Exhibit 10(P)
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF AUGUST 24, 1995
BETWEEN
TEAM, INC.
AS BORROWER
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS LENDER
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE........................................... 1
Section 1.02 CERTAIN DEFINED TERMS......................................... 1
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS........................... 16
ARTICLE II
COMMITMENTS
Section 2.01 LOANS AND LETTERS OF CREDIT................................... 16
Section 2.02 BORROWINGS, CONTINUATIONS AND CONVERSIONS, LETTERS OF CREDIT.. 17
Section 2.03 CHANGES OF REVOLVING CREDIT COMMITMENT........................ 19
Section 2.04 FEES.......................................................... 20
Section 2.05 LENDING OFFICES............................................... 20
Section 2.06 NOTES......................................................... 20
Section 2.07 PREPAYMENTS................................................... 21
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 REPAYMENT OF LOANS............................................ 25
Section 3.02 INTEREST...................................................... 25
ARTICLE IV
PAYMENTS; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS...................................................... 26
Section 4.02 COMPUTATIONS.................................................. 27
Section 4.03 SET-OFF....................................................... 27
Section 4.04 TAXES......................................................... 27
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ARTICLE V
ADDITIONAL COSTS; CAPITAL ADEQUACY; ETC.
Section 5.01 ADDITIONAL COSTS.............................................. 29
Section 5.02 LIMITATION ON EURODOLLAR LOANS................................ 30
Section 5.03 ILLEGALITY.................................................... 31
Section 5.04 BASE RATE LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND 5.03...... 31
Section 5.05 COMPENSATION.................................................. 31
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 INITIAL FUNDING............................................... 32
Section 6.02 INITIAL AND SUBSEQUENT LOANS.................................. 34
Section 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT...................... 34
Section 6.04 POST CLOSING CONDITIONS....................................... 35
Section 6.05 AUDIT AND ASSET MANAGEMENT REVIEW............................. 35
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 CORPORATE EXISTENCE........................................... 35
Section 7.02 FINANCIAL CONDITION........................................... 35
Section 7.03 LITIGATION.................................................... 36
Section 7.04 NO BREACH..................................................... 36
Section 7.05 AUTHORITY..................................................... 36
Section 7.06 APPROVALS..................................................... 37
Section 7.07 USE OF LOANS.................................................. 37
Section 7.08 ERISA......................................................... 37
Section 7.09 TAXES......................................................... 37
Section 7.10 TITLES, ETC................................................... 37
Section 7.11 NO MATERIAL MISSTATEMENTS..................................... 38
Section 7.12 INVESTMENT COMPANY ACT........................................ 38
Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT............................ 38
Section 7.14 SUBSIDIARIES AND PARTNERSHIPS................................. 38
Section 7.15 LOCATION OF BUSINESS AND OFFICES.............................. 38
Section 7.16 DEFAULTS...................................................... 39
Section 7.17 ENVIRONMENTAL MATTERS......................................... 39
Section 7.18 COMPLIANCE WITH THE LAW....................................... 40
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Section 7.19 INSURANCE..................................................... 40
Section 7.20 HEDGING AGREEMENTS............................................ 40
Section 7.21 RESTRICTION ON LIENS.......................................... 40
Section 7.22 MATERIAL AGREEMENTS........................................... 41
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.01 FINANCIAL STATEMENTS AND OTHER REPORTS........................ 41
Section 8.02 LITIGATION.................................................... 43
Section 8.03 MAINTENANCE, ETC.............................................. 43
Section 8.04 ENVIRONMENTAL MATTERS......................................... 43
Section 8.05 FURTHER ASSURANCES............................................ 44
Section 8.06 PERFORMANCE OF OBLIGATIONS.................................... 44
Section 8.07 KEY MAN LIFE INSURANCE POLICY................................. 44
Section 8.08 CERTAIN SUBSIDIARIES.......................................... 45
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01 DEBT.......................................................... 45
Section 9.02 LIENS......................................................... 46
Section 9.03 INVESTMENTS, LOANS AND ADVANCES............................... 47
Section 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS...................... 48
Section 9.05 SALES AND LEASEBACKS.......................................... 48
Section 9.06 NATURE OF BUSINESS............................................ 48
Section 9.07 LIMITATION ON LEASES.......................................... 48
Section 9.08 MERGERS, ETC.................................................. 49
Section 9.09 PROCEEDS OF NOTES............................................. 49
Section 9.10 ERISA COMPLIANCE.............................................. 49
Section 9.11 SALE OR DISCOUNT OF RECEIVABLES............................... 49
Section 9.12 CAPITAL EXPENDITURES.......................................... 49
Section 9.13 CURRENT RATIO................................................. 50
Section 9.14 TANGIBLE NET WORTH............................................ 50
Section 9.15 FUNDED DEBT TO CASH FLOW...................................... 50
Section 9.16 FIXED CHARGE COVERAGE RATIO................................... 51
Section 9.17 INTEREST COVERAGE RATIO....................................... 51
Section 9.18 SALE OF PROPERTIES............................................ 51
Section 9.19 TRANSACTIONS WITH AFFILIATES.................................. 52
Section 9.20 SUBSIDIARIES AND PARTNERSHIPS................................. 52
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Section 9.21 NEGATIVE PLEDGE AGREEMENTS.................................... 52
Section 9.22 TRANSFER OF ASSETS TO CERTAIN SUBSIDIARIES.................... 52
Section 9.23 EXCLUDED SUBSIDIARIES......................................... 52
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT............................................ 53
Section 10.02 REMEDIES..................................................... 55
ARTICLE XI
MISCELLANEOUS
Section 11.01 WAIVER....................................................... 56
Section 11.02 NOTICES...................................................... 56
Section 11.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC........................ 56
Section 11.04 AMENDMENTS, ETC.............................................. 59
Section 11.05 SUCCESSORS AND ASSIGNS....................................... 59
Section 11.06 ASSIGNMENTS AND PARTICIPATIONS............................... 59
Section 11.07 INVALIDITY................................................... 60
Section 11.08 COUNTERPARTS................................................. 61
Section 11.09 REFERENCES................................................... 61
Section 11.10 SURVIVAL..................................................... 61
Section 11.11 CAPTIONS..................................................... 61
Section 11.12 NO ORAL AGREEMENTS........................................... 61
Section 11.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.................... 61
Section 11.14 INTEREST..................................................... 63
Section 11.15 CONFIDENTIALITY.............................................. 64
Section 11.16 EFFECTIVENESS................................................ 64
Section 11.17 TAX REPRESENTATIONS.......................................... 64
Section 11.18 EXCULPATION PROVISIONS....................................... 66
Section 11.19 CONFLICTING PROVISIONS....................................... 66
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Exhibit A-1 - Revolving Credit Note
Exhibit A-2 - Term Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - (Intentionally Omitted)
Exhibit E - List of Security Instruments
Exhibit F - Guarantors
Schedule 7.03 - Litigation
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.16 - Defaults
Schedule 7.19 - Insurance (Separately delivered to Lender)
Schedule 7.22 - Material Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 24,
1995, between TEAM, INC., a Texas corporation (the "BORROWER"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association (the
"LENDER").
R E C I T A L S
A. The Borrower and the Lender entered into that certain Credit
Agreement dated as of April 7, 1994 (as amended and supplemented by First
Amendment and Supplement to Credit Agreement and Term Note Modification
Agreement dated as of February 28, 1995, the "1994 Credit Agreement" whereby,
pursuant to the terms and conditions contained therein, the Lender agreed to
provide certain loans to and extend certain credit on behalf of the Borrower.
B. The Borrower and the Lender mutually desire to amend and restate the
1994 Credit Agreement in its entirety.
C. 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 the 1994 Credit Agreement is hereby
amended and restated in its entirety to read herein and as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE. As used in this Amended and
Restated Credit Agreement, the terms "BORROWER," "LENDER" and "1994 CREDIT
AGREEMENT" shall have the meanings indicated above.
Section 1.02 CERTAIN DEFINED TERMS. As used herein, the following
terms shall have the following meanings (all terms defined in this Article I or
in other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):
"ADDITIONAL COSTS" shall have the meaning assigned such term in
Section 5.01(a).
"AFFECTED LOANS" shall have the meaning assigned such term in
Section 5.04.
"AFFILIATE" of any person shall mean (a) any Person directly or
indirectly controlled by, controlling or under common control with such
first
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Person, (b) any director or officer of such first Person or of any
Person referred to in clause (a) above and (c) if any Person in clause
(i) above is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any
trust whose principal beneficiary is such individual or one or more
members of such immediate family and any Person who is controlled by any
such member or trust. As used in this definition, "CONTROL" (including,
with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") shall mean any person which owns directly or indirectly 20% or
more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 20% or more of the
partnership or other ownership interests of any other Person (other than
as a limited partner of such other Person) will be deemed to control
such corporation or other Person.
"AGREEMENT" shall mean this Amended and Restated Credit
Agreement, as the same may from time to time be amended or supplemented.
"APPLICABLE LENDING OFFICE" shall mean for each Type of Loan, the
lending office of the Lender (or an Affiliate of the Lender) designated
for such Type of Loan on the signature pages hereof or such other
offices of the Lender (or of an Affiliate of the Lender) as the Lender
may from time to time specify to the Borrower as the office by which
Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN" shall mean (a) with respect to Eurodollar
Loans (i) 3.25% per annum if the Borrower's ratio of Funded Debt to Cash
Flow (for the previous twelve-month period) is equal to or greater than
3.0 to 1.0 ("RANGE ONE"), (ii) 2.75% per annum if the Borrower's ratio
of Funded Debt to Cash Flow (for the previous twelve-month period) is
equal to or greater than 2.0 to 1.0 but less than 3.0 to 1.0 ("RANGE
TWO"), (iii) 2.25% per annum if the Borrower's ratio of Funded Debt to
Cash Flow (for the previous twelve-month period) is equal to or greater
than 1.0 to 1.0 but less than 2.0 to 1.0 ("RANGE THREE"), and (iv) 1.75%
per annum if the Borrower's ratio of Funded Debt to Cash Flow (for the
previous twelve-month period) is less than 1.0 to 1.0 ("RANGE FOUR");
and (b) with respect to Base Rate Loans (i) .5% per annum for Range One,
and (ii) zero percent (0%) per annum for Range Two, Range Three, and
Range Four.
"BASE RATE" shall mean, with respect to any Base Rate Loan, for
any day, a rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such
day, or (b) the Federal Funds Rate for such day plus 1/2 of 1%. Each
change in any interest rate provided for herein based upon the Base Rate
resulting from a change
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in the Base Rate shall take effect at the time of such change in the
Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates
based upon the Base Rate.
"BORROWING BASE" shall mean at any time an amount equal to the
sum of (i) 85% of Eligible Accounts, plus (ii) 40% of Eligible Inventory
for the period from and after the Closing Date through August 31, 1996,
and 25% of Eligible Inventory thereafter; PROVIDED, HOWEVER, Eligible
Inventory shall never be permitted to exceed 50% of the Borrowing Base.
"BUSINESS DAY" shall mean any day other than a day on which
commercial banks are authorized or required to close in the State of
Texas and if such day relates to a borrowing or continuation of, a
payment or prepayment of principal of or interest on, or a conversion of
or into, or the Interest Period for, a Eurodollar Loan or a notice by
the Borrower with respect to any such borrowing or continuation,
payment, prepayment, conversion or Interest Period, any day which is
also a day on which dealings in Dollar deposits are carried out in the
London interbank market.
"CASH FLOW" shall mean, for any period, earnings of the Borrower
before interest, depreciation, amortization of goodwill, amortization of
Debt and amortization of taxes, less cash taxes for such period.
"CLOSING DATE" shall mean August 24, 1995.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITMENT" shall mean the Lender's obligation to make Loans
pursuant to Sections 2.01(a) and (c), and to issue, reissue, renew or
extend Letters of Credit as provided in Section 2.01(b).
"CONSOLIDATED SUBSIDIARIES" shall mean each Subsidiary of the
Borrower (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been)
consolidated with the financial statements of the Borrower in accordance
with GAAP, but excluding the Excluded Subsidiaries.
"DEBT" shall mean, for any Person the sum of the following
(without duplication) (a) all obligations of such Person for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments, (b) all obligations of such Person (whether contingent or
otherwise) in respect of
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bankers' acceptances, letters of credit, surety or other bonds and
similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of Property or services (other than for borrowed
money) arising in the ordinary course of business of such Person
exclusive, however, of accrued expenses in accordance with ordinary
trade terms, (d) all obligations under leases which shall have been, or
should have been, in accordance with GAAP, recorded as capital leases in
respect of which such Person is liable, contin gently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such
Person otherwise assures a creditor against loss, (e) all Debt and other
obligations of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person which are or should
be shown as liabilities, contingent or otherwise, on a consolidated
balance sheet, (f) all Debt, directly or indirectly guaranteed by such
Person (g) all obligations of such Person under Hedging Agreements, and
(h) material obligations to deliver goods or services in consideration
of advance payments.
"DEFAULT" shall mean an Event of Default or an event which with
notice or lapse of time or both would become an Event of Default.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"EFFECTIVE DATE" shall have the meaning assigned such term in
Section 11.16.
"ELIGIBLE ACCOUNTS" shall mean at any time an amount equal to the
aggregate net invoice or ledger amount owing of each trade account
receivable of the Borrower and any Subsidiary, for goods sold or leased
or services rendered in the ordinary course of business, in which the
Agent has a perfected, first priority security interest (subject only to
Excepted Liens), after deducting (a) the amount of all such accounts
owing by account debtors which have 20% or more of their accounts owing
to the Borrower unpaid for 91 days or more after the date of original
invoice, unless the account debtor in question is a 20% Rule Exception
(the exclusion contained in this clause (a) being hereinafter called the
"20% Rule"), (b) the amount on all such accounts which are owed by
account debtors having their principal place of business in the United
States that are unpaid for 91 days or more after the date of original
invoice, (c) the amount on all such accounts which are owed by account
debtors having their principal place of business outside of the United
States that are (i) not backed by a letter of credit satisfactory to the
Lender or otherwise not insured in a manner satisfactory to the Lender
or (ii) unpaid for 121 days or more after the date of original invoice,
(d) the amount of all trade and other discounts, returns, allowances,
rebates, credits,
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concessions, unbilled amounts and adjustments to such accounts, (e) all
contra accounts, setoffs subject to any setoff arrangement or agreement,
defenses or counterclaims asserted by or available to the Persons
obligated on such accounts, (f) the amount billed for or representing
retainage, if any, until all prerequisites to the immediate payment of
retainage have been satisfied, (g) all such accounts owed by account
debtors which are insolvent or if Lender reasonably believes
collectibility is in doubt, (h) all such accounts owing by officers or
employees of the Borrower or by Subsidiaries or any other Person in
which the Borrower may have an equity interest, and (i) all such
accounts owing by a Governmental Authority which arise out of contracts
between such Governmental Authority and the Borrower, unless the Lender
is reasonably satisfied that the lender has a perfected lien in or valid
assignment of such accounts.
"ELIGIBLE INVENTORY" shall mean at any time all inventory of raw
materials and finished goods then owned by the Borrower or any
Subsidiary (less any reserve for obsolescence, any reserve for
slow-moving inventory, or any other similar contra-account to inventory
all of which shall be reasonably satisfactory to the Lender) and held
for sale (other than on consignment) or disposition in the ordinary
course of business, in which the Lender has a perfected, first priority
security interest (subject only to Excepted Liens), valued at market
price.
"ENVIRONMENTAL LAWS" shall mean any and all Governmental Require
ments pertaining to health or the environment in effect in any and all
jurisdictions in which the Borrower or any Subsidiary is conducting or
at any time has conducted business, or where any Property of the
Borrower or any Subsidiary is located, including without limitation, the
Oil Pollution Act of 1990 ("OPA"), the Clean Air Act, as amended, the
Comprehensive Environ mental, Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA"), the Federal Water Pollution Control Act,
as amended, the Occupational Safety and Health Act of 1970, as amended,
the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"),
the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous Materials Transportation Act, as
amended, and other environmental conservation or protection laws. The
term "oil" shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA; provided, however, that
(a) in the event either OPA, CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective
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date of such amendment, (b) to the extent the laws of the state in which
any Property of the Borrower or any Subsidiary is located establish a
meaning for "oil," "hazardous substance," "release," "solid waste" or
"disposal" which is broader than that specified in either OPA, CERCLA or
RCRA, such broader meaning shall apply, and (c) the terms "hazardous
substance" and "solid waste" shall include all oil and gas exploration
and production wastes that may present an endangerment to public health
or welfare or the environment, even if such wastes are specifically
exempt from classification as hazardous substances or solid wastes
pursuant to CERCLA or RCRA or the state analogues to those statutes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean each trade or business (whether or
not incorporated) which together with the Borrower or any Subsidiary
would be deemed to be a "single employer" within the meaning of section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414
of the Code.
"ERISA EVENT" shall mean (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder, (b) the
withdrawal of the Borrower, any Subsidiary or any ERISA Affiliate from a
plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of
intent to terminate a Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a plan by the PBGC, or (e) any other event or
condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
plan.
"EURODOLLAR LOANS" shall mean Loans the interest rates on which
are determined on the basis of rates referred to in the definition of
"Fixed Eurodollar Rate" in this Section 1.02.
"EVENT OF DEFAULT" shall have the meaning assigned such term in
Section 10.01.
"EXCESS CASH FLOW" shall mean net earnings of the Borrower before
taxes, plus or minus non-cash items, less cash taxes, capital
expenditures and principal payments.
"EXCEPTED LIENS" shall mean (a) Liens for taxes, assessments or
other governmental charges or levies not yet due or which are being
contested in
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good faith by appropriate action and for which appropriate reserves have
been maintained, (b) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or
public liability obligations not yet due or which are being contested in
good faith by appropriate action and for which appropriate reserves have
been maintained in accordance with GAAP, (c) operator's, vendors',
carriers', warehousemen's, repairmen's, mechanics', workmen's,
materialmen's, construction or other like Liens arising by operation of
law in the ordinary course of business or statutory landlord's liens,
each of which is in respect of obligations that have not been
outstanding more than 90 days or which are being contested in good faith
by appropriate proceedings and for which appropriate reserves have been
maintained in accordance with GAAP, (d) encumbrances (other than to
secure the payment of borrowed money or the deferred purchase price of
Property or services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of way
or other Property of the Borrower or any Subsidiary for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and
other like purposes, or for the joint or common use of real estate,
rights of way, facilities and equipment, and defects, irregularities,
zoning restrictions and deficiencies in title of any rights of way or
other Property which in the aggregate do not materially impair the use
of such rights of way or other Property for the purposes of which such
rights of way and other Property are held by the Borrower or any
Subsidiary, (e) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations and other obligations of a like
nature incurred in the ordinary course of business, (f) Liens permitted
by the Security Instru ments, (g) Liens existing on the date hereof and
(1) filed of record in the real property records of each county in which
the Borrower owns real property or (2) evidenced by financing statements
filed in a jurisdiction in which the Borrower is doing business, and (h)
Liens securing the deferred purchase price of Property, provided that
the Debt secured is permitted to exist under Section 9.01.
"EXCLUDED SUBSIDIARIES" shall mean each of (a) Portales 801,
Inc., (b) Pensacola 801, Inc., (c) Ft. Bragg 801, Inc., (d) Ft. Stewart
801, Inc., (e) First American Capital Corporation, (f) First America
Development Corporation, and (g) all Foreign Subsidiaries.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with a member 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
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Business Day next succeeding such day, provided that (i) if the date for
which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if such rate is not so published for any day, the
Federal Funds Rate for such day shall be the average rate charged to the
Lender on such day on such transactions.
"FINAL MATURITY DATE" shall mean, with respect to the Term Note,
unless the Term Note is sooner prepaid pursuant to Section 2.07 hereof,
June 30, 1998.
"FINANCIAL STATEMENTS" shall mean the financial statement or
statements of the Borrower described or referred to in Section 7.02.
"FIXED EURODOLLAR RATE" shall mean, with respect to any
Eurodollar Loan, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) quoted by the Lender at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) two Business Days
prior to the first day of the Interest Period for such Loan for the
offering by the Lender to leading lenders in the London interbank market
of Dollar deposits having a term comparable to such Interest Period and
in an amount comparable to the principal amount of the Eurodollar Loan
to be made by the Lender for such Interest Period.
"FIXED RATE" shall mean, with respect to any Eurodollar Loan, a
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined by the Lender to be equal to the quotient of (i) the
Fixed Eurodollar Rate for such Loan for the Interest Period for such
Loan divided by (ii) 1 minus the Reserve Requirement for such Loan for
such Interest Period.
"FOREIGN SUBSIDIARIES" shall mean all Subsidiaries of the
Borrower organized under the laws of a jurisdiction other than the
United States of America, any state thereof or the District of Columbia.
"FUNDED DEBT" shall mean all interest bearing Debt.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall include the country, the state,
county, city and political subdivisions in which any Person or such
Person's Property
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is located or which exercises valid jurisdiction over any such Person or
such Person's Property, and any court, agency, department, commission,
board, bureau or instrumentality of any of them including monetary
authorities which exercises valid jurisdiction over any such Person or
such Person's Property. Unless otherwise specified, all references to
Governmental Authority herein shall mean a Governmental Authority having
jurisdiction over, where applicable, the Borrower, its Subsidiaries and
their Property or the Lender or any Applicable Lending Office.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or
other directive or requirement (whether or not having the force of law),
including, without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls, of any
Governmental Authority.
"GUARANTOR" shall mean, jointly and severally, each of the
Subsidiaries listed on Exhibit F, but excluding the Excluded
Subsidiaries but including all Subsidiaries created after the date
hereof (not to include any Foreign Subsidiaries).
"GUARANTY AGREEMENT" shall mean an agreement executed by each
Guarantor in form and substance satisfactory to the Lender guarantying,
unconditionally, payment of the Indebtedness, as the same may be
amended, modified or supplemented from time to time.
"HEDGING AGREEMENTS" shall mean any interest rate or currency
swap, rate cap, rate floor, rate collar, forward agreement or other
exchange or rate protection agreements or any option with respect to any
such transaction.
"HIGHEST LAWFUL RATE" shall mean 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 Notes or on other
Indebtedness under laws applicable to the Lender which are presently in
effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.
"INDEBTEDNESS" shall mean any and all indebtedness, obligations
(including reimbursement obligations) and liabilities owing or to be
owing by the Borrower or any Subsidiary to the Lender in connection with
the Notes or any Security Instrument, including this Agreement and the
Letter of Credit
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Agreements, and any Hedging Agreement now or hereafter arising and all
renewals, extensions, increases and/or rearrangements of any of the
above.
"INDEMNIFIED PARTIES" shall have the meaning assigned such term
in Section 11.03(b).
"INDEMNITY MATTERS" shall mean any and all actions, suits,
proceedings (including any governmental investigations or litigation),
claims, demands and causes of action made or threatened against a Person
and, in connection therewith, all losses, liabilities, damages or
reasonable costs and expenses of any kind or nature whatsoever incurred
by such Person whether caused by the sole or concurrent negligence of
such Person seeking indemnification.
"INITIAL FUNDING" shall mean the funding of the initial Loans
pursuant to Section 6.01 hereof.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar
Loan, the period commencing on the date such Eurodollar Loan is made and
ending on the numerically corresponding day in the first, second or
third calendar month thereafter, as the Borrower may select as provided
in Section 2.02 (or such longer period as may be requested by the
Borrower and agreed to by the Lender), except that each Interest Period
which commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing (a) no Interest Period may commence
before and end after the Revolving Credit Termination Date, with respect
to the Revolving Credit Note, or the Final Maturity Date, with respect
to the Term Note, (b) no Interest Period for any Eurodollar Loan may end
after the due date of any installment, if any, provided for in Section
3.01 hereof to the extent that such Eurodollar Loan would need to be
prepaid prior to the end of such Interest Period in order for such
installment to be paid when due, (c) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business
Day), and (d) no Interest Period shall have a duration of less than one
month and, if the Interest Period for any Eurodollar Loans would
otherwise be for a shorter period, such Loans shall not be available
hereunder.
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"LC EXPOSURE" at any time shall mean the aggregate undrawn
portion of the face amount of all uncancelled Letters of Credit and the
aggregate of all amounts drawn under all Letters of Credit and not yet
reimbursed nor funded as a Loan pursuant to Section 2.09(c).
"LETTER OF CREDIT AGREEMENTS" shall mean the written agreements
with the Lender, as issuing lender for any Letter of Credit, executed or
hereafter executed in connection with the issuance by the Lender of the
Letters of Credit, such agreements to be on the Lender's customary form
for letters of credit of comparable amount and purpose as from time to
time in effect or as otherwise agreed to by the Borrower and the Lender.
"LETTERS OF CREDIT" shall mean the standby letters of credit with
maturities of one year or less (which may incorporate automatic annual
renewals with the consent of the Lender) issued pursuant to Section
2.01(b) and all reimbursement obligations pertaining to any such letters
of credit, and "Letter of Credit" shall mean any one of the Letters of
Credit and the reimbursement obligations pertaining thereto.
"LIEN" shall mean any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or contract,
and whether such obligation or claim is fixed or contingent, and
including but not limited to the lien or security interest arising from
a mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
The term "LIEN" shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing
lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction
intended to create a financing.
"LOANS" shall mean the aggregate of all Revolving Credit Loans
and the Term Loan as provided for by Section 2.01.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse
effect, on (a) the assets, liabilities, financial condition, business or
operations of the Borrower and its Subsidiaries taken as a whole
different from those reflected in the Financial Statements or from the
facts represented or warranted in this Agreement or any other Security
Instrument, or (b) the ability of the
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Borrower and its Subsidiaries taken as a whole to carry out their
business as at the Closing Date or meet its obligations under the Notes,
this Agreement or the other Security Instruments on a timely basis.
"MAXIMUM REVOLVING CREDIT AMOUNT" shall mean at any time an
amount equal to the lesser of (i) $12,000,000, or (ii) the Borrowing
Base as then in effect, as the same may be reduced pursuant to Section
2.03(b).
"MULTIEMPLOYER PLAN" shall mean a Plan defined as such in Sec
tion 3(37) or 4001(a)(3) of ERISA to which contributions have been made
by the Borrower, any Subsidiary or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"NET CASH PROCEEDS" shall mean an amount equal to the gross
proceeds from any financing transaction or sale of assets or business
unit, less any existing Debt secured by or otherwise directly owing in
connection with such assets or business unit, less any income taxes due
from Borrower in connection therewith, less all flotation costs
associated with such transaction including, without limitation, all
legal fees payable by Borrower, all underwriter's expenses and
discounts, all fees of the Securities and Exchange Commission, all state
securities laws administrators' fees, all accountants' fees and all
printing costs.
"NOTES" shall mean, collectively, the Revolving Credit Note and
the Term Note, together with any and all renewals, extensions for any
period, increases, rearrangements, substitutions or modifications
thereof. "Note" shall mean either the Revolving Credit Note or the Term
Note as the context requires.
"OTHER TAXES" shall have the meaning assigned such term in
Section 4.04(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERSON" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.
"PLAN" shall mean any employee pension benefit plan, as defined
in Section 3(2) of ERISA, which (a) is currently or hereafter sponsored,
maintained or contributed to by the Borrower, any Subsidiary or an ERISA
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Affiliate or (b) was at any time during the six calendar years preceding
the Closing Date, sponsored, maintained or contributed to, by the
Borrower, any Subsidiary or an ERISA Affiliate.
"POST-DEFAULT RATE" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this
Agreement or the Note which is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due date until such amount is paid in full or
the default is cured or waived equal to 2% per annum above the Base Rate
as in effect from time to time plus the Applicable Margin (if any), but
in no event to exceed the Highest Lawful Rate (provided that, if such
amount in default is principal of a Eurodollar Loan, the "Post-Default
Rate" for such principal shall be, for the period commencing on the due
date and ending on the last day of the Interest Period therefor, 2% per
annum above the interest rate for such Loan as provided in Section
3.02(b), but in no event to exceed the Highest Lawful Rate.
"PRIME RATE" shall mean the rate of interest which the Lender
determines from time to time as its prime commercial lending rate, and
which is thereafter entered into the minutes of the Lender's Loan and
Discount Committee. Such rate is set by the Lender as a general
reference rate of interest, taking into account such factors as the
Lender may deem appropriate, it being understood that many of the
Lender's commercial or other loans are priced in relation to such rate,
that it is not necessarily the lowest or best rate actually charged to
any customer and that the Lender may make various commercial or other
loans at rates of interest having no relationship to such rate.
"PRINCIPAL OFFICE" shall mean the principal office of the Lender,
presently located at 712 Main Street, Houston, Texas 77002.
"PRIOR REVOLVING CREDIT NOTE" shall mean that certain promissory
note dated April 7, 1994, in the face amount of $13,500,000 executed by
the Borrower and payable to the order of the Lender as therein provided,
which Prior Revolving Credit Note was issued by the Borrower under and
pursuant to the 1994 Credit Agreement.
"PRIOR TERM NOTE" shall mean that certain promissory note dated
April 7, 1994, in the original principal amount of $11,500,000 executed
by the Borrower and payable to the order of the Lender in installments
and as therein provided, which Prior Term Note was issued by the
Borrower under and pursuant to the 1994 Credit Agreement.
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"PROPERTY" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"REGULATION D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be
amended or supplemented from time to time.
"REGULATORY CHANGE" shall mean any change after the Closing Date
in any Governmental Requirement (including Regulation D) or the adoption
or making after such date of any interpretations, directives or written
responses to requests applying to a class of lenders (including the
Lender or its Applicable Lending Office) of or under any Governmental
Requirement (whether or not having the force of law) by any Governmental
Authority charged with the interpretation or administration thereof.
"RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Loan, 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 Fixed Eurodollar Rate for Eurodollar
Loans is to be determined as provided in the definition of "Fixed
Eurodollar Rate" in this Section 1.02, or (b) any category of extensions
of credit or other assets which include a Eurodollar Loan.
"RESPONSIBLE OFFICER" shall mean, as to any Person, the Chief
Executive Officer, the President or any Vice President or Treasurer of
such Person and, with respect to financial matters, the term
"Responsible Officer" shall include the Chief Financial Officer or
Treasurer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the
Borrower.
"REVOLVING CREDIT COMMITMENT" shall mean the obligation of the
Lender to make Loans to the Borrower under Section 2.01(a), and to
issue, reissue, renew or extend Letters of Credit pursuant to Section
2.01(b), up to the Maximum Revolving Credit Amount, as the same may be
reduced pursuant to Section 2.03(b).
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"REVOLVING CREDIT LOANS" shall mean the revolving credit Loans
made by the Lender to the Borrower pursuant to Section 2.01(a).
"REVOLVING CREDIT NOTE" shall mean the promissory note of the
Borrower provided for by Section 2.06(a).
"REVOLVING CREDIT TERMINATION DATE" shall mean the date which is
24 months from the Closing Date.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"SECURITY INSTRUMENTS" shall mean this Agreement, the Letters of
Credit, the Letter of Credit Agreements, the agreements or instruments
described or referred to in Exhibit E, and any and all other agreements
or instruments now or hereafter executed and delivered by the Borrower
or any other Person (other than participation or similar agreements
between the Lender and any other lender or creditor with respect to any
Indebtedness pursuant to this Agreement) in connection with, or as
security for the payment or performance of the Notes, this Agreement, or
reimbursement obligations under the Letters of Credit, as such
agreements may be amended, supplemented or restated from time to time.
"SUBSIDIARY" shall mean any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by the Borrower or one
or more of its Subsidiaries or by the Borrower and one or more of its
Subsidiaries, but excluding the Foreign Subsidiaries.
"TAXES" shall have the meaning assigned such term in Section
4.04(a).
"TERM LOAN" shall mean the term Loan made by the Lender to the
Borrower pursuant to Section 2.01(c).
"TERM NOTE" shall mean the promissory note of the Borrower
provided for by Section 2.06(b).
"20% RULE EXCEPTION" shall mean an account debtor nominated at
any time by the Borrower in writing to the Lender to be an exception to
the 20%
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Rule with regard to Eligible Accounts, and as to which the Lender can
revoke the exception at any time in the event that a material adverse
change occurs in the business, payment performance or financial
condition of such account debtor, by written notice thereof to the
Borrower which notice shall be effective immediately upon receipt
thereof.
"TYPE" shall mean, with respect to any Loan, a Base Rate Loan or
a Eurodollar Loan.
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect the board of directors of
such corporation, other than directors' qualifying shares, are owned or
controlled by the Borrower or one or more of the Wholly-Owned
Subsidiaries or by the Borrower and one or more of the Wholly-Owned
Subsidiaries.
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Lender hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited financial statements of the Borrower referred to in Section 7.02 (except
for changes concurred with by the Borrower's independent public accountants).
ARTICLE II
COMMITMENTS
Section 2.01 LOANS AND LETTERS OF CREDIT.
(a) REVOLVING CREDIT LOANS. The Lender agrees, on the terms of
this Agreement, to make Revolving Credit Loans to the Borrower during the period
from and including the Closing Date to and up to, but excluding, the Revolving
Credit Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of the Maximum Revolving Credit
Amount as then in effect; PROVIDED, HOWEVER, that the aggregate principal amount
of all such Revolving Credit Loans by the Lender hereunder at any one time
outstanding together with the LC Exposure shall not exceed the Maximum Revolving
Credit Amount. Subject to the terms of this Agreement, during the period from
and including the Closing Date to and up to, but excluding, the Revolving Credit
Termination Date, the Borrower may borrow, repay and reborrow the amount
described in this Section 2.01(a). Revolving Credit Loans shall be evidenced by
the Revolving Credit Note described in Section 2.06(a) hereof.
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(b) LETTERS OF CREDIT. During the period from and including the
Closing Date to and up to, but excluding, the Revolving Credit Termination Date,
the Lender agrees to extend credit for the account of the Borrower at any time
and from time to time by issuing, renewing, extending or reissuing Letters of
Credit; provided however, the LC Exposure at any one time outstanding shall not
exceed the lesser of (i) the Maximum Revolving Credit Amount, as then in effect,
minus the aggregate principal amount of all Revolving Credit Loans then
outstanding or (ii) $2,000,000.
(c) TERM LOAN. The Lender agrees, on the terms of this Agreement,
to make a Term Loan to the Borrower on the Closing Date in the amount of
$3,950,000, which shall amortize as set forth in the Term Note described in
Section 2.06(b) hereof.
(d) LIMITATION ON TYPES OF LOANS. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans may be
Base Rate Loans or Eurodollar Loans; provided that no more than four (4)
Eurodollar Loans may be outstanding at any time.
Section 2.02 BORROWINGS, CONTINUATIONS AND CONVERSIONS, LETTERS
OF CREDIT.
(a) BORROWINGS. The Borrower shall give the Lender advance notice
as hereinafter provided of each borrowing hereunder, which shall specify the
aggregate amount of such borrowing, the Type and the date (which shall be a
Business Day) of the Loans to be borrowed and (in the case of Eurodollar Loans)
the duration of the Interest Period therefor.
(b) MINIMUM AMOUNTS. All Base Rate Loan borrowings shall be in
amounts of at least $100,000 or any whole multiple of $100,000 in excess
thereof, and all Eurodollar Loans shall be in amounts of at least $1,000,000 or
any whole multiple of $500,000 in excess thereof.
(c) NOTICES. All borrowings, continuations and conversions shall
require advance written notice to the Lender in the form of Exhibit B hereto (or
telephonic notice promptly confirmed by such a written notice), which in each
case shall be irrevocable, from the Borrower to be received by the Lender not
later than 11:00 a.m. Houston, Texas time at least one Business Day prior to the
date of such Base Rate borrowing and three Business Days prior to the date of
each Eurodollar Loan borrowing, continuation or conversion. Without in any way
limiting the Borrower's obligation to confirm in writing any telephonic notice,
the Lender may act without liability upon the basis of telephonic notice
believed by the Lender in good faith to be from the Borrower prior to receipt of
written confirmation. In each such case, the Borrower hereby waives the right to
dispute the Lender's record of the terms of such telephonic notice except in the
case of gross negligence or wilful misconduct by the Lender.
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(d) CONTINUATION OPTIONS. Subject to the provisions made in this
Section 2.02(d), the Borrower may elect to continue all or any part of any
Eurodollar Loan beyond the expiration of the then current Interest Period
relating thereto by giving advance notice as provided in Section 2.02(c) to the
Lender of such election, specifying the amount of such Loan to be continued and
the Interest Period therefor. In the absence of such a timely and proper
election, the Borrower shall be deemed to have elected to convert such
Eurodollar Loan to a Base Rate Loan pursuant to Section 2.02(e). All or any part
of any Eurodollar Loan may be continued as provided herein, provided that (i)
any continuation of any such Loan shall be (as to each Loan as continued for an
applicable Interest Period) in amounts of at least $1,000,000 or any whole
multiple of $500,000 in excess thereof and (ii) no Default shall have occurred
and be continuing. If a Default shall have occurred and be continuing, each
Eurodollar Loan shall be converted to a Base Rate Loan on the last day of the
Interest Period applicable thereto.
(e) CONVERSION OPTIONS. The Borrower may elect to convert all or
any part of any Eurodollar Loan on the last day of the then current Interest
Period relating thereto to a Base Rate Loan by giving advance notice to the
Lender of such election. Subject to the provisions made in this Section 2.02(e),
the Borrower may elect to convert all or any part of any Base Rate Loan at any
time and from time to time to a Eurodollar Loan by giving advance notice as
provided in Section 2.02(c) to the Lender of such election. All or any part of
any outstanding Loan may be converted as provided herein, provided that (i) any
conversion of any Base Rate Loan into a Eurodollar Loan shall be (as to each
such Loan into which there is a conversion for an applicable Interest Period) in
amounts of at least $1,000,000 or any whole multiple of $500,000 in excess
thereof, and (ii) no Default shall have occurred and be continuing. If no
Default shall have occurred and be continuing, each Base Rate Loan may be
converted into a Eurodollar Loan.
(f) ADVANCES. Not later than 11:00 a.m. Houston, Texas time on
the date specified for each borrowing hereunder, the Lender shall make available
the amount of the Loan to be made on such date in immediately available funds,
for the account of the Borrower. The amount shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by transferring
the same, in immediately available funds, to an account of the Borrower,
designated by the Borrower and maintained with the Lender at the Principal
Office.
(g) LETTERS OF CREDIT. The Borrower shall give the Lender advance
notice to be received by the Lender not later than 11:00 a.m. Houston, Texas
time not less than three (3) Business Days prior thereto of each request for the
issuance and at least thirty (30) Business Days prior to the date of the renewal
or extension of a Letter of Credit hereunder which request shall specify the
amount of such Letter of Credit, the date (which shall be a Business Day) such
Letter of Credit is to be issued, renewed or extended, the duration thereof, the
name and address of the beneficiary thereof and such other information as the
Lender may reasonably request all of which shall be reasonably
18
satisfactory to the Lender. Notwithstanding the foregoing, no request for
renewal or extension of a Letter of Credit need be delivered to the Lender in
the case of a Letter of Credit issued by Lender which provides by its terms for
automatic renewal or extension; nonetheless, Borrower shall (upon request to
Borrower for same from Lender) supply Lender with such a request, but same shall
not be a condition to the automatic renewal or extension. Subject to the terms
and conditions of this Agreement, on the date specified for the issuance,
renewal or extension of a Letter of Credit, the Lender shall issue such Letter
of Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the
Borrower, shall execute a Letter of Credit Agreement. In the event of any
conflict between any provision of a Letter of Credit Agreement and this
Agreement, the Borrower and the Lender hereby agree that the provisions of this
Agreement shall govern.
The Lender will send to the Borrower, immediately upon issuance
of any Letter of Credit, or an amendment thereto, a true and complete copy of
such Letter of Credit, or such amendment thereto.
Section 2.03 CHANGES OF REVOLVING CREDIT COMMITMENT.
(a) The Revolving Credit Commitment shall at all times be equal
to the lesser of (i) the Maximum Revolving Credit Amount after adjustments
resulting from reductions pursuant to Section 2.03(b) hereof, or (ii) the
Borrowing Base as determined from time to time.
(b) The Borrower shall have the right to reduce the amount of the
Revolving Credit Commitment at any time or from time to time upon not less than
three (3) Business Days' prior written notice to the Lender of each such
reduction, which notice shall specify the effective date thereof and the amount
of any such reduction (which shall not be less than $1,000,000 or any whole
multiple of $1,000,000 in excess thereof) and shall be irrevocable and effective
only upon receipt by the Lender. No amount in respect of which notice of
reduction of the Revolving Credit Commitment has been given pursuant to this
Section 2.03(b) shall thereafter be advanced pursuant to Section 2.01(a).
(c) The Borrower shall have the right to terminate the Revolving
Credit Commitment at any time upon not less than three (3) Business Days' prior
written notice to the Lender. The Revolving Credit Commitment once terminated
may not be reinstated and the Lender shall have no further obligation to make
Revolving Credit Loans to the Borrower pursuant to Section 2.01(a), or issue,
reissue, renew or extend Letters of Credit pursuant to Section 2.01(b).
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Section 2.04 FEES.
(a) The Borrower shall pay to the Lender a commitment fee on the
daily average unused amount of the Revolving Credit Commitment for the period
from and including the Closing Date up to but excluding the earlier of the date
the Revolving Credit Commitment is terminated or the Revolving Credit
Termination Date, at a rate per annum equal to .375%. The average unused amount
of the Revolving Credit Commitment shall be determined at any date by
subtracting from the Revolving Credit Commitment at such date the sum of the
then outstanding principal balance of the Revolving Credit Loans plus the LC
Exposure at such date. Accrued commitment fees shall be payable on the last day
of each calendar month from and after the Closing Date and on the earlier of the
date the Revolving Credit Commitment is terminated or the Revolving Credit
Termination Date.
(b) The Borrower agrees to pay the Lender commissions for issuing
Letters of Credit (calculated separately for each Letter of Credit) at the rate
of 1-1/2% per annum of the daily average of the undrawn portion existing from
time to time under such Letter of Credit, provided that each Letter of Credit
shall bear a minimum commission of $1,000 and that each Letter of Credit shall
be deemed to be outstanding up to the full undrawn amount of the Letter of
Credit until the Lender has received the cancelled Letter of Credit or a written
cancellation of the Letter of Credit from the beneficiary of such Letter of
Credit in form and substance acceptable to the Lender or for any reductions in
the amount of the Letter of Credit (other than from a drawing), written
notification from the Borrower. Such commissions are payable in advance at
issuance of the Letter of Credit.
(c) Upon each transfer of any Letter of Credit to a successor
beneficiary in accordance with its terms, the Borrower shall pay the sum of
$1,000 to the Lender.
(d) Upon each drawing upon any Letter of Credit, the Borrower
shall pay to the Lender a negotiation fee of $1,000; provided that such fee
shall not be a condition to any drawing.
(e) The Borrower agrees to pay the Lender a one-time facility fee
equal to $100,000. Such fee is due and payable on the Closing Date.
Section 2.05 LENDING OFFICES. The Loans of each Type shall be
made and maintained at the Lender's Applicable Lending Office for Loans of such
Type.
Section 2.06 NOTES.
(a) REVOLVING CREDIT NOTE. The Loans to be made by the Lender to
the Borrower pursuant to Section 2.01(a) shall be evidenced by the Revolving
Credit Note, being that certain promissory note of the Borrower dated the
Closing Date, in the face amount of the Maximum Revolving Credit Amount, payable
to the order of the Lender as
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therein provided and otherwise being substantially in the form of Exhibit A-1
hereto. The Revolving Credit Note represents a renewal, extension, rearrangement
and modification of the Prior Revolving Credit Note.
(b) TERM NOTE. The Loans to be made by the Lender to the Borrower
pursuant to Subsection 2.01(c) shall be evidenced by the Term Note, being that
certain promissory note of the Borrower dated the Closing Date, in the original
principal amount of $3,950,000, payable to the order of the Lender in twelve
(12) consecutive quarterly installments commencing on September 30, 1995, the
first and second of which being in the amount of $250,000 each, the third and
fourth of which being in the amount of $325,000 each, the fifth through and
including the eleventh of which being in the amount of $350,000 each, and the
twelfth and final installment in the amount of the unpaid principal balance then
owing thereunder being due and payable on the Final Maturity Date. The Term Note
shall otherwise be in substantially the form of Exhibit A-2 hereto. The Term
Note represents a renewal, extension, rearrangement and modification of the
Prior Term Note.
The date, amount, Type, interest rate and Interest Period of each
Loan and all payments made on account of the principal thereof, shall be
recorded by the Lender on its books for the Note, and, prior to any transfer,
endorsed by the Lender on the schedule attached to such Note or any continuation
thereof. Such records shall be deemed conclusive absent manifest error.
Section 2.07 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower may prepay the Base Rate
Loans upon not less than one (1) Business Day prior notice to the Lender, which
notice shall specify the prepayment date (which shall be a Business Day) and the
amount of the prepayment (which shall be at least $250,000 or the remaining
principal balance outstanding on the Note being prepaid) and shall be
irrevocable and effective only upon receipt by the Lender, provided that
interest on the principal prepaid, accrued to the prepayment date, shall be paid
on the prepayment date. The Borrower may not prepay any Eurodollar Loans prior
to the end of an Interest Period (provided that this sentence shall not affect
the Borrower's obligation to prepay Loans pursuant to Sections 2.07(b) or (c) or
Section 10.01 hereof).
(b) MANDATORY PREPAYMENTS.
(i) If, after giving effect to any reduction of the Revolving
Credit Commitment pursuant to Section 2.03(b), the outstanding aggregate
principal amount of the Revolving Credit Loans plus the LC Exposure
exceeds the Revolving Credit Commitment, the Borrower shall (A) either
(x) prepay the Revolving Credit Loans on the date of such reduction in
an aggregate principal amount equal to the excess, together with
interest on the principal amount paid accrued to the date of such
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prepayment or (y) deliver to Lender a letter of credit for the benefit
of Lender (or other collateral reasonably satisfactory to the Lender),
in form, substance and amount (and from an issuing bank) reasonably
satisfactory to Lender, and (B) if any excess remains after prepaying
all of the Revolving Credit Loans or providing one or more letters of
credit, pay to the Lender an amount equal to the excess to be held as
cash collateral as provided in Section 2.09(b) hereof.
(ii) If at any time the Borrowing Base is less than the aggregate
outstanding principal amount of the Revolving Credit Loans made pursuant
to Section 2.01(a) plus the LC Exposure, then the Borrower shall
immediately upon receipt of written notice from the Lender thereof: (A)
prepay such Revolving Credit Loans in an aggregate principal amount
equal to such excess, together with interest on the principal amount
paid accrued to the date of such prepayment and (B) if a Borrowing Base
deficiency remains after prepaying all of the Revolving Credit Loans
because of LC Exposure, either pay to the Lender an amount equal to such
Borrowing Base deficiency to be held as cash collateral as provided in
Section 2.09(b) hereof, or deliver to Lender a letter of credit for the
benefit of Lender (or other collateral reasonably satisfactory to the
Lender) in form, substance and amount (and from an issuing Bank) all
reasonably satisfactory to the Lender.
(iii) The following proceeds received by the Borrower or any
Subsidiary shall be delivered to the Lender for application towards
principal reductions on the Term Note:
(A) 100% of the Net Cash Proceeds from the sale of the
Excluded Subsidiaries (not including the Foreign Subsidiaries);
provided, however, the Borrower or such Subsidiary, as
applicable, shall be entitled to keep the first $1,000,000 of all
Net Cash Proceeds received by it from the sale of Portales 801,
Inc., Pensacola 801, Inc., Ft. Bragg 801, Inc. and Ft. Stewart
801, Inc. and, thereafter, 50% of all such Net Cash Proceeds in
excess of $1,000,000 shall be delivered by the Borrower or such
Subsidiary, as applicable, to the Lender; and
(B) Until all amounts owing under the Term Note are paid
in full, 100% of Net Cash Proceeds received by the Borrower or
any Subsidiary from (x) any insurance, condemnation and/or
similar awards, unless such insurance, condemnation or similar
awards are to be used by Borrower or such Subsidiary, as
applicable, to rebuild, repair or replace the property that was
the subject of such award, in which event the Lender shall, to
the extent received by Lender, cooperate with Borrower or such
Subsidiary, as applicable, in and effect the disbursement of such
insurance, condemnation or other similar awards for such
purposes, and (y) any asset sales not made in the ordinary course
of business (excluding the Excluded Subsidiaries).
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Such proceeds shall be delivered to the Lender within three (3)
Business Day after the Borrower's receipt of same.
(c) PREPAYMENTS GENERALLY. Prepayments permitted or required
under this Section 2.07 shall be without premium or penalty, except as required
under Section 5.05 for prepayment of Eurodollar Loans. Any prepayment made on
the Revolving Credit Note during the Revolving Credit Period may be reborrowed
subject to the then effective Revolving Credit Commitment. Any prepayments made
on the Term Note shall be applied to installments on the Term Note to which the
prepayment is applied in the inverse order of maturity.
Section 2.08 ASSUMPTION OF RISKS. The Borrower assumes all risks
of the acts or omissions of any beneficiary of any Letter of Credit or any
transferee thereof with respect to its use of such Letter of Credit. Neither the
Lender (except in the case of willful misconduct, gross negligence or bad faith
on the part of the Lender or any of its employees) nor its correspondents shall
be responsible for (a) the validity or genuineness of certificates or other
documents or any endorsements thereon, even if such certificates or other
documents should in fact prove to be invalid, fraudulent or forged, (b) errors,
omissions, interruptions or delays in transmissions or delivery of any messages
by mail, telex, or otherwise, whether or not they be in code, (c) errors in
translation or for errors in interpretation of technical terms, (d) the validity
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason, or (e) for any other consequences arising from causes beyond the
Lender's control or the control of its correspondents. In addition, the Lender
shall not be responsible for any error, neglect, or default of any of its
correspondents; and none of the above shall affect, impair or prevent the
vesting of the Lender's or its rights or powers hereunder or under the Letter of
Credit Agreements, all of which rights shall be cumulative. The Lender may
accept certificates or other documents that appear on their face to be in order,
without responsibility for further investigation of any matter contained
therein, provided that the Lender believes such certificates or other documents
to be genuine and to have been signed or sent by the proper person or persons.
In furtherance and not in limitation of the foregoing provisions, the Borrower
agrees that any action, inaction or omission taken or not taken by the Lender or
by any correspondent for the Lender in good faith in connection with any Letter
of Credit, or any related drafts, certificates, documents or instruments, shall
be binding on the Borrower and shall not put the Lender or its correspondents
under any resulting liability to the Borrower.
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY.
(a) If a disbursement by the Lender is made under any Letter of
Credit, the Borrower shall pay to the Lender within two (2) Business Days after
notice of any such
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disbursement is received by the Borrower, the amount of each such disbursement
made by the Lender under the Letter of Credit (if such payment is not sooner
effected as may be required under this Section 2.09 or under other provisions of
the Letter of Credit) together with interest on the amount disbursed from and
including the date of disbursement until payment in full of such disbursed
amount at a varying rate per annum equal to (i) the then applicable interest
rate for Base Rate Loans through the second Business Day after notice of such
disbursement is received by the Borrower, and (ii) the Post-Default Rate for
Base Rate Loans (but in no event to exceed the Highest Lawful Rate) for the
period from and including the third Business Day following the date of such
disbursement to and including the date of repayment in full of such disbursed
amount. The obligations of the Borrower under this Agreement and each Letter of
Credit shall be absolute, unconditional and irrevocable and shall be paid or
performed strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, but only to the fullest
extent permitted by applicable law, the following circumstances (i) any lack of
validity or enforceability of this Agreement, any Letter of Credit or any of the
Security Instruments, (ii) any amendment or waiver of (including any default),
or any consent to departure from this Agreement (except to the extent permitted
by any amendment or waiver), any Letter of Credit or any of the Security
Instruments, (iii) the existence of any claim, set-off, defense or other rights
which the Borrower may have at any time against the beneficiary of any Letter of
Credit or any transferee of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Lender or any other
Person, whether in connection with this Agreement, any Letter of Credit, the
Security Instruments, the transactions contemplated hereby or any unrelated
transaction, (iv) any statement, certificate, draft, notice or any other
document presented under any Letter of Credit proves to have been forged,
fraudulent, or invalid in any respect or any statement therein proves to have
been untrue or inaccurate in any respect whatsoever, (v) payment by the Lender
under any Letter of Credit against presentation of a draft or certificate which
appears on its face to comply, but does not comply, with the terms of such
Letter of Credit; and (vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary, the
Borrower will not be liable for payment or performance that results from the
gross negligence or willful misconduct of the Lender, except (i) where the
Borrower or any Subsidiary actually recovers the proceeds for itself or the
Lender of any payment made by the Lender in connection with such gross
negligence or willful misconduct, or (ii) in cases where the Lender makes
payment to the named beneficiary of a Letter of Credit in accordance with the
terms of the Letter of Credit.
(b) In the event of the maturity of the Revolving Credit Note by
acceleration, an amount equal to the LC Exposure shall be deemed to be forthwith
due and owing by the Borrower to the Lender as of the date of any such
occurrence; and the Borrower's obligation to pay such amount shall be absolute
and unconditional, without
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regard to whether any beneficiary of any such Letter of Credit has attempted to
draw down all or a portion of such amount under the terms of a Letter of Credit,
and, to the fullest extent permitted by applicable law, shall not be subject to
any defense or be affected by a right of set-off, counterclaim or recoupment
which the Borrower may now or hereafter have against any such beneficiary, the
Lender or any other Person for any reason whatsoever. Such payments shall be
held by the Lender as cash collateral securing the LC Exposure. In the event of
any such payment by the Borrower of amounts contingently owing under outstanding
Letters of Credit and in the event that thereafter drafts or other demands for
payment complying with the terms of such Letters of Credit are not made prior to
the respective expiration dates thereof, the Lender agrees, if no Event of
Default has occurred and is continuing or if no other amounts are outstanding
under this Agreement, the Notes or the Security Instruments, to remit to the
Borrower amounts for which the contingent obligations evidenced by the Letters
of Credit have ceased.
(c) The Lender shall have the right (but not the obligation) to
make advances under the Revolving Credit Note to fund any disbursement by the
Lender under any Letter of Credit. Each such advance shall be made as a Base
Rate Loan.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 REPAYMENT OF LOANS. The Borrower will pay to the
Lender, the principal payments required by this Section 3.01.
(a) REVOLVING CREDIT NOTE. On the Revolving Credit Termination
Date the Borrower shall repay the aggregate principal amount of the Revolving
Credit Note.
(b) TERM NOTE. The Term Note shall be payable in twelve (12)
consecutive quarterly installments, the first and second of which being in the
amount of $250,000 each, the third and fourth of which being in the amount of
$325,000 each, the fifth through and including the eleventh of which being in
the amount of $350,000 each, and the twelfth and final installment being in the
amount of the balance of principal then due on the Term Note. The first such
installment is due and payable on September 30, 1995, and the remaining
installments are due and payable in consecutive order on the last day of each
succeeding December, March, June and September thereafter, with the final
installment being due and payable on the Final Maturity Date.
Section 3.02 INTEREST. The Borrower will pay to the Lender
interest on the unpaid principal amount of each Loan for the period commencing
on the date such Loan is made to but excluding the date such Loan shall be paid
in full, at the following rates per annum:
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(a) if such a Loan is a Base Rate Loan, the Base Rate (as in
effect from time to time) plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate; and
(b) if such a Loan is a Eurodollar Loan, for each Interest Period
relating thereto, the Fixed Rate for such Loan plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate.
Notwithstanding the foregoing, the Borrower will pay to the Lender interest at
the applicable Post-Default Rate on any principal of any Loan, and (to the
fullest extent permitted by law) except as otherwise expressly set forth herein,
on any other amount payable by the Borrower hereunder or under the Notes which
shall not be paid in full when due (whether at stated maturity, by acceleration
or otherwise), for the period commencing on the due date thereof until the same
is paid in full.
Accrued interest on Base Rate Loans shall be payable on the last day of
each September, December, March and June, commencing on September 30, 1995, and
accrued interest on each Eurodollar Loan shall be payable on the last day of the
Interest Period therefor and, if such Interest Period is longer than three
months at three-month intervals following the first day of such Interest Period,
except that interest payable at the Post-Default Rate shall be payable from time
to time on demand and interest on any Eurodollar Loan that is converted into a
Base Rate Loan (pursuant to Section 5.04) shall be payable on the date of
conversion (but only to the extent so converted).
Promptly after the determination of any interest rate provided for
herein or any change therein, the Lender shall notify the Borrower thereof. Each
determination by the Lender of an interest rate or fee hereunder shall, except
in cases of manifest error, be presumed to be correct.
ARTICLE IV
PAYMENTS; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS. Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by the
Borrower under this Agreement, the Notes and the Letters of Credit shall be made
in Dollars, in immediately available funds, to the Lender at such account as the
Lender shall specify by notice to the Borrower from time to time, not later than
11:00 a.m. Houston, Texas time on the date on which such payments 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). Such payments shall be made
without (to the fullest extent permitted by applicable law) defense, set-off or
counterclaim; provided, all such defenses and counterclaims may be reserved.
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Each payment received by the Lender under this Agreement or the Notes shall be
paid promptly to the Lender, in immediately available funds. If the due date of
any payment under this Agreement or the Notes would otherwise fall on a day
which is not a Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for any principal so extended for the
period of such extension. At the time of each payment of any principal of or
interest on any borrowing to the Lender, the Borrower shall notify the Lender of
the Loans to which such payment shall apply. In the absence of such notice the
Lender may specify the Loans to which such payment shall apply, but to the
extent possible such payment or prepayment will be applied first to the Loans
comprised of Base Rate Loans.
Section 4.02 COMPUTATIONS. Interest on Loans and fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable, unless such calculation would exceed the Highest Lawful Rate, in which
case interest shall be calculated on the per annum basis of a year of 365 or 366
days, as the case may be.
Section 4.03 SET-OFF. The Borrower agrees that, in addition to
(and without limitation of) any right of set-off, bankers' lien or counterclaim
the Lender may otherwise have, the Lender shall have the right and be entitled,
at its option after the occurrence of an Event of Default and so long as same
shall be continuing, to offset balances held by it or by any of its Affiliates
for account of the Borrower or any Subsidiary at any of its offices, in Dollars
or in any other currency, against any principal of or interest on any of the
Loans or any other amount payable to the Lender hereunder, which is not paid
when due (regardless of whether such balances are then due to the Borrower), in
which case it shall promptly notify the Borrower thereof, provided that Lender's
failure to give such notice shall not affect the validity thereof.
Section 4.04 TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 4.01, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
resulting from a Regulatory Change, EXCLUDING, taxes imposed or based on its
income, and franchise or similar taxes imposed on it, by (i) any jurisdiction
(or political subdivision thereof) of which the Lender, is a citizen or resident
or in which the Lender has an Applicable Lending Office, (ii) the jurisdiction
(or any political subdivision thereof) in which the Lender is organized, or
(iii) any jurisdiction (or political subdivision thereof) in which the Lender
does business which taxes are imposed solely as a result of doing business in
such jurisdiction (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "TAXES").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to the Lender (i) the sum payable shall be
-27-
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
4.04) the Lender shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions,
and (iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable law.
(b) OTHER TAXES. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies other than excluded taxes as aforesaid, that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Security Instrument (hereinafter
referred to as "OTHER TAXES").
(c) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER WILL INDEMNIFY THE LENDER FOR THE FULL AMOUNT OF
TAXES AND OTHER TAXES (INCLUDING, BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES
IMPOSED BY ANY GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION
4.04) PAID BY THE LENDER AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND
EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES
OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED UNLESS THE PAYMENT OF SUCH
TAXES WERE NOT CORRECTLY OR LEGALLY ASSERTED AND THE LENDER'S PAYMENT OF SUCH
TAXES OR OTHER TAXES WAS THE RESULT OF ITS GROSS NEGLIGENCE OR WILFUL MISCONDUCT
PROVIDED, THAT BORROWER'S INDEMNITY HEREUNDER DOES NOT EXTEND TO OR COVER ANY
TAXES EITHER IMPOSED OR BASED UPON LENDER'S INCOME OR CONSTITUTING FRANCHISE OR
SIMILAR TAXES. ANY PAYMENT PURSUANT TO SUCH INDEMNIFICATION SHALL BE MADE WITHIN
THIRTY (30) DAYS AFTER THE DATE THE LENDER MAKES WRITTEN DEMAND THEREFOR. IF THE
LENDER RECEIVES A REFUND OR CREDIT IN RESPECT OF ANY TAXES OR OTHER TAXES FOR
WHICH IT HAS RECEIVED PAYMENT FROM THE BORROWER HEREUNDER IT SHALL PROMPTLY
NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO PAYMENT DEFAULT
HAS OCCURRED AND IS CONTINUING, WITHIN 30 DAYS AFTER RECEIPT OF A REQUEST BY THE
BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED APPLICATION
FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT EQUAL TO SUCH REFUND
OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY INTEREST SO REFUNDED OR
CREDITED), PROVIDED THAT THE BORROWER, UPON THE REQUEST OF THE LENDER, AGREES TO
RETURN SUCH REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO THE
LENDER IN THE EVENT THE LENDER IS REQUIRED TO REPAY SUCH REFUND OR CREDIT.
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ARTICLE V
ADDITIONAL COSTS; CAPITAL ADEQUACY; ETC.
Section 5.01 ADDITIONAL COSTS.
(a) EURODOLLAR REGULATIONS, ETC. The Borrower shall pay directly
to Lender from time to time such amounts as the Lender may determine in good
faith to be necessary to compensate the Lender for any material costs (which,
solely for purposes of this Article V, are costs in excess of $5,000.00) which
it determines are attributable to its making or maintaining of any Eurodollar
Loans or issuing or participating in Letters of Credit hereunder or its
obligation to make any Eurodollar Loans or issue any Letters of Credit
hereunder, or any reduction in any amount receivable by the Lender hereunder in
respect of any of such Eurodollar Loans, Letters of Credit or such obligation
(such increases in costs and reductions in amounts receivable being herein
called "ADDITIONAL COSTS"), resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to the Lender under this
Agreement or any Note in respect of any of such Eurodollar Loans or Letters of
Credit (other than taxes imposed or based in whole or in part on the overall net
income of the Lender or of its Applicable Lending Office for any of such
Eurodollar Loans by the jurisdiction in which the Lender has its Principal
Office or Applicable Lending Office), or (ii) imposes or modifies any reserve,
special deposit, minimum capital, capital ratio or similar requirements (other
than the Reserve Requirement utilized in the determination of the Fixed Rate for
such Loan) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of the Lender (including any of such
Eurodollar Loans or any deposits referred to in the definition of "Fixed
Eurodollar Rate" in Section 1.02 hereof), or the Commitment or the Eurodollar
interbank market, or (iii) imposes any other condition affecting this Agreement
or the Note (or any of such extensions of credit or liabilities) or the
Commitment. The Lender will notify the Borrower of any event occurring after the
Closing Date which will entitle it to compensation pursuant to this Section
5.01(a) as promptly as practicable after it obtains knowledge thereof and
determines in good faith to request such compensation, and will designate a
different Applicable Lending Office for the Loans affected by such event if such
designation will avoid the need for, or reduce the amount of, such compensation.
If the Lender requests compensation from the Borrower under this Section
5.01(a), the Borrower may, by notice to the Lender, suspend the obligation of
the Lender to make additional Loans 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 5.04
shall be applicable).
(b) REGULATORY CHANGE. Without limiting the effect of the
provisions of Section 5.01(a), in the event that, by reason of any Regulatory
Change, the Eurodollar interbank market or the Lender's position in such market,
the Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount
-29-
of a category of deposits or other liabilities of the Lender which includes
deposits by reference to which the interest rate on Eurodollar Loans is
determined as provided in this Agreement or a category of extensions of credit
or other assets of the Lender which includes Eurodollar Loans, or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if the Lender so elects by notice to the
Borrower, the obligation of the Lender to make additional Eurodollar Loans shall
be suspended until such Regulatory Change or other circumstances ceases to be in
effect (in which case the provisions of Section 5.04 shall be applicable).
(c) CAPITAL ADEQUACY. Without limiting the effect of the
foregoing provisions of this Section 5.01 (but without duplication), the
Borrower shall pay directly to the Lender from time to time on request such
material amounts as the Lender may reasonably determine to be necessary to
compensate it or its parent or holding company for any costs which are
attributable to the maintenance by it or its parent or holding company (or any
Applicable Lending Office), pursuant to any Governmental Requirement following
any Regulatory Change, of capital in respect of the Commitment, any Note, the
Loans or any interest held by it in any Letter of Credit (such compensation to
include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of the Lender or its parent or holding company (or
any Applicable Lending Office) to a level below that which the Lender or its
parent or holding company (or any Applicable Lending Office) could have achieved
but for such Governmental Requirement). The Lender will notify the Borrower that
it is entitled to compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such compensation.
(d) COMPENSATION PROCEDURE. If Lender notifies the Borrower in
writing of the incurrence of additional costs under this Section 5.01, such
notice to the Borrower shall set forth the basis and amount of its request for
compensation. Determinations and allocations by the Lender for purposes of this
Section 5.01 of the effect of any Regulatory Change pursuant to Section 5.01(a)
or (b), or of the effect of capital maintained pursuant to Section 5.01(c), on
its costs or rate of return of maintaining Loans or its obligation to make Loans
or issue Letters of Credit, or on amounts receivable by it in respect of Loans
or Letters of Credit, and of the amounts required to compensate the Lender under
this Section 5.01, shall be presumed correct for all purposes and shall be
evidenced by a certificate from Lender setting forth the relevant calculations,
provided that such determinations and allocations are made on a reasonable
basis. Any request for additional compensation under this Section 5.01 shall be
paid by the Borrower within twenty (20) Business Days of the receipt by the
Borrower of the notice described in this Section 5.01(d).
Section 5.02 LIMITATION ON EURODOLLAR LOANS. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any Fixed
Eurodollar Rate for any Interest Period:
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(a) the Lender determines in good faith (which determination
shall be presumed correct absent manifest error) that quotations of
interest rates for the relevant deposits referred to in the definition
of "Fixed Eurodollar Rate" in Section 1.02 are not being provided in the
relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as provided herein;
or
(b) the Lender determines in good faith (which determination
shall be presumed correct absent manifest error) that the relevant rates
of interest referred to in the definition of "Fixed Eurodollar Rate" in
Section 1.02 upon the basis of which the rate of interest for Eurodollar
Loans for such Interest Period is to be determined are not likely to
adequately cover the cost to the Lender of making or maintaining
Eurodollar Loans;
then the Lender shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Eurodollar Loans.
Section 5.03 ILLEGALITY. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for the Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder, then the Lender shall promptly notify the Borrower thereof and
the Lender's obligation to make Eurodollar Loans shall be suspended until such
time as the Lender may again make and maintain Eurodollar Loans (in which case
the provisions of Section 5.04 shall be applicable).
Section 5.04 BASE RATE LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND
5.03. If the obligation of the Lender to make Eurodollar Loans shall be
suspended pursuant to Sections 5.01, 5.02 or 5.03 ("AFFECTED LOANS"), all
Affected Loans which would otherwise be made by the Lender shall be made instead
as Base Rate Loans (and, if an event referred to in Section 5.01(b) or Section
5.03 has occurred and the Lender so requests by notice to the Borrower, all
Affected Loans then outstanding shall be automatically converted into Base Rate
Loans on the date specified by the Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) Base Rate Loans, all
payments of principal which would otherwise be applied to the Affected Loans
shall be applied instead to Base Rate Loans. Any conversion of a Eurodollar Loan
into a Base Rate Loan, to the extent required pursuant to this Section 5.04,
shall be made without any penalty or charge to Borrower, as if such conversion
had been made on the last day of the Interest Period applicable to such
Eurodollar Loan.
Section 5.05 COMPENSATION. The Borrower shall pay to the Lender
within thirty (30) days of receipt of written request of Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis),
-31-
such amount or amounts as shall compensate it for any loss, cost, expense or
liability which the Lender determines are attributable to:
(a) any payment, prepayment or conversion of a Eurodollar Loan
properly made by the Borrower for any reason, or by Lender as a result
of the acceleration of the Loans pursuant to Section 10.01, on a date
other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including but not
limited to, the failure of any of the conditions precedent specified in
Article VI to be satisfied) to borrow, continue or convert a Eurodollar
Loan on the date for such borrowing, continuation or conversion
specified in the relevant notice given pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid, prepaid or
converted or not borrowed for the period from the date of such payment,
prepayment or conversion or failure to borrow to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Loan provided for herein
over (ii) the interest component of the amount the Lender would have bid in the
London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by the Lender).
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 INITIAL FUNDING.
The obligation of the Lender to make the Initial Funding and to
issue any Letters of Credit hereunder is subject to its receipt by the Lender of
all fees payable pursuant to Section 2.04 on or before the Closing Date or
otherwise under this Agreement and the following documents and satisfaction of
the other conditions provided in this Sec tion 6.01, each of which shall be
satisfactory to the Lender in form and substance:
(a) (i) A certificate of the Secretary or an Assistant Secretary
of the Borrower and each Guarantor or other Subsidiary party to any of
the Security Instruments setting forth (A) resolutions of its board of
directors with respect to the authorization of the Borrower, such
Guarantor and such other Subsidiary to execute and deliver this
Agreement, the Note and the Security Instruments to which it is a
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party and to enter into the transactions contemplated in those
documents, (B) the officers of the Borrower, such Guarantor and such
other Subsidiary (x) who are authorized to sign this Agreement, the Note
and the Security Instruments to which Borrower, such Guarantor and such
other Subsidiary is a party, and (y) who will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices
and other communications in connection with this Agreement and the
transactions contemplat ed hereby, (C) specimen signatures of the
authorized officers, and (D) the articles or certificate of
incorporation and bylaws of the Borrower, such Guarantor and such other
Subsidiary, certified as being true and complete. The Lender may
conclusively rely on such certificate until it receives notice in
writing from the Borrower to the contrary.
(b) Certificates of the Secretary of State of Texas with respect
to the existence, qualification and good standing of the Borrower and
Guarantors.
(c) A compliance certificate which shall be substantially in the
form of Exhibit C, duly and properly executed by a Responsible Officer
and dated as of the date of the Initial Funding.
(d) The Notes, each duly completed and executed.
(e) The Security Instruments described on Exhibit E, duly
completed and executed in sufficient number of counterparts for
recording, if necessary.
(f) An opinion of the General Counsel of the Borrower and the
Guarantors dated as of the Closing Date as to such matters as Lender
shall reasonably request, reasonably satisfactory to Lender. Lender has
received the legal opinion of Fulbright & Jaworski L.L.P. dated April 8,
1994, rendered in connection with the 1994 Credit Agreement.
(g) A certificate of hazard insurance coverage of the Borrower
evidencing that the Borrower is carrying hazard insurance in accordance
with Section 7.19 hereof together with a schedule describing all other
insurance carried in accordance with Section 7.19 hereof.
(h) The Lender shall have received the Financial Statements of
the Borrower described or referred to in Section 7.02.
(i) An initial borrowing base report, which shall contain
supporting schedules and being otherwise in substantially the form of
Exhibit G attached hereto.
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(j) Such other documents as the Lender or its counsel may
reasonably request.
Section 6.02 INITIAL AND SUBSEQUENT LOANS. The obligation of the
Lender to issue Letters of Credit and to make Loans to the Borrower upon the
occasion of each borrowing hereunder (including the Initial Funding) is subject
to the further conditions precedent that, as of the date of such Loans and after
giving effect thereto (a) no Default shall have occurred and be continuing, (b)
no Material Adverse Effect shall have occurred, and (c) the representations and
warranties made by the Borrower in Article VII and in the Security Instruments
shall be true in all material respects on and as of the date of the making of
such Loans with the same force and effect as if made on and as of such date and
following such new borrowing, except as such representations and warranties are
modified to give effect to transactions expressly permitted hereby and except
for such representations and warranties as are by their express terms limited to
a specific date. Each request for a borrowing by the Borrower hereunder shall
constitute a certification by the Borrower to the effect set forth in the
preceding sentence (both as of the date of such notice and, unless the Borrower
otherwise notifies the Lender prior to the date of and immediately following
such borrowing as of the date thereof) except there shall be no such
certification for such representations and warranties as are by their express
terms limited to a specific date.
Section 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT. In
addition to the satisfaction of all other conditions precedent set forth in this
Article VI, the issuance, renewal, extension or reissuance of the Letters of
Credit referred to in Section 2.01(b) hereof is subject to the following
conditions precedent:
(a) At least three (3) Business Days prior to the date of the
issuance and at least thirty (30) Business Days prior to the date of the
renewal, extension or reissuance of each Letter of Credit (except for
such Letters of Credit as contain a provision for automatic renewal or
extension thereof without any further act or documentation by Lender)
the Lender shall have received a written request for a Letter of Credit;
provided, however, with respect to Letters of Credit which are
automatically renewed or extended, Borrower shall still furnish Lender
with a written request for same following Lender's request for same but
such request shall not be a condition to such automatically renewed or
extended Letter of Credit.
(b) Each of the Letters of Credit shall (i) be issued by the
Lender, (ii) contain such terms and provisions as are reasonably
required by the Lender, (iii) be for the account of the Borrower, and
(iv) have a maturity of one year or less (which may incorporate
automatic annual renewals with consent of the Lender), but in no event
shall any Letter of Credit expire later than one (1) year after the
Revolving Credit Termination Date.
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(c) The Borrower shall have duly and validly executed and
delivered to the Lender a Letter of Credit Agreement pertaining to the
Letter of Credit.
Section 6.04 POST CLOSING CONDITIONS. In addition to the
satisfaction of all other conditions precedent set forth in this Article VI,
Borrower shall deliver to Lender no later than 30 days after the Closing Date,
certificates of the appropriate state agencies (other than the Secretary of
State of Texas) with respect to the existence, qualification and good standing
of the Borrower and the Guarantors.
Section 6.05 AUDIT AND ASSET MANAGEMENT REVIEW. In addition to
all other conditions precedent set forth in this Article VI, the Lender will
engage its Audit and Asset Management Group to review the financial systems,
controls and working capital assets of the Borrower. The Borrower agrees to pay
all out-of-pocket expenses (excluding overhead allocations) reasonably incurred
by the Lender in connection with such review.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that (each
representation and warranty herein is given as of the Closing Date and shall be
deemed repeated and reaffirmed on the dates of each borrowing as provided in
Section 6.02):
Section 7.01 CORPORATE EXISTENCE. Each of the Borrower and each
Subsidiary (except the Foreign Subsidiaries) (a) is a corporation duly
organized, legally existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite corporate power, and
has all material governmental licenses, authorizations, consents and approvals
necessary 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 the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
Section 7.02 FINANCIAL CONDITION. The audited consolidated
balance sheet of the Borrower and its Subsidiaries as at May 31, 1995 and the
related consolidated statement of income, stockholders' equity and cash flow of
the Borrower and its Subsidiaries for the fiscal year ended on said date, the
related notes, with the opinion thereon of Deloitte & Touche heretofore
furnished to the Lender and the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at February 28, 1995 and their related
consolidated statements of income, stockholders' equity and cash flow of the
Borrower and its Subsidiaries for the six-month period ended on such date
heretofore furnished to the Lender, are complete and correct and fairly present
in all material respects the consolidated financial condition of the Borrower
and its Subsidiaries as at said dates and the results of
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its operations for the fiscal year and the six-month period on said dates, all
in accordance with GAAP, as applied on a consistent basis (subject, in the case
of the interim financial statements, to normal year-end adjustments). The
Borrower and the Subsidiaries, taken as a whole, do not have as of the Closing
Date any material Debt, contingent liability or material long-term obligation
not otherwise set forth in such financial statements or in filings made with the
SEC pursuant to and required by the Securities Exchange Act of 1934 (the "1934
Act") as amended and all such filings have been furnished to the Lender except
for the Certificates of Participation described on Schedule 9.01, which are
hereby represented to be nonrecourse liabilities. Since May 31, 1995, there has
been no change or event having a Material Adverse Effect. Since the date of the
Financial Statements, neither the business nor the Properties of the Borrower or
any Subsidiary have been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any Governmental Authority,
riot, activities of armed forces or acts of God or of any public enemy.
Section 7.03 LITIGATION. Except as disclosed in filings on Form
10-K or 10-Q made with the SEC (with copies of same delivered to Lender) or
disclosed on Schedule 7.03 attached hereto, at the Closing Date there is no
litigation, legal, administrative or arbitral proceeding, investigation or other
action of any nature pending or, to the knowledge of the Borrower threatened
against or affecting the Borrower or any Subsidiary which could reasonably be
expected to have a Material Adverse Effect, except for any effect on any
quarterly income statement.
Section 7.04 NO BREACH. Neither the execution and delivery of
this Agreement, the Notes or the other Security Instruments, nor compliance with
the terms and provisions hereof will conflict with or result in a breach of or
default of, or require any consent which has not been obtained as of the Closing
Date under, the respective charter or by-laws of the Borrower or any Subsidiary,
or any Governmental Requirement or any agreement or instrument to which the
Borrower or any Subsidiary is a party or by which it is bound or to which it or
its Properties are subject, the breach, default or violation of which could
reasonably be expected to have a Material Adverse Effect, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Borrower or any Subsidiary pursuant to the terms of any such agreement or
instrument other than the Liens created by the Security Instruments.
Section 7.05 AUTHORITY. The Borrower and each Consolidated
Subsidiary have all necessary corporate power and authority to execute, deliver
and perform its obligations under this Agreement, the Notes or the other
Security Instruments to which it is a party; and the execution, delivery and
performance by the Borrower and each Consolidated Subsidiary of this Agreement,
the Notes or the other Security Instruments to which it is a party, have been
duly authorized by all necessary corporate action on its part; and assuming the
enforceability thereof against the Lender, this Agreement, the Notes and the
Security
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Instruments constitute the legal, valid and binding obligations of the Borrower
and each Subsidiary, enforceable in accordance with their terms except as may be
limited by bankruptcy, insolvency, moratorium, fraudulent transfer and other
similar laws and judicial decisions relating to the enforcement of creditors'
rights generally, and by general principles of equity.
Section 7.06 APPROVALS. No authorizations, approvals or consents
of, and no filings or registrations with, any Governmental Authority are
necessary for the execution, delivery or performance by the Borrower or any
Consolidated Subsidiary of this Agreement, the Notes or the Security Instruments
or for the validity or enforceability thereof, except for the recording and
filing of the Security Instruments as required by this Agreement.
Section 7.07 USE OF LOANS. The proceeds of the Loans shall be
used (a) to renew, extend, rearrange and modify the Prior Revolving Credit Note
and the Prior Term Note, as applicable, (b) for ongoing working capital, and (c)
for general corporate purposes. The Borrower is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation U or X of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Loan hereunder will
be used to buy or carry any margin stock. Neither the Borrower nor any Person
acting on behalf of the Borrower has taken or will take any action which might
cause any Note or any of the Security Instruments, including this Agreement, to
violate Regulation U or X or any other regulation of the Board of Governors of
the Federal Reserve System or to violate Section 7 of the SEC or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
Section 7.08 ERISA. Neither the Borrower nor any ERISA Affiliate
maintains or contributes to, nor at any time in the six-year period preceding
the Closing Date has sponsored, maintained or contributed to, any Multiemployer
Plan.
Section 7.09 TAXES. Each of the Borrower and its Subsidiaries has
filed all United States Federal income tax returns and to the Borrower's
knowledge, all other tax returns which are required to be filed by them and have
paid all material taxes due pursuant to such returns. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax lien has been filed and, to the knowledge of the Borrower, no material claim
is being asserted with respect to any such tax.
Section 7.10 TITLES, ETC.
(a) The Borrower and its Consolidated Subsidiaries have good and
defensible title to its material (individually or in the aggregate) Properties,
free and clear of all Liens except Liens permitted by Section 9.02.
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(b) All leases and agreements necessary in all material respects
for the conduct of the business of the Borrower and its Consolidated
Subsidiaries are valid and subsisting, in full force and effect and there exists
no default or event or circumstance which with the giving of notice or the
passage of time or both would give rise to a default under any such lease or
leases, which would adversely affect in any material respect the conduct of the
business of the Borrower and its Consolidated Subsidiaries, taken as a whole.
(c) The rights, properties and other assets presently owned,
leased or licensed by the Borrower and its Consolidated Subsidiaries including,
without limitation, all easements and rights of way, include all rights,
Properties and other assets necessary to permit the Borrower and its
Consolidated Subsidiaries to conduct their business in all material respects in
the same manner as its business has been conducted prior to the Closing Date.
(d) Substantially all of the assets and Properties of the
Borrower and its Consolidated Subsidiaries which are reasonably necessary for
the operation of its business are in good working condition and are maintained
in accordance with prudent business standards.
Section 7.11 NO MATERIAL MISSTATEMENTS. As of the date delivered,
no written information, exhibit, certificate, document or report furnished to
the Lender by the Borrower or any Subsidiary pursuant to this Agreement contains
any material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not materially misleading in
the light of the circumstances in which made and with respect to the Borrower
and its Subsidiaries taken as a whole.
Section 7.12 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 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 of a
"subsidiary company" of a "holding company," or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 7.14 SUBSIDIARIES AND PARTNERSHIPS. Except as set forth
on Schedule 7.14, the Borrower has no Subsidiaries and has no interest in any
formally organized and documented partnerships with assets exceeding $250,000.
Section 7.15 LOCATION OF BUSINESS AND OFFICES. The Borrower's
principal place of business and chief executive office are located at the
address stated on the signature
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page of this Agreement. The principal place of business and chief executive
office of each Consolidated Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 DEFAULTS. Neither the Borrower nor any Subsidiary is
in default nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default under any material agreement or instrument to which
the Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary is bound which default would have a Material Adverse Effect except as
disclosed on Schedule 7.16 attached hereto. No Default hereunder has occurred
and is continuing.
Section 7.17 ENVIRONMENTAL MATTERS. Except as would not have a
Material Adverse Effect (or with respect to (c), (d) and (e) below, where the
failure to take such actions would not have a Material Adverse Effect):
(a) To Borrower's knowledge, neither any Property of the Borrower
or any Subsidiary nor the operations conducted thereon violate any order
or requirement of any court or Governmental Authority or any
Environmental Laws;
(b) Without limitation of clause (a) above, the operations
currently conducted by Borrower or its Subsidiaries on the Property are
not subject to any existing, pending or, to Borrower's knowledge,
threatened action, suit, investigation, inquiry or proceeding by or
before any court or Governmental Authority or to any remedial
obligations under Environmental Laws;
(c) All notices, permits, licenses or similar authorizations, if
any, required to be obtained or filed in connection with the operation
or use of any and all Property of the Borrower or any Subsidiary,
including without limitation past (but only to the extent of Borrower's
knowledge with respect to "past" activities) or present treatment,
storage, disposal or release of a hazardous substance into the
environment, have been duly obtained or filed, and the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such
notices, permits, licenses and similar authorizations;
(d) To Borrower's knowledge, all hazardous substances generated
at any and all Property of the Borrower or any Subsidiary have (to the
extent required by applicable law) in the past been transported, treated
and disposed of only by carriers maintaining valid permits under RCRA
and any other Environmental Law and only at treatment, storage and
disposal facilities maintaining valid permits under RCRA and any other
Environmental Law;
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(e) To Borrower's knowledge, no hazardous substances have been
disposed of or otherwise released on or to any Property of the Borrower
or any Subsidiary except in compliance with Environmental Laws;
(f) To Borrower's knowledge and except as previously disclosed in
filings with the Securities and Exchange Commission, neither the
Borrower nor any Subsidiary has any contingent liability in connection
with any release of any oil or hazardous substance into the environment.
Notwithstanding the foregoing or anything else to the contrary contained in this
Agreement or elsewhere, all of Borrower's representations and warranties under
this Section 7.17 with respect to or in connection with the Property of First
American Capital Corporation and its Subsidiaries are made only as of June 1,
1992 and only as to Borrower's knowledge and are not to be deemed repeated after
the Closing Date.
Section 7.18 COMPLIANCE WITH THE LAW. Neither the Borrower nor
any Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Section 7.19 INSURANCE. Schedule 7.19 attached hereto contains an
accurate summary of all material hazard and general liability insurance owned or
held by the Borrower and each Consolidated Subsidiary. All such policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date of the closing have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and of
all agreements to which the Borrower or any Consolidated Subsidiary is a party;
are valid, outstanding policies; provide adequate insurance coverage in at least
such amounts and against at least such risks (but including in any event public
liability) as are usually insured against in the same general area by companies
of comparable size engaged in the same or a similar business for the assets and
operations of the Borrower and each Consolidated Subsidiary; and will not in any
way be adversely affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement.
Section 7.20 HEDGING AGREEMENTS. As of the Closing Date, neither
Borrower nor any Consolidated Subsidiary has entered into any Hedging Agreements
(including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas
or other commodities).
Section 7.21 RESTRICTION ON LIENS. Neither the Borrower nor any
of its Consolidated Subsidiaries is a party to any court order, judgment, writ
or decree, which
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either restricts or purports to restrict its ability to grant Liens to other
Persons on or in respect of their respective assets or Properties.
Section 7.22 MATERIAL AGREEMENTS. The agreements set forth on
Schedule 7.22, together with the agreements set forth in Borrower's Annual
Report on Form 10-K for the fiscal year ended May 31, 1995 and Quarterly Report
on Form 10-Q for the fiscal quarter ended February 28, 1995, constitute all
agreements which are considered by the Borrower to be material to the Borrower
and its Subsidiaries on a consolidated basis.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Commitment is in
effect and until payment in full of all Loans hereunder, all interest thereon
and all other amounts payable by the Borrower hereunder:
Section 8.01 FINANCIAL STATEMENTS AND OTHER REPORTS. The Borrower
shall deliver, or shall cause to be delivered, to the Lender:
(a) As soon as available and in any event within 95 days after
the end of each fiscal year of the Borrower, the audited consolidated
statements of income, stockholders' equity, and cash flow of the
Borrower and its Subsidiaries for such fiscal year, and the related
consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of such fiscal year, and setting forth in each case in
comparative form the corresponding figures for the preceding fiscal
year, and accompanied by the related opinion of independent public
accountants of recognized national standing which opinion shall state to
the effect that said financial statements fairly present in all material
respects the consolidated financial condition and results of operations
of the Borrower and its Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in
accordance with GAAP except for such changes in such principles with
which the independent public accountants shall have concurred and such
opinion shall not contain a "going concern" exception. In addition,
within said 95 days, Borrower shall also deliver to the Lender
consolidating statements of income and consolidating balance sheets of
the Borrower and its Subsidiaries for such fiscal year.
(b) As soon as available and in any event within 45 days after
the end of each of the first three fiscal quarterly periods of each
fiscal year of the Borrower, consolidated statements of income and cash
flow of the Borrower and its Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of
such period, and setting forth in each case in comparative form the
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corresponding figures for the corresponding period in the preceding
fiscal year, and the related consolidated balance sheets as at the end
of such period, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly
present in all material respects the consolidated and consolidating
financial condition and results of operations of the Borrower and its
Subsidiaries in accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments and notes). In
addition, within said 45 days, Borrower shall also deliver to the Lender
consolidating statements of income and consolidating balance sheets of
the Borrower and its Subsidiaries for such fiscal quarters.
(c) Promptly after the Borrower knows that any Default or any
Material Adverse Effect has occurred, a notice of such Default or
Material Adverse Effect, describing the same in reasonable detail and
the action the Borrower proposes to take with respect thereto.
(d) Promptly upon its becoming available, each financial
statement, report, notice or proxy statement sent by the Borrower to
stockholders generally and each regular or periodic report (other than
reports on Form 11-K or any successor form) and any effective
registration statement, or final prospectus (other than registration
statements on Form S-8 or any successor form, or reports on Forms 3, 4
and 5) in respect thereof filed by the Borrower with the SEC or any
successor agency or (except for routine listing applications) with any
national securities exchanges, except for reports filed with any such
exchange but not available for public inspection.
(e) As soon as available and in any event within 30 days after
the end of each calendar month, a borrowing base report, which shall
contain supporting schedules and being otherwise in substantially the
form of Exhibit G attached hereto.
(f) From time to time such other information regarding the
business, affairs or financial condition of the Borrower or any
Subsidiary (including, without limitation, any Plan or Multiemployer
Plan and any reports or other information required to be filed under
ERISA) as the Lender may reasonably request.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C hereto executed by a Responsible Officer
(i) certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Borrower
is in compliance with Sections 9.13, 9.14, 9.15, 9.16 and 9.17 as of the end of
the respective fiscal quarter or fiscal year.
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Section 8.02 LITIGATION. The Borrower shall promptly give to the
Lender notice of all legal or arbitral proceedings, and all proceedings before
any governmental authority affecting the Borrower or any Subsidiary, except
proceedings which do not pose a material risk of having a Material Adverse
Effect. In addition, the Borrower will, and will cause each of its Consolidated
Subsidiaries to, promptly notify Lender of any judgment affecting the Property
of the Borrower or any Subsidiary if the value of such judgment shall exceed
$500,000 over amounts covered by insurance.
Section 8.03 MAINTENANCE, ETC.
(a) The Borrower shall and shall cause each Consolidated
Subsidiary to (i) preserve and maintain its corporate existence and all of its
material rights, privileges and franchises, except that the foregoing shall not
prohibit or limit (A) any merger or consolidation permitted under Section 9.08
hereof or (B) the dissolution or sale of any Subsidiaries other than Team
Environmental Services, Inc. (ii) keep books of record and account in which
full, true and correct entries will be made of all dealings or transactions in
relation to its business and activities, (iii) comply with all Governmental
Requirements if failure to comply with such requirements will have a Material
Adverse Effect, (iv) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained, (v) upon reasonable notice and at reasonable times, permit
authorized representatives of the Lender, during normal business hours, to
examine, copy and make extracts from its books and records (provided, however,
Lender shall be bound by all copyright laws and all confidentiality agreements
(disclosed to Lender by Borrower) in same manner and to the same extent as
Borrower), to inspect its Properties, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by the Lender, (vi)
and keep insured by financially sound and reputable insurers all Property of a
character usually insured by Persons engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such Persons and carry such other insurance as is
usually carried by such Persons.
(b) The Borrower will and will cause each Subsidiary to operate
its Properties or cause such Properties to be operated in accordance with the
practices of the industry and in compliance with all applicable contracts and
agreements and in compliance in all material respects with all Governmental
Requirements the breach or violation of which could reasonably be expected to
have a Material Adverse Effect.
Section 8.04 ENVIRONMENTAL MATTERS.
(a) The Borrower will and will cause each Consolidated Subsidiary
to establish and implement policies and procedures as may be necessary to
reasonably assure
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that (i) all Property of the Borrower and its Subsidiaries and the operations
conducted thereon are in compliance with and do not violate the requirements of
any Environmental Laws, except for such violations as could not reasonably be
expected to have a Material Adverse Effect, (ii) no oil or solid wastes are
disposed of or otherwise released on or to any Property owned by any such party
except in compliance with Environmental Laws, except for such violations as
could not reasonably be expected to have a Material Adverse Effect, (iii) no
hazardous substance will be released on or to any such Property in a quantity
equal to or exceeding that quantity which requires reporting pursuant to Section
103 of CERCLA, except for such violations as could not reasonably be expected to
have a Material Adverse Effect, and (iv) no oil or hazardous substance is
released on or to any such Property so as to pose an imminent and substantial
endangerment to public health or welfare or the environment except for such
violations as could not reasonably be expected to have a Material Adverse
Effect.
(b) The Borrower will promptly notify the Lender in writing if it
has been contacted by any Governmental Authority with respect to any
investigation or inquiry by any Governmental Authority (as to which Borrower has
received written notice) in connection with any Environmental Laws, excluding
routine testing and corrective action.
Section 8.05 FURTHER ASSURANCES. The Borrower will and will cause
each Consolidated Subsidiary to cure promptly any defects in the creation and
issuance of the Notes and the execution and delivery of the Security
Instruments, including this Agreement. The Borrower at its expense will and will
cause each Consolidated Subsidiary to promptly execute and deliver to the Lender
upon request all such other documents, agreements and instruments to comply with
or accomplish the covenants and agreements of the Borrower or any Consolidated
Subsidiary in the Security Instruments, including this Agreement, or to further
evidence and more fully describe the collateral intended as security for the
Notes, or to correct any omissions in the Security Instruments, or state more
fully the security obligations set out herein or in any of the Security
Instruments, or to perfect, protect or preserve any Liens created pursuant to
any of the Security Instruments, or to make any recordings, to file any notices,
or obtain any consents, all as may be necessary or appropriate in connection
therewith.
Section 8.06 PERFORMANCE OF OBLIGATIONS. The Borrower will pay
the Notes according to the reading, tenor and effect thereof; and the Borrower
will and will cause each Consolidated Subsidiary to do and perform every act and
discharge all of the obligations provided to be performed and discharged by the
them under the Security Instruments, including this Agreement, at the time or
times and in the manner specified.
Section 8.07 KEY MAN LIFE INSURANCE POLICY. The Borrower shall
pay all premiums and otherwise do all things necessary to maintain and keep in
full force and effect a separate key man life insurance policy on H. Wesley Hall
in the amount of $2,000,000 and same shall remain assigned to the Lender
pursuant to the Assignment of Key Man Life
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Insurance Policy referred to on Exhibit E, until such time as the Lender
reassigns said $2,000,000 policy to the Borrower.
Section 8.08 CERTAIN SUBSIDIARIES. If, within 90 days from and
after the Closing Date, Texas Lite and Barricade, Inc. (formerly Universal Texas
Lite and Barricade, Inc.), USA Water Consulting Services, Inc. (formerly Water
Company of America) and USA Concrete Restoration Services, Inc. (formerly Epoxy
Design Systems, Inc.) are not merged out of existence or dissolved, the Borrower
will cause each such Subsidiary to execute and deliver to the Lender a Guaranty
Agreement in form and substance satisfactory to the Lender guaranteeing,
unconditionally, payment of the Indebtedness, as the same may be amended,
modified or supplemented from time to time, and such other Security Instruments
as the Lender may reasonably request.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Commitment is in
effect and until payment in full of Loans hereunder, all interest thereon and
all other amounts payable by the Borrower hereunder, without the prior written
consent of the Lender:
Section 9.01 DEBT. Neither the Borrower nor any Consolidated
Subsidiary will incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness or any guaranty of or
suretyship arrangement for the Notes or other Indebtedness;
(b) Debt of the Borrower or its Consolidated Subsidiaries
existing on the Closing Date which is reflected in the Financial
Statements or is disclosed in Schedule 9.01, and any renewals or
extensions (but not increases) thereof;
(c) accounts payable (for the deferred purchase price of Property
or services) from time to time incurred in the ordinary course of
business which, if greater than 90 days past the invoice or billing
date, are being contested in good faith by appropriate proceedings if
reserves adequate under GAAP shall have been established therefor;
(d) Debt under capital leases (as required to be reported on the
financial statements of the Borrower pursuant to GAAP) not to exceed
$1,000,000;
(e) Debt of the Borrower and its Subsidiaries under Hedging
Agreements with the Lender or otherwise approved by the Lender;
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(f) Funded Debt of the Foreign Subsidiaries not to exceed
$500,000 in the aggregate at any one time outstanding;
(g) Debt incurred for capital expenditures permitted under
Section 9.12 hereof, subject to the limitations therein, for the
purchase of (in respective amounts no greater than the purchase price
of) capital assets;
(h) liabilities for taxes, assessments, governmental charges or
levies which are being contested in good faith by appropriate
proceedings diligently conducted if reserves adequate under GAAP have
been established therefor;
(i) (i) Debt owed by any Subsidiary to Borrower or to any other
Subsidiary as of the Closing Date, (ii) Debt incurred thereafter by any
Consolidated Subsidiary and owed to any other Consolidated Subsidiary or
to Borrower and (iii) Debt owed by Borrower to any Consolidated
Subsidiary thereof;
(j) Guaranties by the Borrower of (A) Debt of Consolidated
Subsidiaries otherwise permitted hereby, and (B) payment obligations of
the Consolidated Subsidiaries (but not for borrowed money);
(k) Debt of Borrower and its Consolidated Subsidiaries (in
addition to Debt otherwise permitted under this Section 9.01) which does
not exceed in aggregate $500,000 at any one time outstanding prior to
payment in full of the Term Loan and $2,500,000 at any one time
outstanding after payment in full of the Term Loan but only if no
Default has occurred hereunder and is continuing; and
(l) Debt which is a permitted investment under Section 9.03
hereof.
Section 9.02 LIENS. Neither the Borrower nor any Consolidated
Subsidiary will create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section 9.01(d) but only
on the Property under lease;
(d) Liens disclosed on Schedule 9.02; and
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(e) Liens securing Debt incurred for capital expenditures
permitted under Section 9.12 hereof, upon capital assets for which such
Debt was incurred which shall not exceed $1,000,000 at any time
outstanding.
Section 9.03 INVESTMENTS, LOANS AND ADVANCES. Neither the
Borrower nor any Consolidated Subsidiary will make or permit to remain
outstanding any loans or advances to or investments in any Person, except that
the foregoing restriction shall not apply to:
(a) investments, loans or advances reflected in the Financial
Statements or which are disclosed to the Lender in Schedule 9.03 or in
any filing with the SEC by the Company on Form 10-K or Form 10-Q,
effected prior to the date hereof (copies of which were delivered to
Lender), but not any increases thereto and not any reinvestment, reloan
or readvance thereof once same are reduced;
(b) accounts receivable arising in the ordinary course of
business;
(c) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of creation
thereof;
(d) commercial paper maturing within one year from the date of
creation thereof rated in the second highest grade or better by Standard
& Poor's Corporation or Moody's Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, the Lender or
any office located in the United States of any other bank or trust
company which is organized under the laws of the United States or any
state thereof, has capital, surplus and undivided profits aggregating at
least $100,000,000.00 (as of the date of the Lender's or bank or trust
company's most recent financial reports) and has a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time
to time, by Standard & Poor's Corporation or Moody's Investors Service,
Inc., respectively;
(f) deposits in money market funds investing exclusively in
investments described in Section 9.03(d), 9.03(e) or 9.03(c);
(g) loans, advances and investments by the Borrower to or in its
Consolidated Subsidiaries, and by Consolidated Subsidiaries to one
another or to the Borrower;
(h) investments in eurodollars not in excess of $1,000,000 in
the aggregate, placed through any bank with capital of not less than
$100,000,000;
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(i) investments in partnerships and joint ventures permitted to
be formed under Section 9.21 hereof;
(j) additional investments and advances made by the Borrower
after date hereof in its Excluded Subsidiaries, not to exceed at any one
time outstanding $2,200,000 in the aggregate (but not to include any
investment greater than $1,700,000 in the Excluded Subsidiaries
(excluding Foreign Subsidiaries) and $500,000 in Foreign Subsidiaries);
and
(k) other investments, loans or advances (in addition to those
otherwise permitted under this Section 9.03) not to exceed $500,000 in
the aggregate at any time (but not to include any investment in Excluded
Subsidiaries).
Section 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. The
Borrower will not declare or pay any dividend, purchase, redeem or otherwise
acquire for value any of its stock now or hereafter outstanding, return any
capital to its stockholders or make any distribution of its assets to its
stockholders, except that Borrower (i) may purchase, redeem or otherwise acquire
for value its capital stock now or hereafter outstanding provided that
expenditures therefor do not exceed $100,000 in any one fiscal year of Borrower
and (ii) may purchase, redeem or acquire capital stock of the Borrower or its
Subsidiaries for distribution by an employee benefit plan of Borrower or its
Subsidiaries so long as such purchase is expensed on the income statement of
Borrower (or applicable Subsidiary) in accordance with GAAP.
Section 9.05 SALES AND LEASEBACKS. Neither the Borrower nor any
Consolidated Subsidiary will enter into any arrangement, directly or indirectly,
with any Person whereby the Borrower or any Consolidated Subsidiary shall sell
or transfer any of its Property, whether now owned or hereafter acquired, and
whereby the Borrower or any Consolidated Subsidiary shall then or thereafter
rent or lease as lessee such Property or any part thereof or other Property
which the Borrower or any Consolidated Subsidiary intends to use for
substantially the same purpose or purposes as the Property sold or transferred.
Section 9.06 NATURE OF BUSINESS. Neither the Borrower nor any
Consolidated Subsidiary will allow any material change to be made in the
character of the business of the Borrower and its Consolidated Subsidiaries,
taken as a whole, on the Closing Date.
Section 9.07 LIMITATION ON LEASES. Neither the Borrower nor any
Consolidated Subsidiary will create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal including capital leases but excluding leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Borrower and its Consolidated Subsidiaries
pursuant to such leases or lease agreements to exceed $2,250,000 in the
aggregate in any period of twelve consecutive calendar months.
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Section 9.08 MERGERS, ETC. Neither the Borrower nor any
Consolidated Subsidiary will merge into or with or consolidate with any other
Person, or sell, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its Property or assets to
any other Person; provided however, that (A) any Subsidiary of the Borrower may
merge with or into Borrower or any Consolidated Subsidiary (i) so long as in any
merger or consolidation involving the Borrower, the Borrower shall be the
surviving or continuing corporation, and (ii) so long as in any merger or
consolidation involving a Consolidated Subsidiary, one of the Consolidated
Subsidiaries shall be the surviving or continuing corporation, (B) the Borrower
may consolidate or merge with any other corporation if (i) the Borrower is the
survivor of such consolidation or merger, and (ii) at the time of such
consolidation or merger and after giving effect thereto no Event of Default
shall have occurred and be continuing and (C) any Consolidated Subsidiary may
sell, lease or otherwise dispose of all or any part of its assets to the
Borrower or any Consolidated Subsidiary.
Section 9.09 PROCEEDS OF NOTES. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07.
Section 9.10 ERISA COMPLIANCE. The Borrower will not, and will
not permit any Subsidiary to, at any time create any Multiemployer Plan without
first informing the Lender at least thirty (30) days advance written notice and
without causing this Agreement to be amended to incorporate typical provisions
regarding ERISA representations, covenants and compliance.
Section 9.11 SALE OR DISCOUNT OF RECEIVABLES. Neither the
Borrower nor any Consolidated Subsidiary will discount or sell (with or without
recourse) any of its notes receivable or accounts receivable, provided however,
that the foregoing shall not restrict Borrower's and its Consolidated
Subsidiaries' ability to compromise and otherwise reduce (a) doubtful or
disputed accounts with account debtors in the ordinary course of business in
order to minimize losses on bona fide accounts previously contracted for, and
(b) intercompany accounts without limitation so long as such discounts in all
cases are accounted for under GAAP.
Section 9.12 CAPITAL EXPENDITURES. Beginning August 31, 1995, and
for each three-month period thereafter ending on November 30, 1995, February 28,
1996, May 31, 1996, and August 31, 1996, respectively, the Borrower will not
make any capital expenditures if, after giving effect thereto, the aggregate of
such expenditures for the previous twelve-month period would exceed $1,500,000.
Beginning September 1, 1996, and for each three-month period thereafter ending
on November 30, February 28, May 31 and August 31, respectively, the Borrower
will not make any capital expenditures if, after giving effect thereto, the
aggregate amount of such expenditures for the previous twelve-month period would
exceed $2,000,000.
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Section 9.13 CURRENT RATIO. The Borrower will not permit the
ratio of (i) consolidated current assets less prepaid expenses to (ii)
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries, determined on the last day of each three-month fiscal quarter of
the Borrower, to be less than 1.25 to 1.0 for the period from and after the
Closing Date through August 31, 1996, and 1.50 to 1.0 thereafter.
Section 9.14 TANGIBLE NET WORTH. The Borrower will not permit the
tangible net worth of the Borrower and its Subsidiaries to be less than
$13,500,000, which amount shall increase each fiscal quarter beginning with the
fiscal quarter ended August 31, 1995 by an amount equal to fifty percent (50%)
of the net earnings of the Borrower and its Subsidiaries for such quarter (but
shall not decrease for any net losses). As used in this Section 9.14, "TANGIBLE
NET WORTH" means the sum of preferred stock (if any), par value of common stock,
capital in excess of par value of common stock, and retained earnings less
treasury stock (if any), less good will, cost in excess of the fair value of net
assets acquired and all other assets as are properly classified as intangible
assets.
Section 9.15 FUNDED DEBT TO CASH FLOW.
(a) For the fiscal quarter ending August 31, 1995 the Borrower
will not permit the ratio of (i) Funded Debt to (ii) Cash Flow (for the previous
twelve-month period) for the Borrower and its Consolidated Subsidiaries to be
greater than 3.50 to 1.0.
(b) For each of the fiscal quarters ending November 30, 1995 and
February 28, 1996, the Borrower will not permit the ratio of (i) Funded Debt to
(ii) Cash Flow (for the previous twelve-month period) for the Borrower and its
Consolidated Subsidiaries to be greater than 3.25 to 1.0.
(c) For each of the fiscal quarters ending May 31, 1996, August
31, 1996, and November 30, 1996, the Borrower will not permit the ratio of (i)
Funded Debt to (ii) Cash Flow (for the previous twelve-month period) for the
Borrower and its Consolidated Subsidiaries to be greater than 3.00 to 1.0.
(d) For each of the fiscal quarters ending February 28, 1997 and
May 31, 1997, the Borrower will not permit the ratio of (i) Funded Debt to (ii)
Cash Flow (for the previous twelve-month period) for the Borrower and its
Consolidated Subsidiaries to be greater than 2.75 to 1.0.
(e) Beginning with the fiscal quarter ending August 31, 1997 and
for each fiscal quarter thereafter the Borrower will not permit the ratio of (i)
Funded Debt to (ii) Cash Flow (for the previous twelve-month period) to be less
than 2.50 to 1.0.
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Section 9.16 FIXED CHARGE COVERAGE RATIO.
(a) For the four fiscal-quarter period ending August 31, 1996 the
Borrower will not permit the ratio of (i) Cash Flow (for the previous
twelve-month period) to (ii) cash payments made for mandatory payments of
"current maturities of term debt" (as defined in accordance with GAAP) and
interest plus capital expenditures plus dividends for the Borrower and its
Consolidated Subsidiaries (for the previous twelve-month period) to be less than
1.0 to 1.0.
(b) For the four fiscal-quarter period ending August 31, 1997 the
Borrower will not permit the ratio of (i) Cash Flow (for the previous
twelve-month period) to (ii) cash payments made for mandatory payments of
"current maturities of term debt" (as defined in accordance with GAAP) and
interest plus capital expenditures plus dividends for the Borrower and its
Consolidated Subsidiaries (for the previous twelve-month period) to be less than
1.1 to 1.0.
(c) For the four fiscal-quarter period ending August 31, 1998 the
Borrower will not permit the ratio of (i) Cash Flow (for the previous
twelve-month period) to (ii) cash payments made for mandatory payments of
"current maturities of term debt" (as defined in accordance with GAAP) and
interest plus capital expenditures plus dividends of the Borrower and its
Consolidated Subsidiaries (for the previous twelve-month period) to be less than
1.2 to 1.0.
Section 9.17 INTEREST COVERAGE RATIO.
(a) For the four fiscal-quarter period ending August 31, 1996 the
Borrower will not permit the ratio of (i) Cash Flow (for the previous
twelve-month period) to (ii) cash interest payments made by the Borrower and its
Consolidated Subsidiaries (for the previous twelve-month period) to be less than
3.0 to 1.0.
(b) Beginning with the four fiscal-quarter period ending August
31, 1997 and for each four fiscal-quarter period thereafter the Borrower will
not permit the ratio of (i) Cash Flow (for the previous twelve-month period) to
(ii) cash interest payments made by the Borrower and its Consolidated
Subsidiaries (for the previous twelve-month period) to be less than 3.5 to 1.0.
Section 9.18 SALE OF PROPERTIES. The Borrower will not sell,
assign, farm-out, convey or otherwise transfer any Property or any interest in
any Property except the sale of Property in the ordinary course of business for
which the Borrower has given the Lender at least thirty (30) days prior written
notice of the proposed transfer and which shall not exceed $250,000 in the
aggregate in any fiscal year; provided however, that, following consent of the
Lender (which shall not be unreasonably withheld), Borrower may sell, assign
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or transfer its interest in any or all of the Subsidiaries which are not
Consolidated Subsidiaries at any time and upon such terms as Borrower may elect.
Section 9.19 TRANSACTIONS WITH AFFILIATES. Neither the Borrower
nor any Consolidated Subsidiary will enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary course of its
business and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate; provided that Consolidated Subsidiaries may enter into any
transaction, including without limitation any purchase, sale, lease or exchange
of Property or the rendering of any service or the making of any loan, with
Borrower or any Consolidated Subsidiary on such terms as such parties may
choose, so long as such transaction is not otherwise prohibited under any other
provision of this Agreement.
Section 9.20 SUBSIDIARIES AND PARTNERSHIPS. The Borrower shall
not create any additional Subsidiaries or partnerships unless Borrower shall
first give five (5) Business Days' prior written notice to Lender of Borrower's
intention to create a new Subsidiary or form a new partnership or formal,
written joint venture and such new Subsidiary shall immediately guarantee the
Indebtedness.
Section 9.21 NEGATIVE PLEDGE AGREEMENTS. After the Closing Date,
neither the Borrower nor any Consolidated Subsidiary will create, incur, assume
any contract, agreement or understanding (other than this Agreement and the
Security Instruments) which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property or
restricts any Consolidated Subsidiary from paying dividends to the Borrower, or
which requires the consent of or notice to other Persons in connection
therewith, except restrictions against granting, conveying, creating or imposing
any Lien on any Property which is the subject of any capital lease or purchase
money security interest or Lien pursuant to Sections 9.02(b), (c), (d) and (e).
Section 9.22 TRANSFER OF ASSETS TO CERTAIN SUBSIDIARIES. The
Borrower will not transfer, or permit any Subsidiary to transfer any asset to
Texas Lite and Barricade, Inc., USA Water Consulting Services, Inc. or USA
Concrete Restoration Services, Inc., nor will the Borrower permit any material
assets to exist in any such Subsidiary.
Section 9.23 EXCLUDED SUBSIDIARIES. The Borrower will not permit
any of the Excluded Subsidiaries to enter into any transaction or otherwise take
or refrain from taking any action which could reasonably be expected to have a
Material Adverse Effect on the Borrower and its Subsidiaries on a consolidated
basis.
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ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) The Borrower shall default in the payment or prepayment when
due of any principal of or interest on any Loan, of any reimbursement
obligation for a disbursement made under any Letter of Credit, or any
fees or other amount payable by it hereunder or under any Security
Instrument and such default shall continue unremedied for a period of 3
Business Days; or
(b) The Borrower or any Consolidated Subsidiary shall default in
the payment when due of any principal of or interest on any of its other
Debt aggregating $100,000 or more (so long as such payment default is as
a result of the Borrowers or applicable Consolidated Subsidiary's
refusal or inability to pay), or any event specified in any note,
agreement, indenture or other document evidencing or relating to any
such Debt shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such
holder or holders) to cause, such Debt to become due prior to its stated
maturity; or
(c) Any material representation, warranty or certification made
or deemed made herein or in any Security Instrument by the Borrower or
any Subsidiary, or any certificate furnished to the Lender pursuant to
the provisions hereof or any Security Instrument, shall prove to have
been false or misleading as of the time made or furnished in any
material respect; or
(d) The Borrower or any Subsidiary which is party to a Security
Instrument shall default in the performance of any of its obligations
under this Agreement or under any Security Instrument (other than the
payment of principal or interest due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of
thirty (30) days after notice thereof to the Borrower or appropriate
Subsidiary by the Lender; or
(e) The Borrower shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) The Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit
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of its creditors, (iii) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment
of debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under the Federal Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the Borrower, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution
or winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of
the Borrower of all or any substantial part of its assets, or (iii)
similar relief in respect of the Borrower under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 90 days; or (iv) an order for relief against the
Borrower shall be entered in an involuntary case under the Federal
Bankruptcy Code; or
(h) A judgment or judgments for the payment of money in excess of
$500,000 in the aggregate shall be rendered by a court against the
Borrower or any Consolidated Subsidiary and the same shall not be
covered by insurance and shall not be discharged (or provision shall not
be made for such discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry thereof and the
Borrower or such Consolidated Subsidiary shall not, within said period
of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof
to be stayed during such appeal; or
(i) An event or condition specified in Section 9.10 shall occur
or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or
conditions, the Borrower, any Subsidiary or any ERISA Affiliate shall
incur a liability to a Plan, a Multiemployer Plan or PBGC (or any
combination of the foregoing) which is material in relation to the
financial position of the Borrower and its Consolidated Subsidiaries,
taken as a whole; or
(j) The Security Instruments after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be
in full force and effect and valid, binding and enforceable in
accordance with their terms, or cease to create a valid and perfected
Lien of the priority required thereby on any of the collateral purported
to be covered thereby, or the Borrower shall so state in writing; or
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(k) H. Wesley Hall ceases to hold a senior managerial position
with the Borrower; or
(l) Any Consolidated Subsidiary takes, suffers or permits to
exist any of the events or conditions referred to in paragraphs (e),
(f), (g) or (h) hereof.
Section 10.02 REMEDIES.
(a) In the case of an Event of Default other than ones referred
to in clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Lender may, by notice to the Borrower,
cancel the Commitment and/or declare the principal amount then outstanding of,
and the accrued interest on, the Loans and all other amounts payable by the
Borrower hereunder and under the Notes (including without limitation the payment
of cash collateral to secure the LC Exposure as provided in Section 2.09(b)
hereof) to be forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default referred
to in clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Commitment shall be automatically
cancelled and the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder and under
the Notes (including without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.09(b) hereof) shall become
automatically immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of any Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second to accrued interest on such Note; third to fees; fourth to principal
outstanding on such Note; fifth to serve as cash collateral to be held by the
Lender to secure the LC Exposure; and, to the extent of any excess to be paid to
the Borrower or as otherwise required by any Governmental Requirement.
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ARTICLE XI
MISCELLANEOUS
Section 11.01 WAIVER. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement, the Notes or any Security
Instrument shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, the Notes or any
Security Instrument preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
Section 11.02 NOTICES. All notices and other communications
provided for herein and in the other Security Instruments (including, without
limitation, any modifications of, or waivers or consents under, this Agreement
or the other Security Instruments) shall be given or made by telex, telecopy,
telegraph, cable, courier or U.S. Mail or in writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof or
in the other Security Instruments or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement or in the other Security Instruments, all
such communications shall be deemed to have been duly given when transmitted by
telex or telecopier, delivered to the telegraph or cable office or personally
delivered or, in the case of a mailed notice, three (3) Business Days after the
date deposited in the mails, postage prepaid, in each case given or addressed as
aforesaid.
Section 11.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC. The Borrower
agrees:
(a) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Lender in the
administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of the Lender with respect
thereto) of, and in connection with the negotiation, syndication,
investigation, preparation, execution and delivery of, recording or
filing of, preservation of rights under, enforcement of, and
refinancing, renegotiation or restructuring of, this Agreement, the
Notes and the other Security Instruments and any amendment, waiver or
consent relating thereto (including, without limitation, travel,
photocopy, mailing, courier, telephone and other similar expenses of the
Lender, the cost of environmental audits, surveys and appraisals at
reasonable intervals, the reasonable fees and disbursements of counsel
for the Lender and in the case of enforcement for the Lender); and
promptly reimburse the Lender for all amounts expended, advanced or
incurred by the Lender to satisfy any obligation of the Borrower under
this Agreement or any Security Instrument;
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(B) TO INDEMNIFY THE LENDER AND EACH OF ITS AFFILIATES AND EACH
OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS,
ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED PARTIES") FROM, HOLD
EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON DEMAND PAY OR REIMBURSE
EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE INCURRED BY OR
ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY OF THEM IS
DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR IN ANY WAY
RELATED TO (I) ANY ACTUAL OR PROPOSED USE BY THE BORROWER OF THE
PROCEEDS OF ANY OF THE LOANS, (II) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT, THE NOTE AND THE OTHER SECURITY
INSTRUMENTS, (III) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND
ITS SUBSIDIARIES, (IV) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO
COMPLY WITH THE TERMS OF ANY SECURITY INSTRUMENT, INCLUDING THIS
AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (V) ANY INACCURACY OF
ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE BORROWER OR ANY
GUARANTOR SET FORTH IN THIS AGREEMENT OR THE OTHER SECURITY INSTRUMENTS,
(VI) THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR
FAILURE TO PAY UNDER ANY LETTER OF CREDIT (EXCEPT TO THE EXTENT THE
LENDER BREACHED ITS OBLIGATIONS WITH RESPECT TO SUCH LETTER OF CREDIT),
OR (VII) ANY ASSERTION THAT THE LENDER WAS NOT ENTITLED TO RECEIVE THE
PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, OR (VIII) ANY
OTHER ASPECT OF THIS AGREEMENT, THE NOTE AND THE SECURITY INSTRUMENTS,
INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION WITH
INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS) OR CLAIM AND INCLUDING ALL
INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY
INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS ARISING SOLELY BY
REASON OF CLAIMS OF THE LENDER'S SHAREHOLDERS AGAINST THE LENDER OR BY
REASON OF THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT ON THE PART OF THE
INDEMNIFIED PARTY; AND
(C) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF
THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE TREATMENT OR
DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II) AS A
RESULT OF THE BREACH OR NONCOMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY
WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY,
(III) DUE TO PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF
THEIR PROPERTIES OR PAST ACTIVITY ON ANY THEIR PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (IV) THE
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PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE
BORROWER OR ANY SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR
SAFETY CONDITION IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY
OTHER SECURITY INSTRUMENT, PROVIDED, HOWEVER, NO INDEMNITY SHALL BE
AFFORDED UNDER THIS SECTION 11.03 (C) IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE LENDER DURING THE
PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE
OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN
LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).
(d) No Indemnified Party may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be
unreasonably withheld; provided, that the indemnitor may not reasonably
withhold consent to any settlement that an Indemnified Party proposes,
if the indemnitor does not have the financial ability to pay all its
obligations outstanding and asserted against the indemnitor at that
time, including the maximum potential claims against the Indemnified
Party to be indemnified pursuant to this Section 11.03.
(e) In the case of any indemnification hereunder, the Lender
shall give notice to the Borrower of any such claim or demand being made
against the Indemnified Party and the Borrower shall have the
non-exclusive right to join in the defense against any such claim or
demand provided that if the Borrower provides a defense, the Indemnified
Party shall bear its own cost of defense unless there is a conflict
between the Borrower and such Indemnified Party.
(F) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES
OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY
IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO
THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN ACT
OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF
INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF
THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN
THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF THE INDEMNIFIED PARTY.
(g) The Borrower's obligations under this Section 11.03 shall
survive any termination of this Agreement and the payment of the Notes
and shall continue thereafter in full force and effect.
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(h) The Borrower shall pay any amounts due under this Section
11.03 within thirty (30) days of the receipt by the Borrower of notice
of the amount due.
Section 11.04 AMENDMENTS, ETC. Any provision of this Agreement or
any other Security Instruments may be amended, modified or waived with the
Borrower's and the Lender's prior written consent.
Section 11.05 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 11.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Borrower may not assign its rights or obligations
hereunder or under the Note or any Letters of Credit without the prior consent
of the Lender.
(b) The Lender may (i) assign to Chemical Bank without the prior
written consent of the Borrower, or (ii) upon the prior written consent of the
Borrower (which consent shall not be unreasonably withheld) assign to one or
more other assignees, all or a portion of its rights and obligations under this
Agreement. Any assignment will become effective upon the execution and delivery
of the assignment to the Borrower. Upon receipt and acceptance of such executed
assignment, the Borrower, will execute and deliver new Notes to the assignor
and/or assignee, as appropriate, in accordance with their respective interests
as they appear. Upon the effectiveness of any assignment pursuant to this
Section 11.06(b), the assignee will become a "Lender," if not already a
"Lender," for all purposes of this Agreement and the other Security Instruments.
The assignor shall be relieved of its obligations hereunder to the extent of
such assignment (and if the assigning Lender no longer holds any rights or
obligations under this Agreement, such assigning Lender shall cease to be a
"Lender" hereunder except that its rights under Sections 4.04, 5.01, 5.05 and
11.03 shall not be affected). Anything contained in this Section 11.06
notwithstanding, Lender shall not sell or assign interests in the Loans, this
Agreement or the Letters of Credit issued pursuant hereto unless (i) such
interests are in the amount of at least $10,000,000, and integer multiples of
$1,000,000 in excess thereof, and (ii) Lender retains legal and beneficial
interests of at least 51% of the credit facilities provided hereunder.
(c) The Lender may transfer, grant or assign participations in
all or any part of its interests hereunder pursuant to this Section 11.06(c) to
any Person, PROVIDED that: (i) the Lender shall remain the "Lender" for all
purposes of this Agreement and the transferee of such participation shall not
constitute a "Lender" hereunder; (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver of this
Agreement, the Notes or any Security Instrument except to the extent such
amendment or waiver would (x) extend the Revolving Credit Termination Date, (y)
reduce the interest rate (other than as a result of waiving the applicability of
any post-default increases in
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interest rates) or fees applicable to any of the Commitment or Loans or Letters
of Credit in which such participant is participating, or postpone the payment of
any thereof, or (z) release all or substantially all of the collateral (except
as expressly provided in the Security Instruments) supporting any of the
Commitment or Loans or Letters of Credit in which such participant is
participating; (iii) the Lender shall retain, and shall not sell participations
in, interests in 51% of the credit facilities provided hereunder, (iv) each
participation sold herein shall be in the amount of $10,000,000 or integer
multiples of $1,000,000 in excess thereof, and (v) participants shall only be
commercial banks with aggregate assets for each such bank in excess of
$100,000,000 in assets. In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the Security
Instruments (the participant's rights against the Lender in respect of such
participation to be those set forth in the agreement creating such
participation), and all amounts payable by the Borrower hereunder shall be
determined as if the Lender had not sold such participation, PROVIDED that such
participant shall be entitled to receive additional amounts under Article V on
the same basis as if it were a Lender and be indemnified under Section 11.03 as
if it were a Lender. In addition, each agreement creating any participation must
include an agreement by the participant to be bound by the provisions of Section
11.15.
(d) The Lender may furnish any information concerning the
Borrower in its possession from time to time to assignees and participants
(including prospective assignees and participants); provided that, such Persons
agree to be bound by the provisions of Section 11.15 hereof.
(e) Notwithstanding anything in this Section 11.06 to the
contrary, the Lender may assign and pledge the Notes, or any one of them, to any
Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and any operating circular issued by such Federal Reserve System and/or such
Federal Reserve Bank. No such assignment and/or pledge shall release the Lender
from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 11.06,
no transfer or assignment of the interests or obligations of the Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower to file a registration statement with the
SEC or to qualify the Loans under the "Blue Sky" laws of any state.
Section 11.07 INVALIDITY. In the event that any one or more of
the provisions contained in the Note, this Agreement, the Letters of Credit, the
Letter of Credit Agreements or in any other Security Instrument shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of the Notes, this Agreement or any other Security Instrument.
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Section 11.08 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 11.09 REFERENCES. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular article, section or
subsection. Any reference herein to a Section shall be deemed to refer to the
applicable Section of this Agreement unless otherwise stated herein. Any
reference herein to an exhibit or schedule shall be deemed to refer to the
applicable exhibit or schedule attached hereto unless otherwise stated herein.
Section 11.10 SURVIVAL. The obligations of the parties under
Section 4.04, Article V, and Sections 11.03 and 11.15 shall survive the
repayment of the Loans and the termination of the Commitment for a period of
five (5) years from and after the repayment of the Loans and the termination of
the Commitment. To the extent that any payments on the Indebtedness or proceeds
of any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Lender's Liens, security interests, rights, powers and remedies under this
Agreement and each Security Instrument shall continue in full force and effect.
In such event, each Security Instrument shall be automatically reinstated and
the Borrower shall take such action as may be reasonably requested by the Lender
to effect such reinstatement.
Section 11.11 CAPTIONS. Captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpreta tion of any provision of this Agreement.
Section 11.12 NO ORAL AGREEMENTS. THE NOTE, THIS AGREEMENT AND
THE SECURITY INSTRUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN
THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN
AGREEMENT, THE NOTE AND THE SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 11.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS.
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(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTE OR THE OTHER SECURITY INSTRUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE THE
LENDER FROM OBTAINING JURISDICTION OVER THE BORROWER IN ANY COURT OTHERWISE
HAVING JURISDICTION.
(c) THE BORROWER HEREBY CONFIRMS THAT ITS PREVIOUSLY HAS
IRREVOCABLY DESIGNATED C.T. CORPORATION LOCATED AT 811 DALLAS, HOUSTON, TEXAS
77002, AS THE DESIGNEE, APPOINTEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND
ON BEHALF OF THE BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS
IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTE OR
THE OTHER SECURITY INSTRUMENTS. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS
SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY OVERNIGHT COURIER TO THE
BORROWER AT ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW, BUT THE FAILURE OF
THE BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE THIRTY
(30) DAYS AFTER SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER OR ANY
HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
OTHER JURISDICTION.
(e) EACH OF THE BORROWER AND THE LENDER HEREBY (A) IRREVOCABLY
WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY PUNITIVE DAMAGES; (B) CERTIFY THAT
NO PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C)
ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
SECURITY INSTRUMENTS AND THE TRANSACTIONS
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CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 11.13.
Section 11.14 INTEREST. It is the intention of the parties hereto
that Lender shall conform strictly to usury laws applicable to it. Accordingly,
if the transactions contemplated hereby would be usurious as to the Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to the Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
Note, this Agreement or in any other Security Instrument or agreement entered
into in connection with or as security for the Notes, it is agreed as follows:
(i) the aggregate of all consideration which constitutes interest under law
applicable to the Lender that is contracted for, taken, reserved, charged or
received by the Lender under the Notes, this Agreement or under any of the other
aforesaid Security Instruments or agreements or otherwise in connection with the
Notes shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be cancelled automatically and if
theretofore paid shall be credited by the Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by the Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to the Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be cancelled automatically by the Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by the Lender to the Borrower). All sums paid
or agreed to be paid to the Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to the Lender, be
amortized, prorated, allocated and spread throughout the full term of the Loans
evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to the Lender on any date shall be computed at the
Highest Lawful Rate applicable to the Lender pursuant to this Section 11.14, and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to the Lender would be less than the amount of
interest payable to the Lender computed at the Highest Lawful Rate applicable to
the Lender, then the amount of interest payable to the Lender in respect of such
subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to the Lender until the total amount of interest
payable to the Lender shall equal the total amount of interest which would have
been
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payable to the Lender if the total amount of interest had been computed without
giving effect to this Section 11.14.
Section 11.15 CONFIDENTIALITY. In the event that the Borrower
provides to the Lender written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Lender shall thereafter maintain such information in
confidence in accordance with the standards of care and diligence that each
utilizes in maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (i) are in
the public domain, (ii) hereafter become part of the public domain without the
Lender breaching its obligation of confidence to the Borrower, (iii) are
previously known by the Lender from some source other than the Borrower, (iv)
are hereafter developed by the Lender without using the Borrower's information,
(v) are hereafter obtained by or available to the Lender from a third party who
owes no obligation of confidence to the Borrower with respect to such
information or through any other means other than through disclosure by the
Borrower, (vi) are disclosed with the Borrower's consent, (vii) must be
disclosed either pursuant to any Governmental Requirement or to persons
regulating the activities of the Lender, or (viii) as may be required by law or
regulation or order of any Governmental Authority in any judicial, arbitration
or governmental proceeding, two (2) Business Days after notice of such
proceeding is delivered to Borrower. Further, the Lender may disclose any such
information to any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by such
Person in connection with this Agreement or any Security Instrument, including
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Lender imposes on the
Person to whom such information is disclosed the same obligation to maintain the
confidentiality of such information as is imposed upon it hereunder.
Notwithstanding anything to the contrary provided herein, this obligation of
confidence shall cease three (3) years from the date the information was
furnished, unless the Borrower requests in writing at least thirty (30) days
prior to the expiration of such three year period, to maintain the
confidentiality of such information for an additional three year period. The
Borrower waives any and all other rights it may have to confidentiality as
against the Lender arising by contract, agreement, statute or law except as
expressly stated in this Section 11.15.
Section 11.16 EFFECTIVENESS. This Agreement shall be effective on
the Closing Date (the "EFFECTIVE DATE").
Section 11.17 TAX REPRESENTATIONS.
(a) Lender represents that it is either (i) a corporation
organized under the laws of the United States of America or any state thereof or
(ii) it is entitled to complete exemption from United States withholding tax
imposed on or with respect to any payments,
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including fees, to be made to it pursuant to this Agreement (A) under an
applicable provision of a tax convention to which the United States of America
is a party or (B) because it is acting through a branch, agency or office in the
United States of America and any payment to be received by it hereunder is
effectively connected with a trade or business in the United States of America.
If Lender is not a corporation organized under the laws of the United States of
America or any state thereof, it agrees to provide to the Borrower on the
Closing Date, or on the date of its delivery of the assignment pursuant to which
it becomes a Lender, and at such other times as required by United States law or
as the Borrower shall reasonably request, two accurate and complete original
signed copies of either (A) Internal Revenue Service Form 4224 (or successor
form) certifying that all payments to be made to it hereunder will be
effectively connected to a United States trade or business (the "FORM 4224
CERTIFICATION") or (B) Internal Revenue Service Form 1001 (or successor form)
certifying that it is entitled to the benefit of a provision of a tax convention
to which the United States of America is a party which completely exempts from
United States withholding tax all payments to be made to it hereunder (the "FORM
1001 CERTIFICATION"). In addition, Lender agrees that if it previously filed a
Form 4224 Certification it will deliver to the Borrower a new Form 4224
Certification prior to the first payment date occurring in each of its
subsequent taxable years; and if it previously filed a Form 1001 Certification,
it will deliver to the Borrower a new certification prior to the first payment
date falling in the third year following the previous filing of such
certification. Lender also agrees to deliver to the Borrower such other or
supplemental forms as may at any time be required as a result of changes in
applicable law or regulation in order to confirm or maintain in effect its
entitlement to exemption from United States withholding tax on any payments
hereunder, PROVIDED that the circumstances of the Lender at the relevant time
and applicable laws permit it to do so. If Lender determines, as a result of any
change in either (i) applicable law, regulation or treaty, or in any official
application thereof or (ii) its circumstances, that it is unable to submit any
form or certificate that it is obligated to submit pursuant to this Section
11.17, or that it is required to withdraw or cancel any such form or certificate
previously submitted, it shall promptly notify the Borrower of such fact. If
Lender is organized under the laws of a jurisdiction outside the United States
of America, unless the Borrower has received a Form 1001 Certification or Form
4224 Certification satisfactory to it indicating that all payments to be made to
the Lender hereunder are not subject to United States withholding tax, the
Borrower shall withhold taxes from such payments at the applicable statutory
rate. Lender agrees to indemnify and hold harmless from any United States taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
the Borrower as a result of its reliance on any such form or certificate which
Lender has provided to it pursuant to this Section 11.17.
(b) For any period with respect to which Lender has failed to
provide the Borrower with the form required pursuant to Section 11.17, if any,
(other than if such failure is due to a change in a Governmental Requirement
occurring subsequent to the date on which a form originally was required to be
provided), the Lender shall not be entitled to indemnification under Section
4.04 with respect to taxes imposed by the United States
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which taxes would not have been imposed but for such failure to provide such
forms; PROVIDED, HOWEVER, that should Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax becomes subject to taxes because of
its failure to deliver a form required hereunder, the Borrower shall take such
steps as the Lender shall reasonably request to assist the Lender to recover
such taxes.
(c) If the Lender claims any additional amounts payable pursuant
to this Section 11.17, it shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document requested by
the Borrower or to change the jurisdiction of its Applicable Lending Office or
to contest any tax imposed if the making of such a filing or change or
contesting such tax would avoid the need for or reduce the amount of any such
additional amounts that may thereafter accrue and would not, in its sole
determination, be otherwise disadvantageous to the Lender.
WITH RESPECT TO TEXAS LAW:
Section 11.18 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER
SECURITY INSTRUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS OF THIS AGREEMENT AND THE OTHER SECURITY INSTRUMENTS; THAT IT HAS IN
FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE
OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER SECURITY
INSTRUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS
AGREEMENT AND THE OTHER SECURITY INSTRUMENTS; AND THAT IT RECOGNIZES THAT
CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER SECURITY INSTRUMENTS RESULT
IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION
AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH
PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER
SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF
SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."
Section 11.19 CONFLICTING PROVISIONS. In the event of any conflict
between the terms, conditions or provisions of this Agreement and those
contained in any other Security Instruments, those contained in this Agreement
shall prevail, govern and control.
-66-
The parties hereto have caused this Agreement to be duly executed
as of the day and year first above written.
BORROWER: TEAM, INC.
By: /s/ JOHN M. SLACK
Name: John M. Slack
Title: Vice President and C.F.O.
Address for Notices:
1001 Fannin, Suite 4656
Houston, Texas 77002
LENDER: TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ C.D. KARGES
Name: C.D. Karges
Title: Senior Vice President
-67-
EXHIBIT A-1
REVOLVING CREDIT NOTE
(RENEWAL NOTE)
$12,000,000.00 August 24, 1995
FOR VALUE RECEIVED, TEAM, INC., a Texas corporation (the "Borrower"),
hereby promises to pay on or before the Revolving Credit Termination Date to the
order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "LENDER") at its
Principal Office at 712 Main Street, Houston, Texas 77002, the principal sum of
TWELVE MILLION AND NO/100 Dollars ($12,000,000.00), or such lesser amount as
shall equal the aggregate unpaid principal amount of the Loans made by the
Lender to the Borrower under the Credit Agreement, as hereinafter defined, in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on the scheduleS
attached hereto or any continuation thereof.
This Note is the Revolving Credit Note referred to in the Amended and
Restated Credit Agreement of even date herewith between the Borrower and the
Lender and evidences Revolving Credit Loans made by the Lender thereunder (such
Amended and Restated Credit Agreement as the same may be amended or supplemented
from time to time, the "CREDIT AGREEMENT"). Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit Agreement.
This Note represents a renewal, extension, rearrangement and
modification of the Prior Revolving Credit Note.
This Note is issued pursuant to the Credit Agreement and is entitled to
the benefits provided for in the Credit Agreement and the Security Instruments.
The Credit Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain events, for prepayments of Loans upon the terms
and conditions specified therein and other provisions relevant to this Note.
-A1-
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF TEXAS.
TEAM, INC.
By: /s/ JOHN M. SLACK
Name: John M. Slack
Title: Vice President and C.F.O.
A-2
EXHIBIT A-2
TERM NOTE
(RENEWAL NOTE)
$3,950,000.00 August 24, 1995
FOR VALUE RECEIVED, TEAM, INC., a Texas corporation (the "BORROWER"),
hereby promises to pay to the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(the "LENDER"), at its Principal Office at 712 Main Street, Houston, Texas
77002, the principal sum of THREE MILLION NINE HUNDRED FIFTY THOUSAND AND NO/100
Dollars ($3,950,000.00), in lawful money of the United States of America and in
immediately available funds, in installments, as herein provided, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The principal on this Note is due and payable in twelve (12) consecutive
quarterly installments, the first and second of which being in the amount of
$250,000 each, the third and fourth of which being in the amount of $325,000
each, the fifth through and including the eleventh of which being in the amount
of $350,000 each, and the twelfth and final installment being in the amount of
the balance of principle then due hereon. The first such installment is due and
payable September 30, 1995, and the remaining installments are due and payable
in consecutive order on the last day of each and every succeeding December,
March, June and September thereafter until all sums called for hereunder have
been paid in full, with the maturity of the final installment (if this Note has
not been fully paid or prepaid earlier) being the Final Maturity Date.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on the scheduleS
attached hereto or any continuation thereof.
This Note is the Term Note referred to in the Amended and Restated Credit
Agreement of even date herewith between the Borrower and the Lender and
evidences the Term Loan made by the Lender thereunder (such Amended and Restated
Credit Agreement as the same may be amended or supplemented from time to time,
the "CREDIT AGREEMENT"). Capitalized terms used in this Note have the respective
meanings assigned to them in the Credit Agreement.
A-2-1
This Note represents a renewal, extension, rearrangement and modification
of the Prior Term Note.
This Note is issued pursuant to the Credit Agreement and is entitled to
the benefits provided for in the Credit Agreement and the Security Instruments.
The Credit Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain events, for prepayments of Loans upon the terms
and conditions specified therein and other provisions relevant to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF TEXAS.
TEAM, INC.
By: /s/ JOHN M. SLACK
Name: John M. Slack
Title: Vice President and C.F.O.
A-2-2
EXHIBIT B
FORM OF BORROWING, CONTINUATION AND CONVERSION REQUEST
_____________________, 199__
TEAM, INC., a Texas corporation (the "BORROWER"), pursuant to the Amended
and Restated Credit Agreement dated as of August ____, 1995, between the
Borrower and TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "LENDER") (the
"CREDIT AGREEMENT") hereby makes the requests indicated below (unless otherwise
defined herein, capitalized terms are defined in the Credit Agreement):
[ ] 1. Revolving Credit Loans:
(a) Aggregate amount of new Revolving Credit Loans to be $__________-
__________;
(b) Requested funding date is _________________, 199__;
(c) $_____________________ of such borrowings are to be Eurodollar
Loans;
$_____________________ of such borrowings are to be Base Rate
Loans; and
(d) Length of Interest Period for Eurodollar Loans is:
______________________.
[ ] 2. Eurodollar Loan Continuation for Eurodollar Loans maturing on
______________________ under the Revolving Credit Note:
(a) Aggregate amount to be continued as Eurodollar Loans is $_______-
______________________;
(b) Aggregate amount to be converted to Base Rate Loans is $________-
______________________;
(c) Length of Interest Period for continued Eurodollar Loans is
_______________________________.
B-1
[ ] 3. Eurodollar Loan Continuation for Eurodollar Loans maturing on
______________________ under the Term Note:
(a) Aggregate amount to be continued as Eurodollar Loans is $_______-
______________________;
(b) Aggregate amount to be converted to Base Rate Loans is $________-
______________________;
(c) Length of Interest Period for continued Eurodollar Loans is
_______________________________.
[ ] 4. Conversion of Outstanding Base Rate Loans to Eurodollar Loans:
Convert $__________________ of the outstanding Base Rate Loans to
Eurodollar Loans on ____________________ with an Interest Period
of ________________________.
$_________________________ under the ________________ Revolving Credit
Note, and/or
$_________________________ under the ________________ Term Note
Requested funding date:_________________________.
The undersigned certifies that he is the _____________________ of the
Borrower, and that as such he is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested borrowing, continuation or conversion under the terms and conditions
of the Credit Agreement.
TEAM, INC.
By:
Name:
Title:
B-2
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of TEAM,
INC., a Texas corporation (the "BORROWER") and that as such he is authorized to
execute this certificate on behalf of the Borrower. With reference to the
Amended and Restated Credit Agreement dated as of August ____, 1995 (together
with all amendments or supplements thereto being the "AGREEMENT"), between the
Borrower and TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "LENDER"), the
undersigned represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Agreement unless otherwise
specified):
(a) The representations and warranties of the Borrower contained
in Article VII of the Agreement and in the Security Instruments and
otherwise made in writing by or on behalf of the Borrower pursuant to the
Agreement and the Security Instruments were true and correct in all
material respects when made, and are repeated at and as of the time of
delivery hereof and to the best of the undersigned's knowledge, are true
and correct in all material respects at and as of the time of delivery
hereof, except as such representations and warranties are modified to
give effect to the transactions expressly permitted by the Agreement and
except for such representations and warranties as are by their express
terms limited to a specific date and except as otherwise disclosed to the
Lender in writing.
(b) The Borrower has performed and complied with all agreements
and conditions contained in the Agreement and in the Security Instruments
required to be performed or complied with by it prior to or at the time
of delivery hereof.
(c) Neither the Borrower nor any Subsidiary has incurred any
material liabilities, direct or contingent, since _________________,
except those allowed by the terms of the Agreement or consented to by the
Lender in writing.
(d) Since __________________, no change has occurred, either in
any case or in the aggregate, in the business, financial condition or
results of operations, of the Borrower or any Subsidiary which would have
a Material Adverse Effect.
(e) There exists, and, after giving effect to the loan or loans
with respect to which this certificate is being delivered, will exist, no
Default under the Agreement or any event or circumstance which
constitutes, or with notice
C-1
or lapse of time (or both) would constitute, an event of default which
would permit the acceleration of Debt in excess of $500,000 under any
loan or credit agreement, indenture, deed of trust, security agreement or
other agreement or instrument evidencing or pertaining to any Debt of the
Borrower or any Consolidated Subsidiary.
(f) Schedule I attached hereto sets forth in reasonable detail
computations verifying that the Borrower is in compliance with Sections
9.13, 9.14, 9.15, 9.16 and 9.17 of the Agreement.
EXECUTED AND DELIVERED this ____ day of ______________.
TEAM, INC.
By:
Name:
Title:
C-2
EXHIBIT E
LIST OF SECURITY INSTRUMENTS
1. Guaranty Agreement dated as of August 24, 1995, from Team Environmental
Services, Inc.; Teco Manufacturing Inc.; Pipe Repairs, Inc.; Mudco, Inc.;
Allstate Vacuum & Tanks, Inc.; New Damon Disposal Company; Hellums
Service, Inc.; Elsik, Inc.; Team-Beacon Energy, Inc.; Beacon Services,
Inc.; Soil Enrichment, Inc.; Composite Pole Repair, Inc.; USA Public
Services, Inc. (formerly Infrastructure Services, Inc.); USA Maintenance
and Repair Services, Inc. (formerly Universal Services Co., Inc.); USA
Federal Services, Inc. (formerly Universal Federal Services, Inc.); USA
Gunite Services, Inc. (formerly General Gunite & Construction Co., Inc.)
and Leak Repairs, Inc.
2. Subrogation and Contribution Agreement
3. Security Agreements (Accounts, Inventory and Equipment)
A. Security Agreement (Accounts, Inventory and Equipment) dated as of
April 7, 1994, from:
a. Team, Inc.
b. Team Environmental Services, Inc.
c. Other Subsidiaries:
(i) Teco Manufacturing, Inc.
(ii) Pipe Repairs, Inc.
(iii) Mudco, Inc.
(iv) Allstate Vacuum & Tanks, Inc.
(v) New Damon Disposal Company
(vi) Hellums Service, Inc. (No Equipment)
(vii) Elsik, Inc. (No Equipment)
(viii) Team-Beacon Energy, Inc.
(ix) Beacon Services, Inc.
(x) Soil Enrichment, Inc.
(xi) Composite Pole Repair, Inc.
(xii) USA Public Services, Inc.
(xiii) USA Maintenance and Repair Services, Inc.
(xiv) USA Federal Services, Inc.
(xv) USA Gunite Services, Inc.
(xvi) Leak Repairs, Inc.
E-1
B. First Amendment and Supplement to Security Agreement (Accounts,
Inventory and Equipment) dated as of August 24, 1995,
supplementing and amending document no. 3A, from:
a. Team, Inc.
b. Team Environmental Services, Inc.
c. Other Subsidiaries:
(i) Teco Manufacturing, Inc.
(ii) Pipe Repairs, Inc.
(iii) Mudco, Inc.
(iv) Allstate Vacuum & Tanks, Inc.
(v) New Damon Disposal Company
(vi) Hellums Service, Inc. (No Equipment)
(vii) Elsik, Inc. (No Equipment)
(viii) Team-Beacon Energy, Inc.
(ix) Beacon Services, Inc.
(x) Soil Enrichment, Inc.
(xi) Composite Pole Repair, Inc.
(xii) USA Public Services, Inc.
(xiii) USA Maintenance and Repair Services, Inc.
(xiv) USA Federal Services, Inc.
(xv) USA Gunite Services, Inc.
(xvi) Leak Repairs, Inc.
4. Financing Statements relating to Document No. 3
a. Team, Inc.
b. Team Environmental Services, Inc.
c. Teco Manufacturing, Inc.
d. Pipe Repairs, Inc.
e. Mudco, Inc.
(i) Allstate Vacuum & Tanks, Inc.
f. New Damon Disposal Company
g. Hellums Service, Inc.
h. Elsik, Inc.
i. Team-Beacon Energy, Inc.
j. Beacon Services, Inc.
k. Soil Enrichment, Inc.
l. Composite Pole Repair, Inc.
m. USA Public Services, Inc.
n. USA Maintenance and Repair Services, Inc.
o. USA Federal Services, Inc.
E-2
p. USA Gunite Services, Inc.
q. Leak Repairs, Inc.
5. Security Agreement (Pledge) -- from Team, Inc.
A. Security Agreement (Pledge) dated as of April 7, 1994, from Team,
Inc. covering stock of:
a. Team Environmental Services, Inc.
b. Teco Manufacturing, Inc.
c. Pipe Repairs, Inc.
d. Mudco, Inc.
e. Hellums Service, Inc.
f. Elsik, Inc.
g. Team-Beacon Energy, Inc.
h. Soil Enrichment, Inc.
i. Composite Pole Repair, Inc.
j. USA Public Services, Inc.
k. Leak Repairs, Inc.
B. First Amendment and Supplement to Security Agreement (Pledge)
dated as of August 24, 1995, from Team, Inc., amending and
supplementing document no. 5A.
6. Assignments Separate from Stock Certificate relating to Document No. 5,
together with related Stock Certificates
a. Team Environmental Services, Inc.
b. Teco Manufacturing, Inc.
c. Pipe Repairs, Inc.
d. Mudco, Inc.
e. Hellums Service, Inc.
f. Elsik, Inc.
g. Team-Beacon Energy, Inc.
h. Soil Enrichment, Inc.
i. Composite Pole Repair, Inc.
j. USA Public Services, Inc.
k. Leak Repairs, Inc.
7. Security Agreement (Pledge) -- from certain Subsidiaries
A. Security Agreement (Pledge) dated April 7, 1994, from:
E-3
a. Mudco, Inc., covering stock of Allstate Vacuum & Tanks,
Inc.
b. Team-Beacon Energy, Inc., covering the stock of Beacon
Services, Inc.
c. USA Public Services, Inc., covering the stock of:
(i) USA Maintenance and Repair Services, Inc.
(ii) USA Gunite Services, Inc.
d. Allstate Vacuum & Tanks, Inc., covering the stock of New
Damon Disposal Company
e. USA Maintenance and Repair Services, Inc., covering the
stock of USA Federal Services, Inc.
B. First Amendment and Supplement to Security Agreement (Pledge)
dated as of August 24, 1995, amending and supplementing document
no. 7A, from:
a. Mudco, Inc., covering stock of Allstate Vacuum & Tanks,
Inc.
b. Team-Beacon Energy, Inc., covering the stock of Beacon
Services, Inc.
c. USA Public Services, Inc., covering the stock of:
(i) USA Maintenance and Repair Services, Inc.
(ii) USA Gunite Services, Inc.
d. Allstate Vacuum & Tanks, Inc., covering the stock of New
Damon Disposal Company
e. USA Maintenance and Repair Services, Inc., covering the
stock of USA Federal Services, Inc.
8. Assignments Separate from Stock Certificate relating to Document No. 7,
together with related Stock Certificates
a. Mudco, Inc., covering stock of Allstate Vacuum & Tanks,
Inc.
b. Team-Beacon Energy, Inc., covering the stock of Beacon
Services, Inc.
c. USA Public Services, Inc., covering the stock of:
(i) USA Maintenance and Repair Services, Inc.
E-4
(ii) USA Gunite Services, Inc.
d. Allstate Vacuum & Tanks, Inc., covering the stock of New
Damon Disposal Company
e. USA Maintenance and Repair Services, Inc., covering the
stock of USA Federal Services, Inc.
9. Assignment of Key Man Life Insurance Policy
E-5
EXHIBIT F
GUARANTORS
TEAM ENVIRONMENTAL SERVICES, INC., a Texas corporation
TECO MANUFACTURING, INC., a Texas corporation
PIPE REPAIRS, INC., a Texas corporation
MUDCO, INC., a Texas corporation
ALLSTATE VACUUM & TANKS, INC., a Texas corporation
NEW DAMON DISPOSAL COMPANY, a Texas corporation
HELLUMS SERVICE, INC., a Texas corporation
ELSIK, INC., a Texas corporation
TEAM-BEACON ENERGY, INC., a Texas corporation
BEACON SERVICES, INC., an Oklahoma corporation
SOIL ENRICHMENT, INC., a Texas corporation
COMPOSITE POLE REPAIR, INC., a Texas corporation
USA PUBLIC SERVICES, INC. (formerly Infrastructure Services, Inc.)
USA MAINTENANCE AND REPAIR SERVICES, INC. (formerly Universal Services Co.,
Inc.)
USA FEDERAL SERVICES, INC. (formerly Universal Federal Services, Inc.)
USA GUNITE SERVICES, INC. (formerly General Gunite & Construction Co., Inc.)
LEAK REPAIRS, INC., a Delaware corporation
F-1
SCHEDULE 7.03
LITIGATION
NONE
SCHEDULE 7.14
SUBSIDIARIES AND PARTNERSHIPS
SUBSIDIARIES
Team Environmental Services, Inc., a Texas corporation
Teco Manufacturing, Inc., a Texas corporation
Pipe Repairs, Inc., a Texas corporation
Mudco, Inc., a Texas corporation
Allstate Vacuum & Tanks, Inc., a Texas corporation
New Damon Disposal Company, a Texas corporation
Hellums Service, Inc., a Texas corporation
Elsik, Inc., a Texas corporation
Team-Beacon Energy, Inc., a Texas corporation
Beacon Services, Inc., an Oklahoma corporation
Soil Enrichment, Inc., a Texas corporation
Composite Pole Repair, Inc., a Texas corporation
First America Capital Corporation, a Texas corporation
Portales 801, Inc., a Texas corporation
Pensacola 801, Inc., a Texas corporation
Ft. Bragg 801, Inc., a Texas corporation
Ft. Stewart 801, Inc., a Texas corporation
First America Development Corporation, a Texas corporation
USA Public Services, Inc. (formerly Infrastructure Services, Inc.), a Texas
corporation
USA Maintenance and Repair Services, Inc. (formerly Universal Services Co.,
Inc.), a Texas corporation
1
USA Federal Services, Inc. (formerly Universal Federal Services, Inc.), a Texas
corporation
USA Gunite Services, Inc. (formerly General Gunite & Construction Co., Inc.), an
Alabama corporation
Leak Repairs, Inc., a Delaware corporation
*Texas Lite & Barricade, Inc. (formerly Universal Texas Lite and Barricade,
Inc.), a Texas corporation
*USA Water Consulting Services, Inc. (formerly Water Company of America), a
Texas corporation
*USA Concrete Restoration Services, Inc. (formerly Epoxy Design Systems,
Inc.), a Texas corporation
*THESE SUBSIDIARIES WILL BE DISSOLVED OR MERGED OUT OF EXISTENCE WITHIN 90 DAYS
FROM AND AFTER THE CLOSING DATE
2
SCHEDULE 7.16
DEFAULTS
A subsidiary of the Company, Ft. Stewart 801, Inc., was committed, pursuant to
an agreement with the United States Army Corps of Engineers (the "Corps"), to
construct a 200 unit federal housing project near the Ft. Stewart Military
Reservation located in Hinesville, Georgia. Construction of this project never
commenced as a result of extensive delays in obtaining easements, licenses and
permits necessary in order to develop the project. In fiscal 1993, the Company
filed a Claim and Request for Change Order with the Corps for additional costs
and expenses incurred as a result of these delays, which is presently being
appealed to the United States Armed Services Board of Contract Appeals. During
fiscal 1994, the Corps terminated the Agreement allegedly as a result of Ft.
Stewart 801, Inc.'s default, thereby cancelling the project. In February 1994,
the Company separately appealed the Corps' decision to terminate the Agreement,
again with the United States Armed Services Board of Contract Appeals.
SCHEDULE 7.19
INSURANCE
Separately delivered by Borrower to Lender
SCHEDULE 7.22
MATERIAL AGREEMENTS
1) Asset Purchase Agreement dated April 10, 1995 by and between Hellums
Services, Inc. and Hellums Services II, Inc.
2) Asset Purchase Agreement dated April 10, 1995 by and Between Elsik, Inc.
and Elsik II, Inc.
SCHEDULE 9.01
DEBT
OUTSTANDING AS OF
JULY 31, 1995
-----------------
1. Certificates of Participation related to the $39,253,420
Construction of the Federal Section 801
Housing Projects
2. Sterling Bank Corp. $1,533,929
3. Finova Capital Corp. (capitalized leases $190,454
covering various computer equipment)
4. Mobile Modular Management Corp. (building $45,486
improvements at 1019 S. Hood Street, Alvin,
Texas
SCHEDULE 9.02
LIENS
1. Mortgages and/or Deeds of Trust in favor of Bank of America, as Trustee
for Holders of Certificates of Participation, securing properties held by
Ft. Bragg 801, Inc., Pensacola 801, Inc. and Portales 801, Inc., as
assigned to U.S. Trust Company of New York, as successor Trustee.
2. Lien in favor of Sterling Bank securing certain property at Team, Inc.'s
manufacturing and training facilities in Alvin, Texas.
SCHEDULE 9.03
INVESTMENTS, LOANS AND ADVANCES
NONE