CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is made and entered into this 27th day of
August, 1999, by and between DRIL-QUIP, INC., a Delaware corporation (the
"Borrower"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking
association (the "Lender")
W I T N E S S E T H:
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In consideration of the mutual covenants and agreements herein
contained, the Borrower and the Lender hereby agree as follows:
ARTICLE I
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DEFINITIONS AND INTERPRETATION
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1.1 Terms Defined Above. As used in this Credit Agreement, the
terms "Borrower" and "Lender" shall have the meaning assigned to them
hereinabove.
1.2 Additional Defined Terms. As used in this Credit Agreement,
each of the following terms shall have the meaning assigned thereto in this
Section:
"Additional Costs" shall mean costs which the Lender determines are
attributable to its obligation to make or its making or maintaining any LIBO
Rate Loan, or any reduction in any amount receivable by the Lender in respect of
any such obligation or any LIBO Rate Loan, resulting from any Regulatory Change
which (a) changes the basis of taxation of any amounts payable to the Lender
under this Agreement or the Note in respect of any LIBO Rate Loan (other than
taxes imposed on the overall net income of the Lender), (b) imposes or modifies
any reserve, special deposit, minimum capital, capital rates, or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, the Lender (including LIBO Rate Loans and
Dollar deposits in the London interbank market in connection with LIBO Rate
Loans), or any commitments of the Lender hereunder, (c) increases the Assessment
Rate, or (d) imposes any other condition affecting this Agreement or any of such
extensions of credit, liabilities, or commitments.
"Adjusted LIBO Rate" shall mean, for any LIBO Rate Loan, an interest
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Lender to be equal to the sum of the LIBO Rate for such Loan
plus the Applicable Margin, but in no event exceeding the Highest Lawful Rate.
"Affiliate" shall mean any Person directly or indirectly controlling,
or under common control with, the Borrower and includes any Subsidiary of the
Borrower and any "affiliate" of the Borrower within the meaning of Reg.
(S)240.12b-2 of the Securities Exchange Act of 1934, as amended, with "control,"
as used in this definition, meaning possession, directly or indirectly, of the
power to direct or cause the direction of management, policies or action through
ownership of voting securities, contract, voting trust, or membership in
management or in the group appointing or electing management or otherwise
through formal or informal arrangements or business relationships.
"Agreement" shall mean this Credit Agreement, as it may be amended,
supplemented, or restated from time to time.
"Applicable Lending Office" shall mean, for each type of Loan, the
lending office of the Lender (or an affiliate of the Lender) designated for such
type of Loan on the signature pages hereof or such other office of the Lender
(or an affiliate of the Lender) as the Lender may from time to time specify to
the Borrower as the office by which Loans of such type are to be made and
maintained.
"Applicable Margin" shall mean as to each LIBO Rate Loan, two percent
(2%).
"Assessment Rate" shall mean, for any Interest Period, the average
rate (rounded upwards if necessary to the nearest 1/100 of 1%) charged by the
Federal Deposit Insurance Corporation (or any successor thereto) to the Lender
for deposit insurance for Dollar time deposits with the Lender at the Principal
Office during such Interest Period, as determined by the Lender.
"Available Commitment" shall mean, at any time, an amount equal to the
remainder, if any, of (a) $ 10,000,000 minus (b) the Loan Balance at such time.
"Base Rate" shall mean the interest rate announced or published by the
Lender from time to time as its general reference rate of interest, which Base
Rate shall change upon any change in such announced or published general
reference interest rate and which Base Rate may not be the lowest interest rate
charged by the Lender.
"Borrowing Request" shall mean each written request, in substantially
the form attached hereto as Exhibit II, by the Borrower to the Lender for a
borrowing, conversion, or prepayment pursuant to Sections 2.1 or 2.7, each of
which shall:
(a) be signed by a Responsible Officer of the Borrower;
(b) when requesting a borrowing, be accompanied by a Compliance
Certificate;
(c) specify the amount and type of Loan requested, and, as
applicable, the Loan to be converted or prepaid and the date of the borrowing,
conversion, or prepayment (which shall be a Business Day);
(d) when requesting a Floating Rate Loan, be delivered to the
Lender no later than 10:00 a.m., Central Standard or Daylight Savings Time, as
the case may be, on the Business Day of the requested borrowing, conversion, or
prepayment;
(e) when requesting a LIBO Rate Loan, be delivered to the Lender no
later than 10:00 a.m., Central Standard or Daylight Savings Time, as the case
may be, two Business Days preceding the requested borrowing, conversion, or
prepayment and designate the Interest Period requested with respect to such
Loan.
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"Business Day" shall mean (a) for all purposes other than as covered
by clause (b) of this definition, a day other than a Saturday, Sunday, legal
holiday for commercial banks under the laws of the State of Texas, or any other
day when banking is suspended in the State of Texas, and (b) with respect to all
requests, notices, and determinations in connection with, and payments of
principal and interest on, LIBO Rate Loans, a day which is a Business Day
described in clause (a) of this definition and which is a day for trading by and
between banks for Dollar deposits in the London interbank market.
"Capitalization" shall mean Tangible Net Worth plus Funded Debt.
"Closing Date" shall mean the effective date of this Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" shall mean the obligation of the Lender, subject to
applicable provisions of this Agreement, to make Loans to or for the benefit of
the Borrower pursuant to Section 2.1.
"Commitment Fee" shall mean each fee payable to the Lender by the
Borrower pursuant to Section 2.8.
"Commitment Period" shall mean the period from and including the
Closing Date to but not including the Commitment Termination Date.
"Commitment Termination Date" shall mean the date which is two years
following the Closing Date.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrower within the meaning of Section 4001 of ERISA.
"Compliance Certificate" shall mean each certificate, substantially in
the form attached hereto as Exhibit III, executed by a Responsible Officer of
the Borrower and furnished to the Lender from time to time in accordance with
Sections 5.2 and 5.3.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends, or other obligations of any other Person (for purposes of this
definition, a "primary obligation") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
regardless of whether such obligation is contingent, (a) to purchase any primary
obligation or any Property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any primary
obligation, or (ii) to maintain working or equity capital of any other Person in
respect of any primary obligation, or otherwise to maintain the net worth or
solvency of any other Person, (c) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any primary obligation of the
ability of the Person primarily liable for such primary obligation to make
payment thereof, or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof, with the amount of any
Contingent Obligation being deemed to be equal to the
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stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith.
"Current Assets" shall mean all assets which would, in accordance with
GAAP, be included as current assets on a balance sheet of the Borrower as of the
date of calculation.
"Current Liabilities" shall mean all liabilities which would, in
accordance with GAAP, be included as current liabilities on a balance sheet of
the Borrower as of the date of calculation, but excluding current maturities in
respect of the Obligations, both principal and interest.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to the Base
Rate plus five percent (5%), but in no event exceeding the Highest Lawful Rate.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, for any period, Net Income for such period plus
Interest Expense, federal and state income taxes, depreciation, amortization,
and other non-cash expenses for such period deducted in the determination of Net
Income for such period.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority with respect to (a)
air emissions, (b) spills, releases, or discharges to soils, any improvements
located thereon, surface water, groundwater, or the sewer, septic, waste
treatment, storage, or disposal systems servicing any Property of the Borrower,
(c) solid or liquid waste disposal, (d) the use, generation, storage,
transportation, or disposal of any Hazardous Substance, or (e) other
environmental, health, or safety matters affecting any Property of the Borrower
or the business conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws as they
may be cited, referenced, and amended from time to time: the Clean Air Act, the
Clean Water Act, the Safe Drinking Water Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Endangered Species Act, the
Resource Conservation and Recovery Act, the Occupational Safety and Health Act,
the Hazardous Materials Transportation Act, the Superfund Amendments and
Reauthorization Act, and the Toxic Substances Control Act; (b) any and all
equivalent environmental statutes of any state in which Property of the Borrower
is situated, as they may be cited, referenced and amended from time to time; (c)
any rules or regulations promulgated under or adopted pursuant to the above
federal and state laws; and (d) any other equivalent federal, state, or local
statute or any requirement, rule, regulation, code, ordinance, or order adopted
pursuant thereto, including, without limitation, those relating to the
generation, transportation, treatment, storage, recycling, disposal, handling,
or release of Hazardous Substances.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
"Facility Fee" shall mean the fee payable to the Lender by the
Borrower pursuant to Section 2.9.
"Final Maturity" shall mean the date which is two years following the
Closing Date.
"Financial Statements" shall mean statements of the financial
condition of the Borrower as at the point in time and for the period indicated
and consisting of those financial statements required to be filed periodically
with the SEC under the 1934 Securities Exchange Act.
"Floating Rate" shall mean an interest rate per annum equal to the
Base Rate from time to time in effect, but in no event exceeding the Highest
Lawful Rate.
"Floating Rate Loan" shall mean any Loan and any portion of the Loan
Balance which the Borrower has requested, in the initial Borrowing Request for
such Loan or a subsequent Borrowing Request for such portion of the Loan
Balance, bearing interest at the Floating Rate, or which pursuant to the terms
hereof is otherwise required to bear interest at the Floating Rate.
"Funded Debt" shall mean the total outstanding Indebtedness of the
Borrower for borrowed money.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants and in effect in the United States from time to
time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other political
subdivision and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to government.
"Hazardous Substances" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum, petroleum products, associated oil or natural gas exploration,
production, and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic substances"
under the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, the Superfund Amendments and Reauthorization Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended, the Toxic Substances Control Act, as amended, or
any other law or regulation now or hereafter enacted or promulgated by any
Governmental Authority.
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"Highest Lawful Rate" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of Texas or
the United States of America, whichever authorizes the greater rate, as such
laws are presently in effect or, to the extent allowed by applicable law, as
such laws may hereafter be in effect and which allow a higher maximum non-
usurious interest rate than such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication, (a)
all liabilities (excluding reserves for deferred income taxes, deferred
compensation liabilities, and other deferred liabilities and credits) which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet, (b) all obligations of such Person
evidenced by bonds, debentures, promissory notes, or similar evidences of
indebtedness, (c) all other indebtedness of such Person for borrowed money, and
(d) all obligations of others, to the extent any such obligation is secured by a
Lien on the assets of such Person (whether or not such Person has assumed or
become liable for the obligation secured by such Lien).
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person or of all
or a substantial part of the Property of such Person, or the filing of a
petition (whether voluntary or instituted by another Person) commencing a case
under Title 11 of the United States Code, seeking liquidation, reorganization,
or rearrangement or taking advantage of any bankruptcy, insolvency, debtor's
relief, or other similar law of the United States, the State of Texas, or any
other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such term
as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Interest Period" shall mean, subject to the limitations set forth in
Section 2.15, with respect to any LIBO Rate Loan, a period commencing on the
date such Loan is made or converted from a Loan of another type pursuant to this
Agreement or the last day of the next preceding Interest Period with respect to
such Loan and ending on the numerically corresponding day in the calendar month
that is one, two, three, six, nine or twelve months thereafter, as the Borrower
may request in the Borrowing Request for such Loan.
"Investment" in any Person shall mean any stock, bond, note, or other
evidence of Indebtedness, or any other security (other than current trade and
customer accounts) of, investment or partnership interest in or loan to, such
Person.
"LIBO Rate" shall mean, with respect to any Interest Period for any
LIBO Rate Loan, the lesser of (a) the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) equal to the average of the offered
quotations appearing on Telerate Page 3750 (or if such Telerate Page shall not
be available, any successor or similar service selected by the Lender and
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the Borrower) as of approximately 11:00 a.m., Central Standard or Daylight
Savings Time, as the case may be, on the day two Business Days prior to the
first day of such Interest Period for Dollar deposits in an amount comparable to
the principal amount of such LIBO Rate Loan and having a term comparable to the
Interest Period for such LIBO Rate Loan, or (b) the Highest Lawful Rate. If
neither such Telerate Page 3750 nor any successor or similar service is
available, the term "LIBO Rate" shall mean, with respect to any Interest Period
for any LIBO Rate Loan, the lesser of (a) the rate per annum (rounded upwards if
necessary, to the nearest 1/16 of 1%) quoted by the Lender at approximately
11:00 a.m., London time (or as soon thereafter as practicable) two Business Days
prior to the first day of the Interest Period for such LIBO Rate Loan for the
offering by the Lender to leading banks in the London interbank market of Dollar
deposits in an amount comparable to the principal amount of such LIBO Rate Loan
and having a term comparable to the Interest Period for such LIBO Rate Loan, or
(b) the Highest Lawful Rate.
"LIBO Rate Loan" shall mean any Loan and any portion of the Loan
Balance which the Borrower has requested, in the initial Borrowing Request for
such Loan or a subsequent Borrowing Request for such portion of the Loan
Balance, bearing interest at the Adjusted LIBO Rate and which is permitted by
the terms hereof to bear interest at the Adjusted LIBO Rate.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of such Property, whether such
interest is based on common law, statute, or contract, and including, but not
limited to, the lien or security interest arising from a mortgage, ship
mortgage, encumbrance, pledge, security agreement, conditional sale or trust
receipt, or a lease, consignment, or bailment for security purposes (other than
true leases or true consignments), liens of mechanics, materialmen, and
artisans, maritime liens and reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Property which secure an obligation owed
to, or a claim by, a Person other than the owner of such Property (for the
purpose of this Agreement, the Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the Property
has been retained by or vested in some other Person for security purposes), and
the filing or recording of any financing statement or other security instrument
in any public office.
"Limitation Period" shall mean any period while any amount remains
owing on the Note and interest on such amount, calculated at the applicable
interest rate, plus any fees or other sums payable under any Loan Document and
deemed to be interest under applicable law, would exceed the amount of interest
which would accrue at the Highest Lawful Rate.
"Loan" shall mean any loan made by the Lender to or for the benefit of
the Borrower pursuant to this Agreement.
"Loan Balance" shall mean, at any time, the outstanding principal
balance of the Note at such time.
"Loan Documents" shall mean this Agreement, the Note, and all other
documents and instruments now or hereafter delivered pursuant to the terms of or
in connection with this
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Agreement, the Note, and all renewals and extensions of, amendments and
supplements to, and restatements of, any or all of the foregoing from time to
time in effect.
"Material Adverse Effect" shall mean any material adverse effect on
the business, operations, properties, or condition (financial or otherwise), of
the Borrower.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period, determined in accordance with GAAP.
"Note" shall mean the promissory note of the Borrower, in the form
attached hereto as Exhibit I, together with all renewals, extensions for any
period, increases, and rearrangements thereof.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Note, (b) the obligation of the Borrower for the payment of
Commitment Fees, and Facility Fees, and (c) all other obligations and
liabilities of the Borrower to the Lender, now existing or hereafter incurred,
under, arising out of or in connection with any Loan Document, and to the extent
that any of the foregoing includes or refers to the payment of amounts deemed or
constituting interest, only so much thereof as shall have accrued, been earned
and which remains unpaid at each relevant time of determination.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any or
all of its functions under ERISA.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been initiated) are
being contested in good faith by appropriate proceedings, and such reserve as
may be required by GAAP shall have been made therefor, (b) Liens in connection
with workers' compensation, unemployment insurance or other social security
(other than Liens created by Section 4068 of ERISA), old-age pension, or public
liability obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by GAAP
shall have been made therefor, (c) Liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics, workmen, materialmen, construction, or
similar Liens arising by operation of law in the ordinary course of business in
respect of obligations which are not yet due or which are being contested in
good faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, and (d) Liens securing purchase money or
lease obligations related to items of equipment used in Borrower's operations
with an aggregate principal balance of no more than $5,000,000.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political subdivision of
any government, or any other form of entity.
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"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower, or any Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Principal Office" shall mean the principal office of the Lender in
Houston, Texas, presently located at 000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx,
Xxxxx 00000.
"Prohibited Transaction" shall have the meaning assigned to such term
in Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from time
to time.
"Regulatory Change" shall mean the passage, adoption, institution, or
amendment of any federal, state, local, or foreign Requirement of Law
(including, without limitation, Regulation D), or any interpretation, directive,
or request (whether or not having the force of law) of any Governmental
Authority or monetary authority charged with the enforcement, interpretation, or
administration thereof, occurring after the Closing Date and applying to a class
of banks including the Lender or its Applicable Lending Office.
"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority, of any
Hazardous Substance into or upon (a) the air, (b) soils or any improvements
located thereon, (c) surface water or groundwater, or (d) the sewer or septic
system, or the waste treatment, storage, or disposal system servicing any
Property of the Borrower.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in Section
4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
(S)2615.
"Requirement of Law" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any applicable law, treaty, ordinance, order,
judgment, rule, decree, regulation, or determination of an arbitrator, court, or
other Governmental Authority, including, without limitation, rules, regulations,
orders, and requirements for permits, licenses, registrations, approvals, or
authorizations, in each case as such now exist or may be hereafter amended and
are applicable to or binding upon such Person or any of its Property or to which
such Person or any of its Property is subject.
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"Responsible Officer" shall mean, as to any Person (other than
Borrower), its President, Chief Executive Officer or any Vice President and, as
to Borrower, any of its Co-Chairmen, any of its Co-Chief Executive Officers or
its Chief Financial Officer.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action or any
comparable state registries or list in any state of the United States.
"Tangible Net Worth" shall mean (a) total assets, as would be
reflected on a balance sheet of the Borrower prepared in accordance with GAAP,
minus (b) total liabilities, as would be reflected on a balance sheet of the
Borrower prepared in accordance with GAAP.
"Transferee" shall mean any Person to which the Lender has sold,
assigned, transferred, or granted a participation in any of the Obligations and
any Person acquiring, by purchase, assignment, transfer, or participation, from
any such purchaser, assignee, transferee, or participant, any part of such
Obligations.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas.
"Year 2000 Compliance" shall mean, with regard to any entity, that all
software, embedded microchips, and other processing capabilities material to the
financial condition of such entity are able to interpret and manipulate data on
and involving all calendar dates correctly and without causing any abnormal
ending scenario relating to dates in and after the year 2000.
1.3 Undefined Financial Accounting Terms. Undefined financial
accounting terms used in this Agreement shall be defined according to GAAP at
the time in effect.
1.4 References. References in this Agreement to Exhibit, Article,
or Section numbers shall be to Exhibits, Articles, or Sections of this
Agreement, unless expressly stated to the contrary. References in this Agreement
to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
1.5 Articles and Sections. This Agreement, for convenience only,
has been divided into Articles and Sections; and it is understood that the
rights and other legal relations of the parties hereto shall be determined from
this instrument as an entirety and without regard to
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the aforesaid division into Articles and Sections and without regard to headings
prefixed to such Articles or Sections.
1.6 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.
1.7 Incorporation of Exhibits. The Exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
ARTICLE II
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TERMS OF FACILITY
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2.1 Revolving Line of Credit.
(a) Upon the terms and conditions (including, without limitation,
the right of the Lender to decline to make any Loan so long as any Default or
Event of Default exists) and relying on the representations and warranties
contained in this Agreement, the Lender agrees, during the Commitment Period, to
make Loans, in immediately available funds at the Applicable Lending Office or
the Principal Office, to or for the benefit of the Borrower, from time to time
on any Business Day designated by the Borrower following receipt by the Lender
of a Borrowing Request; provided, however, no Loan shall exceed the then
existing Available Commitment.
(b) Subject to the terms of this Agreement, during the Commitment
Period, the Borrower may borrow, repay, and reborrow and convert Loans of one
type or with one Interest Period into Loans of another type or with a different
Interest Period. Each borrowing, conversion, and prepayment of principal of
Loans shall be in an amount at least equal to $100,000. Each borrowing,
prepayment, or conversion of or into a Loan of a different type or, in the case
of a LIBO Rate Loan, having a different Interest Period, shall be deemed a
separate borrowing, conversion, and prepayment for purposes of the foregoing,
one for each type of Loan or Interest Period. Anything in this Agreement to the
contrary notwithstanding, the aggregate principal amount of LIBO Rate Loans
having the same Interest Period shall be at least equal to $100,000; and if any
LIBO Rate Loan would otherwise be in a lesser principal amount for any period,
such Loan shall be a Floating Rate Loan during such period.
(c) The Loans shall be made and maintained at the Applicable
Lending Office or the Principal Office and shall be evidenced by the Note.
2.2 Use of Loan Proceeds. Proceeds of all Loans shall be used
solely for capital expenditures, general corporate purposes and working capital
needs.
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2.3 Interest. Subject to the terms of this Agreement (including,
without limitation, Section 2.10), interest on the Loans shall accrue and be
payable at a rate per annum equal to the Floating Rate for each Floating Rate
Loan and the Adjusted LIBO Rate for each LIBO Rate Loan. Interest on all
Floating Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable. Interest on all
LIBO Rate Loans shall be computed on the basis of a year of 360 days, and actual
days elapsed (including the first day but excluding the last day) during the
period for which payable. Notwithstanding the foregoing, interest on past-due
principal and, to the extent permitted by applicable law, past-due interest,
shall accrue at the Default Rate, computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable, and shall be
payable upon demand by the Lender at any time as to all or any portion of such
interest. In the event that the Borrower fails to select the duration of any
Interest Period for any LIBO Rate Loan within the time period and otherwise as
provided herein, such Loan (if outstanding as a LIBO Rate Loan) will be
automatically converted into a Floating Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Floating Rate
Loan) will remain as, or (if not then outstanding) will be made as, a Floating
Rate Loan. Interest provided for herein shall be calculated on unpaid sums
actually advanced and outstanding pursuant to the terms of this Agreement and
only for the period from the date or dates of such advances until repayment.
2.4 Repayment of Loans and Interest. Accrued and unpaid
interest on each outstanding Floating Rate Loan shall be due and payable
quarterly commencing on the first day of October, 1999, and continuing on the
first day of each third calendar month thereafter while any Floating Rate Loan
remains outstanding, the payment in each instance to be the amount of interest
which has accrued and remains unpaid in respect of the relevant Loan. Accrued
and unpaid interest on each outstanding LIBO Rate Loan shall be due and payable
on the last day of the Interest Period for such LIBO Rate Loan and, in the case
of any Interest Period in excess of three months, on the day of the third
calendar month following the commencement of such Interest Period corresponding
to the day of the calendar month on which such Interest Period commenced, the
payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan. The Loan Balance, together with
all accrued and unpaid interest thereon, shall be due and payable at Final
Maturity. At the time of making each payment hereunder or under the Note, the
Borrower shall specify to the Lender the Loans or other amounts payable by the
Borrower hereunder to which such payment is to be applied. In the event the
Borrower fails to so specify, or if an Event of Default has occurred or is
continuing, the Lender may apply such payment as it may elect in its sole
discretion.
2.5 Outstanding Amounts. The outstanding principal balance of the
Note reflected by the notations by the Lender on its records or ledger sheets
affixed to the Note shall be deemed rebuttably presumptive evidence of the
principal amount owing on the Note. The liability for payment of principal and
interest evidenced by the Note shall be limited to principal amounts actually
advanced and outstanding pursuant to this Agreement and interest on such amounts
calculated in accordance with this Agreement.
2.6 Time, Place, and Method of Payments. All payments required
pursuant to this Agreement or the Note shall be made in lawful money of the
United States of America and
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in immediately available funds, shall be deemed received by the Lender on the
next Business Day following receipt if such receipt is after 2:00 p.m., Central
Standard or Daylight Savings Time, as the case may be, on any Business Day, and
shall be made at the Principal Office. Except as provided to the contrary
herein, if the due date of any payment hereunder or under the Note would
otherwise fall on a day which is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.
2.7 Voluntary Prepayments and Conversions of Loans. Subject to
applicable provisions of this Agreement, the Borrower shall have the right at
any time or from time to time to prepay Loans and to convert Loans of one type
or with one Interest Period into Loans of another type or with a different
Interest Period; provided, however, that (a) the Borrower shall give the Lender
notice of each such prepayment or conversion of all or any portion of a LIBO
Rate Loan no less than two Business Days prior to prepayment or conversion, (b)
any LIBO Rate Loan may be prepaid or converted only on the last day of an
Interest Period for such Loan, (c) the Borrower shall pay all accrued and unpaid
interest on the amounts prepaid or converted, and (d) no such prepayment or
conversion shall serve to postpone the repayment when due of any Obligation.
2.8 Commitment Fee. In addition to interest on the Note as
provided herein and all other fees payable hereunder and to compensate the
Lender for maintaining funds available, the Borrower shall pay to the Lender, in
immediately available funds, on the first day of October, 1999, and on the first
day of each third calendar month thereafter during the Commitment Period, a fee
in the amount of three-eighths percent (3/8%) per annum, calculated on the
basis of a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day), on the average daily
amount of the Available Commitment during the preceding quarterly period.
2.9 Facility Fee. In addition to interest on the Note as provided
herein and all other fees payable hereunder and to compensate the Lender for the
costs of the extension of credit hereunder, the Borrower shall pay to the Lender
on the Closing Date, in immediately available funds, a facility fee in the
amount of $25,000.
2.10 General Provisions Relating to Interest.
(a) It is the intention of the parties hereto to comply strictly
with the usury laws of the State of Texas and the United States of America.
In this connection, there shall never be collected, charged, or received on the
sums advanced hereunder interest in excess of that which would accrue at the
Highest Lawful Rate. For purposes of Chapter 10 of Subtitle 1 of Title 79, Texas
Revised Civil Statutes, the Borrower agrees that the Highest Lawful Rate shall
be the "weekly ceiling" as defined in such Section, provided that the Lender may
also rely, to the extent permitted by applicable laws of the State of Texas or
the United States of America, on alternative maximum rates of interest under
other laws of the State of Texas or the United States of America applicable to
the Lender, if greater.
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(b) Notwithstanding anything herein or in the Note to the
contrary, during any Limitation Period, the interest rate to be charged on
amounts evidenced by the Note shall be the Highest Lawful Rate, and the
obligation, if any, of the Borrower for the payment of fees or other charges
deemed to be interest under applicable law shall be suspended. During any period
or periods of time following a Limitation Period, to the extent permitted by
applicable laws of the State of Texas or the United States of America, the
interest rate to be charged hereunder shall remain at the Highest Lawful Rate
until such time as there has been paid to the Lender (i) the amount of interest
in excess of that accruing at the Highest Lawful Rate that the Lender would have
received during the Limitation Period had the interest rate remained at the
otherwise applicable rate, and (ii) all interest and fees otherwise payable to
the Lender but for the effect of such Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on the
Note or under this Agreement or any other Loan Document include amounts which by
law are deemed interest and which would exceed the amount permitted if the
Highest Lawful Rate were in effect, the Borrower stipulates that such payment
and collection will have been and will be deemed to have been, to the extent
permitted by applicable laws of the State of Texas or the United States of
America, the result of mathematical error on the part of the Borrower and the
Lender; and the Lender shall promptly refund the amount of such excess (to the
extent only of such interest payments in excess of that which would have accrued
and been payable on the basis of the Highest Lawful Rate) upon discovery of such
error by the Lender or notice thereof from the Borrower. In the event that the
maturity of any Obligation is accelerated, by reason of an election by the
Lender or otherwise, or in the event of any required or permitted prepayment,
then the consideration constituting interest under applicable laws may never
exceed the Highest Lawful Rate; and excess amounts paid which by law are deemed
interest, if any, shall be credited by the Lender on the principal amount of the
Obligations, or if the principal amount of the Obligations shall have been paid
in full, refunded to the Borrower.
(d) All sums paid, or agreed to be paid, to the Lender for the
use, forbearance and detention of the proceeds of any advance hereunder shall,
to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full term hereof until paid in full so that the actual
rate of interest is uniform but does not exceed the Highest Lawful Rate
throughout the full term hereof.
2.11 Yield Protection.
(a) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to the Lender from
time to time such amounts as the Lender may reasonably determine are necessary
to compensate it for any Additional Costs incurred by the Lender.
(b) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to the Lender from
time to time on request such amounts as the Lender may determine are necessary
to compensate the Lender for any costs attributable to the maintenance by the
Lender (or any Applicable Lending Office), pursuant to any Regulatory Change, of
capital in respect of the Commitment, such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets or
equity of
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the Lender (or any Applicable Lending Office) to a level below that which the
Lender (or any Applicable Lending Office) could have achieved but for such
Regulatory Change.
(c) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to the Lender such
amounts as shall be sufficient in the reasonable opinion of the Lender to
compensate it for any loss, cost, or expense incurred by and as a result of:
(i) any payment, prepayment, or conversion by the Borrower
of a LIBO Rate Loan on a date other than the last day of an Interest Period
for such Loan; or
(ii) any failure by the Borrower to borrow a LIBO Rate Loan
from the Lender on the date for such borrowing specified in the relevant
Borrowing Request;
such compensation to include, without limitation, with respect to any LIBO Rate
Loan, an amount equal to the excess, if any, of (A) the amount of interest which
would have accrued on the principal amount so paid, prepaid, converted, or not
borrowed for the period from the date of such payment, prepayment, conversion,
or failure to borrow to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for such
Loan which would have commenced on the date of such failure to borrow) at the
applicable rate of interest for such Loan provided for herein over (B) the
interest component (as reasonably determined by the Lender) of the amount (as
reasonably determined by the Lender) the Lender would have bid in the London
interbank market for Dollar deposits of amounts comparable to such principal
amount and maturities comparable to such period.
(d) Determinations by the Lender for purposes of this Section
of the effect of any Regulatory Change on capital maintained, its costs or rate
of return, maintaining Loans, its obligation to make Loans, or on amounts
receivable by it in respect of Loans or such obligations, and the additional
amounts required to compensate the Lender under this Section shall be
conclusive, absent manifest error, provided that such determinations are made on
a reasonable basis. The Lender shall furnish the Borrower with a certificate
setting forth in reasonable detail the basis and amount of increased costs
incurred or reduced amounts receivable as a result of any such event, and the
statements set forth therein shall be conclusive, absent manifest error. The
Lender shall (i) notify the Borrower, as promptly as practicable after the
Lender obtains knowledge of any Additional Costs or other sums payable pursuant
to this Section and determines to request compensation therefor, of any event
occurring after the Closing Date which will entitle the Lender to compensation
pursuant to this Section; provided that the Borrower shall not be obligated for
the payment of any Additional Costs or other sums payable pursuant to this
Section to the extent such Additional Costs or other sums accrued prior to the
expiration of the Interest Period then in effect for each LIBO Rate Loan; and
(ii) designate a different Applicable Lending Office for the Loans of the Lender
affected by such event if such designation will avoid the need for or reduce the
amount of such compensation and will not, in the sole opinion of the Lender, be
disadvantageous to the Lender. If the Lender requests compensation from the
Borrower under this Section, the Borrower may, by notice to the Lender, require
that the Loans by the Lender of the type with respect to which such compensation
is requested be converted into Floating Rate Loans in accordance with Section
2.7. Any
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compensation requested by the Lender pursuant to this Section shall be due and
payable to the Lender within five days of delivery of any such notice by the
Lender to the Borrower.
(e) The Lender agrees that it shall not request, and the
Borrower shall not be obligated to pay, any Additional Costs or other sums
payable pursuant to this Section unless similar additional costs and other sums
payable are also generally assessed by the Lender against other customers of the
Lender similarly situated where such customers are subject to documents
providing for such assessment.
2.12 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, no more than six separate Loans shall be outstanding at any one
time, with, for purposes of this Section, all Floating Rate Loans constituting
one Loan and all LIBO Rate Loans for the same Interest Period constituting one
Loan. Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any interest rate for any LIBO Rate Loan for any Interest
Period therefor:
(a) the Lender determines (which determination shall be
conclusive) that quotations of interest rates for the deposits referred to in
the definition of "LIBO Rate" in Section 1.2 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loan as provided in this Agreement; or
(b) the Lender determines (which determination shall be
conclusive) that the rates of interest referred to in the definition of "LIBO
Rate" in Section 1.2 upon the basis of which the rate of interest for such Loan
for such Interest Period is to be determined do not accurately reflect the cost
to the Lender of making or maintaining such Loan for such Interest Period,
then the Lender shall give the Borrower prompt notice thereof; and so long as
such condition remains in effect, the Lender shall be under no obligation to
make LIBO Rate Loans or to convert Loans of any other type into LIBO Rate Loans,
and the Borrower shall, on the last day of the then current Interest Period for
each outstanding LIBO Rate Loan, either prepay such LIBO Rate Loan or convert
such Loan into another type of Loan in accordance with Section 2.7. Before
giving such notice pursuant to this Section, the Lender will designate a
different available Applicable Lending Office for LIBO Rate Loans or take such
other action as the Borrower may request if such designation or action will
avoid the need to suspend the obligation of the Lender to make LIBO Rate Loans
hereunder and will not, in the opinion of the Lender, be disadvantageous to the
Lender. Notwithstanding the foregoing provisions, Lender agrees that it shall
not exercise its right pursuant to the foregoing provisions to suspend its
obligations to make LIBO Rate Loans hereunder unless Lender has suspended its
obligations to make the same type of loans with all other customers who are
subject to documents providing for a similar right in favor of Lender.
2.13 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender or its
Applicable Lending Office to (a) honor its obligation to make any type of LIBO
Rate Loans hereunder, or (b) maintain any type of LIBO Rate Loans hereunder,
then the Lender shall promptly notify the Borrower thereof; and the obligation
of the Lender hereunder to make such type of LIBO Rate Loans and to convert
other
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types of Loans into LIBO Rate Loans of such type shall be suspended until such
time as the Lender may again make and maintain LIBO Rate Loans of such type, and
the outstanding LIBO Rate Loans of such type shall be converted into Floating
Rate Loans in accordance with Section 2.7. Before giving such notice pursuant to
this Section, the Lender will designate a different available Applicable Lending
Office for LIBO Rate Loans or take such other action as the Borrower may request
if such designation or action will avoid the need to suspend the obligation of
the Lender to make LIBO Rate Loans and will not, in the opinion of the Lender,
be disadvantageous to the Lender.
2.14 Regulatory Change. In the event that by reason of any
Regulatory Change, the Lender (a) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of the Lender which includes deposits by reference to which
the interest rate on any LIBO Rate Loan is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
which includes any LIBO Rate Loan, or (b) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, at
the election of the Lender with notice to the Borrower, the obligation of the
Lender to make such LIBO Rate Loans and to convert Floating Rate Loans into such
LIBO Rate Loans shall be suspended until such time as such Regulatory Change
ceases to be in effect, and all such outstanding LIBO Rate Loans shall be
converted into Floating Rate Loans in accordance with Section 2.7.
Notwithstanding the foregoing provisions, Lender agrees that it shall not
exercise its right pursuant to the foregoing provisions to suspend its
obligations to make LIBO Rate Loans hereunder unless Lender has suspended its
obligations to make the same type of loans with all other customers who are
subject to documents providing for a similar right in favor of Lender.
2.15 Limitations on Interest Periods. Each Interest Period
selected by the Borrower (a) which commences on the last Business Day of a
calendar month (or, with respect to any LIBO Rate Loan, any day for which there
is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month, (b) which would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, if such next succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day), (c) which would otherwise commence before and end after Final Maturity
shall end on Final Maturity, and (d) shall have a duration of not less than one
month, as to any LIBO Rate Loan, and, if any Interest Period would otherwise be
a shorter period, the relevant Loan shall be a Floating Rate Loan during such
period.
ARTICLE III
-----------
CONDITIONS
----------
The obligations of the Lender to enter into this Agreement and to make
Loans are subject to the satisfaction of the following conditions precedent:
3.1 Receipt of Loan Documents and Other Items. The Lender shall
have no obligation under this Agreement unless and until all matters incident to
the consummation of the transactions contemplated herein, and the Lender shall
have received, reviewed, and approved
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the following documents and other items, appropriately executed when necessary
and, where applicable, acknowledged by one or more authorized officers of the
Borrower, all in form and substance satisfactory to the Lender and dated, where
applicable, of even date herewith or a date prior thereto and acceptable to the
Lender:
(a) multiple counterparts of this Agreement as requested by the
Lender;
(b) the Note;
(c) copies of the Articles of Incorporation or Certificate of
Incorporation and all amendments thereto and the bylaws and all amendments
thereto of the Borrower, accompanied by a certificate issued by the secretary or
an assistant secretary of the Borrower, to the effect that each such copy is
correct and complete;
(d) certificates of incumbency and signatures of all officers of
the Borrower who are authorized to execute Loan Documents on behalf of the
Borrower such entities, each such certificate being executed by the secretary or
an assistant secretary of the Borrower;
(e) copies of corporate resolutions approving the Loan Documents
and authorizing the transactions contemplated herein and therein, duly adopted
by the board of directors of the Borrower, accompanied by certificates of the
secretary or an assistant secretary of the Borrower, to the effect that such
copies are true and correct copies of resolutions duly adopted at a meeting or
by unanimous consent of the board of directors of the Borrower, and that such
resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect, and
are in full force and effect as of the date of such certificate;
(f) audited Financial Statements of the Borrower as of December 31,
1998 and quarterly unaudited Financial Statements of the Borrower as of June 30,
1999;
(g) certificates dated as of a recent date from the Secretary of
State or other appropriate Governmental Authority evidencing the existence or
qualification and good standing of the Borrower in its jurisdiction of
incorporation and in any other jurisdictions where it does business;
(h) the opinion of Gardere, Wynne, Xxxxxx & Xxxxx, L.L.P., counsel
to the Borrower, in a form acceptable to the Lender; and
(i) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Lender may reasonably
request.
3.2 Each Loan. In addition to the conditions precedent stated
elsewhere herein, the Lender shall not be obligated to make any Loan unless:
(a) the Borrower shall have delivered to the Lender a Borrowing
Request at least the requisite time prior to the requested date for the relevant
Loan, and each statement or certification made in such Borrowing Request shall
be true and correct in all material respects on the requested date for such
Loan;
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(b) no Event of Default or Default shall exist or will occur as a
result of the making of the requested Loan;
(c) if requested by the Lender, the Borrower shall have delivered
evidence reasonably satisfactory to the Lender substantiating any of the matters
contained in this Agreement which are necessary to enable the Borrower to
qualify for such Loan;
(d) the Lender shall have received, reviewed, and approved such
additional documents and items as described in Section 3.1 as may be requested
by the Lender with respect to such Loan;
(e) each of the representations and warranties contained in this
Agreement shall be true and correct and shall be deemed to be repeated by the
Borrower as if made on the requested date for such Loan (except that the
representation in the last sentence of Section 4.5 shall not be deemed to have
been repeated upon the requested date for such Loan).
(f) neither the consummation of the transactions contemplated
hereby nor the making of such Loan shall contravene, violate, or conflict with
any Requirement of Law;
(g) the Lender shall have received the payment of all Facility
Fees and other fees payable to the Lender hereunder and reimbursement from the
Borrower, or special legal counsel for the Lender shall have received payment
from the Borrower, for (i) all reasonable fees and expenses of counsel to the
Lender for which the Borrower is responsible pursuant to applicable provisions
of this Agreement and for which invoices have been presented as of or prior to
the date of the relevant Loan, and (ii) estimated fees charged by filing
officers and other public officials incurred or to be incurred in connection
with the filing and recordation of any Security Instruments, for which invoices
have been presented as of or prior to the date of the requested Loan; and
(h) all matters incident to the consummation of the transactions
hereby contemplated shall be satisfactory to the Lender.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lender to enter into this Agreement and to make the
Loans, the Borrower represents and warrants to the Lender (which representations
and warranties shall survive the delivery of the Note) that:
4.1 Due Authorization. The execution and delivery by the Borrower
of this Agreement and the borrowings hereunder, the execution and delivery by
the Borrower of the Note, the repayment of the Note and interest and fees
provided for in the Note and this Agreement, and the performance of all
obligations of the Borrower under the Loan Documents are within the power of the
Borrower, have been duly authorized by all necessary corporate action by the
Borrower, and do not and will not (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law, (c)
contravene or conflict with any indenture, instrument, or other agreement to
which the Borrower is a party or by which
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any Property of the Borrower may be presently bound or encumbered, or (d) result
in or require the creation or imposition of any Lien in, upon or of any Property
of the Borrower under any such indenture, instrument, or other agreement, other
than the Loan Documents.
4.2 Corporate Existence. The Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents, when duly
executed and delivered by the Borrower, will be the legal, valid, and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms.
4.4 Title to Assets. The Borrower has good and indefeasible title
to all of its Properties, free and clear of all Liens except Permitted Liens.
4.5 Scope and Accuracy of Financial Statements. The Financial
Statements of the Borrower as of June 30, 1999, present fairly the financial
position and results of operations and cash flows of the Borrower in accordance
with GAAP as at the relevant point in time or for the period indicated, as
applicable. No event or circumstance has occurred since June 30, 1999, which
could reasonably be expected to have a Material Adverse Effect.
4.6 No Material Misstatements. No information, exhibit, statement,
or report furnished to the Lender by or at the direction of the Borrower in
connection with this Agreement contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not misleading as of the date made or deemed made.
4.7 Liabilities, Litigation, and Restrictions. Other than as
listed under the heading. "Liabilities" on Exhibit IV attached hereto, the
Borrower has no liabilities, direct or contingent, which may materially and
adversely affect its business or operations. Except as set forth under the
heading "Litigation" on Exhibit IV hereto, no litigation or other action of any
nature affecting the Borrower is pending before any Governmental Authority or,
to the best knowledge of the Borrower, threatened against or affecting the
Borrower which might reasonably be expected to result in any impairment of its
ownership of its Property or have a Material Adverse Effect. To the best
knowledge of the Borrower, after due inquiry, no unusual or unduly burdensome
restriction, restraint or hazard exists by contract, Requirement of Law, or
otherwise relative to the business or operations of the Borrower other than such
as relate generally to Persons engaged in business activities similar to those
conducted by the Borrower.
4.8 Authorizations; Consents. Except as expressly contemplated by
this Agreement, no authorization, consent, approval, exemption, franchise,
permit, or license of, or filing with, any Governmental Authority or any other
Person is required to authorize or is otherwise required in connection with the
valid execution and delivery by the Borrower of the Loan Documents or any
instrument contemplated hereby, the repayment by the Borrower of the Note and
interest and fees provided in the Note and this Agreement, or the performance by
the Borrower of the Obligations.
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4.9 Compliance with Laws. The Borrower and its Property are in
compliance with all applicable Requirements of Law, including, without
limitation, Environmental Laws, and ERISA, except to the extent non-compliance
with any such Requirements of Law could not reasonably be expected to have a
Material Adverse Effect.
4.10 ERISA. No Reportable Event has occurred with respect to any
Single Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrower, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Single Employer Plan maintained by the Borrower
or any Commonly Controlled Entity (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits. Neither
the Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan for which there is any withdrawal
liability. As of the most recent valuation date applicable to any Multiemployer
Plan, neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Borrower or such Commonly Controlled
Entity were to withdraw completely from such Multiemployer Plan. Neither the
Borrower nor any Commonly Controlled Entity has received notice that any
Multiemployer Plan is Insolvent or in Reorganization. To the best knowledge of
the Borrower, no such Insolvency or Reorganization is reasonably likely to
occur. Based upon GAAP existing as of the date of this Agreement and current
factual circumstances, the Borrower has no reason to believe that the annual
cost during the term of this Agreement to the Borrower and all Commonly
Controlled Entities for post-retirement benefits to be provided to the current
and former employees of the Borrower and all Commonly Controlled Entities under
Plans which are welfare benefit plans (as defined in Section 3(l) of ERISA)
will, in the aggregate, have a Material Adverse Effect.
4.11 Environmental Laws. To the best knowledge and belief of the
Borrower, except as would not have a Material Adverse Effect, or as described on
Exhibit IV under the heading "Environmental Matters:"
(a) no Property of the Borrower is currently on or has ever been on
any federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported,
and/or disposed of by the Borrower at a site which was, at the time of such
generation, transportation, and/or disposal, or has since become, a Superfund
Site;
(c) except in accordance with applicable Requirements of Law or the
terms of a valid permit, license, certificate, or approval of the relevant
Governmental Authority, no Release of Hazardous Substances by the Borrower or
from, affecting, or related to any Property of the Borrower or adjacent to any
Property of the Borrower has occurred; and
(d) no Environmental Complaint has been received by the Borrower.
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4.12 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, T, U, or X.
4.13 Investment Company Act Compliance. The Borrower is not, nor is
the Borrower directly or indirectly controlled by or acting on behalf of any
Person which is, an "investment company" or an "affiliated person" of an
investment company" within the meaning of the Investment Company Act of 1940, as
amended.
4.14 Public Utility Holding Company Act Compliance. The Borrower
is not a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.15 Proper Filing of Tax Returns; Payment of Taxes Due. The
Borrower has duly and properly filed its United States income tax return and all
other tax returns which are required to be filed and has paid all taxes due
except such as are being contested in good faith and as to which adequate
provisions and disclosures have been made. The respective charges and reserves
on the books of the Borrower with respect to taxes and other governmental
charges are adequate.
4.16 Casualties or Taking of Property. Except as disclosed on
Exhibit IV under the heading "Casualties", since June 30, 1999, neither the
business nor any Property of the Borrower has been materially adversely affected
as a result of any fire, explosion, earthquake, flood, drought, windstorm,
accident, strike or other labor disturbance, embargo, requisition or taking of
Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.17 Locations of Borrower. The principal place of business and
chief executive office of the Borrower is located at the address of the Borrower
set forth in Section 8.3 or at such other location as the Borrower may have, by
proper written notice hereunder, advised the Lender, provided that such other
location is within a state in which appropriate financing statements from the
Borrower in favor of the Lender have been filed.
4.18 Subsidiaries. The Borrower has no Subsidiaries except those
described on Exhibit IV under the heading "Subsidiaries".
ARTICLE V
---------
AFFIRMATIVE COVENANTS
---------------------
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower shall:
5.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the
-22-
reasonable request of the Lender, make such records available for inspection by
the Lender and, at the expense of the Borrower, allow the Lender to make and
take away copies thereof.
5.2 Quarterly Financial Statements; Compliance Certificates.
Deliver to the Lender, (a) on or before the 45th day after the close of each of
the first three quarterly periods of each fiscal year of the Borrower, a copy of
the Form 10-Q filed with the SEC under the Securities Exchange Act of 1934 with
respect to such quarterly period, and (b) on or before the 45th day after the
close of each fiscal quarter, with the exception of the last fiscal quarter, a
Compliance Certificate.
5.3 Annual Financial Statements. Deliver to the Lender, on or
before the 90th day after the close of each fiscal year of the Borrower, a copy
of the Form 10-K filed with the SEC under the Securities Exchange Act of 1934
with respect to such fiscal year and a Compliance Certificate.
5.4 Notices of Certain Events. Deliver to the Lender, immediately
upon having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower and setting forth the relevant event or circumstance and
the steps being taken by the Borrower with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual
obligation of the Borrower, or any litigation, investigation, or proceeding
between the Borrower and any Governmental Authority which, in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower as a
defendant or in which any Property of the Borrower is subject to a claim and in
which the amount involved is $100,000 or more and which is not covered by
insurance or in which injunctive or similar relief is sought;
(d) the receipt by the Borrower of any Environmental Complaint;
(e) any actual, proposed, or threatened testing or
other investigation by any Governmental Authority or other Person concerning the
environmental condition of, or relating to, any Property of the Borrower
following any allegation of a violation of any Requirement of Law;
(f) any Release of Hazardous Substances by the Borrower or from,
affecting, or related to any Property of the Borrower except in accordance with
applicable Requirements of Law or the terms of a valid permit, license,
certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or forfeiture
of or failure to renew, any permit, license, registration, approval, or
authorization which could reasonably be expected to have a Material Adverse
Effect;
(g) any change in the senior management of the Borrower;
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(h) any Reportable Event or imminently expected Reportable Event
with respect to any Plan; any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan; the institution of
proceedings or the taking of any other action by the PBGC, the Borrower, or any
Commonly Controlled Entity or Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Single Employer
Plan or Multiemployer Plan; or any Prohibited Transaction in connection with any
Plan or any trust created thereunder and the action being taken by the Internal
Revenue Service with respect thereto, which, in each case, could reasonably be
expected to have a Material Adverse Effect; and
(i) any other event or condition which could reasonably be expected
to have a Material Adverse Effect.
5.5 Additional Information. Furnish to the Lender, promptly upon
the request of the Lender, such additional financial or other information
concerning the assets, liabilities, operations, and transactions of the Borrower
as the Lender may from time to time request.
5.6 Compliance with Laws. Except to the extent the failure to
comply or cause compliance would not have a Material Adverse Effect, comply with
all applicable Requirements of Law, including, without limitation, (a)
Environmental Laws, and (b) all permits, licenses, registrations, approvals, and
authorizations (i) related to any natural or environmental resource or media
located on, above, within, in the vicinity of, related to or affected by any
Property of the Borrower, (ii) required for the performance of the operations of
the Borrower, or (iii) applicable to the use, generation, handling, storage,
treatment, transport, or disposal of any Hazardous Substances; and cause all
employees, crew members, agents, contractors, subcontractors, and future lessees
(pursuant to appropriate lease provisions) of the Borrower, while such Persons
are acting within the scope of their relationship with the Borrower, to comply
with all such Requirements of Law as may be necessary or appropriate to enable
the Borrower to so comply.
5.7 Payment of Assessments and Charges. Pay all taxes,
assessments, governmental charges, rent, and other Indebtedness which, if
unpaid, might become a Lien against the Property of the Borrower, except any of
the foregoing being contested in good faith and as to which adequate reserve in
accordance with GAAP has been established or unless failure to pay would not
have a Material Adverse Effect.
5.8 Maintenance of Corporate Existence and Good Standing. Maintain
its corporate existence or qualification and good standing in its jurisdictions
of incorporation and in all jurisdictions wherein the Property now owned or
hereafter acquired or business now or hereafter conducted necessitates same,
unless the failure to do so would not have a Material Adverse Effect.
5.9 Payment of Notes; Performance of Obligations. Pay the Note
according to the reading, tenor, and effect thereof, as modified
hereby, and do and perform every act and discharge all of its other Obligations.
-24-
5.10 Further Assurances. Promptly cure any defects in the execution
and delivery of any of the Loan Documents and all agreements contemplated
thereby, and execute, acknowledge, and deliver such other assurances and
instruments as shall, in the opinion of the Lender, be necessary to fulfill the
terms of the Loan Documents.
5.11 Initial Fees and Expenses of Counsel to Lender. Upon request
by the Lender, promptly reimburse the Lender for all reasonable fees and
expenses of Xxxxxxx Xxxxxx L.L.P., special counsel to the Lender, in connection
with the preparation of this Agreement and all documentation contemplated
hereby, the satisfaction of the conditions precedent set forth herein, and the
consummation of the transactions contemplated in this Agreement.
5.12 Subsequent Fees and Expenses of Lender. Upon request by the
Lender, promptly reimburse the Lender (to the fullest extent permitted by law)
for all amounts reasonably expended, advanced, or incurred by or on behalf of
the Lender to satisfy any obligation of the Borrower under any of the Loan
Documents; to collect the Obligations; to ratify, amend, restate, or prepare
additional Loan Documents, as the case may be; which amounts shall be deemed
compensatory in nature and liquidated as to amount upon notice to the Borrower
by the Lender and which amounts shall include, but not be limited to (a) all
court costs, (b) reasonable attorneys' fees, (c) reasonable fees and expenses of
auditors and accountants incurred to protect the interests of the Lender, (d)
fees and expenses incurred in connection with the participation by the Lender as
a member of the creditors' committee in a case commenced under any Insolvency
Proceeding, (e) fees and expenses incurred in connection with lifting the
automatic stay prescribed in (S)362 Title 11 of the United States Code, and (f)
fees and expenses incurred in connection with any action pursuant to (S)1129
Title 11 of the United States Code all reasonably incurred by the Lender in
connection with the collection of any sums due under the Loan Documents,
together with interest at the per annum interest rate equal to the Floating
Rate, calculated on a basis of a calendar year of 365 or 366 days, as the case
may be, counting the actual number of days elapsed, on each such amount from the
date of notification that the same was expended, advanced, or incurred by the
Lender until the date it is repaid to the Lender, with the obligations under
this Section surviving the non-assumption of this Agreement in a case commenced
under any Insolvency Proceeding and being binding upon the Borrower and/or a
trustee, receiver, custodian, or liquidator of the Borrower appointed in any
such case.
5.13 Maintenance of Insurance. Maintain insurance with respect to
its Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Lender and, upon any renewal of any such insurance and at
other times upon request by the Lender, furnish to the Lender evidence,
satisfactory to the Lender, of the maintenance of such insurance.
5.14 INDEMNIFICATION. INDEMNIFY AND HOLD THE LENDER AND ITS
SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, AND
AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY SECURITY
INSTRUMENT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES,
LIABILITIES, FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS
AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS AND ENFORCEMENT
-25-
ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES), ARISING DIRECTLY
OR INDIRECTLY, IN WHOLE OR IN PART, FROM THE PERFORMANCE AND ENFORCEMENT OF THIS
LOAN DOCUMENT, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO
THIS LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY; WITH THE FOREGOING
INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT.
5.15 Borrower's Year 2000 Compliance.
(A) Furnish such additional reasonable information, in Borrower's
possession with respect to Borrower's activities, course of action and progress
towards becoming Year 2000 Compliant as Lender may request from time to time.
Borrower shall have no obligation to deliver any information pursuant to this
Section 5.15(A) at any time after January 31, 2000.
(B) In the event of any change in circumstances that causes or will
likely cause any of Borrower's representations and warranties with respect to
its being or becoming Year 2000 Compliant to no longer be true in any material
respect (hereinafter referred to as a "Change in Circumstances") then Borrower
shall promptly, and in any event within ten (10) days of receipt of information
regarding a Change in Circumstances, provide Lender with written notice (the
"Notice") that describes in reasonable detail the Change in Circumstances and
how such Change in Circumstances caused or will likely cause Borrower's
representations and warranties with respect to being or becoming Year 2000
Compliant to no longer be true in any material respect. Borrower shall, within
ten (10) days of a request, also provide Lender with any additional information
Lender requests of Borrower in connection with any Notice and the Change in
Circumstances described in such Notice.
ARTICLE VI
----------
NEGATIVE COVENANTS
------------------
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower will not:
6.1 Liens. Create, incur, assume, or suffer to exist any Lien on
any of its Property, whether now owned or hereafter acquired; provided, however,
the foregoing restrictions shall not apply to Permitted Liens.
6.2 Changes in Corporate Structure. Enter into any transaction of
consolidation, merger, or amalgamation in which Borrower is not the surviving
entity; liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution).
6.3 ERISA Compliance. Permit any Plan maintained by it or any
Commonly Controlled Entity to (a) engage in any Prohibited Transaction, (b)
incur any "accumulated funding deficiency," as such term is defined in Section
302 of ERISA, or (c) terminate in a manner which could result in the imposition
of a Lien on any Property of the Borrower pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or
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acquire any Person or the assets of any Person which has now or has had at any
time an obligation to contribute to any Multiemployer Plan.
6.4 Tangible Net Worth. Permit Tangible Net Worth as of the close
of any fiscal quarter to be less than $130,000,000 for all periods beginning
with the September 30, 1998 Financial Statements.
6.5 Current Ratio. Permit the ratio of Current Assets to Current
Liabilities at the close of any fiscal quarter, beginning with the September 30,
1998 Financial Statements, to be less than 1.25 to 1.00.
6.6 Funded Debt to Capitalization. Permit the ratio of Funded
Debt to Capitalization, at the close of any fiscal quarter, beginning with the
September 30, 1998 Financial Statements, to be more than 40%.
6.7 Funded Debt to EBITDA. Permit the ratio of Funded Debt to
EBITDA, at the close of any fiscal quarter, beginning with the September 30,
1998 Financial Statements, for the previous four quarters to be more than 3.00
to 1.00. This ratio shall be calculated on a rolling four quarter basis
thereafter.
ARTICLE VII
-----------
EVENTS OF DEFAULT
-----------------
7.1 Enumeration of Events of Default. Any of the following events
shall constitute an Event of Default:
(a) default shall be made in the payment when due of any
installment of principal or interest under this Agreement or the Note or in the
payment when due of any fee or other sum payable under any Loan Document and
such default as to interest or fees only shall have continued for three days
after notice has been given by Lender to Borrower;
(b) default shall be made by the Borrower in the due observance or
performance of any of its obligations under the Loan Documents, and such default
shall continue for 30 days after notice thereof to the Borrower by the Lender;
(c) any representation or warranty made by the Borrower in any of
the Loan Documents proves to have been untrue in any material respect or any
representation, statement (including Financial Statements), certificate, or data
furnished or made to the Lender in connection herewith proves to have been
untrue in any material respect as of the date the facts therein set forth were
stated or certified;
(d) default shall be made by the Borrower (as principal or
guarantor or other surety) in the payment or performance of any bond, debenture,
note, or other Indebtedness or under any credit agreement, loan agreement,
indenture, promissory note, or similar agreement or instrument executed in
connection with any of the foregoing, and such default shall remain unremedied
for in excess of the period of grace, if any, with respect thereto;
-27-
(e) the Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, or liquidator of it or all or a substantial part of its
assets, (ii) file a voluntary petition commencing an Insolvency Proceeding,
(iii) make a general assignment for the benefit of creditors, (iv) be unable, or
admit in writing its inability, to pay its debts generally as they become due,
or (v) file an answer admitting the material allegations of a petition filed
against it in any Insolvency Proceeding;
(f) an order, judgment, or decree shall be entered against the
Borrower by any court of competent jurisdiction or by any other duly authorized
authority, on the petition of a creditor or otherwise, granting relief in any
Insolvency Proceeding or approving a Petition seeking reorganization or an
arrangement of its debts or appointing a receiver, trustee, conservator,
custodian, or liquidator of it or all or any substantial part of its assets, and
such order, judgment, or decree shall not be dismissed or stayed within 30 days;
(g) the levy against any significant portion of the Property of
the Borrower, or any execution, garnishment, attachment, sequestration, or other
writ or similar proceeding which is not permanently dismissed or discharged
within 30 days after the levy;
(h) a final and non-appealable order, judgment, or decree shall be
entered against the Borrower for money damages and/or Indebtedness due in an
amount in excess of $100,000, and such order, judgment, or decree shall not be
dismissed or stayed within 30 days;
(i) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against the Borrower under the
Racketeering Influence and Corrupt Organizations Statute (18 U.S.C. (S) 1961 et
seq.), the result of which could be the forfeiture or transfer of any material
Property of the Borrower subject to a Lien in favor of the Lender without (i)
satisfaction or provision for satisfaction of such Lien, or (ii) such forfeiture
or transfer of such Property being expressly made subject to such Lien;
(j) the Borrower shall have (i) concealed, removed, or diverted,
or permitted to be concealed, removed, or diverted, any part of its Property,
with intent to hinder, delay, or defraud its creditors or any of them, (ii) made
or suffered a transfer of any of its Property which may be fraudulent under any
bankruptcy, fraudulent conveyance, or similar law, (iii) made any transfer of
its Property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid, or (iv) shall have suffered or permitted,
while insolvent, any creditor to obtain a Lien upon any of its Property through
legal proceedings or distraint which is not vacated within 30 days from the date
thereof; or
(k) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan
which could reasonably be expected to have a Material Adverse Effect; any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan for which an excise tax is
due or would be due in the absence of a waiver; a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA;
-28-
any Single Employer Plan shall terminate for purposes of Title IV of ERISA; the
Borrower or any Commonly Controlled Entity shall incur, or in the reasonable
opinion of the Lender, be likely to incur any liability in connection with a
withdrawal from, Or the Insolvency or Reorganization of, a Multiemployer Plan;
or any other event or condition shall occur or exist with respect to a Plan and
the result of such events or conditions referred to in this Section 7.1 could
subject the Borrower or any Commonly Controlled Entity to any tax (other than an
excise tax under Section 4980 of the Code), penalty or other liabilities which
taken in the aggregate would have a Material Adverse Effect and any such
circumstance shall exist for in excess of 30 days.
7.2 Remedies.
(a) Upon the occurrence of an Event of Default specified in
Sections 7.1(f) or 7.1(g), immediately and without notice, (i) all Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest, notice of protest, default, or dishonor, notice of intent to
accelerate maturity, notice of acceleration of maturity, or other notice of any
kind, except as may be provided to the contrary elsewhere herein, all of which
are hereby expressly waived by the Borrower; (ii) the Commitment shall
immediately cease and terminate unless and until reinstated by the Lender in
writing; and (iii) the Lender is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Lender and any and all other
indebtedness at any time owing by the Lender to or for the credit or account of
the Borrower against any and all of the Obligations although such Obligations
may be unmatured.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Lender may, by notice to the
Borrower, declare all Obligations immediately due and payable, without
presentment demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower; (ii) the Commitment
shall immediately cease and terminate unless and until reinstated by the Lender
in writing; and (iii) the Lender is hereby authorized at any time and from time
to time, without notice to the Borrower (any such notice being expressly waived
by the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Lender and any and all other
indebtedness at any time owing by the Lender to or for the credit or account of
the Borrower against any and all of the Obligations although such Obligations
may be unmatured.
(c) Upon the occurrence of any Event of Default, the Lender may,
in addition to the foregoing in this Section, exercise any or all of its rights
and remedies provided by law or pursuant to the Loan Documents.
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ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Transfers; Participations. The Lender may not, at any time,
sell, transfer, assign, or grant
participations in the Obligations or any portion thereof.
8.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Note and shall
remain in force and effect so long as any Obligation is outstanding or any
Commitment exists.
8.3 Notices and Other Communications. Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery by mail,
when deposited in the mail, certified mail, return receipt requested, postage
prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally or by written confirmation report, addressed as follows:
(a) if to the Lender, to:
Bank One, Texas, National Association
910 Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Group, 6th Floor
(or for notice by mail, to:
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Group, 6th Floor
Telecopy: (000) 000-0000
(b) if to the Borrower, to:
Dril-Quip, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxx Xxxxxx
Telecopy: (000) 000-0000
(c) with a copy to:
Dril-Quip, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
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Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
8.4 Parties in Interest. Subject to applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Borrower or the Lender shall be binding upon and inure to the benefit of
the Borrower or the Lender, as the case may be, and their respective legal
representatives, successors, and assigns.
8.5 Rights of Third Parties. All provisions herein are imposed
solely and exclusively for the benefit of the Lender and the Borrower. No other
Person shall have any right, benefit, priority, or interest hereunder or as a
result hereof or have standing to require satisfaction of provisions hereof in
accordance with their terms, and any or all of such provisions may be freely
waived in whole or in part by the Lender at any time if in its sole discretion
it deems it advisable to do so.
8.6 Renewals; Extensions. All provisions of this Agreement
relating to the Note shall apply with equal force and effect to each promissory
note hereafter executed which in whole or in part represents a renewal or
extension of any part of the Indebtedness of the Borrower under this Agreement,
the Note, or any other Loan Document.
8.7 No Waiver; Rights Cumulative. No course of dealing on the
part of the Lender, its officers or employees, nor any failure or delay by the
Lender with respect to exercising any of its rights under any Loan Document
shall operate as a waiver thereof. The rights of the Lender under the Loan
Documents shall be cumulative and the exercise or partial exercise of any such
right shall not preclude the exercise of any other right. The making of any Loan
shall not constitute a waiver of any of the covenants, warranties, or conditions
of the Borrower contained herein. In the event the Borrower is unable to satisfy
any such covenant, warranty, or condition, the making of any Loan shall not have
the effect of precluding the Lender from thereafter declaring such inability to
be an Event of Default as hereinabove provided.
8.8 Survival Upon Unenforceability. In the event any one or more
of the provisions contained in any of the Loan Documents or in any other
instrument referred to herein or executed in connection with the Obligations
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of any Loan Document or of any other instrument referred to
herein or executed in connection with such Obligations.
8.9 Amendments; Waivers. Neither this Agreement nor any provision
hereof may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
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8.10 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE DEEMED TO
BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE TEXAS
FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY.
8.12 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO, OR FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE
SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITES IN HOUSTON,
XXXXXX COUNTY, TEXAS. THE BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON, XXXXXX COUNTY, TEXAS, AND
HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS
SECTION.
8.13 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN
OR ORAL, RELATING TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS
AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE
FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
8.14 Counterparts. For the convenience of the parties, this
Agreement may be executed in multiple counterparts, each of which for all
purposes shall be deemed to be an original and all such counterparts shall
together constitute but one and the same Agreement.
8.15 Confidentiality. Lender agrees to keep confidential any
information furnished or made available to it by Borrower pursuant to this
Agreement; provided that nothing herein shall prevent Lender from disclosing
such information (a) to any affiliate of Lender, or any officer, director,
employee, agent, or advisor of Lender or affiliate of any Lender, (b) to any
other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any law, rule, or regulations, (d)
upon the order of any court or administrative
-32-
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to Lender other than as a result of a disclosure by Lender prohibited by this
Agreement, (g) to the extent required by any subpoena or other judicial process
in connection with any litigation to which Lender or any of its affiliates may
be a party, and (h) to the extent necessary in connection with the exercise of
any remedy under this Agreement or any other Loan Document. Lender shall impose
upon each and every recipient of any information disclosed by Lender pursuant to
clauses (a) or (b) above the obligation of confidentiality that is contained in
this Section 8.15 such that any subsequent disclosure by any such recipient that
is not otherwise permitted by the provisions hereof shall be deemed to be a
violation of the provisions of this Section 8.15 by Lender.
IN WITNESS WHEREOF, this Agreement is deemed executed effective as of
the date first above written.
BORROWER:
DRIL-QUIP, INC.
By: /s/ J. Xxxx Xxxxxx
-----------------------------------
J. Xxxx Xxxxxx
Co-Chairman
LENDER:
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxx
Vice President
-33-
EXHIBIT I
---------
FORM OF NOTE
PROMISSORY NOTE
---------------
$10,000,000 Houston, Texas August 27, 1999
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker")
promises to pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Payee"),
at its banking quarters in Houston, Xxxxxx County, Texas, the sum of TEN MILLION
DOLLARS ($10,000,000), or so much thereof as may be advanced against this Note
pursuant to the Credit Agreement dated of even date herewith by and between
Maker and Payee (as amended, restated, or supplemented from time to time, the
"Credit Agreement"), together with interest at the rates and calculated as
provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the meanings
assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is the "Note" under, and is payable
as provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY TO THIS NOTE.
DRIL-QUIP, INC.
By:
-----------------------------------
J. Xxxx Xxxxxx
Co-Chairman
I-i
EXHIBIT II
----------
FORM OF BORROWING REQUEST
Bank One, Texas, National Association
000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Group, 6th Floor
Re: Credit Agreement dated as of August 27, 1999, by and between BANK
ONE, TEXAS, NATIONAL ASSOCIATION and DRIL-QUIP, INC. (as amended,
restated, or supplemented from time to time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby makes the
requests indicated below:
[_] 1. Loans
(a) Amount of new Loan: $___________
(b) Requested funding date: ____________, 19__
(c) $____________ of such Loan is to be a Floating Rate Loan;
$_____________ of such Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: _______ months.
[_] 2. Continuation or conversion of LIBO Rate Loan maturing on
__________:
(a) Amount to be continued as a LIBO Rate Loan is $____________,
with an Interest Period of __________ months;
(b) Amount to be converted to a Floating Rate Loan is $____________;
and
[_] 3. Conversion of Floating Rate Loan:
(a) Requested conversion date: _______, 19__.
(b) Amount to be converted to a LIBO Rate Loan is $______, with an
Interest Period of _____ months.
The undersigned certifies that he[she] is the ____________ of the
Borrower, has obtained all consents necessary, and as such he[she] is authorized
to execute this request on
II-i
behalf of the Borrower. The undersigned further certifies, represents, and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested borrowing, continuation, or conversion under the terms and conditions
of the Credit Agreement.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
DRIL-QUIP, INC.
By:
-----------------------------------
Xxxxx Xxxxxx
Chief Financial Officer
II-ii
EXHIBIT III
-----------
FORM OF COMPLIANCE CERTIFICATE
_______________, 00___
Xxxx Xxx, Xxxxx, National Association
000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Group, 6th Floor
Re: Credit Agreement dated as of August 27, 1999, by and between BANK
ONE, TEXAS, NATIONAL ASSOCIATION and DRIL-QUIP, INC. (as amended,
restated, or supplemented from time to time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as a Responsible Officer of the Borrower, hereby certifies to you
the following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
1. To the best of the knowledge of the undersigned, no Default or Event
of Default exists as of the date hereof or has occurred since the date of
our previous certification to you, if any.
1. To the best of the knowledge of the undersigned, the following
Defaults or Events of Default exist as of the date hereof or have occurred
since the date of our previous certification to you, if any, and the
actions set forth below are being taken to remedy such circumstances:
2. The compliance of the Borrower with the financial covenants of the
Credit Agreement, as of the close of business on _____________, is
evidenced by the following:
(a) Section 6.4: Tangible Net Worth. Permit Tangible Net Worth as of the
close of any fiscal quarter to be less than $130,000,000 for all
periods beginning with the September 30, 1998 Financial Statements.
Actual
------
(b) Section 6.5: Current Ratio. Permit the ratio of Current Assets to
Current Liabilities at the close of any fiscal quarter, beginning with
the September 30, 1998 Financial Statements, to be less than 1.25 to
1.00.
Actual
------
__________ to 1.0
III-i
(c) Section 6.6: Funded Debt to Capitalization. Permit the ratio of
Funded Debt to Tangible Net Worth, plus Funded Debt, at the close of
anyfiscal quarter, beginning with the September 30, 1998 Financial
Statements, to be more than 40%.
Actual
------
_____%
(d) Section 6.7: Funded Debt to EBITDA. Permit the ratio of Funded Debt
to EBITDA, at the close of any fiscal quarter, beginning with the
September 30, 1998 Financial Statements, for the previous four
quarters to be more than 3.00 to 1.00. This ratio shall be calculated
on a rolling four quarter basis thereafter.
Actual
------
__________ to 1.0
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
DRIL-QUIP, INC.
By:
-----------------------------------
Xxxxx Xxxxxx
Chief Financial Officer
III-ii
EXHIBIT IV
----------
DISCLOSURES
Section 4.7 Liabilities
-----------
None
Litigation
----------
None
Section 4.11 Environmental Matters
---------------------
None
Section 4.16 Casualties
----------
None
Section 4.18 Subsidiaries
------------
Dril-Quip (Europe), Limited
Dril-Quip Asia Pacific P.T.E., Ltd.
DQ Holding PTY, Ltd.
IV-i
NOTICE OF FINAL AGREEMENT
-------------------------
TO: DRIL-QUIP, INC. ("the Borrower")
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
As of the effective date of this Notice, Borrower and BANK ONE, TEXAS,
NATIONAL ASSOCIATION ("Bank") have consummated a transaction pursuant to which
Bank has agreed to make a loan or loans to Borrower, to renew and extend an
existing loan or loans to Borrower, and/or to otherwise extend credit or make
financial accommodations to or for the benefit of Borrower, in an aggregate
amount not to exceed the Borrowing Base (collectively, whether one or more, the
"Loan").
In connection with the Loan, Borrower and Bank have executed and
delivered and may hereafter execute and deliver certain agreements, instruments,
and documents (collectively hereinafter referred to as the "Written Loan
Amendment").
It is the intention of Borrower and Bank that this Notice be
incorporated by reference into each of the written agreements, instruments, and
documents comprising the Written Loan Agreement. Borrower and Bank each
warrants and represents that the entire agreement made and existing by or among
Borrower and Bank with respect to the Loan is and shall be contained within the
Written Loan Agreement, as amended and supplemented hereby, and that no
agreements or promises exist or shall exist by or among Borrower and Bank that
are not reflected in the Written Loan Agreement.
THE 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.
Effective Date: August 27, 1999.
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By:/s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxx
Vice President
ACKNOWLEDGED AND AGREED:
BORROWER:
---------
DRIL-QUIP, INC..
By: /s/ J. Xxxx Xxxxxx
-------------------------
J. Xxxx Xxxxxx
Co-Chairman
PROMISSORY NOTE
---------------
$10,000,000 Houston, Texas August 27, 1999
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker")
promises to pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Payee"),
at its banking quarters in Houston, Xxxxxx County, Texas, the sum of TEN MILLION
DOLLARS ($10,000,000), or so much thereof as may be advanced against this Note
pursuant to the Credit Agreement dated of even date herewith by and between
Maker and Payee (as amended, restated, or supplemented from time to time, the
"Credit Agreement"), together with interest at the rates and calculated as
provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the meanings
assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is the "Note" under, and is payable
as provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY TO THIS NOTE.
DRIL-QUIP, INC.
By: /s/ J. Xxxx Xxxxxx
-----------------------------------
J. Xxxx Xxxxxx
Co-Chairman
