EXHIBIT 10.1
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
dated as of September 30, 2004
among
T-3 ENERGY SERVICES, INC.
as Borrower,
XXXXX FARGO BANK, NATIONAL ASSOCIATION
as Issuing Bank, as a Bank
and as Lead Arranger and Agent for the Banks
and
the Banks
Revolving Credit Facility
(with Swing Line Facility and Letter of Credit Facility)
Table of Contents
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ARTICLE I Definitions........................................................................................... 1
Section 1.1 Definitions........................................................................... 1
Section 1.2 Other Definitional Provisions......................................................... 17
ARTICLE II Advances and Letters of Credit........................................................................ 18
Section 2.1 Commitments........................................................................... 18
Section 2.2 The Revolving Credit Notes............................................................ 18
Section 2.3 Repayment of Advances................................................................. 18
Section 2.4 Interest.............................................................................. 18
Section 2.5 Use of Proceeds....................................................................... 19
Section 2.6 Revolving Credit Commitment Fee....................................................... 19
Section 2.7 Reduction or Termination of Revolving Credit Commitment............................... 19
Section 2.8 Letters of Credit..................................................................... 19
Section 2.9 Payments and Reimbursement Under Letters of Credit.................................... 20
Section 2.10 Optional Commitment Increase.......................................................... 21
ARTICLE III Swing Line Advances.................................................................................. 24
Section 3.1 Swing Line Advances................................................................... 24
Section 3.2 Banks' Funding of Swing Line Advances as Advances..................................... 25
Section 3.3 The Swing Line Note................................................................... 25
ARTICLE IV Borrowing Procedure: Payments; Facilities Fees; Matters Related to Letters of Credit; Matters Related
to Advances; Designation of Additional Guarantors..................................................... 26
Section 4.1 Borrowing Procedure................................................................... 26
Section 4.2 Method of Payment..................................................................... 26
Section 4.3 Voluntary Prepayment.................................................................. 27
Section 4.4 Mandatory Prepayment.................................................................. 27
Section 4.5 Pro Rata Treatment.................................................................... 28
Section 4.6 Non-Receipt of Funds by the Agent..................................................... 28
Section 4.7 Withholding Tax Exemption............................................................. 29
Section 4.8 Computation of Interest............................................................... 29
Section 4.9 Conversions and Continuation.......................................................... 29
Section 4.10 Letter of Credit Procedure............................................................ 30
Section 4.11 Amendments to Letters of Credit....................................................... 30
Section 4.12 Letter of Credit Fees................................................................. 30
Section 4.13 Participation by Banks................................................................ 31
Section 4.14 Obligations Absolute.................................................................. 31
Section 4.15 Limitation of Liability............................................................... 32
Section 4.16 Letter of Credit Agreements........................................................... 32
Section 4.17 Replacement of the Issuing Bank....................................................... 32
Section 4.18 No Advances........................................................................... 32
Section 4.19 Designation of Additional Guarantors; Revocation of Designation....................... 32
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Table of Contents
(continued)
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ARTICLE V Yield Protection and Illegality........................................................................ 33
Section 5.1 Capital Adequacy...................................................................... 33
Section 5.2 Additional Costs...................................................................... 33
Section 5.3 Limitation on LIBOR Advances.......................................................... 34
Section 5.4 Illegality............................................................................ 35
Section 5.5 Treatment of Certain LIBOR Advances................................................... 35
Section 5.6 Compensation.......................................................................... 36
ARTICLE VI Security.............................................................................................. 36
Section 6.1 Collateral............................................................................ 36
Section 6.2 Setoff................................................................................ 37
ARTICLE VII Conditions Precedent................................................................................. 38
Section 7.1 Conditions to Initial Advance......................................................... 38
Section 7.2 All Advances.......................................................................... 40
ARTICLE VIII Representations and Warranties...................................................................... 41
Section 8.1 Corporate Existence................................................................... 41
Section 8.2 Projections; Financial Statements..................................................... 41
Section 8.3 Corporate Action: No Breach........................................................... 42
Section 8.4 Operation of Business................................................................. 42
Section 8.5 Litigation and Judgments.............................................................. 42
Section 8.6 Rights in Properties: Liens........................................................... 42
Section 8.7 Enforceability........................................................................ 43
Section 8.8 Approvals............................................................................. 43
Section 8.9 Debt.................................................................................. 43
Section 8.10 Taxes................................................................................. 43
Section 8.11 Use of Proceeds: Margin Securities.................................................... 43
Section 8.12 ERISA................................................................................. 43
Section 8.13 Disclosure............................................................................ 44
Section 8.14 Subsidiaries; Material Subsidiaries................................................... 44
Section 8.15 Agreements............................................................................ 44
Section 8.16 Compliance with Laws.................................................................. 44
Section 8.17 Investment Company Act................................................................ 44
Section 8.18 Public Utility Holding Company Act.................................................... 44
Section 8.19 Environmental Matters................................................................. 44
ARTICLE IX Affirmative Covenants................................................................................. 46
Section 9.1 Reporting Requirements................................................................ 46
Section 9.2 Maintenance of Existence: Conduct of Business......................................... 48
Section 9.3 Maintenance of Properties............................................................. 48
Section 9.4 Taxes and Claims...................................................................... 49
Section 9.5 Insurance............................................................................. 49
Section 9.6 Inspection Rights..................................................................... 49
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Table of Contents
(continued)
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Section 9.7 Keeping Books and Records............................................................. 49
Section 9.8 Compliance with Laws.................................................................. 49
Section 9.9 Compliance with Agreements............................................................ 49
Section 9.10 Further Assurances.................................................................... 49
Section 9.11 ERISA................................................................................. 50
Section 9.12 Additional Material Subsidiaries as Guarantors: Execution of Additional Security
Agreements-Guarantors................................................................. 50
Section 9.13 Continuity of Operations.............................................................. 50
Section 9.14 Intercompany Notes.................................................................... 51
Section 9.15 Additional Appraisals................................................................. 51
ARTICLE X Negative Covenants..................................................................................... 51
Section 10.1 Debt.................................................................................. 51
Section 10.2 Limitation on Liens................................................................... 52
Section 10.3 Mergers, Dissolutions, Etc............................................................ 53
Section 10.4 Loans and Investments................................................................. 54
Section 10.5 Transactions With Affiliates.......................................................... 55
Section 10.6 Disposition of Assets................................................................. 55
Section 10.7 Sale and Leaseback.................................................................... 56
Section 10.8 Nature of Business.................................................................... 56
Section 10.9 Environmental Protection.............................................................. 56
Section 10.10 Accounting............................................................................ 56
Section 10.11 Changes to Subordinated Debt.......................................................... 56
Section 10.12 Restrictions on Certain Subsidiaries.................................................. 57
Section 10.13 Restricted Payments................................................................... 57
ARTICLE XI Financial Covenants................................................................................... 58
Section 11.1 Consolidated Net Worth................................................................ 58
Section 11.2 Fixed Charge Coverage Ratio........................................................... 58
Section 11.3 Leverage Ratio........................................................................ 58
Section 11.4 Senior Leverage Ratio................................................................. 58
Section 11.5 Capital Expenditures.................................................................. 58
ARTICLE XII Default.............................................................................................. 59
Section 12.1 Events of Default..................................................................... 59
Section 12.2 Remedies Upon Default................................................................. 61
Section 12.3 Letter of Credit...................................................................... 61
Section 12.4 Performance by the Agent.............................................................. 61
ARTICLE XIII The Agent........................................................................................... 61
Section 13.1 Appointment, Powers and Immunities.................................................... 61
Section 13.2 Rights of Agent as a Bank............................................................. 63
Section 13.3 Sharing of Payments, Etc.............................................................. 63
Section 13.4 Indemnification....................................................................... 64
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Table of Contents
(continued)
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Section 13.5 Independent Credit Decisions.......................................................... 65
Section 13.6 Several Commitments................................................................... 65
Section 13.7 Successor Agent....................................................................... 65
ARTICLE XIV Miscellaneous........................................................................................ 66
Section 14.1 Expenses.............................................................................. 66
Section 14.2 Indemnification....................................................................... 66
Section 14.3 Limitation of Liability............................................................... 66
Section 14.4 No Duty............................................................................... 67
Section 14.5 Bank Not Fiduciary.................................................................... 67
Section 14.6 No Waiver; Cumulative Remedies........................................................ 67
Section 14.7 Successors and Assigns................................................................ 67
Section 14.8 Survival.............................................................................. 70
Section 14.9 ENTIRE AGREEMENT; AMENDMENTS.......................................................... 70
Section 14.10 Maximum Interest Rate................................................................. 71
Section 14.11 Notices............................................................................... 72
Section 14.12 GOVERNING LAW; VENUE; SERVICE OF PROCESS.............................................. 72
Section 14.13 Counterparts; Facsimiles.............................................................. 72
Section 14.14 Severability.......................................................................... 72
Section 14.15 Headings.............................................................................. 73
Section 14.16 Non-Application of Chapter 346 of Texas Finance Code.................................. 73
Section 14.17 Construction.......................................................................... 73
Section 14.18 Independence of Covenants............................................................. 73
Section 14.19 Waiver of Trial By Jury............................................................... 73
Section 14.20 Amendment and Restatement; Release.................................................... 73
ARTICLE XV Arbitration........................................................................................... 74
Section 15.1 Arbitration........................................................................... 74
Section 15.2 Governing Rules....................................................................... 74
Section 15.3 No Waiver; Provisional Remedies, Self-Help and Foreclosure............................ 74
Section 15.4 Arbitrator Qualifications and Powers; Awards.......................................... 75
Section 15.5 Judicial Review....................................................................... 75
Section 15.6 Miscellaneous......................................................................... 75
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Schedules
1.2 Existing Letters of Credit
8.5 Litigation
8.10 Tax Matters
8.14 Subsidiaries
8.19 Environmental Matters
9.14 Intercompany Notes
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
B Advance Request Form
C Compliance Certificate
D Assignment and Acceptance
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FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 30,
2004 (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 (including
Agent in its individual capacity as a lender hereunder) or any successor or
assignee thereof (individually, a "Bank" and, collectively, the "Banks"), and
XXXXX FARGO BANK, NATIONAL ASSOCIATION, a national banking association
(successor-by-merger to Xxxxx Fargo Bank Texas, National 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:
A. The Borrower, the Agent, and certain lenders have previously entered
into that certain Credit Agreement dated as of December 17, 2001 (as the same
has been amended, modified, or supplemented, the "Existing Credit Agreement").
B. The Borrower has requested and the Agent and the Banks have agreed to
restructure the credit facilities provided under the Existing Credit Agreement
in the form of a $50,000,000 revolving credit facility (with an option to
increase such amount up to an amount no greater than $75,000,000) and to amend
and restate the Existing Credit Agreement upon the terms and conditions
hereinafter set forth.
In consideration of the mutual covenants and agreements herein contained,
and of the loans, extensions of credit and commitments hereinafter referred to,
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.
"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 Swing Line Advance,
or (c) 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
Leverage Ratio:
APPLICABLE
MARGIN FOR
BASE RATE APPLICABLE
ADVANCES AND MARGIN FOR APPLICABLE MARGIN
LEVERAGE SWING LINE LIBOR FOR COMMITMENT
RATIO ADVANCES ADVANCES FEE
---------------------- ------------ ----------- -----------------
Greater than or equal 2.00% 3.00% 0.500%
to 3.50 to 1.00
Greater than or equal 1.75% 2.75% 0.500%
to 3.00 to 1.00, but
less than 3.50 to 1.00
Greater than or equal 1.50% 2.50% 0.375%
to 2.50 to 1.00, but
less than 3.00 to 1.00
Greater than or equal 1.25% 2.25% 0.375%
to 2.00 to 1.00, but
less than 2.50 to 1.00
2
Greater than or equal 1.00% 2.00% 0.375%
to 1.50 to 1.00, but
less than 2.00 to 1.00
Less than 1.50 to 1.00 0.75% 1.75% 0.250%
From the date hereof until the Agent receives the Borrower's financial
statements for the quarter ending September 30, 2004, the Applicable Margin
shall be deemed to be (a) 2.50% for LIBOR Advances, (b) 1.50% for Base Rate
Advances, and (c) 0.375% for the commitment fee described in Section 2.6 hereof.
Any change in the Leverage Ratio shall be effective to adjust the Applicable
Margin as of the date 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 3.50 to 1.00 until the Borrower delivers such
Compliance Certificate and financial statements, but upon such delivery, the
Applicable Margin shall be determined based on such Compliance Certificate and
the Borrower's financial statements.
"Applicable Rate" means the sum of the Base Rate or Adjusted LIBOR Rate,
as the case may be, plus the Applicable Margin for the Base Rate or Adjusted
LIBOR Rate, as the case may be, 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 (a) 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, or (b) the sale or issuance of the
Borrower's Capital Stock.
"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 "D" with appropriate
completions.
"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.
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"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.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in Houston, Texas, 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 the period of four Fiscal Quarters ended as of
the last day of any Fiscal Quarter, 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 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
4
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 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.
"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 meaning of Rule 13d-3 of the Securities and Exchange Act
of 1934, as amended) of more than 50% 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.
"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 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.
"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 such
Person, 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 upon the occurrence
of certain circumstances, (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
5
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.
"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 on a consolidated basis): (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 sum of (i) the Base Rate, plus
the Applicable Margin for the Base Rate, plus 2.00% per annum 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).
6
"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 (a)
Consolidated Net Income for such period, plus (b) without duplication and to the
extent deducted in determining Consolidated Net Income for such period (i)
Interest Expense for such period, (ii) Tax Expense for such period, (iii)
Non-Cash Charges for such period, (iv) the amount of any amortization of, or
write-downs or write-offs of intangibles (including but not limited to,
goodwill) for such period, (v) any charges taken in connection with the
prepayment, redemption or repurchase of Debt, minus (c) without duplication and
to the extent included in determining Consolidated Net Income for such period,
any extraordinary gains and extraordinary non-cash credits for such period, plus
(d) 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 (e)
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 Sections 7.1 and 7.2 have been satisfied or waived in writing by the
Agent and the Banks.
"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.
"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 September 30, 2004, made by the Borrower in the original principal
amount of $15,000,000, containing terms and provisions satisfactory to the Banks
and the Borrower.
"Environmental Law" means any and all foreign, federal, state, and local
laws, regulations, requirements, ordinances, rules, orders, decrees, or
governmental restrictions pertaining to health, safety, the environment,
pollution and the protection of the environment, or the release of any materials
into the environment, including those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems 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.
7
"Environmental Liabilities" means, as to any Person, all liabilities
(contingent or otherwise), 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, indemnities, sanctions, and interest
incurred directly or indirectly 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
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equity Interests" means, with respect to any Person, all of the shares of
capital stock of (or other ownership or equity interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or equity interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or equity interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
"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 the Code) as the Borrower or is or has been under
common control with the Borrower within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
"Event of Default" has the meaning specified in Section 12.1.
"Existing Credit Agreement" is defined in Recital A to this Agreement.
"Existing LCs" means those letters of credit described on Schedule 1.2
issued pursuant to the Existing Credit Agreement.
"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
8
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 June 18,
2004, executed by and between the Borrower 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, the
ratio of (a) EBITDA for the Calculation Period, divided by (b) the sum of (i)
Current Maturities as of such date, 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.
"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.
"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 without limitation, the Senior Debt and the
Subordinated Debt), plus Capital Lease Obligations.
"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.
9
"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 the First Amended and Restated
Guaranty Agreement-Domestic Guarantors dated of even date herewith executed by
each Domestic Guarantor in favor of the Agent for the benefit of the Banks, as
the same may be amended, restated, supplemented, or modified from time to time.
"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.
"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 polychlorinated biphenyls.
"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.
"Increase Amount" is defined in Section 2.10.
"Increase Request" is defined in Section 2.10.
"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 Notes" means those certain promissory notes described on
Schedule 9.14 and any other intercompany note executed at any time after the
Effective Date, as each such promissory note may be renewed, extended, amended,
restated, replaced, or otherwise modified from time to time. The term
"Intercompany Note" means any one of the Intercompany Notes.
"Intercreditor Agreement" means an intercreditor agreement among the
Borrower, the Agent, the Banks and Xxxxx Fargo Energy Capital, Inc., as agent
and sole initial provider of the Energy Capital Subordinated Debt, in form and
substance satisfactory to the Agent, the Banks and the Borrower, setting forth
the relative rights of the Agent and the Banks hereunder and Xxxxx Fargo Energy
Capital, Inc., as sole initial provider of the Energy Capital Subordinated
10
Debt, as the same may hereafter be amended, restated, supplemented, or otherwise
modified from time to time.
"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, 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.
"Leverage Ratio" means, as to any Person, at any date, the ratio of (a)
Total Debt as of the last day of the Calculation Period divided by (b) EBITDA
for the Calculation Period.
11
"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 (2) 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, as such instruments,
documents, and agreements may be amended, restated, 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.
"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
12
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.
"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 (subject to Permitted
Liens) to Agent for the ratable benefit of Banks on all real property owned by
Borrower and each Subsidiary domiciled in the United States.
"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.
"Net Income" means, for any period, the net income (or loss) determined in
conformity with GAAP of the Borrower.
"Non-Cash Charges" means as to any Person, for any period, depreciation,
amortization and other non-cash charges, determined in accordance with GAAP.
13
"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 September, December, March and June, commencing September
30, 2004, (b) 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), and (c) in the case of all
Revolving Credit Advances, the Revolving Credit Termination Date.
"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.
"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.
"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, the First Amended and Restated Pledge and Security
Agreement dated of even date herewith executed by the Borrower and each Domestic
Guarantor in favor of the Agent for the benefit of the Banks; 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; in each case, as the same may be amended, restated, supplemented,
or modified from time to time.
"Post Closing Letter" means that certain letter agreement dated of even
date herewith executed by and between the Agent and the Borrower.
"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
14
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.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Quarterly Fee Payment Date" means the last Business Day of each
September, December, March and June of each year, the first of which shall be
September 30, 2004.
"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.
"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) at any time while no Advances are outstanding,
two or more Banks holding at least fifty percent (50%) of the aggregate
Revolving Credit Commitments, (b) at any time while Advances are outstanding,
two or more Banks holding at least fifty percent (50%) of the outstanding
aggregate principal amount of the Advances (without regard to any sale
15
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 (a) any category of liabilities which includes
deposits by reference to which the Adjusted LIBOR Rate is to be determined, or
(b) any category of extensions of credit or other assets which include LIBOR
Advances.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
Equity Interest of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other Equity Interest,
or on account of any return of capital to the Borrower's stockholders.
"Revolving Credit Advance" means an advance of funds by the Agent on
behalf of the Banks to the Borrower pursuant to Section 2.1 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, 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.
"Revolving Credit Termination Date" means September 30, 2007, 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.
"Senior Debt" means for the Borrower and its Subsidiaries on a
consolidated basis as of the date of any determination, the aggregate amount of
all outstanding Total Debt less the aggregate amount of all outstanding
Subordinated Debt.
16
"Senior Leverage Ratio" means, as to any Person, as of any date, the ratio
of (a) Senior Debt as of the last day of the Calculation Period to (b) EBITDA of
the Borrower and the Subsidiaries for the Calculation Period.
"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.
"Total Debt" means, as of the date of determination, the sum of (A) Funded
Debt, plus (b) Letter of Credit Liabilities, plus (c) Contingent Liabilities
with respect to Funded Debt.
"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.
17
ARTICLE II
Advances and Letters of Credit
Section 2.1 Commitments. 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 aggregate of the Revolving Credit Commitments, 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. Each Revolving Credit Advance
made by each Bank shall be made and maintained at such Bank's Principal Office.
Section 2.2 The Revolving Credit Notes. 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.
Section 2.3 Repayment of Advances. The Borrower shall repay the unpaid
principal amount of all Revolving Credit Advances on the Revolving Credit
Termination Date.
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; and
(b) on the Revolving Credit Termination 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, 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.
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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 Debt of the Borrower under the Existing Credit
Agreement, (b) for acquisition of assets or Equity Interests in other Persons
permitted under this Agreement (or as otherwise agreed in writing by the
Required Banks), (c) for general corporate and working capital purposes in the
ordinary course of business and (d) to finance fees and expenses incurred in
connection with the closing of the credit transaction described in this
Agreement and in the agreements constituting the Energy Capital Subordinated
Debt.
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 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 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 or Foreign Subsidiary;
provided, however, that (i) the Letter of Credit Liabilities shall not at
any time exceed $5,000,000, and (ii) the aggregate principal amount
outstanding of all Revolving Credit Advances, the Letter of Credit
Liabilities, and the aggregate principal amount outstanding of all Swing
Line Advances may at no time exceed the aggregate Revolving Credit
Commitments. In the event of an actual conflict between the terms and
19
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 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
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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 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.
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(a) Optional Increase Request. The Borrower may, at any time and
from time to time prior to March 31, 2007, so long as no Default or Event
of Default exists, request that the Revolving Credit Commitments be
increased (the "Increase Amount") in an aggregate amount not to exceed
$25,000,000 (each, a "Commitment Increase"), provided that any such
request shall be made in writing (an "Increase Request") by the Borrower
and delivered to the Agent. 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 by an amount not to exceed the Increase
Amount, which election shall be made by notice from each Bank to the Agent
given not 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. 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 in connection with such Increase Request.
(c) Joinder of Additional Banks. If the aggregate amount of the
proposed increases in the Revolving Credit Commitments of all Banks making
an election to increase their respective Revolving Credit Commitment
(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 not greater than an amount equal to (i) the Increase Amount,
less (ii) any increases in the Revolving Credit Commitments of the
Increasing Banks.
(d) Adjustments to Commitments.
(i) If the aggregate amount of the proposed increases to the
Revolving Credit Commitments 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 of each
such Increasing Bank, provided that any Bank which proposes to
increase its Revolving Credit Commitment 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 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 of all Increasing Banks equals the
Increase Amount, then (A) the Revolving Credit Commitment of each
such Increasing Bank shall be increased by the amount of such
Increasing
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Bank's proposed increase, and (B) the Percentages of all Banks shall
be adjusted accordingly.
(iii) If the aggregate amount of the proposed increases to the
Revolving Credit Commitments of all Increasing Banks is less than
the Increase Amount, then (A) the Revolving Credit Commitment of
each such Increasing Bank shall be increased by the respective
amount of its proposed increase; (B) the amount of the Revolving
Credit Commitments 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.
(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, (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, and (iii) such amount so
paid by each Additional Bank and each Increasing Bank shall constitute a
Revolving Credit Advance by such Additional Bank or Increasing Bank under
its Revolving Credit Note and a payment of principal to the other Banks
under their respective Revolving Credit Notes and the outstanding
principal balances of the respective Revolving Credit Notes shall be
increased or reduced accordingly.
(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 of any Increasing Bank, (i) the Revolving Credit
Commitments 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
23
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 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 described in this Section,
(ii) no Bank shall have any obligation to increase its Revolving Credit
Commitment, (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.
(j) Compensation. The Borrower acknowledges that nothing herein
shall constitute a waiver of the Borrower's obligation set forth in
Section 5.6 hereof to provide compensation to the Banks if any
circumstance arising in connection with any increase in the Revolving
Credit Commitment results in a LIBOR Advance being paid on a day other
than the last day of an Interest Period for such LIBOR Advance.
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 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, the aggregate principal amount of all Revolving
Credit Advances, and the Letter of Credit Liabilities may at no time
exceed the aggregate Revolving Credit Commitments; and no Swing Line
Advance shall be made which would cause the
24
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 shall accrue interest at the Base Rate
plus the Applicable Margin for Base Rate Advances and Swing Line Advances.
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 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.
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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. 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 Base Rate Advance
shall be in a minimum principal amount of $500,000.00 or a greater integral
multiple of $100,000.00. Each LIBOR Advance shall be in a minimum principal
amount of $3,000,000 or a greater integral multiple of $1,000,000. 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 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.
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.
26
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 Base Rate
Advances in whole at any time or from time to time in part without premium or
penalty upon not less than one Business Day's prior notice to the Agent (which
shall promptly notify the Banks), which notice shall specify the prepayment date
(which shall be a Business Day) and the amount of the prepayment (which shall be
at least $3,000,000 or any whole multiple of $1,000,000 or, if less, the
remaining aggregate principal balance outstanding on the Revolving Credit Notes)
and shall be irrevocable and effective only upon receipt by the Agent, provided
that interest on the principal prepaid, accrued to the prepayment date, shall be
paid on the prepayment date. The Borrower may prepay LIBOR Advances on the same
conditions as for Base Rate Loans (except that prior notice to the Agent shall
be not less than three Business Days for LIBOR Advances) and in addition such
prepayments of LIBOR Advances shall not relieve the Borrower of its obligations
under Section 5.2 or 5.6 hereof.
Section 4.4 Mandatory Prepayment.
(a) If at any time the amount equal to the sum of (i) the aggregate
principal amount of all Revolving Credit Advances, plus (ii) the Letter of
Credit Liabilities, plus (iii) the aggregate principal amount outstanding
of all Swing Line Advances exceeds the aggregate Revolving Credit
Commitments, 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 cash collateral for the outstanding Letter of Credit Liabilities.
(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 and permanently reduce
the Revolving Credit Commitment in accordance with Section 4.4(d) 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 five percent (5.00%) of the Borrower's
Consolidated Net Worth, and 100% of the amount of Net Cash Proceeds
received from any such sale/leaseback transaction.
(c) Except as expressly set forth in this Section 4.4(c), if the
Borrower or any of its Subsidiaries receives Net Cash Proceeds from the
issuance of Capital Stock to any Person, and if at such time, the Leverage
Ratio equals or exceeds 3.50 to 1.00 (based on the most recent financial
information in Agent's possession at the time of such determination), the
Borrower shall prepay Advances in accordance with Section 4.4(d) in a
principal amount equal to 50% of the amount by which aggregate Net Cash
Proceeds received from such issuances during any twelve month period
exceeds $2,000,000.
27
Notwithstanding the foregoing, the prepayment described above shall not be
required in connection with (i) an issuance of Capital Stock to First
Reserve, and (ii) an issuance of Capital Stock made by April 30, 2006 to
any other Person who has made material investments in, or otherwise has
long-term experience in managing companies in, the Borrower's industry so
long as the aggregate Net Cash Proceeds received from such issuances
pursuant to clause (ii) of this sentence does not exceed $20,000,000;
provided that, if the aggregate Net Cash Proceeds received from such
issuances pursuant to clause (ii) of this sentence does exceed
$20,000,000, the Borrower shall prepay Advances in accordance with Section
4.4(d) in a principal amount equal to 50% of the amount of such excess.
(d) Any prepayment made under Sections 4.4(a), (b), and (c) 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, to
repay outstanding Revolving Credit Advances, with a corresponding
permanent reduction in the Revolving Credit Commitment (other than in
respect of prepayments under Section 4.4(a) above), and second, at any
time there are no Advances outstanding under the Revolving Credit
Commitment, to provide cash collateral for the outstanding Letter of
Credit Liabilities, provided that, in any event there shall be a permanent
reduction in the Revolving Credit Commitment in an amount equal to the
applicable amount of Net Cash Proceeds from the applicable transaction
which, but for the principal amount of Advances outstanding on the date of
receipt thereof, would be required to prepay Advances under this Section.
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 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
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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 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
29
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;
(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 $600 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
30
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 (with a $600 minimum fronting fee per Letter of Credit
issued). Additionally, the Borrower agrees to pay the Issuing Bank, on a demand
basis, all other fees (including without limitation amendment, transfer, or
negotiation fees) due and payable in accordance with the Issuing Bank's then
current fee policy, which fee policy has previously been provided to the
Borrower.
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.
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
31
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.
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
32
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.
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
33
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 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
(c) imposes any other condition affecting this Agreement, the
Revolving Credit 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:
34
(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 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
35
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. Any such purchase
shall have a purchase price equal to the outstanding principal amounts payable
to the Bank with respect to all Advances outstanding 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.
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 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 and the Guarantors (as the case may
be) have executed and delivered
36
the documents described below covering the property and collateral described in
this Section 6.1 (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 have respectively
executed the Pledge and Security Agreement pursuant to which such Persons
have granted to the Agent for its benefit and 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 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 Borrower and the Domestic Guarantors have respectively
executed the Mortgages pursuant to which such Persons have granted to the
Agent for its benefit and for the benefit of the Banks a first priority
lien on all unencumbered real property owned by such Persons.
(c) The Borrower and the Guarantors shall execute or authenticate
and cause to be executed or authenticated, such further agreements,
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 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 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 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.
37
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 in the Post Closing Letter or set
forth below, in each case, 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, (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, and
(iii) that the attached certificate of incorporation and the bylaws of the
Borrower are correct and complete copies. The Agent and the Banks may
conclusively rely on such certificate until the Agent receives notice in
writing from the Borrower to the contrary.
(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, (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, and (iii) that the
articles or certificate of incorporation, bylaws, partnership agreements,
or other organizational documents of such Guarantor have not been modified
in any respect from the copies previously provided to the Agent and the
Banks in connection with the Existing Credit Agreement. The Agent and the
Banks may conclusively rely on such certificate until they receive notice
in writing from such Guarantor to the contrary.
(c) 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.
(d) 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.
(e) Revolving Credit Notes. The Revolving Credit Notes executed by
the Borrower.
(f) Swing Line Note. The Swing Line Note executed by the Borrower.
38
(g) First Amended and Restated Pledge and Security Agreement. The
First Amended and Restated Pledge and Security Agreement executed by the
Borrower and each Domestic Guarantor in favor of the Agent for the benefit
of the Banks.
(h) First Amended and Restated Guaranty Agreement - Domestic
Guarantors. The First Amended and Restated Guaranty Agreement - Domestic
Guarantors executed by each Domestic Guarantor in favor of the Agent for
the benefit of the Banks.
(i) Intercreditor Agreement. The Intercreditor Agreement executed by
the Borrower, the Agent, the Banks, Xxxxx Fargo Energy Capital, Inc., and
any other lenders party to the documents evidencing or executed and
delivered in connection with the Energy Capital Subordinated Debt.
(j) Compliance Certificate. A Compliance Certificate, duly and
properly executed by an authorized officer of the Borrower and dated as of
the date of the initial Advance.
(k) 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.
(l) Subordinated Loan Documents. Fully executed counterparts of the
loan agreement and other loan documents (in form and substance
satisfactory to the Agent) evidencing or executed and delivered in
connection with the refinance of the Energy Capital Subordinated Debt.
(m) Financial Statements. Projected consolidated financial
statements of Borrower and its Subsidiaries, including income statements,
statements of cash flow, and balance sheets.
(n) Appraisals. An updated appraisal of the fixed assets of the
Borrower and each Guarantor, in form and substance satisfactory to the
Agent.
(o) Fees. Payment of all fees required by the Fee Letter to be paid
on or prior to the Effective Date.
(p) Insurance Certificates. Certificates showing the existence of
all insurance policies required by Section 9.5, naming the Agent as loss
payee and additional insured.
(q) UCC Searches. Uniform Commercial Code searches (as Agent shall
deem necessary or appropriate) showing all financing statements on file
against those Domestic Guarantors that have changed their names or
jurisdictions of organization since December 17, 2001.
(r) 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
39
lien waiver or subordination is required by the Agent in its sole
discretion, to the extent not previously delivered to the Agent in
connection with the Existing Credit Agreement.
(s) Stock Certificates. Stock certificates and blank stock powers
with respect to the Capital Stock of T-3 Custom Coating Applicators, Inc.
and T-3 Investment Corporation III.
(t) Mortgages. With respect to real estate located at 103 and 000
Xxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxxxx, 00000 Cypress X. Xxxxxxx, Cypress,
Texas, and 0000 Xxxxxx X, Xxx Xxxx, Xxxxx, Mortgages (in form and
substance satisfactory to Agent) executed by Borrower or the applicable
Guarantor, and any other party indicated on such Mortgage as a party for
whom execution thereof is provided.
(u) Amendments to Mortgages. With respect to those Mortgages
previously delivered to the Agent in connection with the Existing Credit
Agreement, amendments to Mortgages in form and substance satisfactory to
the Agent.
(v) Real Estate Appraisal. Satisfactory appraisals of the real
estate secured by the Mortgages, to the extent not previously delivered to
the Agent in connection with the Existing Credit Agreement.
(w) Title Insurance; Endorsements. With respect to each parcel of
real estate secured by the Mortgages executed on the date hereof, (a) 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, and (b) with respect to those Mortgages
previously delivered to the Agent in connection with the Existing Credit
Agreement, proformas of title insurance endorsements, in form and
substance satisfactory to the Agent; in each case, with all costs thereof
to be paid by Borrower.
(x) Survey. With respect to each parcel of real estate secured by
the Mortgages, a survey with such certification as the Agent may require,
to the extent not previously delivered to the Agent in connection with the
Existing Credit Agreement.
(y) Environmental Site Assessment. With respect to real estate
located at 103 and 000 Xxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxxxx, 00000 Cypress
X. Xxxxxxx, Cypress, Texas, and 0000 Xxxxxx X, Xxx Xxxx, Xxxxx, a
satisfactory Phase I and/or Phase II Environmental Site Assessment, to the
extent not previously delivered to the Agent in connection with the
Existing Credit Agreement.
Section 7.2 All Advances. The obligation of each Bank to make any Advance
(including the initial Advance) and of the Issuing Bank to issue any Letter of
Credit is subject to the additional conditions precedent set forth below.
40
(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.
(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) Material Adverse Effect. No Material Adverse Effect has occurred
since the effective date of the most current financial statements
delivered to Agent in accordance with Section 9.1 below.
(e) Additional Documentation. The Agent shall have received such
additional approvals, opinions, documents, agreements, instruments, or
information as the Agent or its legal counsel may reasonably request.
Each request for a borrowing or issuance, renewal, extension or reissuance of a
Letter of Credit by the Borrower hereunder shall constitute a certification by
the Borrower to the effect set forth in Section 7.2(c) (as of the date of such
notice).
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 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
41
statements of the Borrower and its Subsidiaries as at and for the fiscal year
ended December 31, 2003 and its unaudited consolidated and consolidating
financial statements for the six month period ended June 30, 2004. 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 financial statements.
Since June 30, 2004, 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 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 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.
42
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.
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
43
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 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; Material 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. Except as may be agreed among the Borrower,
the Agent and each Lender in writing, all Material Subsidiaries of the Borrower
are Guarantors.
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:
44
(a) The Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are 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
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 requiring 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
45
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 in any
event no later than the earlier of (i) five (5) days after filing the
Borrower's Form 10--K Annual Report with the SEC, or (ii) 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.
(b) Quarterly 10-Q of the Borrower. As soon as available, but in any
event no later than the earlier of (i) five (5) days after filing the
Borrower's Form 10-Q Quarterly
46
Report with the SEC, or (ii) 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 and consolidated 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 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 10-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 ninety
(90) 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) 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.
(f) 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 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.
(g) 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
47
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.
(h) Notice of Material Adverse Effect. 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.
(i) XXXXX Filings. Promptly following the filing thereof, written
notice of each proxy statement or other document filed with XXXXX.
(j) 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.
(k) 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).
48
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, 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, 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.
49
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 (i) a Guaranty
Agreement-Foreign if such Material Subsidiary is a Foreign Subsidiary (and
such Subsidiary qualifies as a Foreign Guarantor), and (ii) 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, but 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 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) and (b) 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 in 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.
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Section 9.14 Intercompany Notes.
(a) All loans and other advances made by the Borrower or any of its
Subsidiaries to the Borrower or any of the Borrower's other Subsidiaries
shall be evidenced by an Intercompany Note.
(b) Each Intercompany Note shall be (i) subordinated to the
Revolving Credit Notes on terms and conditions reasonably satisfactory to
the Required Banks; and (ii) collaterally assigned to the Agent (as agent
for the other Banks).
(c) No Intercompany Note shall be renewed, extended, amended,
restated, replaced, or otherwise modified without the Required Banks'
prior written consent.
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.
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:
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) Existing Debt and Contingent Liabilities described on Schedule
10.1 hereto;
(c) Extensions, renewals, refundings, amendments or replacements of
Debt permitted by clauses (a) and (b) above or clause (d) below 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;
51
(d) Subordinated Debt so long as the Borrower has delivered a
Compliance Certificate concurrently with the issuance thereof
demonstrating pro forma compliance with Sections 11.1, 11.2 and 11.3 of
this Agreement;
(e) Additional purchase money Debt and Capital Lease Obligations in
an aggregate principal amount not to exceed $1,000,000 at any time
outstanding;
(f) Debt of the Borrower to a Guarantor or of a Guarantor to the
Borrower, so long as such Debt is evidenced by an Intercompany Note;
(g) 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 an Intercompany Note and does not exceed
$2,000,000, in the aggregate outstanding at any time;
(h) obligations of the Borrower or any Subsidiary under real estate
leases entered into in the ordinary course of business;
(i) 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;
(j) 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;
(k) indemnities arising under agreements entered into by the
Borrower or any Subsidiary in the ordinary course of business;
(l) Debt arising on account of deferred Taxes, deferred workers
compensation liabilities or deferred employee medical liabilities; and
(m) 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;
52
(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;
(g) Liens incurred in connection with Debt permitted under Section
10.1(e), 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;
(l) precautionary UCC filings regarding operating leases entered
into in the ordinary course of business; and
(m) Liens securing Debt permitted by Section 10.1(d), so long as (i)
the Agent has, in its reasonable credit judgment, consented to the
granting of any such Lien, and (ii) the aggregate principal amount of the
Debt secured by all such Liens shall not, at any time, exceed $20,000,000.
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:
53
(a) 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;
(b) 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 of the assets or stock of any Subsidiary of the Borrower;
(c) any such merger or consolidation of the Borrower or a 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 terms and conditions of this Agreement, including without limitation
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)
if, after giving effect to such purchase or other acquisition, the
Leverage Ratio is greater than 2.50 to 1.00 (based on the most recent
financial statements in Agent's possession), then for such transactions
under this clause (iv) (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
$15,000,000 and (B) taking into account and including all such
transactions since the Effective Date, 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 $50,000,000; and (v) prior to the consummation of any such
purchase or acquisition, the Borrower delivers to the Agent evidence
satisfactory to the Agent that, after giving effect to such purchase or
acquisition, the amount available to be borrowed pursuant to Section 2.1
of this Agreement shall be greater than or equal to $5,000,000;
(d) investments in joint ventures, partnerships and other entities
not exceeding in the aggregate $2,000,000; and
(e) transactions permitted under Section 10.6.
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), so long as such advances, loans, or
investments made after the Effective Date do not exceed, in the aggregate,
$500,000;
54
(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(d); 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 $100,000 for any employee and up to $200,000 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
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 have been subject to casualty, (d)
licenses or sublicenses of software in the ordinary course of business, (e) the
disposition of certain real property and improvements located thereon, located
in (i) 0000 Xxxxxx X, Xxx Xxxx, Xxxxx, (ii) 000 Xxxxxxxx, Xxxxx, Xxxxxxxxx,
(xxx) 000 Xxxxx Xxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx, and (iv) 0000 Xxxxxx Xxxxx,
Xxxx Xxxxxx, Xxxxx, and (f) without duplication of clauses (a) through (e)
above, dispositions of 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, (iii) the aggregate book value
55
of all such assets disposed of in reliance on this Section 10.6(e) shall not
exceed in any Fiscal Year 5% of the Borrower's Consolidated Net Worth, and (iv)
the Borrower shall have delivered to the Agent (a) a summary of (x) the terms of
the proposed disposition, including without limitation, a description of the
Property to be sold, the current book value of such Property by class, and the
consideration received for such Property, (y) the effect of such disposition on
the Borrower's trailing twelve-month financial performance, and (z) changes to
the appraised value of the assets of the Borrower and its Subsidiaries; and (b)
to the extent such disposition consists of a sale of a Subsidiary (or a division
of any Subsidiary), consolidating, company-prepared financial statements of
Borrower and its Subsidiaries (both including and excluding the Subsidiary or
division that is to be sold) for the latest Fiscal Year end and for the
year-to-date, which financial statements shall include, without limitation,
balance sheets, statements of income and retained earnings and of cash flows,
all of which shall be prepared in accordance with GAAP.
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, 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
56
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.
Section 10.12 Restrictions on Certain Subsidiaries. Notwithstanding any
other provision of the Agreement, the Borrower will not permit (a) any of T-3
Management LP, Inc., Cor-Val LP, Inc., Preferred Industries LP, Inc., or O&M
Equipment LP, Inc. to: (i) incur, create or assume any Debt, (ii) grant any
Liens on its assets, (iii) incur, create or assume any liabilities other than
liabilities arising by operation of law and the costs of maintaining its
corporate existence, or (iv) engage in any trade or business other than acting
as a limited partner in the limited partnership in which it currently acts as a
limited partner, (b) T-3 Investment Corporation IV, The Xxx Group, Inc.,
Xxxxxxxx Metal Forming, Inc., T-3 Investment Corporation V, T-3 Investment
Corporation VI, and T-3 Machine Tools, Inc. to: (i) incur, create or assume any
Debt, (ii) grant any Liens on its assets, (iii) incur, create or assume any
liabilities other than liabilities arising by operation of law or the costs of
maintaining its corporate existence, and (c) T-3 Investment Corporation IV to
engage in any trade or business other than acting as a stockholder in T-3
Investment Corporation III.
Section 10.13 Restricted Payments. The Borrower will not, nor will it
permit any Subsidiary to, declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
or issue or sell any Equity Interests, except that (i) each Subsidiary may make
Restricted Payments to the Borrower or any Guarantor, ratably according to their
respective holdings of the type of Equity Interest in respect of which such
Restricted Payment is being made, and (ii) so long as no Default or Event of
Default shall have occurred and be continuing at the time of any action
described below or would result therefrom:
(a) the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or
other common Equity Interests of such Person;
(b) the Borrower may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially
concurrent issue of new shares of its common stock or other common Equity
Interests; and
(c) the Borrower may issue and sell shares of its common stock.
57
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 Net Worth. The Borrower will at all times
maintain a Consolidated Net Worth in an amount which is not less than the sum of
(a) 90% of Consolidated Net Worth as of the Effective Date, plus (b) 50% of 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 Interests issued by the Borrower after the Effective Date, minus
(d) the amount of any write-downs of goodwill, to the extent such amounts are
deducted in calculating Net Income. Consolidated 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 1.25 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 Leverage Ratio. The Borrower and its Subsidiaries will
maintain at all times, on a consolidated basis, a Leverage Ratio of not greater
than (a) for Fiscal Quarters ending during the period commencing on the date
hereof and ending on June 30, 2006, 4.00 to 1.00, and (b) for the Fiscal Quarter
ending September 30, 2006 and for each Fiscal Quarter thereafter, 3.75 to 1.00.
The Leverage 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 Senior Leverage Ratio. The Borrower and its Subsidiaries will
maintain at all times, on a consolidated basis, a Senior Leverage Ratio of not
greater than (a) for Fiscal Quarters ending during the period commencing on the
date hereof and ending on June 30, 2006, 3.00 to 1.00, and (b) for the Fiscal
Quarter ending September 30, 2006 and for each Fiscal Quarter thereafter, 2.75
to 1.00. The Senior Leverage 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 11.5 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.
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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 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 $2,250,000 against any of its assets or
properties.
(g) A final judgment or judgments for the payment of money in excess
of $2,250,000, 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
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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
$2,250,000, 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 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.
(l) Any of the following events shall occur or exist with respect to
the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any Plan;
(iii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by
the PBGC of any such proceedings; or (v) complete or partial withdrawal
under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization, insolvency, or termination of any Multiemployer Plan; and
in each case above, such event or condition, together with all other
events or conditions, if any, have subjected or could in the reasonable
opinion of Required Banks subject the Borrower to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise
(or any combination thereof) which in the aggregate exceed or could
reasonably be expected to exceed $2,250,000.
(m) Any event or circumstance shall occur or exist that causes a
Material Adverse Effect.
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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.
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:
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(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, 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;
(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.
Notwithstanding the express permission granted to the Agent in Section
13.1(g) hereof or anything else to the contrary, the Agent shall not, without
the prior written consent of each Lender (i) appoint one or more members of the
Board of Directors (or similar governing body) of the Borrower or any of its
Affiliates, or (ii) exercise any rights or remedies with respect to any Capital
Stock pledged to secure any or all of the Obligations; provided, however, if any
Lender does not, within thirty (30) days after such Lender's receipt of a
written request from the Agent for a consent to one or more of the actions
described in clause (i) or (ii) of this sentence, respond to any such written
request, such Lender shall, for the purposes of this sentence, be deemed to have
consented to such request.
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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 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 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, 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
63
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' 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
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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. 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 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
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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 outside 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 outside 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 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
66
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, 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); provided, however, that (i) such Bank's obligations
under this Agreement and the other Loan Documents (including, without
limitation, its Revolving Credit Commitments) 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 for all purposes of this Agreement, and (iv)
the Borrower shall continue to
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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) (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, 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 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 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
68
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.
(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 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 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 Swing Line Note,
if applicable), new Revolving Credit Notes (and Swing Line Note, if
applicable) to the order of such Eligible Assignee in an amount equal to
the Revolving Credit Commitments assumed by it pursuant to such Assignment
and Acceptance and, if the
69
Assigning Bank has retained a portion of its Revolving Credit Commitments,
new Revolving Credit Notes to the order of the Assigning Bank in an amount
equal to the Revolving Credit Commitments retained by it hereunder (each
such promissory note shall constitute a "Revolving Credit Note" for
purposes of the Loan Documents). Such new Revolving Credit Notes (and
Swing Line Note, if applicable) shall be in an aggregate principal amount
of the surrendered Revolving Credit 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
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.
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 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, 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. Subject
to Section 2.10, no amendment, modification, waiver or consent shall change the
Percentage of any Bank without the consent of such Bank. No amendment,
modification, waiver or consent shall (a) extend or increase the amount of the
Revolving Credit 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,
70
(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, or (e) 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
(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 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.
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 or the Swing Line Note, as applicable;
and, if the principal of the Revolving Credit 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 and the Swing Line Note so that interest for the entire term does not
exceed the Maximum Rate.
71
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
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; Facsimiles. 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. Facsimiles of
signatures shall be binding and effective as originals.
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.
72
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, EACH OF the Borrower, THE AGENT AND THE BANKS 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.
Section 14.20 Amendment and Restatement; Release. This Agreement amends
and restates in its entirety the Existing Credit Agreement. The execution of
this Agreement and the other Loan Documents executed in connection herewith does
not extinguish the indebtedness outstanding in connection with the Existing
Credit Agreement nor does it constitute a novation with respect to such
indebtedness. THE BORROWER REPRESENTS AND WARRANTS THAT AS OF THE DATE HEREOF
THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OR
ANY OBLIGATED PARTIES' OBLIGATIONS UNDER THE EXISTING CREDIT AGREEMENT, THE
OTHER LOAN DOCUMENTS AND THE DOCUMENTATION RELATING TO THE DEPOSIT AND CASH
MANAGEMENT SERVICES. TO INDUCE THE AGENT, THE ISSUING BANK AND THE BANKS TO
ENTER INTO THIS AGREEMENT, THE BORROWER AND, BY THE EXECUTION OF THE LOAN
DOCUMENTS TO WHICH IT IS A PARTY, EACH GUARANTOR WAIVES ANY AND ALL CLAIMS,
OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO
THE DATE HEREOF AND HEREBY RELEASES THE AGENT, THE BANKS, THE
73
ISSUING BANK AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
ATTORNEYS (COLLECTIVELY, THE "RELEASED PARTIES") FROM ANY AND ALL OBLIGATIONS,
INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER,
WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH THE BORROWER OR ANY
GUARANTOR EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED
PARTY ARISING PRIOR TO THE DATE HEREOF OR FROM OR IN CONNECTION WITH THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY DOCUMENTATION RELATING TO THE DEPOSIT
AND CASH MANAGEMENT SERVICES OR THE TRANSACTIONS CONTEMPLATED THEREBY.
ARTICLE XV
Arbitration
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,
74
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 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.
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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, NATIONAL
Revolving Credit Commitment: ASSOCIATION
$20,000,000.00 By: /s/ Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx, Vice President
Address for Notices:
0000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx X. Xxxx
(Signature Page to First Amended and Restated Credit Agreement)
GENERAL ELECTRIC CAPITAL
Revolving Credit Commitment: CORPORATION
$20,000,000.00 By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Xxxxxx X. Xxxx, Duly Authorized Signatory
Address for Notices:
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: T-3 Energy Services Account Manager
Revolving Credit Commitment: COMERICA BANK
$10,000,000.00 By: /s/ Xxxxxxxx Xxxxx
---------------------------------------
Xxxxxxxx Xxxxx, Vice President
Address for Notices:
000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx Xxxx
(Signature Page to First Amended and Restated Credit Agreement)
