1
Exhibit 10.1
U.S. $10,000,000
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 12, 1998
Between
CARBO CERAMICS INC.
as Borrower
and
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.
as Lender
2
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Accounting and Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT . . . . . . . . . . . . . . 7
SECTION 2.01. The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.02. Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.03. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.04. Optional Termination of the Commitment . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.05. Selection of Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.06 Interest Rate Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.07 Special Provisions for LIBOR Rate Advances . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.08. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.09. Indemnity and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.10. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11. Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . 19
SECTION 3.01. Condition Precedent to Initial Advance . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.02. Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 21
SECTION 4.01. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V
COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . 25
SECTION 5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.02. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . 31
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 34
SECTION 7.01. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.02. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.04. Costs, Expenses, and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.05. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.06. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.08 Merger of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3
Schedule I - Litigation
Schedule II - Permitted Liens
Exhibit A - Promissory Note
Exhibit B - Rollover Notice
Exhibit C - No-Default Certificate
4
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of February 12, 1998
This First Amended and Restated Credit Agreement is made and effective
as of February 12, 1998, by and between CARBO CERAMICS INC., a Delaware
corporation (the "Borrower"), and ▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO., a New York
limited partnership (the "Lender").
WITNESSETH:
WHEREAS, the Lender and the Borrower entered into a Credit Agreement
dated December 27, 1993, as amended by a First Amendment to Credit Agreement
dated as of April 3, 1995, as affected by certain waivers and modifications
contained in that certain letter agreement dated as of April 3, 1996, and as
further amended by a Second Amendment to Credit Agreement dated as of April 22,
1996, a Third Amendment to Credit Agreement dated as of December 31, 1997, and
a Fourth Amendment to Credit Agreement dated as of January 30, 1998, by and
between the Lender and the Borrower (as so amended and affected, the "Credit
Agreement"), pursuant to which the Lender committed, among other things, to
make loans, advances, and other credit facilities available to the Borrower;
WHEREAS, the parties desire to amend and restate the Credit Agreement
in its entirety, as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing, for other valuable
consideration hereby acknowledged, and subject to the other terms and
conditions hereof, the Lender and the Borrower agree that the Credit Agreement
shall be and is hereby amended and restated in its entirety, effective the date
hereof, as follows:
5
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below (such meanings to be
applicable equally to both the singular and plural forms of such terms).
"Adjusted LIBOR Rate" means, an interest rate per annum (rounded
upwards, if necessary, to the next higher 1/100 of 1%) equal to the quotient
obtained by dividing (a) the LIBOR Rate for such LIBOR Interest Period by (b) a
percentage equal to one hundred percent (100%) minus the Eurodollar Reserve
Percentage applicable during such LIBOR Interest Period (or, if more than one
Eurodollar Reserve Percentage is so applicable, minus the daily average of such
Eurodollar Reserve Percentage for those days in such LIBOR Interest Period
during which any such Eurodollar Reserve Percentage may be so applicable).
"Advance" shall mean a disbursement by the Lender to or for the
benefit of the Borrower, all as set forth in Section 2.01 hereof.
"Agreement" means this First Amended and Restated Credit Agreement,
and all amendments, modifications, and supplements thereto.
"Applicable Contract Rate" means either the Base Rate or the LIBOR
Fixed Rate, whichever is in effect during the particular time period in
question pursuant to the provisions of this Agreement.
"Authorized Officer" means, with respect to any act to be performed or
duty to be discharged by any entity which is not an individual, any officer or
other representative thereof then authorized to perform such act or discharge
such duty.
"Base Rate" means a fluctuating rate per annum which shall be equal to
the rate of interest
6
established by the Lender in New York, New York, from time to time, as the
Lender's base rate of interest charged by Lender to commercial borrowers in the
United States of America.
"Base Rate Advance" means an Advance during such time as it bears
interest, from time to time, at the Base Rate pursuant to the provisions of
this Agreement.
"Business Day" means any day other than a Saturday, Sunday, or a
public holiday or the equivalent for banks generally under the laws of the
State of New York.
"Closing Date" means the date first shown herein, as of which this
Agreement is executed and effective.
"Commitment" has the meaning set forth for such term in Section 2.01
hereof.
"Consequential Loss" means, with respect to the Borrower's payment or
prepayment of the principal sum of a LIBOR Rate Advance on a day other than the
last day of the Interest Period applicable to such LIBOR Rate Advance, any loss
or expense incurred by the Lender in redepositing such principal sum,
including, without limitation, the sum of (a) the interest which, but for such
payment, the Lender would have earned at the applicable LIBOR Fixed Rate, in
respect of such LIBOR Rate Advance so paid or prepaid, for the remainder of the
LIBOR Interest Period; reduced, if the Lender is reasonably able to redeposit
such principal sum so paid for the balance of such LIBOR Interest Period in a
New York City bank, by the interest earned by the Lender as a result of so
redepositing such principal sum, plus (b) any expense or penalty incurred by
the Lender in redepositing the principal sum of such LIBOR Rate Advance.
"Conversion Date" has the meaning specified in Section 2.06(c)(2)
hereof.
"Conversion Option" has the meaning specified in Section 2.06(c)(2)
hereof.
3
7
"EBITDA" means the Borrower's earnings before deduction of interest,
taxes, depreciation, and amortization.
"Employee Plan" means an employee benefit plan or other plan covered
by Title IV of ERISA and maintained in whole or in part for employees of the
Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974,
together with the rules and regulations promulgated thereunder, as in effect
from time to time.
"Eurodollar Reserve Percentage" means, as of the date of any
determination, that reserve percentage actually required to be reserved by the
Lender with respect to the Advances, which percentage is applicable during any
LIBOR Interest Period (or if more than one such percentage is so applicable,
the daily average of such percentages for those days in such LIBOR Interest
Period during which any such percentage shall be applicable) under the
regulations issued, from time to time, by the Board of Governors of the Federal
Reserve System (or other governmental authority having jurisdiction with regard
thereto or any successor), for determining the maximum reserve requirements
(including, without limitation, basic, supplemental, transitional, emergency,
or marginal reserve requirements) for the Lender in respect to liabilities or
assets consisting of, or including, "Eurocurrency liabilities" as defined in
Regulation D. It shall be assumed, for purposes of computing reserve costs
hereunder, that the making and maintaining of the LIBOR Rate Advances have been
accomplished by the Lender through the Lender's principal office in New York
City, New York.
"Event of Default" means any of the events set forth in Section 6.01
hereof.
"Fixed Charges" means, for any applicable period specified in Section
5.01(c) hereof, the
4
8
aggregate of the Borrower's interest expense, lease expense, principal
payments, dividends and anticipated annual maintenance capital expenditures of
$4,000,000.
"Increased Costs" shall have the meaning specified in Section 2.07(b)
hereof.
"Indebtedness" means (i) all indebtedness or other obligations for
borrowed money or for the deferred purchase price of property or services, (ii)
all indebtedness or other obligations of another person for borrowed money, the
deferred purchase price of property or services (except for accounts payable by
the Borrower which have been incurred by the Borrower in the ordinary course of
its business), or otherwise, the payment or collection of which the Borrower
has guaranteed or in respect of which the Borrower has any direct or contingent
liability which is reportable on the Borrower's financial statements in
accordance with generally accepted accounting principles, (iii) all lease
obligations that, in accordance with generally accepted accounting principles
consistently applied, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of such obligation shall be the
capitalized amount thereof determined in accordance with such principles, and
(iv) any equity or other interest which, by its terms, is convertible into a
debt instrument.
"Interest Payment Date" means, as to either a Base Rate Advance or a
LIBOR Rate Advance, the first (1st) day of each calendar month during the term
of the Commitment.
"Interest Rate Option" has the meaning specified in Section 2.06(a)
hereof.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"LIBOR Fixed Rate" means, during the applicable LIBOR Interest Period
for a LIBOR Rate Advance, an interest rate per annum which shall be equal to
the sum of (a) the LIBOR Rate
5
9
Margin plus (b) the Adjusted LIBOR Rate for such LIBOR Interest Period.
"LIBOR Interest Period" means, with respect to a LIBOR Rate Advance, a
period commencing on the date specified by notice from the Borrower to the
Lender and ending on (but excluding) the date which is 30, 60, or 90 days
thereafter, as the Borrower shall elect.
"LIBOR Rate" during each applicable LIBOR Interest Period for a LIBOR
Rate Advance, means an interest rate equal to the rate of interest per annum at
which U.S. dollar deposits are offered by the Lender to prime banks in the
London interbank market at 10:00 a.m. (London time) two Business Days prior to
the first (1st) day of such LIBOR Interest Period for a period equal to such
LIBOR Interest Period.
"LIBOR Rate Advance" means an Advance during such time as it bears
interest, from time to time, at the LIBOR Fixed Rate pursuant to the provisions
of this Agreement.
"LIBOR Rate Margin" means three-quarters of one percent (.75%) per
annum.
"Loan Documents" means this Agreement, the Note, and all amendments,
modifications, and supplements thereto.
"Maximum Rate" means the maximum rate of interest, if any, from time
to time permitted under federal or Texas laws applicable to the indebtedness
evidenced hereby.
"No-Default Certificate" means a certificate by an authorized officer
of the Borrower, substantially in the form of Exhibit C hereto.
"Note" has the meaning set forth for such term in Section 2.11 hereof.
"Prohibited Transaction" has the meaning specified therefor in Section
4975 of the Internal Revenue Code or Title I of ERISA.
6
10
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as from time to time in effect, and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Reportable Event" has the meaning specified therefor in Title IV of
ERISA.
"Rollover Notice" means a notice in the form of Exhibit B hereto.
"Termination Date" means December 31, 2000; provided, however, that
such date may be extended by mutual consent for additional one-year periods;
provided further, however, if so extended, such extended date may be shortened
during any such one-year period to the end of any calendar quarter within such
one-year period, beginning March 31, 2001, upon not less than thirty (30) days
prior written notice from either party to the other party.
SECTION 1.02. Accounting and Other Terms. All accounting terms
used in this Agreement which are not otherwise defined herein shall be
construed in accordance with generally accepted accounting principles
consistently applied unless otherwise expressly stated herein.
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
SECTION 2.01. The Commitment. The Lender agrees, on the terms and
conditions hereinafter set forth, to make Advances to the Borrower in an
aggregate principal amount not to exceed Ten Million Dollars ($10,000,000), as
such commitment may be terminated pursuant to Section 2.04 hereof (the
"Commitment"). Such Advances shall be made from time to time on any Business
Day during the period from the Closing Date to the Termination Date. Each
Advance
7
11
shall be in an amount not less than $100,000 or an integral multiple thereof,
except that an Advance may be in an amount equal to the entire unused
Commitment. Within the limits of the Commitment, the Borrower may borrow,
prepay pursuant to Section 2.08, and reborrow under this Section 2.01.
SECTION 2.02. Making the Advances. Each Advance shall be made on
the same day the Borrower has given notice to the Lender, provided the Lender
has received such notice by 12:00 p.m. (New York City time) on such date. Such
notice shall be by telephone and shall be promptly confirmed by the Borrower in
writing. All such notices shall specify the date and amount thereof. Upon
fulfillment by the Borrower of the applicable conditions set forth in Article
III, the Lender will make such Advance available to the Borrower in immediately
available funds at the Lender's office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
SECTION 2.03. Commitment Fee. The Borrower agrees to pay to the
Lender a commitment fee on the average daily unused portion of the Commitment
from the Closing Date until the Termination Date at the rate of three-eighths
(3/8) of one percent (1%) per annum, payable quarterly in arrears on the first
Business Day of each fiscal quarter of the Borrower for the immediately
preceding fiscal quarter of the Borrower in each year during such period,
commencing April 1, 1998, and ending on the Termination Date.
SECTION 2.04. Optional Termination of the Commitment. The Borrower
shall have the right, upon (i) at least thirty (30) days' notice to the Lender
prior to the end of each fiscal quarter of the Borrower after the first
anniversary of the Closing Date, and (ii) full repayment of all sums, both
principal and accrued interest, then outstanding, to terminate the
8
12
Commitment in whole, but not in part. Simultaneously with any termination of
the Commitment under this Section, the Borrower shall pay to the Lender the
commitment fee earned through the Termination Date on the amount of the
Commitment so terminated.
SECTION 2.05. Selection of Interest Options. Subject to Section
2.06, and provided that no Event of Default shall have occurred and is
continuing, the outstanding principal balance of each Advance shall bear
interest at the LIBOR Fixed Rate or the Base Rate, in accordance with the
following:
(a) Interest on a Base Rate Advance. A Base Rate Advance
shall bear interest on the unpaid principal balance thereof, from time
to time outstanding, at a fluctuating interest rate per annum which
shall, from day to day, be equal to the lesser of either: (1) the
Base Rate; or (2) the Maximum Rate. Each change in either the Base
Rate or the Maximum Rate (or any component of the Base Rate or the
Maximum Rate) as the case may be, shall become effective, without
notice to the Borrower (which notice is hereby expressly waived by the
Borrower), on the date of each change in either of such interest rates
(or any component of any of such interest rates).
(b) Interest on a LIBOR Rate Advance. A LIBOR Rate
Advance shall bear interest, during each LIBOR Interest Period
applicable thereto, on the unpaid principal balance thereof, from time
to time outstanding, at an interest rate per annum which shall, from
day to day, be equal to the lesser of either: (1) the applicable
LIBOR Fixed Rate; or (2) the Maximum Rate. Each change in the Maximum
Rate or any component of the Maximum Rate, as the case may be, shall
become effective, without notice to the
9
13
Borrower (which notice is hereby expressly waived by the Borrower) on
the date of each change in such interest rate or any component of such
interest rate.
(c) Advance Deemed To Be Base Rate Advance. Unless the
Borrower selects the LIBOR Fixed Rate as the Applicable Contract Rate
with regard to an Advance, as provided for in this Article II, such
Advance shall be deemed to be a Base Rate Advance for the purpose of
computing interest thereon pursuant to this Agreement.
(d) Interest Recoupment. If, at any time, the Applicable
Contract Rate then in effect shall exceed the Maximum Rate, thereby
causing the Applicable Contract Rate to be limited to the Maximum
Rate, any subsequent reductions in the Applicable Contract Rate shall
not reduce the Applicable Contract Rate below the Maximum Rate until
the total amount of interest accrued on the unpaid principal balance
of the Advances from time to time outstanding during the term thereof,
equals the amount of interest which would have accrued thereon if the
various Applicable Contract Rates which are applicable to the unpaid
principal balances of the Advances from time to time outstanding
during the term of this Agreement, had at all times been in effect
without the limitation of the Maximum Rate.
(e) Final Interest Payment. If on the date of the final
payment of all Advances (whether on the Termination Date or
otherwise), the total amount of interest actually paid, or accrued,
under the provisions of the Loan Documents is less than the total
amount of interest which would have accrued if the various Applicable
Contract Rates had at all times been applicable to the principal
balance of the Advances, from time to time
10
14
outstanding, during the term of this Agreement, the Borrower agrees to
pay, to the extent permitted by applicable law, to the Lender an
amount equal to the difference between: (1) the lesser of either (A)
the amount of interest which would have accrued on the Advances if the
Maximum Rate had at all times been in effect, or (B) the amount of
interest which would have accrued on the Advances if the various
Applicable Contract Rates had at all times been in effect without the
limitation of the Maximum Rate; and (2) the amount of interest which
has actually accrued or been paid on the Advances through the date of
such final payment in accordance with the provisions of the Loan
Documents.
(f) Interest After Maturity of the Advances. All
delinquent payments of principal and/or interest on the Advances shall
bear interest at a fluctuating rate per annum equal to the Base Rate
plus four percent (4%) from the date due until paid.
(g) Interest Payment Dates. Interest on the aggregate
principal balance of the Advances from time to time outstanding shall
be payable as it accrues on each Interest Payment Date, beginning with
the Interest Payment Date following the Closing Date, and continuing
on each Interest Payment Date thereafter, until the maturity thereof.
(h) Payment on Business Day. If any payment of principal
or interest to be made on the Advances shall become due on a day other
than a Business Day, such payment may be made on the next succeeding
Business Day (unless the result of such extension of time would be to
extend the date for such payment into another calendar month, beyond
the maturity date of the Advances or beyond the expiration of the
applicable LIBOR Interest Period, in such event, said payment shall be
made on the
11
15
Business Day immediately preceding the day on which such payment would
otherwise have been due) and such extension of time shall in such case
be included in computing of interest, if any, in connection with such
payment.
(i) Additional Amounts Payable Upon Prepayments or Other
Payments of LIBOR Rate Advances. If any LIBOR Rate Advance is to be
prepaid, or if the Borrower makes any principal payments with respect
to any such LIBOR Rate Advance on any date other than the last day of
the LIBOR Interest Period for such LIBOR Rate Advance, the Borrower
shall reimburse the Lender, on demand, for all Consequential Loss and
Increased Costs incurred by Lender, plus all accrued, but unpaid,
interest on the amount so prepaid to such prepayment or payment date,
together with any other amounts owing to the Lender in connection with
such prepayment or payment pursuant to the terms of this Agreement or
any of the other Loan Documents. All prepayments (whether optional or
otherwise) made pursuant to this Agreement shall be applied first to
accrued, but unpaid, interest and then to principal. A certificate of
the Lender setting forth the amount of any such loss or cost shall, in
the absence of manifest error or bad faith, be final, binding, and
conclusive for all purposes. Any conversion of any LIBOR Rate Advance
to a Base Rate Advance on a day other than on the last day of the
applicable LIBOR Interest Period shall be deemed a principal
prepayment for the purpose of this Subsection 2.05(i).
SECTION 2.06 Interest Rate Options.
(a) Interest Rate Options. Subject to the provisions of
this Section 2.06, and provided that no Event of Default has occurred
and is continuing, the Borrower shall have
12
16
the option of having an Advance bear interest at the Base Rate or the
LIBOR Fixed Rate (an "Interest Rate Option"); provided, however, that
(i) the Borrower may not have more than three (3) Interest Rate
Options which select the LIBOR Fixed Rate for the Advances in effect
at any one time and (ii) no Interest Rate Option which selects the
LIBOR Fixed Rate for any portion of the Advances shall be for an
amount less than the principal amount of $2,000,000 plus an integral
multiple of $100,000.
(b) Changes in Interest Rate Options. Each change in
Interest Rate Options made pursuant to this Section 2.06 shall, for
all purposes of this Agreement, be deemed both a payment of the Base
Rate Advance or LIBOR Rate Advance, whichever is applicable, from
which such change was made and a borrowing (notwithstanding that the
aggregate unpaid principal of the Advances is not thereby changed) of
the Base Rate Advance or LIBOR Rate Advance, whichever is applicable,
into which such Advance is converted.
(c) Selection of Interest Rate Options. The Borrower may
select an Interest Rate Option by giving the Lender a Rollover Notice
in accordance with the provisions of subsections (1) or (2) below, as
applicable, which notice shall specify a LIBOR Interest Period;
provided, however, that (i) any LIBOR Interest Period which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day, unless the result of such
extension would be to extend such LIBOR Interest Period into another
calendar month, in which event such LIBOR Interest Period shall end on
the immediately preceding Business Day; (ii) any LIBOR Interest Period
that begins
13
17
on the last Business Day of a calendar month shall end on the last
Business Day of a calendar month; (iii) any LIBOR Interest Period
which begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Interest Period
shall end on the last Business Day of such calendar month; (iv) the
length of each LIBOR Interest Period selected by the Borrower shall be
irrevocable for the period so selected; and (v) no LIBOR Interest
Period shall extend beyond the Termination Date.
(1) Selection at Expiration of LIBOR Interest
Period. Before the termination of any LIBOR Interest Period,
and provided that no Event of Default has occurred and is
continuing, the Borrower shall give the Lender a Rollover
Notice specifying the Interest Rate Option which shall be
applicable to such LIBOR Rate Advance upon the expiration of
such LIBOR Interest Period. Such Rollover Notice shall be
given to the Lender at least three (3) Business Days before
the termination of such LIBOR Interest Period. If the
Borrower shall specify the LIBOR Fixed Rate, such Rollover
Notice shall also specify the length of the succeeding LIBOR
Interest Period selected by the Borrower. Each Rollover
Notice shall be irrevocable and effective upon receipt thereof
by the Lender. If the required Rollover Notice shall not have
been timely received by the Lender as herein provided before
expiration of the then relevant LIBOR Interest Period, the
applicable LIBOR Rate Advance shall be automatically converted
to a Base Rate Advance on the last day of the then current
LIBOR
14
18
Interest Period for such LIBOR Rate Advance.
(2) Conversion Option. With respect to Base Rate
Advances, and provided no Event of Default has occurred and is
continuing, the Borrower shall have the option ("Conversion
Option"), on any Business Day ("Conversion Date"), to convert
from the Base Rate to the LIBOR Fixed Rate by giving the
Lender a Rollover Notice specifying such Conversion Option at
least three (3) Business Days prior to such Conversion Date.
SECTION 2.07 Special Provisions for LIBOR Rate Advances.
(a) Unavailability, Illegality, or Inadequacy of the
LIBOR Fixed Rate. If at any time the Lender determines (which
determination shall, for all purposes, be final, conclusive, and
binding on the Borrower) that: (1) the Lender is unable, or that it
has become unlawful for the Lender to obtain, or cause to be obtained,
funds in the London interbank market in order to make, fund, or
maintain the principal balances of any LIBOR Rate Advances during any
applicable LIBOR Interest Period; or (2) the LIBOR Fixed Rate will not
adequately and fairly reflect the cost to the Lender of making,
maintaining, or funding LIBOR Rate Advances for such LIBOR Interest
Period, the Lender shall so notify the Borrower by telephone or telex
(to be confirmed in writing) of such determination, whereupon, until
the Lender notifies the Borrower that the circumstances which have
given rise to such notice no longer exist, (A) the obligation of the
Lender to provide the LIBOR Fixed Rate with respect to such LIBOR Rate
Advances shall be suspended, and (B) such LIBOR Rate Advances shall be
made, continued as, or
15
19
converted to Base Rate Advances.
(b) Increased Costs. If due either to: (1) the
introduction of, or any change (including, without limitation, any
change by way of any imposition or increase of reserve requirements)
in the interpretation of, any law or regulation, including, without
limitation, Regulation D or (2) the compliance by the Lender with any
guideline or request from any central bank or other governmental
authority (whether or not having the force of law), there shall be any
increase in the cost to the Lender of agreeing to make, fund, or
maintain the LIBOR Rate Advances (such costs being herein collectively
called "Increased Costs"), the Borrower shall, from time to time, upon
demand by the Lender, pay to the Lender, such additional amounts as
are sufficient to indemnify the Lender against such Increased Costs.
Absent manifest error, a certificate as to the amount of such
Increased Costs, submitted to the Borrower by the Lender shall, for
all purposes, be final, conclusive, and binding on the Borrower. It
shall be assumed for purposes of computing Increased Costs, that the
making and maintaining of LIBOR Rate Advances has been by the Lender's
principal office in New York City, New York.
(c) Indemnity. Without prejudice to any other provisions
of this Agreement or any of the other Loan Documents, the Borrower
shall indemnify the Lender against any loss or expense which the
Lender (or its branches, subsidiaries, affiliates, or partners) may
sustain or incur as a consequence of any Event of Default by the
Borrower in making any payment when due of any amount due hereunder or
in making any scheduled borrowing hereunder with respect to any LIBOR
Rate Advance, including, without
16
20
limitation, any loss of profit, premium or penalty incurred by the
Lender (or its branches, subsidiaries, affiliates, or partners) in
respect of funds borrowed by the Lender (or its branches,
subsidiaries, affiliates, or partners), for the purpose of maintaining
such LIBOR Rate Advance, as determined by the Lender in the exercise
of its sole, but reasonable, discretion. Absent manifest error, a
certificate as to any such loss or expense submitted by the Lender to
the Borrower shall, for all purposes, be final, conclusive, and
binding on the Borrower.
SECTION 2.08. Prepayments. The Borrower shall have the right to
prepay any principal amount of any Advance, in whole or in part, subject to the
requirements of Sections 2.05(i) and 2.09, but otherwise without premium or
penalty; provided, however, that each such partial prepayment shall be in an
integral multiple of $100,000, except that a prepayment may be in an amount
equal to the entire outstanding principal balance of all Advances.
SECTION 2.09. Indemnity and Release. The Borrower shall indemnify
the Lender against any loss or expense which the Lender may sustain or incur as
a consequence of any failure by the Borrower to fulfill on the date of any
Advance hereunder the applicable conditions set forth in Article III, any
default in payment or prepayment of the principal amount of any Advance or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by irrevocable notice of prepayment, or otherwise), or the
occurrence of any Event of Default. By its execution hereof, the Borrower
hereby certifies to the Lender that as of the date hereof, (i) all
representations and warranties heretofore made by it under any credit
agreement, promissory note or other instrument or document related thereto
which are amended
17
21
by or which relate to this Agreement are true in all material respects, (ii)
the Borrower does not have or claim to have any offset, counterclaim, or
defense to any of its obligations under any of such prior instruments or
documents, and (iii) in consideration of and to induce the Lender's agreement
to the terms of this Agreement, the Borrower, for itself and its successors and
assigns, does hereby RELEASE, ACQUIT, and FOREVER DISCHARGE the Lender, its
partners, officers, employees, agents, attorneys, other representatives and all
other persons, (collectively, the "Indemnitees") who might be liable, from any
and all claims, demands, liabilities, and causes of action of whatsoever
nature, whether in contract or in tort, or arising under or by virtue of any
statute, rule, regulation, or other laws, for all losses and damages, including
but not limited to exemplary and punitive damages, that have accrued or may
ever accrue to the Borrower and its successors and assigns, and which arise out
of, result from, or are caused by any act or omission of any one or more of the
Indemnitees on or prior to the date hereof in connection with the Loan
Documents, or any matter or thing in connection therewith or related thereto.
The Lender shall use its best efforts to mitigate any loss and to reduce any
expense for which it is being indemnified pursuant to this Section.
SECTION 2.10. Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Note not later than 12:00
noon (New York City time) on the day when due in lawful money of the
United States of America to the Lender for the account of Borrower at
the Lender's office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in
same day funds.
(b) The Borrower hereby authorizes the Lender, if and to the
extent payment for
18
22
interest, principal, or fees is not made when due hereunder or under
the Note, to charge from time to time against any of the Borrower's
accounts with the Lender any amount so due.
(c) Except to the extent the result would cause an interest
rate to exceed the Maximum Rate, all computations of interest and of
commitment fees hereunder shall be made by the Lender on the basis of
a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such
interest or commitment fee is payable.
SECTION 2.11. Evidence of Debt. The indebtedness of the Borrower
resulting from all Advances made from time to time shall be evidenced by a
promissory note of the Borrower, in substantially the form of Exhibit A hereto
(the "Note"), delivered to the Lender pursuant to Article III.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Initial Advance. The
obligation of the Lender to make its initial Advance is subject to the
fulfillment, in a manner satisfactory to the Lender, of each of the following
conditions precedent:
(a) The making of the Commitment shall not contravene any
law, rule, or regulation applicable to the Lender.
(b) No material adverse change in the condition or
operations, financial or otherwise, of the Borrower, as reasonably
determined by the Lender, shall have occurred
19
23
and be continuing since the date of the latest audited financial
statements of the Borrower provided to the Lender, the representations
and warranties contained in Section 4.01 shall be true and correct,
and no event shall have occurred and be continuing, or would result
from such Advance, which constitutes or could constitute an Event of
Default, as set forth in a certificate from an Authorized Officer of
the Borrower dated as of the Closing Date.
(c) The Lender shall have received on or before the
Closing Date the following, in form and substance satisfactory to the
Lender:
(i) the Note, duly executed by the Borrower;
(ii) a copy of the resolutions of the Borrower's
Board of Directors, certified as of the Closing Date by an
Authorized Officer thereof, authorizing (A) the transactions
contemplated by the Loan Documents to which the Borrower is a
party and (B) the execution, delivery, and performance by the
Borrower of the Loan Documents;
(iii) a certificate, dated as of the Closing Date,
of an Authorized Officer of the Borrower, certifying the names
and genuine signatures of the officers of the Borrower
authorized to sign on behalf of the Borrower the Loan
Documents and the other documents to be executed and delivered
by the Borrower in connection herewith, together with evidence
of the incumbency of such Authorized Officer;
(iv) a copy of the Articles of Incorporation of
the Borrower, recently certified by the Secretary of State of
the State of Delaware;
(v) a copy of the By-laws of the Borrower,
certified as of the Closing
20
24
Date by an Authorized Officer;
(vi) Certificates of Existence and Good Standing
of the Borrower, issued by the appropriate government
officials of the State of Delaware, the State of Texas and any
other applicable jurisdiction, together with any other
evidence satisfactory to the Lender that the Borrower has been
duly formed, is validly existing and in good standing under
the laws of the State of Delaware and has been duly qualified
to do business and is in good standing under the laws of the
State of Texas and each other jurisdiction where the Borrower
does business;
(vii) a favorable written opinion of ▇▇▇▇▇▇▇▇ &
Knight, P.C., counsel to the Borrower, dated the Closing Date,
as to such matters as the Lender may reasonably request; and
(viii) payment of a closing fee of $25,000.
SECTION 3.02. Conditions Precedent to All Advances. The obligation
of the Lender to make each Advance shall be subject to the further conditions
precedent that, on the date of such Advance (a) the Lender shall have received
a notice of such Advance as required by Section 2.02 hereof, (b) the following
statements shall be true, and by making or sending any such notice of an
Advance, the Borrower shall be deemed to have made the following statements to
the Lender as of the date on which such notice is made or sent to the Lender:
(i) The representations and warranties contained
in Section 4.01 are true and correct on and as of the date of
such Advance as though made on and as of such date, and
21
25
(ii) No event has occurred and is continuing, or
would result from such Advance, which constitutes an Event of
Default; and
(c) the Lender shall have received such other approvals, opinions, or documents
as the Lender may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. The Borrower
represents and warrants as follows:
(a) The Borrower is a corporation duly organized and
validly existing under the laws of the State of Delaware. The Borrower
is duly qualified to do business and in good standing in the States of
Texas, Louisiana, Alabama, and every other jurisdiction in which the
transaction of any material portion of its business (as now conducted
and as currently contemplated) makes such qualification necessary.
(b) The execution, delivery, and performance by the
Borrower of each Loan Document is within the Borrower's powers, has
been duly authorized by all necessary action, does not contravene (i)
the Borrower's charter or by-laws or (ii) any law or governmental
regulation or contractual restriction binding on or affecting the
Borrower or any of its properties, and does not result in or require
the creation of any lien, security interest, or other charge or
encumbrance upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required for the due execution,
22
26
delivery, and performance by the Borrower of any Loan Document to
which it is or will be a party.
(d) This Agreement is, and each Loan Document to which
the Borrower will be a party when delivered hereunder, will be the
legal, valid, and binding obligations of the Borrower, legally
enforceable against the Borrower in accordance with their respective
terms.
(e) Except as set forth on Schedule I hereto, there is no
action, suit, or proceeding pending or threatened against or otherwise
affecting the Borrower before any court, arbitrator, or governmental
department, commission, board, bureau, agency, or instrumentality,
which may materially adversely affect the condition or operations,
financial or otherwise, of the Borrower or the ability of the Borrower
to perform its obligations under the Loan Documents.
(f) The financial statements of the Borrower heretofore
provided to the Lender by the Borrower fairly present the financial
condition of the Borrower as at the respective dates thereof, and the
results of operations of the Borrower for the fiscal periods ended on
such respective dates, all in accordance with generally accepted
accounting principles consistently applied, subject to changes
resulting from normal year-end audit adjustments, and, since December
31, 1996, there has been no material adverse change in such condition
or operations.
(g) The Borrower is not engaged in the business of
extending credit for the purpose of purchasing, carrying, or trading
in securities (within the meaning of
23
27
Regulation T issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase,
carry, or trade in any such securities or to extend credit to others
for the purpose of purchasing, carrying, or trading in any such
securities.
(h) All federal, state, and local tax returns and other
material reports required by applicable law to be filed by the
Borrower have been filed, and except with respect to any taxes,
assessments, or other governmental charges being contested in good
faith by the Borrower, all taxes, assessments, and other governmental
charges imposed upon the Borrower or any of its properties which have
become due and payable on or prior to the date hereof have been paid.
(i) Each Employee Plan, if any, of the Borrower has
satisfied the minimum funding standards under the Internal Revenue
Code and ERISA applicable thereto, and no Employee Plan, if any, has
an accumulated funding deficiency thereunder. The Borrower has not
incurred any liability under ERISA to the Pension Benefit Guaranty
Corporation with respect to any Employee Plan, and no Reportable Event
or other event has occurred which could constitute grounds for the
termination of any Employee Plan by the Pension Benefit Guaranty
Corporation or the appointment of a trustee to administer any Employee
Plan. The Borrower has not participated in any Prohibited Transaction
with respect to any Employee Plan or trust created thereunder, and the
consummation of the transactions contemplated hereby will not involve
any Prohibited Transaction. The Borrower is not in the process of
terminating any Employee Plan, which could result in the creation of
any
24
28
material liability for the Borrower.
(j) The Borrower has not violated its charter or by-laws
or any law, governmental regulation, order, judgment, or any agreement
or instrument binding on or affecting it or any of its properties in
such a manner so as to result in a material adverse change to the
condition or operations, financial or otherwise, of the Borrower.
(k) Except as set forth on Schedule II hereto, and except
as may be created by statute, all of the real property owned by the
Borrower, including any and all real property leasehold interests, is
free and clear of all liens, security interests, and other charges and
encumbrances.
(l) The Borrower has not made a material misstatement of
or failed to disclose a material fact to the Lender at any time during
the course of the negotiations related to this Agreement or in
connection with the Advances.
(m) No proceeds of any Advance will be used to acquire
any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934. All proceeds of the Advances
will be used for general corporate and working capital purposes.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any principal of
or interest on the Note shall remain unpaid or the Lender shall have any
Commitment hereunder, the Borrower will, unless the Lender shall otherwise
consent in writing:
25
29
(a) Current Ratio. Maintain a ratio of its current
assets to its current liabilities of not less than 2.5 to 1.0.
(b) Minimum Tangible Net Worth. Maintain an amount of
tangible net worth of at least $60,000,000 at all times during
its fiscal year 1998, and cause the amount of such capital to
increase in each fiscal year thereafter by at least fifty
percent (50%) of its net income in the immediately preceding
fiscal year.
(c) Earnings Ratio. Maintain a ratio of its EBITDA to
its Fixed Charges greater than 2.5 to 1.0 calculated quarterly
on a rolling four (4) quarter basis for the four (4) quarters
immediately preceding the date of such calculation.
(d) Ratio of Debt to Worth. Maintain a ratio of its
total Indebtedness to its tangible net worth of less than 0.5
to 1.0.
(e) Capital Expenditures. Maintain its level of capital
expenditures in any fiscal year at a level not more than twice
the amount of its EBITDA for the preceding fiscal year.
(f) Reporting Requirements. Furnish to the Lender:
(i) as soon as available and in any event within
45 days after the end of each quarter of each fiscal year of
the Borrower, (A) unaudited financial statements (including a
balance sheet, income statement, and statement of cash flows)
of the Borrower as of the end of such quarter, in reasonable
detail, prepared in accordance with generally accepted
accounting principles consistently applied and duly certified
by the Treasurer of the Borrower as (1) fairly presenting
26
30
the financial condition of the Borrower at the end of such
quarter and the results of the operations of the Borrower for
such period (subject to changes resulting from normal year-end
audit adjustments) and (2) having been prepared in accordance
with generally accepted accounting principles consistently
applied, together with a No-Default Certificate of such
officer, together with (B) a copy of SEC Form 10-Q, as filed
by the Borrower with the Securities and Exchange Commission
for such quarter;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the Borrower, (A)
audited financial statements (including a balance sheet,
income statement, and statement of cash flows) of the Borrower
for such fiscal year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles
consistently applied, accompanied by a report and opinion and
a No-Default Certificate, based on an end-of-year review, each
in form and substance reasonably satisfactory to the Lender,
of a public accounting firm reasonably satisfactory to the
Lender, together with (B) a copy of SEC Form 10-K, as filed by
the Borrower with the Securities and Exchange Commission for
such fiscal year;
(iii) as soon as possible and in any event within
five (5) days after the occurrence of each Event of Default or
event which, with the giving of notice or the lapse of time or
both, would constitute an Event of Default, and which is
continuing on the date of such statement, the statement of the
Treasurer or the
27
31
President of the Borrower setting forth the details of such
Event of Default or event and the action which the Borrower
proposes to take with respect thereto;
(iv) promptly after the filing or receipt thereof,
copies of all reports and notices, if any, which the Borrower
either (A) files in respect of any Employee Plan under the
Internal Revenue Code or ERISA with the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor, or which the Borrower receives from any
agency thereof, (B) furnishes to any holders of any
Indebtedness of the Borrower, or (C) files with the Securities
and Exchange Commission on SEC Form 8-K, if any of the
information therein could form the basis of, or any dispute
referred to therein which, if determined adversely to the
Borrower, could constitute or give rise to, an Event of
Default or an event which, with the giving of notice or the
lapse of time or both, would constitute an Event of Default;
(v) within five Business Days after the knowledge
of the Borrower of the commencement thereof, notice of each
action, suit, or proceeding before any court, arbitrator, or
governmental department, commission, board, bureau, agency, or
instrumentality involving a claim which may materially
adversely affect the condition or operations, financial or
otherwise, of the Borrower;
(vi) as soon as available and in any event within
45 days after the end of each fiscal quarter of the Borrower,
a quarterly summary setting forth any contingent liability
(including but not limited to any liability as a guarantor,
28
32
surety, warrantor, or account party to a letter of credit)
incurred, assumed, or created during such period and any
material joint venture or partnership entered into by the
Borrower; and
(vii) promptly upon request, such other information
concerning the condition or operations, financial or
otherwise, as the Lender may from time to time reasonably
request.
(g) Maintenance of Existence, Compliance with Laws. Etc.
Maintain its legal existence and permits and authority to do business
in all jurisdictions where the nature of its business requires such
permits and authority to be maintained, and comply in all material
respects with all applicable laws, rules, regulations, and orders,
such compliance to include, without limitation, compliance with ERISA
and all applicable laws pertaining to the environment and workers'
health and safety, paying before the same become delinquent all taxes,
assessments, and governmental charges or levies imposed upon it or
upon its income or profits or upon any of its properties, and paying
all lawful claims which if unpaid might become a lien or charge upon
any of its properties, except to the extent any such taxes,
assessments, governmental charges or levies, and claims may be
diligently contested by the Borrower in good faith and by appropriate
proceedings, and for which adequate reserves have been established by
the Borrower.
(h) Insurance. (i) Keep its insurable properties
adequately insured at all times by financially sound and reputable
insurers to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with
29
33
companies similarly situated and in the same or similar businesses,
(ii) maintain in full force and effect public liability insurance
against claims for personal injury or death or property damage
occurring upon, in, about, or in connection with the use of any
properties owned, occupied, or controlled by the Borrower, in such
amount as shall be reasonably necessary, and (iii) maintain such other
insurance as may be required by law. The amounts and types of
insurance coverages and the insurers issuing such coverages shall be
subject to the Lender's approval, which approval shall not be
unreasonably withheld.
(i) Keeping of Records and Books of Account. Keep
adequate records and books of account, with complete entries made in
accordance with generally accepted accounting principles consistently
applied, reflecting all of its financial transactions.
(j) Inspection Rights. Permit the Lender or any of its
representatives or agents at any reasonable time and from time to
time, upon reasonable notice, to examine and make copies of and
abstracts from its records and books of account, to visit and inspect
its properties and to discuss its affairs, finances, and accounts with
any of the directors or officers thereof, all as the Lender may
reasonably request.
SECTION 5.02. Negative Covenants. So long as any principal of or
interest on the Note shall remain unpaid or the Lender shall have any
Commitment hereunder, the Borrower will not, without the prior written consent
of the Lender:
(a) Liens, Etc. Create or suffer to exist any lien,
security interest, or other charge or encumbrance, or any other type
of preferential arrangement, upon or with
30
34
respect to any of its properties, rights, or other assets, whether now
owned or hereafter acquired, other than:
(i) liens existing as of the date hereof, as
shown on Schedule II hereto; and
(ii) such other liens as may be mutually agreed
upon by the Lender and the Borrower from time to time.
(b) Indebtedness. Create, incur, or suffer to exist any
Indebtedness which would cause the ratio of its total Indebtedness to
its tangible net worth to exceed the ratio specified in Section
5.01(d), above.
(c) Change in Nature of Business. Change the primary
nature of its business from the manufacture of ceramic proppants.
(d) Sales, Etc. of Assets. Sell, assign, lease, or
otherwise dispose of any of its assets, or any part thereof, including
its receivables, except in the ordinary course of business.
(e) Consolidation, Merger, Etc. Consolidate with, merge
into, or acquire any other entity or convey, transfer, or lease its
properties, voting stock, and assets substantially as an entirety to
any person or entity, or permit any entity to consolidate with, merge
into, or acquire the Borrower or convey, transfer, or lease its
properties, voting stock, or assets substantially as an entirety to
the Borrower; provided, however, that the Lender's prior written
consent shall not be required for any such transaction (i) in which
the other party's principal business is the same as or functionally
related to the
31
35
Borrower's principal business and (ii) which, when combined with all
other such transactions consummated by the Borrower during any one of
its fiscal years does not involve an aggregate payment by the Borrower
of consideration in cash, securities, or otherwise, of more than
$40,000,000; provided further, that nothing in this subsection (e)
shall be deemed to permit the Borrower to incur any Indebtedness not
expressly permitted under subsection (b) of this Section 5.02.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal amount
of, or interest on, the Note when due; or
(b) Any representation or warranty made by the Borrower
(or any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) The Borrower (i) shall fail to perform or observe any
covenant in subsections (c), (d), or (e) of Section 5.02 hereof, or
(ii) shall fail to perform or observe any other term, covenant, or
agreement contained in any Loan Document on its part to be performed
or observed, and which failure continues for a period of fifteen (15)
days or more, or
(d) The Borrower shall (i) fail to pay any Indebtedness,
including all currently
32
36
existing Indebtedness of the Borrower to the Lender, but excluding
Indebtedness evidenced by the Note, of the Borrower, when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Indebtedness, or (ii) fail to perform or observe any term,
covenant, or condition on its part to be performed or observed under
any agreement or instrument relating to any such Indebtedness, when
required to be performed or observed, and such failure shall continue
after the applicable grace period, if any, specified in such agreement
or instrument; or any such Indebtedness shall be declared to be due
and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
or
(e) The Borrower shall admit in writing its inability to
pay its debts as they come due, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower seeking reorganization, arrangement, adjustment,
composition of it or its debts, or any other relief under any law
relating to bankruptcy, insolvency, reorganization, or relief of
debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property;
or the Borrower shall take any action to authorize any of the actions
set forth above in this subsection (e); or
(f) The Borrower shall receive notice of termination of
an Employee Plan by reason of the occurrence of a Reportable Event; or
33
37
(g) The Borrower shall fail to maintain all material
licenses, authorizations, and approvals required to operate its
business, which failure is not cured to the Lender's satisfaction
within fifteen (15) days following the occurrence of such failure; or
(h) The Borrower shall liquidate, dissolve, or take any
action in contemplation thereof, or there shall be any change in the
material terms of Borrower's charter or by-laws without the prior
written consent of the Lender, which consent shall not be unreasonably
withheld; or
(i) The validity or the enforceability of any of the Loan
Documents is contested by the Borrower; or
(j) The entry of a final non-appealable judgment or order
against the Borrower for the payment of money of $1,000,000 or more in
excess of amounts covered by third-party insurance, and such judgment
or order shall continue unsatisfied and in effect for a period of 60
consecutive days; or
(k) The failure of the persons who were the shareholders
of the Borrower on March 31, 1996 to maintain their beneficial
ownership, in the aggregate, of at least fifty-one percent (51%) of
the outstanding voting stock of the Borrower; or
(l) Any action or proceeding shall be initiated by or
against the Borrower or any of its properties wherein the validity of
or the Borrower's right to use any patent, copyright, trademark, trade
secret, right, permit, license, or any other form of intellectual
property owned or held by the Borrower shall be contested, which
action or proceeding is not diligently prosecuted in good faith by the
Borrower in appropriate proceedings
34
38
deemed by the Lender to be satisfactory; or
(m) Any event which, in the good-faith judgment of the
Lender, constitutes or could reasonably be expected to constitute or
result in a material adverse change in the financial condition or
business operations of the Borrower;
then, and in any such event, and the continuance thereof, the Lender may, by
notice to the Borrower, (i) declare its obligation to make Advances to be
terminated, whereupon the same shall forthwith terminate, and (ii) declare the
principal balances of all Advances and the Note, all accrued but unpaid
interest thereon, and other amounts properly payable under this Agreement to be
forthwith due and payable, whereupon the principal balances of all Advances and
the Note, all such interest, and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by the Borrower, (iii) take such
other actions as may be permitted under the Loan Documents, and (iv) exercise
any and all other remedies available under applicable law.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any
provision of the Loan Documents, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. Except as otherwise specifically
provided herein, all
35
39
notices and other communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed or telegraphed or delivered,
if to the Borrower, at its address at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇; if to the Lender, at
its address at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Credit
Department; or, as to each party, at such other address as shall be designated
by such party in a written notice to the other party. All such notices and
communications shall, when mailed or telegraphed, be effective when deposited
in the mails or delivered to the telegraph company, respectively, addressed as
aforesaid.
SECTION 7.03. No Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies that may be
available to the Lender at law, in equity, or otherwise. No notice to or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
SECTION 7.04. Costs, Expenses, and Taxes. (a) The Borrower agrees
to pay on demand all costs and expenses reasonably incurred by the Lender in
connection with the preparation, execution, delivery, filing, recording, and
administration of the Loan Documents and the other documents to be delivered
under the Loan Documents, including, without limitation, all fees and
out-of-pocket expenses of counsel for the Lender with respect thereto and
36
40
with respect to advising the Lender as to its rights and responsibilities under
the Loan Documents, and all costs and expenses, if any, in connection with the
enforcement of the Loan Documents and the other documents to be delivered under
the Loan Documents. In addition, the Borrower shall pay any and all stamp and
other taxes, excluding taxes imposed on net income and all income and franchise
taxes of the United States and any political subdivisions thereof (all such
non-excluded taxes being herein referred to as "Taxes") and fees, if any,
payable or determined to be payable in connection with the execution and
delivery of the Loan Documents and the other documents to be delivered under
the Loan Documents, and agrees to save the Lender harmless from and against any
and all liabilities with respect to or resulting from any delay by the Borrower
in paying or omission to pay such Taxes and fees.
SECTION 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the
Lender to or for the credit or the account of the Borrower against any and all
of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note, irrespective or whether or not the Lender shall have
made any demand under this Agreement or the Note and although such obligations
may be unmatured. The Lender agrees to use its best efforts to notify the
Borrower promptly after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights and remedies (including, without
37
41
limitation, other rights of set-off) which the Lender may have.
SECTION 7.06. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Lender, and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender. The Lender may, with the Borrower's consent, such
consent not to be unreasonably withheld or delayed, assign to one or more banks
or entities all or any part of, or may grant participations to one or more
banks or other entities in or to all or any part of, any Advance or Advances
and the Note, and to the extent of any such assignment or participation (unless
otherwise stated therein), the assignee or participant of such assignment or
participation shall have the same rights and benefits hereunder and under the
Note as it would have if it were the Lender hereunder.
SECTION 7.07. Governing Law. The Loan Documents shall be governed
by and construed in accordance with the laws of the State of Texas, except to
the extent any law, rule, or regulation of the federal government of the United
States of America may be applicable, in which case such federal law, rule, or
regulation shall govern and control; provided that the provisions of Chapter 15
of the Texas Credit Code shall not be applicable to this Agreement.
SECTION 7.08 Merger of Agreements. THE LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
38
42
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CARBO CERAMICS INC.
ATTEST:
By:
-------------------------------------
Print Name:
--------------------------
Title:
----------------------------- -------------------------------
per pro ▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.
-----------------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
39
43
SCHEDULE I
Litigation
44
SCHEDULE II
Permitted Liens
The following liens, security interests, and other charges and
encumbrances are expressly permitted under the terms of this Agreement, and the
amounts of such liens, security interests and other charges and encumbrances
described in (a), (b) and (c) below shall not exceed $500,000 in the aggregate
at any time during the term of this Agreement:
(a) Statutory and Good Faith Deposits. (i) Pledges or deposits
under workmen's compensation laws, unemployment insurance laws, the Social
Security Act, or similar legislation, and (ii) deposits to secure public or
statutory obligations of Borrower, surety, customs, appeal, or performance
bonds to which Borrower is a party, or the payment of contested taxes or import
duties of Borrower, each made and maintained in the ordinary course of
business;
(b) Statutory Liens. (i) Any lien which is imposed by law, such
as those of carriers, warehousemen, and mechanics, if payment of the obligation
secured thereby is not yet due, or the validity or amount of which is being
contested by appropriate legal proceedings, or (ii) any lien for taxes,
assessments, or other governmental charges of levies not yet subject to
penalties for nonpayment or the validity or amount of which is being contested
by appropriate legal proceedings;
(c) Minor Title Defects. Minor survey exceptions, minor
encumbrances, easements, or reservations of, or rights of others for, sewers,
electric lines, telegraph and telephone lines, rights of way, and other similar
purposes, or zoning or other restrictions as to the use of any real property;
provided that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said property or materially impair the use
of such property in the operation of the business of Borrower.
(d) Landlord's Liens. Security interests in favor of
Cambridge/Las Colinas Limited Partnership, as lessor, on personal property of
the Borrower now or hereafter attached or affixed to or used in or about the
premises leased by the said lessor to the Borrower, as lessee, at Cigna Tower,
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(e) Equipment. Security interests in (i) a used Caterpillar 938F
Wheel Loader in favor of ▇▇▇▇▇▇▇▇ Tractor Co., Inc., as described in that
certain UCC-1 Financing Statement filed with the Secretary of State of the
State of Alabama on December 6, 1996, file No. 96-51148 and (ii) a new
Caterpillar 928F Wheel Loader in favor of ▇▇▇▇▇▇▇▇ Tractor Co., Inc., as
described in that certain UCC-1 Financing Statement filed with the Secretary of
State of the State of Alabama on February 24, 1997, file No. 97-07667.
45
REVOLVING CREDIT NOTE
U.S. $10,000,000
Dated: February 12, 1998
FOR VALUE RECEIVED, the undersigned, CARBO CERAMICS INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of ▇▇▇▇▇
BROTHERS ▇▇▇▇▇▇▇▇ & CO., a New York limited partnership (the "Lender") the
principal amount of each Advance made by the Lender to the Borrower pursuant to
the Credit Agreement (as hereinafter defined). All terms not otherwise defined
herein shall have the meanings set forth for such terms in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of each Advance from the date of such Advance until such principal amount is
paid in full, at such interest rate, and payable at such times, as are
specified in the Credit Agreement. In no event, however, shall the rate of
interest charged hereunder exceed the Maximum Rate.
All agreements between the Borrower and the Lender, whether now
existing or hereafter arising and whether written for oral, are hereby
expressly limited so that in no event, whether by reason of acceleration of the
maturity hereof or otherwise, shall the amount paid or agreed to be paid to the
holder hereof for the use, forbearance or detention of the money to be loaned
hereunder or otherwise exceed the Maximum Rate. In fulfillment of any provision
hereof or of any loan agreement or other document evidencing or securing the
loan evidenced by this Note, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, then,
ipso facto, the obligation to be fulfilled shall be reduced to the limit of
such validity; and if the holder of this Note shall ever receive anything of
value deemed to be interest under applicable law which would exceed interest at
the Maximum Rate, an amount equal to any such excessive interest shall be
applied to the reduction of the principal amount owing hereunder and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance
of principal hereof, such excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the holder hereof for the use, forbearance, or
detention of the indebtedness of the Borrower to the Lender shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of such indebtedness until payment in full so
that the rate of interest of account of such indebtedness is uniform throughout
the term thereof. The provisions of this paragraph shall control all agreements
between the Borrower and the Lender.
Both principal and interest are payable for the account of Borrower in
lawful money of the United States of America to the Lender at its offices at ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in same day funds. Each Advance made by
the Lender to the Borrower and the maturity thereof, and all payments made on
account of principal hereof, shall be recorded by the Lender and, prior to any
transfer hereof, either endorsed on the grid attached hereto which is part of
this Promissory Note or maintained in comparable form within the Lender's
internal books and records (which may be electronic).
46
The Borrower hereby affirms and certifies to the Lender that the
obligation evidenced by this note was not and will not be incurred for the
purposes of purchasing, carrying, or trading in securities, as defined in
Regulation T of the Board of Governors of the Federal Reserve System.
This Promissory Note is the Note referred to in, and is entitled to
the benefits of, the First Amended and Restated Credit Agreement dated as of
February 12, 1998 (the "Credit Agreement") between the Borrower and the Lender.
The Credit Agreement, among other things, (i) provides for the making of
advances (the "Advances") by the Lender to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each
such Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
This Promissory Note shall be governed by and construed in accordance with the
laws of the State of Texas, except to the extent any law, rule, or regulation
of the federal government of the United States of America may be applicable, in
which case such federal law, rule, or regulation shall govern and control;
provided that the provisions of Chapter 15 of the Texas Credit Code shall not
be applicable to this Promissory Note.
CARBO CERAMICS INC.
ATTEST:
By:
-------------------------------------
Print Name:
--------------------------
Title:
----------------------------- -------------------------------
47
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Amount of Principal Principal Notations
Date Advance Payment Balance Made By
---- --------- --------- --------- ---------
48
ROLLOVER AND CONVERSION NOTICE
DATE: ____________, 19__
LENDER: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.
BORROWER: Carbo Ceramics Inc.
This notice is delivered pursuant to that certain First Amended and
Restated Credit Agreement dated as of February 12, 1998, between ▇▇▇▇▇ Brothers
▇▇▇▇▇▇▇▇ & Co, a New York limited partnership (the "Lender"), and Carbo
Ceramics Inc., a Delaware corporation (the "Borrower"). All the defined terms
contained in the Agreement have the same meanings when used herein.
1. Please be advised that the Borrower currently has an
outstanding principal indebtedness under an Advance in the amount of
$____________, bearing interest at the ______ Rate (Base Rate or LIBOR Fixed
Rate), [and the present LIBOR Interest Period for which ends on ____________,
19__ (if such Advance presently bears interest at the LIBOR Fixed Rate).]
2. Effective as of ____________, 19__ [which must be the last day
of the present LIBOR Interest Period if the Advance bears interest at the LIBOR
Fixed Rate], the Borrower requests that the principal indebtedness under such
Advance bear interest at the __________ Rate (Base Rate or LIBOR Fixed Rate)
[and (if such Advance is to bear interest at the LIBOR Fixed Rate) such balance
shall have a LIBOR Interest Period ending on ____________, 19__ (30, 60, or 90
days thereafter, but not later than the Termination Date).]
The Borrower hereby certifies to the Lender that on, and as of, the
date hereof the representations and warranties made in all of the Loan
Documents are, and will be, true and correct in all material respects, and no
Event of Default or any event which, with notice or lapse of time or both,
could become an Event of Default has occurred and is continuing.
Very truly yours,
CARBO CERAMICS INC.
By:
-------------------------------------
Print Name:
--------------------------
Title:
-------------------------------
49
NO DEFAULT CERTIFICATE
Pursuant to Section 5.01(f) of that certain First Amended and Restated
Credit Agreement dated as of February 12, 1998 (the "Credit Agreement"),
between Carbo Ceramics Inc. (the "Borrower") and ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.
(the "Lender"), the undersigned, being the Treasurer of the Borrower, hereby
certifies to the Lender as follows:
On and as of the date hereof, no event has occurred which constitutes
an Event of Default under the Credit Agreement or which, with the giving of
notice or the lapse of time or both, would constitute an Event of Default under
the Credit Agreement.
IN WITNESS WHEREOF, this instrument is executed by the undersigned as
of __________________, 199_.
-----------------------------------------
, Treasurer
------------------------------
