent and
each of the Lenders with respect to Interest Options, Interest Periods and the
amounts of Loans to which they are applicable shall be prima facie evidence of
the correctness thereof. Interest on the Loans shall be calculated at the Base
Rate except where it is expressly provided pursuant to this Agreement that a
Eurodollar Rate or the Past Due Rate is to apply. Interest on the amount of each
advance against the Notes shall be computed on the amount of that advance and
from the date it is made. Notwithstanding anything in this Agreement to the
contrary, for the full term of the Notes the interest rate produced by the
aggregate of all sums paid or agreed to be paid to the holders of the Notes for
the use, forbearance or detention of the debt evidenced thereby (including all
interest on the Notes at the Stated Rate plus the Additional Interest) shall not
exceed the Ceiling Rate.
(b) Designation and Conversion. Borrower shall have the right to
designate or convert its Interest Options in accordance with the provisions
hereof. So long as no Event of Default has occurred and is continuing and
subject to the last sentence of Section 3.3(a) and the provisions of Section
3.3(c), Borrower may elect to have a Eurodollar Rate apply or continue to apply
to all or any portion of the principal balance of the Notes. Each change in
Interest Options shall be a conversion of the rate of interest applicable to the
specified portion of the Loans, but such conversion shall not change the
respective outstanding principal balances of the Notes. The Interest Options
shall be designated or converted in the manner provided below:
(i) Borrower shall give Agent telephonic notice, promptly
confirmed by a Rate Designation Notice (and Agent shall
promptly inform each Lender thereof). Each such telephonic and
written notice shall specify the amount of the Loan which is
the subject of the designation; the amount of borrowings into
which such borrowings are to be converted or for which an
Interest Option is designated; the proposed date for the
designation or conversion and the Interest Period or Periods,
if any, selected by Borrower. Such telephonic notice shall be
irrevocable and shall be given to Agent no later than the
applicable Rate Designation Date.
(ii) No more than five (5) LIBOR Borrowings shall be in effect with
respect to the Loans at any time.
(iii) Each designation or conversion of a LIBOR Borrowing shall
occur on a LIBOR Business Day.
(iv) Except as provided in Section 3.3(c) hereof, no LIBOR
Borrowing shall be converted to a Base Rate Borrowing or
another LIBOR Borrowing on any day other than the last day of
the applicable Interest Period.
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(v) Each request for a LIBOR Borrowing shall be in the amount
equal to a Minimum Advance.
(vi) Each designation of an Interest Option with respect to the
Notes shall apply to all of the Notes ratably in accordance
with their respective outstanding principal balances. If any
Lender assigns an interest in any of its Notes when any LIBOR
Borrowing is outstanding with respect thereto, then such
assignee shall have its ratable interest in such LIBOR
Borrowing.
(c) Special Provisions Applicable to LIBOR Borrowings.
(i) Options Unlawful. If the adoption of any applicable Legal
Requirement after the Closing Date or any change after the
Closing Date in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental
Authority or compliance by any Lender with any request or
directive (whether or not having the force of law) issued
after the Closing Date by any central bank or other
Governmental Authority shall at any time make it unlawful or
impossible for any Lender to permit the establishment of or to
maintain any LIBOR Borrowing, the commitment of such Lender to
establish or maintain such LIBOR Borrowing shall forthwith be
canceled and Borrower shall forthwith, upon demand by Agent to
Borrower, (1) convert the LIBOR Borrowing of such Lender with
respect to which such demand was made to a Base Rate
Borrowing; (2) pay all accrued and unpaid interest to date on
the amount so converted; and (3) pay any amounts required to
compensate each Lender for any additional cost or expense
which any Lender may incur as a result of such adoption of or
change in such Legal Requirement or in the interpretation or
administration thereof and any Funding Loss which any Lender
may incur as a result of such conversion. If, when Agent so
notifies Borrower, Borrower has given a Rate Designation
Notice specifying a LIBOR Borrowing but the selected Interest
Period has not yet begun, as to the applicable Lender such
Rate Designation Notice shall be deemed to be of no force and
effect, as if never made, and the balance of the Loans made by
such Lender specified in such Rate Designation Notice shall
bear interest at the Base Rate until a different available
Interest Option shall be designated in accordance herewith.
(ii) Increased Cost of Borrowings. If the adoption after the
Closing Date of any applicable Legal Requirement or any change
after the Closing Date in any applicable Legal Requirement or
in the interpretation or administration thereof by any
Governmental Authority or compliance by any Lender with any
request or directive (whether or not having the force of law)
issued after the Closing Date by any central bank or
Governmental Authority shall at any time as a result of any
portion of the principal balances of the Notes being
maintained on the basis of a Eurodollar Rate:
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(1) subject any Lender to any Taxes, or any deduction or
withholding for any Taxes, on or from any payment due
under any LIBOR Borrowing or other amount due
hereunder, other than income and franchise taxes (or
taxes in lieu thereof) of the United States or its
political subdivisions or such other jurisdiction in
which the applicable Lender has its principal office
or applicable lending office; or
(2) change the basis of taxation of payments due from
Borrower to any Lender under any LIBOR Borrowing
(otherwise than by a change in the rate of taxation
of the overall net income of such Lender); or
(3) impose, modify, increase or deem applicable any
reserve requirement (excluding that portion of any
reserve requirement included in the calculation of
the applicable Eurodollar Rate), special deposit
requirement or similar requirement (including, but
not limited to, state law requirements and Regulation
D) against assets of any Lender, or against deposits
with any Lender, or against loans made by any Lender,
or against any other funds, obligations or other
property owned or held by any Lender; or
(4) impose on any Lender any other condition regarding
any LIBOR Borrowing;
and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such LIBOR Borrowing, or
reduce the amount of principal or interest received by any Lender, then, within
15 Business Days after demand by Agent (accompanied by a statement setting forth
in reasonable detail the applicable Lender's basis therefor), Borrower shall pay
to Agent additional amounts which shall compensate each Lender for such
increased cost or reduced amount. The determination by any Lender of the amount
of any such increased cost, increased reserve requirement or reduced amount
shall be prima facie evidence of the correctness thereof. Borrower shall have
the right, if it receives from Agent any notice referred to in this paragraph,
upon three Business Days' notice to Agent (which shall notify each affected
Lender), either (i) to repay in full (but not in part) any borrowing with
respect to which such notice was given, together with any accrued interest
thereon, or (ii) to convert the LIBOR Borrowing which is the subject of the
notice to a Base Rate Borrowing; provided, that any such repayment or conversion
shall be accompanied by payment of (x) the amount required to compensate each
Lender for the increased cost or reduced amount referred to in the preceding
paragraph; (y) all accrued and unpaid interest to date on the amount so repaid
or converted; and (z) any Funding Loss which any Lender may incur as a result of
such repayment or conversion. Each Lender will notify Borrower through Agent of
any event occurring after the date of this Agreement which will entitle such
Lender to compensation pursuant to this Section as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation, and
(if so requested by Borrower through Agent) will designate a different lending
office of such Lender for the applicable LIBOR Borrowing or will take such other
action as Borrower may reasonable request if such designation or action is
consistent with the internal policy of such Lender and legal and regulatory
restrictions, will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
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disadvantageous to such Lender (provided that such Lender shall have no
obligation so to designate a different lending office which is located in the
United States of America).
(iii) Inadequacy of Pricing and Rate Determination. If, for any
reason with respect to any Interest Period, Agent (or, in the
case of clause 3 below, the applicable Lender) shall have
determined (which determination shall be prima facie evidence
of the correctness thereof) that:
(1) Agent is unable through its customary general
practices to determine any applicable Eurodollar
Rate, or
(2) by reason of circumstances affecting the applicable
market, generally, Agent is not being offered
deposits in United States dollars in such market, for
the applicable Interest Period and in an amount equal
to the amount of any applicable LIBOR Borrowing
requested by Borrower, or
(3) as a result of LIBOR market conditions generally, any
applicable Eurodollar Rate will not adequately and
fairly reflect the cost to any Lender of making and
maintaining such LIBOR Borrowing hereunder for any
proposed Interest Period,
then Agent shall give Borrower notice thereof and thereupon, (A) any Rate
Designation Notice previously given by Borrower designating the applicable LIBOR
Borrowing which has not commenced as of the date of such notice from Agent shall
be deemed for all purposes hereof to be of no force and effect, as if never
given, and (B) until Agent shall notify Borrower that the circumstances giving
rise to such notice from Agent no longer exist, each Rate Designation Notice
requesting the applicable Eurodollar Rate shall be deemed a request for a Base
Rate Borrowing, and any applicable LIBOR Borrowing then outstanding shall be
converted, without any notice to or from Borrower, upon the termination of the
Interest Period then in effect with respect to it, to a Base Rate Borrowing.
(iv) Funding Losses. Borrower shall indemnify each Lender against
and hold each Lender harmless from any Funding Loss. This
indemnity shall survive the payment of the Notes. A
certificate of such Lender (explaining in reasonable detail
the amount and calculation of the amount claimed) as to any
additional amounts payable pursuant to this paragraph
submitted to Borrower shall be prima facie evidence of the
correctness thereof.
(d) Funding Offices; Adjustments Automatic; Calculation Year. Any
Lender may, if it so elects, fulfill its obligation as to any LIBOR Borrowing by
causing a branch or affiliate of such Lender to make such Loan and may transfer
and carry such Loan at, to or for the account of any branch office or affiliate
of such Lender; provided, that in such event for the purposes of this Agreement
such Loan shall be deemed to have been made by such Lender and the obligation of
Borrower to repay such Loan shall nevertheless be to such Lender and shall be
deemed held by it for
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the account of such branch or affiliate. Without notice to Borrower or any other
Person, each rate required to be calculated or determined under this Agreement
shall automatically fluctuate upward and downward in accordance with the
provisions of this Agreement. Interest at the Prime Rate shall be computed on
the basis of the actual number of days elapsed in a year consisting of 365 or
366 days, as the case may be. All other interest required to be calculated or
determined under this Agreement shall be computed on the basis of the actual
number of days elapsed in a year consisting of 360 days, unless the Ceiling Rate
would thereby be exceeded, in which event, to the extent necessary to avoid
exceeding the Ceiling Rate, the applicable interest shall be computed on the
basis of the actual number of days elapsed in the applicable calendar year in
which accrued.
(e) Funding Sources. Notwithstanding any provision of this Agreement to
the contrary, each Lender shall be entitled to fund and maintain its funding of
all or any part of the Loans in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all determinations hereunder
shall be made as if each Lender had actually funded and maintained each LIBOR
Borrowing during each Interest Period through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the Eurodollar Rate for such Interest Period.
4. Payments; Pro Rata Treatment; Computations, Etc.
4.1 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts to be made by
Borrower hereunder, under the Notes and under the other Loan Documents shall be
made in Dollars, in immediately available funds, to Agent at the Principal
Office (or in the case of a successor Agent, at the principal office of such
successor Agent in the United States), not later than 11:00 a.m. Houston time on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day). Agent, or any Lender for whose account any such payment is made,
may (but shall not be obligated to) debit the amount of any such payment which
is not made by such time to any ordinary deposit account of Borrower with Agent
or such Lender, as the case may be, in the event that Borrower has not otherwise
paid Agent all amounts that are due.
(b) Borrower shall, at the time of making each payment hereunder, under
any Note or under any other Loan Document, specify to Agent the Loans or other
amounts payable by Borrower hereunder or thereunder to which such payment is to
be applied. Each payment received by Agent hereunder, under any Note or under
any other Loan Document for the account of a Lender shall be paid promptly to
such Lender, in immediately available funds. If Agent fails to send to any
Lender the applicable amount by the close of business on the date any such
payment is received by Agent if such payment is received prior to 11:00 a.m.
Houston time (or on the next succeeding Business Day with respect to payments
which are received after 11:00 a.m. Houston time), Agent shall pay to the
applicable Lender interest on such amount from such date at the Federal Funds
Rate. Borrower, the Lenders and Agent acknowledge and agree that this provision
and each other provision
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of this Agreement or any of the other Loan Documents relating to the application
of amounts in payment of the Obligations shall be subject to the provisions of
Section 4.2(d) regarding pro rata application of amounts after an Event of
Default shall have occurred and be continuing.
(c) If the due date of any payment hereunder or under any Note falls on
a day which is not a Business Day, the due date for such payments (except as
otherwise provided in Section 3.3 hereof) shall be extended to the next
succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension.
(d) All payments by Borrower hereunder or under any other Loan Document
shall be made free and clear of and without deduction for or on account of any
present or future income, stamp, or other taxes, fees, duties, withholding or
other charges of any nature whatsoever imposed by any taxing authority excluding
in the case of each Lender taxes imposed on or measured by its net income or
franchise taxes (or taxes in lieu thereof) imposed by the jurisdiction in which
it is organized or through which it acts for purposes of this Agreement (such
non-excluded items being hereinafter referred to as "Taxes"). If as a result of
any change in law (or the interpretation thereof having the force of law) after
the date that the applicable Lender became a "Lender" under this Agreement any
withholding or deduction from any payment to be made to, or for the account of,
a Lender by Borrower hereunder or under any other Loan Document is required in
respect of any Taxes pursuant to any applicable law, rule, or regulation, then
Borrower will (i) pay to the relevant authority the full amount required to be
so withheld or deducted; (ii) to the extent available, promptly forward to Agent
an official receipt or other documentation reasonably satisfactory to Agent
evidencing such payment to such authority; and (iii) pay to Agent, for the
account of each affected Lender, such additional amount or amounts as are
necessary to ensure that the net amount actually received by such Lender will
equal the full amount such Lender would have received had no such withholding or
deduction been required. Each Lender shall determine such additional amount or
amounts payable to it (which determination shall be prima facie evidence of the
correctness thereof). If a Lender becomes aware that any such withholding or
deduction from any payment to be made by Borrower hereunder or under any other
Loan Document is required, then such Lender shall promptly notify Agent and
Borrower thereof stating the reasons therefor and the additional amount required
to be paid under this Section. Each Lender shall execute and deliver to Agent
and Borrower such forms as it may be required to execute and deliver pursuant to
Section 11.13 hereof. To the extent that any such withholding or deduction
results from the failure of a Lender to provide a form required by Section 11.13
hereof (unless such failure is due to some prohibition under applicable Legal
Requirements), Borrower shall have no obligation to pay the additional amount
required by clause (iii) above. Anything in this Section notwithstanding, if any
Lender elects to require payment by Borrower of any material amount under this
Section, Borrower may, within 60 days after the date of receiving notice thereof
and so long as no Default shall have occurred and be continuing, elect to
terminate such Lender as a party to this Agreement; provided that, concurrently
with such termination Borrower shall (i) if Agent and each of the other Lenders
shall consent, pay that Lender all principal, interest and fees and other
amounts owed to such Lender through such date of termination or (ii) have
arranged for another financial institution approved by Agent (such approval not
to be unreasonably withheld) as of such date, to become a substitute Lender for
all purposes under this Agreement in the manner provided in Section 11.6;
provided, further, that, prior to
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substitution for any Lender, Borrower shall have given written notice to Agent
of such intention and the Lenders shall have the option, but no obligation, for
a period of 60 days after receipt of such notice, to increase their Commitments
in order to replace the affected Lender in lieu of such substitution.
4.2 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) each borrowing from the Lenders under Section 2.1 hereof shall be made
ratably from the Lenders in accordance with their respective Revolving Loan
Commitments; (b) each payment of revolving loan commitment fees shall be made
for the account of the Lenders, and each termination or reduction of the
Revolving Loan Commitments of the Lenders under Section 2.3 hereof shall be
applied, pro rata, according to the Lenders' respective Revolving Loan
Commitments; (c) each payment by Borrower of principal of or interest on the
Loans shall be made to Agent for the account of the Lenders pro rata in
accordance with the respective unpaid principal amounts of such Loans held by
the Lenders; and (d) the Lenders (other than the applicable Issuer) shall
purchase from the applicable Issuer participations in each Letter of Credit to
the extent of their respective Revolving Loan Commitment Percentages.
4.3 Certain Actions, Notices, Etc. Notices to Agent of any termination
or reduction of Revolving Loan Commitments and of borrowings and optional
prepayments of Loans and requests for issuances of Letters of Credit shall be
irrevocable and shall be effective only if received by Agent not later than
11:00 a.m. Houston time on the number of Business Days prior to the date of the
relevant termination, reduction, borrowing and/or prepayment specified below:
Number of Business Days
Prior Notice
-----------------------
Termination or Reduction of Revolving Loan Commitments 5
Loan repayment Same day
Borrowing at the Base Rate Same day
Letter of Credit issuance 2
Prepayments required pursuant to Section 3.2(b) Same day
Selection of a Eurodollar Rate 3 LIBOR Business Days
Each such notice of termination or reduction shall specify the amount of the
applicable Revolving Loan Commitment to be terminated or reduced. Each such
notice of borrowing or prepayment shall specify the amount of the Loans to be
borrowed or prepaid and the date of borrowing or prepayment (which shall be a
Business Day). Agent shall promptly notify the affected Lenders of the contents
of each such notice.
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4.4 Non-Receipt of Funds by Agent. Unless Agent shall have been
notified by a Lender or Borrower (the "Payor") prior to the date on which such
Lender is to make payment to Agent of the proceeds of a Loan (or funding of a
drawing under a Letter of Credit or reimbursement with respect to any drawing
under a Letter of Credit) to be made by it hereunder or Borrower is to make a
payment to Agent for the account of one or more of the Lenders, as the case may
be (such payment being herein called the "Required Payment"), which notice shall
be effective upon receipt, that the Payor does not intend to make the Required
Payment to Agent, Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to Agent, the recipient of such
payment (or, if such recipient is the beneficiary of a Letter of Credit,
Borrower and, if Borrower fails to pay the amount thereof to Agent forthwith
upon demand, the Lenders ratably in proportion to their respective Revolving
Loan Commitment Percentages) shall, on demand, pay to Agent the amount made
available by Agent, together with interest thereon in respect of the period
commencing on the date such amount was so made available by Agent until the date
Agent recovers such amount at a rate per annum equal to the Federal Funds Rate
for such period.
4.5 Sharing of Payments, Etc. If a Lender shall obtain payment of any
principal of or interest on any Loan made by it under this Agreement, on any
Reimbursement Obligation or on any other Obligation then due to such Lender
hereunder, through the exercise of any right of set-off (including, without
limitation, any right of setoff or lien granted under Section 9.2 hereof),
banker's lien, counterclaim or similar right, or otherwise, it shall promptly
purchase from the other Lenders participations in the Loans made, or
Reimbursement Obligations or other Obligations held, by the other Lenders in
such amounts, and make such other adjustments from time to time as shall be
equitable to the end that all the Lenders shall share the benefit of such
payment (net of any expenses which may be incurred by such Lender in obtaining
or preserving such benefit) pro rata in accordance with the unpaid Obligations
then due to each of them. To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
Lender so purchasing a participation in the Loans made, or Reimbursement
Obligations or other Obligations held, by other Lenders may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans, or
Reimbursement Obligations or other Obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower.
5. Conditions Precedent.
5.1 Initial Loans and Letters of Credit. The obligation of each Lender
or each Issuer to make its initial Loans or issue or participate in a Letter of
Credit (if such Letter of Credit is issued prior to the funding of the initial
Loans) hereunder is subject to the following conditions precedent, each of which
shall have been fulfilled or waived to the reasonable satisfaction of Agent. The
parties
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hereto acknowledge that certain of said conditions were fulfilled at the time of
execution of the 1998 Loan Agreement, and to the extent agreed by Agent and
Borrower, said conditions need not be duplicated. Until such time as each of
said conditions is fulfilled, the 1998 Loan Agreement shall remain in effect and
upon fulfillment of said conditions, this Agreement shall automatically become
effective and shall, at such time, amend, restate and supercede the 1998 Loan
Agreement.
(a) Authorization and Status. Agent shall have received from the
appropriate Governmental Authorities certified copies of the Organizational
Documents (other than by-laws) of each Obligor, and evidence satisfactory to
Agent of all action taken by each Obligor authorizing the execution, delivery
and performance of the Loan Documents and all other documents related to this
Agreement to which it is a party (including, without limitation, a certificate
of the secretary of each such party which is a corporation setting forth the
resolutions of its Board of Directors authorizing the transactions contemplated
thereby and attaching a copy of its bylaws), together with such certificates as
may be appropriate to demonstrate the qualification and good standing of and
payment of taxes by each Obligor in the jurisdiction of its organization and in
each other jurisdiction where the failure in which to qualify would have a
material adverse effect on the business, condition (financial or otherwise),
operations or Properties of any Obligor.
(b) Incumbency. Each Obligor shall have delivered to Agent a
certificate in respect of the name and signature of each of the officers (i) who
is authorized to sign on its behalf the applicable Loan Documents related to any
Loan or the issuance of any Letter of Credit and (ii) who will, until replaced
by another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with any Loan or the issuance of any Letter
of Credit. Agent and each Lender may conclusively rely on such certificates
until they receive notice in writing from the applicable Obligor to the
contrary.
(c) Notes. Agent shall have received the appropriate Notes of Borrower
for each Lender, duly completed and executed, including that certain note in the
original principal amount of $10,000,000.
(d) Loan Documents. Each Obligor shall have duly executed and delivered
the other Loan Documents to which it is a party (including the execution of a
Guaranty by each domestic Subsidiary of the Borrower if requested in accordance
with Section 7.11 hereof) in such number of copies as Agent shall have
requested. Each such Loan Document shall be in substantially the form furnished
to the Lenders prior to their execution of this Agreement, together with such
changes therein as Agent may approve.
(e) Fees and Expenses. Borrower shall have paid to Agent all unpaid
fees in the amounts previously agreed upon in writing among Borrower and Agent;
and shall have in addition paid to Agent all amounts payable under Section 11.3
hereof, on or before the date of this Agreement, except for amounts which Agent,
in its sole discretion, agrees may be paid at a later date.
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(f) Insurance. Borrower shall have delivered to Agent certificates of
insurance reasonably satisfactory to Agent evidencing the existence of all
insurance required to be maintained by each Obligor by this Agreement and the
Security Documents.
(g) Opinions of Counsel. Agent shall have received such opinions of
counsel to Obligors as Agent shall reasonably request with respect to Obligors
and the Loan Documents.
(h) Consents. Agent shall have received evidence satisfactory to the
Lenders that all material consents of each Governmental Authority and of each
other Person, if any, reasonably required in connection with (a) the Loans and
the Letters of Credit and (b) the execution, delivery and performance of this
Agreement and the other Loan Documents have been satisfactorily obtained.
(i) Borrower shall have received at least $30,000,000 net proceeds from
an initial public offering of Borrower's stock.
(j) Lien Priority. The Borrower shall have delivered to the Agent the
Title Insurance Policies and such other evidence as to the priority of the
Agent's Liens on the Collateral as the Agent or any Lender may reasonably
request.
(k) Modifications to Deeds of Trust. The Borrower shall have delivered
to the Agent modifications to the Deed of Trust and the Second Lien Deed of
Trust, reflecting the Revolving Loan Maturity Date and containing such other
provisions and in a form satisfactory to Agent.
(l) Other Documents. Agent shall have received such other documents
consistent with the terms of this Agreement and relating to the transactions
contemplated hereby as Agent may reasonably request, including, without
limitation, P(9)b.3 modification endorsements to the existing title policy
insuring the Deed of Trust.
5.2 All Loans and Letters of Credit. The obligation of each Lender to
make any Loan to be made by it hereunder or to issue or participate in any
Letter of Credit is subject to (a) the accuracy, in all material respects, on
the date of such Loan or such issuance of all representations and warranties of
each Obligor contained in this Agreement and the other Loan Documents (other
than those which became inaccurate because of transactions permitted under the
Loan Documents and consummated after the date of the relevant representation);
(b) Agent shall have received the following, all of which shall be duly executed
and in Proper Form: (1) a Request for Extension of Credit as to the Loan or the
Letter of Credit, as the case may be, no later than 11:00 a.m. Houston time on
the Business Day on which such Request for Extension of Credit must be given
under Section 4.3 hereof, (2) in the case of a Letter of Credit, an Application,
and (3) such other documents as Agent may reasonably require; (c) prior to the
making of such Loan or the issuance of such Letter of Credit, there shall have
occurred no material adverse change in the assets, liabilities, financial
condition, business or affairs of Borrower and the Obligors, on a consolidated
basis; (d) no Default or Event of Default shall have occurred and be continuing;
(e) the making of such Loan or the issuance of such Letter of Credit shall not
be illegal or prohibited by any Legal Requirement; and (f) Borrower shall have
paid all fees and expenses of the type described in Section 11.3 hereof and
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all other fees owed to Agent or any Lender under the Loan Documents which are
due and payable, in each case, prior to or on the date of such Loan or such
issuance. The submission by Borrower of a Request for Extension of Credit shall
be deemed to be a representation and warranty that the conditions precedent to
the applicable Loan or Letter of Credit have been satisfied.
6. Representations and Warranties.
To induce the Lenders to enter into this Agreement and to make the
Loans and issue or participate in the Letters of Credit, Borrower represents and
warrants (such representations and warranties to survive any investigation and
the making of the Loans and the issuance of any Letters of Credit) to the
Lenders and Agent as follows:
6.1 Organization. Each Obligor (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization; (b)
has all necessary power and authority to conduct its business as presently
conducted, and (c) is duly qualified to do business and in good standing in the
jurisdiction of its organization and in all jurisdictions in which the failure
to so qualify would reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations or Properties of
any Obligor.
6.2 Financial Statements. Borrower has furnished to Agent (i) audited
financial statements (including a balance sheet) as to Borrower which fairly
present in all material respects, in accordance with GAAP, the consolidated
financial condition and the results of operations of Borrower as at the end of
Borrower's fiscal year ended December 31, 1999, (ii) unaudited consolidating
financial statements (including a balance sheet) as to Borrower which fairly
present in all material respects, in accordance with GAAP, the financial
condition and the results of operations of Borrower, on a consolidating basis,
as at the end of Borrower's fiscal year ended December 31, 1999 and (iii)
unaudited financial statements (including a balance sheet) as to Borrower which
fairly present in all material respects, in accordance with GAAP, the
consolidated financial condition and the results of operations of Borrower as at
the end of Borrower's fiscal quarter ended June 30, 2000. No events, conditions
or circumstances have occurred from the date that the financial statements were
delivered to Agent through the Closing Date which would cause said financial
statements to be misleading in any material respect. There are no material
instruments or liabilities which should be reflected in such financial
statements provided to Agent which are not so reflected.
6.3 Enforceable Obligations; Authorization. The Loan Documents are
legal, valid and binding obligations of each applicable Obligor, enforceable in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency and other similar laws and judicial decisions affecting creditors'
rights generally and by general equitable principles. The execution, delivery
and performance of the Loan Documents by the Obligors party thereto (a) have all
been duly authorized by all necessary action on the part of the Obligors; (b)
are within the power and authority of each applicable Obligor; (c) do not and
will not contravene or violate any Legal Requirement applicable to any
applicable Obligor or the Organizational Documents of any applicable Obligor,
the contravention or violation of which would reasonably be expected to have a
material adverse effect
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on the business, condition (financial or otherwise), operations or Properties of
any Obligor; (d) do not and will not result in the breach of, or constitute a
default under, any material agreement or instrument by which any Obligor or any
of its Property may be bound; and (e) do not and will not result in the creation
of any Lien upon any Property of any Obligor, except in favor of Agent or as
expressly contemplated therein. All necessary permits, registrations and
consents for such making and performance have been obtained.
6.4 Other Debt. Neither Borrower nor any of its Subsidiaries is in
default in the payment of any other Indebtedness or under any agreement,
mortgage, deed of trust, security agreement or lease to which it is a party and
which default would reasonably be expected to have a material adverse effect on
(a) the business, condition (financial or otherwise), operations or Properties
of any Obligor; (b) the business, condition (financial or otherwise), operations
or Properties of Borrower and its Subsidiaries taken as a whole; or (c) the
ability of any Obligor to perform its respective obligations under any Loan
Document to which it is a party.
6.5 Litigation. There is no litigation or administrative proceeding, to
the knowledge of any executive officer of any Obligor, pending or threatened
against, nor any outstanding judgment, order or decree against, any Obligor
before or by any Governmental Authority which does or would reasonably be
expected to have a material adverse effect on (a) the business, condition
(financial or otherwise), operations or Properties of any Obligor; (b) the
business, condition (financial or otherwise), operations or Properties of
Borrower and its Subsidiaries taken as a whole; or (c) the ability of any
Obligor to perform its respective obligations under any Loan Document to which
it is a party. No Obligor is in default with respect to any judgment, order or
decree of any Governmental Authority where such default would have a material
adverse effect on the business, condition (financial or otherwise), operations
or Properties of any Obligor. No Subsidiary of Borrower is in default with
respect to any judgment, order or decree of any Governmental Authority where
such default would have a material adverse effect on the business, condition
(financial or otherwise), operations or Properties of Borrower and its
Subsidiaries taken as a whole.
6.6 Title. Borrower and each of its Subsidiaries has good and
marketable title to its material Property, free and clear of all Liens except
Permitted Liens. The Liens of the Security Documents will constitute valid and
perfected first and prior Liens on the Collateral, subject to no other Liens
whatsoever other than Permitted Liens on Collateral.
6.7 Taxes. Borrower and each of its Subsidiaries has filed all tax
returns required to have been filed and paid all taxes shown thereon to be due,
except those for which extensions have been obtained or those which are being
contested in good faith.
6.8 Regulations G, U and X. None of the proceeds of any Loan will be
used for the purpose of purchasing or carrying directly or indirectly any margin
stock or for any other purpose would constitute this transaction a "purpose
credit" within the meaning of Regulations G, U and X of the Board of Governors
of the Federal Reserve System, as any of them may be amended from time to time.
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6.9 Subsidiaries. As of the Closing Date, Borrower has no Subsidiaries
other than those set forth on Exhibit 6.9 hereto.
6.10 No Untrue or Misleading Statements. No representation or warranty
made by Borrower in any Loan Document or in any document, instrument or other
writing furnished to the Lenders by or on behalf of any Obligor in connection
with the transactions contemplated in any Loan Document does or will contain any
untrue material statement of fact or will omit to state any such fact (of which
any executive officer of any Obligor has knowledge) necessary to make the
representations, warranties and other statements contained herein or in such
other document, instrument or writing not misleading in any material respect.
6.11 ERISA. With respect to each Plan, Borrower and each member of the
Controlled Group have fulfilled their obligations under Title IV of ERISA and
the minimum funding standards of ERISA and the Code. No event has occurred which
could result in a liability of Borrower or any member of the Controlled Group to
the PBGC or a Plan (other than to make contributions in the ordinary course)
that would reasonably be expected to have a material adverse effect on the
Properties, liabilities, condition (financial or otherwise), business or
operations of any Obligor. There have not been any nor are there now existing
any events or conditions that would cause the Lien provided under Section 4068
of ERISA to attach to any Property of Borrower or any member of the Controlled
Group. No "prohibited transaction" has occurred with respect to any Plan.
6.12 Investment Company Act. No Obligor is an investment company within
the meaning of the Investment Company Act of 1940, as amended, or, directly or
indirectly, controlled by or acting on behalf of any Person which is an
investment company, within the meaning of said Act.
6.13 Public Utility Holding Company Act. No Obligor is an "affiliate"
or a "subsidiary company" of a "public utility company," or a "holding company,"
or an "affiliate" or a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
6.14 Solvency. None of Borrower, any Obligor, or Borrower and its
Subsidiaries, on a consolidated basis, is "insolvent," as such term is used and
defined in (i) the Bankruptcy Code and (ii) the fraudulent conveyance statutes
of the State of Texas.
6.15 Fiscal Year. The fiscal year of each Obligor ends on December 31.
6.16 Compliance. Each Obligor is in compliance with all Legal
Requirements applicable to it, except to the extent that the failure to comply
therewith would not reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations or Properties of
any Obligor or the ability of any Obligor to perform its obligations under this
Agreement or the Loan Documents to which it is a party. Each Subsidiary of
Borrower is in compliance with all Legal Requirements applicable to it, except
to the extent that the failure to comply therewith would not reasonably be
expected to have a material adverse effect on the
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business, condition (financial or otherwise), operations or Properties of
Borrower and its Subsidiaries taken as a whole.
6.17 Environmental Matters.
(a) Each Obligor has, to the best knowledge of its executive officers,
obtained and maintained in effect all Environmental Permits (or the applicable
Person has initiated the necessary steps to transfer the Environmental Permits
into its name or obtain such permits), the failure to obtain which would
reasonably be expected to have a material adverse effect on the Properties,
liabilities, condition (financial or otherwise), business or operations of such
Obligor. Each Obligor and its Properties, business and operations have been and
are, to the best knowledge of its executive officers, in compliance with all
applicable Requirements of Environmental Law and Environmental Permits the
failure to comply with which would reasonably be expected to have a material
adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of such Obligor. Each Obligor and its
Properties, business and operations are not subject to any (A) Environmental
Claims or (B) to the best knowledge of its executive officers (after making
reasonable inquiry of the personnel and records of such Obligor), Environmental
Liabilities, in either case direct or contingent, arising from or based upon any
act, omission, event, condition or circumstance occurring or existing on or
prior to the date hereof which would reasonably be expected to have a material
adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of such Obligor. None of the officers of any
Obligor has received any notice of any violation or alleged violation of any
Requirements of Environmental Law or Environmental Permit or any Environmental
Claim in connection with its Properties, liabilities, condition (financial or
otherwise), business or operations which would reasonably be expected to have a
material adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of such Obligor. Borrower does not know of
any event or condition with respect to currently enacted Requirements of
Environmental Laws presently scheduled to become effective in the future with
respect to any of the Properties of any Obligor which would reasonably be
expected to have a material adverse effect on the Properties, liabilities,
condition (financial or otherwise), business or operations of such Obligor, for
which such Obligor has not made good faith provisions in its business plan and
projections of financial performance.
(b) Each Subsidiary of Borrower has, to the best knowledge of such
Subsidiary's executive officers, obtained and maintained in effect all
Environmental Permits (or the applicable Person has initiated the necessary
steps to transfer the Environmental Permits into its name or obtain such
permits), the failure to obtain which would reasonably be expected to have a
material adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of Borrower and its Subsidiaries taken as a
whole. Each Subsidiary of Borrower and such Subsidiary's Properties, business
and operations have been and are, to the best knowledge of such Subsidiary's
executive officers, in compliance with all applicable Requirements of
Environmental Law and Environmental Permits the failure to comply with which
would reasonably be expected to have a material adverse effect on the
Properties, liabilities, condition (financial or otherwise), business or
operations of Borrower and its Subsidiaries taken has a whole. Each Subsidiary
of Borrower and such Subsidiary's Properties, business and operations are not
subject to any (A) Environmental
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Claims or (B) to the best knowledge of its executive officers (after making
reasonable inquiry of the personnel and records of such Obligor), Environmental
Liabilities, in either case direct or contingent, arising from or based upon any
act, omission, event, condition or circumstance occurring or existing on or
prior to the date hereof which would reasonably be expected to have a material
adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of Borrower and its Subsidiaries taken as a
whole. None of the officers of any Subsidiary of Borrower has received any
notice of any violation or alleged violation of any Requirements of
Environmental Law or Environmental Permit or any Environmental Claim in
connection with its Properties, liabilities, condition (financial or otherwise),
business or operations which would reasonably be expected to have a material
adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of Borrower and its Subsidiaries taken as a
whole. Borrower does not know of any event or condition with respect to
currently enacted Requirements of Environmental Laws presently scheduled to
become effective in the future with respect to any of the Properties of any
Subsidiary of Borrower which would reasonably be expected to have a material
adverse effect on the Properties, liabilities, condition (financial or
otherwise), business or operations of Borrower and its Subsidiaries taken as a
whole, for which Borrower has not made good faith provisions in its business
plan and projections of financial performance for Borrower and its Subsidiaries
taken as a whole.
7. Affirmative Covenants.
Borrower covenants and agrees with Agent and the Lenders that prior to
the termination of this Agreement it will do or cause to be done, and cause each
of its Subsidiaries (unless limited by the language of the applicable provision
to less than all of such Subsidiaries) to do or cause to be done, each and all
of the following:
7.1 Taxes, Existence, Regulations, Property, Etc. At all times (a) pay
when due all taxes and governmental charges of every kind upon it or against its
income, profits or Property, unless and only to the extent that the same shall
be contested diligently in good faith and adequate reserves in accordance with
GAAP have been established therefor; (b) do all things necessary to preserve its
existence, qualifications, rights and franchises in all jurisdictions where such
failure to qualify would reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise), operations or
Properties of (1) any Obligor or (2) Borrower and its Subsidiaries taken as a
whole; (c) comply with all applicable Legal Requirements (including without
limitation Requirements of Environmental Law) in respect of the conduct of its
business and the ownership of its Property, the noncompliance with which would
reasonably be expected to have a material adverse effect on (1) the business,
condition (financial or otherwise), operations or Properties of (A) any Obligor;
or (B) Borrower and its Subsidiaries taken as a whole, or (2) the ability of any
Obligor to perform its obligations under any Loan Document to which it is a
party; and (d) cause its Property to be protected, maintained and kept in good
repair and make all replacements and additions to such Property as may be
reasonably necessary to conduct its business properly and efficiently.
7.2 Financial Statements and Information. Furnish to Agent and each
Lender each of the following: (a) as soon as available and in any event within
120 days after the end of each applicable
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fiscal year, beginning with the fiscal year ending on December 31, 2000, Annual
Financial Statements of Borrower; (b) as soon as available and in any event
within 45 days after the end of each fiscal quarter (other than the last fiscal
quarter) of each applicable fiscal year, Quarterly Financial Statements of
Borrower; (c) concurrently with the financial statements provided for in
Sections 7.2(a) and 7.2(b) hereof, such schedules, computations and other
information, in reasonable detail, as may be required by Agent to demonstrate
compliance with the covenants set forth herein or reflecting any non-compliance
therewith as of the applicable date, all certified and signed by the president,
the chief financial officer or the treasurer of Borrower (or other authorized
officer approved by Agent) as true and correct in all material respects to the
best knowledge of such officer and, commencing with the quarterly financial
statement prepared as of September 30, 2000, a compliance certificate
("Compliance Certificate") in the form of Exhibit 7.2 hereto, duly executed by
such authorized officer; (d) by January 31 of each fiscal year, Borrower's
annual business plan for such fiscal year (including its balance sheet and
income and cash flow projections for such fiscal year); and (e) such other
information relating to the condition (financial or otherwise), operations,
prospects or business of Borrower or any of its Subsidiaries as from time to
time may be reasonably requested by Agent.
7.3 Financial Tests. Borrower will have and maintain:
(a) Tangible Net Worth - Tangible Net Worth, at any time
during the term hereof, of not less than the sum of:
(1) the greater of: (i) $95,000,000 or (ii) the
sum of: (A) $65,971,000.00 (namely, 80% of
the Tangible Net Worth, as of June 30, 2000)
plus (B) 80% of the net proceeds realized by
the Borrower from the initial public
offering of its stock on the Effective Date,
plus
(2) 50% of the net income (if positive) of
Borrower and its Subsidiaries, on a
consolidated basis, for each Computation
Period, commencing with the Computation
Period ending December 31, 2000, plus
(3) 100% of the net proceeds (whether cash or
non-cash) realized from the issuance after
the Effective Date of any equity securities
by Borrower or its Subsidiaries to any
Person other than the Borrower or another
Subsidiary.
For purposes of this Section 7.3(a), the term "Computation
Period" shall mean (i) the period from July 1, 2000 through
December 31, 2000 and (ii) each fiscal year of the Borrower
commencing with the fiscal year ending December 31, 2001.
(b) Debt to Capitalization Ratio - a Debt to Capitalization
Ratio of not greater than 45% at any time during the term hereof.
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(c) Interest Coverage Ratio - an Interest Coverage Ratio of
not less than the amount set forth for the period ending below:
From December 31, 1999 through December 31, 2000 2.0 - 1.0
After December 31, 2000 2.5 - 1.0
(d) A Leverage Ratio of not greater than 3.0 to 1.0 at any
time during the term hereof.
7.4 Inspection. Subject to Section 11.16 hereof, permit Agent and each
Lender upon 3 days' prior notice (unless a Default or an Event of Default has
occurred which is continuing, in which case no prior notice is required) to
inspect its Property, to examine its files, books and records, except privileged
communication with legal counsel and classified governmental material, and make
and take away copies thereof, and to discuss its affairs with its officers and
accountants, all during normal business hours and at such intervals and to such
extent as Agent or such Lender may reasonably desire.
7.5 Further Assurances. Promptly execute and deliver, at Borrower's
expense, any and all other and further instruments which may be reasonably
requested by Agent to cure any defect in the execution and delivery of any Loan
Document in order to effectuate the transactions contemplated by the Loan
Documents.
7.6 Books and Records. Maintain books of record and account which
permit financial statements to be prepared in accordance with GAAP.
7.7 Insurance. Borrower will (and will cause each of its Subsidiaries
to) maintain insurance with such insurers, on such of its Property, with
responsible companies in such amounts, with such deductibles and against such
risks as are usually carried by owners of similar businesses and properties in
the same general areas in which the applicable Corporation operates or as Agent
may otherwise reasonably require, and furnish Agent satisfactory evidence
thereof promptly upon request therefor. Agent shall be provided with copies of
the policies of insurance and a certificate of the insurer that the insurance
required by this Section may not be canceled, reduced or affected in any
material manner without thirty (30) days' prior written notice to Agent. These
insurance provisions are cumulative of the insurance provisions of the Security
Documents.
7.8 Notice of Certain Matters. Give Agent written notice of the
following promptly after any executive officer of Borrower shall become aware of
the same:
(a) the issuance by any court or governmental agency or authority of
any injunction, order or other restraint prohibiting, or having the effect of
prohibiting, the performance of this Agreement, any other Loan Document, or the
making of the Loans or the initiation of any litigation, or any claim or
controversy which would reasonably be expected to result in the initiation of
any litigation, seeking any such injunction, order or other restraint;
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(b) the filing or commencement of any action, suit or proceeding,
whether at law or in equity or by or before any court or any Governmental
Authority involving claims in excess of $5,000,000 against Borrower or any of
its Subsidiaries or which may reasonably be expected to result in a Default
hereunder; and
(c) any Event of Default or Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with the respect
thereto.
Borrower will also notify Agent in writing at least 30 days prior to the date
that any Obligor changes its name or the location of its chief executive office
or principal place of business or the place where it keeps its books and
records.
7.9 Capital Adequacy. If any Lender shall have determined that the
adoption or effectiveness after the Closing Date (whether or not previously
announced) of any applicable law, rule, regulation or treaty regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof after the Closing Date by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive after the Closing Date
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency has or would have the
effect of reducing the rate of return on such Lender's capital as a consequence
of its obligations hereunder or under the Letters of Credit, the Notes or other
Obligations held by it to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, upon satisfaction of the
conditions precedent set forth in this Section, after demand by such Lender
(with a copy to Agent) as provided below, pay (subject to Section 11.7 hereof)
to such Lender such additional amount or amounts as will compensate such Lender
for such reduction. The certificate of any Lender setting forth such amount or
amounts as shall be necessary to compensate it and the basis thereof and reasons
therefor shall be delivered as soon as practicable to Borrower and shall be
prima facie evidence of the correctness thereof. Borrower shall pay the amount
shown as due on any such certificate within five (5) Business Days after the
delivery of such certificate. In preparing such certificate, a Lender may employ
such assumptions and allocations of costs and expenses as it shall in good ▇▇▇▇▇
▇▇▇▇ reasonable and may use any reasonable averaging and attribution method.
7.10 ERISA Information and Compliance. Promptly furnish to Agent (i)
immediately upon receipt, a copy of any notice of complete or partial withdrawal
liability under Title IV of ERISA and any notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any Plan,
(ii) if requested by Agent, promptly after the filing thereof with the United
States Secretary of Labor or the PBGC or the Internal Revenue Service, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (iii) immediately upon becoming aware of the occurrence of any
"reportable event," as such term is defined in Section 4043 of ERISA, for which
the disclosure requirements of Regulation Section 2615.3 promulgated by the PBGC
have not been waived, or of any "prohibited transaction," as such term is
defined in Section 4975 of the Code, in connection with any Plan or any trust
created thereunder, a written
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notice signed by the President or the principal financial officer of Borrower or
the applicable member of the Controlled Group specifying the nature thereof,
what action Borrower or the applicable member of the Controlled Group is taking
or proposes to take with respect thereto, and, when known, any action taken by
the PBGC, the Internal Revenue Service or the Department of Labor with respect
thereto, (iv) promptly after the filing or receiving thereof by Borrower or any
member of the Controlled Group of any notice of the institution of any
proceedings or other actions which may result in the termination of any Plan,
and (v) each request for waiver of the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or Section 412 of
the Code promptly after the request is submitted by Borrower or any member of
the Controlled Group to the Secretary of the Treasury, the Department of Labor
or the Internal Revenue Service, as the case may be. To the extent required
under applicable statutory funding requirements, Borrower will fund, or will
cause the applicable member of the Controlled Group to fund, all current service
pension liabilities as they are incurred under the provisions of all Plans from
time to time in effect, and comply with all applicable provisions of ERISA, in
each case, except to the extent that failure to do the same would not reasonably
be expected to have a material adverse effect on the business, condition
(financial or otherwise), operations or Properties of any Obligor. Borrower
covenants that it shall and shall cause each member of the Controlled Group to
(1) make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the contribution obligations under such Plan and the
minimum funding standards requirements of ERISA; (2) prepare and file in a
timely manner with respect to each Plan all notices and reports required under
the terms of ERISA including but not limited to annual reports; and (3) pay in a
timely manner all required PBGC premiums, in each case, except to the extent
that failure to do the same would not reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations
or Properties of any Obligor.
7.11 New Subsidiaries. Borrower will promptly notify the Agent of the
creation of any Subsidiary under the laws of the United States or any state or
territory thereof ("Domestic Subsidiary") and any Subsidiary under the laws of
any foreign jurisdiction ("Foreign Subsidiary"), and will: (i) in the case of
any Domestic Subsidiary, deliver to the Agent a stock certificate and stock
power evidencing all of the ownership of such Domestic Subsidiary held by
borrower (or any of Borrower's other Subsidiaries) and in the case of any
Foreign Subsidiary, deliver to the Agent a stock certificate and stock power
evidencing sixty-five percent (65%) of the ownership of such Foreign Subsidiary
held by Borrower (or any of Borrower's other Subsidiaries) and (ii) execute such
additional documents or modifications to the Loan Documents as required to
insure Agent holds a perfected security interest in such stock and, upon request
by the Agent, will cause any such Subsidiary to execute a Guaranty guarantying
the Obligations.
8. Negative Covenants.
Borrower covenants and agrees with Agent and the Lenders that prior to
the termination of this Agreement it will not, and will not suffer or permit any
of its Subsidiaries to, do any of the following:
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8.1 Borrowed Money Indebtedness. Create, incur, suffer or permit to
exist, or assume or guarantee, directly or indirectly, or become or remain
liable with respect to any Borrowed Money Indebtedness, whether direct,
indirect, absolute, contingent or otherwise, except the following: (a)
Indebtedness under this Agreement and the other Loan Documents, (b) the Long
Term Debt and (c) other Indebtedness allowed by Noteholder under the documents
governing the Long Term Debt.
8.2 Liens. Create or suffer to exist any Lien upon any of its Property
now owned or hereafter acquired, or acquire any Property upon any conditional
sale or other title retention device or arrangement or any purchase money
security agreement; or in any manner directly or indirectly sell, assign, pledge
or otherwise transfer any of its Accounts or General Intangibles other than
those existing as of the Closing Date and described on Exhibit 8.2; provided,
however, that Borrower and any of its Subsidiaries may create or suffer to exist
Permitted Liens and engage in transactions permitted by Section 8.4 hereof.
8.3 Contingent Liabilities. Directly or indirectly guarantee the
performance or payment of, or purchase or agree to purchase, or assume or
contingently agree to become or be secondarily liable in respect of, any
obligation or liability of any other Person except for (a) the endorsement of
checks or other negotiable instruments in the ordinary course of business; (b)
obligations disclosed to Agent in the financial statements delivered on or prior
to the Closing Date pursuant to Section 6.2 hereof (but not increases of such
obligations after the Closing Date), and (c) those liabilities permitted under
Section 8.1 hereof.
8.4 Mergers, Consolidations and Dispositions of Assets. In any single
transaction or series of transactions, directly or indirectly: (a) liquidate or
dissolve; (b) be a party to any merger or consolidation unless and so long as
(i) no Default or Event of Default has occurred that is then continuing, (ii)
immediately thereafter and giving effect thereto, no event will occur and be
continuing which constitutes a Default, (iii) an Obligor is the surviving
Person; (iv) the surviving Person ratifies and assumes each Loan Document to
which any party to such merger was a party, and (v) Agent is given at least ten
days' prior notice of such merger or consolidation; (c) sell, convey or lease
all or any part of its assets, except for (1) sales of Inventory in the ordinary
course of business; (2) dispositions of assets, including Collateral, having an
aggregate net book value (such net book value being determined immediately after
the consummation of each such disposition) during the then current fiscal year
of the Company of no more than 15% of the Total Capitalization of the Company
and the Subsidiaries minus all intangibles, as such term is defined in the
definition of Tangible Net Worth, determined as of the last day of the then most
recently ended twelve (12) month period, with the first twelve (12) month period
beginning on the Effective Date, provided, however, that the aggregate net book
value of all assets (other than (x) the real property located in Humble, Texas
subject to the Deed of Trust and the Second Lien Deed of Trust, and (y) the
California real property that has been released from the Lien of the Security
Documents) sold in accordance with the terms of this subsection (c)(2) hereof
during the term of this Agreement shall not exceed Twenty Million and No/100
Dollars ($20,000,000) and further provided that, if requested by the Borrower in
connection with any such sale and after receipt by the Agent of a letter from
the Noteholders (as said term is defined in the Collateral Agency Agreement)
confirming that the Borrower is entitled to the net proceeds of the sale of such
assets, which letter is substantially in the form of that attached
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hereto as Exhibit 8.4 or in a form reasonably satisfactory to the Agent, the
Agent, in its capacity as Agent and as Collateral Agent under the Collateral
Agency Agreement, shall execute releases as are reasonably necessary to evidence
the release of its Liens in the property so sold; provided, however, the Liens
on the real property located in Humble, Texas subject to the Deed of Trust and
the Second Lien Deed of Trust shall be released only in accordance with the
terms of said Deed of Trust and Second Lien Deed of Trust; and (3) dispositions
of Collateral (other than Inventory) in connection with the obsolescence or
replacement thereof, or (d) except for Liens in favor of Agent in its capacity
as Agent and as Collateral Agent under the Collateral Agency Agreement, pledge,
transfer or otherwise dispose of any equity interest in any of Borrower's
Subsidiaries or any Indebtedness of any of Borrower's Subsidiaries or issue or
permit any Subsidiary of Borrower to issue any additional equity interest.
8.5 Redemption, Dividends and Distributions. (a) Borrower will not, and
will not permit any of its Subsidiaries to, at any time, declare or make, or
incur any liability to declare or make, any dividend, distribution, redemption,
payment or similar item in respect of any of its shareholders or holders of its
Indebtedness (collectively, a "Restricted Payment") unless, immediately after
giving effect to such action, no Default or Event of Default would exist
(including, without limitation, under Section 7.3 hereof) and Borrower would be
permitted by the provisions of Section 8.1 hereof and Section 10.1 of the Note
Agreement to incur at least $1.00 of additional Funded Debt (other than Funded
Debt owing to a Subsidiary or Funded Debt incurred pursuant to clauses (a)
through (d), inclusive, of said Section 10.1).
(c) Notwithstanding the above, any Subsidiary may always pay dividends
of any kind to Borrower.
8.6 Nature of Business. Change the nature of its business or enter into
any business which is substantially different from the business in which it is
presently engaged.
8.7 Transactions with Related Parties. Enter into any transaction or
agreement with any officer, director or holder of any equity interest in
Borrower or any of its Subsidiaries (or any Affiliate of any such Person) other
than transactions among Obligors, unless the same is upon terms substantially
similar to (or more favorable to the relevant Obligor than) those obtainable
from wholly unrelated sources (to the best knowledge of the executive officers
of the applicable Corporation or Affiliate, after making reasonable inquiry of
the personnel and records of the applicable Corporation or Affiliate).
8.8 Loans and Investments. Make any loan, advance, extension of credit
or capital contribution to, or make or have any Investment in, any Person, or
make any commitment to make any such extension of credit or Investment, except
(a) Permitted Investments; (b) Investments disclosed to Agent in the financial
statements delivered on or prior to the Closing Date pursuant to Section 6.2
hereof (but not increases in such Investments after the Closing Date); (c)
Investments in any Obligor; (d) advances to Subsidiaries which are not Obligors,
but the aggregate of such advances may not exceed $5,000,000 at any one time
outstanding; and (e) normal and reasonable advances in the ordinary course of
business to directors, officers and employees.
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8.9 Intentionally omitted.
8.10 Organizational Documents. Amend, modify, restate or supplement any
of its Organizational Documents if such action would reasonably be expected to
materially and adversely affect any Loan or Obligation or the abilities of
Borrower to perform its Obligations under any Loan Document, unless such action
shall be consented to in writing by Agent.
8.11 Unfunded Liabilities. Allow any Unfunded Liabilities after the
Closing Date to arise or exist in an aggregate amount in excess of $8,000,000.
8.12 Operating Lease Expenses. Incur operating lease expenses
(excluding lease payments under capital leases) for Borrower and its
Subsidiaries in the aggregate in any fiscal year in excess of $5,000,000.
8.13 Subordinated Indebtedness. Except as expressly permitted by the
relevant subordination agreement or in writing by the Majority Lenders, amend,
modify or obtain or grant a waiver of any provision of any document or
instrument evidencing any Subordinated Indebtedness or prepay, purchase, redeem,
retire or otherwise acquire for value, deposit any monies with any Person with
respect to or make any payment or prepayment of the principal of or any other
amount owing in respect of, any Subordinated Indebtedness.
8.14 Negative Pledges. Enter into any agreement or contract which
limits or restricts in any way the granting of Cover.
8.15 Amendment to Long Term Debt. Borrower will not (i) shorten the
maturity of the Long Term Debt, or (ii) amend any of the financial covenants in
any documents evidencing, describing or securing the Long Term Debt, or any
other Indebtedness permitted hereby, in any way that is less favorable to
Borrower than the comparable terms that exist in the Loan Agreement or the Loan
Documents.
9. Defaults and Remedies.
9.1 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur, then Agent may (and at the
direction of the Majority Lenders, shall) do any or all of the following: (1)
without notice to Borrower or any other Person, declare the Revolving Loan
Commitments terminated (whereupon the Revolving Loan Commitments shall be
terminated) and/or accelerate the Revolving Loan Termination Date to a date as
early as the date of termination of the Revolving Loan Commitments; (2)
terminate any Letter of Credit allowing for such termination, by sending a
notice of termination as provided therein and require Borrower to provide Cover
for outstanding Letters of Credit; (3) declare the principal amount then
outstanding of and the unpaid accrued interest on the Loans and Reimbursement
Obligations and all fees and all other amounts payable hereunder, under the
Notes and under the other Loan Documents to be forthwith due and payable,
whereupon such amounts shall be and become immediately due and payable,
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without notice (including, without limitation, notice of acceleration and notice
of intent to accelerate), presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by Borrower; provided that in
the case of the occurrence of an Event of Default with respect to any Obligor
referred to in clause (f), (g) or (h) of this Section 9.1, the Revolving Loan
Commitments shall be automatically terminated and the principal amount then
outstanding of and unpaid accrued interest on the Loans and the Reimbursement
Obligations and all fees and all other amounts payable hereunder, under the
Notes and under the other Loan Documents shall be and become automatically and
immediately due and payable, without notice (including, without limitation,
notice of acceleration and notice of intent to accelerate), presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by Borrower; and (4) exercise any or all other rights and remedies
available to Agent or any of the Lenders under the Loan Documents, at law or in
equity:
(a) Payments - (i) any Obligor shall fail to make any payment
or required prepayment of any installment of principal on the Loans or
any Reimbursement Obligation payable under the Notes, this Agreement or
the other Loan Documents when due or (ii) any Obligor fails to make any
payment or required prepayment of interest with respect to the Loans,
any Reimbursement Obligation or any other fee or amount under the
Notes, this Agreement or the other Loan Documents when due and such
failure to pay continues unremedied for a period of five days; or
(b) Other Obligations - Borrower or any of its Subsidiaries
shall default in the payment when due of any principal of or interest
on any Indebtedness having an outstanding principal amount of at least
$5,000,000 including, without limitation, the Long Term Debt (other
than the Loans and Reimbursement Obligations) and such default shall
continue beyond any applicable period of grace; or any event or
condition shall occur which results in the acceleration of the maturity
of any such Indebtedness or enables (or, with the giving of notice or
lapse of time or both, would enable) the holder of any such
Indebtedness or any Person acting on such holder's behalf to accelerate
the maturity thereof and such event or condition shall not be cured
within any applicable period of grace; or
(c) Representations and Warranties - any representation or
warranty made or deemed made by or on behalf of any Obligor in this
Agreement or any other Loan Document or in any certificate furnished or
made by any Obligor to Agent or the Lenders in connection herewith or
therewith shall prove to have been incorrect, false or misleading in
any material respect as of the date thereof or as of the date as of
which the facts therein set forth were stated or certified or deemed
stated or certified; or
(d) Affirmative Covenants - (i) default shall be made in the
due observance or performance of any of the covenants or agreements
contained in Section 7.3 hereof, (ii) default shall be made in the due
observance or performance of any of the covenants or agreements
contained in Sections 7.2, 7.4, 7.7 or 7.8 hereof and, in each case,
such default continues unremedied for a period of 20 days after (x)
notice thereof is given by Agent to Borrower or (y) such default
otherwise becomes known to any executive officer of Borrower,
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whichever is earlier, or (iii) default is made in the due observance or
performance of any of the other covenants and agreements contained in
Section 7 hereof or any other affirmative covenant of any Obligor
contained in this Agreement or any other Loan Document and such default
continues unremedied for a period of 30 days after (x) notice thereof
is given by Agent to Borrower or (y) such default otherwise becomes
known to any executive officer of Borrower, whichever is earlier; or
(e) Negative Covenants - default is made in the due observance
or performance by Borrower of any of the other covenants or agreements
contained in Section 8 of this Agreement or of any other negative
covenant of any Obligor contained in this Agreement or any other Loan
Document; or
(f) Involuntary Bankruptcy or Receivership Proceedings - a
receiver, conservator, liquidator or trustee of Borrower or any of its
Subsidiaries or of any of their respective Property is appointed by the
order or decree of any court or agency or supervisory authority having
jurisdiction, and such decree or order remains in effect for more than
60 days; or Borrower or any of its Subsidiaries is adjudicated bankrupt
or insolvent; or any of such Person's Property is sequestered by court
order and such order remains in effect for more than 60 days; or a
petition is filed against Borrower or any of its Subsidiaries under any
state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment or debt, dissolution, liquidation or receivership law or
any jurisdiction, whether now or hereafter in effect, and is not
dismissed within 60 days after such filing; or
(g) Voluntary Petitions or Consents - Borrower or any of its
Subsidiaries commences a voluntary case or other proceeding or order
seeking liquidation, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or other relief with
respect to itself or its debts or other liabilities under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its Property, or consents to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or fails generally to, or
cannot, pay its debts generally as they become due or takes any
corporate action to authorize or effect any of the foregoing; or
(h) Assignments for Benefit of Creditors or Admissions of
Insolvency - Borrower or any of its Subsidiaries makes an assignment
for the benefit of its creditors, or admits in writing its inability to
pay its debts generally as they become due, or consents to the
appointment of a receiver, trustee, or liquidator of such Corporation
or of all or any substantial part of its Property; or
(i) Undischarged Judgments - a final non-appealable judgment
or judgments for the payment of money exceeding, in the aggregate,
$2,000,000 (exclusive of amounts covered by insurance or indemnity) is
rendered by any court or other governmental body against Borrower or
any if its Subsidiaries and such Corporation does not discharge the
same
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or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof within 30 days from the date of entry
thereof; or
(j) Invalid Lien - the Borrower shall claim, or any court
shall find or rule, that the Agent does not have a valid Lien as
provided for herein on any material portion of the Collateral; or
(k) Collateral - the sale, encumbrance or abandonment (except
as otherwise expressly permitted by this Agreement) of any material
portion of the Collateral; or the making of any levy, seizure or
attachment thereof or thereon; or the uninsured loss, theft,
substantial damage, or destruction of any material portion of the
Collateral; or
(l) Concealment - Borrower or any of its Subsidiaries shall
have concealed, removed, or permitted to be concealed or removed, any
part of its Property, with intent to hinder, delay or defraud its
creditors or any of them, or shall have made any transfer of its
Property to or for the benefit of a creditor at a time when other
creditors similarly situated have not been paid; or
(m) Ownership Change or Encumbrance - any Person other than
Borrower shall own more than fifty percent (50%) of the outstanding
equity interest in any Subsidiary of Borrower (other than directors'
qualifying shares mandated by applicable law and, if a Subsidiary is
organized in a foreign jurisdiction and the applicable laws of such
jurisdiction require such Subsidiary to be partially owned by the
government or individual or corporate citizens of such jurisdiction in
order for such Subsidiary to transaction business in such jurisdiction,
the interest of such government and/or citizens in such Subsidiary) or
any Person shall acquire any Lien on Borrower's interest in and to the
equity interest in any Subsidiary of Borrower (other than the
Noteholder's Liens pursuant to the Security Documents on a pari passu
basis with the Lenders' Liens) or any Change of Control shall occur; or
(n) Uninsured Loss - Borrower and its Subsidiaries shall be
the subject of uninsured or unindemnified casualty losses exceeding, in
the aggregate, $5,000,000 during the term hereof; or
9.2 Right of Setoff. Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time and from time
to time, without notice to any Obligor (any such notice being expressly waived
by Borrower and the other Obligors), to setoff and apply any and all deposits
(general or special, time or demand, provisional or final (but excluding the
funds held in accounts clearly designated as escrow or trust accounts held by
Borrower or any other Obligor for the benefit of Persons which are not
Affiliates of any Obligor, whether or not such setoff results in any loss of
interest or other penalty, and including without limitation all certificates of
deposit) at any time held, and any other funds or Property at any time held, and
other Indebtedness at any time owing by such Lender to or for the credit or the
account of Borrower or any other Obligor against any and all of the Obligations
irrespective of whether or not such Lender or Agent will have made any demand
under this Agreement, the Notes or any other Loan Document. Should the right
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of any Lender to realize funds in any manner set forth hereinabove be challenged
and any application of such funds be reversed, whether by court order or
otherwise, the Lenders shall make restitution or refund to Borrower pro rata in
accordance with their Revolving Loan Commitments. Each Lender agrees to promptly
notify Borrower and Agent after any such setoff and application, provided that
the failure to give such notice will not affect the validity of such setoff and
application. The rights of Agent and the Lenders under this Section are in
addition to other rights and remedies (including without limitation other rights
of setoff) which Agent or the Lenders may have. This Section is subject to the
terms and provisions of Sections 4.5 and 11.7 hereof.
9.3 Collateral Account. Borrower hereby agrees, in addition to the
provisions of Section 9.1 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by Agent or the
Majority Lenders (through Agent), pay to Agent an amount in immediately
available funds equal to the then aggregate amount available for drawings under
all Letters of Credit issued for the account of Borrower, which funds shall be
held by Agent as Cover; Agent shall release such Cover upon Borrower's request
if (a) no Default or Event of Default then exists and (b) the release of such
Cover would not give Agent the right to demand a prepayment pursuant to Section
3.2(b) hereof.
9.4 Preservation of Security for Unmatured Reimbursement Obligations.
In the event that, following (i) the occurrence and during the continuation of
an Event of Default and the exercise of any rights available to Agent or any
Lender under the Loan Documents and (ii) payment in full of the principal amount
then outstanding of and the accrued interest on the Loans and Reimbursement
Obligations and fees and all other amounts payable hereunder and under the
Notes, any Letters of Credit shall remain outstanding and undrawn, Agent shall
be entitled to hold (and Borrower and each other Obligor hereby grants and
conveys to Agent a security interest in and to) all cash or other Property
("Proceeds of Remedies") realized or arising out of the exercise of any rights
available under the Loan Documents, at law or in equity, including, without
limitation, the proceeds of any foreclosure, as collateral for the payment of
any amounts due or to become due under or in respect of such Letters of Credit;
provided, however, that the aggregate Proceeds of Remedies may not exceed the
Obligations. Such Proceeds of Remedies shall be held for the ratable benefit of
the Lenders. The rights, titles, benefits, privileges, duties and obligations of
Agent with respect thereto shall be governed by the terms and provisions of this
Agreement. Agent may, but shall have no obligation to, invest any such Proceeds
of Remedies in such manner as Agent, in the exercise of its sole discretion,
deems appropriate. Such Proceeds of Remedies shall be applied to Reimbursement
Obligations arising in respect of any such Letters of Credit and/or the payment
of any Lender's obligations under any such Letter of Credit when such Letter of
Credit is drawn upon. Nothing in this Section shall cause or permit an increase
in the maximum amount of the Obligations permitted to be outstanding from time
to time under this Agreement.
9.5 Remedies Cumulative. To the maximum extent not prohibited by
applicable law, no remedy, right or power conferred upon Agent or any Lender is
intended to be exclusive of any other remedy, right or power given hereunder or
now or hereafter existing at law, in equity, or otherwise, and all such
remedies, rights and powers shall be cumulative.
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10. Agent.
10.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes Agent to act as its agent hereunder, under the Letters
of Credit and under the other Loan Documents with such powers as are
specifically delegated to Agent by the terms hereof and thereof, together with
such other powers as are reasonably incidental thereto. Any Loan Documents
executed in favor of Agent shall be held by Agent for the ratable benefit of the
Lenders. Agent ("Agent" as used in this Section 10 shall include reference to
its Affiliates and its own and its Affiliates' respective officers,
shareholders, directors, employees and agents) (a) shall not have any duties or
responsibilities except those expressly set forth in this Agreement, the Letters
of Credit, and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Lender;
(b) shall not be responsible to any Lender for any recitals, statements,
representations or warranties contained in this Agreement, the Letters of Credit
or any other Loan Document, or in any certificate or other document referred to
or provided for in, or received by any of them under, this Agreement, the
Letters of Credit or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, execution, filing, registration,
collectibility, recording, perfection, existence or sufficiency of this
Agreement, the Letters of Credit, or any other Loan Document or any other
document referred to or provided for herein or therein or any Property covered
thereby or for any failure by any Obligor or any other Person to perform any of
its obligations hereunder or thereunder, and shall not have any duty to inquire
into or pass upon any of the foregoing matters; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under
the Letters of Credit or any other Loan Document except to the extent requested
by the Majority Lenders; (d) shall not be responsible for any mistake of law or
fact or any action taken or omitted to be taken by it hereunder or under the
Letters or Credit or any other Loan Document or any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, including, without limitation, pursuant to its own negligence, except
for its own gross negligence or willful misconduct; (e) shall not be bound by or
obliged to recognize any agreement among or between Borrower and any Lender to
which Agent is not a party, regardless of whether Agent has knowledge of the
existence of any such agreement or the terms and provisions thereof; (f) shall
not be charged with notice or knowledge of any fact or information not herein
set out or provided to Agent in accordance with the terms of this Agreement or
any other Loan Document; (g) shall not be responsible for any delay, error,
omission or default of any mail, telegraph, cable or wireless agency or
operator; and (h) shall not be responsible for the acts or edicts of any
Governmental Authority. Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Without in any way
limiting any of the foregoing, each Lender acknowledges that Agent shall have no
greater responsibility in the operation of the Letters of Credit than is
specified in the Uniform Customs and Practice for Documentary Credits (1993
Revision, International Chamber of Commerce Publication No. 500). In any
foreclosure proceeding concerning any collateral, each holder of an Obligation
if bidding for its own account or for its own account and the accounts of other
Lenders is prohibited from including in the amount of its bid an amount to be
applied as a credit against the Obligations held by it or the Obligations held
by the other Lenders; instead, such holder must bid in cash only. However, in
any such foreclosure proceeding, Agent may (but shall not be obligated to)
submit a bid for all Lenders (including itself)
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in the form of a credit against the Obligations, and Agent or its designee may
(but shall not be obligated to) accept title to such collateral for and on
behalf of all Lenders.
10.2 Reliance. Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (which may be counsel for Borrower), independent
accountants and other experts selected by Agent. Agent shall not be required in
any way to determine the identity or authority of any Person delivering or
executing the same. As to any matters not expressly provided for by this
Agreement, the Letters of Credit, or any other Loan Document, Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions of the Majority Lenders, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. If any order, writ, judgment or decree shall be made or entered by any
court affecting the rights, duties and obligations of Agent under this Agreement
or any other Loan Document, then and in any of such events Agent is authorized,
in its sole discretion, to rely upon and comply with such order, writ, judgment
or decree which it is advised by legal counsel of its own choosing is binding
upon it under the terms of this Agreement, the relevant Loan Document or
otherwise; and if Agent complies with any such order, writ, judgment or decree,
then it shall not be liable to any Lender or to any other Person by reason of
such compliance even though such order, writ, judgment or decree may be
subsequently reversed, modified, annulled, set aside or vacated.
10.3 Defaults. Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the non-payment of principal of or interest
on Loans or Reimbursement Obligations) unless Agent has received notice from a
Lender or Borrower specifying such Default and stating that such notice is a
"Notice of Default." In the event that Agent receives such a Notice of Default,
Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such non-payment). Agent shall (subject to Section
10.7 hereof) take such action with respect to such Notice of Default as shall be
directed by the Majority Lenders and within its rights under the Loan Documents
and at law or in equity, provided that, unless and until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, permitted hereby with respect to
such Notice of Default as it shall deem advisable in the best interests of the
Lenders and within its rights under the Loan Documents, at law or in equity.
10.4 Material Written Notices. In the event that Agent receives any
written notice of a material nature from Borrower or any Obligor under the Loan
Documents, Agent shall promptly inform each of the Lenders thereof.
10.5 Rights as a Lender. With respect to its Revolving Loan Commitments
and the Loans made and Letter of Credit Liabilities, Bank One in its capacity as
a Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting in its agency
capacity, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity. Agent may (without having
to account
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therefor to any Lender) accept deposits from, lend money to and generally engage
in any kind of banking, trust, letter of credit, agency or other business with
Borrower (and any of its Affiliates) as if it were not acting as Agent, and
Agent may accept fees and other consideration from Borrower (in addition to the
fees heretofore agreed to between Borrower and Agent) for services in connection
with this Agreement or otherwise without having to account for the same to the
Lenders.
10.6 Indemnification. The Lenders agree to indemnify Agent (to the
extent not reimbursed under Section 2.2(c), Section 11.3 or Section 11.4 hereof,
but without limiting the obligations of Borrower under said Sections 2.2(c),
11.3 and 11.4), ratably in accordance with the sum of the Lenders' respective
Revolving Loan Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN
PART BY THE NEGLIGENCE OF ANY INDEMNIFIED PARTIES, which may be imposed on,
incurred by or asserted against Agent in any way relating to or arising out of
this Agreement, the Letters of Credit or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which Borrower is obligated to pay under Sections 2.2(c), 11.3 and 11.4
hereof, interest, penalties, attorneys' fees and amounts paid in settlement, but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents; provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified. The obligations of the Lenders under
this Section 10.6 shall survive the termination of this Agreement and the
repayment of the Obligations.
10.7 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has received current financial information with respect to Borrower and each
other Obligor that it has, independently and without reliance on Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and each other Obligor and
decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. Agent shall not be required to keep itself
informed as to the performance or observance by any Obligor of this Agreement,
the Letters of Credit or any of the other Loan Documents or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Obligor. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder, under the Letters of Credit or the other Loan Documents, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of any
Obligor (or any of their affiliates) which may come into the possession of
Agent.
10.8 Failure to Act. Except for action expressly required of Agent
hereunder, under the Letters of Credit or under the other Loan Documents, Agent
shall in all cases be fully justified in
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failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 10.6 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
10.9 Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving notice thereof to the Lenders and Borrower, and Agent may be removed
at any time with or without cause by the Majority Lenders; provided, that Agent
shall continue as Agent until such time as any successor shall have accepted
appointment as Agent hereunder. Upon any such resignation or removal, (i) the
Majority Lenders without the consent of Borrower shall have the right to appoint
a successor Agent so long as such successor Agent is also a Lender at the time
of such appointment and (ii) the Majority Lenders shall have the right to
appoint a successor Agent that is not a Lender at the time of such appointment
so long as Borrower consents to such appointment (which consent shall not be
unreasonably withheld). If no successor Agent shall have been so appointed by
the Majority Lenders and accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent. Any successor Agent shall be a bank which
has an office in the United States and a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under any other Loan Documents. Such successor Agent shall
promptly specify by notice to Borrower its Principal Office referred to in
Section 3.1 and Section 4 hereof. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 10 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Agent.
10.10 No Partnership. Neither the execution and delivery of this
Agreement nor any of the other Loan Documents nor any interest the Lenders,
Agent or any of them may now or hereafter have in all or any part of the
Obligations shall create or be construed as creating a partnership, joint
venture or other joint enterprise between the Lenders or among the Lenders and
Agent. The relationship between the Lenders, on the one hand, and Agent, on the
other, is and shall be that of principals and agent only, and nothing in this
Agreement or any of the other Loan Documents shall be construed to constitute
Agent as trustee or other fiduciary for any Lender or to impose on Agent any
duty, responsibility or obligation other than those expressly provided for
herein and therein.
11. Miscellaneous.
11.1 Waiver. No waiver of any Default or Event of Default shall be a
waiver of any other Default or Event of Default. No failure on the part of Agent
or any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any
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other right, power or privilege. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law or in equity.
11.2 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy
(confirmed by mail), cable or other writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof (or
provided for in an Assignment and Acceptance); or, as to any party hereto, at
such other address as shall be designated by such party in a notice (given in
accordance with this Section) (i) as to Borrower, to Agent, (ii) as to Agent, to
Borrower and to each Lender, and (iii) as to any Lender, to Borrower and Agent.
Except as otherwise provided in this Agreement, all such notices or
communications shall be deemed to have been duly given when (i) transmitted by
telex or telecopier or delivered to the telegraph or cable office, (ii)
personally delivered, (iii) one Business Day after deposit with an overnight
mail or delivery service, postage prepaid or (iv) three Business Days after
deposit in a receptacle maintained by the United States Postal Service, postage
prepaid, registered or certified mail, return receipt requested, in each case
given or addressed as aforesaid.
11.3 Expenses, Etc. Whether or not any Loan is ever made or any Letter
of Credit ever issued, Borrower shall pay or reimburse within 30 days after
written demand (a) Agent for paying the reasonable fees and expenses of legal
counsel to Agent, together with the reasonable fees and expenses of each local
counsel to Agent, in connection with the preparation, negotiation, execution and
delivery of this Agreement (including the exhibits and schedules hereto) and the
other Loan Documents and the making of the Loans and the issuance of Letters of
Credit hereunder, and any modification, supplement or waiver of any of the terms
of this Agreement, the Letters of Credit or any other Loan Document; (b) Agent
for any lien search fees; (c) Agent for reasonable out-of-pocket expenses
incurred in connection with the preparation, documentation, administration and
syndication of the Loans or any of the Loan Documents (including, without
limitation, the advertising, marketing, printing, publicity, duplicating,
mailing and similar expenses) of the Loans and Letter of Credit Liabilities; (d)
Agent for paying all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement, any Letter of Credit or any other Loan Document or
any other document referred to herein or therein; (e) Agent for paying all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any Lien contemplated
by this Agreement or any document referred to herein; and (f) following the
occurrence and during the continuation of an Event of Default (or, in connection
with the protection of the Collateral, after a Default), any Lender or Agent for
paying all amounts reasonably expended, advanced or incurred by such Lender or
Agent to satisfy any obligation of any Obligor under this Agreement or any other
Loan Document, to appraise, evaluate, monitor, administer and protect the
Collateral, to realize on the Collateral, to collect the Obligations or to
enforce, protect, preserve or defend the rights of the Lenders or Agent under
this Agreement or any other Loan Document, including, without limitation and to
the maximum extent not prohibited by applicable law, reasonable fees and
expenses incurred in connection with such Lender's or Agent's participation as a
member of a creditor's committee in a case commenced under the Bankruptcy Code
or other similar law, fees and expenses incurred in
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connection with lifting the automatic stay prescribed in Section 362 of the
Bankruptcy Code and fees and expenses incurred in connection with any action
pursuant to Section 1129 of the Bankruptcy Code and all other customary
out-of-pocket expenses incurred by such Lender or Agent in connection with such
matters, together with interest thereon at the Past Due Rate on each such amount
until the date of reimbursement to such Lender or Agent; but (x) no right or
option granted by the Borrower to the Agent or any Lender pursuant to any Loan
Document shall be deemed to impose or admit a duty on the Agent or any Lender to
supervise, monitor or control any aspect of the character or condition of any of
the Collateral or any operations conducted in connection with it for the benefit
of the Borrower or any other Person, and (y) the performance by the Agent or any
Lender of an agreement, covenant or obligation of the Borrower under any Loan
Document which the Borrower has not performed shall not be considered or
constitute a cure of such default or a waiver of the Agent's or any Lender's
right at any time after an Event of Default to exercise its rights and remedies
under the Loan Documents and applicable law. Without limiting any of the
foregoing, in addition to all other payments required hereunder, Borrower hereby
agrees to pay to Agent, for its services as Collateral Agent, the following
fees: (i) all actual out of pocket expenses incurred in its role as Collateral
Agent, (ii) an annual fee of $15,000.00, payable upon the execution of this
Agreement and on each anniversary hereof.
11.4 Indemnification. Borrower shall indemnify each of Agent, the
Lenders, and each affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY
INDEMNIFIED PARTIES, insofar as such losses, liabilities, claims or damages
arise out of or result from any (i) actual or proposed use by Borrower of the
proceeds of any extension of credit (whether a Loan or a Letter of Credit) by
any Lender hereunder; (ii) breach by any Obligor of this Agreement or any other
Loan Document; (iii) violation by any Obligor of any Legal Requirement; (iv)
investigation, litigation or other proceeding relating to any of the foregoing,
and Borrower shall reimburse Agent, each Lender, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon demand for any
reasonable expenses (including reasonable legal fees) incurred in connection
with any such investigation or proceeding; or (v) taxes (excluding income taxes
and franchise taxes) payable or ruled payable by any Governmental Authority in
respect of the Obligations or any Loan Document, together with interest and
penalties, if any; provided, however, that Borrower shall not have any
obligations pursuant to this Section with respect to any losses, liabilities,
claims, damages or expenses incurred by the Person seeking indemnification by
reason of the gross negligence or willful misconduct of that Person or with
respect to any disputes between or among any and all of Agent, Lenders and
Issuers. Nothing in this Section is intended to limit the obligations of
Borrower under any other provision of this Agreement. Agent and each Lender,
respectively, shall indemnify Borrower and hold Borrower harmless from and
against the gross negligence or willful misconduct of Agent or such Lender, as
the case may be.
11.5 Amendments, Etc. No amendment or modification of this Agreement,
the Notes or any other Loan Document shall in any event be effective against
Borrower unless the same shall be agreed or consented to in writing by Borrower.
No amendment, modification or waiver of any
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provision of this Agreement, the Notes or any other Loan Document, nor any
consent to any departure by Borrower therefrom, shall in any event be effective
against the Lenders unless the same shall be agreed or consented to in writing
by the Majority Lenders, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
that no amendment, modification, waiver or consent shall, unless in writing and
signed by each Lender affected thereby, do any of the following: (a) increase
any Revolving Loan Commitment of any of the Lenders (or reinstate any
termination or reduction of the Revolving Loan Commitments) or subject any of
the Lenders to any additional obligations; (b) reduce the principal of, or
interest on, any Loan, Reimbursement Obligation or fee payable to such Lender
hereunder; (c) postpone or extend the Revolving Loan Maturity Date, the
Revolving Loan Termination Date, the Revolving Loan Availability Period or any
scheduled date fixed for any payment of principal of, or interest on, any Loan,
Reimbursement Obligation, fee or other sum to be paid hereunder or waive any
Event of Default described in Section 9.1(a) hereof; (d) change the percentage
of any of the Revolving Loan Commitments or of the aggregate unpaid principal
amount of any of the Loans and Letter of Credit Liabilities, or the percentage
of Lenders, which shall be required for the Lenders or any of them to take any
action under this Agreement; (e) change any provision contained in Sections
2.2(c), 7.9, 11.3 or 11.4 hereof or this Section 11.5; (f) release any Person
from liability under a Guaranty; or (g) modify the provisions of Sections 4.1(b)
or 4.2 hereof regarding pro rata application of amounts after an Event of
Default shall have occurred and be continuing. Notwithstanding anything in this
Section 11.5 to the contrary, no amendment, modification, waiver or consent
shall be made with respect to Section 10 without the consent of Agent to the
extent it affects Agent, as Agent.
11.6 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrower, Agent and the Lenders and their respective successors and assigns;
provided, however, that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of all of the Lenders,
and any such assignment or transfer without such consent shall be null and void.
Each Lender may sell participations to any Person in all or part of any Loan, or
all or part of its Notes, Revolving Loan Commitments or interests in Letters of
Credit, in which event, without limiting the foregoing, the provisions of the
Loan Documents shall inure to the benefit of each purchaser of a participation;
provided, however, the pro rata treatment of payments, as described in Section
4.2 hereof, shall be determined as if such Lender had not sold such
participation. Any Lender that sells one or more participations to any Person
shall not be relieved by virtue of such participation from any of its
obligations to Borrower under this Agreement relating to the Loans. In the event
any Lender shall sell any participation, such Lender shall retain the sole right
and responsibility to enforce the obligations of Borrower relating to the Loans,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement other than amendments,
modifications or waivers with respect to (i) any fees payable hereunder to the
Lenders and (ii) the amount of principal or the rate of interest payable on, or
the dates fixed for the scheduled repayment of principal of, the Loans.
(b) Each Lender may assign to one or more Lenders or any Eligible
Assignee all or a portion of its interests, rights and obligations under this
Agreement; provided, however, that (i) the
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aggregate amount of the Revolving Loan Commitments of the assigning Lender
subject to each such assignment shall in no event be less than $5,000,000; (ii)
other than in the case of an assignment to another Lender (that is, at the time
of the assignment, a party hereto) or to an Affiliate of such Lender or to a
Federal Reserve Bank, Agent and, so long as no Event of Default shall have
occurred and be continuing, Borrower must each give its prior written consent,
which consent shall not be unreasonably withheld; and (iii) the parties to each
such assignment shall execute and deliver to Agent, for its acceptance an
Assignment and Acceptance in the form of Exhibit 11.6(b) hereto (each an
"Assignment and Acceptance") with blanks appropriately completed, together with
any Note or Notes subject to such assignment and a processing and recording fee
of $3,000 paid by the assignee (for which Borrower will have no liability). Upon
such execution, delivery and acceptance, from and after the effective date
specified in each Assignment and Acceptance (A) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (B) the Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto except in respect of provisions of this Agreement which
survive payment of the Obligations and termination of the Commitments).
Notwithstanding anything contained in this Agreement to the contrary, any Lender
may at any time assign all or any portion of its rights under this Agreement and
the Notes issued to it as collateral to a Federal Reserve Bank; provided that no
such assignment shall release such Lender from any of its obligations hereunder.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such Lender assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance or observance by Borrower of
any of its obligations under this Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 6.2 hereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon Agent, such Lender
assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents;
(v) such assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance
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with their terms all obligations that by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Lender.
(d) The entries in the records of Agent as to each Assignment and
Acceptance delivered to it and the names and addresses of the Lenders and the
Revolving Loan Commitments of, and principal amount of the Loans owing to, each
Lender from time to time shall be conclusive, in the absence of manifest error,
and Borrower, Agent and the Lenders may treat each Person the name of which is
recorded in the books and records of Agent as a Lender hereunder for all
purposes of this Agreement and the other Loan Documents.
(e) Upon Agent's receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee thereunder, together with any Note or Notes
subject to such assignment and the written consent to such assignment (to the
extent consent is required), Agent shall, if such Assignment and Acceptance has
been completed with blanks appropriately filled, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in its records and
(iii) give prompt notice thereof to Borrower. Within five Business Days after
receipt of notice, Borrower, at its own expense, shall execute and deliver to
Agent in exchange for the surrendered Notes new Notes to the order of such
assignee in an amount equal to the Revolving Loan Commitments assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained Revolving Loan Commitments hereunder, new Notes to the order of the
assigning Lender in an amount equal to the Revolving Loan Commitment retained by
it hereunder. Such new Notes shall be in an aggregate maximum principal amount
equal to the aggregate maximum principal amount of such surrendered Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the respective Note. Thereafter, such
surrendered Notes shall be marked renewed and substituted and the originals
thereof delivered to Borrower (with copies, certified by Borrower as true,
correct and complete, to be retained by Agent).
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 11.6 but
subject to Section 11.16 hereof, disclose to the assignee or participant or
proposed assignee or participant, any information relating to Borrower furnished
to such Lender by or on behalf of Borrower.
11.7 Limitation of Interest. Borrower and the Lenders intend to
strictly comply with all applicable federal and Texas laws, including applicable
usury laws (or the usury laws of any jurisdiction whose usury laws are deemed to
apply to the Notes or any other Loan Documents despite the intention and desire
of the parties to apply the usury laws of the State of Texas). Accordingly, the
provisions of this Section 11.7 shall govern and control over every other
provision of this Agreement or any other Loan Document which conflicts or is
inconsistent with this Section, even if such provision declares that it
controls. As used in this Section, the term "interest" includes the aggregate of
all charges, fees, benefits or other compensation which constitute interest
under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in
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equal parts during the full term of the Obligations. In no event shall Borrower
or any other Person be obligated to pay, or any Lender have any right or
privilege to reserve, receive or retain, (a) any interest in excess of the
maximum amount of nonusurious interest permitted under the laws of the State of
Texas or the applicable laws (if any) of the United States or of any other
jurisdiction, or (b) total interest in excess of the amount which such Lender
could lawfully have contracted for, reserved, received, retained or charged had
the interest been calculated for the full term of the Obligations at the Ceiling
Rate. The daily interest rates to be used in calculating interest at the Ceiling
Rate shall be determined by dividing the applicable Ceiling Rate per annum by
the number of days in the calendar year for which such calculation is being
made. None of the terms and provisions contained in this Agreement or in any
other Loan Document (including, without limitation, Section 9.1 hereof) which
directly or indirectly relate to interest shall ever be construed without
reference to this Section 11.7, or be construed to create a contract to pay for
the use, forbearance or detention of money at an interest rate in excess of the
Ceiling Rate. If the term of any Obligation is shortened by reason of
acceleration of maturity as a result of any Default or by any other cause, or by
reason of any required or permitted prepayment, and if for that (or any other)
reason any Lender at any time, including but not limited to, the stated
maturity, is owed or receives (and/or has received) interest in excess of
interest calculated at the Ceiling Rate, then and in any such event all of any
such excess interest shall be canceled automatically as of the date of such
acceleration, prepayment or other event which produces the excess, and, if such
excess interest has been paid to such Lender, it shall be credited pro tanto
against the then-outstanding principal balance of Borrower's obligations to such
Lender, effective as of the date or dates when the event occurs which causes it
to be excess interest, until such excess is exhausted or all of such principal
has been fully paid and satisfied, whichever occurs first, and any remaining
balance of such excess shall be promptly refunded to its payor. The Borrower,
the Lenders and the Agent expressly agree, pursuant to Chapter 346 ("Chapter
346") of the Texas Finance Code, that Chapter 346 (which relates to open-end
line of credit revolving loan accounts) shall not apply to any Loan Document or
to any Obligation, and that none of them shall be governed by Chapter 346 or
subject to its provisions in any manner whatsoever.
11.8 Survival. The obligations of Borrower under Sections 2.2(c),
2.2(d), 7.9, 11.3 and 11.4 hereof and all other obligations of Borrower in any
other Loan Document (to the extent stated therein), the obligations of each
Issuer under the last sentence of Section 2.2(b)(iii) and the obligations of the
Lenders under Sections 10.5 and 11.7 hereof, shall, notwithstanding anything
herein to the contrary, survive the repayment of the Loans and Reimbursement
Obligations and the termination of the Revolving Loan Commitments and the
Letters of Credit.
11.9 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by signing
any such counterpart.
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11.11 Governing Law. THIS AGREEMENT AND (EXCEPT AS THEREIN PROVIDED)
THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM
TIME TO TIME IN EFFECT.
11.12 Severability. Whenever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of any Loan Document shall be invalid, illegal
or unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions of such Loan Document shall not
be affected or impaired thereby.
11.13 Tax Forms. Each Lender which is organized under the laws of a
jurisdiction outside the United States shall, on the day of the initial
borrowing from each such Lender hereunder and from time to time thereafter if
requested by Borrower or Agent, provide Agent and Borrower with the forms
prescribed by the Internal Revenue Service of the United States certifying as to
such Lender's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Lender
hereunder or other documents satisfactory to such Lender, Borrower and Agent
indicating that all payments to be made to such Lender hereunder are not subject
to United States withholding tax or are subject to such tax at a rate reduced by
an applicable tax treaty. Unless Borrower and Agent shall have received such
forms or such documents indicating that payments hereunder are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, Borrower or Agent shall withhold taxes from such payments
at the applicable statutory rate.
11.14 Conflicts Between This Agreement and the Other Loan Documents. In
the event of any conflict between the terms of this Agreement and the terms of
any of the other Loan Documents, the terms of this Agreement shall control.
11.15 Limitation on Charges; Substitute Lenders; Non-Discrimination.
Anything in Section 2.2(d), 3.3(c) or 7.9 notwithstanding:
(1) Borrower shall not be required to pay to any Lender
reimbursement with regard to any costs or expenses described in such
Sections, unless such Lender notifies Borrower of such costs or
expenses within 90 days after the date paid or incurred;
(2) none of the Lenders shall be permitted to pass through to
Borrower charges and costs under such Sections on a discriminatory
basis (i.e., which are not also passed through by such Lender to other
customers of such Lender similarly situated where such customer is
subject to documents providing for such pass through); and
(3) if any Lender elects to pass through to Borrower any
material charge or cost under such Sections or elects to terminate the
availability of LIBOR Borrowings for any material period of time,
Borrower may, within 60 days after the date of such event and so long
as no Default shall have occurred and be continuing, elect to terminate
such Lender as
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a party to this Agreement; provided that, concurrently with such
termination Borrower shall (i) if Agent and each of the other Lenders
shall consent, pay that Lender all principal, interest and fees and
other amounts owed to such Lender through such date of termination or
(ii) have arranged for another financial institution approved by Agent
(such approval not to be unreasonably withheld) as of such date, to
become a substitute Lender for all purposes under this Agreement in the
manner provided in Section 11.6; provided further that, prior to
substitution for any Lender, Borrower shall have given written notice
to Agent of such intention and the Lenders shall have the option, but
no obligation, for a period of 60 days after receipt of such notice, to
increase their Revolving Loan Commitments in order to replace the
affected Lender in lieu of such substitution.
11.16 Disclosure to Other Persons; Confidentiality. Agent and each
Lender agree that it may deliver copies of any financial statements and other
documents or information delivered to it and disclose any other information
disclosed to it by or on behalf of Borrower or any Subsidiary of Borrower in
connection with or pursuant to this Agreement and the other Loan Documents only
to:
(i) its directors, officers, employees and professional
consultants, but only in connection with extensions of credit and
proposed extensions of credit to the Borrower and/or some or all of its
Subsidiaries (collectively, "Credit Transactions");
(ii) any other Lender, but only in connection with Credit
Transactions;
(iii) any Person to which such Lender offers to sell its Note
or any part thereof, provided that each such Person agrees in writing
before such disclosure to observe the confidentiality standards
described in this Section (including but not limited to the restriction
on the use of Confidential Information only in connection with Credit
Transactions);
(iv) any Person to which such Lender sells or offers to sell a
participation in all or any part of its Note, provided that each such
Person agrees in writing before such disclosure to observe the
confidentiality standards described in this Section (including but not
limited to the restriction on the use of Confidential Information only
in connection with Credit Transactions);
(v) any federal or state regulatory authority having
jurisdiction over it;
(vi) any other Person to which such delivery or disclosure may
be necessary or reasonably appropriate in response to any subpoena or
other legal process or investigative demand; and
(vii) any other Person in connection with any litigation
involving any obligation, right or remedy of Agent or any Lender under
the Loan Documents.
Subject to the foregoing, Agent and each Lender hereby agrees to use
its best efforts to hold in confidence and not to disclose any Confidential
Information; provided, that such Person will be
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free, after notice to Borrower, to correct any false or misleading information
which may become public concerning its relationship to Borrower. For the purpose
of this Section, the term "Confidential Information" shall mean information
about Borrower or any Subsidiary of Borrower furnished by Borrower or any such
Subsidiary, but does not include any information which (i) is publicly known, or
otherwise known to such holder, at the time of disclosure; (ii) subsequently
becomes publicly known, but not through any act or omission by such holder; or
(iii) otherwise becomes known to such holder other than through disclosure by
Borrower or any Subsidiary of Borrower.
The Borrower shall be entitled to equitable relief by way of injunction
if the Agent, any Lender, any Transferee or any representative of the Agent, any
Lender or any Transferee breaches or threatens to breach any of the provisions
of this Section.
11.17 Conditional Release of Collateral. (a) If at any time the
Borrower obtains an investment grade rating, same being defined as a senior
unsecured rating of (i) BBB- by Standard & Poor's Rating Services, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or (ii) Baa3 by ▇▇▇▇▇'▇ Investors Service (to the
extent a split rating prevails, the lower rating cannot be more than one level
below the higher) or (b) a National Association of Insurance Commissioners
senior unsecured rating of 2 or higher, the Agent and the Lenders agree that
Collateral shall no longer be required to secure the Obligations and all of the
Security Documents shall, upon request of the Borrower and payment by the
Borrower of all reasonable expenses incidental thereto, be released promptly. In
consideration thereof, the Borrower hereby agrees with the Agent and the
Lenders, if at any time it does not maintain such investment credit rating that
it will thereafter, promptly upon request of the Agent, execute such Security
Documents, in form and substance reasonably satisfactory to Agent and the
Majority Lenders, as Agent shall request to reinstate the liens and security
interests that exist in the Collateral under the Security Documents, as of the
Closing Date.
(b) To the extent that the Borrower has not obtained the requisite
senior unsecured credit rating as determined above, then based upon achieving
all of the following financial measurements at the end of any fiscal quarter or
year, the Collateral shall no longer be required so long as the Borrower
maintains the required financial measurements as set forth below:
(i) Minimum Interest Coverage Ratio (which shall exclude
Rent Expense in the calculation thereof) of 8.0 to
1.0
(ii) Maximum Leverage Ratio of 1.75 to 1.0
(iii) Maximum Debt to Capitalization Ratio of 35%
(iv) Minimum trailing twelve month revenues determined in
accordance with GAAP of $250MM
(v) Minimum shareholder's equity determined in accordance
with GAAP of $200MM.
(c) Notwithstanding the foregoing, in the event the Senior Notes are
still outstanding when the foregoing conditions are satisfied, the Agent and the
Lenders shall not release any Collateral pursuant to the foregoing provisions
until and unless the Noteholder (i) simultaneously
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releases its liens in and to the Collateral, (ii) agrees that, in the event the
liens and security interests are reinstated in accordance with the foregoing,
the form of security documents reinstating said liens and security interests
shall be in substantially the same form as the Security Documents, and (iii)
executes an intercreditor agreement in substantially the same form as the
Collateral Agency Agreement.
11.18 Final Agreement. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Closing Date.
HYDRIL COMPANY,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and CFO
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
71
BANK ONE, TEXAS, N.A., a national banking
association, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address for Notices:
Revolving Loan Commitment 910 ▇▇▇▇▇▇
Percentage: ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
100% Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT 1.01A
RATE DESIGNATION NOTICE
HYDRIL COMPANY, Bank One, Texas, N.A., as Agent, and certain financial
institutions executed and delivered that certain Second Amended and Restated
Loan Agreement (as amended, supplemented and restated, the "Loan Agreement")
dated as of August 25, 2000. Any term used herein and not otherwise defined
herein shall have the meaning herein ascribed to it in the Loan Agreement. In
accordance with the Loan Agreement, Borrower hereby notifies Agent of the
exercise of an Interest Option.
A. Current borrowings
1. Interest Options now in effect: _________________
2. Amounts: $_______________
3. Expiration of current Interest Periods, if applicable: ______
B. Proposed election
1. Total Amount: $________________
2. Date Interest Option is to be effective: ____________________
3. Interest Option to be applicable (check one):
[ ] Base Rate
[ ] LIBOR
4. Interest Period: (if applicable, check one)
[ ] one month
[ ] three months
[ ] six months
Exhibit 1.01A - Page 1
73
Borrower represents and warrants that the Interest Option and Interest Period
selected above comply with all provisions of the Loan Agreement and that there
exists no Event of Default or any event which, with the passage of time, the
giving of notice or both, would be an Event of Default.
Date:
-----------------------
HYDRIL COMPANY,
a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exhibit 1.01A - Page 2
74
EXHIBIT 1.01B
[LETTERHEAD OF THE BORROWER]
REQUEST FOR EXTENSION OF CREDIT
---------------------------, -------
Bank One, Texas, N.A.
------------------------------
------------------------------
------------------------------
Attention:
-------------------------------
Ladies and Gentlemen:
The undersigned hereby certify that the undersigned are the
_______________ and ____________________ of HYDRIL COMPANY, a Delaware
corporation (the "Company"), and that as such they are authorized to execute
this Request for Extension of Credit (the "Request") on behalf of the Company
pursuant to the Second Amended and Restated Loan Agreement (as it may be
amended, supplemented or restated from time to time, the "Agreement") dated as
of August 25, 2000, by and among the Company, Bank One, Texas, N.A., as Agent,
and the Lenders therein named. The (check one) [Loan] Letter of Credit being
requested hereby is to be in the amount set forth in (b) below and is requested
to be made on ___________________________________, which is a Business Day. The
undersigned further certify, represent and warrant that to the knowledge of such
officers, after due inquiry (each capitalized term used herein having the same
meaning given to it in the Agreement unless otherwise specified herein):
(a) As of the date hereof:
(1) The aggregate Revolving Loan Commitment is: $
==========
(2) The aggregate outstanding principal of the Notes,
before giving effect to the Loan, if any, requested
hereby, is: (__________)
Exhibit 1.01B - Page 1
75
(3) The Letter of Credit Liabilities as of the date
hereof, before giving effect to the Letter
of Credit, if any, requested hereby, is: (__________)
(4) The aggregate unused Revolving Loan
Commitment of all Lenders, if positive, is: $
==========
(b) If and only if the aggregate unused Revolving Loan Commitments
of all Lenders is positive, the Company hereby requests under
this Request a Loan or Letter of Credit (as indicated above)
in the amount of $______________ (which is no more than the
aggregate unused Revolving Loan Commitments of all Lenders).
(c) If a Letter of Credit is requested hereby, it should be issued
for the benefit of ___________________________________ and
should have an expiration date of _____________________ and
any special language to be incorporated into such Letter of
Credit is attached hereto. The sum of the face amount of the
requested Letter of Credit plus the Letter of Credit
Liabilities as the date hereof as specified in item (a)(5)
above does not exceed $5,000,000.
(d) The representations and warranties made in each Loan Document
are true and correct in all material respects on and as of the
time of delivery hereof, with the same force and effect as if
made on and as of the time of delivery hereof (other than
those which became inaccurate because of transactions
permitted by the Loan Documents and consummated after the date
of the relevant representation).
(e) No material adverse change in the assets, liabilities,
financial condition, business or affairs of the Company or any
of the other Obligors has occurred.
(f) After giving effect to the proposed extension of credit, the
aggregate amount of credit extended to Borrower and its
Subsidiaries by outside sources, including credit extended by
the Lenders, does not exceed $85,000,000.
(g) No Default or Event of Default has occurred and is continuing.
Thank you for your attention to this matter.
Very truly yours,
[SIGNATURES OF TWO AUTHORIZED
OFFICERS]
Exhibit 1.01B - Page 2
76
EXHIBIT 2.6
NOTE
$____________ Houston, Texas __________________, _____
FOR VALUE RECEIVED, HYDRIL COMPANY ("Maker"), a Delaware corporation,
promises to pay to the order of _______________________ ("Payee"), at the
principal office of Bank One, Texas, N.A., a national banking association, ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in immediately
available funds and in lawful money of the United States of America, the
principal sum of _________________________________ Dollars ($____________) (or
the unpaid balance of all principal advanced against this note, if that amount
is less), together with interest on the unpaid principal balance of this note
from time to time outstanding at the rate or rates provided in that certain
Second Amended and Restated Loan Agreement (as amended, supplemented, restated
or replaced from time to time, the "Loan Agreement") dated as of August 25,
2000, among Maker, certain signatory banks named therein, and Bank One, Texas,
N.A., as Agent; provided, that for the full term of this note the interest rate
produced by the aggregate of all sums paid or agreed to be paid to the holder of
this note for the use, forbearance or detention of the debt evidenced hereby
(including, but not limited to, all interest on this note at the Stated Rate
plus the Additional Interest) shall not exceed the Ceiling Rate. Any term
defined in the Loan Agreement which is used in this note and which is not
otherwise defined in this note shall have the meaning ascribed to it in the Loan
Agreement.
1. Loan Agreement; Advances. This note has been issued pursuant to the
terms of the Loan Agreement, and is one of the Notes referred to in the Loan
Agreement. Advances against this note by Payee or other holder hereof shall be
governed by the terms and provisions of the Loan Agreement. Reference is hereby
made to the Loan Agreement for all purposes. Payee is entitled to the benefits
of the Loan Agreement. The unpaid principal balance of this note at any time
shall be the total of all amounts lent or advanced against this note less the
amount of all payments or permitted prepayments made on this note and by or for
the account of Maker. All loans and advances and all payments and permitted
prepayments made hereon may be endorsed by the holder of this note on a schedule
which may be attached hereto (and thereby made a part hereof for all purposes)
or otherwise recorded in the holder's records; provided, that any failure to
make notation of (a) any advance shall not cancel, limit or otherwise affect
Maker's obligations or any holder's rights with respect to that advance, or (b)
any payment or permitted prepayment of principal shall not cancel, limit or
otherwise affect Maker's entitlement to credit for that payment as of the date
received by the holder.
2. Mandatory Payments of Principal and Interest.
(a) Accrued and unpaid interest on the unpaid principal balance of this
note shall be due and payable on the Interest Payment Dates.
Exhibit 2.6 - Page 1
77
(b) On the Revolving Loan Maturity Date, the entire unpaid principal
balance of this note and all accrued and unpaid interest on the unpaid principal
balance of this note shall be finally due and payable.
(c) All payments hereon made pursuant to this Paragraph 2 shall be
applied first to accrued interest, the balance to principal.
(d) If any payment provided for in this note shall become due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day (unless the result of such extension of time would be to extend the
date for such payment into another calendar month or beyond the Revolving Loan
Maturity Date, and in either such event such payment shall be made on the
Business Day immediately preceding the day on which such payment would otherwise
have been due), and such extension of time shall in such case be included in the
computation of interest on this note.
(e) The Loan Agreement provides for required prepayments of the
indebtedness evidenced hereby upon terms and conditions specified therein.
3. No Usury Intended; Spreading. Notwithstanding any provision to the
contrary contained in this note or any of the other Loan Documents, it is
expressly provided that in no case or event shall the aggregate of (i) all
interest on the unpaid balance of this note, accrued or paid from the date
hereof and (ii) the aggregate of any other amounts accrued or paid pursuant to
this note or any of the other Loan Documents, which under applicable laws are or
may be deemed to constitute interest upon the indebtedness evidenced by this
note from the date hereof, ever exceed the Ceiling Rate. In this connection,
Maker and Payee stipulate and agree that it is their common and overriding
intent to contract in strict compliance with applicable federal and Texas usury
laws (and the usury laws of any other jurisdiction whose usury laws are deemed
to apply to this note or any of the other Loan Documents despite the intention
and desire of the parties to apply the usury laws of the State of Texas). In
furtherance thereof, none of the terms of this note or any of the other Loan
Documents shall ever be construed to create a contract to pay, as consideration
for the use, forbearance or detention of money, interest at a rate in excess of
the Ceiling Rate. Maker or other parties now or hereafter becoming liable for
payment of the indebtedness evidenced by this note shall never be liable for
interest in excess of the Ceiling Rate. If, for any reason whatever, the
interest paid or received on this note during its full term produces a rate
which exceeds the Ceiling Rate, the holder of this note shall credit against the
principal of this note (or, if such indebtedness shall have been paid in full,
shall refund to the payor of such interest) such portion of said interest as
shall be necessary to cause the interest paid on this note to produce a rate
equal to the Ceiling Rate. All sums paid or agreed to be paid to the holder of
this note for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of this note, so
that the interest rate is uniform throughout the full term of this note. The
provisions of this Paragraph 3 shall control all agreements, whether now or
hereafter existing and whether written or oral, between Maker and Payee.
Exhibit 2.6 - Page 2
78
4. Default. The Loan Agreement provides for the acceleration of the
maturity of this note and other rights and remedies upon the occurrence of
certain events specified therein.
5. Waivers by Maker and Others. Except to the extent, if any, that
notice of default is expressly required herein or in any of the other Loan
Documents, Maker and any and all co-makers, endorsers, guarantors and sureties
severally waive notice (including, but not limited to, notice of intent to
accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its liability on
or with respect to this note shall not be affected by any release of or change
in any guaranty or security at any time existing or by any failure to perfect or
to maintain perfection of any lien against or security interest in any such
security or the partial or complete unenforceability of any guaranty or other
surety obligation, in each case in whole or in part, with or without notice and
before or after maturity.
6. Paragraph Headings. Paragraph headings appearing in this note are
for convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this note.
7. Choice of Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES
OF AMERICA FROM TIME TO TIME IN EFFECT.
8. Successors and Assigns. This note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective permitted legal representatives, heirs, successors
and assigns of Maker and Payee.
9. Records of Payments. The records of Payee shall be prima facie
evidence of the amounts owing on this note.
10. Severabilitv. If any provision of this note is held to be illegal,
invalid or unenforceable under present or future laws, the legality, validity
and enforceability of the remaining provisions of this note shall not be
affected thereby, and this note shall be liberally construed so as to carry out
the intent of the parties to it.
11. Revolving Loan. Subject to the terms and provisions of the Loan
Agreement, Maker may use all or any part of the credit provided to be evidenced
by this note at any time before the Revolving Loan Maturity Date. Maker may
borrow, repay and reborrow hereunder, and except as set forth in the Loan
Agreement there is no limitation on the number of advances made hereunder.
Exhibit 2.6 - Page 3
79
MAKER
HYDRIL COMPANY,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Exhibit 2.6 - Page 4
80
EXHIBIT 6.9
HYDRIL COMPANY
SUBSIDIARIES
% JURISDICTION OF
NAME OWNED ORGANIZATION
---- ----- ------------
Hydril Canadian Company, Ltd. 100% Canada
Hydril U.K. Ltd. 100% United Kingdom
Rototec Ltd. 100% United Kingdom
Hydril Private Ltd. 100% Singapore
Hydril S.A. de C.V. 100% Mexico
▇▇▇▇▇▇ de Mexico S.A. de C.V. 100% Mexico
Hydril Africa 100% United States
Hydril S.A. 100% Switzerland
Technical Drilling & Production 60% Nigeria
Services Nigeria, Ltd.
P.T. Hydril Indonesia 100% Indonesia
Hydril Oil Tool Company 100% United States
Hydril Foreign Sales Corp. 100% U.S. Virgin Islands
White Rock Engineering, Inc. 100% United States
Exhibit 6.9 - Page 1
81
EXHIBIT 7.2
COMPLIANCE CERTIFICATE
The undersigned hereby certifies that such officer is the
_________________ of HYDRIL COMPANY, a Delaware corporation (the "Borrower"),
and that such officer is authorized to execute this certificate on behalf of the
Borrower pursuant to the Second Amended and Restated Loan Agreement (the
"Agreement") dated as of August 25, 2000, by and among the Borrower, BANK ONE,
TEXAS, N.A., as Agent, and the lenders therein named; and that a review of the
Borrower and the other Obligors has been made under such officer's supervision
with a view to determining whether the Borrower and the other Obligors have
fulfilled all of their respective obligations under the Agreement, the Notes and
the other Loan Documents; and on behalf of the Borrower further certifies,
represents and warrants that to the knowledge of such officer, after due inquiry
(each capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) The Borrower and the other Obligors have fulfilled, in all
material respects, their respective obligations under the Agreement,
the Notes and the other Loan Documents.
(b) The representations and warranties made in each Loan
Document are true and correct in all material respects on and as of the
time of delivery hereof, with the same force and effect as if made on
and as of the time of delivery hereof (other than those which became
inaccurate because of transactions permitted under the Loan Documents
and consummated after the date of the relevant representation).
(c) The financial statements delivered to the Agent
concurrently with this Compliance Certificate have been prepared in
accordance with GAAP consistently followed throughout the period
indicated and fairly present the financial condition and results of
operations of the applicable Persons as at the end of, and for, the
period indicated (subject, in the case of Quarterly Financial
Statements, to the absence of footnotes and normal changes resulting
from year-end adjustments).
(d) The calculations set forth on Schedule I attached hereto
and incorporated herein by reference made for the purpose of providing
the information required in (e) below are true and correct and
accurately reflect the financial condition of Borrower with respect
thereto.
(e) No Default or Event of Default has occurred and is
continuing. In this regard, the compliance with the provisions of
Section 7.3 is as follows:
Exhibit 7.2 - Page 1
82
(i) SECTION 7.3(a) -- TANGIBLE NET WORTH
Minimum
Actual Required
$_________ $________
(ii) SECTION 7.3(b) - DEBT TO CAPITALIZATION RATIO
Minimum
Actual Allowed
_________ 45%
(iii) SECTION 7.3(c) -- INTEREST COVERAGE RATIO
From December 31, 1999 through December 31, 2000:
Minimum
Actual Required
_____ to 1.00 2.00 to 1.00
After December 31, 2000:
Minimum
Actual Required
_____ to 1.00 2.50 to 1.00
(iv) SECTION 7.3(d) - LEVERAGE RATIO
Minimum
Actual Allowed
_____ to 1.00 3.00 to 1.00
DATED as of ____________________________.
[SIGNATURE OF AUTHORIZED OFFICER]
Exhibit 7.2 - Page 2
83
SCHEDULE I
CALCULATIONS
[TO BE PROVIDED BY BORROWER]
Schedule I to Exhibit 7.2 - Page 1
84
EXHIBIT 8.2
LIENS
HYDRIL COMPANY
LIENS
AUGUST 23, 2000
(000S)
Final
HYDRIL COMPANY Amount Bal 8/23 Mo Pymt Payment
---------- ---------- ---------- --------
1997 IBM Capital Lease for Software/Hardware $ 827 $ 321 $ 18 05/30/02
1999 IBM Capital Lease for Software/Hardware 200 105 6 02/28/01
---------- ---------- ----------
TOTAL HYDRIL COMPANY $ 1,027 $ 426 $ 24
========== ========== ==========
Exhibit 8.2 - Page 1
85
EXHIBIT 8.4
[Letterhead of Hydril Company]
----------------------------, -----
Principal Mutual Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Investment Department-Securities
Re: Note Purchase Agreement dated as of June 25, 1998 (the
"Agreement"; capitalized terms being used with the meanings
specifed in the Agreement)
Dear ▇▇▇▇:
We have recently sold our _______________________________ for
approximately _____________________ after obtaining the requisite lien release
from the Collateral Agent. The Collateral Agent has informed us that since it is
not a party to the Agreement, they would like for us to obtain your confirmation
that Hydril is entitled to the Net Proceeds of the sale as provided by Section
10.7(a)(vi) of the Agreement. (After giving effect to the sale, Hydril is well
within the 15% of Consolidated Total Capitalization test in that Section.)
Accordingly, we would appreciate your confirming that Hydril
is entitled to the Net Proceeds of the ___________________________ sale [AND
OTHER TRANSFERS THAT COMPLY WITH SECTION 10.7(A)] by signing below and returning
a copy to me. Also, please fax me a copy at ▇▇▇-▇▇▇-▇▇▇▇.
Thank you for your attention to this matter.
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Assistant Treasurer
Confirmed as of the date of this letter.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
----------------------------------
Title:
-------------------------------
Exhibit 8.4 - Page 1
86
EXHIBIT 11.6(b)
ASSIGNMENT AND ACCEPTANCE
DATED:
-----------------
Reference is made to the Second Amended and Restated Loan Agreement
dated as of August 25, 2000 (as restated, amended, modified, supplemented and in
effect from time to time, the "Loan Agreement"), among HYDRIL COMPANY, a
Delaware corporation (the "Company"), the Lenders named therein, and BANK ONE,
TEXAS, N.A., as Agent (the "Agent"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Loan
Agreement. This Assignment and Acceptance, between the Assignor (as defined and
set forth on Schedule I hereto and made a part hereof) and the Assignee (as
defined and set forth on Schedule I hereto and made a part hereof) is dated as
of the Effective Date (as set forth on Schedule I hereto and made a part
hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date, an undivided interest (the "Assigned Interest") in and to all
the Assignor's rights and obligations under the Loan Agreement respecting those,
and only those, credit facilities contained in the Loan Agreement as are set
forth on Schedule I (collectively, the "Assigned Facilities," individually, an
"Assigned Facility"), in a principal amount for each Assigned Facility as set
forth on Schedule I.
2. The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any other Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Company or its Subsidiaries or the performance or observance by the
Company or its Subsidiaries of any of its respective obligations under the Loan
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto; and (iii) attaches the Note(s) held by it evidencing the
Assigned Facility or Facilities, as the case may be, and requests that the Agent
exchange such Note(s) for a new Note or Notes payable to the Assignor (if the
Assignor has retained any interest in the Assigned Facility or Facilities) and a
new Note or Notes payable to the Assignee in the respective amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Loan Agreement,
Exhibit 11.6(b) - Page 1
87
together with copies of the financial statements referred to in Section 6.2
thereof, or if later, the most recent financial statements delivered pursuant to
Section 7.2 thereof, and such other documents and information as it has deemed
appropriate to make its own credit analysis; (iii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Agreement; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (v) agrees that it will be bound by
the provisions of the Loan Agreement and will perform in accordance with its
terms all the obligations which by the terms of the Loan Agreement are required
to be performed by it as a Lender; (vi) if the Assignee is organized under the
laws of a jurisdiction outside the United States, attaches the forms prescribed
by the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Loan Agreement or such other
documents as are necessary to indicate that all such payments are subject to
such tax at a rate reduced by an applicable tax treaty, and (vii) has supplied
the information requested on the administrative questionnaire attached hereto as
Exhibit A.
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Agent for acceptance by it and the Company and recording by
the Agent pursuant to Section 11.6 of the Loan Agreement, effective as of the
Effective Date (which Effective Date shall, unless otherwise agreed to by the
Agent, be at least five Business Days after the execution of this Assignment and
Acceptance).
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee, whether such amounts have accrued prior to the Effective Date or
accrue subsequent to the Effective Date. The Assignor and Assignee shall make
all appropriate adjustments in payments for periods prior to the Effective Date
by the Agent or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (i) the Assignee shall be a party
to the Loan Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder, and (ii) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective duly authorized
officers on Schedule I hereto.
Exhibit 11.6(b) - Page 2
88
SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE
Legal Name of Assignor:
-----------------------------
Legal Name of Assignee:
-----------------------------
Effective Date of Assignment:
-----------------------
Percentage Assigned of Each
Facility (to at least 8
Principal decimals) (Shown as a
Amount (or, percentage of aggregate
with respect original principal amount
to Letters [or, with respect to Letters
Assigned of Credit, face of Credit, face amount]
Facilities amount) Assigned of all Lenders)
---------- ---------------- ----------------------------
Loans $ %
----------------- ---------
Letter of Credit
participation interests $ %
----------------- ---------
Total $
-----------------
, Revolving Loan Commitment Percentage: %
----------------------------- --
as Assignor
By:
--------------------------
Name:
------------------------
Title:
-----------------------
, Revolving Loan Commitment Percentage: %
----------------------------- --
as Assignee
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Schedule I to Exhibit 11.6(b) - Page 1
89
ACCEPTED:
BANK ONE, TEXAS, N.A., as Agent
By:
--------------------------
Name:
------------------------
Title:
-----------------------
HYDRIL COMPANY
By:
--------------------------
Name:
------------------------
Title:
-----------------------
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Schedule I to Exhibit 11.6(b) - Page 2