Exhibit 10.2
CREDIT AGREEMENT
dated as of December 17, 2001
among
T-3 ENERGY SERVICES, INC.
as Borrower,
XXXXX FARGO BANK TEXAS, NATIONAL ASSOCIATION
as Issuing Bank, as a Bank
and as Lead Arranger and Administrative Agent for the Banks,
GENERAL ELECTRIC CAPITAL CORPORATION
as Co-Arranger and Syndication Agent for the Banks
and
the Banks
Table of Contents
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ARTICLE I Definitions.................................................................................. 1
Section 1.1 Definitions.................................................................................. 1
Section 1.2 Other Definitional Provisions................................................................ 22
ARTICLE II Advances, Term Loan Advances, and Letters of Credit.......................................... 22
Section 2.1 Commitments.................................................................................. 22
Section 2.2 The Notes.................................................................................... 23
Section 2.3 Repayment of Advances........................................................................ 23
Section 2.4 Interest..................................................................................... 24
Section 2.5 Use of Proceeds.............................................................................. 24
Section 2.6 Revolving Credit Commitment Fee............................................................ 24
Section 2.7 Reduction or Termination of Revolving Credit Commitment...................................... 24
Section 2.8 Letters of Credit............................................................................ 25
Section 2.9 Payments and Reimbursement Under Letters of Credit........................................... 25
Section 2.10 Optional Commitment Increase................................................................. 27
ARTICLE III Swing Line Advances.......................................................................... 30
Section 3.1 Swing Line Advances.......................................................................... 30
Section 3.2 Banks' Funding of Swing Line Advances as Advances............................................ 31
Section 3.3 The Swing Line Note.......................................................................... 32
ARTICLE IV Borrowing Procedure: Payments; Facilities Fees; Matters Related to Letters of Credit;
Matters Related to Advances; Designation of Additional Guarantors............................ 32
Section 4.1 Borrowing Procedure.......................................................................... 32
Section 4.2 Method of Payment............................................................................ 33
Section 4.3 Voluntary Prepayment......................................................................... 33
Section 4.4 Mandatory Prepayment......................................................................... 33
Section 4.5 Pro Rata Treatment........................................................................... 35
Section 4.6 Non-Receipt of Funds by the Agent............................................................ 35
Section 4.7 Withholding Tax Exemption.................................................................... 35
Section 4.8 Computation of Interest...................................................................... 36
Section 4.9 Conversions and Continuation................................................................. 36
Section 4.10 Letter of Credit Procedure................................................................... 36
Section 4.11 Amendments to Letters of Credit.............................................................. 37
Section 4.12 Letter of Credit Fees........................................................................ 37
Section 4.13 Participation by Banks....................................................................... 37
Section 4.14 Obligations Absolute......................................................................... 38
Section 4.15 Limitation of Liability...................................................................... 38
Section 4.16 Letter of Credit Agreements............................................................... 38
Section 4.17 Replacement of the Issuing Bank.............................................................. 39
Section 4.18 No Advances.................................................................................. 39
Section 4.19 Designation of Additional Guarantors; Revocation of Designation.............................. 39
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(continued)
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ARTICLE V Yield Protection and Illegality.............................................................. 40
Section 5.1 Capital Adequacy............................................................................. 40
Section 5.2 Additional Costs............................................................................. 40
Section 5.3 Limitation on LIBOR Advances................................................................. 41
Section 5.4 Illegality................................................................................... 42
Section 5.5 Treatment of Certain LIBOR Advances......................................................... 42
Section 5.6 Compensation................................................................................. 43
ARTICLE VI Security..................................................................................... 43
Section 6.1 Collateral................................................................................... 43
Section 6.2 Setoff....................................................................................... 44
ARTICLE VII Conditions Precedent......................................................................... 45
Section 7.1 Conditions to Initial Advance................................................................ 45
Section 7.2 All Advances................................................................................. 48
ARTICLE VIII Representations and Warranties............................................................... 49
Section 8.1 Corporate Existence.......................................................................... 49
Section 8.2 Projections; Financial Statements............................................................ 49
Section 8.3 Corporate Action: No Breach.................................................................. 50
Section 8.4 Operation of Business........................................................................ 50
Section 8.5 Litigation and Judgments..................................................................... 50
Section 8.6 Rights in Properties: Liens.................................................................. 50
Section 8.7 Enforceability............................................................................... 50
Section 8.8 Approvals.................................................................................... 51
Section 8.9 Debt......................................................................................... 51
Section 8.10 Taxes........................................................................................ 51
Section 8.11 Use of Proceeds: Margin Securities........................................................... 51
Section 8.12 ERISA........................................................................................ 51
Section 8.13 Disclosure................................................................................... 51
Section 8.14 Subsidiaries................................................................................. 52
Section 8.15 Agreements................................................................................... 52
Section 8.16 Compliance with Laws......................................................................... 52
Section 8.17 Investment Company Act....................................................................... 52
Section 8.18 Public Utility Holding Company Act........................................................... 52
Section 8.19 Environmental Matters........................................................................ 52
ARTICLE IX Affirmative Covenants........................................................................ 54
Section 9.1 Reporting Requirements....................................................................... 54
Section 9.2 Maintenance of Existence: Conduct of Business................................................ 57
Section 9.3 Maintenance of Properties.................................................................... 57
Section 9.4 Taxes and Claims............................................................................. 57
Section 9.5 Insurance.................................................................................... 57
Section 9.6 Inspection Rights............................................................................ 57
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(continued)
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Section 9.7 Keeping Books and Records.................................................................... 58
Section 9.8 Compliance with Laws......................................................................... 58
Section 9.9 Compliance with Agreements................................................................... 58
Section 9.10 Further Assurances........................................................................... 58
Section 9.11 ERISA........................................................................................ 58
Section 9.12 Additional Material Subsidiaries as Guarantors: Execution of Additional Security
Agreements-Guarantors........................................................................ 58
Section 9.13 Continuity of Operations..................................................................... 59
Section 9.14 Intercompany Note............................................................................ 59
Section 9.15 Additional Appraisals........................................................................ 59
Section 9.16 Hedging Agreement............................................................................ 59
ARTICLE X Negative Covenants........................................................................... 59
Section 10.1 Debt......................................................................................... 60
Section 10.2 Limitation on Liens.......................................................................... 61
Section 10.3 Mergers, Dissolutions, Etc................................................................... 62
Section 10.4 Loans and Investments........................................................................ 63
Section 10.5 Transactions With Affiliates................................................................. 63
Section 10.6 Disposition of Assets........................................................................ 64
Section 10.7 Sale and Leaseback........................................................................... 64
Section 10.8 Nature of Business........................................................................... 64
Section 10.9 Environmental Protection..................................................................... 64
Section 10.10 Accounting................................................................................... 64
Section 10.11 Changes to Subordinated Debt................................................................. 65
ARTICLE XI Financial Covenants.......................................................................... 65
Section 11.1 Consolidated Tangible Net Worth.............................................................. 65
Section 11.2 Fixed Charge Coverage Ratio.................................................................. 65
Section 11.3 Funded Debt to EBITDA Ratio.................................................................. 66
Section 11.4 Capital Expenditures......................................................................... 66
ARTICLE XII Default...................................................................................... 66
Section 12.1 Events of Default............................................................................ 66
Section 12.2 Remedies Upon Default........................................................................ 68
Section 12.3 Letter of Credit............................................................................. 68
Section 12.4 Performance by the Agent..................................................................... 68
ARTICLE XIII The Agent.................................................................................... 69
Section 13.1 Appointment, Powers and Immunities........................................................... 69
Section 13.2 Rights of Agent as a Bank.................................................................... 70
Section 13.3 Sharing of Payments, Etc..................................................................... 71
Section 13.4 Indemnification.............................................................................. 71
Section 13.5 Independent Credit Decisions................................................................. 72
Section 13.6 Several Commitments.......................................................................... 72
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(continued)
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Section 13.7 Successor Agent.............................................................................. 72
ARTICLE XIV Miscellaneous................................................................................ 73
Section 14.1 Expenses..................................................................................... 73
Section 14.2 Indemnification.............................................................................. 73
Section 14.3 Limitation of Liability...................................................................... 74
Section 14.4 No Duty...................................................................................... 74
Section 14.5 Bank Not Fiduciary........................................................................... 74
Section 14.6 No Waiver; Cumulative Remedies............................................................... 74
Section 14.7 Successors and Assigns....................................................................... 75
Section 14.8 Survival..................................................................................... 78
Section 14.9 ENTIRE AGREEMENT; AMENDMENTS................................................................. 78
Section 14.10 Maximum Interest Rate........................................................................ 79
Section 14.11 Notices...................................................................................... 80
Section 14.12 GOVERNING LAW; VENUE; SERVICE OF PROCESS..................................................... 80
Section 14.13 Counterparts................................................................................. 81
Section 14.14 Severability................................................................................. 81
Section 14.15 Headings..................................................................................... 81
Section 14.16 Non-Application of Chapter 346 of Texas Finance Code......................................... 81
Section 14.17 Construction................................................................................. 81
Section 14.18 Independence of Covenants.................................................................... 81
Section 14.19 Waiver of Trial By Jury...................................................................... 81
ARTICLE XV Arbitration.................................................................................. 81
Section 15.1 Arbitration.................................................................................. 82
Section 15.2 Governing Rules.............................................................................. 82
Section 15.3 No Waiver; Provisional Remedies, Self-Help and Foreclosure................................... 82
Section 15.4 Arbitrator Qualifications and Powers; Awards................................................. 82
Section 15.5 Judicial Review.............................................................................. 83
Section 15.6 Miscellaneous................................................................................ 83
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Schedules
7.1 Existing Debt to be Repaid
8.5 Litigation
8.10 Tax Matters
8.14 Subsidiaries
8.19 Environmental Matters
10.1 Existing Permitted Debt
10.2 Existing Permitted Liens
10.5 Transactions with Affiliates
Exhibits
A-1 Revolving Credit Note
A-2 Swing Line Note
A-3 Term Loan Note
B Advance Request Form
C Compliance Certificate
D Guaranty Agreement -- Domestic
E Pledge and Security Agreement
F Borrowing Base Report
G Assignment and Acceptance
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 17, 2001 (this
"Agreement"), is among T-3 ENERGY SERVICES, INC., a Delaware corporation (the
"Borrower"), each of the banks or other lending institutions which is or which
may from time to time become a signatory hereto or any successor or assignee
thereof (individually, a "Bank" and, collectively, the "Banks"), and XXXXX FARGO
BANK TEXAS, NATIONAL ASSOCIATION, a national banking association, as agent for
itself, each Issuing Bank and the other Banks (in such capacity, together with
its successors in such capacity, the "Agent").
RECITALS:
The Borrower has requested the Banks to extend credit in the form of
(a) a revolving credit facility not to exceed $41,500,000 outstanding at any
time (subject to increase and reduction as herein set forth) under which the
Borrower may request (i) advances and (ii) letters of credit (subject to a
$2,500,000 sublimit), and (b) a single advance term loan in the original
principal amount of $16,500,000. The Banks are willing to extend such credit and
make such term loan to the Borrower upon the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"AAA" has the meaning given to such term in Section 15.2 of this
Agreement.
"Account Debtor" means any Person who is or who may become obligated
to the Borrower or its Subsidiaries under, with respect to, or on account of an
Account.
"Accounts" means all rights to payment for goods sold or leased or
services rendered by the Borrower or its Subsidiaries, whether or not earned by
performance, together with all security interests or other security held by or
granted to the Borrower or its Subsidiaries to secure such rights to payment.
"Additional Bank" is defined in section 2.10.
"Additional Costs" has the meaning given to such term in Section 5.2.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined by the
Agent to be equal to (a) LIBOR for the applicable Interest Period divided by (b)
the difference of 1 minus the Reserve Requirement for such LIBOR Advance for
such Interest Period.
"Advance" means (a) a Revolving Credit Advance, (b) a Term Loan
Advance, (c) a Swing Line Advance, and (d) a payment under a Letter of Credit.
"Advance Request Form" means a certificate, in substantially the form
attached hereto as Exhibit "B", properly completed and signed by an Authorized
Representative requesting an Advance.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds 10% or more of any class of voting
stock of such Person; or (c) 10% or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in question. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise; provided,
however, in no event shall any of the Agent, the Issuing Bank and the Banks be
deemed an Affiliate of the Borrower or any of its Subsidiaries.
"Agent" has the meaning given to such term in the first paragraph of
this Agreement.
"Applicable Lending Office" means for each Bank and each Type of
Advance, the Lending Office of such Bank (or of an Affiliate of such Bank)
designated for such Type of Advance below its name on the signature pages hereof
or such other office of the Bank (or of an Affiliate of such Bank) as such Bank
may from time to time specify to the Borrower as the office by which its
Advances of such Type are to be made and maintained.
"Applicable Margin" means, on any date of determination of the
interest rate for any Base Rate Advance or LIBOR Advance or of the commitment
fee described in Section 2.6 hereof, the applicable percentage set forth in the
table below for such Advance or fee, as appropriate, which corresponds to the
Borrower's Funded Debt to EBITDA Ratio:
APPLICABLE
FUNDED DEBT MARGIN FOR APPLICABLE
TO BASE RATE MARGIN FOR
EBITDA ADVANCES AND SWING LIBOR APPLICABLE MARGIN
RATIO LINE ADVANCES ADVANCES FOR COMMITMENT FEE
=======================================================================================
Greater than or 2.00% 3.00% 0.625%
equal to 2.50 to 1.00
2
Greater than or 1.75% 2.75% 0.500%
equal to 2.00 to
1.00, but less than
2.50 to 1.00
Greater than or 1.50% 2.50% 0.375%
equal to 1.00 to
1.00, but less than
2.00 to 1.00
Less than 1.00 to 1.25% 2.25% 0.250%
1.00
From the date hereof until the Agent receives the Borrower's
financial statements for the quarter ending March 31, 2002, the Applicable
Margin shall be deemed to be (a) 2.75% for LIBOR Advances, (b) 1.75% for Base
Rate Advances, and (c) 0.50% for the commitment fee described in Section 2.6
hereof. Any change in the Funded Debt to EBITDA Ratio shall be effective to
adjust the Applicable Margin as of the date of receipt by the Agent of the most
recently delivered Compliance Certificate. If the Borrower fails to deliver the
Compliance Certificate and financial statements within the times specified in
this Agreement, such ratio shall be deemed to be greater than 2.50 to 1.00 until
the Borrower delivers such Compliance Certificate and financial statements.
"Applicable Rate" means the sum of the Base Rate or Adjusted LIBOR
Rate, as the case may be, plus the Applicable Margin from time to time in
effect.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer") by
the Borrower or any of its Subsidiaries, directly or indirectly, in one or a
series of related transactions, to any Person other than the Borrower or any of
its Subsidiaries of (a) any Capital Stock of any of Borrower's Subsidiaries, (b)
all or substantially all of the properties and assets of the Borrower and its
Subsidiaries representing a division or line of business or (c) any other
properties or assets of the Borrower or any of its Subsidiaries, other than in
the ordinary course of business. For purposes of this definition, the term
"Asset Sale" does not include any transfer of properties or assets between or
among the Borrower and the Guarantors pursuant to transactions that do not
violate any provision of this Agreement.
"Assignee" has the meaning given to such term in Section 14.7 (b).
"Assignment and Acceptance" means an Assignment and Acceptance, in
substantially the form attached hereto as Exhibit "G" with appropriate
completions.
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"Authorized Representative" means any officer or employee of the
Borrower who has been designated in writing by the Borrower to the Agent to be
an Authorized Representative.
"Bank" has the meaning given to such term in the first paragraph of
this Agreement.
"Base Rate" means, for any day, a per annum interest rate equal to
the higher of (a) the sum of 0.50% plus the Federal Funds Rate on such day or
(b) the Prime Rate on such day. The Base Rate shall be adjusted automatically as
of the opening of business on the effective date of each change in the Prime
Rate or Federal Funds Rate, as applicable, to account for such change.
"Base Rate Advances" means Advances that bear interest at rates based
upon the Base Rate.
"Basle Accord" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.
"Borrower" has the meaning given to such term in the first paragraph
of this Agreement.
"Borrowing Base" means, at any time, an amount equal to the sum of
(a) eighty-five percent (85%) of Eligible Accounts, plus (b) fifty percent (50%)
of Eligible Inventory, provided that the amount determined under this clause (b)
may never exceed an amount equal to thirty-five percent (35%) of the total
Borrowing Base, minus (c) the Environmental Reserve.
"Borrowing Base Report" means a report, in substantially the form of
Exhibit "F" hereto, certified by the chief financial officer of the Borrower.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in Houston, Texas or New York, New York, and (b)
with respect to all borrowings, payments, Conversions, Continuations, Interest
Periods, and notices in connection with LIBOR Advances, any day which is a
Business Day described in clause (a) above and which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Calculation Period" means, as of the last day of any Fiscal Quarter,
(a) beginning with the Fiscal Quarter ending March 31, 2002, and continuing
through and including the Fiscal Quarter ending September 30, 2002, the period
beginning on January 1, 2002 and ending on such last day of such Fiscal Quarter,
and (b) at all times after September 30, 2002, the period of four Fiscal
Quarters ended as of such date or, if a calculation is performed on a date other
than the last day of any Fiscal Quarter, the period of twelve months ending on
such date.
"Capital Expenditures" means, for any Person, all expenditures for
assets which, in accordance with GAAP, are properly classified as equipment,
real property, improvements, fixed
4
assets or a similar type of capitalized asset and which would be required to be
capitalized and shown on the balance sheet of such Person.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such Person's equity interest (however designated).
"Cash Equivalent Investment" means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, corporate demand notes
or other debt securities having a maturity or tender right less than one year
from the date of issuance thereof, in each case (unless issued by a Bank or its
holding company) rated in one of the two highest rating categories by Standard &
Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (c) any certificate of
deposit (or time deposits represented by such certificates of deposit) or
bankers acceptance, maturing not more than one year after such time, or
overnight Federal Funds transactions that are issued or sold by a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000, (d) any repurchase agreement entered into with any Bank (or other
commercial banking institution of the stature referred to in clause (c) which
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial banking institution)
thereunder and (e) investments in short-term asset management accounts offered
by any Bank for the purpose of investing in investment grade loans to any
corporation (other than the Borrower or an Affiliate of the Borrower) , state or
municipality, in each case organized under the laws of any state of the United
States or of the District of Columbia.
"Cash Reserves" means for any Person amounts held by such Person in
cash or Cash Equivalent Investments.
"Cash Taxes" means, for any Person, the sum of all cash income taxes
paid or required to be paid during the period in question, as determined in
accordance with GAAP applied consistently.
"Change of Control" means the occurrence of any transaction or event
by which any Person, or two or more Persons acting in concert, acquire
beneficial ownership (within the
5
meaning of Rule 13d-3 of the Securities and Exchange Act of 1934, as amended) of
50% or more of the outstanding shares of the Borrower's voting stock.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning given to such term in Section 6.1.
"Commitment Increase" is defined in Section 2.10.
"Compliance Certificate" means a certificate, in substantially the
form of Exhibit "C" attached hereto, properly completed and signed by the
Borrower in connection with Section 9.1(c).
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) determined in conformity with GAAP of the Borrower and its
Subsidiaries.
"Consolidated Tangible Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as Stockholders'
Equity on a consolidated balance sheet of the Borrower and its Subsidiaries;
provided, however, there shall be excluded therefrom intangible assets,
including: (a) any amount at which shares of capital stock of the Borrower
appear as an asset on the Borrower's balance sheet, (b) goodwill, including any
amounts, however designated, that represent the excess of the purchase price
paid for assets or stock over the value assigned thereto, and (c) loans (to the
extent that such are not fully secured) to any stockholder, director, officer,
or employee of the Borrower or any Affiliate of the Borrower.
"Contingent Liabilities" means, as applied to any Person, those
direct or indirect liabilities of that Person which, in conformity with GAAP,
would be included as liabilities of that Person on a consolidated balance sheet
of the Borrower and its Subsidiaries, with respect to any Debt, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor") including, without limitation, any obligation of
such Person, whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation, or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof. The amount of any Contingent
Liabilities shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Liabilities
are made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good faith.
6
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 4.9 of a LIBOR Advance as a LIBOR Advance from
one Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a conversion
pursuant to Section 4.9 or Article V of one Type of Advance into another Type of
Advance.
"Credit Request" has the meaning in Section 4.10 hereof.
"Current Maturities" means as to any Person, at any date, the current
maturities of Funded Debt determined in accordance with GAAP.
"Debt" means as to any Person at any time (without duplication as to
such Person and as to such Person's Subsidiaries): (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, notes, debentures, or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable of such Person arising in the ordinary course of business
that are not past due by more than ninety (90) days or which are being contested
in good faith and for which adequate reserves have been established, (d) all
Capital Lease Obligations of such Person, (e) all obligations secured by a Lien
existing on property owned by such Person, whether or not the obligations
secured thereby have been assumed by such Person or are non-recourse to the
credit of such Person, (f) all reimbursement obligations of such Person (whether
contingent or otherwise and whether or not a request for funding has been made)
in respect of letters of credit, bankers' acceptances, surety or other bonds and
similar instruments, (g) all liabilities of such Person in respect of unfunded
vested benefits under any Plan, (h) all Contingent Liabilities and (i) all
obligations under Hedging Agreements.
"Default" means the occurrence of an event or condition which with
notice or lapse of time or both would become an Event of Default.
"Default Rate" means the lesser of (a) the Applicable Rate plus 2.00%
and (b) the Maximum Rate.
"Dollars" and "$" mean lawful money of the United States of America.
"Domestic Guarantors" means (a) all the Material Subsidiaries which
are Domestic Subsidiaries, and (b) all other Domestic Subsidiaries which have
been designated by the Borrower to be Domestic Guarantors pursuant to Section
4.19(a), and "Domestic Guarantor" means any one of the Domestic Guarantors.
"Domestic Subsidiary" means any Subsidiary of the Borrower which is
organized and existing under the laws of the United States of America or any
state thereof.
"EBITDA" means as to any Person, for any period, the sum of
Consolidated Net Income for such period plus Interest Expense, Tax Expense,
Non-Cash Charges, and the amount of any write-downs of goodwill, all to the
extent deducted when determining Consolidated Net Income
7
in such period, plus historical EBITDA of acquired entities for periods included
in the applicable Calculation Period in which such acquired entities were not
Subsidiaries of the Borrower, so long as the financial statements of such
acquired entities are in form and detail satisfactory to the Agent, minus
historical EBITDA of sold entities for periods included in the applicable
Calculation Period in which such sold entities were Subsidiaries of the
Borrower.
"XXXXX" means the Electronic Data Gathering, Analysis and Retrieval
program operated by the SEC pursuant to Regulation ST of the General Rules and
Regulations of the SEC under the Securities Act of 1933, and shall include any
successor program.
"Effective Date" means the date on which all the conditions precedent
set forth in Section 7.1 have been satisfied or waived in writing by the Agent
and the Banks.
"Eligible Account" means an Account owing by an Account Debtor to the
Borrower or the Guarantors which is not deemed by the Agent to be ineligible, in
its sole discretion, is subject to a first priority security interest in favor
of the Agent, and which meets the following requirements at the time it comes
into existence and continues to meet the same until it is collected in full:
(i) it is evidenced by an invoice rendered to the Account
Debtor thereunder which invoice is in form reasonably acceptable to the Agent,
and such Account is due and payable no later than ninety (90) days after the
date of the invoice and is not more than sixty (60) days past due;
(ii) (A) with respect to Major Customers, not more than
twenty-five percent (25%) of the balance of all Accounts owing from the Account
Debtor obligated on such Account is due and payable later than one hundred
twenty (120) days after the invoice date or is more than ninety (90) days past
due, and (B) with respect to all other Account Debtors, not more than twenty
five percent (25%) of the balance of all Accounts owing from the Account Debtor
obligated on such Account fails to comply with clause (i) above (at all times
when this condition is not met, all Accounts upon which such Account Debtor is
obligated shall be ineligible Accounts);
(iii) it is not an Account with respect to which the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless the Borrower or applicable Guarantor assigns its
right to payment of such Account to the Agent pursuant to, and in full
compliance with, the Assignment of Claims Act of 1940, as amended;
(iv) it is not an Account with respect to which the Account
Debtor is any state, municipality or any department, agency or instrumentality
thereof, unless such Person assigns its rights to payment of such Account to
Agent pursuant to, and in full compliance with all applicable laws, rules and
regulations relating thereto;
(v) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to setoff,
counterclaim, credit, allowance or adjustment by the Account Debtor thereunder,
or to any claim by such Account Debtor denying liability
8
thereunder in whole or in part, provided that only the amount of such claim,
setoff, counterclaim, credit, allowance or adjustment shall be deemed to be
ineligible hereunder, and such Account Debtor has not refused to accept and/or
has not returned or offered to return any of the goods or services which are the
subject of such Account;
(vi) the Account Debtor obligated on such Account is not
insolvent or the subject of any bankruptcy or insolvency proceeding of any kind,
and, to the knowledge of such Person, there are no actions or proceedings which
are then threatened in writing or pending against the Account Debtor which might
result in any material adverse change in its financial condition or in its
ability to pay any Account in full;
(vii) it does not arise out of a contract or order which, by its
terms, forbids or effectively makes void or unenforceable the assignment by such
Person to the Agent of the Account arising with respect thereto;
(viii) the Account Debtor is not a director, officer, employee,
Subsidiary or Affiliate of the Borrower or any Subsidiary of the Borrower or the
applicable Guarantor;
(ix) the Account Debtor is a resident or citizen of and is
located within the United States of America or Canada, unless such Account
Debtor has furnished the Borrower or the applicable Guarantor with an
irrevocable letter of credit which has been issued or confirmed by a financial
institution acceptable to the Agent, is in form and substance acceptable to the
Agent, has been pledged to the Agent for the benefit of the Banks, and is
payable in United States Dollars in an amount not less than the face value of
the Account or there is FCIA (Foreign Credit Insurance Association) insurance or
other insurance acceptable to the Agent in effect covering not less than ninety
percent (90%) of the face value of such account with the Agent named as loss
payee, provided that, Accounts not exceeding $100,000 in the aggregate that do
not satisfy this condition may nonetheless be included in Eligible Accounts to
the extent such Accounts otherwise satisfy the conditions for inclusion;
(x) it is created in the ordinary course of the Borrower's or
applicable Guarantor's business and arises from: (a) the bona fide performance
of services such Person and such services have been fully performed; or (b) the
bona fide sale or lease of goods by such Person, and such goods have been
completed in accordance with Account Debtor's specifications (if any) and
delivered to and accepted by the Account Debtor, and such Person has possession
of, or has delivered to the Agent at the Agent's request, shipping and delivery
receipts evidencing such shipment, and, in the case of clauses (a) and (b) of
this clause (x), no part of such Account which represents interest or incidental
service charges shall be considered an Eligible Account;
(xi) it is not evidenced by chattel paper or an instrument of any
kind;
(xii) it is not an Account which, when added to the relevant
Account Debtor's other Accounts to the Borrower and its Subsidiaries, results in
all Accounts in the aggregate from such Account Debtor exceeding (A) with
respect to Major Customers, twenty-five percent (25%) of
9
all Accounts due to the Borrower and its Subsidiaries, and (B) with respect to
all other Account Debtors, twenty (20%) of all Accounts due to the Borrower and
its Subsidiaries; and
(xiii) it is not a progress xxxxxxxx or retention receivable, and it
is not an unapplied credit balance aged over 90 days.
The amount of the Eligible Accounts owed by an Account Debtor to the
Borrower and its Subsidiaries shall be reduced by the amount of all "contra
accounts" and other obligations owed by any Borrower or any of its Subsidiaries
to such Account Debtor. An Account which is at any time an Eligible Account, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account.
"Eligible Assignee" means any commercial bank, savings and loan
association; savings bank, finance company, insurance company, pension fund,
mutual fund, or other financial institution (whether a corporation, partnership,
or other entity) acceptable to the Agent, and having combined capital and
surplus of at least $500,000,000.
"Eligible Inventory" means raw materials, refurbished goods and
finished goods Inventory of the Borrower or the Guarantors (exclusive of work in
progress), less forty percent (40%) of used inventory, which is not deemed to be
ineligible by Agent, in its sole discretion, valued at the lower of cost or
market and valued in accordance with GAAP, which at all times meets the
following requirements:
(i) such Inventory is located in the United States of America;
(ii) it is owned by such Person, such Person has the right to
subject it to a security interest in favor of the Agent for the ratable benefit
of the Banks, it is subject to a first priority security interest in favor of
the Agent, and to no other claims, liens, security interests or encumbrances
whatsoever, subject to Section 10.2, and it is located at a location identified
to the Agent in the Loan Documents as a location where such Person will keep
Inventory;
(iii) it is not obsolete or slow-moving, it is in good condition,
it is fully insured, it meets all standards imposed by any governmental agency,
or department or division thereof, having regulatory authority over such goods,
it is currently usable or saleable in the ordinary course of such Person's
business and is not unacceptable to the Agent due to age, type, category and/or
quantity;
(iv) it is not stored or placed with a bailee, consignee,
warehouseman, supplier, lessor (i.e., at a location not owned by such Person) or
similar party, except for (x) inventory located at public warehouses with
respect to which such Person has provided the Agent with bailee letters in form
and content acceptable to the Agent, and (y) inventory located at leased
locations with respect to which such Person has provided the Agent with
landlord's waiver letters in form and content acceptable to the Agent;
(v) it is not delivered to such Person on consignment and has not
been consigned to a customer of such Person; and
10
(vi) it is not comprised of goods configured to a particular
customer's specifications, packaging and/or shipping materials, advertising
materials, supplies, including goods not held for sale or use in the ordinary
course of business, proprietary goods, including sub-assemblies or components
which have been manufactured or assembled to customers' specifications, or
samples and proto-types.
Any Inventory which is at any time Eligible Inventory, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be
Eligible Inventory.
"Energy Capital Subordinated Debt" means Debt of the Borrower owed to
Xxxxx Fargo Energy Capital, Inc., evidenced by that certain Promissory Note
dated as of December 17, 2001, made by the Borrower in the original principal
amount of $12,000,000, containing terms and provisions satisfactory to the Banks
and the Borrower.
"Environmental Law" means any and all foreign, federal, state, and
local laws, regulations, and requirements pertaining to health, safety, or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et.
seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901
et seq., the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as such laws, regulations, and requirements may be amended
or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental Authority or
other Person, arising from environmental, health or safety conditions or the
Release or threatened Release of a Hazardous Material into the environment,
resulting from the past, present, or future operations of such Person or its
Affiliates.
"Environmental Reserve" means an amount not less than $500,000,
determined by Camp Dresser & XxXxx to be a fair and reasonable estimation, as of
the Effective Date, of the costs of environmental clean up remaining with
respect to properties owned or operated by Borrower and its Subsidiaries, which
reserve amount shall be reduced by payments made in connection with such clean
up.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
or has been a member of the same controlled group of corporations (within the
meaning of Section 414 (b) of
11
the Code) as the Borrower or is or has been under common control (within the
meaning of Section 414 (c) of the Code) with the Borrower.
"Event of Default" has the meaning specified in Section 12.1.
"Excess Cash Flow" means, for the Borrower and its Subsidiaries on a
consolidated basis for any Fiscal Year, an amount equal to (a) EBITDA for such
period, minus (b) the sum of (without duplication) (i) scheduled payments made
on Debt during such period, plus (ii) Interest Expense for such period, plus
(iii) Tax Expense for such period, plus (iv) actual non-financed Capital
Expenditures for such period, plus (iv) mandatory prepayments paid in cash.
"Federal Funds Rate" means, for any day, the rate per annum, (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published on such next
succeeding Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the Agent on such day on such transactions as determined by the
Agent.
"Fee Letter" means that certain letter agreement dated as of November
13, 2001, executed by and among the Borrower, First Reserve and the Agent,
setting forth certain fees to be paid by the Borrower to the Agent in connection
with this Agreement.
"First Reserve" means First Reserve Fund VIII, Limited Partnership, a
Delaware limited partnership.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries, which period is the 12 month period ending on December 31 of each
year.
"Fixed Charge Coverage Ratio" means as to any Person, at any date (a)
EBITDA for the Calculation Period, divided by (b) the sum of (i) Current
Maturities as of such date (except, with respect to periods ending after
December 17, 2003, 88.89% of the final scheduled installment of the Term Loan
Advances), plus (ii) cash Interest Expense for the Calculation Period, plus
(iii) Cash Taxes for the Calculation Period, plus (iv) actual cash Maintenance
Capital Expenditures for the Calculation Period; provided that, for purposes of
determining the Fixed Charge Coverage Ratio for the Fiscal Quarters ending on or
prior to September 30, 2002, EBITDA, cash Interest Expense, Cash Taxes, and
actual cash Maintenance Capital Expenditures for the Calculation Period shall be
multiplied by a fraction, the numerator of which shall be 4 and the denominator
of which shall be the number of Fiscal Quarters having occurred during the
period beginning January 1, 2002 and ending on the date of determination.
12
"Foreign Guarantors" means (a) all of the Material Subsidiaries which
are Foreign Subsidiaries and which have executed a Guaranty Agreement, provided
that, no Foreign Subsidiary shall become a Foreign Guarantor under this clause
(a) if delivery of a Guaranty Agreement - Foreign by such Foreign Subsidiary
would result in material increased tax or similar liabilities for the Borrower
and its Subsidiaries on a consolidated basis, and (b) all other Foreign
Subsidiaries which have been designated by the Borrower to be Foreign Guarantors
pursuant to Section 4.19(b) (and such designation has not been revoked pursuant
to Section 4.19(c)) and which have executed a Guaranty Agreement, and "Foreign
Guarantor" means any one of the Foreign Guarantors.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is
organized and existing under the laws of a jurisdiction other than the United
States of America or any state thereof.
"Funded Debt" means, at any time, the aggregate obligations of the
Borrower and its Subsidiaries (determined on a consolidated basis) for Debt for
borrowed money (including Capital Lease Obligations).
"Funded Debt to EBITDA Ratio" means, at any time, (a) Funded Debt as
of the last day of the Calculation Period divided by (b) EBITDA for the
Calculation Period, provided that, for purposes of determining the Funded Debt
to EBITDA Ratio for the Fiscal Quarters ending on or prior to September 30,
2002, EBITDA for the Calculation Period shall be multiplied by a fraction, the
numerator of which shall be 4 and the denominator of which shall be the number
of Fiscal Quarters having occurred during the period beginning January 1, 2002
and ending on the date of determination.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantors" means the Domestic Guarantors and the Foreign
Guarantors.
"Guaranty Agreement" means a Guaranty Agreement-Domestic or a
Guaranty Agreement-Foreign, and "Guaranty Agreements" means the Guaranty
Agreements-Domestic and the Guaranty Agreements-Foreign.
"Guaranty Agreement-Domestic" means a General Continuing Guaranty
executed by a Domestic Guarantor in favor of the Agent, in substantially the
form attached hereto as Exhibit
13
"D" with appropriate completions, as the same may be amended, supplemented, or
modified from time to time, and "Guaranty Agreements-Domestic" means more than
one Guaranty Agreement-Domestic.
"Guaranty Agreement-Foreign" means a guarantee agreement in form and
substance satisfactory to the Agent executed by a Foreign Guarantor in favor of
the Agent, as the same may be amended, supplemented, or modified from time to
time, and "Guaranty Agreements-Foreign" means more than one Guaranty
Agreement-Foreign.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinatedbiphenyls.
"Hedging Agreements" shall mean any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreement or any option with respect to any such transaction.
"IHI" means Industrial Holdings, Inc., a Texas corporation.
"IHI Merger" means the merger of T-3 Energy Services, Inc., a
Delaware corporation, into IHI, the subsequent merger of IHI into a wholly owned
subsidiary of IHI, and the subsequent name change of such subsidiary to T-3
Energy Services, Inc., which is the Borrower hereunder, all pursuant to the
Merger Agreements.
"Increase Amount" is defined in Section 2.10.
"Increase Request" is defined in Section 2 1.0.
"Increasing Bank" is defined in Section 2.10.
"Institutional Debt" means unsecured Debt for borrowed money which
may be raised by the Borrower or any of its Subsidiaries in the private
placement or public debt markets pursuant to terms satisfactory to the Required
Banks, but which shall exclude Subordinated Debt.
"Intercompany Note" means that certain T-3 Energy Services, Inc.
Omnibus Intercompany Revolving Credit Note dated as of the date of this
Agreement, made by Borrower and each Subsidiary to which Borrower or any
Subsidiary has made loans or other advances, payable to the order of Borrower
and each Subsidiary from which Borrower or any Subsidiary has obtained loans or
other advances, in the stated principal amount of the Revolving Credit
Commitments.
"Intercreditor Agreement" means an intercreditor agreement among the
Borrower, the Agent, the Banks and Xxxxx Fargo Energy Capital, Inc., as agent
and sole initial lender, in form and substance satisfactory to the Agent, the
Banks and the Borrower, setting forth the relative
14
rights of the Agent and Banks hereunder and Xxxxx Fargo Energy Capital, Inc., as
sole initial provider of the Energy Capital Subordinated Debt.
"Interest Expense" means the sum of all interest expense (whether
cash or non-cash) paid or required by its terms to be paid during the period in
question, as determined in accordance with GAAP applied consistently, with
respect to the Funded Debt of a Person or any portion thereof.
"Interest Period" means, with respect to LIBOR Advances, each period
commencing on the date such Advances are made or Converted from Advances of
another Type or, in the case of each subsequent, successive Interest Period
applicable to a LIBOR Advance, the last day of the next preceding Interest
Period with respect to such Advance, and ending on that day which is one, two,
three, or six months thereafter, as the Borrower may select as provided in
Section 4.1 or 4.9 hereof. Notwithstanding the foregoing: (a) each Interest
Period which would otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which event such
Interest Period shall end on the preceding Business Day; (b) any Interest Period
which would otherwise extend beyond the Revolving Credit Termination Date shall
end on the Revolving Credit Termination Date; (c) no more than eight Interest
Periods for each LIBOR Advance shall be in effect at the same time; and (d) no
Interest Period for any LIBOR Advances shall have a duration of less than one
month and, if the Interest Period for any LIBOR Advance would otherwise be a
shorter period, such Advance shall be a Base Rate Advance.
"Inventory" shall mean any and all goods, merchandise, and other
personal property now owned or hereafter acquired by the Borrower or its
Subsidiaries that are held for sale or lease, or are furnished or to be
furnished under any contract of service or are raw materials, work-in-process,
supplies, or materials used or consumed in the Borrower's or its Subsidiaries'
business, and all products thereof, and all substitutions, replacements,
additions, or accessions therefor and thereto.
"Issuing Bank" means the Agent (or any of its Affiliates) and any
other Bank (or any of its Affiliates) appointed by the Borrower and approved by
the Agent that agrees to issue Letters of Credit hereunder.
"Letter of Credit" means a Letter of Credit issued pursuant to
Article II of this Agreement and "Letters of Credit" means more than one Letter
of Credit.
"Letter of Credit Agreements" means the application and letter of
credit agreements and other documents, if any, then required by the Issuing Bank
now or hereafter executed by the Borrower, such agreements to be on the Issuing
Bank's standard form (with such changes thereto as the Borrower and the Issuing
Bank may agree from time to time) and completed in form and substance
satisfactory to the Issuing Bank.
"Letter of Credit Liabilities" means, at any time, the aggregate
undrawn face amounts of all outstanding Letters of Credit.
15
"LIBOR Advances" means Advances the interest rates on which are
determined on the basis of the rates referred to in the definition of "Adjusted
LIBOR Rate".
"LIBOR" means, with respect to each Interest Period:
(a) the rate per annum equal to the rate determined by the
Agent to be the offered rate that appears on page 3750 of the
Telerate screen (or any successor thereto) for deposits in Dollars
(for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period, or
(b) if the rate referenced in the preceding subsection (a)
does not appear on such page or service or such page or service shall
cease to be available, the rate per annum equal to the rate
determined by the Agent to be the offered rate on such other page or
other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the
first day of such Interest Period) with a term equivalent to such
Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, or
(c) if the rates referenced in the preceding subsections
(a) and (b) are not available, the rate per annum (rounded upwards,
if necessary, to the nearest 1/16 of 1%) offered to the Agent at
approximately 11:00 a.m. London time (or as soon thereafter as
practicable) two (2) Business Days prior to the first day of the
Interest Period for such Advance by leading banks in the London
interbank market for Dollar deposits having a term comparable to such
Interest Period and in an amount comparable to the principal amount
of the LIBOR Advance to be made by the Banks for such Interest
Period.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise.
"Loan Documents" means (a) this Agreement, the Intercreditor
Agreement and all promissory notes, security agreements, deeds of trust,
assignments, guaranties, and other instruments, documents, and agreements
executed and delivered pursuant to or in connection with this Agreement (but
excluding the Merger Agreements), as such instruments, documents, and agreements
may be amended, modified, renewed, extended, or supplemented from time to time,
(b) any interest rate Hedging Agreements between the Borrower and any Bank or
its Affiliate, and (c) the Fee Letter.
"Maintenance Capital Expenditures" means all Capital Expenditures
other than those made for the original purchase of equipment, real property,
improvements, fixed assets or similar type of capitalized asset.
"Major Customers" means those customers of Borrower or the Guarantors
that are publicly traded companies with an issued debt rating of at least BBB-
by Standard & Poor's
16
Ratings Group or Baa3 by Xxxxx'x Investors Service, Inc., and such other
customers that may from time to time be designated by the Borrower and approved
by the Agent in its sole discretion.
"Material Adverse Effect" means (a) a material adverse effect on (i)
the business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of the Borrower and its Subsidiaries, taken as a whole, to perform their
respective obligations under this Agreement or any of the other Loan Documents,
or (iii) the validity or enforceability of this Agreement or any of the other
Loan Documents, or the rights or remedies of the Agent, the Banks or the Issuing
Bank hereunder or thereunder or (b) civil or criminal liability for the Agent or
the Banks under Environmental Laws.
"Material Subsidiary" means any Subsidiary which constitutes a
"significant subsidiary" under Regulation SX of the Securities Exchange Act of
1934, as amended.
"Maximum Rate" means, with respect to any Bank and the holder of the
Swing Line Note or any Revolving Credit Note, the maximum nonusurious interest
rate, if any, that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the indebtedness created under this
Agreement, the Revolving Credit Notes, the Swing Line Note or any other Loan
Document under the laws which are presently in effect in the United States and
the State of Texas applicable to the Banks, such holders and such indebtedness
or, to the extent permitted by law, under such applicable laws of the United
States and the State of Texas which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow. To the
extent that Chapter 303 of the Texas Finance Code (the "Finance Code"), is
relevant to any Bank or any holder of the Swing Line Note or any Revolving
Credit Note for the purposes of determining the Maximum Rate, each such Person
shall determine such applicable legal rate under the Finance Code pursuant to
the "weekly ceiling," from time to time in effect, as referred to and defined in
Chapter 303 of the Finance Code; subject, however, to the limitations on such
applicable ceiling referred to and defined in Chapter 303 of the Finance Code,
and further subject to any right such Person may have subsequently, under
applicable law, to change the method of determining the Maximum Rate. If no
Maximum Rate is established by applicable law, then the Maximum Rate shall be
equal to 18%, per annum.
"Merger Agreements" means the Agreement and Plan of Merger, as
amended, dated as of May 7, 2001 among Borrower, IHI and First Reserve, as
amended through the date hereof, and any agreements, documents or instruments
executed or delivered in connection therewith and any renewals, extensions,
amendments, restatements or other modifications of any of the above.
"Mortgages" means mortgages or deeds of trust, as appropriate,
executed by Borrower or the applicable Subsidiary, as the case may be, in form
and substance satisfactory to Agent, granting a first priority lien to Agent for
the ratable benefit of Banks on all real property owned by Borrower and each
Subsidiary domiciled in the United States.
17
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any predecessor thereto or any ERISA Affiliate and which is covered by Title IV
of ERISA.
"Net Cash Proceeds" means, with respect to (a) any Asset Sale, (b)
any other transfer or disposition of any asset to a third party, (c) issuance of
any Institutional Debt or Subordinated Debt, or (d) issuance of any Capital
Stock, the aggregate amount of cash and Cash Equivalent Investments received by
such Person in connection with such transaction minus reasonable fees, costs and
expenses and related taxes paid or payable as a result of such transaction.
"Non-Cash Charges" means as to any Person, for any period,
depreciation, amortization and other non-cash charges, determined in accordance
with GAAP.
"Obligated Party" means each Guarantor or any other Person who is or
becomes party to any agreement pursuant to which such Person guarantees or
secures payment and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness and liabilities of
the Borrower and its Subsidiaries to the Agent, the Issuing Banks, the Banks,
any of their respective Affiliates, or any or some of them, arising pursuant to
this Agreement or any of the Loan Documents, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several.
"Payment Date" means, (a) in the case of Base Rate Advances, the last
Business Day of each March, June, September and December, commencing Xxxxx 00,
0000, (x) in the case of LIBOR Advances the last day of each Interest Period
therefor (and, in the case of six-month Interest Periods, on the last day of the
third month following the date of such Advance), (c) in the case of all
Revolving Credit Advances, the Revolving Credit Termination Date, and (d) in the
case of Term Loan Advances, each date on which the principal thereof is
amortized pursuant to Section 2.3(b).
"Payor" has the meaning given to such term in Section 4.6.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Percentage" means at any time with respect to any Bank, such Bank's
portion, expressed as a percentage, of the aggregate Revolving Credit
Commitments, Term Loan Commitments or outstanding Term Loan Advances, as
applicable.
"Permitted Liens" has the meaning assigned to it in Section 10.2.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
18
"Plan" means any employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate.
"Pledge and Security Agreement" means (a) with respect to Borrower
and each Domestic Guarantor as of the date hereof, a pledge and security
agreement executed by the Borrower and each Domestic Guarantor in favor of the
Agent in substantially the form attached hereto as Exhibit "E" with appropriate
completions, as the same may be amended, supplemented, or modified from time to
time and (b) with respect to each Foreign Guarantor, a pledge and security
agreement executed by such Foreign Guarantor in favor of the Agent in form and
substance satisfactory to the Agent, as the same may be amended, supplemented or
modified from time to time.
"Prime Rate" means, at any time, the rate of interest per annum most
recently announced by Agent at its principal office in San Francisco as its
prime rate, with the understanding that such prime rate is one of its base rates
and serves as the basis upon which effective rates of interest are calculated
for those loans making reference thereto, and is evidenced by the recording
thereof after its announcement in such internal publication or publications as
Agent may designate.
"Principal Office" means the respective principal office of the
Agent, the Issuing Banks and the Banks, presently located for such Persons at
the addresses shown under the signature line of such Persons in this Agreement.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"Quarterly Fee Payment Date" means the last Business Day of each
March, June, September, and December of each year, the first of which shall be
March 31, 2002.
"Register" has the meaning assigned to it in Section 14.7(d).
"Regulation D" means 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" means, with respect to a Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property.
19
"Remedial Action" means all actions required to (a) clean up, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations in
post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Required Banks" means, (a) while five or fewer Banks are party to
this Agreement, (i) at any time while no Advances are outstanding, Banks having
at least sixty percent (60%) of the aggregate Revolving Credit Commitments, and
(ii) at any time while Advances are outstanding, Banks holding at least sixty
percent (60%) of the outstanding aggregate principal amount of the Advances
(without regard to any sale by a Bank of a participation in any Advance under
Section 14.7(a)), and (b) while more than five Banks are party to this
Agreement, (i) at any time while no Advances are outstanding, Banks having at
least fifty-one percent (51%) of the aggregate Revolving Credit Commitments, and
(ii) at any time while Advances are outstanding, Banks holding at least
fifty-one percent (51%) of the outstanding aggregate principal amount of the
Advances (without regard to any sale by a Bank of a participation in any Advance
under Section 14.7(a)). For purposes of this definition, Swing Line Advances
shall not constitute "Advances."
"Reserve Requirement" means, for any LIBOR Advance for any Interest
Period therefor, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the Adjusted LIBOR Rate is to be determined, or
(ii) any category of extensions of credit or other assets which include LIBOR
Advances.
"Response Date" is defined in Section 2.10.
"Revolving Credit Advance" means an advance of funds by the Agent on
behalf of the Banks to the Borrower pursuant to Section 2.1(a) and includes, as
applicable, a Base Rate Advance or a LIBOR Advance.
"Revolving Credit Commitment" means as to each Bank, the obligation
of such Bank to (a) make Advances and (b) subject to applicable sublimits,
purchase participations in Letters of Credit pursuant to Section 4.13, in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite the name of such Bank on the signature pages
hereto or to the most recent amendment hereto under the heading "Revolving
Credit Commitment," or on the signature pages of an Assignment and Acceptance,
as the case may be,
20
as such amount may be reduced pursuant to Section 2.7, increased pursuant to
Section 2.10, or terminated pursuant to Section 2.7 or Section 12.2.
"Revolving Credit Notes" means the promissory notes of the Borrower
payable to the order of the Banks, in substantially the form attached hereto as
Exhibit "A-1" with appropriate completions, and all extensions, renewals,
replacements, modifications, supplements or rearrangements thereof from time to
time, and "Revolving Credit Note" means any one of the Revolving Credit Notes.
"Revolving Credit Termination Date" means December 17, 2004, or such
earlier date on which the Revolving Credit Commitment terminates as provided in
this Agreement.
"SEC" means the Securities and Exchange Commission of the United
States of America, and includes any successor agency.
"Stockholders Equity" has the meaning given to such term under GAAP.
"Subordinated Debt" means (a) Debt of a Person which has been
subordinated to the Obligations in form and substance and upon terms
satisfactory to the Agent and the Required Banks, and (b) the Energy Capital
Subordinated Debt.
"Subsidiary" means any Person of which or in which the Borrower and
its other Subsidiaries own or control, directly or indirectly, 50% or more of
(a) the combined voting power of all classes having general voting power under
ordinary circumstances to elect a majority of the directors or equivalent body
of such Person, if it is a corporation, (b) the capital interest or profits
interest of such Person, if it is a partnership, limited liability company,
joint venture or similar entity, or (c) the beneficial interest of such Person,
if it is a trust, association or other unincorporated association or
organization.
"Swing Line Advance" means any Advance made by Agent under Section
3.1 of this Agreement.
"Swing Line Note" means the promissory note of the Borrower payable
to the order of the Agent, in substantially the form attached hereto as Exhibit
"A-2" with appropriate completions, and all extensions, renewals, replacements,
modifications, supplements or rearrangements thereof from time to time.
"Tax Expense" means, for any period, all expenses incurred during
such period by the Borrower and its subsidiaries, on a consolidated basis, in
connection with income tax obligations, all as determined in accordance with
GAAP applied consistently.
"Term Loan Advance" means an advance of funds by the Agent on behalf
of the Banks to the Borrower pursuant to Section 2.1(b) and includes, as
applicable, a Base Rate Advance or a LIBOR Advance.
21
"Term Loan Commitment" means as to each Bank, the obligation of such
Bank to make an Advance in the principal amount set forth opposite the name of
such Bank on the signature pages hereto or to the most recent amendment hereto
under the heading "Term Loan Commitment," or on the signature pages of an
Assignment and Acceptance, as the case may be.
"Term Loan Notes" means the promissory notes of the Borrower payable
to the order of the Banks, in substantially the form attached hereto as Exhibit
"A-3" with appropriate completions, and all extensions, renewals, replacements,
modifications, supplements or rearrangements thereof from time to time, and
"Term Loan Note" means any one of the Term Loan Notes.
"Term Loan Maturity Date" means December 17, 2004, or such earlier
date on which the Term Loan Advances are accelerated as provided in this
Agreement.
"Type" means any type of Advance (i.e., Base Rate Advance or LIBOR
Advance).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas from time to time.
Section 1.2 Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II
Advances, Term Loan Advances, and Letters of Credit
Section 2.1 Commitments.
(a) Subject to the terms and conditions of this Agreement,
each Bank severally agrees to make one or more Revolving Credit
Advances to the Borrower from time to time from the Effective Date to
and including the Revolving Credit Termination Date in an aggregate
principal amount at any time outstanding up to but not exceeding the
amount of such Bank's Revolving Credit Commitment, provided that the
aggregate amount of all Revolving Credit Advances and Swing Line
Advances at any time outstanding shall not exceed (i) the lesser of
(A) the aggregate of the Revolving Credit Commitments or (B) the
Borrowing Base, minus (ii) the outstanding Letter of Credit
Liabilities. Subject to the foregoing limitations, and the other
terms and provisions of this Agreement, the Borrower may borrow,
repay, and reborrow hereunder the aggregate amount of the Revolving
Credit Commitments by means of Revolving Credit Advances.
22
Each Revolving Credit Advance made by each Bank shall be made and
maintained at such Bank's Principal Office.
(b) Subject to the terms and conditions of this Agreement,
each Bank severally agrees to make a single Term Loan Advance to the
Borrower on the Effective Date in the amount of such Bank's Term Loan
Commitment. The Borrower may not borrow, repay, and reborrow Term
Loan Advances. Immediately upon a Bank making its Term Loan Advance,
its Term Loan Commitments shall be automatically terminated. The Term
Loan Advance made by each Bank shall be made and maintained at such
Bank's Principal Office.
Section 2.2 The Notes.
(a) The obligation of the Borrower to repay the Revolving
Credit Advances (other than Swing Line Advances) and interest thereon
shall be evidenced by a Revolving Credit Note executed by the
Borrower, payable to the order of each Bank, in the principal amount
of such Bank's Revolving Credit Commitment as originally in effect
and dated the date hereof or such later date as may be required with
respect to transactions contemplated by Section 14.7.
(b) The obligation of the Borrower to repay the Term Loan
Advances and interest thereon shall be evidenced by a Term Loan Note
executed by the Borrower, payable to the order of each Bank, in the
principal amount of such Bank's Term Loan Commitment and dated the
date hereof or such later date as may be required with respect to
transactions contemplated by Section 14.7.
Section 2.3 Repayment of Advances.
(a) The Borrower shall repay the unpaid principal amount of
all Revolving Credit Advances on the Revolving Credit Termination
Date.
(b) To the extent not otherwise required to be paid earlier
as provided herein, the principal amount of the Term Loan Advances
shall be repaid on the last day of each calendar quarter, commencing
on March 31, 2002 and continuing through and including June 30, 2004,
and on the Term Loan Maturity Date, in such amounts as set forth next
to each such date below:
Amount of Reduction of
Quarterly Date Term Loan Advances as of each date
-------------- ----------------------------------
March 31, 2002, through and including $ 825,000
September 30, 2004
December 17, 2004 $7,425,000
23
Section 2.4 Interest. The unpaid principal amount of the Advances
shall bear interest prior to maturity at a varying rate per annum equal from day
to day to the lesser of (a) the Maximum Rate, and (b) the Applicable Rate. If at
any time the Applicable Rate for any Advance shall exceed the Maximum Rate,
thereby causing the interest accruing on such Advance to be limited to the
Maximum Rate, then any subsequent reduction in the Applicable Rate for such
Advance shall not reduce the rate of interest on such Advance below the Maximum
Rate until the aggregate amount of interest accrued on such Advance equals the
aggregate amount of interest which would have accrued on such Advance if the
Applicable Rate had at all times been in effect. Accrued and unpaid interest on
the Advances shall be due and payable as follows:
(a) on each Payment Date;
(b) with respect to Revolving Credit Advances, on the
Revolving Credit Termination Date; and
(c) with respect to the Term Loan Advances, on the Term
Loan Maturity Date.
Notwithstanding the foregoing, after an Event of Default and during any
continuance thereof, at the Agent's election or at the request of the Required
Banks, the Obligations shall bear interest at a rate per annum equal to the
Default Rate. Such interest shall be payable on the earlier of demand or the
Revolving Commitment Termination Date or the Term Loan Maturity Date, as
appropriate, and shall accrue until the earlier of (i) waiver or cure of the
applicable Event of Default, (ii) agreement by the Required Banks to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
Obligations. The Banks shall not be required to accelerate the maturity of the
Advances or to exercise any other rights or remedies under the Loan Documents.
Section 2.5 Use of Proceeds. The proceeds of Advances shall be used
by the Borrower (a) to refinance certain existing Debt, and (b) for general
corporate purposes (including the financing, in part, of the IHI Merger and
payment of post-closing expenses in connection therewith) in the ordinary course
of business.
Section 2.6 Revolving Credit Commitment Fee. The Borrower agrees to
pay to the Agent for the account of each Bank a commitment fee on the daily
average unused amount of such Bank's Revolving Credit Commitment for the period
from and including the Effective Date to and including the Revolving Credit
Termination Date at the rate per annum equal to the Applicable Margin in effect
on the date such payment is due, based on a 360 day year and the actual number
of days elapsed; provided that (a) the amount of any Swing Line Advances that
may be outstanding from time to time shall not be considered usage of the
Revolving Credit Commitment and (b) the face amount of outstanding Letters of
Credit shall be considered usage of the Revolving Credit Commitment. The accrued
commitment fee shall be payable in arrears on each Quarterly Fee Payment Date
and on the Revolving Credit Termination Date.
Section 2.7 Reduction or Termination of Revolving Credit Commitment.
The Borrower shall have the right to terminate in whole or reduce in part the
unused portion of the
24
Revolving Credit Commitments upon at least three Business Days' prior notice
(which notice shall be irrevocable) to the Agent specifying the effective date
thereof, whether a termination or reduction is being made, and the amount of any
partial reduction; provided, however, that the Revolving Credit Commitments
shall never be reduced below an amount equal to the aggregate outstanding Letter
of Credit Liabilities unless cash collateralized. Each partial reduction shall
be in the amount of $1,000,000 or a greater integral multiple of $500,000, and
the Borrower shall simultaneously prepay the Advances by the amount by which the
unpaid principal amount of the Advances plus the Letter of Credit Liabilities
exceeds the lesser of (a) the Borrowing Base or (b) the Revolving Credit
Commitments (after giving effect to such notice) plus accrued and unpaid
interest on the principal amount so prepaid. Subject to Section 2.10 hereof, the
Revolving Credit Commitments may not be reinstated after they have been
terminated or reduced.
Section 2.8 Letters of Credit.
(a) Subject to, and upon the terms, conditions, covenants
and agreements contained herein and in the Letter of Credit
Agreements, prior to the Revolving Credit Termination Date, the
Issuing Bank agrees to issue irrevocable standby letters of credit
("Letters of Credit"), for the account of the Borrower or any
Domestic Guarantor; provided, however, that the outstanding Letter of
Credit Liabilities shall not at any time exceed the lesser of (i)
$2,500,000, and (ii) an amount equal to the lesser of (A) the
Borrowing Base or (B) the aggregate amount of the Revolving Credit
Commitments minus the outstanding Advances. In the event of an actual
conflict between the terms and conditions of this Agreement and the
terms and conditions of any Letter of Credit Agreement, then the
terms and conditions of this Agreement shall prevail. Letters of
Credit shall expire no later than one year after the date of issuance
(but may include provision for automatic one year renewals unless
notice of non-renewal is timely sent by Issuing Bank), must be
satisfactory in form to the Issuing Bank, and must be issued pursuant
to a Letter of Credit Agreement.
(b) On or before the Revolving Credit Termination Date, the
Borrower agrees to deposit with and pledge to the Agent cash or Cash
Equivalent Investments in an amount equal to 110% of all outstanding
Letter of Credit Liabilities.
Section 2.9 Payments and Reimbursement Under Letters of Credit.
(a) Payments. Issuing Bank shall promptly notify the Agent
and the Borrower of the date and amount of any draft presented for
honor under any Letter of Credit (but failure to give notice will not
affect the Borrower's obligations under this Agreement). Issuing Bank
shall pay the requested amount upon presentment of a draft unless
presentment on its face does not comply with the terms of the
applicable Letter of Credit. When making payment, Issuing Bank may
disregard (i) any default or potential default that exists under any
other agreement and (ii) obligations under any other agreement that
have or have not been performed by the beneficiary or any other
Person (and Issuing Bank is not liable for any of those obligations
absent gross negligence or
25
willful misconduct). Issuing Bank shall promptly pay to the Agent for
the Agent to promptly distribute reimbursement payments received from
the Borrower to all Banks according to their Percentages.
(b) Reimbursement Obligation of the Borrower. To induce
Issuing Bank to issue and maintain Letters of Credit, and to induce
Banks to participate in issued Letters of Credit, the Borrower agrees
to pay or reimburse Issuing Bank (or cause another Obligated Party to
pay or reimburse Issuing Bank) (i) the amount paid by Issuing Bank
pursuant to a draw on a Letter of Credit on the same day such payment
is made, and (ii) on demand, the amount of any additional reasonable
fees Issuing Bank customarily charges for amending Letter of Credit
Agreements, for honoring drafts under Letters of Credit, and for
taking similar action in connection with Letters of Credit. If the
Borrower or another Obligated Party has not reimbursed Issuing Bank
for any drafts when reimbursement is required under this section,
then the Agent is irrevocably authorized to fund the Borrower's
reimbursement obligations as a Base Rate Advance if proceeds are
available under the Revolving Credit Commitment and if the conditions
in this Agreement for such an Advance (other than any notice
requirements or minimum funding amounts) have, to the Agent's
knowledge, been satisfied. The proceeds of that Advance shall be
advanced directly to Issuing Bank to pay the Borrower's unpaid
reimbursement obligations. If funds cannot be advanced under the
Revolving Credit Commitment, then the Borrower's reimbursement
obligation shall constitute a demand obligation. The Borrower's
obligations under this section are absolute and unconditional under
any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment that the Borrower may have at any
time against Issuing Bank or any other Person. From the date that
Issuing Bank pays a draft under a Letter of Credit until the Borrower
or another Obligated Party either reimburses or is obligated to
reimburse Issuing Bank for that draft under this section, the amount
of that draft bears interest payable to Issuing Bank at the rate then
applicable to Base Rate Advances. From the due date of the respective
amounts due under this section, to the date paid (including any
payment from proceeds of a Base Rate Advance), unpaid reimbursement
amounts accrue interest that is payable on demand at the Default
Rate.
(c) Obligation of Banks. If an Obligated Party fails to
reimburse Issuing Bank as provided herein by the date on which
reimbursement is due hereunder, and funds cannot be advanced under
the Revolving Credit Commitment to satisfy the reimbursement
obligations, then the Agent shall promptly notify each Bank of such
failure, of the date and amount paid, and of each Bank's Percentage
of the unreimbursed amount as a participation in such unreimbursed
amounts. Each Bank shall promptly and unconditionally make available
to the Agent in immediately available funds its Percentage of the
unpaid reimbursement obligation, subject to the limitations of
Section 2.1. Funds are due and payable to the Agent before the close
of business on the Business Day when the Agent gives notice to each
Bank of such reimbursement failure (if notice is given before 11:00
a.m. (Houston time)) or on the next succeeding Business Day (if
notice is given after 11:00 a.m. (Houston time)). All amounts payable
by any Bank accrue interest after the due date at the Federal Funds
Rate from the day the applicable
26
draft or draw is paid by the Agent to (but not including) the date
the amount is paid by the Bank to the Agent. Upon receipt of those
funds, the Agent shall make them available to Issuing Bank.
(d) Duties of Issuing Bank. Issuing Bank agrees with each
Bank that it will exercise and give the same care and attention to
each Letter of Credit as it gives to its other letters of credit.
Each Bank and the Borrower agree that, in paying any draft under any
Letter of Credit, Issuing Bank has no responsibility to obtain any
document (other than any documents expressly required by the
respective Letter of Credit) or to ascertain or inquire as to any
document's validity, enforceability, sufficiency, accuracy, or
genuineness or the authority of any Person delivering it. Neither
Issuing Bank nor its representatives will be liable to any Bank or
any Obligated Party for any Letter of Credit's use or for any
beneficiary's acts or omissions. Any action, inaction, error, delay,
or omission taken or suffered by Issuing Bank or any of its
representatives in connection with any Letter of Credit, applicable
drafts or documents, or the transmission, dispatch, or delivery of
any related message or advice, if in good faith and in conformity
with applicable laws and in accordance with the standards of care
specified in the Uniform Customs and Practices for Documentary
Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (as amended or modified), is binding upon the
Obligated Parties and Banks and, except as expressly provided herein,
does not place Issuing Bank or any of its representatives under any
resulting liability to any Obligated Party or any Bank. Agent is not
liable to any Obligated Party or any Bank for any action taken or
omitted, in the absence of gross negligence or willful misconduct, by
Issuing Bank or its representative in connection with any Letter of
Credit.
Section 2.10 Optional Commitment Increase.
(a) Optional Increase Request. The Borrower may, at any
time and from time to time prior to December 17, 2003, so long as no
Default or Event of Default exists, request that the Revolving Credit
Commitments be increased and/or the Term Loan Commitments be
reinstated and increased by an aggregate amount (the "Increase
Amount") not to exceed $20,000,000 (a "Commitment Increase"),
provided that (i) any such request shall be made in writing (an
"Increase Request") by the Borrower and delivered to the Agent, and
(ii) after giving effect to the Commitment Increase the aggregate
principal amount of all Term Loan Advances shall not exceed
seventy-five (75%) of the fair market value of Borrower's newly
acquired real estate, plus the lesser of (A) eighty percent (80%) of
the fair market value of the Borrower's newly acquired unencumbered
machinery and equipment or (B) 100% of the orderly liquidation value
of the Borrower's newly acquired unencumbered machinery and
equipment. Promptly upon receipt of an Increase Request, the Agent
shall notify the Banks of such request.
(b) Banks' Response to Increase Request. Each Bank shall
have the right, but not the obligation, to elect to increase its
respective Revolving Credit Commitment and/or Term Loan Commitment,
as applicable, by an amount not to exceed the Increase Amount, which
election shall be made by notice from each Bank to the Agent given
not
27
later than 21 days after the date notified of the Increase Request by
Agent (the "Response Date"), and shall specify the amount of the
proposed increase in such Bank's Revolving Credit Commitment and/or
Term Loan Commitment, as applicable. If any Bank shall fail to give
such notice to Agent by the Response Date, such Bank shall be deemed
to have elected not to increase its Revolving Credit Commitment
and/or Term Loan Commitment, as applicable, in connection with such
Increase Request.
(c) Joinder of Additional Banks. If the aggregate amount of
the proposed increases in the Revolving Credit Commitments and/or
Term Loan Commitments, as applicable, of all Banks making an election
to increase their respective Revolving Credit Commitment and/or Term
Loan Commitment, as applicable, (each, an "Increasing Bank") does not
equal or exceed the Increase Amount, then the Agent shall use
commercially reasonable efforts to add one or more financial
institutions (which must be Eligible Assignees reasonably
satisfactory to the Borrower and the Agent) as Banks (each an
"Additional Bank"), which Additional Banks shall have aggregate
Revolving Credit Commitments and/or Term Loan Commitments, as
applicable, not greater than an amount equal to (i) the Increase
Amount, less (ii) any increases in the Revolving Credit Commitments
and/or Term Loan Commitments, as applicable, of the Increasing Banks.
(d) Adjustments to Commitments.
(i) If the aggregate amount of the proposed
increases to the Revolving Credit Commitments and/or Term
Loan Commitments, as applicable, of all Increasing Banks is
in excess of the Increase Amount, then (A) the Increase
Amount shall be allocated pro rata among the Increasing
Banks based on the respective amounts of the proposed
increases to the Revolving Credit Commitment and/or Term
Loan Commitment, as applicable, of each such Increasing
Bank, provided that any Bank which proposes to increase its
Revolving Credit Commitment and/or Term Loan Commitment, as
applicable, by an amount equal to its Percentage of the
Increase Amount shall be allocated its Percentage of the
Increase Amount; (B) the Revolving Credit Commitment and/or
Term Loan Commitment, as applicable, of each such
Increasing Bank shall be increased by the amount allocated
to such Increasing Bank pursuant to clause (A) of this
Section 2.10 (d)(i); and (C) the Percentages of all Banks
shall be adjusted accordingly.
(ii) If the aggregate amount of the proposed
increases to the Revolving Credit Commitments and/or Term
Loan Commitments, as applicable, of all Increasing Banks
equals the Increase Amount, then (A) the Revolving Credit
Commitment and/or Term Loan Commitment, as applicable, of
each such Increasing Bank shall be increased by the amount
of such Increasing Bank's proposed increase, and (B) the
Percentages of all Banks shall be adjusted accordingly.
28
(iii) If the aggregate amount of the proposed
increases to the Revolving Credit Commitments and/or Term
Loan Commitments, as applicable, of all Increasing Banks is
less than the Increase Amount, then (A) the Revolving
Credit Commitment and/or Term Loan Commitment, as
applicable, of each such Increasing Bank shall be increased
by the respective amount of its proposed increase; (B) the
amount of the Revolving Credit Commitments and/or Term Loan
Commitments, as applicable, shall be further increased by
the portion of the Increase Amount allocated to Additional
Banks, if any; and (C) the Percentages of all Banks shall
be adjusted accordingly.
(e) Notes. Upon any increase in the Revolving Credit
Commitments pursuant to this Section, the Borrower will execute and
deliver (i) a replacement Revolving Credit Note to each Increasing
Bank, each in the principal amount of the Revolving Credit Commitment
of such Increasing Bank, as increased in accordance with subsection
(d) of this Section 2.10, and (ii) a new Revolving Credit Note to
each Additional Bank made party to this Agreement in connection
therewith, each in the principal amount of such Additional Bank's
Revolving Credit Commitment. Upon any increase in the Term Loan
Commitments pursuant to this Section, (i) the Borrower will execute
and deliver (A) a replacement Term Loan Note to each Increasing Bank,
each in the principal amount of the Term Loan Commitment of such
Increasing Bank, as increased in accordance with subsection (d) of
this Section 2.10, and (B) a new Term Loan Note to each Additional
Bank made party to this Agreement in connection therewith, each in
the principal amount of such Additional Bank's Term Loan Commitment,
and (ii) each Increasing Bank and each Additional Bank shall promptly
return the original of such Note being replaced marked "Replaced",
and shall, in accordance with the procedures set forth in this
Agreement, make a Term Loan Advance in the amount of such increase or
new commitment, as applicable.
(f) Documentation. The Borrower and the Agent shall execute
appropriate documentation to add each Additional Bank as a party to
this Agreement, whereupon such Additional Bank shall have all of the
rights and obligations of a Bank hereunder and under the other Loan
Documents. The Obligated Parties shall execute and deliver
appropriate documentation and pay any and all mortgage or other taxes
that are lawfully due and payable in connection with a Commitment
Increase to preserve and protect the Liens of the Agent in the
Collateral and the perfection and priority of such Liens.
(g) Payment; Amortization. (i) Each Additional Bank shall
pay to the Agent for the account of the other Banks an amount equal
to its Percentage of outstanding Revolving Credit Advances or Term
Loan Advances, as applicable, (ii) each Increasing Bank shall pay to
the Agent for the account of the other Banks the amount necessary so
that such Increasing Bank has advanced an amount equal to its
Percentage (as adjusted in accordance with subsection (d) of this
Section 2.10) of outstanding Revolving Credit Advances or Term Loan
Advance, as applicable, and (iii) such amount so paid by each
Additional Bank and each Increasing Bank shall constitute a Revolving
Credit Advance
29
or Term Loan Advances, as applicable, by such Additional Bank or
Increasing Bank under its Revolving Credit Note or Term Loan Note, as
applicable, and a payment of principal to the other Banks under their
respective Revolving Credit Notes or Term Loan Notes, as applicable,
and the outstanding principal balances of the respective Revolving
Credit Notes or Term Loan Notes, as applicable, shall be increased or
reduced accordingly, and the scheduled amortization of the Term Loan
Advances shall be adjusted such that no greater than 45% of the
Increase Amount is payable with the final scheduled principal
installment thereof.
(h) Effects of Increase. Upon and as of the date of the
addition of any Additional Bank to the Agreement or the increase of
the Revolving Credit Commitment or Term Loan Commitment, as
applicable, of any Increasing Bank, (i) the Revolving Credit
Commitments or Term Loan Commitments, as applicable, of the other
Banks (other than other Increasing Banks) shall remain unchanged, and
(ii) solely with respect to Revolving Credit Commitments, each of the
other Banks shall be deemed to have sold and transferred to such
Additional Bank or such Increasing Bank, as the case may be, and such
Additional Bank or Increasing Bank shall be deemed irrevocably and
unconditionally to have purchased and received from each such other
Banks (on a pro rata basis, based on such other Banks' respective
Percentages, as adjusted in accordance with this Section) a portion
of such other Banks' participation shares under Section 4.13 in all
Letters of Credit outstanding on such date and related rights, in an
aggregate amount equal to such Additional Bank's or such Increasing
Bank's Percentage of such outstanding Letters of Credit. The addition
of any Additional Bank or the increase of the Revolving Credit
Commitment or Term Loan Commitment, as applicable, of an Increasing
Bank and the effects thereof as described in this Section shall occur
automatically upon satisfaction of the requirements specified in this
Section, without the necessity for further documentation to be
executed by the other Banks.
(i) Acknowledgments Regarding Obligation to Increase. The
Borrower acknowledges that (i) neither the Agent nor any Bank has
made any representations to the Borrower regarding its intent to
agree to any increases to the Revolving Credit Commitments or Term
Loan Commitments, as applicable, described in this Section, (ii) no
Bank shall have any obligation to increase its Revolving Credit
Commitment or Term Loan Commitment, as applicable, (iii) any Bank's
agreement to one or more increases shall not commit such Bank to any
additional increases, and (iv) neither the Agent, nor any Bank, nor
any of their respective Affiliates shall have any obligation to find
or arrange for any Additional Bank.
ARTICLE III
Swing Line Advances
Section 3.1 Swing Line Advances. For the convenience of the parties,
the Agent, solely for its own account, may make any requested Advance under the
Revolving Credit
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Commitment (which request must be made before 1:00 p.m. (Houston
time) on the Business Day the Advance is to be made and may be
telephonic if confirmed in writing within two Business Days) in the
minimum amount of $500,000 (or a greater integral multiple of
$100,000) directly to the Borrower as a Swing Line Advance without
requiring each other Bank to fund its Percentage thereof on such
Business Day. Swing Line Advances are subject to the following
conditions:
(a) Each Swing Line Advance must occur on a Business Day
before the Revolving Credit Termination Date;
(b) The aggregate principal outstanding of all Swing Line
Advances may not exceed $5,000,000; the aggregate principal amount
outstanding of all Swing Line Advances, all other Revolving Credit
Advances, and all Letter of Credit Liabilities may not exceed the
lesser of (i) the Borrowing Base, or (ii) aggregate Revolving Credit
Commitments; and no Swing Line Advance shall be made which would
cause the aggregate principal outstanding of Agent's percentage of
all Revolving Credit Advances (including Swing Line Advances) to
exceed the Agent's Revolving Credit Commitment;
(c) Each Swing Line Advance shall be paid in full or
Converted by the Borrower no later than 10 Business Days after such
Swing Line Advance is made, and if such Swing Line Advance is not
paid within such time, then such Swing Line Advance shall be paid in
by the funding of an Advance in accordance with Section 3.2; and
(d) Each Swing Line Advance is a Base Rate Advance.
Section 3.2 Banks' Funding of Swing Line Advances as Advances. If the
Borrower fails to repay any Swing Line Advance within 10 Business Days after the
making thereof, the Agent shall promptly notify the Banks of such failure and
the unpaid amount, which notice shall, on behalf of the Borrower (and for such
purpose the Borrower hereby irrevocably directs the Agent to act on its behalf),
request each Bank to make, and each Bank hereby agrees to make, an Advance in an
amount equal to such Bank's Percentage of the aggregate amount of such unpaid
Swing Line Advance (each a "Refunded Swing Line Advance"), to repay the Agent.
Each Bank shall make the amount of such Advance available to the Agent in
immediately available funds, not later than 10:00 a.m. Houston time one Business
Day after the date of such notice. The proceeds of such Advance shall be
immediately made available to the Agent for application by the Agent to the
repayment of the Refunded Swing Line Advance. The Borrower irrevocably
authorizes the Agent to charge the Borrower's accounts with the Agent in order
to immediately pay the amount of such Refunded Swing Line Advance to the extent
amounts received from the Banks are not sufficient to repay in full such
Refunded Swing Line Advance (with notice of such charge being provided to the
Borrower, provided that the failure to give such notice shall not affect the
validity of such charge). All such Refunded Swing Line Advances shall be subject
to all provisions of this Agreement concerning Advances, except that such
Advances shall be made without regard to satisfaction of the conditions
precedent to Advances (including the existence of a Default or Event of
Default). If prior to the time an Advance would otherwise have been made
pursuant to this paragraph, Advances may not be made as contemplated by this
paragraph, each
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Bank shall irrevocably and unconditionally purchase and receive from Agent a
ratable participation in such Swing Line Advance and shall make available to
Agent in immediately available funds its Percentage of such unpaid amount,
together with interest from the date when its payment was due to, but not
including, the date of payment. If a Bank does not promptly pay its amount upon
Agent's demand, and until such Bank makes the required payment, Agent is deemed
to continue to have outstanding a Swing Line Advance in the amount of such
Bank's unpaid obligation. The Borrower shall make each payment of all or any
part of any Swing Line Advance to Agent for the ratable benefit of Agent and
those Banks who have funded their participations in Swing Line Advances under
this section (but all interest accruing on Swing Line Advances before the
funding date of any Advance to repay such Swing Line Advance or any
participation is payable solely to Agent for its own account).
Section 3.3 The Swing Line Note. The obligation of the Borrower to
repay the Swing Line Advances and interest thereon shall be evidenced by the
Swing Line Note in the principal amount of $5,000,000.
ARTICLE IV
Borrowing Procedure: Payments; Facilities Fees;
Matters Related to Letters of Credit; Matters Related to Advances;
Designation of Additional Guarantors
Section 4.1 Borrowing Procedure.
(a) The Borrower shall give the Agent notice by means of an
Advance Request Form of each requested Revolving Credit Advance
(other than Swing Line Advances) at least one Business Day before the
requested date of a Base Rate Advance, and at least three (3) days
before the requested date of a LIBOR Advance, specifying: (a) the
requested date of such Revolving Credit Advance (which shall be a
Business Day), (b) the amount of such Revolving Credit Advance, (c)
the Type of the Revolving Credit Advance, and (d) in the case of a
LIBOR Advance, the duration of the Interest Period for such Revolving
Credit Advance. The Agent at its option may accept telephonic
requests for Revolving Credit Advances, provided that such acceptance
shall not constitute a waiver of the Agent's right to delivery of the
appropriate Advance Request Form in connection with subsequent
advances. Any telephonic request for an Revolving Credit Advance by
the Borrower shall be promptly continued by submission of a properly
completed Advance Request Form to the Agent. Each Revolving Credit
Advance shall be in minimum principal amount of $500,000.00 or a
greater integral multiple of $100,000.00. The Agent shall notify each
Bank of the contents of each such notice on the date such notice is
given by the Borrower. Not later than 11:00 A.M. Houston, Texas time
on the date specified for each Revolving Credit Advance hereunder,
each Bank will make available to the Agent at the Principal Office in
immediately available funds, for the account of the Borrower, its
Percentage of each Revolving Credit Advance. After the Agent's
receipt of such funds and subject to the other terms and conditions
of this
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Agreement, the Agent will make each Revolving Credit Advance
available to the Borrower by depositing the same, in immediately
available funds, in an account of the Borrower (designated by the
Borrower) maintained with the Agent at the Agent's Principal Office.
All notices under this Section shall be irrevocable and shall be
given not later than 11:00 A.M. Houston, Texas, time on the day which
is not less than the number of Business Days specified above for such
notice.
(b) On the Effective Date, the Agent shall notify each Bank
of the effectiveness of this Agreement. Promptly thereafter, each
Bank will make available to the Agent at the Principal Office in
immediately available funds, for the account of the Borrower, its
Percentage of the Term Loan Advance. After the Agent's receipt of
such funds and subject to the other terms and conditions of this
Agreement, the Agent will make the Term Loan Advance available to the
Borrower by either (i) depositing the same, in immediately available
funds, in an account of the Borrower (designated by the Borrower)
maintained with the Agent at the Agent's Principal Office, or (ii)
transmitting the funds by wire transfer according to instructions
provided by the Borrower.
Section 4.2 Method of Payment. All payments of principal, interest,
and other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Agent at its Principal Office for the
account of each Bank's Principal Office in Dollars and in immediately available
funds, without setoff, deduction, or counterclaim, not later than 11:00 A.M.,
Houston, Texas time on the date on which such payment shall become due (each
such payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day). The Borrower shall, at the time of
making each such payment, specify to the Agent the sums payable by the Borrower
under this Agreement and the other Loan Documents to which such payment is to be
applied (and in the event that the Borrower fails to so specify, or if an Event
of Default has occurred and is continuing, the Agent may apply such payment to
the Obligations in such order and manner as it may elect in its sole discretion,
subject to Section 4.5 hereof). Each payment received by the Agent under this
Agreement or any other Loan Document for the account of a Bank shall be paid
promptly to such Bank, in immediately available funds, for the account of such
Bank's Principal Office. Whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of the payment of
interest and commitment fee, as the case may be.
Section 4.3 Voluntary Prepayment. The Borrower may prepay the
Advances in whole at any time or from time to time in part without premium or
penalty; provided that each partial prepayment shall be in the principal amount
of $500,000.00 or a greater integral multiple of $100,000.00 and provided
further that no such prepayment shall relieve the Borrower of its obligations
under Section 5.2 or 5.6 hereof.
Section 4.4 Mandatory Prepayment.
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(a) If at any time the amount equal to the sum of (i) the
outstanding principal amount of the Revolving Credit Advances, plus
(ii) the Letter of Credit Liabilities exceeds the lesser of (1) the
aggregate Revolving Credit Commitments or (2) the Borrowing Base, the
Borrower shall promptly prepay the outstanding Revolving Credit
Advances by the amount of the excess or, if no Revolving Credit
Advances are outstanding, the Borrower shall immediately pledge to the
Agent cash or Cash Equivalent Investments in an amount equal to the
excess as security for the Obligations.
(b) Promptly upon receipt of the Net Cash Proceeds from
any Asset Sale or sale/leaseback transaction with respect to the
Borrower's or its Subsidiaries' motor vehicles, or receipt of any
insurance proceeds with respect to properties or assets of the Borrower
or any of its Subsidiaries, the Borrower shall prepay Advances in
accordance with Section 4.4(f) in a principal amount equal to 100% of
the amount by which aggregate Net Cash Proceeds received from such
Asset Sales or insurance proceeds during any twelve month period
exceeds $250,000, and 100% of the amount of Net Cash Proceeds received
from any such sale/leaseback transaction.
(c) Until the Term Loan and the Energy Capital
Subordinated Debt is paid in full, promptly upon receipt of Net Cash
Proceeds from the issuance of Institutional Debt or Subordinated Debt
(other than the Energy Capital Subordinated Debt) by Borrower or any of
its Subsidiaries, the Borrower shall prepay Advances in accordance with
Section 4.4(f) in a principal amount equal to 100% of the amount by
which aggregate Net Cash Proceeds received from such issuances during
any twelve month period exceeds $250,000.
(d) Promptly upon receipt of Net Cash Proceeds from the
issuance of Capital Stock by Borrower or any of its Subsidiaries, the
Borrower shall prepay Advances in accordance with Section 4.4(f) in a
principal amount equal to 100% of the amount by which aggregate Net
Cash Proceeds received from such issuances during any twelve month
period exceeds $250,000.
(e) Commencing on March 31, 2003 and on each March 31
thereafter, the Borrower shall prepay Advances in accordance with
Section 4.4(f) in a principal amount equal to 50% of Excess Cash Flow,
if any, for the Fiscal Year ending immediately preceding each such
March 31 so long as the Funded Debt to EBITDA Ratio for such Fiscal
Year is 2.25 to 1.00 or greater.
(f) Any prepayment made under Sections 4.4(a), (b), (c),
(d) and (e) shall (i) include accrued interest to the date of such
prepayment on the principal amount prepaid, (ii) not be subject to (A)
any minimum payment provisions contained in this Agreement or (B) the
requirement set forth in Section 5.6 hereof to provide compensation to
the Banks if such prepayment results in a LIBOR Advance being paid on a
day other than the last day of an Interest Period for such LIBOR
Advance, and (iii) be applied first, pro rata to the unpaid principal
installments of the Term Loan, second, at any time there are no
Advances outstanding under the Term Loan, to repay outstanding
Revolving
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Credit Advances (but not to permanently reduce the Revolving Credit
Commitment), and third, at any time there are no Advances outstanding
under the Revolving Credit Commitment, to provide cash collateral for
the outstanding Letter of Credit Liabilities.
Section 4.5 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Advance shall be made by the Banks pro rata in
accordance with their respective Percentages, (b) each payment of fees under
Section 2.6 and letter of credit fees under Section 4.12(a) shall be made for
the account of the Banks pro rata in accordance with their respective
Percentages, (c) each termination or reduction of the Revolving Credit
Commitments under Section 2.7 shall be applied to the Revolving Credit
Commitments pro rata according to the respective unused Revolving Credit
Commitments, (d) each Letter of Credit shall be deemed participated in by the
Banks, pro rata in accordance with their respective Percentages; and (e) each
payment and prepayment of principal of or interest on the Advances by the
Borrower shall be made to the Agent for the account of the Banks pro rata in
accordance with the respective unpaid principal amounts of the Advances or the
Advances held by such Banks.
Section 4.6 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Borrower (the "Payor") prior to the
date on which such Bank is to make payment to the Agent of the proceeds of an
Advance to be made or participated in as applicable, by it hereunder or the
Borrower is to make a payment to the Agent for the account of one or more of the
Banks, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, pay to the
Agent the amount made available to it together with interest thereon in respect
of the period commencing on the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate per annum equal to
the Federal Funds Rate for such period.
Section 4.7 Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of Form W-8BEN or W-8ECI, certifying in either case that such Bank is
entitled to receive payments from the Borrower under any Loan Document without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form W-8BEN or W-8ECI further undertakes to deliver to the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Bank is entitled to receive payments from the Borrower under any Loan
Document without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such
35
form with respect to it and such Bank advises the Borrower and the Agent that it
is not capable of receiving such payments without any deduction or withholding
of United States federal income tax. Notwithstanding any provisions of this
agreement to the contrary, the Borrower shall make payments net of, and after
deductions for, taxes and shall not be required to increase any such amount
payable to any non-U.S. Bank that fails to comply with this Section.
Section 4.8 Computation of Interest. Interest on the LIBOR
Advances and all other amounts payable by the Borrower hereunder shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed (including the first day but excluding the last day) unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be.
Interest on the Base Rate Advances shall be computed on the basis of a year of
365 or 366 days, as the case may be.
Section 4.9 Conversions and Continuation. The Borrower shall
have the right from time to time to Convert all or part of an Advance of one
Type into an Advance of another Type or to Continue LIBOR Advances of one Type
as Advances of the same Type by giving the Agent written notice at least one (l)
Business Day before Conversion into a Base Rate Advance, and at least three (3)
Business Days before Conversion into or Continuation of a LIBOR Advance,
specifying: (a) the Conversion or Continuation date, (b) the amount of the
Advance to be Converted or Continued, (c) in the case of Conversions, the Type
of Advance to be Converted into, and (d) in the case of a Continuation of or
Conversion into a LIBOR Advance, the duration of the Interest Period applicable
thereto; provided that (i) LIBOR Advances may only be Converted on the last day
of the applicable Interest Period, and (ii) except for Conversions into Base
Rate Advances, no Conversions shall be made while a Default or an Event of
Default has occurred and is continuing. All notices under this Section shall be
irrevocable and shall be given not later than 11:00 A.M. Houston, Texas time on
the day which is not less than the number of Business Days specified above for
such notice. The Agent shall promptly notify the Banks of each such notice it
receives. If the Borrower shall fail to give the Agent the notice as specified
above for Continuation or Conversion of a LIBOR Advance prior to the end of the
Interest Period with respect thereto, such LIBOR Advance shall be Converted
automatically into a Base Rate Advance on the last day of the then current
Interest Period for such LIBOR Advance.
Section 4.10 Letter of Credit Procedure. Each Letter of Credit
shall be issued upon receipt by the Issuing Bank of a written request of the
Borrower (a "Credit Request"), together with a duly executed Letter of Credit
Agreement, not later than 11:00 A.M. (Houston, Texas time), three Business Days
prior to the date set for the issuance of such Letter of Credit. Each Credit
Request shall contain or specify, among other things:
(a) the proposed date of the issuance of the Letter of
Credit, which shall be a Business Day;
(b) the stated amount of the Letter of Credit;
(c) the date of expiration of the Letter of Credit;
36
(d) the name and address of the beneficiary of the Letter
of Credit;
(e) the documents to be presented by the beneficiary of
the Letter of Credit in case of any drawing thereunder;
(f) the full text of any certificate to be presented by
the beneficiary in case of any drawing thereunder;
(g) the purpose of the Letter of Credit; and
(h) the aggregate amount of Letter of Credit Liabilities
(including the requested Letter of Credit) to be existing on the date
of issuance of such requested Letter of Credit.
Section 4.11 Amendments to Letters of Credit. Any request for
amendment to or extension of the expiry date of any previously issued Letter of
Credit shall be submitted pursuant to a Credit Request by the Borrower to the
Issuing Bank not later than three Business Days prior to the date of the
proposed amendment or extension. The Issuing Bank shall not amend or extend the
expiry date of any Letter of Credit if the issuance of a new Letter of Credit
having the same terms and conditions as such Letter of Credit as so amended or
extended would be prohibited by any provision of this Agreement.
Section 4.12 Letter of Credit Fees. The Borrower agrees in all
instances, to pay (a) to the Agent a non-refundable letter of credit fee, due
and payable quarterly in arrears on each Quarterly Fee Payment Date and on the
Revolving Credit Termination Date, for the account of the Banks, which fee shall
be equal to the Applicable Margin for LIBOR Advances on the date of payment
multiplied by the Dollar equivalent (at the applicable Exchange Rate) of the
face amount of each Letter of Credit (with a $300 minimum letter of credit fee
per Letter of Credit issued), and based on a year of 360 days, and (b) to the
Issuing Bank a fronting fee, due and payable on the date of issuance of any
Letter of Credit, for the sole account of the Issuing Bank, which fee shall be
equal to 0.125% of the face amount of each such Letter of Credit.
Section 4.13 Participation by Banks. By the issuance of any Letter
of Credit and without any further action on the part of the Issuing Bank or any
of the Banks in respect thereof, the Issuing Bank hereby grants to each Bank and
each Bank hereby agrees to acquire from the Issuing Bank a participation in each
such Letter of Credit and the related Letter of Credit Liabilities, effective
upon the issuance thereof without recourse or warranty, equal to such Bank's
Percentage of such Letter of Credit and Letter of Credit Liabilities. The
Issuing Bank shall provide a copy of each Letter of Credit to each other Bank
promptly after issuance. This agreement to grant and acquire participations is
an agreement between the Issuing Bank and the Banks, and neither the Borrower
nor any beneficiary of a Letter of Credit or Bank Guaranty shall be entitled to
rely thereon. The Borrower agrees that each Bank purchasing a participation from
the Issuing Bank pursuant to this Section 4.13 may exercise all its rights to
payment against the Borrower including the right of setoff, with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
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Section 4.14 Obligations Absolute. The obligations of the Borrower
and the Guarantors under this Agreement and the other Loan Documents (including
without limitation the obligation of the Borrower to reimburse the Issuing Bank
for draws under any Letter of Credit) shall be joint and several, absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and the other Loan Documents under all
circumstances whatsoever, including without limitation the following
circumstances (provided that nothing in this Agreement constitutes a waiver of
the Borrower's rights to assert any claim or defense based upon the gross
negligence or willful misconduct of any Bank):
(a) Any lack of validity or enforceability of any Letter
of Credit or any other Loan Document;
(b) Any amendment or waiver of or any consent to
departure from any Loan Document;
(c) The existence of any claim, set-off, counterclaim,
defense or other rights which the Borrower, any Obligated Party, or any
other Person may have at any time against any beneficiary of any Letter
of Credit, the Issuing Bank, or any other Person, whether in connection
with this Agreement or any other Loan Document or any unrelated
transaction except for the Agent's, Issuing Bank's, or any Bank's gross
negligence or willful misconduct;
(d) The occurrence of any Default or Event of Default; or
(e) Any statement, draft, or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid,
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever except for the Agent's, Issuing
Bank's, or any Bank's gross negligence or willful misconduct.
Section 4.15 Limitation of Liability. The Borrower assumes all
risks of the acts or omissions of any beneficiary of any Letter of Credit with
respect to its use of such Letter of Credit. Neither the Issuing Bank, the
Agent, any Bank nor any of their officers or directors shall have any
responsibility or liability to the Borrower or any other Person for: (a) errors,
omissions, interruptions, or delays in transmission or delivery of any messages,
or (b) the validity, sufficiency, or genuineness of any draft or other document,
or any endorsement(s) thereon, even if any such draft, document or endorsement
should in fact prove to be in any and all respects invalid, insufficient,
fraudulent, or forged or any statement therein is untrue or inaccurate in any
respect, provided that in each case such actions taken or omitted by the Issuing
Bank, the Agent or any Bank are done or omitted in the absence of gross
negligence or willful misconduct. The Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
Section 4.16 Letter of Credit Agreements. Certain additional
provisions regarding the obligations, liabilities, rights, remedies and
agreements of the Borrower and the Issuing Bank relative to the Letters of
Credit are set out in the Letter of Credit Agreements.
38
Section 4.17 Replacement of the Issuing Bank. The Borrower may,
with the approval of the Required Banks, appoint a successor Issuing Bank
hereunder upon the condition precedent that such successor Issuing Bank shall
become a party to this Agreement and expressly agree to be bound by the terms
and conditions contained in this Agreement pertaining to the Issuing Bank. Upon
the appointment of a successor Issuing Bank, the Issuing Bank replaced by such
successor Issuing Bank shall cease to issue Letters of Credit but shall continue
to carry out its obligations hereunder and shall continue to have the benefit of
this Agreement and the other Loan Documents with respect to the outstanding
Letters of Credit issued by it until all such Letters of Credit have expired and
any drawings thereunder have been reimbursed in full.
Section 4.18 No Advances. Neither the Agent nor any Bank shall
have any obligation to make any Advance, if a Default or an Event of Default has
occurred and is continuing.
Section 4.19 Designation of Additional Guarantors; Revocation of
Designation.
(a) The Borrower may designate any Domestic Subsidiary
which is not a Guarantor to be a Domestic Guarantor by delivering to
the Agent notice that such Domestic Subsidiary is to be a Domestic
Guarantor and causing such Domestic Subsidiary to execute and deliver
to Agent a Guaranty Supplement in substantially the form of Exhibit A
to the Guaranty Agreement-Domestic, a Security Agreement Supplement in
substantially the form of Exhibit G to the Pledge and Security
Agreement, and any applicable Mortgage. Any such Domestic Subsidiary
shall be deemed a Domestic Guarantor five Business Days following the
date on which such Domestic Subsidiary delivers the documents described
above to the Agent.
(b) The Borrower may designate any Foreign Subsidiary
which is not a Guarantor to be a Foreign Guarantor by delivering to the
Agent notice that such Foreign Subsidiary is to be a Foreign Guarantor
and causing such Foreign Subsidiary to execute and deliver to Agent a
Guaranty Agreement-Foreign and a Pledge and Security Agreement. Any
such Foreign Subsidiary shall be deemed a Foreign Guarantor five
Business Days following the date on which such Foreign Subsidiary
delivers the documents described above.
(c) The Borrower may determine that any Subsidiary which
has been designated to be a Guarantor (other than those which own real
property and other fixed assets constituting Collateral) shall cease to
be a Guarantor by delivering to the Agent (i) evidence satisfactory to
the Agent that such Guarantor is not a Material Subsidiary, and (ii)
notice that such Guarantor is no longer to be a Guarantor. Five
Business Days following the date on which the Borrower delivers the
documents described in the preceding sentence to the Agent and pays any
applicable prepayment required under Section 4.4(a) of this Agreement,
any such Guarantor shall cease to be a Guarantor and such Person's
Guaranty Agreement, Security Agreement and Mortgages shall be null and
void and the Agent shall promptly deliver such appropriate lien release
documents and return any applicable Guaranty Agreement, as requested in
writing by the Borrower.
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ARTICLE V
Yield Protection and Illegality
Section 5.1 Capital Adequacy. If after the date hereof, any
adoption or implementation of any applicable law, rule, or regulation regarding
capital adequacy (including, without limitation, any law, rule, or regulation
implementing the Basle Accord) , or any change therein, or any change in the
interpretation or administration thereof by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or compliance by such Bank (or its parent) with any guideline, request,
or directive regarding capital adequacy (whether or not having the force of law)
of any such central bank or other Governmental Authority (including, without
limitation, any guideline or other requirement implementing the Basle Accord),
has or would have the effect of reducing the rate of return on such Bank's (or
its parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which such Bank (or its
parent) could have achieved but for such adoption, implementation, change, or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within ten Business Days after demand by such Bank (with a copy to
the Agent), the Borrower agrees to pay to such Bank (or its parent) such
additional amount or amounts as will compensate such Bank for such reduction.
Any such demand shall be accompanied by a certificate of such Bank claiming
compensation under this Section and setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to it hereunder shall
be conclusive (absent manifest error), provided that the determination thereof
is made on a reasonable basis. In determining such amount or amounts, such Bank
may use any reasonable averaging and attribution methods.
Section 5.2 Additional Costs. The Borrower shall pay (without
duplication of amounts owing under other Sections of this Article V) directly to
each Bank from time to time such amounts as such Bank may determine to be
necessary to compensate it for any costs incurred by such Bank which the Bank
determines are attributable to its making or maintaining of any LIBOR Advances
hereunder or its obligation to make any of such Advances hereunder, or any
reduction in any amount receivable by such Bank hereunder in respect of any such
Advances or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(a) changes the basis of taxation, of any amounts payable
to such Bank under this Agreement or its Revolving Credit Note, Term
Loan Note or Swing Line Note in respect of any of such Advances (other
than taxes imposed on the overall net income of such Bank or its
Applicable Lending Office for any of such Advances by the jurisdiction
in which such Bank has its principal office or such Applicable Lending
Office);
(b) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio, or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, the Bank (including any of such Advances
or any deposits referred to in the definition of "LIBOR" in Section
1.1); or
40
(c) imposes any other condition affecting this Agreement,
the Revolving Credit Notes, the Term Loan Notes, the Swing Line Note or
any of such extensions of credit or liabilities or commitments.
Each Bank will notify the Borrower of any event occurring after the date of this
Agreement which will entitle such Bank to compensation pursuant to this Section
5.2 as promptly as practicable after it obtains knowledge thereof and determines
to request such compensation, and will designate a different Applicable Lending
Office for the Advances 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 such Bank, violate any law, rule, or regulation or be in any way
disadvantageous to such Bank, provided that such Bank shall have no obligation
to so designate an Applicable Lending Office located in the United States of
America. Each Bank will furnish the Borrower with a certificate setting forth in
reasonable detail the basis and the amount of each request of such Bank for
compensation under this Section 5.2, and the Borrower shall not be obligated to
pay under this Section 5.2 prior to receipt of such certificate. If a Bank
requests compensation from the Borrower under this Section 5.2, the Borrower
may, by notice to such Bank and the Agent suspend the obligation of such Bank to
make or Continue making, or Convert Advances into, Advances of the Type with
respect to which such compensation is requested until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.5 hereof shall be applicable). Determinations and allocations by a
Bank for purposes of this Section 5.2 of the effect of any Regulatory Change on
its costs of maintaining its obligations to make Advances or of making or
maintaining Advances or on amounts receivable by it in respect of Advances, and
of the additional amounts required to compensate such Bank in respect of any
Additional Costs, shall be conclusive absent manifest error, provided that such
determinations and allocations are made on a reasonable basis and in good faith.
Section 5.3 Limitation on LIBOR Advances. Anything herein to the
contrary notwithstanding, if with respect to any LIBOR Advances for any Interest
Period therefor:
(a) The Agent determines (which determination shall be
conclusive absent manifest error) that quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR" in
Section 1.1 hereto are not being provided in the relative amounts or
for the relative maturities for purposes of determining the rate of
interest for such Advances as provided in this Agreement; or
(b) A Bank determines (which determination shall be
conclusive absent manifest error) that the relevant rates of interest
referred to in the definition of "LIBOR" in Section 1.1 hereto on the
basis of which the rate of interest for such Advances for such Interest
Period is to be determined do not accurately reflect the cost to such
Bank of making or maintaining such Advances for such Interest Period;
then such Bank shall give the Borrower prompt notice thereof and the
relevant amounts or periods, and so long as such condition remains in
effect, such Bank shall be under no obligation to make additional LIBOR
Advances or to Convert Base Rate Advances into LIBOR Advances and the
Borrower shall, on the last day(s) of the then current Interest
Period(s) for, the
41
outstanding LIBOR Advances, either prepay such Advances or Convert such
Advances into Base Rate Advances in accordance with the terms of this
Agreement.
Section 5.4 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for a Bank or its
Applicable Lending Office to (a) honor its obligation to make LIBOR Advances
hereunder or (b) maintain LIBOR Advances hereunder, then such Bank shall
promptly notify the Borrower thereof and such Bank's obligation to make or
maintain LIBOR Advances and to Convert Base Rate Advances into LIBOR Advances
hereunder shall be suspended until such time as such Bank may again make and
maintain LIBOR Advances (in which case the provisions of Section 5.5 hereof
shall be applicable).
Section 5.5 Treatment of Certain LIBOR Advances. If the LIBOR
Advances of a Bank are to be Converted pursuant to Section 5.2, 5.3 or 5.4
hereof, such Bank's LIBOR Advances shall be automatically Converted into Base
Rate Advances on the last day(s)of the then current Interest Period(s) for the
LIBOR Advances (or, in the case of a Conversion required by Section 5.4 hereof,
on such earlier date as such Bank may specify to the Borrower, such earlier date
to be not earlier than the date the Bank gives notice thereof to the Borrower)
and, unless and until such Bank gives notice as provided below that the
circumstances specified in Section 5.2, 5.3 or 5.4 hereof which gave rise to
such Conversion no longer exist:
(a) To the extent that the Bank's LIBOR Advances have
been so Converted, all payments and prepayments of principal which
would otherwise be applied to such Bank's LIBOR Advances shall be
applied instead to its Base Rate Advances; and
(b) All Advances which would otherwise be made or
Continued by a Bank as LIBOR Advances shall be made as or Converted
into Base Rate Advances and all Advances of such Bank which would
otherwise be Converted into LIBOR Advances shall be Converted instead
into (or shall remain as) Base Rate Advances.
If a Bank gives notice to the Borrower that the circumstances specified in
Section 5.2, 5.3 or 5.4 hereof which gave rise to the Conversion of such Bank's
LIBOR Advances pursuant to this Section 5.5 no longer exist (which such Bank
agrees to do promptly upon such circumstances ceasing to exist) at a time when
any LIBOR Advances are outstanding, the Bank's Base Rate Advances shall be
automatically Converted to LIBOR Advances, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding LIBOR Advances to the extent
necessary so that, after giving effect thereto, all Advances held by the Bank
holding LIBOR Advances and by such Banks are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with their respective
Percentages. In the event any Bank invokes Section 5.2, 5.3 or 5.4 or Borrower
becomes obligated to pay any additional amounts to any Bank pursuant such
Sections, then, unless such Bank has removed or cured the conditions actuating
such Sections, the Borrower may designate a substitute lender which is an
Eligible Assignee (such lender referred to in this Agreement as a "Replacement
Bank") to purchase such Bank 's rights and obligations with respect to its
Percentage of the Revolving Credit Commitments and its Percentage of the
outstanding Term Loan Advances. Any such purchase shall have a purchase price
equal to the outstanding principal amounts payable to the Bank with respect to
all Advances outstanding
42
under this Agreement on the date of purchase, plus any accrued and unpaid
interest, fees and charges (including breakage charges, if any, up to such date)
in respect of such Bank's Percentage of the Revolving Credit Commitments, and on
other terms reasonably satisfactory to the Agent. Upon such purchase by the
Replacement Bank and payment of all other amounts owing to the Bank being
replaced, such exiting Bank shall no longer be a party to this Agreement or any
rights or obligations under this Agreement and the Replacement Bank shall
succeed to the rights and obligations of the exiting Bank with respect to the
exiting Bank's Percentage of the Revolving Credit Commitments and its Percentage
of the outstanding Term Loan Advances.
Section 5.6 Compensation. The Borrower shall pay (without
duplication of amounts owing under other Sections of this Article V) to the
Banks, upon the request of any Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Agent) to compensate the Banks for
any actual loss, cost, or expense incurred by them as a result of:
(a) Any payment, prepayment or Conversion of a LIBOR
Advance for any reason (including, without limitation, the acceleration
of the outstanding Advances pursuant to Section 12.2 or any payment
pursuant to Section 2.10(g) or Section 5.5) on a date other than the
last day of an Interest Period for such Advance; or
(b) Any failure by the Borrower for any reason
(including, without limitation, the failure of any conditions precedent
specified in Article VII to be satisfied) to borrow, Convert, or prepay
a LIBOR Advance on the date for such borrowing, Conversion, or
prepayment, specified in the relevant notice of borrowing, prepayment,
or Conversion under this Agreement.
The Agent shall furnish the Borrower with a certificate setting forth in
reasonable detail the basis and amount of each request for compensation under
this Section 5.6, and the Borrower shall not be obligated to pay under this
Section 5.6 prior to receipt of such certificate.
ARTICLE VI
Security
Section 6.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrower shall execute and deliver or cause
to be executed and delivered the documents described below covering the property
and collateral described in this Section 6.1 each in form and substance
satisfactory to the Agent, (which, together with any other property and
collateral which may now or hereafter secure the Secured Obligations or any part
thereof, is sometimes herein called the "Collateral"):
(a) The Borrower and the Domestic Guarantors shall
respectively execute the Pledge and Security Agreement pursuant to
which such Persons shall grant to the Agent for the benefit of the
Banks a first priority security interest in (i) all of such Persons'
accounts accessions, chattel paper, commercial tort claims, commodity
accounts, commodity contracts, deposit accounts, documents, equipment,
financial assets, fixtures,
43
general intangibles, goods, instruments, intellectual property,
inventory, investment property, letters of credit, letter of credit
rights, payment intangibles, licenses, permits, securities, securities
accounts, security entitlements, software, supporting obligations, cash
and cash accounts, (ii) 100% of the Capital Stock issued to such
Persons by any Domestic Subsidiary or Foreign Guarantor, (iii) 65% of
the Capital Stock issued to such Persons by any Foreign Subsidiary that
is not a Foreign Guarantor, (iv) promissory notes made by any
Subsidiary payable to the order of the Borrower or such Domestic
Guarantor, and (v) all products and proceeds related to any of the
above.
(b) The Foreign Guarantors shall respectively execute a
Pledge and Security Agreement, pursuant to which such Persons shall,
grant to the Agent for the benefit of the Banks a first priority
security interest in (i) all of such Persons' accounts accessions,
chattel paper, commercial tort claims, commodity accounts, commodity
contracts, deposit accounts, documents, equipment, financial assets,
fixtures, general intangibles, goods, instruments, intellectual
property, inventory, investment property, letters of credit, letter of
credit rights, payment intangibles, licenses, permits, securities,
securities accounts, security entitlements, software, supporting
obligations, cash and cash accounts, (ii) 100% of the Capital Stock
issued to such Persons by any Subsidiary, (iii) promissory notes made
by any other Subsidiary payable to the order of Borrower or such
Foreign Guarantor and (iv) all products and proceeds related to any of
the above.
(c) The Borrower and the Domestic Guarantors shall
respectively execute the Mortgages pursuant to which such Persons
shall, grant to the Agent for the benefit of the Banks a first priority
lien on all unencumbered real property owned by such Persons.
(d) The Borrower and the Guarantors shall execute or
authenticate and cause to be executed or authenticated, such further
documents and instruments, including without limitation, as applicable,
financing statements under the UCC, as the Agent, in its sole
discretion, deems necessary or desirable to create, preserve, evidence,
and perfect its liens and security interests in the Collateral.
Section 6.2 Setoff. If an Event of Default shall have occurred
and is continuing, the Agent, the Issuing Bank and each Bank are hereby
authorized at any time and from time to time, without notice to the Borrower
(any such notice being hereby expressly waived by the Borrower), to set off and
apply any and all deposits (general, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Issuing Bank, the
Agent or such Bank 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, the Revolving Credit Notes, the Term Loan Notes, the Swing Line
Note or any other Loan Document, irrespective of whether or not the Agent, the
Issuing Bank or such Bank shall have made any demand under this Agreement, the
Revolving Credit Notes, the Term Loan Notes, the Swing Line Note or any other
Loan Document and although such Obligations may be unmatured. The Issuing Bank,
the Agent and each Bank agree promptly to notify the Borrower (with a copy to
the Agent) after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights and remedies of the Issuing
44
Bank, the Agent and each Bank hereunder are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Issuing Bank, the Agent and such Bank may have.
ARTICLE VII
Conditions Precedent
Section 7.1 Conditions to Initial Advance. This Agreement is not
effective, and the obligation of each Bank to make the initial Advance or of the
Issuing Bank to issue the initial Letter of Credit is subject to the condition
precedent that the Agent shall have received (or waived or postponed in writing
the requirement that it receive) on or before the day of such Advance or Letter
of Credit issuance all of the items set forth below in form and substance
satisfactory to the Agent.
(a) Certificate - Borrower. A certificate of the
Secretary or an Assistant Secretary or other appropriate officer of the
Borrower certifying (i) resolutions of the Board of Directors of the
Borrower which authorize the execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents to which the
Borrower is or is to be a party hereunder, and (ii) the names and
signatures of the officers of the Borrower authorized to sign this
Agreement and each of the other Loan Documents to which the Borrower is
or is to be a party hereunder.
(b) Certificate - Guarantors. A certificate of the
Secretary or an Assistant Secretary or other appropriate officer of
each Guarantor certifying (i) resolutions of the Board of Directors of
such Guarantor or actions of any other body which authorize the
execution, delivery and performance by such Guarantor of the Loan
Documents to which such Guarantor is or is to be a party hereunder, and
(ii) the names and signatures of the officers of such Guarantor
authorized to sign the Loan Documents to which such Guarantor is or is
to be a party hereunder.
(c) Organizational Documents - Borrower and Guarantors.
The articles of incorporation, certificate of limited partnership,
articles of organization, or such other applicable formation documents
of the Borrower and each Guarantor certified by the Secretary of State
of state of formation of such Person, or with respect to Foreign
Guarantors, the appropriate governmental authority of the jurisdiction
of such Person's formation.
(d) Governing Documents - Borrower and Guarantors. The
bylaws, partnership agreement, regulations, management agreement,
operating agreement or such other applicable governing documents of the
Borrower and each Guarantor, certified by the Secretary or an Assistant
Secretary or such other appropriate officer of such Person.
45
(e) Governmental Certificates - Borrower. Certificates of
the appropriate government officials of the state of organization of
the Borrower as to the existence and good standing of the Borrower.
(f) Governmental Certificates - Guarantors. Certificates
of the appropriate government officials of the jurisdiction of
organization of each Guarantor as to the existence and good standing of
such Guarantor.
(g) Revolving Credit Notes. The Revolving Credit Notes
executed by the Borrower.
(h) Term Loan Notes. The Term Loan Notes executed by the
Borrower.
(i) Swing Line Note. The Swing Line Note executed by the
Borrower.
(j) Pledge and Security Agreement. A Pledge and Security
Agreement executed by the Borrower and each Domestic Guarantor.
(k) Financing Statements. UCC or other applicable
financing statements or documents evidencing the Liens granted in the
Pledge and Security Agreements executed by the Borrower and the
Guarantors and covering the Collateral.
(l) UCC Searches. Uniform Commercial Code searches
showing all financing statements on file against the Borrower and the
Domestic Guarantors in such filing offices in which Agent deems
necessary or appropriate to conduct searches.
(m) Guaranty Agreements-Domestic Guarantors. A Guaranty
Agreement - Domestic executed by each Domestic Guarantor.
(n) Intercompany Note. The Intercompany Note executed by
the Borrower and each applicable Subsidiary, accompanied by a fully
executed acknowledgement of the collateral assignment to the Agent of
such Intercompany Note.
(o) Landlord Waivers. Landlord lien waivers or
subordinations, as the case may be, with respect to each location of
equipment and inventory of Borrower and the Guarantors which is leased
by Borrower or any such Guarantor and for which a landlord lien waiver
or subordination is required by the Agent in its sole discretion.
(p) Stock Certificates. Stock certificates and blank
stock powers with respect to the Capital Stock being pledged pursuant
to the Pledge and Security Agreements.
(q) Motor Vehicle Titles. Original certificates of title
with respect to each motor vehicle owned by the Borrower and its
Subsidiaries as of the date hereof and not encumbered by a Lien granted
to any Person other than the Agent
46
(r) Mortgages. With respect to each parcel of real estate
owned by Borrower or any Domestic Guarantor, a Mortgage executed by
Borrower or the applicable Guarantor, and any other party indicated on
such Mortgage as a party for whom execution thereof is provided.
(s) Real Estate Appraisal. Satisfactory appraisals of the
real estate secured by the Mortgages, other than the appraisal of the
real property located at 000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx.
(t) Title Insurance. With respect to each parcel of real
estate secured by the Mortgages, a binding commitment to issue a
Mortgagee Policy of Title Insurance in form and substance satisfactory
to Agent in an amount not less than the appraised value of the
applicable real estate, insuring Agent's Lien on such real estate to be
of first priority, which commitment shall be issued by Commonwealth
Land Title Company and contain such endorsements as Agent may require,
and shall be subject only to such exceptions as Agent shall approve in
its sole discretion, with all costs thereof to be paid by Borrower.
(u) Survey. With respect to each parcel of real estate
secured by the Mortgages, a survey with such certification as the Agent
may require.
(v) Environmental Site Assessment. With respect to each
parcel of real estate secured by the Mortgages, a satisfactory Phase I
and/or Phase II Environmental Site Assessment.
(w) Environmental Verification. Verification from an
independent environmental engineer that estimated environmental clean
up costs on all real estate secured by the Mortgages is approximately
$500,000.
(x) Merger Agreements. Evidence satisfactory to Agent
that all conditions precedent to the closing of the IHI Merger have
been satisfied, except for payment of the portion of the consideration
being provided hereunder, including without limitation (i) certified
executed copies of the Merger Agreement, (ii) evidence that First
Reserve has made the capital injection into the Borrower described in
the Merger Agreement and (iii) the Certificate of Merger issued by the
Secretary of State of the appropriate state or states.
(y) Opinion of Borrower's Counsel. A favorable opinion of
legal counsel to the Borrower and the Guarantors in such form as the
Agent may request, including without limitation opinions relating to
the Loan Documents and the Merger Agreements.
(z) Opinion of IHI's Counsel. A favorable opinion of
legal counsel to IHI in such form as the Agent may request, including
without limitation opinions relating to the Merger Agreements,
including language permitting the Agent and the Banks to rely thereon.
47
(aa) Repayment of Existing Debt and Lien Releases. Such
documentation as the Agent may require to evidence that existing debt
to the parties listed on Schedule 7.1 hereto will be repaid in full on
the date hereof after giving effect to the initial Advance, together
with UCC-3 Termination Statements executed by such parties with respect
to existing Liens securing such debt.
(bb) Collateral Audit. A satisfactory audit of the
Borrower and the Guarantors by the Agent's collateral examination
group.
(cc) Asset Sales. Evidence that the Borrower or IHI, as
applicable, has consummated the sale of EPG, Xxxxxx and GHX and
received aggregate cash proceeds from such sales or an assumption of
Debt in connection with such sales of at least $21,500,000, together
with evidence satisfactory to the Agent that the Borrower or IHI, as
applicable, is no longer liable on such assumed Debt.
(dd) Financial Statements. Projected consolidated
financial statements of Borrower and its Subsidiaries after giving
effect to the IHI Merger, including income statements, statements of
cash flow, and balance sheets.
(ee) Insurance Certificates. Certificates showing the
existence of all insurance policies required by Section 9.5, naming the
Agent as loss payee and additional insured.
(ff) Subordinated Loan Documents. Fully executed
counterparts of the loan agreement and other loan documents evidencing
or executed and delivered in connection with the Energy Capital
Subordinated Debt.
(gg) Intercreditor Agreement. The Intercreditor Agreement
executed by the Agent, the Banks, Xxxxx Fargo Energy Capital, Inc., any
other lenders party to the documents referenced in clause (ff) above,
and the Borrower.
(hh) Borrowing Base Report. A Borrowing Base Report dated
as of the date of this Agreement.
(ii) Fees. Payment of all fees required by the Fee Letter
to be paid on or prior to the Effective Date.
Section 7.2 All Advances. The obligation of each Bank to make any
Advance and of the Issuing Bank to issue any Letter of Credit is subject to the
additional conditions precedent set forth below.
(a) Items Required by Agreement. The Agent shall have
received the items required by Section 4.1 and 4.10, as applicable.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing, or would result from such Advance and/or
Letter of Credit issuance, as applicable.
48
(c) Representations and Warranties. All of the
representations and warranties contained in Article VIII hereof and in
the other Loan Documents shall be true and correct on and as of the
date of such Advance and/or Letter of Credit issuance, as applicable
with the same force and effect as if such representations and
warranties had been made on and as of such date except for those that
relate solely to a specific date or have changed as a result of
transactions permitted by this Agreement.
(d) Additional Documentation. The Agent shall have
received such additional approvals, opinions, or documents as the Agent
or its legal counsel may reasonably request.
ARTICLE VIII
Representations and Warranties
To induce the Agent, the Issuing Bank and the Banks to enter into this
Agreement, the Borrower represents and warrants to each such Person that:
Section 8.1 Corporate Existence. The Borrower and each Subsidiary
(a) is a corporation, partnership or limited liability company duly organized,
validly existing, and in good standing to the extent applicable under the laws
of the jurisdiction of its incorporation or organization; (b) has all requisite
organizational power and authority to own its assets and carry on its business
as now being or as proposed to be conducted; and (c) is qualified to do business
in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a Material
Adverse Effect. The Borrower and each Guarantor has the corporation, partnership
or limited liability company, as applicable, power and authority to execute,
deliver and perform its obligations under this Agreement and the other Loan
Documents to which it is or may become a party.
Section 8.2 Projections; Financial Statements. All financial
information delivered by the Borrower to the Agent before the date of this
Agreement, including without limitation all projections of the financial
performance of the Borrower after the IHI Merger, has been prepared by the
Borrower in good faith based upon reasonable assumptions consistent with each
other and all facts then known to the Borrower. The Borrower has delivered to
the Agent audited consolidated financial statements of the Borrower and its
Subsidiaries as at and for the fiscal year ended December 31, 2000 and its
unaudited consolidated and consolidating financial statements for the nine month
period ended September 30, 2001. Such financial statements have been prepared in
accordance with GAAP except as expressly noted therein, and fairly present, on a
consolidated basis, the financial condition of the Borrower and its Subsidiaries
as of the respective dates indicated therein and the results of operations for
the respective periods indicated therein. Neither the Borrower nor any of its
Subsidiaries has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments except as referred to or reflected on such
49
financial statements. Since September 30, 2001, there has been no event,
occurrence or circumstance that has had a Material Adverse Effect.
Section 8.3 Corporate Action: No Breach. The execution, delivery,
and performance by the Borrower and its Subsidiaries of the Loan Documents to
which such Persons are or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
organizational action on the part of such Persons and do not (a) violate or
conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation or bylaws or other organizational documents of such
Persons, (ii) any applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator, or (iii) any
material agreement or instrument to which the Borrower or any of its
Subsidiaries is a party or by which any of them or any of their property is
bound or subject, or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien (except as
provided in Article VI) upon any of the revenues or assets of the Borrower or
any Subsidiary.
Section 8.4 Operation of Business. The Borrower and each of its
Subsidiaries possess (and after consummation of the IHI Merger will possess) all
material licenses, permits, franchises, patents, copyrights, trademarks, and
trade names, or rights thereto, material necessary to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted, and the Borrower and each of its Subsidiaries are not in violation of
any valid rights of others with respect to any of the foregoing in any respect
that could reasonably be expected to have a Material Adverse Effect.
Section 8.5 Litigation and Judgments. Except as disclosed on
Schedule 8.5 hereto, there is no action, suit, investigation, or proceeding
before or by any Governmental Authority or arbitrator pending (in respect of
which process has been served on the Borrower or any of its Subsidiaries), or to
the knowledge of the President, Chief Executive Officer or any Vice President of
the Borrower, threatened against or affecting the Borrower or any Subsidiary,
that would, if adversely determined, have a Material Adverse Effect. There are
no outstanding judgments against the Borrower or any Subsidiary, except as
disclosed on Schedule 8.5 hereto.
Section 8.6 Rights in Properties: Liens. The Borrower and each
Subsidiary have (and after consummation of the IHI Merger, will have) good and
indefeasible title to or valid leasehold interests in all material respects in
their respective properties and assets, real and personal, including the
properties, assets and leasehold interests reflected in the financial statements
described in Section 8.2, and none of the properties, assets or leasehold
interests of the Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 10.2.
Section 8.7 Enforceability. This Agreement constitutes, and the
other Loan Documents to which the Borrower and its Subsidiaries are party, when
delivered, shall constitute legal, valid, and binding obligations of the
Borrower and its Subsidiaries as applicable, enforceable against the Borrower
and its Subsidiaries as applicable, in accordance with their respective terms,
except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights and by general
equitable principles.
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Section 8.8 Approvals. No authorization, approval, or consent of,
and no filing or registration with, any Governmental Authority or third party is
or will be necessary for the execution, delivery, or performance by the Borrower
and its Subsidiaries of the Loan Documents to which the Borrower and its
Subsidiaries are or may become a party or the validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to Loan Documents and appropriate filings with the SEC.
Section 8.9 Debt. The Borrower and its Subsidiaries have no Debt,
except Debt permitted by Section 10.1.
Section 8.10 Taxes. The Borrower and each Subsidiary have filed
all tax returns (federal, state, local and foreign) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid all of their respective liabilities for taxes, assessments,
governmental charges and other levies that are due and payable, in each case
except for those contested in good faith by appropriate proceedings and for
which appropriate reserves in accordance with GAAP are being maintained. Except
as set forth on Schedule 8.10, the Borrower knows of no pending investigation of
the Borrower or any Subsidiary by any taxing authority or of any pending but
unassessed tax liability of the Borrower or any Subsidiary.
Section 8.11 Use of Proceeds: Margin Securities. Neither the
Borrower nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.
Section 8.12 ERISA. The Borrower and each Subsidiary are in
compliance with all applicable provisions of ERISA and the applicable provisions
of the Code relating thereto. No Reportable Event which is required to be
reported to the PBGC pursuant to Section 4043(b) of ERISA or Prohibited
Transaction which could reasonably be expected to have a Material Adverse Effect
has occurred and is continuing with respect to any Plan. No notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated. No
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Neither the Borrower nor any ERISA
Affiliate (nor any predecessor to the Borrower or any ERISA Affiliate) has
completely or partially withdrawn from a Multiemployer Plan. The Borrower and
each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of their Plans, and the present value of all vested benefits
under each Plan do not exceed the fair market value of all Plan assets allocable
to such benefits, as determined on the most recent valuation date of the Plan
and in accordance with ERISA. Neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
Section 8.13 Disclosure. No statement, information, report,
representation, or warranty made by the Borrower or any of its Subsidiaries in
this Agreement or in any other Loan Document or furnished to the Agent or any
Bank in connection with this Agreement or any of
51
the transactions contemplated hereby (but excluding all projections and proforma
financial statements which shall have been prepared in good faith and based upon
reasonable assumptions) contains any untrue statement of a material fact and all
such statements, information, reports, representations and warranties, taken as
a whole, do not omit to state any material fact necessary to make the statements
herein or therein not materially misleading. There is no fact known to the
Borrower or any of its Subsidiaries which has a Material Adverse Effect, or
which could reasonably be expected to have, in the reasonable judgment of the
Borrower, in the future a Material Adverse Effect, that has not been disclosed
in writing to the Agent.
Section 8.14 Subsidiaries. The Borrower has no Subsidiaries other
than those listed on Schedule 8.14 hereto, and Schedule 8.14 lists the
jurisdiction of organization or incorporation of each Subsidiary and the
percentage of the Borrower's and its Subsidiaries' ownership of the outstanding
voting stock or other similar interests of each such Subsidiary. All of the
outstanding Capital Stock of each Subsidiary has been validly issued, is fully
paid, and is nonassessable.
Section 8.15 Agreements. Except as disclosed in SEC filings,
neither the Borrower nor any Guarantor is a party to any indenture, loan, or
credit agreement, or to any lease or other agreement or instrument, or subject
to any charter or corporate restriction which could reasonably be expected to
have a Material Adverse Effect. Neither the Borrower nor any Guarantor is in
default in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in any agreement or
instrument material to its business to which it is a party where such default or
the effect thereof could reasonably be expected to result in a Material Adverse
Effect.
Section 8.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation of any law, rule, regulation, order, or decree of any
Governmental Authority or arbitrator except where such Person's failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
Section 8.17 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of, or "controlled by"
an "investment "company" within the meaning of, the Investment Company Act of
1940, as amended.
Section 8.18 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 8.19 Environmental Matters. Except as disclosed on
Schedule 8.19 hereto:
(a) The Borrower, each Subsidiary, and all of their
respective properties, assets, and operations are (and after
consummation of the IHI Merger, will be) in full compliance with all
Environmental Laws, except for occurrences of noncompliance which could
not in the aggregate, reasonably be expected to have a Material Adverse
52
Effect. The Borrower is not aware of, nor has the Borrower received
notice of, any past, present, or future conditions, events, activities,
practices, or incidents which may interfere with or prevent the
compliance or continued compliance of the Borrower and its Subsidiaries
with all Environmental Laws, except for occurrences of noncompliance
which could not in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in effect and
the Borrower and its Subsidiaries are in compliance with all of the
terms and conditions of such permits, except where failure to obtain or
comply with such permits, licenses or authorizations could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(c) No Hazardous Materials exist on, about, or within or
have been used, generated, stored, transported, disposed of on, or
Released from any of the properties or assets of the Borrower or any
Subsidiary except (i) in amounts that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect and (ii) for dynamite and other explosives for which such Person
possesses all licenses and permits necessary to comply with all
Environmental Laws and other federal, state, local and foreign laws,
regulations and requirements pertaining to the use, possession,
disposal, storage or sale thereof, and such use, possession, disposal,
storage or sale thereof is in compliance with Environmental Laws and
such other laws, regulations and requirements except where failure to
obtain or comply with such licenses or permits or to comply with such
laws, regulations or requirements could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(d) Neither the Borrower nor any of its Subsidiaries nor
any of their respective currently or previously owned or leased
properties or operations is subject to any outstanding or, to the best
of its knowledge, threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or
docketed administrative proceeding with respect to (i) failure to
comply with Environmental Laws, (ii) Remedial Action, or (iii) any
Environmental Liabilities arising from a Release or threatened Release,
which, in the aggregate, could reasonably be expected to have a
Material Adverse Effect;
(e) There are no conditions or circumstances associated
with the currently or previously owned or leased properties or
operations of the Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect;
(f) Neither the Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiting a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et. seq.
regulations thereunder or any comparable provision of state law. The
Borrower and its Subsidiaries are in compliance with all applicable
financial
53
responsibility requirements of all Environmental Laws except where
failure to be in such compliance could not reasonably be expected to
have a Material Adverse Effect;
(g) Neither the Borrower nor any of its Subsidiaries has
filed or failed to file any notice required under applicable
Environmental Law reporting a Release, which Release or any aggregation
thereof, or failure to file, could reasonably be expected to have a
Material Adverse Effect; and
(h) To the best of the Borrower's knowledge, no Lien
arising under any Environmental Law has attached to any property or
revenues of the Borrower or its Subsidiaries.
ARTICLE IX
Affirmative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any commitment to lend
hereunder or the Issuing Bank has any obligation to issue any Letter of Credit
hereunder or any Letter of Credit Liabilities exist, the Borrower will perform
and observe the following covenants:
Section 9.1 Reporting Requirements. The Borrower will furnish the
items set forth below to the Agent for distribution to the Banks:
(a) Annual Financial Statements. As soon as available,
but no later than 90 days after the end of the Borrower's Fiscal Year,
the Borrower's Form 10-K Annual Report, including (i) the consolidated
balance sheets of the Borrower and its Subsidiaries, as of the end of
such Fiscal Year and (ii) the consolidated statements of earnings of
the Borrower and its Subsidiaries and consolidated statements of
changes in shareholders' equity of the Borrower and its Subsidiaries,
and statements of changes in cash flows of the Borrower and its
Subsidiaries as of and through the end of such Fiscal Year, all of
which are prepared in accordance with GAAP, and certified by
independent certified public accountants acceptable to the Agent, whose
opinion shall be in scope and substance in accordance with generally
accepted auditing standards and shall be unqualified. Additionally,
concurrent with delivery of the information described above, the
Borrower shall deliver (A) the unaudited consolidating balance sheets
of the Borrower and its Subsidiaries, as of the end of such Fiscal Year
and (B) the unaudited consolidating statements of earnings of the
Borrower and its Subsidiaries and consolidating statements of changes
in shareholders' equity of the Borrower and its Subsidiaries, and
statements of changes in cash flows of the Borrower and its
Subsidiaries as of and through the end of such Fiscal Year, all of
which are prepared in accordance with GAAP, and certified by the chief
financial officer, chief accounting officer, or another officer of the
Borrower acceptable to the Agent.
54
(b) Quarterly 10-Q of the Borrower. As soon as available,
but in any event no later than 45 days after the end of each Fiscal
Quarter of the Borrower, the Borrower's Form 10-Q Quarterly Report,
including (i) the consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries, as of the end of such Fiscal Quarter and
(ii) the consolidated and consolidating statements of earnings of the
Borrower and its Subsidiaries in consolidated and consolidating
statements of changes in shareholders' equity of the Borrower and its
Subsidiaries, and statements of changes in cash flow of the Borrower
and its Subsidiaries as of and through the end of such Fiscal Quarter,
all of which are prepared in accordance with GAAP, and certified by the
chief financial officer, chief accounting officer, or another officer
of the Borrower acceptable to the Agent.
(c) Compliance Certificate. Concurrently with the
delivery of the Form 10-K's or Form 1O-Q's, as applicable, referred to
in subsections 9.1(a) and 9.1(b), a Compliance Certificate of the chief
financial officer, the chief accounting officer, the treasurer or the
assistant treasurer of the Borrower or another officer of the Borrower
acceptable to the Agent (i) stating, among other things, that no
Default or Event of Default has occurred and is continuing, or if a
Default or Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which is proposed to be taken
with respect thereto, and (ii) showing in reasonable detail the
calculations demonstrating compliance with Article XI.
(d) Annual Projected Financial Statements and Capital
Expenditure Projections. As soon as available, but in any event no
later than thirty (30) days after the end of each Fiscal Year of the
Borrower, projected financial statements for the upcoming fiscal year
of the Borrower and its Subsidiaries, including projected Capital
Expenditures, in form and detail satisfactory to the Agent and prepared
under the supervision of the chief financial officer or the chief
accounting officer of the Borrower or another officer of the Borrower
acceptable to the Agent.
(e) Borrowing Base Report. As soon as available, but in
any event no later than twenty (20) days after the end of each calendar
month, a Borrowing Base Report, an accounts receivable aging report,
and, upon request of Agent, (i) an accounts payable aging report, (ii)
an inventory stock status summary report listing inventory
classification, location, reserves, and value, and (iii) a summary
report of sales, credit memos and collections for such month, in each
case certified by the chief financial officer, chief accounting
officer, or other officer of the Borrower acceptable to the Agent.
(f) Notice of Litigation. Promptly after the service of
process or notice thereof, notice of all actions, suits, and
proceedings before any Governmental Authority or arbitrator affecting
the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect.
(g) Notice of Default. As soon as possible and in any
event within two days after any of the chief executive officer, the
chief financial officer, the chief accounting officer, the treasurer or
any other employee serving in a comparable capacity (regardless
55
of title) of the Borrower or any Guarantor obtains any knowledge,
becomes aware or should have known through the exercise of prudent
business judgment of the occurrence of any Default, a written notice
setting forth the details of such Default and the action that the
Borrower has taken and proposes to take with respect thereto.
(h) ERISA Reports. Upon the request of the Agent from
time to time copies of all reports, including annual reports, and
notices which the Borrower or any Subsidiary files with or receives
from the PBGC, the U.S. Department of Labor under ERISA or the Internal
Revenue Service under the Code; and as soon as possible and in any
event within five days after the Borrower or any Subsidiary knows or
has reason to know that any Reportable Event which is required to be
reported to the PBGC pursuant to Section 4043 (b) of ERISA or
Prohibited Transaction which could be reasonably expected to have a
Material Adverse Effect has occurred with respect to any Plan or that
the PBGC or the Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, a
certificate of the chief financial officer of the Borrower setting
forth the details as to such Reportable Event or Prohibited Transaction
or Plan termination and the action that the Borrower proposes to take
with respect thereto.
(i) Notice of Material Adverse Change. As soon as
possible and in any event within two days after any of the chief
executive officer, the chief financial officer, the chief accounting
officer, the treasurer or any other employee serving in a comparable
capacity (regardless of title) of the Borrower or any Guarantor obtains
any knowledge, becomes aware or should have known through the exercise
of prudent business judgment of the occurrence thereof, written notice
of any matter that could reasonably be expected to have a Material
Adverse Effect.
(j) XXXXX Filings. Promptly following the filing thereof,
written notice of each proxy statement or other document filed with
XXXXX.
(k) Notice of Actual or Contingent Liabilities. As soon
as possible, and in any event within two Business Days after any of the
chief executive officer, the chief financial officer, the chief
accounting officer, the treasurer or any other employee serving in a
comparable capacity (regardless of title) of the Borrower or any
Guarantor obtains any knowledge, becomes aware or should have known
through the exercise of prudent business judgment of the occurrence
thereof, written notice of any actual or contingent liabilities which,
if resolved adversely to such Person could reasonably be expected to
have a Material Adverse Effect.
(l) Vendor and Customer Information. In conjunction with
collateral audit reviews by the Agent, promptly upon the Agent's
request, a current list of account debtors' and vendors' contact
information (names, address, contacts and phone numbers).
(m) Environmental Review. Concurrent with delivery of the
financial statements described in clause (a) of this Section 9.1, an
environmental operational report with respect to of all real property
leased or owned by the Borrower or any of its
56
Subsidiaries, in form and detail satisfactory to the Agent and prepared
by an environmental engineer satisfactory to the Agent and the
Borrower.
(n) General Information. Within such a time period as
Agent may reasonably request, such additional information and
statements, lists of assets and liabilities, tax returns, financial
statements, reporting statements and any other reports with respect to
the Borrower's or any Subsidiary's financial condition, business
operations and properties as the Agent may reasonably request from time
to time.
Section 9.2 Maintenance of Existence: Conduct of Business. Except
as provided in Section 10.3, the Borrower will preserve and maintain, and will
cause each Guarantor to preserve and maintain, its corporate existence and all
of its leases, privileges, licenses, permits, franchises, qualifications, and
rights that are necessary or desirable in the ordinary conduct of its business.
The Borrower will conduct, and will cause each Subsidiary to conduct, its
businesses in an orderly and efficient manner in accordance with good business
practices.
Section 9.3 Maintenance of Properties. Subject to Sections 10.3
and 10.6, the Borrower will maintain, keep, and preserve, and cause each
Subsidiary to maintain, keep, and preserve, in all material respects, all of its
properties (tangible and intangible) necessary in the proper conduct of its
business in good working order and condition (ordinary wear and tear excepted).
Section 9.4 Taxes and Claims. The Borrower will pay or discharge,
and will cause each Subsidiary to pay or discharge, at or before maturity or
before becoming delinquent all material taxes, levies, assessments, and
governmental charges imposed on it or its income or profits or any of its
property; provided, however, that neither the Borrower nor any Subsidiary shall
be required to pay or discharge any tax, levy, assessment, or governmental
charge which is being contested in good faith by appropriate proceedings
diligently pursued, and for which adequate reserves have been established to the
extent required by GAAP.
Section 9.5 Insurance. The Borrower will maintain, and will cause
each Subsidiary to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and its Subsidiaries
operate, provided that in any event the Borrower will maintain and will cause
each Subsidiary to maintain workmen's compensation insurance, property
insurance, comprehensive general liability insurance, and business interruption
insurance with respect to processing centers in accordance with the Borrower's
and such Subsidiaries' current practices reasonably satisfactory to the Agent.
Section 9.6 Inspection Rights. At any reasonable time during
business hours and from time to time, provided that so long as no Event of
Default exists, no more than four collateral audits may be performed annually,
the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Agent, the Banks and the Issuing Bank to examine, copy,
and make extracts from its books and records, to visit and inspect its
properties, and to discuss its business,
57
operations, and financial condition with its officers, employees, and
independent certified public accountants.
Section 9.7 Keeping Books and Records. The Borrower will
maintain, and will cause each Subsidiary to maintain, proper books of record and
account in which full, true, and correct entries in conformity with GAAP shall
be made of all dealings and transactions in relation to its business and
activities.
Section 9.8 Compliance with Laws. The Borrower will comply, and
will cause each Subsidiary to comply with all applicable laws, rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator if
its failure to comply could reasonably be expected to result in a Material
Adverse Effect.
Section 9.9 Compliance with Agreements. The Borrower will comply,
and will cause each Subsidiary to comply with all agreements, contracts, and
instruments binding on it or affecting its properties or business if its failure
to comply could reasonably be expected to result in a Material Adverse Effect.
Section 9.10 Further Assurances. The Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be requested by the Agent or any Bank to
carry out the provisions and purposes of this Agreement and the other Loan
Documents to create, preserve, and perfect the Liens of the Agent in the
Collateral.
Section 9.11 ERISA. The Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements of ERISA and the applicable provisions of the Code
relating thereto, if applicable, so as not to give rise to any liability
thereunder if its failure to comply could reasonably be expected to result in a
Material Adverse Effect.
Section 9.12 Additional Material Subsidiaries as Guarantors:
Execution of Additional Security Agreements-Guarantors.
(a) The Borrower will cause each Material Subsidiary
created or acquired after the Effective Date to execute a Guaranty
Agreement-Foreign if such Material Subsidiary is a Foreign Subsidiary
(and such Subsidiary qualifies as a Foreign Guarantor) or to execute a
Guaranty Supplement in substantially the form of Exhibit A to the
Guaranty Agreement-Domestic if such Material Subsidiary is a Domestic
Subsidiary. The Borrower will cause each such Material Subsidiary to
deliver such Guaranty Agreement to the Agent.
(b) If any Subsidiary which was not determined to be a
Material Subsidiary on the Effective Date or upon its creation or
acquisition becomes a Material Subsidiary, the Borrower will promptly
give the Agent notice of such event and will cause such Material
Subsidiary to execute and deliver to the Agent a Guaranty
Agreement-Foreign (if such Material Subsidiary is a Foreign Subsidiary
and qualifies as a Foreign Guarantor) or a
58
Guaranty Supplement in substantially the form of Exhibit A to the
Guaranty Agreement-Domestic (if such Material Subsidiary is a Domestic
Subsidiary), unless the Required Banks determine that such Material
Subsidiary is not to be a Guarantor.
(c) Contemporaneously with the delivery by any Material
Subsidiary of a Guaranty Agreement pursuant to paragraph (a) of this
Section 9.12, such Material Subsidiary will execute and deliver to the
Agent (i) a Pledge and Security Agreement if such Material Subsidiary
is a Foreign Subsidiary, (ii) a Security Agreement Supplement and
substantially the form of Exhibit G to the Pledge and Security
Agreement if such Material Subsidiary is a Domestic Subsidiary, and
(iii) uniform commercial code or other applicable financing statements
or documents with respect to security interest granted by the document
executed in connection with clause (i) or (ii) of this Section 9.12(c),
as applicable. Any such Material Subsidiary shall be deemed a Guarantor
five Business Days following the date on which such Material Subsidiary
delivers the documents described above to the Agent.
Section 9.13 Continuity of Operations. Subject to Sections 10.3
and 10.6, the Borrower will continue to conduct, and will cause each of the
Guarantors to continue to conduct, its primary businesses as conducted as of the
Effective Date and to continue its operations in such businesses.
Section 9.14 Intercompany Note. All loans and other advances made
by the Borrower or any of its Subsidiaries to Borrower or any of Borrower's
other Subsidiaries shall be evidenced by the Intercompany Note.
Section 9.15 Additional Appraisals. The Borrower shall promptly
pay, upon demand, the costs and expenses associated with any appraisal on
machinery, equipment, real property and other fixed assets of Borrower and its
Subsidiaries, which appraisals may be required by the Agent in its sole
discretion no more frequently than once during each Fiscal Year.
Section 9.16 Hedging Agreement. The Borrower shall, within 60 days
after the Effective Date, enter into a Hedging Agreement acceptable to the Agent
in a notional amount equal to 25% of Borrower's floating rate obligations under
the Term Loan Advances, in order to convert such floating rate obligations to
fixed rate obligations.
ARTICLE X
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any commitment to lend
hereunder or the Issuing Bank has any obligation to issue any Letter of Credit
hereunder or any Letter of Credit Liabilities exist, the Borrower will observe
the following covenants:
59
Section 10.1 Debt. The Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume, or
permit to exist, any Debt, except:
(a) Debt and Contingent Liabilities pursuant to the Loan
Documents;
(b) unsecured Subordinated Debt and Contingent
Liabilities incurred in connection with a transaction permitted by
Section 10.3(d)(iv)(A) in an aggregate principal amount (together with
the principal amount of any Debt incurred pursuant to clause (d) to
refinance such Debt) not to exceed $10,000,000 at any time outstanding;
(c) Existing Debt and Contingent Liabilities described on
Schedule 10.1 hereto;
(d) Extensions, renewals, refundings, amendments or
replacements of Debt permitted by clauses (b) and (c) above provided
that no such extension, renewal, refunding or replacement shall (i) if
such Debt is Subordinated Debt, amend or modify any subordination
provisions, if any, contained in the original Debt so that the Debt, as
extended, renewed or replaced, is no longer Subordinated Debt, (ii)
shorten the fixed maturity the Debt being refinanced, (iii) increase
the principal amount of the Debt being refinanced by an amount greater
than the lesser of (A) reasonable fees and expenses incurred in
connection with such refinancing and (B) an amount equal to five
percent (5.00%) of the principal amount of the Debt being refinanced,
or (iv) increase the rate of interest to a rate greater than the
current market rate at the time of the extension, renewal, refunding,
or replacement of the original Debt;
(e) Subordinated Debt;
(f) Additional purchase money Debt and Capital Lease
Obligations in an aggregate principal amount not to exceed $1,000,000
at any time outstanding;
(g) Debt of the Borrower to a Guarantor or of a Guarantor
to the Borrower, so long as such Debt is evidenced by the Intercompany
Note;
(h) Debt of the Borrower to a Subsidiary which is not a
Guarantor or of a Subsidiary to another Subsidiary which is not a
Guarantor so long as such Debt is evidenced by the Intercompany Note
and does not exceed $2,000,000, in the aggregate outstanding at any
time;
(i) obligations of the Borrower or any Subsidiary under
real estate leases entered into in the ordinary course of business;
(j) Contingent Obligations under any guaranty by the
Borrower or any Subsidiary of obligations as lessee under any lease
which is otherwise permitted under this Agreement;
60
(k) Debt constituting deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds and performance bonds
and other obligations of a like nature that are incurred in the
ordinary course of business, not to exceed $2,000,000 in the aggregate
at any time outstanding;
(l) indemnities arising under agreements entered into by
the Borrower or any Subsidiary in the ordinary course of business;
(m) Debt arising on account of deferred Taxes, deferred
workers compensation liabilities or deferred employee medical
liabilities; and
(n) Additional Debt in an aggregate principal amount not
to exceed $2,500,000 at any time outstanding.
Section 10.2 Limitation on Liens. The Borrower will not incur,
create, assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of their respective
properties, assets, or revenues, whether now owned or hereafter acquired, except
the following (herein referred to as "Permitted Liens"):
(a) Liens disclosed on Schedule 10.2 hereto;
(b) Liens in favor of the Agent for the benefit of the
Banks and the Issuing Bank;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of property that do not
(individually or in the aggregate) materially affect the value of the
assets encumbered thereby or materially impair the ability of the
Borrower or its Subsidiaries to use such assets in their respective
businesses;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent for longer than ninety (90) days or
which are being contested in good faith and for which adequate reserves
have been established;
(e) Liens of landlords, tenants, vendors, mechanics,
materialmen, warehousemen, carriers, or other similar statutory Liens
securing obligations that are not delinquent for longer than ninety
(90) days and are incurred in the ordinary course of business or which
are being contested in good faith and for which adequate reserves have
been established;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, or contracts (other than for payment of Debt), or
leases made in the ordinary course of business;
61
(g) Liens incurred in connection with Debt permitted
under Section 10.1(f), so long as such Liens only extend to the assets
being acquired with the proceeds of such Debt and do not extend to any
Inventory;
(h) Liens incurred in connection with the Energy Capital
Subordinated Debt, so long as such Liens are and shall remain junior in
priority to the Liens on the Collateral in favor of the Agent;
(i) Inchoate Liens arising under ERISA;
(j) Rights of set-off or banker's liens created by law in
favor of commercial banks,
(k) Liens to be discharged and released on the Effective
Date; and
(l) precautionary UCC filings regarding operating leases
entered into in the ordinary course of business.
Section 10.3 Mergers, Dissolutions, Etc. The Borrower will not,
and will not permit any Subsidiary to, be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or sell, transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
receivables, except for the following:
(a) the IHI Merger;
(b) any other such merger or consolidation, sale,
transfer, conveyance, lease or assignment of or by any Subsidiary of
the Borrower into the Borrower or into, with or to any other Subsidiary
of the Borrower; provided that (i) if such event involves the Borrower,
the Borrower shall be the surviving corporation, (ii) if such event
involves a Guarantor, a Guarantor shall be the surviving corporation,
and (iii) no Default or Event of Default shall exist at such time;
(c) any such purchase or other acquisition by the
Borrower of the assets or stock of any Guarantor or any Subsidiary of
the Borrower, or by any Guarantor or any Subsidiary of the Borrower of
the assets or stock of any Subsidiary of the Borrower;
(d) any such merger or consolidation of the Borrower or
an Subsidiary of the Borrower into, with or to any other Person or any
such purchase or other acquisition by the Borrower or any Subsidiary of
the Borrower of the assets or stock of any other Person where (i)
immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; (ii) the Borrower and its Subsidiaries, taken as a whole,
are in pro forma compliance with all the financial covenants set forth
in Article XI taking into account such purchase or acquisition; (iii)
such Person (or its board of directors or similar body) has approved
such acquisition or other purchase; and (iv) taking into account and
including all such transactions since the
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Effective Date, (A) the aggregate consideration to be paid or Funded
Debt incurred (or assumed) by the Borrower and its Subsidiaries in
connection with any single purchase or acquisition is not greater than
10% of Consolidated Tangible Net Worth and (B) the aggregate
consideration to be paid or Funded Debt incurred (or assumed) by the
Borrower and its Subsidiaries in connection with all such purchases or
acquisitions is not greater than $20,000,000; and
(e) investments in joint ventures, partnerships and other
entities not exceeding in the aggregate $500,000.
Section 10.4 Loans and Investments. The Borrower will not make,
and will not permit any Subsidiary to make, any advance, loan, extension of
credit, or capital contribution to or investment in, or purchase, or permit any
Subsidiary to purchase, any stock, bonds, notes, debentures or other securities
of, any Person, except:
(a) advances or loans to, or investments in, Subsidiaries
(other than the Borrower and the Guarantors) not to exceed $1,000,000;
(b) any bonds or other obligations of the United States
of America which, as to principal and interest, constitute direct
obligations or are guaranteed by the United States of America;
(c) any bonds, debentures, participation certificates,
notes or other obligations of any agency or corporation or
instrumentality of the United States of America, the obligations of
which are unconditionally guaranteed by the United States of America;
(d) interest bearing accounts, interest bearing deposits,
Eurodollar investments, or certificates of deposit issued by or bankers
acceptances drawn or accepted by, banks or trust companies, including
the Agent, organized under the laws of the United States or any state
thereof, but only with institutions whose capital and surplus is in
excess of $500,000,000;
(e) investments described in Section 10.3(e); and
(f) advances or loans to any employee of the Borrower or
any Subsidiary (i) in the ordinary course of business consistent with
past practices for travel and entertainment expenses, relocation costs
and similar purposes of up to $50,000 for any employee and up to
$150,000 in the aggregate at any one time outstanding, and (ii) to
finance the exercise of stock options up to $100,000 for any employee
and up to $300,000 in the aggregate at any one time outstanding.
Section 10.5 Transactions With Affiliates. Except as disclosed on
Schedule 10.5, the Borrower will not enter into, and will not permit any
Subsidiary to enter into, any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate of the Borrower or any Subsidiary, except in the ordinary course
of and pursuant to the reasonable requirements of the Borrower's or such
Subsidiary 's business and
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upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate of the Borrower or such Subsidiary; provided that the
foregoing shall not prohibit the Borrower or the Subsidiaries from entering into
management contracts with Affiliates upon fair and reasonable terms in the
ordinary course of business or from entering into transactions permitted by this
Agreement.
Section 10.6 Disposition of Assets. Subject to Sections 9.2, 9.3
and 10.3, the Borrower will not sell, lease, assign, transfer, or otherwise
dispose of any of its assets, nor permit any Subsidiary to do so with any of its
assets, except (a) dispositions of inventory in the ordinary course of business,
(b) transfers of condemned property to the Governmental Authority that has
condemned such property, (c) transfers of property that has been subject to
casualty, (d) licenses or sublicenses of software in the ordinary course of
business, and (e) dispositions of personal property of the Borrower and the
Subsidiaries made in the best business judgment of the Borrower, if (i) no Event
of Default has occurred and is continuing, (ii) no Event of Default would arise
as a result of any such disposition, and (iii) the aggregate book value of all
such assets disposed of in connection with such dispositions does not exceed
$1,000,000.00 in any fiscal year.
Section 10.7 Sale and Leaseback. Other than a sale/leaseback
arrangement with respect to all of the Borrower's and its Subsidiaries' motor
vehicles, the Borrower will not enter into, and will not permit any Subsidiary
to enter into, any arrangement or series or arrangements with any Person or
group of Persons pursuant to which any of them leases from such Person real or
personal property that has been or is to be sold or transferred, directly or
indirectly, by any of them to such Person, except that the Borrower and the
Subsidiaries may enter into such arrangements as long as the aggregate book
value of the property sold and which at any time remains subject to a lease does
not exceed $1,000,000.00.
Section 10.8 Nature of Business. The Borrower will not, and will
not permit any Guarantor to, engage in any business other than the businesses in
which they are engaged as of the date hereof and other businesses reasonably
related thereto.
Section 10.9 Environmental Protection. If, as a result thereof, a
Material Adverse Effect could be reasonably be expected to result therefrom, the
Borrower will not, and will not permit any Subsidiary to, (a) use (or permit any
tenant to use) any of their respective properties or assets for the handling,
processing, storage, transportation, or disposal of any Hazardous Material
except in compliance with Environmental Law, (b) generate any Hazardous Material
except in compliance with Environmental Law, (c) conduct any activity that is
likely to cause a Release or threatened Release of any Hazardous Material, or
(d) otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate in any material respect any
Environmental Law or create any Environmental Liabilities for which the Borrower
or any of its Subsidiaries would be responsible.
Section 10.10 Accounting. The Borrower will not, and will not
permit any of its Subsidiaries to, make any material change (a) in accounting
treatment or reporting practices,
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except as required or permitted by GAAP, or (b) in tax reporting treatment,
except as required or permitted by law.
Section 10.11 Changes to Subordinated Debt. The Borrower will not
agree, and will not permit any of its Subsidiaries to agree, to any change or
amendment to the terms of any agreement, document or instrument evidencing or
executed in connection with any Subordinated Debt if the effect of such change
or amendment is to: (a) increase the interest rate on such Subordinated Debt,
(b) change the dates upon which payments of principal or interest are due on
such Subordinated Debt other than to extend such dates, (c) change any default
or event of default or covenant other than to delete or make less restrictive
any default or covenant provision therein, or add any covenant with respect to
such Subordinated Debt, (d) change the redemption or prepayment provisions of
such Subordinated Debt other than to extend the dates therefor or to reduce the
premiums (if any) payable in connection therewith, (e) grant any security,
collateral or guaranty (or additional security, collateral or guaranty, as the
case may be) to secure payment of such Subordinated Debt, unless (i) prior to or
concurrent with such grant, the Agent, for the benefit of the Banks, is granted
the identical security, collateral or guaranty to secure payment of the
Obligations, and (ii) such additional security interest or guaranty to secure
payment of the applicable Subordinated Debt is expressly made subordinate in
priority to the additional security interest or guaranty to secure payment of
the Obligations, (f) change any of the terms of subordination thereof, or (g)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights to
the holder of such Subordinated Debt in a manner adverse to the Borrower or
Banks.
ARTICLE XI
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any commitment to lend
hereunder or the Issuing Bank has any obligation to issue Letters of Credit
hereunder or any Letter of Credit Liabilities exist, the Borrower will observe
and perform the following financial covenants:
Section 11.1 Consolidated Tangible Net Worth. The Borrower will at
all times maintain Consolidated Tangible Net Worth in an amount which is not
less than the sum of (a) 85% of Consolidated Tangible Net Worth as of the
Effective Date, plus (b) 50% of Consolidated Net Income during the period
beginning on the Effective Date and ending on the date on which such calculation
is made, plus (c) 100% of the sum of the net proceeds of any equity issued by
the Borrower or any of its Subsidiaries (on a consolidated basis) after the
Effective Date, minus (d) the amount of any write-downs of goodwill, to the
extent such amounts are deducted in calculating Consolidated Net Income.
Consolidated Tangible Net Worth shall be calculated and tested quarterly as of
the last day of each Fiscal Quarter.
Section 11.2 Fixed Charge Coverage Ratio. The Borrower and its
Subsidiaries will at all times maintain, on a consolidated basis, a Fixed Charge
Coverage Ratio of not less than 1.50
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to 1.00. The Fixed Charge Coverage Ratio shall be calculated and tested
quarterly as of the last day of each Fiscal Quarter for the Calculation Period
ending on the last day of such Fiscal Quarter.
Section 11.3 Funded Debt to EBITDA Ratio. The Borrower and its
Subsidiaries will maintain at all times, on a consolidated basis, a Funded Debt
to EBITDA Ratio of not greater than (a) 2.50 to 1.00 from the effective date
through and including December 31, 2002, (b) 2.25 to 1.00 from January 1, 2003
through and including December 31, 2003, and (c) 2.00 to 1.00 at all times
thereafter. The Funded Debt to EBITDA Ratio shall be calculated and tested
quarterly as of the last day of each Fiscal Quarter for the Calculation Period
ending on the last day of such Fiscal Quarter.
Section 11.4 Capital Expenditures. The Borrower will not make, and
will not permit any of its Subsidiaries to make, Capital Expenditures during any
Fiscal Year which exceed, in the aggregate, twenty-five percent (25%) of EBITDA
for the Borrower and its Subsidiaries for the immediately preceding Fiscal Year,
provided that amounts not in excess of thirty-three and one-third percent (33
1/3%) of what could have been used for Capital Expenditures without exceeding
the limitation above but was not so used may be used for Capital Expenditures in
the immediately following Fiscal Year, provided that the first dollars expended
in such following year shall be considered as carried over from the previous
year.
ARTICLE XII
Default
Section 12.1 Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) The Borrower shall fail to pay (i) any interest or
principal portion of the Obligations when due or (ii) any other portion
of the Obligations.
(b) Any representation or warranty made or deemed made by
the Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice,
or financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) The Borrower or any Obligated Party shall fail to
perform, observe, or comply with (i) any covenant, agreement, or term
contained in Sections 9.2, 9.3, 9.4, 9.7, 9.8, 9.9, 9.11, 9.13 and 9.14
of this Agreement and such failure shall continue for twenty (20) days
after the occurrence thereof, or (ii) any other covenant, agreement, or
term contained in this Agreement or in any other Loan Document.
(d) The Borrower or any Obligated Party shall commence a
voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its
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debts under any bankruptcy, insolvency, or other similar law nor or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a substantial
part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it or shall make
a general assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any corporate
action to authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against
the Borrower or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian, or other similar official for its or a substantial part of
its property, and such involuntary proceeding shall remain undismissed
and unstayed for a period of 60 days.
(f) The Borrower or any Obligated Party shall fail to
discharge within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, or similar proceeding or
proceedings involving an aggregate amount in excess of five percent
(5.00%) of the Borrower's Consolidated Tangible Net Worth against any
of its assets or properties.
(g) A final judgment or judgments for the payment of
money in excess of five percent (5.00%) of the Borrower's Consolidated
Tangible Net Worth, in the aggregate, shall be rendered by a court or
courts against the Borrower, any of its Subsidiaries, or any Obligated
Party and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry thereof and
the Borrower or the relevant Subsidiary or Obligated Party shall not,
within said period of 30 days, or such longer period during which
execution of the same shall have been stayed, appealed therefrom and
cause the execution thereof to be stayed during such appeal.
(h) The Borrower, any Subsidiary, or any Obligated Party
shall be in default under any agreement, instrument or other document
evidencing or in any way related to any Debt (other than the
Obligations) in excess of five percent (5.00%) of the Borrower's
Consolidated Tangible Net Worth, which default permits any holder of
such Debt to accelerate the maturity of such Debt or require all or any
portion of such Debt to be prepaid prior to the stated maturity
thereof, whether or not the maturity of such Debt shall actually have
been accelerated or such prepayment shall actually have been demanded.
(i) This Agreement or any other Loan Document shall cease
to be in full force and effect or shall be declared null and void or
the validity or enforceability thereof shall be contested or challenged
by the Borrower, any Subsidiary, any Obligated Party or any of their
respective shareholders, or the Borrower or any Obligated Party shall
deny that it has any further liability or obligation under any of the
Loan Documents, or any lien or security interest created by the Loan
Documents shall for any reason cease to be a
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valid, first priority perfected security interest in and lien upon any
of the Collateral purported to be covered thereby.
(j) The Borrower, any of its Subsidiaries, or any
Obligated Party, or any of their properties, revenues, or assets, shall
become subject to an order of forfeiture, seizure, or divestiture and
the same shall not have been discharged within thirty (30) days from
the date of entry thereof.
(k) A Change of Control shall have occurred.
Section 12.2 Remedies Upon Default. If any Event of Default shall
occur and be continuing, the Agent may (and if directed by Required Banks,
shall) without notice terminate the Revolving Credit Commitments and declare the
Obligations or any part thereof to be immediately due and payable, and the same
shall thereupon become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that upon the occurrence of an Event of Default under Section 12.1(d)
or Section 12.1(e), the Revolving Credit Commitments shall automatically
terminate, and the Obligations shall become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, notice of intent to demand, protest, or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower. Except as otherwise expressly set forth herein, if any Event of
Default shall occur and be continuing, the Agent may exercise all rights and
remedies available to it in law or in equity, under the Loan Documents, or
otherwise.
Section 12.3 Letter of Credit. If any Event of Default shall occur
and be continuing, the Borrower shall, if requested by the Agent, immediately
deposit with and pledge to the Agent cash or Cash Equivalent Investments in an
amount equal to one hundred ten percent (110%) of the outstanding Letter of
Credit Liabilities.
Section 12.4 Performance by the Agent. If the Borrower shall fail
to perform any covenant or agreement contained in any of the Loan Documents, the
Agent may, at the direction of the Required Banks, perform or attempt to perform
such covenant or agreement on behalf of the Borrower. In such event, the
Borrower shall, at the request of the Agent, promptly pay any amount expended by
the Agent or the Banks in connection with such performance or attempted
performance to the Agent, together with interest thereon at the Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that neither the Agent, the Issuing Bank nor any Bank shall have any
liability or responsibility for the performance of any obligation of the
Borrower under this Agreement or any other Loan Document except for the Agent's
gross negligence or willful misconduct.
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ARTICLE XIII
The Agent
Section 13.1 Appointment, Powers and Immunities. In order to
expedite the various transactions contemplated by this Agreement, the Banks and
the Issuing Bank hereby irrevocably appoint and authorize the Agent to act as
their agent hereunder and under each of the other Loan Documents. The Agent
consents to such appointment and agrees to perform the duties of the Agent as
specified herein. The Banks and the Issuing Bank authorize and direct the Agent
to take such action in their name and on their behalf under the terms and
provisions of the Loan Documents and to exercise such rights and powers
thereunder as are specifically delegated to or required of the Agent for the
Banks and the Issuing Bank, together with such rights and powers as are
reasonably incidental thereto. The Agent is hereby expressly authorized to act
as the Agent on behalf of the Banks and the Issuing Bank:
(a) To receive on behalf of each of the Banks, the
Issuing Bank and the Agent any payment of principal, interest, fees or
other amounts paid pursuant to this Agreement, the Revolving Credit
Notes, the Term Loan Notes, and the Swing Line Note and to distribute
to each Bank, the Issuing Bank and the Agent, or any or some of them
its share of all payments so received as provided in this Agreement;
(b) To receive all documents and items to be furnished
under the Loan Documents;
(c) To act as nominee for and on behalf of the Banks, the
Issuing Bank and the Agent in and under the Loan Documents.
(d) To arrange for the means whereby the funds of the
Banks are to be made available to the Borrower;
(e) To distribute to the Banks and the Issuing Bank
information, requests, notices, payments, prepayments, documents and
other items received from the Borrower, the other Obligated Parties,
and other Persons;
(f) To execute and deliver to the Borrower, the other
Obligated Parties, and other Persons, all requests, demands, approvals,
notices, and consents received from the Banks and the Issuing Bank;
(g) To the extent permitted by the Loan Documents, to
exercise on behalf of itself, each Bank and the Issuing Bank all rights
and remedies of Bank upon the occurrence of any Event of Default;
(h) To enter into the Intercreditor Agreement;
(i) To accept, execute, and deliver any security
documents as the secured party, including, without limitation all
financing statements;
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(j) To take such other actions as may be requested by
Required Banks.
(k) To appoint from time to time, with the Borrower's
consent, such additional agents and co-agents as the Agent deems
appropriate, including without limitation a syndication agent, a
documentation agent and a collateral agent.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent (i) may treat the payee of any Revolving Credit
Note or Term Loan Note as the holder thereof until the Agent receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (ii) shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents, and
shall not by reason of this Agreement or any other Loan Document be a trustee or
fiduciary for any Bank or the Issuing Bank; (iii) shall not be required to
initiate any litigation or collection proceedings hereunder or under any other
Loan Document except to the extent hereunder or under any other Loan Document
except to the extent requested by the Required Banks; (iv) shall not be
responsible to the Banks or the Issuing Bank for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document or
for the value, validity, effectiveness, enforceability, or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder; (v) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; and (vi) shall incur no liability under or in respect
of any Loan Document by acting upon any notice, consent, certificate, or other
instrument or writing believed by it to be genuine and signed or sent by the
proper party or parties. As to any matters not expressly provided for by this
Agreement, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Banks, and such instructions of the Required Banks and any action taken
or failure to act pursuant thereto shall be binding on all of the Banks;
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or any other Loan Document or applicable law.
Section 13.2 Rights of Agent as a Bank. With respect to its
commitment to lend hereunder, the Advances made by it and the Revolving Credit
Note, Term Loan Note, and Swing Line Note issued to it, the Agent in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as the
Agent or the Issuing Bank and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Agent and its Affiliates may (without having to account therefor to any Banks or
the Issuing Bank) accept deposits from,
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lend money to, act as trustee under indentures of, provide merchant banking
services to, and generally engage in any kind of business with the Borrower, any
of its Subsidiaries, any other Obligated Party, and any other Person who may do
business with or own securities of the Borrower, any Subsidiary, or any other
Obligated Party, all as if it were not acting as the Agent and without any duty
to account therefor to the Banks or the Issuing Bank.
Section 13.3 Sharing of Payments, Etc. If any Bank shall obtain
any payment of any principal of or interest on any Advance made by it under this
Agreement or payment of any other obligation under the Loan Documents then owed
by the Borrower or any other Obligated Party to such Bank, whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, in excess of its pro rata share,
such Bank shall promptly purchase from the other Banks participations in the
Advances held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of the other Banks in accordance with its
pro rata portion thereof. To such end, all of the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess payment is thereafter rescinded or must
otherwise be restored. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Bank so purchasing a
participation in the Advances made by the other Banks may exercise all rights of
setoff, banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Advances to the
Borrower in the amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower.
Section 13.4 Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY
THE AGENT FROM AND HOLD THE AGENT AND THE ISSUING BANK HARMLESS AGAINST (TO THE
EXTENT NOT REIMBURSED UNDER SECTIONS 14.1 AND 14.2, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE
WITH THEIR RESPECTIVE COMMITMENTS, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT OR THE
ISSUING BANK IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS
OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT OR THE ISSUING BANK
UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL
BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S
OR THE ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION
OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE BANKS THAT THE AGENT AND
THE ISSUING BANK SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST
ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
71
FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT OR THE
ISSUING BANK. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK
AGREES TO REIMBURSE THE AGENT AND THE ISSUING BANK PROMPTLY UPON DEMAND FOR ITS
PRO RATA SHARE (CALCULATED ON THE BASIS OF THE COMMITMENTS) OF ANY AND ALL
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE AGENT OR THE
ISSUING BANK IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE
AGENT OR THE ISSUING BANK IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 13.5 Independent Credit Decisions. Each Bank agrees that
it has independently and without reliance on the Agent, the Issuing Bank, or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the Obligated
Parties and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent, the Issuing Bank, or any
other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any Obligated Party of this
Agreement or any other Loan Document or to inspect the properties or books of
the Borrower or any Obligated Party. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Agent hereunder or under the other Loan Documents, the Agent shall not have any
duty or responsibility to provide the Issuing Bank or any Bank with any credit
or other financial information concerning the affairs, financial condition or
business of the Borrower or any Obligated Party (or any of their Affiliates)
which may come into the possession of the Agent or any of its Affiliates.
Section 13.6 Several Commitments. The commitments to lend and
other obligations of the Banks under this Agreement are several. The default by
the Bank in making an Advance in accordance with its commitment hereunder shall
not relieve the other Banks of their obligations under this Agreement. In the
event of any default by any Bank in making any Advance, each nondefaulting Bank
shall be obligated to make its Advance but shall not be obligated to advance the
amount which the defaulting Bank was required to advance hereunder. In no event
shall any Bank be required to advance an amount or amounts which shall in the
aggregate exceed such Bank's Revolving Credit Commitment or Term Loan
Commitment, as applicable. No Bank shall be responsible for any act or omission
of any other Bank.
Section 13.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by
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the Required Banks. Upon any such resignation or removal, the Required Banks
(with the consent of the Borrower, with consent will not be unreasonably
withheld) will have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Banks and shall have accepted
such appointment within thirty (30) days after the retiring Agent's giving
notice of resignation or the Required Banks' removal of the retiring Agent, then
the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or any State thereof and having combined capital and surplus of at least
$500,000,000.00. Upon the acceptance of its appointment as successor Agent, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, privileges, immunities, and duties of the resigning or removed Agent,
and the resigning or removed Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any Agent's
resignation or removal as Agent, the provisions of this Article XIII shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was the Agent.
ARTICLE XIV
Miscellaneous
Section 14.1 Expenses. Borrower hereby agrees to pay on demand (a)
all reasonable costs and expenses of the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent, the Issuing
Bank and the Banks, (b) all reasonable costs and expenses of the Agent, the
Issuing Bank and the Banks in connection with any Default and the enforcement of
this Agreement or any other Loan Document, including, without limitation, the
reasonable fees and expenses of legal counsel for the Agent, the Issuing Bank
and the Banks, (c) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of this
Agreement or any of the other Loan Documents, (d) all costs, expenses,
assessments, and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (e) all other
reasonable costs and expenses incurred by the Agent, the Issuing Bank and the
Banks in connection with this Agreement or any other Loan Document, including,
without limitation, all costs, expenses, and other charges incurred in
connection with obtaining audit, or appraisal in respect of the Collateral.
Section 14.2 Indemnification. THE BORROWER SHALL INDEMNIFY EACH OF
THE AGENT, THE ISSUING BANK, AND THE BANKS AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENT, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
73
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B)
ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY
THE BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, OR
(E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
RELATING TO ANY OF THE FOREGOING.
Section 14.3 Limitation of Liability. Neither the Agent, the
Issuing Bank or the Banks nor any Affiliate, officer, director, employee,
attorney, or agent of the Agent, the Issuing Bank or the Banks shall have any
liability with respect to, and the Borrower hereby waives, releases, and agrees
not to xxx any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. The Borrower hereby waives, releases, and agrees
not to xxx the Agent, the Issuing Bank or the Banks or any of such Person's
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Nothing contained in this Section shall affect the rights of the Borrower to
collect actual damages awarded to them against any of the Agents, the Issuing
Bank, the Banks or any Affiliate of any of the foregoing Persons.
Section 14.4 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by any of the Agent, the
Issuing Bank or the Banks shall have the right to act exclusively in the
interest of such Persons and shall have no duty of disclosure, duty of loyalty,
duty of care, or other duty or obligation of any type or nature whatsoever to
the Borrower or any of the Borrower's shareholders or any other Person.
Section 14.5 Bank Not Fiduciary. The relationship between the
Borrower, on one hand, and the Agent, the Issuing Bank and the Banks, on the
other hand, is solely that of debtor and creditor, and no such Person has any
fiduciary or other special relationship with the Borrower, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and such Persons to be other than that of
debtor and creditor.
Section 14.6 No Waiver; Cumulative Remedies. No failure on the
part of any of the Agent, the Issuing Bank or the Banks to exercise and no delay
in exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right,
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power or privilege. The rights and remedies provided for in this Agreement and
the other Loan Documents are cumulative and not exclusive of any rights and
remedies provided by law.
Section 14.7 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Agent
and all of the Banks. Any Bank may sell participations to one or more
banks or other institutions in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Revolving
Credit Commitments and the Advances owing to it and its Percentage of
outstanding Term Loan Advances); provided, however, that (i) such
Bank's obligations under this Agreement and the other Loan Documents
(including, without limitation, its Revolving Credit Commitments and
its Percentage of outstanding Term Loan Advances) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the
Borrower for the performance of such obligations, (iii) such Bank shall
remain the holder of its Revolving Credit Notes and Term Loan Notes for
all purposes of this Agreement, and (iv) the Borrower shall continue to
deal solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement and the other Loan
Documents. Participants have no rights under the Loan Documents except
as provided below. Subject to the following, each Bank may obtain, on
behalf of its participants, the benefits of Article V with respect to
all participations in its part of the Obligations outstanding from time
to time, so long as Borrower is not obligated to pay any amount in
excess of the amount that would be due to that Bank under Article V
calculated as though no participations have been made. No Bank may sell
any participating interest under which the participant has any rights
to approve any amendment, modification, or waiver of any Loan Document
except as to matters in Section 14.9(a), (b) and (c).
(b) The Borrower and each of the Banks agree that any
Bank (the "Assigning Bank") may, with the Agent's consent (which
consent shall not be unreasonably withheld or delayed) and unless an
Event of Default has occurred, the Borrower's consent, which consent of
the Borrower shall not be unreasonably withheld or delayed, at any time
assign to one or more Eligible Assignees all, or a proportionate part
of all, of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, its Revolving
Credit Commitments and Advances and its Percentage of outstanding Term
Loan Advances) (each an "Assignee"); provided, however, that (i) each
such assignment shall be of a consistent, and not a varying, percentage
of all of the Assigning Bank's Revolving Credit Commitments and its
Percentage of outstanding Term Loan Advances, rights and obligations
under this Agreement and the other Loan Documents, (ii) except in the
case of an assignment of all of a Bank's rights and obligations under
this Agreement and the other Loan Documents, the amount of the
Revolving Credit Commitments and the amount of outstanding Term Loan
Advances of the Assigning Bank being assigned pursuant to each
assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event
75
be less than $5,000,000 in the aggregate, and (iii) the parties to each
such assignment shall execute and deliver to the Agent for its
acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Revolving Credit Notes
(and the Swing Line Note, if applicable) subject to such assignment,
and a processing and recordation fee of $5,000 to be paid by the
Assignee. Upon such execution, delivery, acceptance, and recording,
from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days
after the execution thereof, or, if so specified in such Assignment and
Acceptance, the date of acceptance thereof by the Agent, (x) the
assignee thereunder shall be a party hereto as a "Bank" and, to the
extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and under the Loan Documents and (y)
the Bank that is an assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the
remaining portion of a Bank's rights and obligations under the Loan
Documents, such Bank shall cease to be a party thereto); provided that
the obligations of the Borrower under Article V and Section 14.1 and
14.2 shall continue to apply to such Bank.
(c) By executing and delivering an Assignment and
Acceptance, the Bank that is an assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and
Acceptance, such Assigning Bank makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties,
or representations made in or in connection with the Loan Documents or
the execution, legality, validity, and enforceability, genuineness,
sufficiency, or value of the Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such Assigning Bank makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any Obligated Party or
the performance or observance by the Borrower or any Obligated Party of
its obligations under the Loan Documents; (iii) such assignee confirms
that it has received a copy of the other Loan Documents, together with
copies of the current financial statements dated a date acceptable to
such assignee and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently
and without reliance upon the Agent or such assignor and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Bank.
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(d) The Agent shall maintain at its Principal Office a
copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the
Banks and the Revolving Credit Commitments of, and principal amount of
the Revolving Credit Advances and Term Loan Advances owing to, each
Bank from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent, the Issuing Bank and the Banks may
treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes under the Loan Documents. The Register shall
be available for inspection by the Borrower, the Issuing Bank or any
Bank at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an Assigning Bank and assignee representing that it is an
Eligible Assignee, together with any Revolving Credit Note and Term
Loan Note (and the Swing Line Note, if applicable) subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in the form satisfactory to the Agent in its sole
discretion, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt
written notice thereof to the Borrower. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its expense, shall
execute and deliver to the Agent in exchange for the surrendered
Revolving Credit Notes and Term Loan Notes (and Swing Line Note, if
applicable), new Revolving Credit Notes and Term Loan Notes (and Swing
Line Note, if applicable) to the order of such Eligible Assignee in an
amount equal to the Revolving Credit Commitments and amount of
outstanding Term Loan Advances assumed by it pursuant to such
Assignment and Acceptance and, if the Assigning Bank has retained a
portion of its Revolving Credit Commitments and Term Loan Advances, new
Revolving Credit Notes and Term Loan Notes to the order of the
Assigning Bank in an amount equal to the Revolving Credit Commitments
and amount of outstanding Term Loan Advances retained by it hereunder
(each such promissory note shall constitute a "Revolving Credit Note"
or "Term Loan Note", as applicable, for purposes of the Loan
Documents). Such new Revolving Credit Notes and Term Loan Notes (and
Swing Line Note, if applicable) shall be in an aggregate principal
amount of the surrendered Revolving Credit Notes and Term Loan Notes
(and Swing Line Note, if applicable), shall be dated the last interest
payment date prior to the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of the
appropriate Revolving Credit Notes and Term Loan Notes (and Swing Line
Note, if applicable) initially issued pursuant hereto with appropriate
changes.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower or its
Subsidiaries furnished to such Bank by or on behalf of the Borrower or
its Subsidiaries.
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Section 14.8 Survival. All representations and warranties made in
this Agreement or any other Loan Documents or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by any of the Agent, the Issuing Bank or the Banks or any closing
shall affect the representations and warranties or the right of any such Person
to rely upon them. Without prejudice to the survival of any other obligation of
the Borrower hereunder, the obligations of the Borrower under Article V and
Sections 14.1 and 14.2 shall survive repayment of the Revolving Credit Notes,
Term Loan Notes and the Swing Line Note and termination of the Banks'
commitments to lend hereunder.
Section 14.9 ENTIRE AGREEMENT; AMENDMENTS. THIS AGREEMENT, THE
REVOLVING CREDIT NOTES, THE SWING LINE NOTE AND THE OTHER LOAN DOCUMENTS
REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. No amendment, modification or waiver
of, or consent with respect to, any provision of this Agreement, the Revolving
Credit Notes, the Term Loan Notes or the Swing Line Note shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Borrower and the Required Banks, and then any such amendment, modification,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No amendment, modification, waiver or consent
shall change the Percentage of any Bank without the consent of such Bank.
Subject to Section 2.10, no amendment, modification, waiver or consent shall (a)
extend or increase the amount of the Revolving Credit Commitments or Term Loan
Commitments, (b) extend the date for payment of any principal of or interest on
the Advances or any fees or other amounts payable hereunder, (c) reduce the
principal amount of any Advances, the rate of interest thereof or any fees or
other amounts payable hereunder, (d) release a Guaranty Agreement (other than
with respect to a Guarantor which ceases to be a Material Subsidiary as a result
of a transaction permitted hereunder) or all or substantially all of the
Collateral, (e) increase any of the percentages set forth in the definition of
Borrowing Base, or (f) reduce the aggregate Percentage required to effect an
amendment, modification, waiver or consent without, in each case, the consent of
all Banks. No provisions of Article XIII or other provision of this Agreement
affecting the Agent in its capacity as such shall be amended, modified or waived
without the consent of the Agent. No provision of this Agreement relating to the
rights or duties of an Issuing Bank in its capacity as such shall be amended,
modified or waived without the consent of such Issuing Bank. If, in connection
with any proposed amendment, waiver or consent (a "Proposed Change"):
(i) requiring the consent of all Banks, the consent of Required
Banks is obtained, but the consent of other Banks is not obtained (any such Bank
whose consent is not obtained as described in this clause (i) and in clause (ii)
below being referred to as a "Non-Consenting Bank"), or
78
(ii) requiring the consent of Required Banks, the consent of
Required Banks is obtained,
then, so long as the Agent is not a Non-Consenting Bank, at the Borrower's
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Banks' Revolving Credit Commitments and outstanding Term Loan Advances for an
amount equal to the principal balances thereof and all accrued interest and fees
with respect thereto through the date of sale pursuant to Assignment and
Acceptance(s), without premium or discount.
Notwithstanding any of the foregoing to the contrary, after consulting with the
Borrower, the Agent may change the pricing, terms and structure of the financial
accommodations and related terms under the Loan Documents from those currently
set forth in the Loan Documents if the Agent determines that such changes are
advisable in order to successfully complete the syndication of the Loans
hereunder such that, after giving effect to such syndication, the aggregate
amount of the Agent's Revolving Credit Commitment and outstanding Term Loan
Advances does not exceed $15,000,000. This right will survive the execution and
delivery of the Loan Documents until the syndication has been successfully
completed as set forth in the commitment letter dated as of November 13, 2001
among the Borrower, the Agent and Xxxxx Fargo Energy Capital, Inc. The Borrower
agrees to be bound by such modifications in the Loan Documents and to execute
any documents reasonably requested by the Agent to reflect such modifications
within ten Business Days after such request. The Borrower agrees to cooperate
and to take all actions the Agent may reasonably request to assist the Agent in
forming a syndicate of lenders and completing a syndication satisfactory to the
Agent. These actions will include (a) providing the Agent with all information
the Agent considers necessary, and in the form requested by the Agent, including
information and projections relating to the Advances and uses thereof, (b)
assisting the Agent in preparing an information memorandum for use in connection
with the syndication, and verifying the information contained therein, and (c)
making senior officers and representatives of the Borrower and the Guarantors
available during the syndication to make presentations concerning the business
and prospects of the Borrower at one or more meetings and conference calls the
Agent may arrange with prospective lenders.
Section 14.10 Maximum Interest Rate. No provision of this Agreement
or any other Loan Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors, successors, or
assigns of the Borrower shall be obligated to pay the excess amount of such
interest or any other excess sum paid for the use, forbearance, or detention of
sums loaned pursuant hereto. In the event any of the Agent, the Issuing Bank or
the Banks ever receives, collects, or applies as interest any such sum, such
amount which would be in excess of the maximum amount permitted by applicable
law shall be applied as a payment and reduction of the principal of the
indebtedness evidenced by the Revolving Credit Notes, the
79
Term Loan Notes or the Swing Line Note, as applicable; and, if the principal of
the Revolving Credit Notes, the Term Loan Notes and the Swing Line Note has been
paid in full, any remaining excess shall forthwith be paid to the Borrower. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, the Borrower and the Agent, the Issuing Bank and the Banks shall, to the
extent permitted by applicable law, (a) characterize any non-principal payment
as an expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof; and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the indebtedness evidenced by the Revolving Credit
Notes, the Term Loan Notes and the Swing Line Note so that interest for the
entire term does not exceed the Maximum Rate.
Section 14.11 Notices. All notices and other communications
provided for in this Agreement and the other Loan Documents to which the
Borrower is a party shall be in writing and may be telecopied (faxed), mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered to, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to the Agent pursuant to
Articles II, III and IV shall not be effective until received by the Agent.
Section 14.12 GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
AGREEMENT HAS BEEN ENTERED INTO IN XXXXXX COUNTY, TEXAS, AND IT SHALL BE
PERFORMABLE FOR ALL PURPOSES IN XXXXXX COUNTY, TEXAS. SUBJECT TO SECTION 14.19,
ANY ACTION OR PROCEEDING AGAINST THE BORROWER UNDER OR IN CONNECTION WITH ANY OF
THE LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN XXXXXX
COUNTY, TEXAS. THE BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. THE BORROWER AGREES
THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 14.11. NOTHING HEREIN OR IN ANY OF THE OTHER LOAN
DOCUMENTS SHALL AFFECT THE RIGHT OF THE AGENT, THE ISSUING BANK OR THE BANKS TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR, SUBJECT TO SECTION 14.19,
SHALL LIMIT THE RIGHT OF SUCH PERSONS TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER
JURISDICTIONS. SUBJECT TO
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SECTION 14.19, ANY ACTION OR PROCEEDING BY THE BORROWER AGAINST ANY OF THE
AGENT, THE ISSUING BANK OR THE BANKS SHALL BE BROUGHT ONLY IN A COURT LOCATED IN
XXXXXX COUNTY, TEXAS.
Section 14.13 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 14.14 Severability. Any provision of this Agreement by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 14.15 Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 14.16 Non-Application of Chapter 346 of Texas Finance Code.
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Agreement or any of
the other Loan Documents or to the transactions contemplated hereby.
Section 14.17 Construction. The Borrower, the Agent, the Issuing
Bank and the Banks acknowledge that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review this
Agreement and the other Loan Documents with its legal counsel and that this
Agreement and the other Loan Documents shall be construed as if jointly drafted
by the Borrower, the Agent, the Issuing Bank and the Banks.
Section 14.18 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
Section 14.19 Waiver of Trial By Jury. To the fullest extent
permitted, by applicable law, the Borrower hereby voluntarily, knowingly,
irrevocably and unconditionally waives any right to have a jury participate in
resolving any dispute (whether based upon contract, tort or otherwise) between
or among the Borrower and any other party to this Agreement arising out of or in
any way related to this Agreement, any other Loan Documents, or any relationship
between any other party to this Agreement and the Borrower. This provision is a
material inducement to the Banks to provide the financing described in this
Agreement.
ARTICLE XV
Arbitration
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Section 15.1 Arbitration. Upon the demand of any party, any
Dispute shall be resolved by binding arbitration (except as set forth in Section
15.5 below) in accordance with the terms of this Agreement. A "Dispute" shall
mean any action, dispute, claim or controversy of any kind, whether in contract
or tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party may
by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
Section 15.2 Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such other
administrator as the parties shall mutually agree upon in accordance with the
AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be
resolved in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the Loan Documents. The arbitration shall be conducted at a location in Texas
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. Section 91 or any similar applicable state law.
Section 15.3 No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or ancillary
remedies, including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a court of
competent jurisdiction before, after or during the pendency of any arbitration
or other proceeding. The exercise of any such remedy shall not waive the right
of any party to compel arbitration hereunder.
Section 15.4 Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the State Bar of Texas with expertise in
the substantive laws applicable to the subject matter of the Dispute.
Arbitrators are empowered to resolve Disputes by summary rulings in response to
motions filed prior to the final arbitration hearing. Arbitrators (i) shall
resolve all Disputes in accordance with the substantive law of the State of
Texas, (ii) may grant any remedy or relief that a court of the State of Texas
could order or grant within the scope hereof and such ancillary relief as is
necessary to make effective any award, and (iii) shall have the power to award
recovery of all costs and fees, to impose sanctions and to take such other
actions as they deem necessary to the same extent a judge could pursuant to the
Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure or other
applicable law. Any Dispute in
82
which the amount in controversy is $5,000,000 or less shall be decided by a
single arbitrator who shall not render an award of greater than $5,000,000
(including damages, costs, fees and expenses). By submission to a single
arbitrator, each party expressly waives any right or claim to recover more than
$5,000,000. Any Dispute in which the amount in controversy exceeds $5,000,000
shall be decided by majority vote of a panel of three arbitrators; provided
however, that all three arbitrators must actively participate in all hearings
and deliberations.
Section 15.5 Judicial Review. Notwithstanding anything herein to
the contrary, in any arbitration in which the amount in controversy exceeds
$25,000,000, the arbitrators shall be required to make specific, written
findings of fact and conclusions of law. In such arbitrations (i) the
arbitrators shall not have the power to make any award which is not supported by
substantial evidence or which is based on legal error, (ii) an award shall not
be binding upon the parties unless the findings of fact are supported by
substantial evidence and the conclusions of law are not erroneous under the
substantive law of the State of Texas, and (iii) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of (A) whether the
findings of fact rendered by the arbitrators are supported by substantial
evidence, and (B) whether the conclusions of law are erroneous under the
substantive law of the State of Texas. Judgment confirming an award in such a
proceeding may be entered only if a court determines the award is supported by
substantial evidence and not based on legal error under the substantive law of
the State of Texas.
Section 15.6 Miscellaneous. To the maximum extent practicable, the
AAA, the arbitrators and the parties shall take all action required to conclude
any arbitration proceedings within 180 days of the filing of the Dispute with
the AAA. No arbitrator or other party to an arbitration proceeding may disclose
the existence, content or results thereof, except for disclosures of information
by a party required in the ordinary course of its business, by applicable law or
regulations, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provisions most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
T-3 ENERGY SERVICES, INC.
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx, Vice President
Address for Notices:
00000 Xxxxxxxxx Xxxxxxx, # 000
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
AGENT and BANKS:
XXXXX FARGO BANK TEXAS, NATIONAL
Revolving Credit Commitment: ASSOCIATION
$20,750,000.00 By: /s/ XXXXX XXXXXX
--------------------------------------
Xxxxx Xxxxxx, Assistant Vice President
Term Loan Commitment: Address for Notices:
$8,250,000.00 0000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx Xxxx
GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Arranger, Syndication Agent and a Bank
Revolving Credit Commitment:
$20,750,000.00 By:_______________________________________
Name:_______________________________
Title:______________________________
Term Loan Commitment: Address for Notices:
$8,250,000.00 ________________________________
________________________________
________________________________
Fax No.:________________________
Telephone No.:__________________
Attention:______________________
