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EXHIBIT 10.5
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CREDIT AGREEMENT
BETWEEN
XXXXXX INDUSTRIES, INC.
AND
FIRST INTERSTATE BANK
OF TEXAS, N.A.
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Dated: October 20, 1995
EXECUTION COPY
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TABLE OF CONTENTS
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Repayment of the Principal Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5. Interest Rates Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. Interest Computations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. Procedure for Advance of Funds, Continuation or Conversion . . . . . . . . . . . . . . . . . . . . . 2
1.8. General Payment and Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9. Past-Due Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12. Unavailability of Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.13. Funding Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.14. Discretion of Lender as to Manner of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.15. Taxes and Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.16. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.17. Indemnification of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.18 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . 10
LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Letter of Credit Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . 11
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Conditions Precedent to the Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2. Conditions Precedent to Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . 12
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 12
(i)
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4.1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2. Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3. Outstanding Debt and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5. Regulation U: Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6. Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.7. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . 14
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1. Delivery of Financial Statements. Additional Information, Inspection . . . . . . . . . . . . . . . 15
5.2. Limitation on Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3. Limitation on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4. Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5. Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6. Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7. Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8. Limitation on Subsidiary Funded Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9. Private Placement Agreement Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11. Merger, Consolidation or Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12. Notice of Amendment, Waiver or Consent to Private Placement Agreement . . . . . . . . . . . . . . . 19
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . 20
EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . . . . . 20
6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2. Remedies of Lender upon an Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . 23
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1. Debiting Borrower's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2. Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3. Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4. Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(ii)
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7.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.8. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.9. Interest Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.10. Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.13. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.14. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.15. Survival of Representations, Warranties, and Covenants . . . . . . . . . . . . . . . . . . . . . . . 27
7.16. No Fiduciary Relationship; No Third-Party Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . 28
7.17. Right to Inspect Properties, Books, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.18. Agreement for Binding Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . 28
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1. Agreement Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2. Senior Note Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . 37
STATUTE OF FRAUDS NOTICE . . . . . . . . . . . . . . . . . . . . . . 37
(iii)
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CREDIT AGREEMENT
This Credit Agreement, dated as of __________________, 1995 (as the
same may be amended, extended, supplemented or restated from time to time, the
"Agreement") is between Xxxxxx Industries, Inc., a Nevada corporation
("Borrower"), and FIRST INTERSTATE BANK OF TEXAS, N.A., a national banking
association ("Lender"). Capitalized terms not otherwise defined in this
Agreement shall have the meanings given to them in Article VIII.
Subject to the terms and conditions of this Agreement, Lender agrees
to make Advances or issue Letters of Credit up to the amount of the Commitment
as more fully set forth in Articles I and II. In addition, Lender may, in
accordance with the provisions of Section 2.1(b) issue additional Letters of
Credit in excess of the Commitment.
ARTICLE I
THE LOAN
1.1 ADVANCES. (a) Lender agrees, on the terms and
conditions hereinafter set forth, to make one or more Advances to Borrower from
time to time on any Business Day during the period from the date hereof until
the Termination Date, on a revolving credit basis, in an amount which shall not
exceed, in the aggregate at any one time outstanding, the Commitment. Within
the limits of the Commitment and the limitations set forth herein, Borrower may
borrow, repay, prepay and reborrow under this Section 1.1(a). Upon termination
of the Commitment, Lender shall have no obligation to make any Advance.
(b) The obligations of Borrower and the rights of Lender under the
Loan Documents shall continue until all Obligations have been paid in full,
subject to the provisions of Section 7.3.
1.2 NOTE. Borrower shall execute and deliver to Lender to
evidence the Advances a promissory note substantially in the form of Exhibit
1.2 hereto, payable to the order of Lender in the amount of the Commitment (the
"Note").
1.3. REPAYMENT OF THE PRINCIPAL DEBT. Subject to any
other provision of this Agreement (including, without limitation, subsection
1.10(b)) requiring repayment (in whole or in part) on
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any earlier date, the Principal Debt shall be due and payable on the
Termination Date.
1.4. PAYMENT OF INTEREST.
(a) Interest on the Principal Debt, at the applicable rate or
rates specified in this Agreement, shall be computed on the Principal Debt that
exists from time to time and shall be computed with respect to each Advance
only from the date of that Advance.
(b) Accrued interest on a Prime Rate Advance shall be due and
payable on the last day of each calendar month during the term of this
Agreement and on the Termination Date.
(c) Accrued interest on a Eurodollar Rate Advance shall
be due and payable on the last day of the applicable Interest Period or, if
earlier, the date on which such Interest Period otherwise terminates (whether
by reason of acceleration or pursuant to any other provision of this
Agreement).
1.5. INTEREST RATES APPLICABLE. An Advance shall bear
interest at one of the following rates of interest as selected by Borrower in
its Notice of Election:
(a) Any Prime Rate Advance from time to time outstanding
shall bear interest at a varying rate per annum equal to the lesser of (i) the
Highest Lawful Rate, or (ii) the Prime Rate plus the applicable Base Rate
Margin from the date of such Prime Rate Advance or the date of the conversion
into such Prime Rate Advance until the earlier of (A) the Maturity Date, or (B)
with respect to any Prime Rate Advance converted into a Eurodollar Rate Advance
in accordance with the terms of this Agreement, until the first day of the
Interest Period applicable to any such Eurodollar Rate Advance.
(b) Any Eurodollar Rate Advance from time to time
outstanding shall bear interest from the first day of the Interest Period
applicable thereto until the last day of such Interest Period at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate, or (ii) the
Eurodollar Rate plus the applicable Libor Margin applicable to such Interest
Period.
1.6. INTEREST COMPUTATIONS AND DETERMINATIONS. Except as
set forth in the immediately succeeding sentence, interest at the
(2)
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Prime Rate, the Eurodollar Rate, and the Default Rate, as the case may be,
shall be computed on the basis of the 365/360 method, which computes a daily
amount of interest for a hypothetical year of 360 days, then multiplies such
amount by the actual number of days elapsed in an interest computation period,
but in no event shall any such computation result in an amount of interest that
would cause the interest contracted for, taken, reserved, charged, or received
by the holder of the Note to be in excess of the amount that would be payable
at the Highest Lawful Rate. For the purpose of calculating the Highest Lawful
Rate, interest shall be calculated on the basis of a year of 365 or 366 days,
as applicable. Lender shall determine the interest payable on the Principal
Debt in accordance with this Agreement, and Lender's determination thereof
shall be conclusive in the absence of manifest error.
1.7. PROCEDURE FOR ADVANCE OF FUNDS, CONTINUATION OR
CONVERSION. Each request for an Advance, continuation or conversion shall be
made by delivery of a Notice of Election delivered by Borrower to Lender in
accordance with this Section 1.7.
(a) With respect to a request for a Prime Rate Advance or
a conversion to a Prime Rate Advance, a Prime Rate Election must be made prior
to 11:30 a.m., Houston, Texas time, on the date on which such Advance or
conversion is requested to be made.
(b) With respect to a request for a Eurodollar Rate
Advance or a continuation of, or a conversion to a Eurodollar Rate Advance, a
Eurodollar Rate Election must be made prior to 11:30 a.m., Houston, Texas time,
three (3) Business Days prior to the date on which such Advance, continuation,
or conversion is requested to be made.
(c) With respect to any Eurodollar Rate Election, there
shall not be more than three (3) Interest Periods in effect at any one time.
(d) The amount of any Prime Rate Advance requested in any
Prime Rate Election shall be a minimum amount equal to $100,000 or a larger
integral multiple of $100,000, unless Lender otherwise agrees with respect to
any particular Prime Rate Election.
(3)
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(e) The amount of any Eurodollar Rate Advance requested
in any Eurodollar Rate Election shall be a minimum amount equal to $500,000 or
a larger integral multiple of $100,000, unless Lender otherwise agrees with
respect to any particular Eurodollar Rate Election.
(f) Any conversion from a Eurodollar Rate Advance, if
made other than on the last day of the corresponding Interest Period, shall (i)
be allowed only with Lender's prior written consent, (ii) constitute an early
termination of the Interest Period then applicable thereto, as of the time of
such conversion, and (iii) be made subject to the provisions of Section 1.12.
(g) Borrower may (i) make a Eurodollar Rate Election or a
Prime Rate Election for a new Advance or for any Eurodollar Rate Advance for
which the corresponding Interest Period is expiring, and/or (ii) make a
Eurodollar Rate Election for any Prime Rate Advance, subject in each case to
the limitations, conditions, and notice requirements set forth in this
Agreement. If for any reason an effective Eurodollar Rate Election is not made
in accordance with the terms of this Agreement for any Advance or for any
Eurodollar Rate Advance for which the corresponding Interest Period is
expiring, or for any conversion of a Prime Rate Advance to a Eurodollar Rate
Advance, then the sums in question shall constitute a Prime Rate Advance until
such time as an effective Eurodollar Rate Election has been made for such sums;
provided that, with respect to any ineffective Eurodollar Rate Election
requesting an Advance, such attempted Eurodollar Rate Election may, at the
election of Lender, be treated as null and void.
(h) All Notices of Election shall be irrevocable once
given. Each Notice of Election shall be made either by (i) telephone, with
written confirmation delivered to Lender (in the form set forth in Exhibit 1.7
hereto) no later than 11:30 a.m. Houston, Texas time on the date on which the
Advance, conversion, or continuation to which the Notice of Election relates is
requested to be made, or (ii) written notice to Lender (in the form set forth
in Exhibit 1.7 hereto). Lender shall have no obligation to make any Advance,
conversion, or continuation requested in any Notice of Election if Borrower
fails to timely deliver such written confirmation to Lender with respect to any
such Notice of Election made by telephone; provided, that Lender, at its option
in any particular instance, may make an Advance, conversion, or
(4)
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continuation in reliance on and as requested in any such verbal Notice of
Election, notwithstanding Borrower's failure to timely deliver such written
confirmation and without waiving such requirement for any other or future
Advance, conversion, or continuation.
(i) Each Notice of Election shall be given (in the case
of notice by telephone) and executed (in the case of written notice or
confirmation) by an authorized representative of Borrower. Lender shall not
incur any liability in acting upon any Notice of Election (whether given by
telephone or written notice) that Lender in good faith believes to have been
given or executed by an authorized representative of Borrower.
(j) Upon receipt by the Lender of a Notice of Election
requesting an Advance, a continuation or a conversion in accordance with this
Section 1.7, and upon fulfillment of the applicable conditions set forth in
Article III, Lender shall make such Advance, continuation or conversion
available to Borrower.
1.8. GENERAL PAYMENT AND INTEREST PROVISIONS. Each
payment of principal, interest, and/or other sums due under this Agreement or
any other Loan Document shall be made by Borrower to Lender before 11:30 a.m.
Houston, Texas time on the due date therefor, without setoff or counterclaim,
in Dollars in immediately available funds at Lender's banking house at 0000
Xxxxxxxxx, Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000, or at such other place as may
be from time to time designated by Lender by notice to Borrower. Should the
principal of, or any installment of the principal or interest on, the Note
become due and payable on a day other than a Business Day, the date for payment
thereof shall be extended to the next succeeding Business Day, unless, with
respect to any Eurodollar Rate Advance, the next succeeding Business Day falls
in another calendar month, in which case the date for payment thereof shall be
the next preceding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable
for the extended time at the lesser of (i) the Highest Lawful Rate, or (ii) at
(A) the Prime Rate plus the applicable Base Rate Margin if such Advance is a
Prime Rate Advance, or (B) the Eurodollar Rate plus the applicable Libor
Margin, in effect for such Advance immediately prior to such extension, if such
Advance is a Eurodollar Rate Advance.
(5)
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1.9. PAST-DUE OBLIGATIONS. The Principal Debt shall be
past-due if not paid on or before the Termination Date. Accrued unpaid
interest on the Principal Debt shall be past-due if not paid on or before the
applicable interest payment date (whether scheduled, by acceleration, or
otherwise). Any Obligation (including, to the extent permitted by applicable
Laws, all accrued unpaid interest on the Principal Debt) that is not paid when
due (whether on the scheduled due date, by acceleration, or otherwise) shall
bear interest, payable on demand, from the date on which such Obligation became
due until such Obligation is paid, at a rate per annum equal to the lesser of
(i) the Highest Lawful Rate or (ii) the Default Rate, each as computed as
provided in Section 1.6.
1.10. PREPAYMENTS.
(a) Borrower may prepay the Principal Debt in full at any
time or in part from time to time, on any Business Day, without premium or
penalty, provided that (i) Borrower gives Lender notice thereof at least two
(2) Business Day prior to the time of prepayment of any Eurodollar Rate Advance
and same day notice thereof with respect to any Prime Rate Advance, (ii) each
partial prepayment shall be in a principal amount of $100,000 or a larger
integral multiple of $10,000, (iii) the prepayment is accompanied by payment of
all accrued unpaid interest on the amount prepaid, (iv) except to any extent
required under any other provision of this Agreement, no portion of any
Eurodollar Rate Advance may be prepaid until the expiration of the Interest
Period applicable thereto, unless (A) Borrower gives notice thereof in
accordance with this Section 1.10(a), and (B) Borrower pays to Lender any
Consequential Loss incurred as a result of any such prepayment, in accordance
with Section 1.13, and (v) no prepayment of the outstanding Prime Rate Advances
may be made which would reduce the aggregate outstanding Prime Rate Advances to
less than $100,000, unless (A) such prepayment would reduce the aggregate
outstanding Prime Rate Advances to zero, or (B) the prior written consent of
Lender is obtained.
(b) If at any time the Principal Debt exceeds the
Commitment, Borrower shall immediately pay to Lender the amount necessary to
eliminate such excess, together with all accrued unpaid interest on such
amount.
(6)
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(c) Prior to the occurrence of an Event of Default, and
subject to any other applicable provision of this Agreement regarding payment
to Lender by Borrower of any Consequential Loss, (i) any prepayment of
Principal Debt shall be applied to the Principal Debt in the manner and order
specified by Borrower by written notice to Lender delivered with the notice of
prepayment delivered under Section 1.10 to which it relates, and (ii) if
Borrower fails to so notify Lender, then any prepayment of Principal Debt shall
first be applied to reduce any Prime Rate Advances then outstanding with any
excess thereafter applied to reduce any Eurodollar Rate Advances then
outstanding, in the manner and order determined by Lender in its sole
discretion.
1.11. ILLEGALITY. Notwithstanding any other provision of
this Agreement or any other Loan Document to the contrary, if at any time
Lender shall determine in good faith that any change in applicable Law or in
the interpretation thereof makes it unlawful for Lender to make or continue to
maintain Eurodollar Rate Advances hereunder, Lender shall promptly give notice
thereof to Borrower and thereupon (i) the obligation to make, continue, or
effect by conversion any Eurodollar Rate Advance under this Agreement shall be
suspended until Lender shall notify Borrower that the circumstances causing
such suspension no longer exist, and (ii) the outstanding principal of all
Eurodollar Advances at such time shall on and after the date of such notice,
bear interest at the Prime Rate plus the applicable Base Rate Margin, not to
exceed the Highest Lawful Rate.
1.12. UNAVAILABILITY OF RATE. Notwithstanding any other
provision of this Agreement or any other Loan Document to the contrary, if
prior to the commencement of any Interest Period Lender determines (i) that
deposits in the amount of any Eurodollar Rate Advance which has been requested
are not available to Lender, or (ii) by reason of circumstances affecting the
eurodollar market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate, then Lender shall promptly give notice thereof to Borrower
and the obligation of Lender to make such Advance, or to continue, or effect by
conversion any such Eurodollar Rate Advance in such amount and for such
Interest Period shall terminate until deposits in such amount and for the
Interest Period selected by Borrower shall again be readily available to Lender
or adequate and reasonable means exist for ascertaining the Eurodollar Rate, as
the case may be. Upon the giving of such notice, Borrower may elect to
(7)
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either (i) convert such requested Advance or such affected Eurodollar Rate
Advance to a Prime Rate Advance, or (ii) prepay such affected Eurodollar Rate
Advance, together with accrued and unpaid interest thereon, in each case,
subject to all of the terms and conditions of this Agreement.
1.13. FUNDING INDEMNITY. Notwithstanding any provision of
this Agreement or any other Loan Document to the contrary, in the event Lender
incurs any actual loss, cost, expense, or premium (including, without
limitation, any loss of profit and any loss, cost, expense, or premium
(collectively, "Consequential Loss") incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by Lender to fund or maintain
any Eurodollar Rate Advance or the relending or reinvesting of such deposits or
amounts paid or prepaid to Lender) as a result of: (i) any payment of a
Eurodollar Rate Advance on a date other than the last day of the then
applicable Interest Period; (ii) any failure by Borrower to borrow, continue,
or effect by conversion any Eurodollar Rate Advance on the date specified in a
notice given pursuant to Section 1.7; or (iii) the occurrence of any Event of
Default; then, upon the notice of Lender, Borrower shall pay to Lender such
amount as will reimburse Lender for such Consequential Loss. If Lender makes
such a claim for Consequential Loss, the notice shall set forth the amount of
such Consequential Loss in reasonable detail and these figures shall be
conclusive, absent manifest error.
1.14. DISCRETION OF LENDER AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement or any other Loan Document to
the contrary, Lender shall be entitled to fund and maintain its funding of all
or any part of any Eurodollar Rate Advance 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 Lender had actually funded and maintained each
Eurodollar Rate Advance during each Interest Period for such Eurodollar Rate
Advance through the purchase of deposits having maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period, in the case of any Eurodollar Rate Advance Interest
Period.
1.15. TAXES AND INCREASED COSTS. Notwithstanding any
provision of this Agreement or any other Loan Document to the contrary, with
respect to any Eurodollar Rate Advance, if Lender
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13
determines in good faith that any change in applicable Law (including, without
limitation, Regulation D) or any new applicable Law, or any interpretation of
any of the foregoing by any Tribunal charged with the administration thereof or
any central bank or other fiscal, monetary, or other authority having
jurisdiction over Lender or its lending branch (whether or not having the force
of law) shall:
(a) impose, modify or deem applicable any assessment
rate, reserve, special deposit, or similar requirements against assets held by
or deposits in or for the account of, or loans by, or any other acquisition of
funds or disbursements by Lender;
(b) subject Lender, any Eurodollar Rate Advance, this
Agreement or any other Loan Document to any tax (including, without limitation,
any United States interest equalization tax or similar tax however named
applicable to the acquisition or holding of debt obligations or any interest or
penalties with respect thereto), duty, charge, stamp tax, fee, deduction, or
withholding in respect of this Agreement, any Eurodollar Rate Advance, or any
other Loan Document, except such taxes as may be measured by the overall net
income of Lender or its lending branch and imposed by the jurisdiction, or any
political subdivision or taxing authority thereof, in which Lender's principal
executive office or its lending branch is located;
(c) change the basis of taxation of payments of principal
and interest due from Borrower to Lender hereunder or under this Agreement
(other than by a change in basis of taxation of the net income of Lender); or
(d) impose on Lender any penalty with respect to the
foregoing or any other condition regarding this Agreement, its disbursement,
any Eurodollar Rate Advance, or any other Loan Document and Lender determines
that the result of any of the foregoing is to increase the cost (whether by
incurring a cost or adding to a cost) to Lender of making or maintaining any
Eurodollar Rate Advance or to reduce the amount of principal or interest
received by Lender; then Borrower shall pay to Lender from time to time as
specified by Lender such additional amounts as Lender reasonably determines are
sufficient to compensate and indemnify it for such increased cost or reduced
amount. Lender shall promptly give Borrower notice of any condition described
in this
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Section 1.15 that gives it a right to compensation under this Section 1.15. If
Lender makes such a claim for compensation, the notice shall set forth such
increased cost or reduced amount and the cause thereof, and such notice shall
be conclusive, absent manifest error.
1.16. CAPITAL ADEQUACY. Notwithstanding any provision of
this Agreement or any other Loan Document to the contrary, if after the date
hereof Lender reasonably determines that compliance with any future Law or
regulation or any future guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by
Lender or any corporation controlling Lender and that the amount of such
capital is increased by or based upon the existence of Lender's commitment to
lend hereunder and other commitments of this type, then, upon demand by Lender,
Borrower shall immediately pay to Lender, from time to time as specified by
Lender, additional amounts sufficient to compensate Lender or such corporation
in the light of such circumstances, to the extent that Lender reasonably
determines such increase in capital to be allocable to the existence of
Lender's commitment to lend hereunder. Any request for payments under this
Section 1.16 will be submitted to Borrower by Lender identifying with
reasonable specificity the basis for and the amount of such increased cost,
which information shall be conclusive and binding for all purposes, absent
manifest error.
1.17. INDEMNIFICATION OF LENDER.
(a) In consideration of Lender permitting Borrower to
make telecopy, telex or telephone requests for Advances and for Letters of
Credit, Borrower covenants and agrees to assume liability for and to protect,
indemnify and save Lender harmless from any and all liabilities, obligations,
damages, penalties, claims, causes of action, costs, charges and expenses,
including attorneys' fees and expenses of employees, which may be imposed,
incurred by or asserted against Lender by reason of any loss, damage or claim
howsoever arising or incurred, including claims, liabilities and damages caused
by Lender's own negligence (but not gross negligence or willful misconduct)
because of, out of or in connection with (i) any action of Lender pursuant to
telecopy, telex or telephone requests for Advances and for Letters of Credit,
(ii) the breach of any provisions of this Agreement by Borrower,
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(iii) the transfer of funds pursuant to such telecopy, telex or telephone
requests, or (iv) Lender's honoring or failing to honor any telecopy, telex or
telephone request for any reason or no reason whatsoever. Lender is entitled to
rely upon and act upon telecopy, telex or telephone requests made or
purportedly made by any of the officers or employees specified in the
resolutions delivered to Lender of even date herewith, as supplemented in
writing from time to time and accepted by Lender, and Borrower shall be
unconditionally and absolutely estopped from denying (x) the authenticity and
validity of any such transaction so acted upon by Lender once Lender has
advanced funds under the Note and has deposited or transferred such funds or
issued any Letter of Credit as requested in any such telecopy, telex or
telephone request and (y) Borrower's liability and responsibility therefor.
(b) In addition, as to any matter not addressed in the
preceding subsection (a) and except as otherwise provided in the Letter of
Credit Applications, notwithstanding any provision of this Agreement or any
other Loan Document to the contrary, Borrower hereby agrees to indemnify Lender
against all claims, liabilities, damages, and expenses in connection with or
arising out of any litigation or proceeding relating to or arising in
connection with this Agreement, any Letter of Credit, any other Loan Document,
the making of the Commitment, or any Advance, except to the extent any such
claim, liability, damage, or expense arose as a result of Lender's negligence
or willful misconduct. Borrower agrees to indemnify and hold Lender harmless
from any and all claims (including reasonable attorneys' fees) which may arise
out of or in connection with Lender's good faith reliance upon instructions
from Borrower, as provided herein, except for such claims, damages, losses,
costs, and expenses resulting from acts or omissions constituting negligence or
willful misconduct on the part of Lender. The amount of any such
indemnification not paid within thirty (30) days after written demand therefor
shall accrue interest from and including such 30th day to but excluding the
date paid at the Default Rate, computed as provided in Section 1.6.
1.18 COMMITMENT FEE. Borrower agrees to pay Lender a
commitment fee, computed as provided in Section 1.6, at the rate of one quarter
of one percent (1/4%) per annum on the average daily unused amount of the
Commitment, from the date hereof until the Termination Date (the "Commitment
Fee"). The Commitment Fee shall be payable in arrears, commencing on the last
Business Day of the
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calendar quarter succeeding the date hereof and thereafter on the last Business
Day of each successive calendar quarter, with a final payment due and payable
on the Termination Date. As used herein, unused amount of the Commitment is the
difference between $15,000,000 and the sum of (i) outstanding principal balance
of the Note plus (ii) the Letter of Credit Exposure.
ARTICLE II
LETTERS OF CREDIT
2.1. ISSUANCE OF LETTERS OF CREDIT. (a) Prior to the date
hereof Lender has issued for the account of Borrower those certain Letters of
Credit set forth on Exhibit 2.1A hereto (the "Existing Letters of Credit").
The Existing Letters of Credit shall be subject to the same terms and
conditions of this Agreement affecting Letters of Credit (as defined below). In
addition, Lender shall from time to time, until August 15, 1997 (such date, or
such later date as may be determined by Lender in its sole and absolute
discretion upon the prior written request of Borrower, the "Letter of Credit
Maturity Date"), upon the request of Borrower, if the applicable conditions
precedent specified in subsections 3.1(b) and 3.1(c) and subsections 3.2(b),
3.2(c), and 3.2(e) shall have been satisfied with respect to such requested
Letter of Credit, issue either documentary letters of credit or standby letters
of credit ("Letters of Credit") in the name of Borrower on behalf of any of its
wholly-owned Subsidiaries. The Letter of Credit Exposure plus the outstanding
principal balance of any Advances shall not exceed FIFTEEN MILLION DOLLARS
($15,000,000). Except in connection with the Existing Letters of Credit, each
Letter of Credit shall have a term not to exceed the Letter of Credit Maturity
Date, provided that Letters of Credit with an aggregate undrawn face amount of
up to $5,000,000 may have expiry dates through, but not after, August 15, 1998
and shall be in such form as Lender may from time to time approve. Borrower
shall give Lender irrevocable written notice (in the form set forth in Exhibit
2.1B hereto) of a request for the issuance of a Letter of Credit (a "Letter of
Credit Request"), which shall be accompanied by a duly completed and executed
Letter of Credit Application at least four (4) Business Days before the
requested date of issuance of any such Letter of Credit, which requested date
shall be a Business Day. Any Letter of Credit issued hereunder shall be
governed by the terms and conditions of the
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respective Letter of Credit Application and the terms and conditions set forth
herein, provided that in the event of any inconsistencies between such terms
and provisions, the terms and provisions of this Agreement shall control. Upon
termination of the Commitment, Lender shall have no obligation to issue any
Letter of Credit.
(b) Lender may, in its sole and absolute discretion in addition to the
Letters of Credit to be issued pursuant to Section 2.1(a), issue one or more
Letters of Credit from time to time on any Business Day during the period from
the date hereof until the Termination Date, on a revolving basis, in an amount
which shall not exceed, in the aggregate at any one time outstanding,
$5,000,000.
2.2. LETTER OF CREDIT FEES. Borrower agrees to pay to
Lender a Letter of Credit fee for the issuance and maintenance of each Letter
of Credit issued hereunder in an amount equal to: (i) as to each Letter of
Credit which by its terms expires on or before a date which is 365 days from
the date of issuance thereof, three- quarters of one percent (3/4%) per annum
of the face amount thereof, and (ii) as to each Letter of Credit which by its
terms expires on or after a date which is 366 days from the date of issuance
thereof, one percent (1%) per annum of the face amount thereof. All such
Letter of Credit fees shall be payable quarterly in advance from the date of
issuance and shall be non-refundable.
ARTICLE III
CONDITIONS
3.1. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The
obligation of Lender to make the initial Advance is subject to the terms of
this Agreement, including, without limitation, the following conditions
precedent:
(a) Lender shall have received this Agreement and the
Note, each duly executed by Borrower;
(b) Lender shall have received a Secretary's Certificate
of Borrower in the form of Exhibit 3.1 hereto, certifying as to (i) the names
and true signatures of the officers of Borrower
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authorized to sign this Agreement and the other Loan Documents, (ii)
resolutions of the board of directors of Borrower authorizing the negotiation
and execution of this Agreement and the other Loan Documents, and (iii) the
articles of incorporation and bylaws of the Borrower;
(c) Lender shall have received such other documents,
opinions of counsel, certificates, and evidence as Lender may reasonably
request (in form and content reasonably satisfactory to Lender); and
(d) No material adverse change has occurred in the
operations, business, properties, prospects, assets or condition, financial or
other, of Borrower and its Subsidiaries, taken as a whole, subsequent to July
31, 1995.
3.2. CONDITIONS PRECEDENT TO EACH ADVANCE. Lender will
not be obligated to make any Advance, including the initial Advance, except in
accordance with the terms of this Agreement, including, without limitation, the
following conditions precedent:
(a) Lender shall have timely received a Notice of
Election for each such Advance, in accordance with Section 1.7;
(b) At the time that the Advance is to be made, all
representations and warranties made by Borrower in the Loan Documents are true
and correct and not misleading, as if made on and as at such date, except for
those which by their express terms relate to a specific point in time;
(c) No Default or Event of Default has occurred;
(d) The sum of the Principal Debt plus the amount of the
requested Advance plus the Letter of Credit Exposure does not exceed the
Commitment; and
(e) Lender shall have received a certificate of Borrower
in the form of Exhibit 3.2 hereto, pursuant to which Borrower represents to
Lender that the conditions set forth in subsections 3.2(b), 3.2(c), and 3.2(d)
are satisfied.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, as of the date hereof and as
of each date on which an Advance is to be made and as of each date on which a
Letter of Credit is to be issued as follows:
4.1. FINANCIAL STATEMENTS. Borrower has furnished to
Lender copies of consolidated balance sheets of Borrower and its Subsidiaries
as at October 31, 1994 and the related consolidated statements of operations,
cash flows and shareholders' equity of Borrower and its Subsidiaries for the
fiscal periods ended on such date, accompanied by the unqualified opinion of
its independent certified public accountants, together with the similar, but
unaudited, financial statements for and as of the fiscal period ended July 31,
1995 (certified, subject to customary non-material audit adjustments, by an
authorized financial officer of Borrower). Said financial statements, including
the related schedules and notes, are complete and correct and fairly present
(i) the financial condition of Borrower and its Subsidiaries as at the
respective dates of said balance sheets, and (ii) the results of the operations
of Borrower and its Subsidiaries for the fiscal periods ended on said dates,
all in conformity with generally accepted accounting principles applied on a
consistent basis (except as otherwise stated therein or in the notes thereto)
throughout the periods involved. Said consolidated balance sheet as of October
31, 1994 and the related schedules and notes show all material liabilities,
direct and contingent, of Borrower and its Subsidiaries as of that date.
4.2. POWER AND AUTHORITY. Borrower and its Subsidiaries
have full power and authority, without the consent or joinder of any other
party, to execute and deliver this Agreement and the other Loan Documents to
which Borrower or any Subsidiary is a party and to perform their respective
Obligations set forth herein and therein.
4.3. OUTSTANDING DEBT AND LIENS. Exhibit 4.3 hereto
correctly sets forth all Indebtedness outstanding on the date hereof and all
Liens securing Indebtedness of Borrower or its Subsidiaries existing on the
date hereof.
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4.4. LITIGATION. Except as set forth in Exhibit 4.4
hereto, there are no actions, suits or proceedings (whether or not purportedly
on behalf of Borrower or any Subsidiary) pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any of its Subsidiaries
at law or in equity or before or by any Tribunal, which involve any of the
transactions herein contemplated or the likelihood of any material and adverse
change in the business, operations, properties, prospects, assets or condition,
financial or other, of Borrower and its Subsidiaries, taken as a whole; and
neither Borrower nor any Subsidiary is in default or violation of any Law which
would have a material and adverse effect on the business, operations,
properties, prospects, assets or condition, financial or other, of Borrower and
its Subsidiaries, taken as a whole.
4.5. REGULATION U: USE OF PROCEEDS. All of the proceeds
from the Advances will be used by Borrower for general corporate purposes. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U (12
C.F.R., Chapter II, Part 221) of the Board of Governors of the Federal Reserve
System (herein called "margin stock") or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of said Regulation U. Neither Borrower nor
any agent acting on its behalf has taken or will take any action which might
cause the transaction contemplated herein to violate said Regulation U,
Regulation G (12 C.F.R., Chapter II, Part 207), Regulation T (12 C.F.R.,
Chapter II, Part 220) or Regulation X (12 C.F.R.m Chapter II, Part 224) or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Securities Exchange Act of 1934, in each case as now in effect or
as the same may hereafter be in effect.
4.6. ENFORCEABILITY. This Agreement and each other Loan
Document to which Borrower or any Subsidiary is a party is the legal, valid,
and binding obligation of Borrower or any such Subsidiary, enforceable against
Borrower and any such Subsidiary in accordance with its terms, except as
enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally.
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4.7. COMPLIANCE WITH LAWS. Borrower and its Subsidiaries
are in compliance, in all material respects, with all Laws applicable and
necessary for the conduct of their respective businesses.
4.8. ERISA. The making of any Advance hereunder will not
involve any "prohibited transaction" within the meaning of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended.
4.9. PRIVATE PLACEMENT AGREEMENT REPRESENTATIONS AND
WARRANTIES. Borrower hereby represents and warrants to Lender those
representations and warranties set forth in Sections 2.2. 2.4 2.5, 2.6. 2.7,
2.9, 2.10, 2.11, 2.12 (other than the last sentence thereof), 2.13. 2.15, 2.16
and 2.17 of the Private Placement Agreement, as in effect as of the date
hereof. It is understood and agreed that each of said representations and
warranties, together with any Exhibits referred to therein, is hereby
incorporated in this Agreement by reference to the same extent as if set forth
herein and attached hereto, and, as so incorporated, is for the benefit of
Lender. References in such Sections of the Private Placement Agreement to (i)
"you" shall be deemed to mean Lender, (ii) the "Agreement" and the "Notes"
shall be deemed to mean this Agreement and any other Loan Document, (iii)
"Company" shall be deemed to mean Borrower, (iv) "transactions contemplated
hereby" and "transactions contemplated herein" shall be deemed to mean
transactions contemplated by this Agreement and the other Loan Documents, and
(v) "provisions hereof" shall be deemed to mean the provisions of this
Agreement and the other Loan Documents. The incorporation of such Sections and
Exhibits hereby and their continued effectiveness hereunder, shall in no way be
affected by the termination of the Private Placement Agreement, any amendment
thereto or any waiver of the provisions thereof.
ARTICLE V
COVENANTS
Borrower covenants that, so long as any Obligation remains
outstanding or Lender shall have any Commitment hereunder:
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5.1. DELIVERY OF FINANCIAL STATEMENTS. ADDITIONAL
INFORMATION, INSPECTION. Borrower covenants that, so long as any Obligation
remains outstanding or Lender shall have any Commitment hereunder, Borrower
shall perform and comply and shall cause each Subsidiary, or Restricted
Subsidiary, as the case may be, to perform and comply with each of the
following provisions for the benefit of Lender and deliver to Lender, in
duplicate, the following information within the referenced time frames.
(a) as soon as practicable, and in any event within 45
days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year of the Borrower, the
consolidated statements of operations, cash flows and shareholders'
equity of the Borrower and its Subsidiaries and of the Borrower and
its Restricted Subsidiaries for such period and for that part of the
fiscal year ended with such quarterly period and the consolidated
balance sheet of the Borrower and its Subsidiaries and of the Borrower
and its Restricted Subsidiaries as at the end of such period, setting
forth in each case in comparative form the corresponding figures as of
the end of and for the corresponding quarterly period of the preceding
fiscal year, all in reasonable detail, prepared in conformity with
generally accepted accounting principles applied on a basis consistent
with that of previous years (except as otherwise stated therein or in
the notes thereto and except that footnotes shall not be required) and
certified by the chief financial officer of the Borrower as presenting
fairly the financial condition and results of operations of the
Borrower and its Subsidiaries and of the Borrower and its Restricted
Subsidiaries as at the end of and for the fiscal periods to which they
relate, subject to the Borrower's year-end adjustments;
(b) as soon as practicable, and in any event within 90
days after the end of each fiscal year, the consolidated balance sheet
and related consolidated statements of operations, cash flows and
shareholders' equity of the Borrower and its Subsidiaries and of the
Borrower and its Restricted Subsidiaries as at the end of and for such
year, setting forth in each case in comparative form the corresponding
figures of the
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previous fiscal year, all in reasonable detail, prepared in conformity
with generally accepted accounting principles applied on a basis
consistent with that of previous years (except as otherwise stated
therein or in the notes thereto) and certified by the chief financial
officer of the Borrower as presenting fairly the financial condition
and results of operations and changes in financial position of the
Borrower and its Subsidiaries and of the Borrower and its Restricted
Subsidiaries as at the end of and for the fiscal year to which such
financial statements relate, and accompanied by a unqualified report
or opinion of independent certified public accountants of recognized
national standing selected by the Borrower stating that such financial
statements present fairly the consolidated financial condition and
results of operations of the Borrower and its Subsidiaries and of the
Borrower and its Restricted Subsidiaries in accordance with generally
accepted accounting principles consistently applied (except for
changes with which such accountants concur) and that the examination
of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards;
(c) concurrently with the financial statements delivered
pursuant to Section 5.1(b), the written statement of said accountants
that in making the examination necessary for their report or opinion
on said financial statements they have obtained no knowledge of any
Event of Default or any event which, with notice or lapse of time or
both, would constitute such an Event of Default, or, if such
accountants shall have obtained knowledge of any such Event of Default
or event, they shall disclose in such statement the Event of Default
or event and the nature and status thereof, but such accountants shall
not be liable, directly or indirectly, to anyone for any failure to
obtain knowledge of any such Event of Default or event;
(d) as soon as practicable, copies of all financial
statements, proxy statements and reports as the Borrower shall send or
make available generally to its security holders, all news releases
issued by the Borrower or any
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24
Subsidiary which are deemed to be material by the Borrower and all
registration statements and regular periodic reports, if any, which it
or any Subsidiary may file with the Securities and Exchange Commission
or any governmental agency or agencies substituted therefor or with
any national securities exchange;
(e) immediately upon a responsible officer of the
Borrower's becoming aware of the existence of an Event of Default
under the Note or any other evidence of Indebtedness of the Borrower
or any Subsidiary, or an event which, with notice or lapse of time or
both, would constitute such an Event of Default, written notice
specifying the nature and period of existence thereof and what action
the Borrower or such Subsidiary, as the case may be, is taking or
proposes to take with respect thereto;
(f) immediately upon a responsible officer of the
Borrower's becoming aware of the occurrence of any (1) Reportable
Event, or (2) nonexempted "prohibited transaction," as defined in
Sections 406 and 408 of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended, in connection with any Plan or any trust
created thereunder, a written notice specifying the nature thereof,
what action the Borrower is taking or proposes to take with respect
thereto and, when known, any action taken by the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect
thereto; and
(g) such other information as to the business and
properties of the Borrower and of its Subsidiaries, including without
limitation, financial statements and other reports filed by the
Borrower or any Subsidiary with any governmental department, bureau,
commission or agency, as Lender may from time to time reasonably
request.
5.2. LIMITATION ON NEGATIVE PLEDGES. Borrower will not,
and will not permit any Subsidiary to, enter into any agreement, other than the
Private Placement Agreement, whereby it effectively agrees that it will not (i)
create, assume, incur or suffer to exist any Lien upon any property or assets
(real or personal,
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25
tangible or intangible) of Borrower or any Subsidiary, whether now owned or
hereafter acquired, or any income or profits therefrom, (ii) own or acquire or
agree to acquire any property or assets (real or personal, tangible or
intangible) subject to any Lien, or (iii) suffer to exist any Indebtedness of
Borrower or any Subsidiary or claims or demands against Borrower or any
Subsidiary, which Indebtedness, claims or demands, if unpaid, might (in the
hands of the holder or anyone who shall guarantee the same or who has any right
or obligation to purchase the same), by law or upon bankruptcy or insolvency or
otherwise, be given any priority whatsoever over its general creditors.
5.3. LIMITATION ON SENIOR INDEBTEDNESS. Borrower shall
not incur any Indebtedness which by its terms, or by the terms of any agreement
or instrument relating thereto, provides that such Indebtedness would rank
senior in right of payment to the Indebtedness incurred under this Agreement.
5.4. MAXIMUM LEVERAGE RATIO. Borrower will not permit the
ratio of Consolidated Funded Indebtedness to Tangible Capitalization to exceed
forty-five percent (45%); provided that, in the event that Funded Indebtedness
is incurred in connection with the acquisition of a Restricted Subsidiary or
other property, the computations required by this Section 5.4 shall be made
immediately prior to such acquisition on a pro forma basis after giving effect
to such acquisition.
5.5. FIXED CHARGE COVERAGE RATIO. Borrower will not
permit the Fixed Charge Coverage Ratio as of the end of each fiscal quarter for
the immediately preceding four (4) fiscal quarters to be less than 1.50 to 1.0;
provided that, in the event that Funded Indebtedness is to be incurred in
connection with the acquisition of a Restricted Subsidiary or other property,
the computations required by this Section 5.5 shall be made immediately prior
to such acquisition on a pro forma basis after giving effect to such
acquisition.
5.6. TANGIBLE NET WORTH. Borrower will not permit its
Tangible Net Worth to be less than $44,000,000 plus (i) fifty percent of
positive net income after provision for income taxes for the fiscal year ending
October 31, 1995 and for each fiscal year thereafter, without reduction for any
fiscal year during which the
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Borrower incurs a net loss, plus (ii) one hundred percent (100%) of additional
equity contributions, whether preferred or common stock.
5.7. CURRENT RATIO. Borrower will not permit its ratio of
current assets to current liabilities to be less than 1.50 to 1.0.
5.8. LIMITATION ON SUBSIDIARY FUNDED INDEBTEDNESS.
Borrower will not permit any Restricted Subsidiary to create, assume, incur or
otherwise become liable, in each case contingently or otherwise, in respect of
any Indebtedness, whether secured or unsecured, other than:
(a) Indebtedness of a Restricted Subsidiary outstanding
on October 31, 1994 and identified as such on Exhibit 4.3 hereof;
(b) Indebtedness of a Restricted Subsidiary owing to
Borrower or a Wholly-Owned Restricted Subsidiary; and
(c) Renewals or refundings of Indebtedness of a
Restricted-Subsidiary permitted by subsection 5.8(a), provided, that the
outstanding principal amount of such Indebtedness so renewed or refunded is not
increased and, immediately after giving effect to such renewal or refunding,
there shall not exist a Default or an Event of Default.
5.9. PRIVATE PLACEMENT AGREEMENT COVENANTS. It is
understood and agreed that Sections 3.01 3.02, 3.03, 3.04, 4.02, 4.04, 4.05,
4.08, 4.09, and 4.10 of the Senior Note, as in effect as of the date hereof,
together with any Exhibits referred to therein, are hereby incorporated in this
Agreement by reference to the same extent as if set forth herein or attached
hereto. Borrower covenants that, so long as any Obligation remains
outstanding, Borrower shall perform and comply with each of its covenants
contained in such Sections for the benefit of Lender. References in such
Sections of the Senior Note to (i) "Company" shall be deemed to mean Borrower,
(ii) the "Agreement" and the "Notes" shall be deemed to mean this Agreement and
the other Loan Documents, (iii) "Event of Default" shall be deemed to mean an
"Event of Default" as defined in this Agreement, (iv) "Section 4.07" shall mean
Section 5.9 hereof, and (v) "each holder of the Notes" shall be deemed to mean
Lender. The incorporation of such Sections hereby, and their continued
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effectiveness hereunder, shall in no way be affected by the termination of the
Private Placement Agreement, any amendment thereto or any waiver of the
provisions thereof and the terms of such covenants shall only be amended as
between Borrower and Lender by the express written agreement of Borrower and
Lender. Notwithstanding the foregoing, for purposes of this Section 5.9, the
last two sentences of Section 4.08 of the Senior Note shall be replaced by the
following provision:
If such net proceeds are not so reinvested within such
six-month period, Borrower shall apply such proceeds (or such
portion thereof as shall not have been so reinvested), at the
option of Lender, to the pro rata prepayment of Consolidated
Funded Indebtedness which prepayment in the case of this
Agreement shall be prepaid with accrued interest to the date
of prepayment.
5.10. COMPLIANCE CERTIFICATES. Concurrently with the
delivery of Borrower's financial statements to Lender pursuant to Section 5.1
hereof, the chief financial officer of Borrower shall deliver to Lender a
certificate in the form of Exhibit 5.10 hereto (the "Compliance Certificate")
setting forth the figures, computations and representations and warrants
required thereby.
5.11. MERGER, CONSOLIDATION OR SALE. Borrower will not
consolidate with or merge into any Person, or permit any Person to merge into
it, or sell, transfer or otherwise dispose of all or substantially all of its
properties and assets, except that Borrower may merge with any other
corporation, provided that (a) Borrower shall be the continuing or surviving
corporation, and (b) immediately after giving effect to such merger no Event of
Default or Default shall exist.
5.12. NOTICE OF AMENDMENT, WAIVER OR CONSENT TO PRIVATE
PLACEMENT AGREEMENT. Promptly upon the execution and delivery of any amendment
to the Private Placement Agreement, the Senior Note or any exhibits thereto, or
any waiver of any provision thereof, or any consent to any modification in
connection therewith, Borrower shall deliver to Lender an accurate and complete
execution copy thereof.
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ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
6.1. EVENTS OF DEFAULT. If one or more of the following
events herein called "Events of Default" shall happen for any reason whatsoever
and whether such happening shall be voluntary or involuntary or come about or
be effected by operation of Law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body and be continuing:
(a) Default shall be made in the payment of principal of
(or premium, if any, on) the Note when and as the same shall become due and
payable, whether at maturity or at a date fixed for prepayment, or by
acceleration or otherwise; or
(b) Default shall be made in the payment of any interest
on the Note when such interest becomes due and payable, and such default shall
continue for a period of five (5) days; or
(c) Default shall be made in the due observance or
performance of any covenant, condition or agreement contained in Sections 5.2
through 5.8 hereof, Section 5.9 hereof (to the extent Section 5.9 hereof
incorporates Sections 4.02 through 4.10 of the Senior Note) and Section 5.11
hereof; or
(d) Default shall be made in the due observance or
performance of any other covenant, condition or agreement contained in this
Agreement or in the Note and such default shall continue for thirty (30) days
after written notice thereof, specifying such default and requesting that the
same be remedied, shall have been given to Borrower by Lender; or
(e) Borrower or any Restricted Subsidiary shall be
adjudicated a bankrupt or insolvent, or shall consent to the appointment of a
receiver, trustee, custodian or liquidator of itself or of any part of its
property, or shall admit in writing its inability, or shall fail, to pay its
debts generally as they come due, or shall make a general assignment for the
benefit of creditors, or shall file a voluntary petition in reorganization or
arrangement in a proceeding under any bankruptcy law (as now or hereafter in
effect) or an answer admitting the material
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allegations of a petition filed against Borrower or any Restricted Subsidiary
in any such proceeding, or shall, by voluntary petition, answer or consent,
seek relief under the provisions of any other now existing or future bankruptcy
or other similar law providing for the reorganization or winding up of
corporations, or Borrower or any Restricted Subsidiary or its directors of
majority stockholders shall take action looking to the dissolution or
liquidation of Borrower or such Restricted Subsidiary (other than as
contemplated by Sections 4.07 or 4.09 of the Senior Note as incorporated herein
by Section 5.7; or
(f) An order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent of Borrower or
any Restricted Subsidiary, a receiver, trustee, custodian or liquidator of
Borrower or such Restricted Subsidiary or of any part of its property, and such
receiver, trustee, custodian or liquidator shall not have been removed or
discharged within sixty (60) days thereafter, or any part of the property of
Borrower or any Restricted Subsidiary shall, in any judicial proceeding, be
sequestered and shall not be returned to the possession of Borrower or such
Restricted Subsidiary within sixty (60) days thereafter; or
(g) A petition against Borrower or any Restricted
Subsidiary in a proceeding under any bankruptcy law (as now or hereafter in
effect) shall be filed and shall not be dismissed within ninety (90) days after
such filing, or, in case the approval of such petition by a court of competent
jurisdiction is required, shall be filed and approved by such a court as
properly filed and such approval shall not be withdrawn or the proceeding
dismissed within thirty (30) days thereafter, or if, under the provisions of
any other similar law providing for reorganization or winding up of
corporations and which may apply to Borrower or any Restricted Subsidiary, any
court of competent jurisdiction shall assume jurisdiction, custody or control
of Borrower or such Restricted Subsidiary or of any part of its property and
such jurisdiction, custody or control shall not be relinquished or terminated
within ninety (90) days thereafter; or
(h) Borrower or any Restricted Subsidiary shall default in the
payment of principal or interest on any other evidence of Indebtedness for
money borrowed in excess of $25,000 (either in any one case or in the
aggregate) or shall default in the performance
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or observance of any other term, condition or agreement contained in any such
evidence of Indebtedness or in any agreement relating thereto, the effect of
which is to cause or permit any holder of such indebtedness or a trustee to
cause the same to become or be declared due prior to its stated maturity,
unless such default shall have been cured or waived prior to such Indebtedness
becoming or being declared to be due and payable prior to its stated maturity;
or
(i) Final judgment for the payment of money in excess of
$25,000 shall be rendered against Borrower or any Restricted Subsidiary and the
same shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed; or
(j) Any representation or warranty made by Borrower in
this Agreement, in any Letter of Credit Application or in any writing furnished
in connection with the transactions contemplated hereby shall prove to have
been false or incorrect in a material respect as of the date made; or
(k) A "Default" shall occur under any Letter of Credit
Application.
6.2. REMEDIES OF LENDER UPON AN EVENT OF DEFAULT. Upon
the occurrence of an Event of Default, Lender, without (i) presentment, demand,
or protest, (ii) notice of default, dishonor, demand, non-payment, or protest,
(iii) notice of intent to accelerate all or any part of the Obligations, (iv)
notice of acceleration of all or any part of the Obligations, or (v) notice of
any other kind, all of which Borrower and any guarantor, surety, or endorser of
this Agreement hereby expressly waive, except for any notice required under
this Agreement or any other Loan Document, may, at Lender's option: (A) by
notice to Borrower, terminate the Commitment; (B) declare the Obligations, in
whole or in part, immediately due and payable; and/or (C) exercise any other
rights and remedies available to Lender under this Agreement, any other Loan
Document, or applicable Laws; provided that upon the occurrence of an Event of
Default described in subsections 6.1(e), 6.1(f) and 6.1(g), all the Obligations
shall automatically be immediately due and payable, and the Commitment shall
automatically terminate, without notice of any kind to Borrower or to any
surety
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or endorser of this Agreement, or to any other Person, which notice is hereby
expressly waived by all such parties.
6.3. RIGHT OF SET-OFF. Borrower hereby authorizes Lender,
to the maximum extent permitted under and in accordance with applicable Laws,
at any time after the occurrence of an Event of Default, to set-off and apply
any and all deposits, funds, or assets at any time held and any and all other
indebtedness at any time owing by Lender to or for the credit or the account of
Borrower against any and all Obligations, whether or not Lender exercises any
other right or remedy hereunder and whether or not such Obligations are then
matured.
6.4. REMEDIES CUMULATIVE. No remedy, right, or power
conferred upon 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.
ARTICLE VII
MISCELLANEOUS
7.1. DEBITING BORROWER'S ACCOUNT. Borrower authorizes
Lender, at Lender's election (but Lender shall have no obligation), to effect
payment when due of all or any part of the Obligations by means of debiting any
account maintained by Borrower with Lender, to the maximum extent permitted
under and in accordance with applicable Laws; provided, that such authorization
shall not affect (i) any right of setoff or similar right Lender may have, or
(ii) the obligation of Borrower to pay such Obligations when due.
7.2. APPLICATION OF PAYMENTS.
(a) Prior to the occurrence of an Event of Default, except as
otherwise provided in subsection 1.10(c), all payments received by Lender
hereunder from or on behalf of Borrower shall be applied first to pay accrued
and unpaid interest then due and payable, second to repay the Principal Debt,
and third to pay any other Obligations.
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(b) After the occurrence of an Event of Default, all
payments received by Lender hereunder from or on behalf of Borrower shall be
applied to the Obligations in the manner and order determined by Lender in its
sole discretion.
7.3. PAYMENTS SET ASIDE. To the extent that Borrower or
any other Person pays the Obligations or any part thereof to Lender, or Lender
enforces any of its rights under this Agreement or any other Loan Document, and
at any time such payment or enforcement or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside, rescinded,
and/or otherwise required to be repaid or returned to Borrower or such other
Person, its estate, a trustee, receiver, or any other Person under any Law,
including, without limitation, upon the insolvency, bankruptcy or
reorganization of Borrower or any of its Subsidiaries, the Obligations or part
thereof originally intended to be satisfied, together with this Agreement and
all other Loan Documents (including all the terms hereof and thereof and all
Lender's rights hereunder and thereunder), notwithstanding any prior
termination, release and/or delivery of this Agreement or any other Loan
Document to Borrower or any other Loan Party, shall be reinstated, revived and
continued in effect as if such payment had not been made or such enforcement
had not occurred. The provisions of this Section 7.3. shall survive any prior
termination, release and/or delivery of this Agreement or any other Loan
Document.
7.4. WAIVERS AND CONSENTS. No failure or delay on the
part of Lender in exercising any remedy, power, or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such remedy, right, or power, or any abandonment or discontinuance of steps to
enforce any such remedy, right, or power, preclude any other or further
exercise thereof or the exercise of any other remedy, right, or power. No
course of dealing between Borrower and Lender shall operate as a waiver of any
right of Lender. No modification or waiver of any provision of this Agreement
or consent to any departure by Borrower therefrom shall in any event be
effective unless such modification, waiver, or consent shall be executed by
Lender in writing, and then such waiver, modification, or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on Borrower in any case shall entitle Borrower to any other
or further notice or demand in similar or other circumstances.
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7.5. EXPENSES. Borrower agrees to pay Lender all fees,
costs, and expenses (including, without limitation, reasonable attorneys' fees,
costs, and expenses) incurred by Lender in connection with (i) the preparation
of this Agreement or any other Loan Document, and (ii) any amendments,
consents, or waivers related to this Agreement or any other Loan Document. In
addition, if following the occurrence of an Event of Default this Agreement is
placed in the hands of an attorney for collection, or if all or any part of the
Obligations are proved, established or collected in any court or in connection
with any proceeding for bankruptcy, receivership, debtor relief, probate, or
any other court proceeding, then in either such event Borrower and all
endorsers, sureties, and guarantors of this Agreement jointly and severally
agree to pay reasonable attorneys' fees, costs, and expenses and collection
costs to the Lender, or any other holder of the Note, in addition to all other
amounts payable hereunder.
7.6. CONSENT TO JURISDICTION. BORROWER CONSENTS TO
PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF TEXAS (INCLUDING, WITHOUT
LIMITATION, SUCH COURTS IN XXXXXX COUNTY, TEXAS) AND THE UNITED STATES COURTS
LOCATED WITHIN THE STATE OF TEXAS (INCLUDING, WITHOUT LIMITATION, SUCH COURTS
IN THE SOUTHERN DISTRICT OF TEXAS) IN CONNECTION WITH ANY PROCEEDING RELATED TO
OR ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, AND EXPRESSLY WAIVES ANY OBJECTIONS TO THE VENUE OF SUCH COURTS AND
AGREES THAT SERVICE OF PROCESS MAY BE MADE ON BORROWER BY MAILING A COPY OF THE
PETITION AND CITATION OR SUMMONS AND COMPLAINT, AS THE CASE MAY BE, TO
BORROWER, BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF. NOTHING SET FORTH HEREIN OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAWS OR AFFECT THE RIGHT OF LENDER
TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ANY OF ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
7.7. GOVERNING LAW.
(a) This Agreement, the Note and the other Loan Documents
shall be construed and enforced in accordance with and governed by the laws of
the State of Texas and the laws of the United States of America.
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(b) Chapter 15 of Subtitle 3, Title 79, of the Revised
Civil Statutes of the State of Texas, as in effect on the date hereof and as
the same may hereafter be amended or supplemented from time to time, shall not
apply to any Advance or to this Agreement or to any other Loan Document.
7.8. BINDING EFFECT. This Agreement and the other Loan
Documents shall be binding upon and shall inure to the benefit of Borrower and
Lender and their respective successors and assigns, except that Borrower shall
not have the right to assign its rights or Obligations hereunder or any
interest herein without the prior written consent of Lender (which consent may
be withheld, at Lender's sole discretion). Lender may assign to one or more
assignees or participants, all or any part of, or may grant participations to
one or more assignees or participants in or to all or any part of this
Agreement, and the other Loan Documents, and to the extent, if any, specified
in any such assignment or participation, such assignee(s) or participant(s)
shall have the rights and benefits with respect to this Agreement, and the
other Loan Documents as such party or parties would have if such party or
parties were Lender hereunder.
7.9. INTEREST LIMITATION. It is the intent of Lender and
Borrower and all other parties to the Loan Documents to conform to and contract
in strict compliance with applicable usury law from time to time in effect. All
agreements between Lender or any other holder hereof and Borrower (or any other
party liable with respect to any indebtedness under the Loan Documents) are
hereby limited by the provisions of this paragraph which shall override and
control all such agreements, whether now existing or hereafter arising and
whether written or oral (however, reference to the term "oral" shall not be
construed to modify or negate any provisions hereof or of any other Loan
Document regarding the absence or ineffectiveness of oral agreements). In no
way, nor in any event or contingency (including but not limited to prepayment,
default, demand for payment, or acceleration of maturity), shall the interest
taken, reserved, contracted for, charged, chargeable or received under this
Agreement or under any of the other Loan Documents, or otherwise, exceed the
maximum nonusurious amount permitted by applicable law (the "Maximum Amount").
If, from any possible construction of any document, interest would otherwise be
payable in excess of the Maximum Amount, any such construction shall be subject
to the provisions of this paragraph and, ipso facto, such
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document shall be reformed and the interest payable shall be reduced to the
Maximum Amount, without the necessity of execution of any amendment or new
document. If the holder hereof shall ever receive anything of value that is
characterized as interest under applicable law and that would apart from this
provision be in excess of the Maximum Amount, an amount equal to the amount
that would have been excessive interest shall, without penalty, be applied to
the reduction of the principal amount owing on the indebtedness evidenced
hereby in the inverse order of its maturity and not to the payment of interest,
or refunded to Borrower or the other payor thereof if and to the extent such
amount that would have been excessive exceeds such unpaid principal. The right
to accelerate maturity of this Agreement or any other indebtedness does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the holder hereof does not intend to charge
or receive any unearned interest in the event of acceleration. All interest
paid or agreed to be paid to the holder hereof shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full stated term (including any renewal or extension) of such indebtedness so
that the amount of interest on account of such indebtedness does not exceed the
Maximum Amount. As used in this paragraph, the term "applicable law" shall
mean the laws of the State of Texas or the federal laws of the United States
applicable to this transaction, whichever laws allow the greater interest, as
such laws now exist or may be changed or amended or come into effect in the
future. If at any time and from time to time, (i) the amount of interest
payable to Lender on any date shall be computed at the Highest Lawful Rate
pursuant to this Section 7.9 and (ii) in respect of any subsequent interest
computation period the amount of interest otherwise payable to Lender would be
less than the amount of interest payable to Lender computed at the Highest
Lawful Rate, then the amount of interest payable to Lender in respect of such
subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate until the total amount of interest payable to Lender shall
equal the total amount of interest which would have been payable to Lender if
the total amount of interest had been computed without giving effect to this
Section 7.9.
7.10. TITLES. The section titles used in this Agreement
are inserted for convenience only and shall not be given any effect in
construing the terms hereof.
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7.11. SEVERABILITY. If any provision(s) of this Agreement
shall be held to be invalid, illegal, or unenforceable, or if it is determined
that any provision(s) of this Agreement operate or would prospectively operate
to invalidate this Agreement, then such provision(s) only shall be deemed void,
and such determination shall not affect any other provision of this Agreement;
provided, that except to any extent otherwise required by applicable Laws, any
determination that the application of any provision of this Agreement to any
Person or circumstance is invalid, illegal, or unenforceable, shall not affect
the validity, legality, or enforceability of such provision as it may apply to
any other Person or circumstance.
7.12. NOTICES. Any notice required or desired to be given
hereunder shall be delivered to Borrower or Lender, as the case may be, at
their respective addresses set forth on the signature page(s) hereof and to the
appropriate person indicated on such page(s), shall be in writing (except as
otherwise permitted in subsection 1.7(k) with respect to a Notice of Election),
and shall:
(a) with respect to any notice other than a Notice of
Election and a Letter of Credit Request (including the respective Letter of
Credit Application), be deemed to have been validly delivered (i) upon deposit
in the United States mail, when sent by registered or certified mail, return
receipt requested, and with proper postage prepaid; (ii) if sent by telecopy,
telex, or other similar facsimile transmission, when the sender receives a
written confirmation of receipt from an authorized representative of the other
party; (iii) one (1) Business Day after the date properly and timely deposited
with a reputable courier company for next Business Day delivery, with all
charges prepaid; or (iv) when delivered, if hand-delivered (provided, that hand
deliveries shall be deemed delivered on the next Business Day if delivered on a
date that is not a Business Day or if received after 5:00 p.m. Houston, Texas
time on any Business Day); and
(b) with respect to any Notice of Election and any Letter
of Credit Request (including the respective Letter of Credit Application), be
deemed to have been validly delivered only upon Lender's actual receipt
thereof.
7.13. COMPUTATION OF TIME PERIODS. In this Agreement in
the computation of periods of time from a specified date to a
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later specified date, the word "on" means "on and including", the word "from"
means "from and including", and each of the words "to" and "until" means "to
but excluding".
7.14. REFERENCES. References to "Sections", "subsections",
and "Articles" shall be to Sections, subsections, and Articles, respectively,
of this Agreement unless otherwise specifically provided.
7.15. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND
COVENANTS. All representations, warranties, and covenants (including, without
limitation, indemnities) made by Borrower in this Agreement and/or in any other
Loan Document shall survive the delivery of this Agreement to Lender, the
making of Advances, and the termination of the Commitment, and, with respect to
such indemnities, shall survive the payment in full of the Obligations and the
termination of this Agreement and/or any other Loan Document. No investigation
at any time made by or on behalf of Lender shall diminish Lender's right to
rely on all representations and warranties made by Borrower hereunder. All
statements contained in any certificate or other written instrument executed by
any Person authorized by Borrower shall constitute representations and
warranties hereunder made by Borrower as of the time that such certificate or
instrument is delivered to Lender.
7.16. NO FIDUCIARY RELATIONSHIP; NO THIRD-PARTY
BENEFICIARY. The relationship between Lender and Borrower is solely that of
lender and borrower. Lender has no fiduciary or other special relationship
with Borrower. This Agreement is for the sole benefit of Lender and Borrower
and is not for the benefit of any third party.
7.17. RIGHT TO INSPECT PROPERTIES, BOOKS, ETC. Lender (or
a nominee designated by Lender) shall have the right to visit and inspect any
of the properties of Borrower and its Subsidiaries, to examine the books of
account and records of Borrower and its Subsidiaries, to make copies and
extracts therefrom, to discuss the affairs, finances, accounts and conditions
of Borrower and its Subsidiaries with, and to be advised as to the same by,
their respective officers, employees and independent accountants, all at such
reasonable times and intervals as Lender may desire.
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7.18. AGREEMENT FOR BINDING ARBITRATION. THE PARTIES AGREE
TO BE BOUND BY THE TERMS AND PROVISIONS OF THE CURRENT ARBITRATION PROGRAM OF
FIRST INTERSTATE BANK OF TEXAS, N.A., WHICH IS INCORPORATED BY REFERENCE HEREIN
AND IS ACKNOWLEDGED AS RECEIVED BY THE PARTIES, PURSUANT TO WHICH ANY AND ALL
DISPUTES SHALL BE RESOLVED BY MANDATORY BINDING ARBITRATION UPON THE REQUEST OF
EITHER PARTY.
ARTICLE VIII
DEFINITIONS
8.1. AGREEMENT DEFINITIONS. Capitalized terms not
otherwise defined in this Agreement shall have the following meanings (such
meanings to be applicable to both the singular and the plural forms of the
terms defined):
"ADVANCE" shall mean any disbursement by Lender of an amount
or amounts loaned to Borrower under this Agreement and the Note, and any such
amounts outstanding from time to time hereunder and thereunder.
"BASE RATE MARGIN" shall mean the percentage indicated below:
Ratio of Funded
Indebtedness to EBITDA
for the preceding four
(4) fiscal quarters Base Rate Margin
----------------------- ----------------
less than 1.75 to 1.0 0%
1.75 to 1.0 or greater .25%
The initial Base Rate Margin shall be zero percent (0%) and shall apply until
January 1, 1996 at which time a new Base Rate Margin shall be determined in
accordance with the foregoing based upon the financial statements for the
quarter ending October 31, 1995. Thereafter, on the first of the month
following delivery of the financial statements for such fiscal quarter, a new
Base Rate Margin shall be determined based upon the financial statements for
such fiscal quarter.
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"BORROWER" shall mean Xxxxxx Industries, Inc., a Nevada
corporation.
"BUSINESS DAY" shall mean a day of the year on which national
banking associations are not required or authorized to close in Houston, Texas,
and, if the applicable Business Day relates to any Notice of Election for an
Advance, continuation of, or conversion to Eurodollar Rate Advance, a day of
the year on which Lender is open for business and commercial banks are open for
business in New York City and in the London interbank market.
"CAPITAL LEASE OBLIGATION" shall mean at any time the
capitalized amount of the rental commitment under a lease which should be
capitalized under generally accepted accounting principles.
"COMMITMENT" shall mean $15,000,000.
"COMMITMENT FEE" shall have the meaning given to such term in
Section 1.18.
"CONSEQUENTIAL LOSS" shall have the meaning given to such term
in Section 1.13.
"CONSOLIDATED FUNDED INDEBTEDNESS" shall mean the Funded
Indebtedness of the Borrower and its Restricted Subsidiaries, after eliminating
intercompany items, all as consolidated and determined in accordance with
generally accepted accounting principles.
"DEFAULT" shall mean any event which, with the lapse of time
or giving of notice, or both, would constitute an Event of Default.
"DEFAULT RATE" shall mean from (i) the date that any payment
is due, after applicable grace periods, until ten (10) days thereafter, an
interest rate per annum equal to the lesser of (y) two (2) percent above the
interest rate otherwise applicable to such payment or, if there is no otherwise
applicable interest rate, two (2) percent above the Prime Rate, or (z) the
Highest Lawful Rate, and (ii) thereafter, the Highest Lawful Rate.
"DOLLARS" and the sign "$" shall mean lawful money of the
United States of America.
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"EBITDA" shall mean earnings before income tax, plus interest
expense, plus depreciation and amortization.
"EURODOLLAR RATE" shall mean a per annum rate of interest
(rounded upwards, if necessary, to the nearest .01%) equal to the quotient
obtained by dividing (a) the rate at which Lender offers deposits to major
banks in dollars in the aggregate. amount of the relevant Eurodollar Rate
Advance and for a period comparable to the applicable Interest Period in the
London interbank market at approximately 10:00 a.m. (London time), two (2)
Business Days prior to the beginning of the relevant Interest Period, by (b) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements applicable to the relevant Eurodollar Rate Advance (including,
without limitation, any margin, emergency, supplemental, special, or other
reserves required by applicable Law) applicable to Lender. Upon request, Lender
shall deliver certificate setting forth in detail its calculation on a
reasonable basis of the Eurodollar Rate, which certificate shall be conclusive
and binding.
"EURODOLLAR RATE ADVANCE" shall mean that portion, if any, of
the Principal Debt that is and continues to be the subject of one or more
effective Eurodollar Rate Elections, in accordance with the terms of this
Agreement.
"EURODOLLAR RATE ELECTION" shall mean a notice by Borrower to
Lender requesting a Eurodollar Rate Advance, a continuation of, or conversion
to, a Eurodollar Rate Advance, given in accordance with the terms of this
Agreement, including, without limitation, Section 1.7..
"EVENT OF DEFAULT" shall have the meaning given to such term
in Section 6.1.
"FIXED CHARGE COVERAGE RATIO" shall mean the ratio of (i)
EBITDA, minus cash tax payments, plus Rental expense to (ii) current maturities
of long term debt, plus interest expense, plus Rental expense.
"FUNDED INDEBTEDNESS" means, without duplication, (i) all
Indebtedness which by its terms matures more than one year from the date as of
which any determination of Funded Indebtedness is made, (ii) any Indebtedness
maturing within one year from such date which
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is renewable at the option of the obligor beyond one year from such date,
including any Indebtedness renewable or extendible (whether or not theretofore
renewed or extended) under, or payable from the proceeds of other Indebtedness
which may be incurred pursuant to the provisions of, any revolving credit
agreement or other similar agreement (iii) Capital Lease Obligations with a
remaining term in excess of one year and (iv) at the time of determination, the
principal amount of current Indebtedness of the Borrower outstanding, except
that if the Borrower shall have no current Indebtedness outstanding for any
period of 30 consecutive days in the twelve months immediately preceding such
time of determination, then the amount of current Indebtedness included in the
calculation of Funded Indebtedness shall be deemed to be zero.
"HEREOF", "HERETO", "HEREUNDER" and similar terms shall refer
to this Agreement and not to any particular section or provision of this
Agreement.
"HIGHEST LAWFUL RATE" shall mean the maximum non-usurious
interest rate, if any, permitted from time to time under applicable Laws to be
contracted for, taken, reserved, charged, or received by the holder of the
Note. If the Highest Lawful Rate shall change after the date hereof, the
Highest Lawful Rate shall be automatically increased or decreased, as the case
may be, from time to time as of the effective time of each change in the
Highest Lawful Rate, without notice to Borrower; provided, that the Highest
Lawful Rate shall decrease only to any extent required by applicable Laws and
shall increase only to the extent permitted by applicable Laws. For purposes of
determining the Highest Lawful Rate under the applicable Laws of the State of
Texas, the applicable rate ceiling shall be the indicated rate ceiling
described in and computed in accordance with the provisions of Article
5069-1.04 of the Texas Revised Civil Statutes, as in effect on the date hereof
and as the same may hereafter be amended or supplemented from time to time;
provided, that to the extent permitted by applicable Laws and subject to any
notice or other requirements under applicable Laws, Lender may from time to
time change the rate ceiling.
"INDEBTEDNESS" of any Person means and includes, without
duplication, (i) all indebtedness or obligations for money borrowed which in
accordance with generally accepted accounting principles would be included in
determining total liabilities as shown on the
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liability side of a balance sheet of such Person at the date as of which
indebtedness is to be determined, (ii) indebtedness or obligations of such
Person owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in Current
Liabilities and incurred in respect of property purchased in the ordinary
course of business, (iii) indebtedness or obligations secured or evidenced by
any Lien existing on property owned by the Person whose indebtedness is being
determined, whether or not the indebtedness or obligations secured or evidenced
thereby shall have been assumed, (iv) Capital Lease Obligations, (v) guaranties
and endorsements of (other than endorsements for purposes of collection in the
ordinary course of business), and obligations to purchase goods or services for
the purpose of supplying funds for the purchase or payment of, or measured by,
indebtedness, liabilities or obligations of others (whether or not representing
money borrowed) and other contingent obligations in respect of, or to purchase
or otherwise acquire or service, indebtedness, liabilities or obligations of
others (whether or not representing money borrowed) and (vi) all indebtedness,
liabilities or obligations (whether or not representing money borrowed) in
effect guaranteed by an agreement, contingent or otherwise, to make a loan,
advance or capital contribution to or other investment in the debtor for the
purpose of assuring or maintaining a minimum equity, asset base, working
capital or other balance sheet condition for any date, or to provide funds for
the payment of any liability, dividend or stock liquidation payment, or
otherwise to supply funds to or in any manner invest in the debtor for such
purpose. The guarantees, endorsements, obligations and agreements referred to
in clauses (v) and (vi) of the preceding sentence shall constitute (a) Current
Indebtedness to the extent the indebtedness, liabilities or obligations of
another Person to which they relate are Current Indebtedness of such other
Person and (b) Funded Indebtedness to the extent such related indebtedness,
liabilities or obligations of such other Person are Funded Indebtedness of such
other Person. A renewal or extension of any Indebtedness shall be deemed to be
the incurrence of the Indebtedness so renewed or extended. In case any
corporation shall become a Restricted Subsidiary, such corporation shall be
deemed to have incurred at the time it becomes a Restricted Subsidiary all
Indebtedness of such corporation outstanding immediately thereafter.
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"INTEREST PERIOD" means, with respect to any Eurodollar Rate
Advance, the period of time designated by Borrower in the Notice of Election
relating thereto, subject to the limitations and provisions set forth in this
Agreement. An Interest Period shall commence on the date of the Advance of,
conversion into, or continuation of the Eurodollar Rate Advance to which such
Interest Period is to apply. The duration of each Interest Period for any
Eurodollar Rate Advance shall be 1, 3, or 6 months; provided, that:
(i) Whenever the last day of any Interest Period
would otherwise be a day other than a Business Day, the last day of
such Interest Period shall be extended to the next succeeding Business
Day; provided further, that for any Interest Period for a Eurodollar
Rate Advance, if such extension would cause the last day of such
Interest Period to occur in the next succeeding calendar month, then
the last day of such Interest Period shall be the immediately
preceding Business Day;
(ii) Each Interest Period applicable to a
Eurodollar Rate Advance shall terminate on the same numerical day of
the last calendar month of such Interest Period as corresponds to the
commencement day of that Interest Period, except that if the last
calendar month of such Interest Period has no day that corresponds
numerically to the commencement day, then such Interest Period shall
instead terminate on the last Business Day of such calendar month; and
(iii) No Interest Period may end on a date after
the Stated Maturity Date.
"LAWS" shall mean all constitutions, treaties, statutes, laws,
ordinances, regulations, rules, orders, writs, injunctions, or decrees of the
United States of America, any state or commonwealth, any municipality, any
foreign country, any territory or possession, or any Tribunal, as in effect on
the date hereof and as the same may hereafter be amended, issued, or
promulgated, or otherwise hereafter come into effect, from time to time.
"LENDER" shall mean First Interstate Bank of Texas, N.A., a
national banking association.
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"LETTERS OF CREDIT" shall have the meaning given to such term
in Section 2.1.
"LETTER OF CREDIT APPLICATION" shall mean the application to
Lender by Borrower for the issuance of a documentary letter of credit or a
standby letter of credit, in substantially the form of Exhibit 8.1-A hereto;
provided, that Lender may, from time to time, substitute for such Exhibit such
form as Lender customarily employs.
"LETTER OF CREDIT EXPOSURE" shall mean (i) the amount of
outstanding Letters of Credit issued pursuant to subsection 2.1(a) which have
not expired plus (ii) the amount of any Letters of Credit issued pursuant to
subsection 2.1(a) which have been presented, which Lender has paid, and as to
which Borrower has not previously reimbursed Lender.
"LETTER OF CREDIT REQUEST" shall have the meaning given to
such term in Section 2.1, and shall be evidenced by a letter from Borrower to
Lender in a form substantially similar to Exhibit 2.1B hereto, which form may
be modified from time to time by Lender in order to incorporate its customary
terms and conditions.
"LIBOR MARGIN" shall mean the percentage indicated below:
Ratio of Funded
Indebtedness to EBITDA for
the preceding four Libor
(4) fiscal quarters Margin
-------------------------- ------
less than or equal to 1.25 to 1.0 1.00%
1.26 to 1.0 or greater but less 1.25%
than 1.50 to 1.0
1.50 to 1.0 or greater but less 1.50%
than 1.75 to 1.0
1.75 to 1 or greater but less 1.75%
than 2.00 to 1.0
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equal to or greater than 2.00 to 1.0 2.25%
The initial Libor Margin shall be one percent (1.00%) and shall apply until
January 1, 1996 at which time a new Libor Margin shall be determined in
accordance with the foregoing based upon the financial statements for the
quarter ending October 31, 1995. Thereafter, on the first of the month
following delivery of the financial statements for such fiscal quarter, a new
Libor Margin shall be determined based upon the financial statements for such
fiscal quarter.
"LIEN" shall have the meaning ascribed to such term in the
Senior Note.
"LOAN DOCUMENTS" shall mean this Agreement, the Note, any
Letter of Credit Application, any Letter of Credit Requests and all other
documents, agreements, and instruments now or hereafter existing, evidencing,
securing, or otherwise relating to this Agreement, the Note, any Letter of
Credit Application, any Letter of Credit Requests, and/or any transaction
contemplated by this Agreement, the Note or by any Letter of Credit
Application, Letter of Credit Requests, as any of the foregoing items may be
modified, amended or supplemented from time to time.
"MAXIMUM AMOUNT" shall have the meaning given to such term in
Section 7.9.
"NOTE" shall mean any promissory note, in substantially the
form of Exhibit 1.2 hereto, duly executed by Borrower and payable to the order
of Lender, as such promissory note may, from time to time, be amended,
modified, supplemented, or substituted.
"NOTICE OF ELECTION" shall mean a Eurodollar Rate Election or
a Prime Rate Election.
"OBLIGATIONS" shall mean (i) the Principal Debt, (ii) all
accrued unpaid interest (at any time and from time to time) on the Principal
Debt, and (iii) all other outstanding (at any time and from time to time) fees,
costs, expenses, charges, reimbursement obligations, and obligations payable,
and all covenants performable, under this Agreement, any Letter of Credit
Application
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or any other Loan Document by Borrower and/or any Subsidiary including, without
limitation, all accrued unpaid interest on any such other fees, costs,
expenses, charges, or obligations.
"PERSON" shall mean and include an individual, a partnership
(general or limited), a joint venture, a corporation, a trust, an
unincorporated organization, and a government or any department, agency, or
political subdivision thereof.
"PRIME RATE" shall mean, on any day, the rate of interest per
annum then most recently established by Lender as its "prime rate". The Prime
Rate is set by Lender as a general reference rate of interest, taking into
account such factors as Lender may deem appropriate. The Prime Rate is not
necessarily the lowest or best rate actually charged to any customer, and such
rate may not correspond with future increases or decreases in interest rates
charged by other lenders or market rates in general. Lender may make various
business or other loans at rates of interest having no relationship to the
Prime Rate. Without notice to Borrower or any other Person, the Prime Rate
shall change automatically from time to time, as and in the amount by which
Lender's prime rate changes, subject always to limitation to the Highest Lawful
Rate.
"PRIME RATE ADVANCE" shall mean that portion, if any, of the
Principal Debt that is and continues to be the subject of one or more effective
Prime Rate Elections, in accordance with the terms of this Agreement.
"PRIME RATE ELECTION" shall mean a notice by Borrower to
Lender requesting a Prime Rate Advance or a conversion to a Prime Rate Advance,
given in accordance with the terms of this Agreement, including, without
limitation, Section 1.7.
"PRINCIPAL DEBT" shall mean the aggregate unpaid balance of
all Advances at the time in question.
"PRIVATE PLACEMENT AGREEMENT" shall mean that certain Loan
Agreement dated as of June 26, 1990 among Borrower, Metropolitan Life Insurance
Company and Metropolitan Property and Casualty Insurance Company, together with
all Exhibits and Schedules thereto, as amended prior to the date hereof, an
execution copy of which is attached hereto as Exhibit 8.1-C.
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"REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, or any successor or other regulation
hereafter promulgated by said Board to replace the prior Regulation D and
having substantially the same function.
"RENTAL" with respect to any Lease and for any period, means
the aggregate amount payable for such period by the lessee under any such Lease
excluding amounts required to be paid for taxes, insurance, maintenance,
repairs, interest and amortization charges and other similar charges. Whenever
it is necessary to determine the amount of Rentals for any period in the future
and to the extent that such Rentals are not definitely determinable by the
terms of the Lease, Rentals not so definitely determinable may be estimated in
such reasonable manner as an authorized financial officer of the Borrower may
determine.
"RESTRICTED SUBSIDIARY" means any Subsidiary (i) at least 80%
of whose outstanding stock having ordinary voting power for the election of a
majority of the members of the board of directors (or other governing body) of
such corporation (other than stock having such power only be reason of the
happening of a contingency) shall at the time be owned by the Borrower and/or
one or more Restricted Subsidiaries of the Borrower, (ii) which is organized
under the laws of the United States of America or any state thereof, and has
substantially all of its assets located in the United States of America, and
(ii) which has not been designated by the Board of Directors of the Borrower as
an Unrestricted Subsidiary, provided, however, that notwithstanding clause (ii)
above, Xxxxxx Foreign Sales Corporation shall be deemed to be a Restricted
Subsidiary.
"SENIOR NOTE" shall mean the form of 10.40% Senior Note Due
June 26, 1997 set forth as Exhibit A to the Private Placement Agreement.
"STATED MATURITY DATE" shall mean August 15, 1997.
"SUBSIDIARY" means any corporation which is consolidated under
generally accepted accounting principles in the financial statements of
Borrower.
"TANGIBLE CAPITALIZATION" means the sum of Consolidated Funded
Indebtedness and Consolidated Tangible Net Worth.
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"TANGIBLE NET WORTH" shall have the meaning under generally
accepted accounting principles.
"TERMINATION DATE" shall mean August 15, 1997.
"TRIBUNAL" shall mean any state, commonwealth, federal,
foreign, territorial or other court or governmental or administrative
department, commission, board, bureau, district, authority, agency, or
instrumentality, or any arbitration authority.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means any Restricted
Subsidiary all of the capital stock (other than directors' qualifying shares)
of which is owned by the Borrower and/or one or more Wholly-Owned Restricted
Subsidiaries.
8.2. SENIOR NOTE DEFINITIONS.
(a) As herein provided, this Agreement incorporates by
reference for the benefit of Lender certain provisions of the Private Placement
Agreement and the Senior Note, as in effect as of the date hereof, and certain
of the definitions provided for therein shall be applicable to this Agreement
to the same extent as if set forth in full herein in order to, and to the
extent necessary, give meaning and effect to the other provisions of the
Private Placement Agreement and the Senior Note incorporated herein as
aforesaid. In the event that, as a result of such incorporation, there are
inconsistencies inadvertently created between the actual text of this Agreement
and the Private Placement Agreement and the Senior Note, the terms and
provisions of this Agreement shall control. The incorporation of such
definitions hereby, and their continued effectiveness hereunder, shall in no
way be affected by the termination of the Private Placement Agreement, any
amendment thereto or any waiver of the provisions thereof.
(b) All Schedules and Exhibits to the Private Placement
Agreement and the Senior Note which are referred to in the provisions of the
Private Placement Agreement and the Senior Note which are incorporated herein
as aforesaid are incorporated herein by reference to the same extent as if
attached hereto in order to give meaning and effect to such terms and
provisions of the Private Placement Agreement and the Senior Note. The
incorporation of such
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Schedules and Exhibits hereby, and their continued effectiveness hereunder,
shall in no way be affected by the termination of the Private Placement
Agreement, any amendment thereto or any waiver of the provisions thereof.
Notwithstanding the immediately preceding sentence, any such Schedules and
Exhibits which are, or are required to be, updated and delivered by Borrower
pursuant to the Private Placement Agreement and the Senior Note shall also be
delivered to Lender.
ARTICLE IX
STATUTE OF FRAUDS NOTICE
The following notice is being provided in compliance with
Section 26.02 of the Texas Business and Commerce Code, which provides that
certain "loan agreements" must be in writing to be enforceable. As used in the
notice, the term "Loan Agreement" means one or more promises, promissory notes,
agreements, undertakings, security agreements, deeds of trust, or other
documents, or commitments, or any combination of those actions or documents,
pursuant to which a financial institution loans or delays repayment of or
agrees to loan or delay repayment of money, goods, or another thing of value or
to otherwise extend credit or make a financial accommodation. To the extent
permitted by applicable Laws, Borrower and Lender agree to be bound by the
terms of the following notice:
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereto duly authorized, as of the
date first above written.
XXXXXX INDUSTRIES, INC.
By: ________________________________
Name: X. X. Xxxxx
Title: Vice President
Address for Notices:
XXXXXX INDUSTRIES, INC.
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx
Vice President
Telecopy number for Notices:
(000) 000-0000
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: ________________________________
Name: X. Xxxxxx Xxxxxxxx
Title: Vice President
Address for Notices:
0000 Xxxx Xxx Xxxxxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: X. Xxxxxx Xxxxxxxx
Telecopy number: (000) 000-0000
[Signature Page - Credit Agreement]
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