EXHIBIT 99(a)
CREDIT AGREEMENT
Dated as of November 25, 2002
among
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Lenders,
BANK OF AMERICA, N. A.,
as the Agent,
TEXAS PETROCHEMICALS LP,
as the Borrower,
TEXAS PETROCHEMICAL HOLDINGS, INC.,
TPC HOLDING CORP.,
and
PETROCHEMICAL PARTNERSHIP HOLDINGS, INC.
as Guarantors,
TABLE OF CONTENTS
<Table>
ARTICLE 1- LOANS AND LETTERS OF CREDIT............................................................................1
Section 1.1 Total Facility.........................................................................1
Section 1.2 Revolving Loans........................................................................1
Section 1.3 Letters of Credit and Credit Support...................................................5
Section 1.4 Bank Products.........................................................................10
ARTICLE 2 - INTEREST AND FEES....................................................................................10
Section 2.1 Interest..............................................................................10
Section 2.2 Continuation and Conversion Elections.................................................11
Section 2.3 Maximum Interest Rate.................................................................12
Section 2.4 Unused Line Fee.......................................................................14
Section 2.5 Letter of Credit Fee..................................................................14
Section 2.6 Other Fees............................................................................14
ARTICLE 3 - PAYMENTS AND PREPAYMENTS.............................................................................15
Section 3.1 Revolving Loans.......................................................................15
Section 3.2 Termination or Reduction of Total Facility............................................15
Section 3.3 Prepayment of the Revolving Loans.....................................................16
Section 3.4 LIBOR Rate Revolving Loan Prepayments.................................................17
Section 3.5 Payments by the Borrower..............................................................17
Section 3.6 Payments as Revolving Loans...........................................................17
Section 3.7 Apportionment, Application, and Reversal of Payments..................................18
Section 3.8 Indemnity for Returned Payments.......................................................18
Section 3.9 The Agent's and the Lenders' Books and Records; Monthly Statements....................19
ARTICLE 4 - TAXES, YIELD PROTECTION, AND ILLEGALITY..............................................................19
Section 4.1 Taxes.................................................................................19
Section 4.2 Illegality............................................................................20
Section 4.3 Increased Costs and Reduction of Return...............................................21
Section 4.4 Funding Losses........................................................................21
Section 4.5 Inability to Determine Rates..........................................................22
Section 4.6 Certificates of the Agent.............................................................22
Section 4.7 Survival..............................................................................22
Section 4.8 Replacement of Affected Lenders.......................................................22
ARTICLE 5 - BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES....................................................23
Section 5.1 Books and Records.....................................................................23
Section 5.2 Financial Information.................................................................23
Section 5.3 Notices to the Lender.................................................................27
ARTICLE 6 - GENERAL WARRANTIES AND REPRESENTATIONS...............................................................29
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Section 6.1 Authorization, Validity, and Enforceability of this Agreement and the
other Loan Documents; No Conflicts....................................................30
Section 6.2 Validity and Priority of Security Interest............................................30
Section 6.3 Corporate Name; Prior Transactions....................................................30
Section 6.4 Capitalization and Subsidiaries.......................................................30
Section 6.5 Financial Statements and Projections..................................................31
Section 6.6 Solvency..............................................................................31
Section 6.7 Debt..................................................................................31
Section 6.8 Distributions.........................................................................32
Section 6.9 Real Estate; Leases...................................................................32
Section 6.10 Proprietary Rights....................................................................32
Section 6.11 Trade Names...........................................................................32
Section 6.12 Litigation............................................................................32
Section 6.13 Labor Disputes........................................................................32
Section 6.14 Environmental Laws....................................................................33
Section 6.15 No Violation of Law...................................................................34
Section 6.16 No Default............................................................................34
Section 6.17 ERISA Compliance......................................................................35
Section 6.18 Taxes.................................................................................36
Section 6.19 Regulated Entities....................................................................36
Section 6.20 Use of Proceeds; Margin Regulations...................................................36
Section 6.21 No Material Adverse Change............................................................36
Section 6.22 Full Disclosure.......................................................................36
Section 6.23 Material Agreements...................................................................36
Section 6.24 Bank Accounts.........................................................................36
Section 6.25 Governmental Authorization............................................................36
Section 6.26 Investment Property...................................................................37
ARTICLE 7 - AFFIRMATIVE AND NEGATIVE COVENANTS...................................................................38
Section 7.1 Taxes and Other Obligations...........................................................38
Section 7.2 Legal Existence and Good Standing.....................................................38
Section 7.3 Compliance with Law and Agreements; Maintenance of Licenses...........................38
Section 7.4 Maintenance of Property; Inspection of Property.......................................39
Section 7.5 Insurance.............................................................................39
Section 7.6 Insurance and Condemnation Proceeds...................................................40
Section 7.7 Environmental Laws....................................................................41
Section 7.8 Compliance with ERISA and Similar Foreign Laws........................................41
Section 7.9 Mergers, Consolidations, or Sales.....................................................41
Section 7.10 Distributions; Capital Change; Restricted Investments.................................42
Section 7.11 Reserved..............................................................................43
Section 7.12 Guaranties............................................................................43
Section 7.13 Debt..................................................................................43
Section 7.14 Prepayment............................................................................44
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ii
<Table>
Section 7.15 Transactions with Affiliates..........................................................44
Section 7.16 Investment Banking and Finder's Fees..................................................44
Section 7.17 Business Conducted....................................................................44
Section 7.18 Liens.................................................................................44
Section 7.19 Sale and Leaseback Transactions.......................................................45
Section 7.20 New Subsidiaries; Addition of Subsidiaries as Guarantors..............................45
Section 7.21 Fiscal Year...........................................................................46
Section 7.22 Borrower's Fixed Charge Coverage Ratio................................................46
Section 7.23 Adjusted Tangible Net Worth...........................................................46
Section 7.24 Net Excess Availability; Minimum Average Net Excess Availability......................46
Section 7.25 Use of Proceeds.......................................................................46
Section 7.26 Solvency..............................................................................46
Section 7.27 Guaranties of the Obligations.........................................................47
Section 7.28 Landlord and Mortgagee Agreements.....................................................47
Section 7.29 Additional Collateral; Further Assurances.............................................47
Section 7.30 Indentures............................................................................48
Section 7.31 Capital Expenditures..................................................................48
Section 7.32 Modification to Other Agreements......................................................48
ARTICLE 8 - CONDITIONS OF LENDING................................................................................49
Section 8.1 Conditions Precedent to Making of Revolving Loans on the Closing
Date..................................................................................49
Section 8.2 Conditions Precedent to Each Loan.....................................................54
ARTICLE 9 - DEFAULT; REMEDIES....................................................................................55
Section 9.1 Events of Default.....................................................................55
Section 9.2 Remedies..............................................................................58
ARTICLE 10 - TERM AND TERMINATION................................................................................59
Section 10.1 Term and Termination..................................................................59
ARTICLE 11 - AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS;
SUCCESSORS....................................................................................60
Section 11.1 Amendments and Waivers................................................................60
Section 11.2 Assignments; Participations...........................................................62
ARTICLE 12 - THE AGENT...........................................................................................64
Section 12.1 Appointment and Authorization.........................................................64
Section 12.2 Delegation of Duties..................................................................64
Section 12.3 Liability of the Agent................................................................65
Section 12.4 Reliance by the Agent.................................................................65
Section 12.5 Notice of Default.....................................................................65
Section 12.6 Credit Decision.......................................................................66
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iii
<Table>
Section 12.7 Indemnification.......................................................................66
Section 12.8 The Agent in Individual Capacity......................................................66
Section 12.9 Successor Agent.......................................................................67
Section 12.10 Withholding Tax.......................................................................67
Section 12.11 Collateral Matters....................................................................69
Section 12.12 Restrictions on Actions by the Lenders; Sharing of Payments...........................70
Section 12.13 Agency for Perfection.................................................................70
Section 12.14 Payments by the Agent to the Lenders..................................................71
Section 12.15 Settlement............................................................................71
Section 12.16 Letters of Credit; Intra-Lender Issues................................................74
Section 12.17 Concerning the Collateral and the Related Loan Documents..............................77
Section 12.18 Field Audit and Examination Reports; Disclaimer by the Lenders........................77
Section 12.19 Relation Among the Lenders............................................................78
ARTICLE 13 - MISCELLANEOUS.......................................................................................78
Section 13.1 No Waivers; Cumulative Remedies.......................................................78
Section 13.2 Severability..........................................................................78
Section 13.3 Governing Law; Choice of Forum; Service of Process....................................78
Section 13.4 Waiver of Jury Trial..................................................................79
Section 13.5 Survival of Representations and Warranties............................................80
Section 13.6 Other Security and Guaranties.........................................................80
Section 13.7 Fees and Expenses.....................................................................80
Section 13.8 Notices...............................................................................81
Section 13.9 Waiver of Notices.....................................................................81
Section 13.10 Binding Effect........................................................................82
Section 13.11 Indemnity of the Agent and the Lenders by the Borrower................................82
Section 13.12 Limitation of Liability...............................................................83
Section 13.13 Final Agreement.......................................................................83
Section 13.14 Counterparts..........................................................................84
Section 13.15 Captions..............................................................................84
Section 13.16 Right of Setoff.......................................................................84
Section 13.17 Confidentiality.......................................................................84
Section 13.18 Conflicts with other Loan Documents...................................................85
Section 13.19 Agency of the Borrower for Each Other Obligated Party.................................85
Section 13.20 Additional Guarantors.................................................................86
Section 13.21 Express Waivers By the Obligated Parties..............................................86
Section 13.22 Designated Senior Indebtedness........................................................87
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EXHIBITS
Exhibit A - Form of Revolving Loan Note
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Notice of Borrowing
Exhibit E - Form of Notice of Continuation/Conversion
Exhibit F - Form of Assignment and Acceptance
SCHEDULES
Schedule 6.3 - Prior Names
Schedule 6.4 - Capitalization; Subsidiaries
Schedule 6.7 - Debt
Schedule 6.8 - Distributions
Schedule 6.9 - Real Estate; Leases
Schedule 6.10 - Proprietary Rights
Schedule 6.11 - Trade Names
Schedule 6.14 - Environmental Matters
Schedule 6.17 - ERISA
Schedule 6.23 - Material Agreements
Schedule 6.24 - Bank Accounts
Schedule 6.26 - Investment Property
Schedule 6.28 - Affiliate Transactions
Schedule A-1 - Commitments
Schedule A-2 - Permitted Liens
Schedule A-3 - Investments
v
CREDIT AGREEMENT
This Credit Agreement, dated as of November 25, 2002 ("Agreement"),
among the financial institutions from time to time parties hereto (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), Bank of America, N.A., with an office at 55 S. Lake Avenue,
Suite 900, Pasadena, California 91101, as administrative agent for the Lenders
(in its capacity as administrative agent, the "Agent"), and Texas Petrochemicals
LP, a Texas limited partnership (the "Borrower"), and each of the other
Obligated Parties party hereto.
RECITALS:
A. Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein. The rules of construction contained in Annex A
shall govern the interpretation of this Agreement, and all Annexes, Exhibits,
and Schedules attached hereto are incorporated herein by reference.
B. The Obligated Parties have requested the Lenders to make available
to the Borrower a revolving credit facility for loans and letters of credit in
the aggregate principal amount of $60,000,000, which extensions of credit the
Borrower will use for the purposes permitted by Section 7.25.
C. The Lenders have agreed to make available to the Borrower a
revolving credit facility upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Obligated Parties hereby agree as follows.
ARTICLE 1
LOANS AND LETTERS OF CREDIT
Section 1.1 Total Facility. Subject to all of the terms and conditions
of this Agreement, the Lenders agree to make available a total credit facility
of up to $60,000,000 (the "Total Facility") for use by the Borrower from time to
time during the term of this Agreement. The Total Facility shall be composed of
a revolving line of credit consisting of Revolving Loans and Letters of Credit
and Credit Support as described in Section 1.2 and Section 1.3.
Section 1.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions
precedent set forth in Article 8, each Lender severally, but not
jointly, agrees, upon the Borrower's request from time to time on any
Business Day during the period from the Closing Date to the Termination
Date, to make revolving loans (the "Revolving Loans") to the Borrower
in amounts not to
CREDIT AGREEMENT - Page 1
exceed such Lender's Pro Rata Share of the Availability, except for
Non-Ratable Loans and Agent Advances. The Lenders, however, in their
unanimous discretion, may elect to make Revolving Loans or issue or
arrange to have issued Letters of Credit or Credit Support in excess of
the Borrowing Base on one or more occasions, but if they do so, neither
the Agent nor the Lenders shall be deemed thereby to have changed the
limits of the Borrowing Base or to be obligated to exceed such limits
on any other occasion. If any requested Borrowing exceeds the
Availability (as determined prior to such Borrowing), then the Lenders
may refuse to make or may otherwise restrict the making of Revolving
Loans and the issuance of Letters of Credit and Credit Support, subject
to the Agent's authority, in its sole discretion, to make Agent
Advances pursuant to the terms of Section 1.2(j).
(b) Revolving Loan Notes. The Borrower shall execute and
deliver to each Lender a promissory note to evidence the Revolving
Loans of that Lender (each a "Revolving Loan Note" and, collectively,
the "Revolving Loan Notes"). Each Revolving Loan Note shall be in the
principal amount of the applicable Lender's Pro Rata Share of the
Commitments, dated as of the Closing Date or the date of any assignment
of a portion of any Lender's Revolving Loans, and substantially in the
form of Exhibit A. Each Revolving Loan Note shall represent the
obligation of the Borrower to pay the amount of the applicable Lender's
Pro Rata Share of the Commitments, or, if less, such Lender's Pro Rata
Share of the aggregate unpaid principal amount of all Revolving Loans
to the Borrower together with interest thereon as prescribed in this
Agreement. The entire unpaid balance of the Revolving Loans and all
other non-contingent Obligations shall be immediately due and payable
in full in immediately available funds on the Termination Date.
(c) Procedure for Borrowing.
(i) Each Borrowing of Revolving Loans shall be made
upon the Borrower's irrevocable written notice delivered to
the Agent in the form of a notice of borrowing in the form
attached hereto as Exhibit D (a "Notice of Borrowing"), which
must be received by the Agent prior to 10:00 a.m. (Pacific
time) (y) three (3) Business Days prior to the requested
Funding Date, in the case of LIBOR Rate Revolving Loans and
(z) on the requested Funding Date, in the case of Base Rate
Revolving Loans, specifying:
(A) the amount of the Borrowing, which in
the case of LIBOR Rate Revolving Loans shall be in an
amount that is not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof;
(B) the requested Funding Date, which shall
be a Business Day;
(C) whether the Revolving Loans requested
are to be Base Rate Revolving Loans or LIBOR Rate
Revolving Loans; provided that if the Borrower fails
to specify whether any Revolving Loans are to be Base
Rate Revolving Loans or LIBOR Rate Revolving Loans,
such request shall be deemed a request for Base Rate
Revolving Loans;
CREDIT AGREEMENT - Page 2
(D) the duration of the Interest Period if
the requested Revolving Loans are to be LIBOR Rate
Revolving Loans; provided that if the Borrower fails
to select the duration of the Interest Period with
respect to any requested LIBOR Rate Revolving Loans,
the Borrower shall be deemed to have requested such
Revolving Loans be made as LIBOR Rate Revolving Loans
with an Interest Period of one month in duration; and
(E) whether the proceeds of such Borrowing
are to be deposited to the Designated Account or sent
by wire transfer to a third party, in which case the
Borrower shall provide the Agent with wire transfer
instructions satisfactory to the Agent;
provided, however, that with respect to the Borrowing to be
made on the Closing Date, such Borrowing will consist of Base
Rate Revolving Loans only.
(ii) With respect to any request for Base Rate
Revolving Loans, in lieu of delivering a Notice of Borrowing,
the Borrower may give the Agent telephonic notice of such
request for advances to the Designated Account not later than
the required time specified in clause (i) preceding. The Agent
at all times shall be entitled to rely on such telephonic
notice in making any such Revolving Loans, regardless of
whether any written confirmation is received by the Agent.
(iii) The Borrower shall have no right to request a
LIBOR Rate Revolving Loan while a Default or an Event of
Default exists.
(d) Disbursement. The Borrower shall deliver to the Agent,
prior to the Closing Date, a notice setting forth the deposit account
of the Borrower (the "Designated Account") to which the Agent is
authorized by the Borrower to transfer the proceeds of the Revolving
Loans requested hereunder. The Borrower may designate a replacement
Designated Account from time to time by written notice to the Agent.
Any designation by the Borrower of the Designated Account must be
reasonably acceptable to the Agent.
(e) Reliance Upon Authority; No Liability. The Agent is
entitled to rely conclusively on any individual's request for Revolving
Loans on behalf of the Borrower, so long as the proceeds thereof are to
be transferred to the Designated Account or according to such other
instructions as may be provided to the Agent pursuant to Section
1.2(c)(i)(E). The Agent shall have no duty to verify the identity of
any individual representing himself or herself as a person authorized
by the Borrower to make such requests on its behalf. The Agent shall
not incur any liability to the Borrower as a result of acting upon any
notice referred to in Section 1.2(c) and Section 1.2(d), which the
Agent reasonably believes to have been given by an officer or other
person duly authorized by the Borrower to request Revolving Loans on
its behalf or for otherwise acting under this Section 1.2. The
crediting of Revolving Loans to the Designated Account, or wire
transfer to
CREDIT AGREEMENT - Page 3
such Person as the Borrower shall direct, shall conclusively establish
the obligation of the Borrower to repay such Revolving Loans as
provided herein.
(f) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 1.2(c) shall be
irrevocable and the Borrower shall be bound to borrow the funds
requested therein in accordance therewith.
(g) The Agent's Election. Subject to the requirements of
Section 1.2(i), promptly after receipt of a Notice of Borrowing (or
telephonic notice in lieu thereof) other than a request for LIBOR Rate
Revolving Loans, the Agent shall elect in its discretion to have the
terms of Section 1.2(h), Section 1.2(i), or Section 1.2(j) apply to
such requested Borrowing. If the Bank declines, in its sole discretion,
to make a Non-Ratable Loan pursuant to Section 1.2(i) or an Agent
Advance pursuant to Section 1.2(j), the terms of Section 1.2(h) shall
apply to the requested Borrowing.
(h) Making of Revolving Loans. If the Agent elects to have the
terms of this Section 1.2(h) apply to a requested Borrowing or if the
requested Borrowing is for a LIBOR Rate Revolving Loan, then promptly
after receipt of a Notice of Borrowing or telephonic notice in lieu
thereof, the Agent shall notify the Lenders by telecopy, telephone, or
e-mail of the requested Borrowing. Each Lender shall transfer its Pro
Rata Share of the requested Borrowing to the Agent in immediately
available funds, to the account from time to time designated by the
Agent, not later than 12:00 noon. (Pacific time) on the applicable
Funding Date. After the Agent's receipt of all proceeds of such
requested Borrowing, the Agent shall make the proceeds of such
requested Borrowing available to the Borrower on the applicable Funding
Date by transferring same day funds to the Designated Account;
provided, however, that the amount of Revolving Loans so made on any
date shall not exceed the Availability on such date.
(i) Making of Non-Ratable Loans. Subject to Section 1.2(g), if
the Agent elects, with the consent of the Bank, to have the terms of
this Section 1.2(i) apply to a requested Borrowing, the Bank shall make
a Revolving Loan in the amount of such requested Borrowing available to
the Borrower on the applicable Funding Date by transferring same day
funds to the Designated Account. Each Revolving Loan made solely by the
Bank pursuant to this Section 1.2(i) is referred to hereinafter as a
"Non-Ratable Loan," and such Revolving Loans are collectively referred
to as the "Non-Ratable Loans." Each Non-Ratable Loan shall be subject
to all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to the Bank solely
for its own account. The aggregate amount of Non-Ratable Loans
outstanding at any time shall not exceed $10,000,000. The Agent shall
not request the Bank to make any Non-Ratable Loan if (A) the Agent has
received written notice from any Lender that one or more of the
applicable conditions precedent set forth in Article 8 will not be
satisfied on the requested Funding Date for the applicable Borrowing,
or (B) the requested Borrowing would exceed the Availability on the
applicable Funding Date. The Non-Ratable Loans shall be secured by the
Agent's Liens in and to the Collateral and shall constitute Base Rate
Revolving Loans and Obligations hereunder.
CREDIT AGREEMENT - Page 4
(j) Agent Advances. Subject to the limitations set forth
below, the Agent is authorized by the Borrower and the Lenders, from
time to time in the Agent's sole discretion, (i) after the occurrence
of a Default or an Event of Default, or (ii) at any time that any of
the other conditions precedent set forth in Article 8 have not been
satisfied, to make Base Rate Revolving Loans to the Borrower on behalf
of the Lenders in an aggregate amount outstanding at any time not to
exceed $3,000,000, which the Agent, in its reasonable business
judgment, deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of,
or maximize the amount of, repayment of the Revolving Loans and other
Obligations, or (C) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including costs, fees, and
expenses as described in Section 13.7 (any of such advances are herein
referred to as "Agent Advances"); provided that the Required Lenders
may at any time revoke the Agent's authorization to make Agent
Advances. Any such revocation must be in writing and shall become
effective prospectively upon the Agent's receipt thereof. Absent such
revocation, the Agent's determination that the making of an Agent
Advance is required for any such purposes shall be conclusive. The
Agent Advances shall be secured by the Agent's Liens in and to the
Collateral and shall constitute Base Rate Revolving Loans and
Obligations hereunder.
Section 1.3 Letters of Credit and Credit Support.
(a) Agreement to Issue or Cause to Issue. Subject to the terms
and conditions of this Agreement, the Agent agrees (i) to cause the
Letter of Credit Issuer to issue for the account of the Borrower, in
support of an obligation of the Borrower, one or more
commercial/documentary and standby letters of credit (each a "Letter of
Credit" and collectively, the "Letters of Credit") and/or (ii) to
provide credit support or other enhancement to an alternate issuer
acceptable to the Agent, which issues a Letter of Credit for the
account of the Borrower in support of an obligation of the Borrower
(any such credit support or enhancement being herein referred to as a
"Credit Support") from time to time during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to issue or cause to be issued any Letter of Credit or
Credit Support at any time if: (i) the maximum face amount of the
requested Letter of Credit or Credit Support is greater than the Unused
Letter of Credit Subfacility at such time; (ii) the maximum undrawn
amount of the requested Letter of Credit or Credit Support and all
commissions, fees, and charges due from the Borrower in connection with
the opening thereof would exceed the Availability at such time; or
(iii) such Letter of Credit or Credit Support has an expiration date
later than thirty (30) days prior to the Stated Termination Date or
more than twelve (12) calendar months from the date of issuance for
standby letters of credit and six (6) calendar months from the date of
issuance for commercial/documentary letters of credit.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in
Article 8, the obligation of the Agent to cause to be issued any Letter
of Credit or Credit Support is subject to the following conditions
precedent having been satisfied in a manner reasonably satisfactory to
the Agent:
CREDIT AGREEMENT - Page 5
(i) the Borrower shall have delivered to the Letter
of Credit Issuer, at such times and in such manner as the
Letter of Credit Issuer may prescribe, an application in form
and substance satisfactory to the Letter of Credit Issuer and
reasonably satisfactory to the Agent for the issuance of the
Letter of Credit or Credit Support and such other documents as
may be required pursuant to the terms thereof, and the form,
terms, and purpose of the proposed Letter of Credit or Credit
Support shall be satisfactory to the Agent and the Letter of
Credit Issuer (provided that in the event any term of such
application or any other document is inconsistent with the
terms of this Agreement and the Letter of Credit Issuer is
either the same Person as the Agent or any Lender, then the
terms of this Agreement shall be controlling); and
(ii) as of the date of issuance, no order of any
court, arbitrator, or Governmental Authority shall purport by
its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount
of the proposed Letter of Credit or letter of credit for which
the proposed Credit Support has been requested, and no law,
rule, or regulation applicable to money center banks generally
and no request or directive (whether or not having the force
of law) from any Governmental Authority with jurisdiction over
money center banks generally shall prohibit, or request that
the proposed Letter of Credit Issuer refrain from, the
issuance of letters of credit generally or the issuance of
such proposed Letters of Credit or Credit Support.
(d) Issuance of Letters of Credit and Credit Support.
(i) Request for Issuance. The Borrower must notify
the Agent of such request for issuance at least three (3)
Business Days prior to the proposed issuance date. Such notice
shall be irrevocable and must specify the original face amount
of the Letter of Credit or Credit Support requested, the
Business Day of issuance of such requested Letter of Credit or
Credit Support, whether such Letter of Credit or Credit
Support may be drawn in a single or in partial draws, the
Business Day on which the requested Letter of Credit or Credit
Support is to expire, the purpose for which such Letter of
Credit or Credit Support is to be issued, the conditions
precedent to the drawing of the Letter of Credit or Credit
Support, and the beneficiary of the requested Letter of Credit
or Credit Support. The Borrower shall attach to such notice
the proposed form of the Letter of Credit or letter of credit
for which such Credit Support is requested.
(ii) Responsibilities of the Agent; Issuance. The
Agent shall determine, as of the Business Day immediately
preceding the requested issuance date of the Letter of Credit
or Credit Support set forth in the notice from the Borrower
pursuant to Section 1.3(d)(i), (A) the amount of the Unused
Letter of Credit Subfacility and (B) the Availability as of
such date. If the face amount of the requested Letter of
Credit or Credit Support is not greater than the Unused Letter
of Credit Subfacility and the amount of such requested Letter
of Credit or Credit Support and all commissions, fees, and
charges due from the
CREDIT AGREEMENT - Page 6
Borrower in connection with the opening thereof does not
exceed the Availability, the Agent shall cause the Letter of
Credit Issuer to issue the requested Letter of Credit or
Credit Support on the requested issuance date so long as the
other conditions hereof are met.
(iii) Extensions and Amendments. The Agent shall not
be obligated to cause the Letter of Credit Issuer to extend or
amend any Letter of Credit or Credit Support issued pursuant
hereto unless the requirements of this Section 1.3 are met as
though a new Letter of Credit or Credit Support were being
requested and issued. With respect to any Letter of Credit or
Credit Support which contains any "evergreen" or automatic
renewal provision, each Lender shall be deemed to have
consented to any such extension or renewal unless such Lender
shall have provided to the Agent, written notice that it
declines to consent to any such extension or renewal at least
thirty (30) days prior to the date on which the Letter of
Credit Issuer is entitled to decline to extend or renew the
Letter of Credit or Credit Support; provided that,
notwithstanding the foregoing, if all of the requirements of
this Section 1.3 are met and no Default or Event of Default
has occurred and is continuing, no Lender may decline to
consent to any such extension or renewal.
(e) Payments Pursuant to Letters of Credit and Credit Support.
The Borrower agrees to reimburse the Letter of Credit Issuer
immediately for any draw under any Letter of Credit and the Agent, for
the account of the Lenders (as applicable) upon any payment pursuant to
any Credit Support, and to pay the Letter of Credit Issuer the amount
of all other charges and fees payable to the Letter of Credit Issuer
under or in connection with any Letter of Credit immediately when due,
irrespective of any claim, setoff, defense, or other right which the
Borrower may have at any time against the Letter of Credit Issuer or
any other Person. Each drawing under any Letter of Credit or Credit
Support shall constitute a request by the Borrower for whose account
such Letter of Credit or Credit Support was issued for a Borrowing of a
Base Rate Revolving Loan in the amount of such drawing. The Funding
Date with respect to such Borrowing shall be the date of such drawing.
(f) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. In addition to amounts payable
as elsewhere provided in this Section 1.3, the Borrower agrees
to protect, indemnify, pay, and save the Lenders, the Agent,
and the Letter of Credit Issuer harmless from and against any
and all claims, demands, liabilities, damages, losses, costs,
charges, and expenses (including reasonable attorneys' fees)
which any Lender, the Agent, or the Letter of Credit Issuer
may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit or the
provision of any Credit Support or enhancement in connection
therewith. The Borrower's obligations under this Section
1.3(f)(i) shall survive payment of all other Obligations.
CREDIT AGREEMENT - Page 7
(ii) Assumption of Risk by the Borrower. As among the
Borrower, the Lenders, the Agent, and the Letter of Credit
Issuer, the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by,
the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the
Lenders, the Agent, and the Letter of Credit Issuer shall not
be responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness, or legal effect of any document
submitted by any Person in connection with the application for
and issuance of and presentation of drafts with respect to any
of the Letters of Credit, even if it should prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent,
or forged; (B) the validity or sufficiency 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; (C) the failure of the
beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex, or otherwise, whether or not they be in
cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter
of Credit or of the proceeds thereof; (G) the misapplication
by the beneficiary of any Letter of Credit of the proceeds of
any drawing under such Letter of Credit; (H) any consequences
arising from causes beyond the control of the Lenders or the
Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
Governmental Authority; or (I) the Letter of Credit Issuer's
honor of a draw for which the draw or any certificate fails to
comply in any respect with the terms of the Letter of Credit.
None of the foregoing shall affect, impair, or prevent the
vesting of any rights or powers of the Agent, any Lender, or
the Letter of Credit Issuer under this Section 1.3(f)(ii).
(iii) Exoneration. Without limiting the foregoing, no
action or omission whatsoever by the Agent or any Lender
(excluding any Lender in its capacity as the Letter of Credit
Issuer) under or in connection with any of the Letters of
Credit or Credit Support or any related matters shall result
in any liability of the Agent or any Lender to the Borrower,
or relieve the Borrower of any of its obligations hereunder to
any such Person.
(iv) Rights Against Letter of Credit Issuer. Nothing
contained in this Agreement is intended to limit the
Borrower's rights, if any, with respect to the Letter of
Credit Issuer which arise as a result of the letter of credit
application and related documents executed by and between the
Borrower and the Letter of Credit Issuer.
(v) Account Party. The Borrower hereby authorizes and
directs the Letter of Credit Issuer to name the Borrower as
the "Account Party" in any Letter of Credit and to deliver to
the Agent all instruments, documents, and other writings and
property received by the Letter of Credit Issuer pursuant to
each such Letter of Credit, and to accept and
CREDIT AGREEMENT - Page 8
rely upon the Agent's instructions and agreements with respect
to all matters arising in connection with each such Letter of
Credit or the application therefor.
(vi) Power of Attorney. In connection with all
Inventory financed by any Letter of Credit, the Borrower
hereby appoints the Agent, or the Agent's designee, as its
attorney-in-fact, with full power and authority during the
existence of an Event of Default: (A) to sign and/or endorse
the Borrower's name upon any warehouse or other receipts; (B)
to sign the Borrower's name on bills of lading and other
negotiable and non-negotiable documents; (C) to clear
Inventory through customs in the Agent's or the Borrower's
name; (D) to complete in the Borrower's or the Agent's name,
any order, sale, or transaction, obtain the necessary
documents in connection therewith, and collect the proceeds
thereof; and (E) to do such other acts and things as are
necessary in order to enable the Agent to obtain possession or
control of such Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as the
Borrower's attorney-in-fact, will be liable for any acts or
omissions, nor for any error of judgment or mistakes of fact
or law other than for gross negligence or willful misconduct.
This power of attorney, being coupled with an interest, is
irrevocable until the applicable Event of Default is waived by
the requisite Lenders or all Obligations have been paid and
satisfied, whichever occurs first.
(vii) Control of Inventory. In connection with all
Inventory financed by Letters of Credit, during the existence
of an Event of Default the Borrower will, at the Agent's
request, instruct all suppliers, carriers, forwarders, customs
brokers, warehouses, or others receiving or holding cash,
checks, Inventory, documents, or instruments in which the
Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent's order, and if they shall come
into the Borrower's possession, to deliver them, upon request,
to the Agent in their original form. During the existence of
an Event of Default the Borrower shall also, at the Agent's
request, designate the Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents in
which the Agent holds a security interest.
(g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 1.3(b) and Section 10.1, any
Letter of Credit or Credit Support is outstanding upon the termination
of this Agreement, then upon such termination the Borrower shall
deposit with the Agent with respect to each such Letter of Credit or
Credit Support then outstanding, as the Agent in its discretion shall
specify, either (i) a standby letter of credit (a "Supporting Letter of
Credit") in form and substance satisfactory to the Agent, issued by an
issuer satisfactory to the Agent in an amount equal to the greatest
amount for which such Letter of Credit or Credit Support may be drawn
plus any fees and expenses associated with such Letter of Credit or
Credit Support, under which Supporting Letter of Credit the Agent is
entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments to be made by the Agent and the Lenders under such
Letter of Credit or Credit Support and any fees and expenses associated
with such Letter of Credit or Credit Support or (ii) cash in an amount
necessary to reimburse the Agent and the Lenders for payments to be
made by the Agent and the Lenders under such Letter of Credit or Credit
Support
CREDIT AGREEMENT - Page 9
and any fees and expenses associated with such Letter of Credit or
Credit Support. Such Supporting Letter of Credit or deposit of cash
shall be held by the Agent until termination or expiration and return
of such Letters of Credit or Credit Support, for the benefit of the
Agent and the Lenders, as security for, and to provide for the payment
of, the aggregate undrawn amount of such Letters of Credit or Credit
Support remaining outstanding.
Section 1.4 Bank Products. The Borrower may request and the Agent may,
in its sole and absolute discretion, arrange for the Obligated Parties to obtain
Bank Products from the Bank or the Bank's Affiliates although no Obligated Party
is required to do so. To the extent Bank Products are provided by an Affiliate
of the Bank, the Obligated Parties agree to indemnify and hold the Agent, the
Bank, and the Lenders harmless from any and all costs and obligations now or
hereafter incurred by the Agent, the Bank, or any of the Lenders which arise
from any indemnity given by the Agent to its Affiliates related to such Bank
Products; provided, however, nothing contained herein is intended to limit the
Obligated Parties' rights, with respect to the Bank or its Affiliates, if any,
which arise as a result of the execution of documents by and between the any
Obligated Party and the Bank or its Affiliates which relate to Bank Products.
The agreement contained in this Section shall survive termination of this
Agreement. Each Obligated Party acknowledges and agrees that the obtaining of
Bank Products from the Bank or the Bank's Affiliates (a) is in the sole and
absolute discretion of the Bank or the Bank's Affiliates, and (b) is subject to
all rules and regulations of the Bank or the Bank's Affiliates.
ARTICLE 2
INTEREST AND FEES
Section 2.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the
extent permitted by law, on accrued interest thereon not paid when due)
from the date made or incurred until paid in full at a rate determined
by reference to the Base Rate or the LIBOR Rate, as applicable, plus
the Applicable Margin as set forth below, but not to exceed the Maximum
Rate. If at any time Revolving Loans are outstanding with respect to
which the Borrower has not delivered to the Agent a notice specifying
the basis for determining the interest rate applicable thereto in
accordance herewith, such Revolving Loans shall be Base Rate Revolving
Loans and bear interest at a rate determined by reference to the Base
Rate until notice to the contrary has been given to the Agent in
accordance with this Agreement and such notice has become effective.
Except as otherwise provided herein, the outstanding Obligations shall
bear interest as follows:
(i) For all Base Rate Revolving Loans and other
Obligations (other than LIBOR Rate Revolving Loans) at a
fluctuating per annum rate equal to the lesser of (A) the Base
Rate, plus the Applicable Margin for Base Rate Revolving Loans
or (B) the Maximum Rate; and
CREDIT AGREEMENT - Page 10
(ii) For all LIBOR Rate Revolving Loans at a per
annum rate equal to the lesser of (A) the LIBOR Rate, plus the
Applicable Margin for LIBOR Rate Revolving Loans or (B) the
Maximum Rate.
Each change in the Base Rate shall be reflected in the interest rate
described in clause (i) preceding as of the effective date of such
change. Subject to Section 2.3, all interest charges on the Obligations
shall be computed on the basis of a year of 360 days and actual days
elapsed (which results in more interest being paid than if computed on
the basis of a 365 day year).
(b) Default Rate. During the existence of any Event of Default
if the Agent or the Majority Lenders in their discretion so elect,
then, while any such Event of Default exists, the Obligations shall
bear interest at a rate per annum equal to the lesser of (i) the
Default Rate applicable thereto or (ii) the Maximum Rate.
(c) Interest Periods. After giving effect to any Borrowing,
conversion, or continuation of any LIBOR Rate Revolving Loan, there may
not be more than five (5) different Interest Periods in effect
hereunder.
Section 2.2 Continuation and Conversion Elections.
(a) The Borrower may upon irrevocable written notice to the
Agent in accordance with Section 2.2(b):
(i) elect, as of any Business Day, in the case of
Base Rate Revolving Loans to convert any such Base Rate
Revolving Loans (or any part thereof in an amount not less
than $1,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof) into LIBOR Rate Revolving Loans;
(ii) elect, as of any Business Day subject to Section
4.4, in the case of LIBOR Rate Revolving Loans to convert any
such LIBOR Rate Revolving Loans into Base Rate Revolving
Loans; or
(iii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate Revolving Loans
having Interest Periods expiring on such day (or any part
thereof in an amount not less than $1,000,000, or that is in
an integral multiple of $1,000,000, in excess thereof as LIBOR
Rate Revolving Loans);
provided, that if at any time the aggregate amount of LIBOR Rate
Revolving Loans in respect of any Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than $1,000,000,
such LIBOR Rate Revolving Loans shall, effective as of the expiration
date of the applicable Interest Period, automatically convert into Base
Rate Revolving Loans; provided, further, that if the notice shall fail
to specify the duration of the Interest Period of any LIBOR Rate
CREDIT AGREEMENT - Page 11
Revolving Loan to result from any such continuation or conversion, such
Interest Period shall be one month in duration.
(b) The Borrower shall deliver a notice of
continuation/conversion in the form of Exhibit E (a "Notice of
Continuation/Conversion") to the Agent not later than 12:00 noon
(Pacific time) at least three (3) Business Days in advance of the
Continuation/Conversion Date, if the Revolving Loans are to be
converted into or continued as LIBOR Rate Revolving Loans and
specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the Revolving Loans and the aggregate amount of
such Revolving Loans to be converted or continued;
(iii) the type of Revolving Loans resulting from the
proposed conversion or continuation; and
(iv) the duration of the requested Interest Period,
provided, however, the Borrower may not select an Interest
Period that ends after the Stated Termination Date.
With respect to any request to convert or continue any Revolving Loans,
the Borrower may give the Agent telephonic notice of such request not
later than the required time specified in this clause (b). The Agent at
all times shall be entitled to rely on such telephonic notice in
converting or continuing any such Revolving Loans, regardless of
whether any written confirmation is received by the Agent, and the
Agent may at any time refuse to accept any such telephonic notice and
require that the Borrower provide a written Notice of
Continuation/Conversion.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Revolving Loans, the Borrower has failed to timely select
a new Interest Period to be applicable to such LIBOR Rate Revolving
Loans or if any Event of Default then exists, the Borrower shall be
deemed to have elected to convert such LIBOR Rate Revolving Loans into
Base Rate Revolving Loans effective as of the expiration date of such
Interest Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective
outstanding principal amounts of the Revolving Loans with respect to
which such notice was given held by each Lender.
Section 2.3 Maximum Interest Rate. If any Interest Rate, absent the
limitation set forth in this Section 2.3, would otherwise exceed the Maximum
Rate, then such Interest Rate shall be the Maximum Rate, and, if in the future,
such Interest Rate would otherwise be less than the Maximum Rate, then such
Interest Rate shall remain at the Maximum Rate until such time as the amount of
interest paid hereunder equals the amount of interest which would have been paid
if the same had not been limited by the Maximum
CREDIT AGREEMENT - Page 12
Rate. In the event that, upon payment in full of the Obligations, the total
amount of interest paid or accrued under the terms of this Agreement is less
than the total amount of interest which would, but for this Section 2.3, have
been paid or accrued if the Interest Rate otherwise set forth in this Agreement
had at all times been in effect, then the Borrower shall, to the extent
permitted by applicable law, pay the Agent, for the account of the Lenders, an
amount equal to the excess of (a) the lesser of (i) the amount of interest which
would have been paid or accrued if the Maximum Rate had, at all times, been in
effect or (ii) the amount of interest which would have been paid or accrued had
the interest rate otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. Each of the Agent, each Lender, and the Borrower acknowledges,
agrees, and declares that it is its intention to expressly comply with all
Requirements of Law in respect of limitations on the amount or rate of interest
that can legally be contracted for, charged, or received under or in connection
with the Loan Documents. Notwithstanding anything to the contrary contained in
any Loan Document (even if any such provision expressly declares that it
controls all other provisions of the Loan Documents), in no contingency or event
whatsoever shall the amount of interest (including the aggregate of all charges,
fees, benefits, or other compensation which constitutes interest under any
Requirement of Law) under the Loan Documents paid by the Borrower, received by
the Agent, the Letter of Credit Issuer, or any Lender, agreed to be paid by the
Borrower, or requested or demanded to be paid by the Agent, the Letter of Credit
Issuer, or any Lender, exceed the Maximum Rate, and all provisions of the Loan
Documents in respect of the contracting for, charging, or receiving compensation
for the use, forbearance, or detention of money shall be limited as provided by
this Section 2.3. In the event any such interest is paid to the Agent, the
Letter of Credit Issuer, or any Lender by the Borrower in an amount or at a rate
which would exceed the Maximum Rate, the Agent, the Letter of Credit Issuer, or
such Lender, as the case may be, shall automatically apply such excess to any
unpaid amount of the Obligations other than interest, in the inverse order of
maturity, or if the amount of such excess exceeds said unpaid amount, such
excess shall be paid to the Borrower. All interest paid, or agreed to be paid,
by the Borrower, or taken, reserved, or received by the Agent, the Letter of
Credit Issuer, or any Lender, shall be amortized, prorated, spread, and
allocated in respect of the Obligations throughout the full term of this
Agreement. Notwithstanding any provision contained in any of the Loan Documents,
or in any other related documents executed pursuant hereto, neither the Agent,
the Letter of Credit Issuer, nor any Lender shall ever be entitled to charge,
receive, take, reserve, collect, or apply as interest any amount which, together
with all other interest under the Loan Documents would result in a rate of
interest under the Loan Documents in excess of the Maximum Rate and, in the
event the Agent, the Letter of Credit Issuer, or any Lender ever charges,
receives, takes, reserves, collects, or applies any amount in respect of the
Borrower that otherwise would, together with all other interest under the Loan
Documents, be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining excess
shall forthwith be paid to the Borrower. The Borrower, the Agent, the Letter of
Credit Issuer, and the Lenders shall, to the maximum extent permitted under any
Requirement of Law, (A) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge, expense, or reimbursement
for a third-party expense rather than as interest and (B) exclude prepayments,
acceleration, and the effects thereof. Nothing in any Loan Document shall be
construed or so operate as to require or obligate the Borrower to pay any
interest, fees, costs, or charges greater than is permitted by any Requirement
of Law. Subject to the foregoing, the Borrower hereby agrees that the actual
effective rate of interest from time to time existing under the Loan
CREDIT AGREEMENT - Page 13
Documents, including all amounts agreed to by the Borrower or charged or
received by the Agent, the Letter of Credit Issuer, or the Lenders pursuant to
and in accordance with the Loan Documents, which may be deemed to be interest
under any Requirement of Law, shall be deemed to be a rate which is agreed to
and stipulated by the Borrower and the Agent, the Letter of Credit Issuer, and
the Lenders in accordance with Requirements of Law.
Section 2.4 Unused Line Fee. Subject to Section 2.3, until the
Revolving Loans have been paid in full and this Agreement terminated, the
Borrower agrees to pay to the Agent, for the account of the Lenders, in
accordance with their respective Pro Rata Shares, on the first day of each
calendar month and on the Termination Date, an unused line fee (the "Unused Line
Fee") equal to the Applicable Margin for the percentage specified for the
"Unused Line Fee" as provided by the definition of Applicable Margin, multiplied
by the amount by which the Maximum Revolver Amount exceeded the sum of the
average daily outstanding amount of the Revolving Loans and the average daily
undrawn face amount of all outstanding Letters of Credit and Credit Support
during the immediately preceding month or shorter period if calculated for the
first month after the Closing Date or on the Termination Date. Subject to
Section 2.3, the Unused Line Fee shall be computed on the basis of a 360 day
year for the actual number of days elapsed. For purposes of calculating the
Unused Line Fee pursuant to this Section 2.4, any payment received by the Agent
(if received prior to 12:00 noon (Pacific time)) shall be deemed to be credited
to the Borrower's Loan Account on the Business Day following the date such
payment is received by the Agent.
Section 2.5 Letter of Credit Fee. Subject to Section 2.3, the Borrower
agrees to pay to the Agent, for the account of the Lenders, in accordance with
their respective Pro Rata Shares, for each Letter of Credit or Credit Support, a
fee (the "Letter of Credit Fee") equal to the Letter of Credit Fee Percentage,
or during the existence of any Event of Default the Default Rate with respect to
Letters of Credit, multiplied by the undrawn face amount of each Letter of
Credit or Credit Support, plus all customary out-of-pocket costs, fees, and
expenses incurred by the Letter of Credit Issuer, other than any fees or
commissions charged to the Agent for the issuance of such Letter of Credit or
Credit Support, in connection with the application for, processing of, issuance
of, or amendment to any Letter of Credit or Credit Support, which costs, fees,
and expenses shall include a "fronting fee" in an amount equal to one-eighth
percent (0.125%) of the face amount of such Letter of Credit or Credit Support,
payable to the Letter of Credit Issuer on the date of issuance of each Letter of
Credit or Credit Support. The Letter of Credit Fee shall be payable monthly in
arrears on the first day of each month following any month in which a Letter of
Credit or Credit Support was issued and/or in which a Letter of Credit or Credit
Support remained outstanding and on the Termination Date. Subject to Section
2.3, the Letter of Credit Fee shall be computed on the basis of a 360 day year
for the actual number of days elapsed.
Section 2.6 Other Fees. Subject to Section 2.3, the Borrower agrees to
pay the Agent all other fees and expenses as set forth in the Agent's Letter.
CREDIT AGREEMENT - Page 14
ARTICLE 3
PAYMENTS AND PREPAYMENTS
Section 3.1 Revolving Loans. The Borrower shall repay the outstanding
principal balance of the Revolving Loans, together with all other Obligations,
including all accrued and unpaid interest thereon, on the Termination Date. The
Borrower may prepay the Revolving Loans at any time and reborrow subject to the
terms of this Agreement; provided that with respect to any LIBOR Rate Revolving
Loans prepaid prior to the expiration date of the Interest Period applicable
thereto, the Borrower shall pay to the Agent, for the account of the Lenders,
the amounts described in Section 4.4. In addition, and without limiting the
generality of the foregoing, upon demand the Borrower shall pay to the Agent,
for the account of the Lenders, the amount, if any and without duplication, by
which the Aggregate Revolver Outstandings exceeds the lesser of the Borrowing
Base or the Maximum Revolver Amount. Accrued interest on the Revolving Loans
shall be due and payable in arrears (a) in the case of Base Rate Revolving
Loans, on the first day of each calendar month and on the Termination Date and
(b) in the case of LIBOR Rate Revolving Loans and with respect to each such
LIBOR Rate Revolving Loan (i) on the first day of each calendar month, (ii) on
the last day of the Interest Period with respect thereto, and (iii) on the
Termination Date.
Section 3.2 Termination or Reduction of Total Facility.
(a) The Borrower may terminate this Agreement upon at least
thirty (30) days prior written notice thereof to the Agent and the
Lenders, upon (a) the payment in full of all outstanding Revolving
Loans, together with accrued and unpaid interest thereon, and the
cancellation and return of all outstanding Letters of Credit and Credit
Support (or alternatively, with respect to each such Letter of Credit
or Credit Support, the furnishing to the Agent, in the Agent's
discretion, of a Supporting Letter of Credit or cash deposit, in each
case in amounts and in the manner required by Section 1.3(g)), (b) the
payment in full of the early termination fee set forth in the following
sentence, (c) the payment in full of all reimbursable expenses and
other Obligations together with accrued and unpaid interest thereon,
and (d) the payment in full of any amount due under Section 3.4.
Subject to Section 2.3, if this Agreement is terminated at any time
prior to the third Anniversary Date, whether pursuant to this Section
or pursuant to Section 9.2, the Borrower shall pay to the Agent, for
the account of the Lenders, an early termination fee determined in
accordance with the following table:
CREDIT AGREEMENT - Page 15
<Table>
<Caption>
Period during which early termination occurs Early Termination Fee
- -------------------------------------------- ---------------------
On or prior to the first Anniversary Date 1.00% of the Maximum
Revolver Amount
After the first Anniversary Date but on or 0.50% of the Maximum
prior to the second Anniversary Date Revolver Amount
After the second Anniversary Date 0.25% of the Maximum
Revolver Amount
</Table>
Notwithstanding the foregoing, no such early termination fee shall be
payable in the event this Agreement is terminated in connection with
refinancing of the Obligations in a transaction in which the Bank or
any of its Affiliates provides or arranges replacement financing or
acts as an underwriter or arranger of any public offering of debt or
equity securities of the Borrower. The Maximum Revolver Amount shall
not be reduced except in connection with termination of the Total
Facility and payment in full as provided by this Section 3.2(a) or as
provided by Section 3.2(b).
(b) The Borrower may reduce the Maximum Revolver Amount to an
amount, not less than $45,000,000, as may be designated by the Borrower
at any time effective upon five (5) Business Days prior written notice
thereof to the Agent and the Lenders, provided that (i) no more than
two (2) such notices shall be effective, (ii) any such reduction shall
be in an amount of at least $1,000,000 or any integral multiple of
$1,000,000 in excess thereof, and (iii) any such reduction shall be
permanent. The Lenders shall have no obligation at any time to increase
the Maximum Revolver Amount following any such reduction.
Section 3.3 Prepayment of the Revolving Loans.
(a) The Borrower may prepay the principal of the Revolving
Loans, in whole or in part, at any time and from time to time.
(b) Immediately upon receipt by any Obligated Party of
proceeds of any disposition (excluding proceeds of asset dispositions
permitted by Section 7.9(a)) of any Collateral or collection of
Accounts outside the ordinary course of business, the Borrower shall
cause such Obligated Party to prepay the Revolving Loans in an amount
equal to all such proceeds, net of (i) commissions and other reasonable
and customary transaction costs, fees, and expenses properly
attributable to such transaction and payable by such Obligated Party in
connection therewith (in each case, paid to non-Affiliates), (ii)
transfer taxes, (iii) amounts payable to holders of senior Liens (to
the extent such Liens constitute Permitted Liens hereunder), if any,
and (iv) an appropriate reserve for income taxes in accordance with
GAAP in connection therewith. Any such prepayment shall be applied in
accordance with Section 3.7.
CREDIT AGREEMENT - Page 16
(c) All cash amounts received by any Obligated Party in
respect of a Distribution, loan, or other advance (other than a loan or
advance by an Obligated Party to an Obligated Party) to such Obligated
Party, other than such proceeds which are proceeds of the Revolving
Loans loaned from the Borrower to an Obligated Party to the extent not
prohibited by this Agreement, shall be paid to the Agent, promptly upon
such receipt, for application to the Revolving Loans in accordance with
Section 3.7.
(d) No provision contained in this Section 3.3 shall
constitute a consent to an asset disposition that is otherwise not
permitted by the terms of this Agreement.
(e) All cash proceeds arising from the sale of Inventory or
collection of Accounts in the ordinary course of business of any
Obligated Party shall be applied to repayment of the Obligations in
accordance with Section 3.7.
Section 3.4 LIBOR Rate Revolving Loan Prepayments. In connection with
any prepayment, if any LIBOR Rate Revolving Loans are prepaid prior to the
expiration date of the Interest Period applicable thereto, the Borrower shall
pay to the Agent, for the benefit of the Lenders, the amounts described in
Section 4.4.
Section 3.5 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be made
without setoff, recoupment, or counterclaim. Without in any way
limiting the requirements of the Borrower Security Agreement, except as
otherwise expressly provided herein all payments by the Borrower shall
be made to the Agent, for the account of the Lenders, to the account
designated by the Agent and shall be made in Dollars and in immediately
available funds, no later than 12:00 noon (Pacific time) on the date
specified herein. Any payment received by the Agent after such time
shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
Interest Period, whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business Day,
and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
Section 3.6 Payments as Revolving Loans. At the election of the Agent,
all payments of principal, interest, reimbursement obligations in connection
with Letters of Credit and Credit Support, fees, premiums, reimbursable expenses
(including, without limitation, all reimbursement for expenses pursuant to
Section 13.7), and other sums payable under the Loan Documents, may be paid from
the proceeds of Revolving Loans made hereunder whether made following a request
by the Borrower pursuant to Section 1.2 or a deemed request as provided in this
Section 3.6. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying all amounts from time to time due under
the Loan Documents and agrees that all such amounts charged shall constitute
Revolving Loans
CREDIT AGREEMENT - Page 17
(including Non-Ratable Loans and Agent Advances) and that all such Revolving
Loans shall be deemed to have been requested pursuant to Section 1.2.
Section 3.7 Apportionment, Application, and Reversal of Payments.
Principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Revolving Loans to which such
payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders, except for fees payable
solely to the Agent and the Letter of Credit Issuer and except as provided in
Section 11.1(e). All payments shall be remitted to the Agent and all such
payments not relating to principal or interest of specific Revolving Loans, or
not constituting payment of specific fees, and all proceeds of the Borrower's
Accounts or any other Collateral received by the Agent, shall be applied,
ratably, subject to the other provisions of this Agreement, first, to pay any
fees, indemnities, or expense reimbursements, then due to the Agent from the
Borrower, second, to pay any fees or expense reimbursements then due to any of
the Lenders from the Borrower, including any amounts relating to Bank Products,
third, to pay interest due in respect of the Revolving Loans, including
Non-Ratable Loans and Agent Advances, fourth, to pay or prepay principal of the
Non-Ratable Loans and the Agent Advances, fifth, to pay or prepay principal of
the Revolving Loans (other than the Non-Ratable Loans and the Agent Advances)
and unpaid reimbursement obligations in respect of Letters of Credit and Credit
Support, sixth, to pay an amount to the Agent equal to one hundred percent
(100%) of the aggregate undrawn face amount of all outstanding Letters of Credit
and Credit Support and the aggregate amount of any unpaid reimbursement
obligations in respect of Letters of Credit and Credit Support, to be held as
cash collateral for such Obligations, and seventh, to the payment of any other
Obligation due to the Agent or any Lender by the Borrower; provided however,
that proceeds of Term Lender Priority Collateral (including insurance and
condemnation proceeds) shall be applied first to the Term Loan Obligations in
accordance with the Term Loan Facility before being applied to the Obligations
as provided above. Notwithstanding anything to the contrary contained in this
Agreement, unless so directed by the Borrower, or unless an Event of Default is
in existence, neither the Agent nor any Lender shall apply any payment which it
receives to any LIBOR Rate Revolving Loan, except (a) on the expiration date of
the Interest Period applicable to any such LIBOR Rate Revolving Loan, or (b) in
the event, and only to the extent, that there are no outstanding Base Rate
Revolving Loans and, in any event, the Borrower shall pay the LIBOR breakage
losses in accordance with Section 4.4. The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply any and all such
proceeds and payments to any portion of the Obligations.
Section 3.8 Indemnity for Returned Payments. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent, any Lender, the Bank, or any Affiliate of the Bank is for any reason
compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender and the Borrower shall be liable to
pay to the Agent and the Lenders, and the Borrower hereby indemnifies the Agent
and the Lenders and holds the Agent and the Lenders harmless for the amount of
such payment or proceeds surrendered. The provisions of this Section 3.8 shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Agent or any Lender in reliance
CREDIT AGREEMENT - Page 18
upon such payment or application of proceeds, and any such contrary action so
taken shall be without prejudice to the Agent's and the Lenders' rights under
this Agreement and shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The provisions of
this Section 3.8 shall survive the termination of this Agreement.
Section 3.9 The Agent's and the Lenders' Books and Records; Monthly
Statements. The Agent shall record the principal amount of the Revolving Loans
owing to each Lender, the undrawn face amount of all outstanding Letters of
Credit and Credit Support and the aggregate amount of unpaid reimbursement
obligations outstanding with respect to the Letters of Credit and Credit Support
from time to time on its books. In addition, each Lender may note the date and
amount of each payment or prepayment of principal of such Lender's Revolving
Loans in its books and records. Failure by the Agent or any Lender to make any
such notation shall not affect the obligations of the Borrower with respect to
the Revolving Loans, the Letters of Credit, or any Credit Support. The Borrower
agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute presumptive proof thereof, irrespective of whether any
Obligation is also evidenced by a promissory note or other instrument. The Agent
will provide to the Borrower a monthly statement of Revolving Loans, payments,
and other transactions pursuant to this Agreement. Such statement shall be
deemed correct, accurate, and binding on the Borrower and an account stated
(except for reversals and reapplications of payments made as provided in Section
3.7 and corrections of errors discovered by the Agent), unless the Borrower
notifies the Agent in writing to the contrary within thirty (30) days after such
statement is rendered. In the event a timely written notice of objections is
given by the Borrower, only the items to which exception is expressly made will
be considered to be disputed by the Borrower.
ARTICLE 4
TAXES, YIELD PROTECTION, AND ILLEGALITY
Section 4.1 Taxes.
(a) Any and all payments by the Borrower to the Agent or any
Lender under this Agreement and any other Loan Document shall be made
free and clear of, and without deduction or withholding for, any Taxes.
In addition, subject to Section 12.10(c), the Borrower shall pay all
Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.1) paid by the Agent or any Lender
and any liability (including penalties, interest, additions to tax, and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within thirty (30) days after
the date the Agent or any Lender makes written demand therefor. Nothing
contained in this clause (b) shall affect the
CREDIT AGREEMENT - Page 19
Borrower's right to contest the validity or legality of any Taxes or
other Taxes if the Borrower makes any such payment to the Agent or such
Lender, and, if the Borrower is successful in any such contest, the
Agent or such Lender (as applicable) shall refund any such Taxes or
Other Taxes which have been received by the Agent or such Lender to the
extent of the Borrower's successful contest, but only to such extent.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to the Agent or any Lender, then:
(i) the Borrower shall make such deductions and
withholdings;
(ii) the Borrower shall pay the full amount deducted
or withheld to the relevant taxing authority or other
authority in accordance with any applicable Requirement of
Law; and
(iii) the Borrower shall also pay to the Agent, for
the account of each Lender, or each Lender at the time
interest is paid, all additional amounts (including, without
limitation, deductions and withholdings applicable to
additional sums payable under this Section 4.1) which are
necessary to preserve the after-tax yield such Lender would
have received if such Taxes or Other Taxes had not been
imposed.
(d) Within thirty (30) days after the date of any payment by
the Borrower of Taxes or Other Taxes, the Borrower shall furnish the
Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to
the Agent or any Lender pursuant to Section 4.1(c), then the applicable
Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending
office so as to eliminate any such additional payment by the Borrower
which may thereafter accrue, if such change in the judgment of such
Lender is not otherwise disadvantageous to such Lender.
Section 4.2 Illegality.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for such Lender or its applicable lending
office to make LIBOR Rate Revolving Loans, then, on notice thereof by
such Lender to the Borrower through the Agent, any obligation of such
Lender to make LIBOR Rate Revolving Loans shall be suspended until such
Lender notifies the Agent and the Borrower that the circumstances
giving rise to such determination no longer exist.
CREDIT AGREEMENT - Page 20
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Revolving Loan, the Borrower shall, upon receipt of notice
of such fact and demand from such Lender (with a copy to the Agent),
prepay in full such LIBOR Rate Revolving Loans of such Lender then
outstanding, together with accrued and unpaid interest thereon and
amounts required under Section 4.4, either on the last day of the
Interest Period thereof, if such Lender may lawfully continue to
maintain such LIBOR Rate Revolving Loans to such day, or immediately,
if such Lender may not lawfully continue to maintain such LIBOR Rate
Revolving Loans. If the Borrower is required to so prepay any LIBOR
Rate Revolving Loans, then concurrently with such prepayment, the
Borrower shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Revolving Loan.
Section 4.3 Increased Costs and Reduction of Return.
(a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or
regulation or (ii) the compliance by such Lender with any guideline or
request from any central bank or other Governmental Authority (whether
or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding, or
maintaining any LIBOR Rate Revolving Loans, then the Borrower shall be
liable for, and shall from time to time, upon demand by such Lender
(with a copy of such demand to be sent to the Agent), pay to the Agent
for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank
or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Lender or any
corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
or other entity controlling such Lender and (taking into consideration
such Lender's or such corporation's or other entity's policies with
respect to capital adequacy and such Lender's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits, or obligations under
this Agreement, then, upon demand of such Lender to the Borrower
through the Agent, the Borrower shall pay to such Lender, from time to
time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such increase.
Section 4.4 Funding Losses. The Borrower shall reimburse each Lender
and hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Revolving Loan;
CREDIT AGREEMENT - Page 21
(b) the failure of the Borrower to (i) borrow any requested
LIBOR Rate Revolving Loan, (ii) continue any LIBOR Rate Revolving Loan,
or (iii) convert a Base Rate Revolving Loan to a LIBOR Rate Revolving
Loan after the Borrower has given (or is deemed to have given) a Notice
of Borrowing or a Notice of Continuation/Conversion with respect
thereto (except as permitted by Section 4.5); or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Revolving Loans on a day that
is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by such Lender to maintain its LIBOR Rate Revolving Loans or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by any
Lender in connection with the foregoing.
Section 4.5 Inability to Determine Rates. If the Agent determines that
for any reason adequate and reasonable means do not exist for determining the
LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR
Rate Revolving Loan, or that the LIBOR Rate for any requested Interest Period
with respect to a proposed LIBOR Rate Revolving Loan does not adequately and
fairly reflect the cost to the Lenders of funding such Revolving Loan, the Agent
will promptly so notify the Borrower and each Lender. Thereafter, the obligation
of the Lenders to make or maintain LIBOR Rate Revolving Loans hereunder shall be
suspended until the Agent revokes such notice in writing. Upon receipt of a
notice pursuant to the first sentence of this Section, the Borrower may revoke
any Notice of Borrowing or Notice of Continuation/Conversion then submitted by
the Borrower. If the Borrower does not revoke any such Notice of Borrowing or
Notice of Continuation/Conversion, the Lenders shall make, convert, or continue
the Revolving Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Revolving Loans shall be
made, converted, or continued as Base Rate Revolving Loans instead of LIBOR Rate
Revolving Loans.
Section 4.6 Certificates of the Agent. If any Lender claims
reimbursement or compensation under this Article 4, the Agent shall determine
the amount thereof and shall deliver to the Borrower (with a copy to the
affected Lender) a certificate setting forth in reasonable detail the amount
payable to the affected Lender, and such certificate shall be conclusive and
binding on the Borrower in the absence of manifest error.
Section 4.7 Survival. The agreements and obligations of the Borrower in
this Article 4 shall survive the payment of all other Obligations.
Section 4.8 Replacement of Affected Lenders. Within thirty (30) days
after receipt by the Borrower of written notice and demand from any Lender for
any payment under the terms of Section 4.1, Section 4.2, or Section 4.3 then,
subject to this Section 4.8, the Borrower may, at its option, notify the Agent
and such Lender (the "Affected Lender") of the Borrower's intention to obtain,
at the Borrower's sole expense, a replacement Lender ("Replacement Lender") to
purchase the Affected Lender's Revolving Loans and its obligations under the
Loan Documents. Subject to this Section 4.8, the Borrower shall,
CREDIT AGREEMENT - Page 22
within thirty (30) days following the delivery of such notice from the Borrower,
cause the Replacement Lender to purchase (and the Affected Lender hereby agrees
to sell and convey to such Replacement Lender) the Revolving Loans of the
Affected Lender and assume the Affected Lender's Commitment and obligations
hereunder in accordance with the terms of an Assignment and Acceptance for cash
in an aggregate amount equal to the aggregate unpaid principal of the Revolving
Loans and other Obligations held by such Affected Lender, all unpaid interest
and fees accrued thereon or with respect thereto, and all other Obligations owed
to such Affected Lender, including amounts owed under Section 4.1 or Section 4.3
(but excluding any amount pursuant to Section 4.2). Notwithstanding the
foregoing, (a) the Borrower shall continue to be obligated to pay to the
Affected Lender in full all amounts then demanded and due under Section 4.1 or
Section 4.3 in accordance with the terms of this Agreement, (b) neither the
Agent nor any Lender shall have any obligation to find a Replacement Lender, (c)
the Replacement Lender must be acceptable to the Agent in its reasonable
discretion, and (d) the Bank may not be replaced under this Section 4.8 without
its consent. If the Borrower elects to replace any Affected Lender, the Borrower
must replace all Affected Lenders as set forth in this Section, each such
replacement to occur within a reasonable period of time not to exceed ninety
(90) days from the date such Affected Lender requested any payment under Section
4.1 or Section 4.3.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
Section 5.1 Books and Records. The Obligated Parties shall, and shall
cause each of their Subsidiaries to, maintain, at all times, correct and
complete books, records, and accounts in which complete, correct, and timely
entries are made of their transactions in accordance with GAAP. The Obligated
Parties shall, and shall cause each of their Subsidiaries to, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP. The Obligated Parties shall maintain at all times books and records
pertaining to the Collateral in such detail, form, and scope as the Agent or any
Lender shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to the
Accounts, (b) the loss, damage, or destruction of any Inventory as required
pursuant to GAAP, and (c) all other dealings affecting the Collateral as
required pursuant to GAAP. Without limiting any other provision of this
Agreement requiring the Obligated Parties to prepare Financial Statements in
accordance with GAAP, as used in this Section 5.1 with respect to any Subsidiary
not organized under the laws of the U.S. or any state of the U.S., "GAAP" shall
include such accounting rules (if any) as may be comparable to GAAP in the
jurisdiction of organization of such foreign Subsidiary.
Section 5.2 Financial Information. The Obligated Parties shall promptly
furnish to the Agent, all such information regarding the Obligated Parties' and
each of their Subsidiaries' financial and business affairs as the Agent or any
Lender (through the Agent) may reasonably request. Without limiting the
foregoing, the Obligated Parties will furnish, or cause to be furnished, to the
Agent the following, in sufficient copies for distribution by the Agent to each
Lender, in such detail as the Agent or the Lenders (through the Agent) shall
request:
CREDIT AGREEMENT - Page 23
(a) The Obligated Parties will furnish, or cause to be
furnished, as soon as available, but in any event not later than ninety
(90) days after the close of each Fiscal Year, consolidated audited and
consolidating unaudited balance sheets and statements of income, cash
flow, and stockholders' equity for the Borrower and its Subsidiaries
for such Fiscal Year, and the accompanying notes thereto, setting forth
in each case in comparative form figures for the previous Fiscal Year,
all in reasonable detail, fairly presenting the financial position and
the results of operations of the Borrower and its Subsidiaries as at
the date thereof and for the Fiscal Year then ended, and prepared in
accordance with GAAP. Such Financial Statements shall be examined in
accordance with generally accepted auditing standards by and, in the
case of such Financial Statements prepared on a consolidated basis,
accompanied by a report thereon, unqualified in any respect, of
independent certified public accountants of national standing selected
by the Borrower. Each Obligated Party hereby authorizes the Agent to
communicate directly with its certified public accountants (provided
that the Obligated Parties are given prior notice of, and an
opportunity to participate in, any such communication) and, by this
provision, authorizes those accountants to disclose to the Agent any
and all financial statements and other supporting financial documents
and schedules relating to the Obligated Parties and their Subsidiaries
and to discuss directly with the Agent the finances and affairs of the
Obligated Parties and their Subsidiaries.
(b) The Obligated Parties will furnish or cause to be
furnished,
(i) as soon as available, but in any event not later
than thirty (30) days after the end of each calendar month
that is not the end of a Fiscal Quarter, consolidated
unaudited balance sheets of the Borrower and its Subsidiaries
as at the end of such month, and consolidated unaudited
statements of income and cash flow for the Borrower and its
Subsidiaries for such month and for the period from the
beginning of the Fiscal Year to the end of such month and
(ii) as soon as available, but in any event not later
than forty-five (45) days after the end of such Fiscal
Quarter, consolidated and consolidating unaudited balance
sheets of the Borrower and its Subsidiaries as at the end of
such Fiscal Quarter, and consolidated and consolidating
unaudited statements of income and cash flow for the Borrower
and its Subsidiaries for such Fiscal Quarter and for the
period from the beginning of the Fiscal Year to the end of
such Fiscal Quarter, all in reasonable detail, fairly
presenting the financial position and results of operations of
the Borrower and its Subsidiaries as at the date thereof and
for such periods, and, in each case, in comparable form,
figures for the corresponding period in the prior Fiscal Year
and in the Borrower's budget, and prepared in accordance with
GAAP (other than for presentation of footnotes and subject to
normal year-end audit adjustments) applied consistently with
the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). The Borrower shall certify by a
certificate signed by its chief financial officer or chief
accounting officer that all such Financial Statements have
been prepared in accordance with GAAP and present fairly,
subject to normal year- end adjustments, the financial
position of the
CREDIT AGREEMENT - Page 24
Borrower and its Subsidiaries as at the dates thereof and its
results of operations for the periods then ended.
(c) Reserved.
(d) The Obligated Parties will furnish or cause to be
furnished, with each of the annual audited Financial Statements
delivered pursuant to Section 5.2(a), and with each of the unaudited
Financial Statements delivered pursuant to Section 5.2(b), a
certificate of the chief financial officer or chief accounting officer
of the Borrower in the form of Exhibit C (a "Compliance Certificate")
(i) setting forth in reasonable detail the calculations required to
establish the Obligated Parties' compliance with the covenants set
forth in Section 7.22 through Section 7.24 during the period covered by
such Financial Statements and as at the end thereof and (ii) except as
explained in reasonable detail in such certificate, (A) stating that
all of the representations and warranties of the Obligated Parties
contained in this Agreement and the other Loan Documents are correct
and complete in all material respects as at the date of such
certificate as if made at such time, except for those that speak as of
a particular date, (B) stating that the Obligated Parties are, at the
date of such certificate, in compliance in all material respects with
all of their respective covenants and agreements in this Agreement and
the other Loan Documents, (C) stating that no Default or Event of
Default then exists or existed during the period covered by such
Financial Statements, and (D) describing and analyzing in reasonable
detail all material trends, changes, and developments in each and all
such Financial Statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a
covenant has not been complied with, or that a Default or Event of
Default existed or exists, such certificate shall set forth what action
(if any) the Obligated Parties have taken or propose to take with
respect thereto.
(e) The Obligated Parties will furnish, or cause to be
furnished, not more than forty-five (45) days after the end of each
Fiscal Year, three-year forecasts prepared by the Borrower (to include
forecasted consolidated and consolidating balance sheets and statements
of income and cash flow) for the Obligated Parties as at the end of and
for each of the following three (3) Fiscal Years and for each calendar
month of the current Fiscal Year.
(f) Upon request of the Agent, the Obligated Parties will
furnish, or cause to be furnished, promptly after filing with the PBGC
and the IRS or any other Governmental Authority, a copy of each annual
report or other filing filed with respect to each Plan or Foreign Plan
of any Obligated Party.
(g) The Obligated Parties will furnish, or cause to be
furnished, promptly upon the filing thereof, copies of all reports, if
any, to or other documents filed by the Parent or any of its
Subsidiaries with the Securities and Exchange Commission under the
Exchange Act or any other similar Governmental Authority pursuant to
any Requirement of Law, and all reports, notices, or statements sent or
received by the Parent or any of its Subsidiaries to or from the
holders of any equity interests of the Parent or any of its
Subsidiaries or of any Debt of the Parent or any of its
CREDIT AGREEMENT - Page 25
Subsidiaries registered under the Securities Act of 1933 or to or from
the trustee under any indenture under which the same is issued (other
than routine non- material correspondence).
(h) The Obligated Parties will furnish, or cause to be
furnished, as soon as available, but in any event not later than
fifteen (15) days after the Borrower's or any of its Subsidiaries'
receipt thereof, a copy of all management reports and management
letters prepared by any independent certified public accountants of the
Borrower or any of its Subsidiaries.
(i) The Obligated Parties will furnish, or cause to be
furnished, promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Parent
makes available to its shareholders or which are made available to any
holder of any Debt of any Obligated Party.
(j) If requested by the Agent, the Obligated Parties will
furnish, or cause to be furnished, promptly after filing with the IRS
or any other Governmental Authority, a copy of each tax return filed by
the Parent or any Subsidiary of the Parent.
(k) The Obligated Parties will furnish, or cause to be
furnished, as soon as available, but in any event on the second
Business Day of each calendar week for the last Business Day of the
preceding calendar week and at such other times, from time to time, as
may be requested by the Agent, a Borrowing Base Certificate and
supporting information in connection therewith.
(l) The Obligated Parties shall provide, or cause to be
provided, to the Agent the following documents, in form reasonably
satisfactory to the Agent:
(i) as soon as available but in any event on the
second (2nd) Business Day of each calendar week, a Borrowing
Base Certificate with a schedule of generated invoices
attached;
(ii) within fifteen (15) days after the end of each
calendar month, or more frequently if requested by the Agent,
in each case determined as of the last day of the preceding
calendar month:
(A) a schedule of the Borrower's accounts
receivable created since the last such schedule which
(1) shall be reconciled to the Borrowing Base
Certificate and the Borrower's general ledger as of
the last day of the preceding month and (2) shall set
forth a detailed aged final balance of all then
existing accounts receivable specifying the names,
addresses (if requested by the Agent), and balances
due for each Account Debtor obligated on an account
receivable so listed,
(B) an aging of the Borrower's accounts
payable, and
CREDIT AGREEMENT - Page 26
(C) an Inventory Report, which report will
identify each location, if any, where any Collateral
is located with a Person under any bailee, consignee,
or warehouse arrangement;
(iii) upon the Agent's request, copies of invoices in
connection with the Borrower's Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips,
and shipping and delivery documents in connection with the
Borrower's Accounts and for Equipment acquired by the
Borrower, purchase orders, and invoices;
(iv) such other reports as to the Collateral as the
Agent may reasonably request from time to time; and
(v) with the delivery of each of the foregoing, a
certificate of the Borrower executed by a Responsible Officer
of the Borrower certifying to such Responsible Officer's
knowledge, after due inquiry, as to the accuracy and
completeness of the foregoing. If any records or reports of
the Collateral are prepared by an accounting service or other
agent, each Obligated Party hereby authorizes such service or
agent to deliver such records, reports, and related documents
to the Agent, for distribution to the Lenders.
(m) The Obligated Parties will furnish, or cause to be
furnished, each of the items required pursuant to Section 7.7(b).
(n) The Obligated Parties will furnish, or cause to be
furnished, such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and
business affairs of the Parent or any Subsidiary of the Parent.
Section 5.3 Notices to the Lender. The Obligated Parties shall notify
the Agent and the Lenders in writing of the following matters at the following
times:
(a) immediately after becoming aware of any Default or Event
of Default;
(b) immediately after becoming aware of the assertion by the
holder of any Capital Stock of the Parent or any Subsidiary of the
Parent or the holder of any Debt of the Parent or any Subsidiary of the
Parent in excess of $2,000,000 that a default exists with respect
thereto or that any such Person is not in compliance with the terms
thereof, or the written threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance;
(c) immediately after becoming aware of any event or
circumstance which could have, or has resulted in, a Material Adverse
Effect;
(d) immediately after becoming aware of any pending or
threatened (in writing) action, suit, proceeding, or counterclaim by
any Person, or any pending or threatened (in writing)
CREDIT AGREEMENT - Page 27
investigation by a Governmental Authority, which could have, or has
resulted in, a Material Adverse Effect;
(e) immediately after becoming aware of any pending or
threatened (in writing) strike, work stoppage, unfair labor practice
claim, or other labor dispute affecting any Obligated Party which could
have, or has resulted in, a Material Adverse Effect;
(f) immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority
affecting any Obligated Party which could have, or has resulted in, a
Material Adverse Effect;
(g) immediately after receipt of any notice of any violation
by any Obligated Party of any Environmental Law which could have, or
has resulted in, a Material Adverse Effect;
(h) immediately after receipt of any written notice that any
Obligated Party is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that any Obligated
Party is subject to investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant which, in either case,
is reasonably likely to give rise to liability in excess of $2,000,000;
(i) immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any
Obligated Party;
(j) any change in any Obligated Party's name as it appears in
the jurisdiction of its organization, type of entity, organizational
identification number, locations of Collateral, or trade names under
which such Obligated Party will sell Inventory or create Accounts, or
to which instruments in payment of Accounts may be made payable, in
each case at least thirty (30) days prior thereto;
(k) within ten (10) days after any Obligated Party or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Code) has occurred, and, when known, any action taken or threatened
by the IRS, the DOL, or the PBGC with respect thereto;
(l) upon request, copies of the following: (i) each annual
report (form 5500 series), including Schedule B thereto, filed with the
PBGC, the DOL, or the IRS with respect to each Plan, (ii) a copy of
each funding waiver request filed with the PBGC, the DOL, or the IRS
with respect to any Plan and all communications received by any
Obligated Party or any ERISA Affiliate from the PBGC, the DOL, or the
IRS with respect to such request, and (iii) a copy of each other filing
or notice filed with the PBGC, the DOL, or the IRS, with respect to
each Plan by any Obligated Party or any ERISA Affiliate (other than
routine non-material correspondence);
CREDIT AGREEMENT - Page 28
(m) upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan,
and within three (3) Business Days after receipt thereof by any
Obligated Party or any ERISA Affiliate, copies of the following: (i)
any notices of the PBGC's intention to terminate a Plan or to have a
trustee appointed to administer such Plan; (ii) any favorable or
unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any
notice from a Multi-employer Plan regarding the imposition of
withdrawal liability;
(n) within ten (10) days after the occurrence thereof: (i) any
changes in the benefits of any existing Plan or Foreign Plan which
increase any Obligated Party's annual costs with respect thereto by an
amount in excess of $1,000,000, or the establishment of any new Plan or
Foreign Plan or the commencement of contributions to any Plan or
Foreign Plan to which any Obligated Party or any ERISA Affiliate was
not previously contributing; or (ii) any failure by any Obligated Party
or any ERISA Affiliate to make a required installment or any other
required payment to any Plan or Foreign Plan in excess of $1,000,000
under Section 412 of the Code on or before the due date for such
installment or payment;
(o) within ten (10) days after any Obligated Party or any
ERISA Affiliate knows or has reason to know that any of the following
events has occurred or will occur: (i) a Multi-employer Plan has been
or will be terminated; (ii) the administrator or plan sponsor of a
Multi-employer Plan intends to terminate a Multi-employer Plan; or
(iii) the PBGC has instituted proceedings under Section 4042 of ERISA
to terminate a Multi-employer Plan;
(p) immediately upon becoming aware of an event or anticipated
or expected event which would constitute a default or an event of
default under either of the Indentures;
(q) immediately upon commencement of any proceedings
contesting any tax, fee, assessment, or other governmental charge in
excess of $2,000,000; and
(r) immediately upon becoming aware that any material
assumption on which the Obligated Parties prepared and presented the
Latest Projections is no longer valid.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action, if any, that any Obligated
Party or any ERISA Affiliate, as applicable, has taken or proposes to take with
respect thereto.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
Each Obligated Party warrants and represents to the Agent and the
Lenders that except as set forth in the Schedules to this Agreement:
CREDIT AGREEMENT - Page 29
Section 6.1 Authorization, Validity, and Enforceability of this
Agreement and the other Loan Documents; No Conflicts. Each Obligated Party has
the power and authority to execute, deliver, and perform this Agreement and the
other Loan Documents to which it is a party, to incur the indebtedness,
liabilities, and obligations it has agreed to undertake hereunder and under the
other Loan Documents, and to grant to the Agent Liens upon the Collateral owned
by such Obligated Party. Each Obligated Party has taken all necessary action
(including obtaining approval of its stockholders, partners, general partner(s),
members, or other applicable equity owners, if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which each Obligated Party is a party have been duly executed and delivered by
such Obligated Party, and constitute the legal, valid, and binding obligations
of such Obligated Party, enforceable against it in accordance with their
respective terms without defense, setoff, or counterclaim. Each Obligated
Party's execution, delivery, and performance of this Agreement and the other
Loan Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or constitute a default under, or result in
or require the creation or imposition of any Lien upon the property of the
Parent or any Subsidiary of the Parent by reason of the terms of (a) any
contract, mortgage, Lien, lease, agreement, indenture (including, without
limitation, the Indentures), document, or instrument to which the Parent or any
Subsidiary of the Parent is a party or which is binding upon any of them, (b)
any Requirement of Law applicable to the Parent or any Subsidiary of the Parent,
or (c) the certificate or articles of incorporation, bylaws, limited liability
company or partnership agreement, or other organizational or constituent
documents, as the case may be, of the Parent or any Subsidiary of the Parent.
Section 6.2 Validity and Priority of Security Interest. The provisions
of this Agreement and the other Loan Documents create legal and valid Liens on
all the Collateral in favor of the Agent, for the benefit of the Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on the
Collateral, securing the Obligations, enforceable against the applicable
Obligated Party and all third parties, and having priority over all other Liens
on the Collateral except (a) in the case of Liens described in clause (c),
clause (e), and clause (f) of the definition of Permitted Liens to the extent
any such Liens would have priority over the Agent's Liens pursuant to any
Requirement of Law, (b) Liens in certificated vehicles, to the extent the Agent
has not complied with applicable Requirements of Law governing perfection of
Liens thereon, and Liens perfected only by possession to the extent the Agent
has not obtained or does not maintain possession of such Collateral, (c) Liens
on the Term Lender Priority Collateral pursuant to the Term Loan Facility as
provided by the Intercreditor Agreement, and (d) requirements in connection with
accounts owed by governmental agencies that may be imposed pursuant to
Requirements of Law.
Section 6.3 Corporate Name; Prior Transactions. Except as set forth on
Schedule 6.3, the Obligated Parties have not, during the past five (5) years,
been known by or used any other corporate or fictitious name, or been a party to
any merger or consolidation, or acquired all or substantially all of the assets
of any Person, or acquired any of its property outside of the ordinary course of
business.
Section 6.4 Capitalization and Subsidiaries. Schedule 6.4 sets forth
(a) a correct and complete list of the name and relationship to the Parent of
each and all of the Parent's Subsidiaries, (b) the location of the chief
executive office of the Parent and each of its Subsidiaries, (c) a true and
complete listing of each class of each of the Parent's Subsidiaries' authorized
Capital Stock, of which all of such issued shares are
CREDIT AGREEMENT - Page 30
validly issued, outstanding, fully paid and non-assessable, and owned
beneficially and of record by the Persons identified on Schedule 6.4, and (d)
the type of entity of the Parent and each of its Subsidiaries. With respect to
each Obligated Party, Schedule 6.4 sets forth the employer or taxpayer
identification number of each Obligated Party and the organizational
identification number issued by each Obligated Party's jurisdiction of
organization or a statement that no such number has been issued. Each Obligated
Party is (x) duly incorporated, formed, or organized and validly existing in
good standing under the laws of its jurisdiction of incorporation, formation, or
organization set forth on Schedule 6.4, (y) qualified to do business and in good
standing (as applicable) in each jurisdiction in which the failure to so qualify
or be in good standing could reasonably be expected to have a Material Adverse
Effect, and (z) has all requisite power and authority to conduct its business
and own its property.
Section 6.5 Financial Statements and Projections.
(a) The Obligated Parties have delivered to the Agent and the
Lenders the audited balance sheet and related statements of income,
retained earnings, cash flow, and changes in stockholders' equity for
the Borrower and its Subsidiaries as of June 30, 2002, and for the
Fiscal Year then ended, accompanied by the report thereon of the
Borrower's independent certified public accountants,
PricewaterhouseCoopers LLP. The Obligated Parties have also delivered
to the Agent and the Lenders the unaudited balance sheet and related
statements of income and cash flow for the Borrower and its
Subsidiaries as of August 31, 2002. All such financial statements have
been prepared in accordance with GAAP and fairly present the financial
position of the Borrower and its Subsidiaries as at the dates thereof
and their results of operations for the periods then ended (except with
respect to the financial statements dated August 31, 2002, for the
absence of applicable footnotes and subject to normal year-end audit
adjustments).
(b) The Latest Projections when submitted to the Agent and the
Lenders as required herein represent the Obligated Parties' good faith
estimate of the future financial performance of the Obligated Parties
for the periods set forth therein. The Latest Projections have been
prepared on the basis of the assumptions set forth therein, which the
Obligated Parties believe are fair and reasonable in light of current
and reasonably foreseeable business conditions at the time submitted to
the Agent and the Lenders.
Section 6.6 Solvency. Each Obligated Party is Solvent prior to and
after giving effect to the Borrowings to be made on the Closing Date and the
issuance of the Letters of Credit and Credit Support to be issued on the Closing
Date (if any).
Section 6.7 Debt. After giving effect to the making of the Revolving
Loans to be made on the Closing Date and the issuance of the Letters of Credit
and Credit Support to be issued on the Closing Date (if any), the Obligated
Parties have no Debt, except (a) the Obligations, (b) Debt described on Schedule
6.7, and (c) other Debt entered into after the Closing Date as permitted by
Section 7.13 and reflected in the Financial Statements delivered pursuant to
Section 5.2.
CREDIT AGREEMENT - Page 31
Section 6.8 Distributions. As of the Closing Date, since June 30, 2002,
no Distribution has been declared, paid, or made upon or in respect of any
Capital Stock of the Parent, the GP, the LP, or the Borrower other than as set
forth on Schedule 6.8.
Section 6.9 Real Estate; Leases. As of the Closing Date, Schedule 6.9
sets forth a correct and complete list of all Real Estate owned by each
Obligated Party, all leases and subleases of real or personal property by each
Obligated Party as lessee or sublessee (other than leases of personal property
as to which such Obligated Party is lessee or sublessee for which the value of
such personal property in the aggregate is less than $1,000,000), and all leases
and subleases of real or personal property by each Obligated Party as lessor, or
sublessor. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. Each Obligated Party has good and
indefeasible title in fee simple to the Real Estate identified on Schedule 6.9
as owned by such Obligated Party, or valid leasehold interests in all Real
Estate designated therein as "leased" by such Obligated Party, and each
Obligated Party has good, indefeasible, and merchantable title to all of its
other property reflected on the August 31, 2002 Financial Statements of the
Borrower and its Subsidiaries delivered to the Agent and the Lenders, except as
disposed of in the ordinary course of business since the date thereof, free of
all Liens except Permitted Liens.
Section 6.10 Proprietary Rights. As of the Closing Date, Schedule 6.10
sets forth a correct and complete list of all of each Obligated Party's patents,
trademarks, and copyrights and all other Proprietary Rights that are material to
such Obligated Party's business. None of the Proprietary Rights listed in
Schedule 6.10 is subject to any licensing agreement or similar arrangement
except as set forth on Schedule 6.10. The Proprietary Rights described on
Schedule 6.10 constitute all of the property of such type necessary to the
current and anticipated future conduct of the Obligated Parties' business. To
the best of each Obligated Party's knowledge, no slogan or other advertising
device, product, process, method, substance, part, or other material now
employed, or now contemplated to be employed, by any Obligated Party infringes
in any material respect upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the best of each
Obligated Party's knowledge, threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard, or code
is pending or, to the knowledge of any Obligated Party, proposed, which, in
either case, could reasonably be expected to have a Material Adverse Effect.
Section 6.11 Trade Names. All trade names or styles under which any
Obligated Party will sell Inventory or create Accounts, or to which instruments
in payment of Accounts may be made payable, are listed on Schedule 6.11.
Section 6.12 Litigation. There is no pending, or to the best of any
Obligated Party's knowledge threatened, action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority, or
any basis for any of the foregoing, which could reasonably be expected to have a
Material Adverse Effect.
Section 6.13 Labor Disputes. As of the Closing Date, (a) there is no
collective bargaining agreement or other labor contract covering classes of
employees of any Obligated Party, (b) no such
CREDIT AGREEMENT - Page 32
collective bargaining agreement or other such labor contract is scheduled to
expire during the term of this Agreement, (c) to the knowledge of each Obligated
Party, no union or other labor organization is seeking to organize, or to be
recognized as, a collective bargaining unit of employees of any Obligated Party
or for any similar purpose, and (d) there is no pending or (to the best of any
Obligated Party's knowledge) threatened, strike, work stoppage, material unfair
labor practice claim, or other material labor dispute against or affecting any
Obligated Party or its employees.
Section 6.14 Environmental Laws. Except as otherwise set forth on
Schedule 6.14:
(a) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, each Obligated Party and each of
their respective Subsidiaries has complied in all material respects
with all Environmental Laws and neither any Obligated Party, any of
their respective Subsidiaries, nor any of their respective presently or
previously owned Real Estate or presently conducted or prior
operations, is subject to any enforcement order from or liability
agreement with any Governmental Authority or private Person respecting
(i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.
(b) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, each Obligated Party and each of
their respective Subsidiaries has obtained all permits necessary for
its current operations under Environmental Laws, and all such permits
are in good standing, and each Obligated Party and each of their
respective Subsidiaries is in compliance with all material terms and
conditions of such permits.
(c) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, no Obligated Party or any of their
respective Subsidiaries, nor to the best of any Obligated Party's
knowledge any of their predecessors in interest, has in violation of
any Environmental Law stored, treated, or disposed of any hazardous
waste (as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law).
(d) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, no Obligated Party or any of their
respective Subsidiaries has received any summons, complaint, order, or
similar written notice indicating that it is not currently in
compliance with, or that any Governmental Authority is investigating
its compliance with, any Environmental Laws or that it is or may be
liable to any other Person as a result of a Release or threatened
Release of a Contaminant.
(e) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, none of the present or past
operations of any Obligated Party or any of their respective
Subsidiaries is the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond
to a Release or threatened Release of a Contaminant.
CREDIT AGREEMENT - Page 33
(f) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, there is not now, nor to the best
of any Obligated Party's knowledge has there ever been, on or in the
Real Estate of any Obligated Party or any of their respective
Subsidiaries in violation of Environmental Laws:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers, or other equipment.
(g) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, no Obligated Party or any
Subsidiary of an Obligated Party has filed any notice under any
requirement of Environmental Law reporting a spill or accidental and
unpermitted Release or discharge of a Contaminant into the environment.
(h) Except as otherwise could not reasonably be expected to
result in a Material Adverse Effect, no Obligated Party or any
Subsidiary of any Obligated Party has entered into any negotiations or
settlement agreements with any Person (including the prior owner of its
property) imposing material obligations or liabilities on any Obligated
Party or any Subsidiary of any Obligated Party with respect to any
remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) None of the products manufactured, distributed, or sold by
any Obligated Party or any Subsidiary of any Obligated Party contains
asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate of
any Obligated Party or any Subsidiary of any Obligated Party.
Section 6.15 No Violation of Law. No Obligated Party or any Subsidiary
of any Obligated Party is in violation of any law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which violation could
reasonably be expected to have a Material Adverse Effect.
Section 6.16 No Default. No Obligated Party or any Subsidiary of any
Obligated Party is in default with respect to any note, indenture (including
without limitation, the Indentures), loan agreement, mortgage, lease, deed, or
other agreement to which such Obligated Party or Subsidiary of an Obligated
Party is a party or by which it is bound, which default could reasonably be
expected to have a Material Adverse Effect.
CREDIT AGREEMENT - Page 34
Section 6.17 ERISA Compliance. Except as set forth on Schedule 6.17:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code, and other federal or
state law. Each Plan which is intended to qualify under Section 401(a)
of the Code has received a favorable determination letter from the IRS
and to the best knowledge of each Obligated Party, nothing has occurred
which would cause the loss of such qualification. Each Obligated Party
and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of any
Obligated Party, threatened claims, actions, or lawsuits, or action by
any Governmental Authority, with respect to any Plan which has resulted
or could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) Except to the extent that any of the following either
individually or in the aggregate cannot reasonably be expected to
result in a Material Adverse Effect, (i) No ERISA Event has occurred or
is reasonably expected to occur, (ii) no Pension Plan has any Unfunded
Pension Liability, (iii) no Obligated Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV
of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA), (iv) no Obligated Party
nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multi- employer
Plan, and (v) no Obligated Party nor any ERISA Affiliate has engaged in
a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
(d) Each Foreign Plan is in compliance in all material
respects with the laws and regulations applicable to such Foreign Plan
and each Obligated Party has satisfied all contribution obligations in
all material respects with respect to such Foreign Plan (to the extent
applicable). Each Foreign Plan and related funding arrangement that is
intended to qualify for tax-favored status has been reviewed and
approved for such status by the appropriate Governmental Authority (or
has been submitted for such review and approval within the applicable
time period), and nothing has occurred and no condition exists that is
likely to cause the loss or denial of such tax-favored status. No
Foreign Plan has any liabilities in any material respect in excess of
the current value of such Foreign Plan's assets, determined in
accordance with the assumptions used for funding such Foreign Plan
pursuant to reasonable accounting standards in accordance with
applicable law. No Obligated Party has incurred or reasonably expects
to incur any material liability as a result of the termination or other
insolvency of any Foreign Plan or any material liability which is not
otherwise funded or satisfied with readily available assets set aside
with respect to such Foreign Plan.
CREDIT AGREEMENT - Page 35
Section 6.18 Taxes. Each Obligated Party has filed all federal, state,
and other tax returns and reports required to be filed (or appropriate
extensions have been timely filed), and has paid all federal, state, and other
taxes, assessments, fees, and other governmental charges levied or imposed upon
it or its properties, income, or assets otherwise due and payable unless such
unpaid taxes and assessments would constitute a Permitted Lien.
Section 6.19 Regulated Entities. No Obligated Party nor any Person
controlling any Obligated Party is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. No Obligated Party is a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, or a regulated entity under the Federal Power Act, the Interstate Commerce
Act, any state public utilities code or law, or any other federal or state
statute or regulation limiting its ability to incur indebtedness.
Section 6.20 Use of Proceeds; Margin Regulations. The proceeds of the
Revolving Loans are to be used solely for the purposes specified in Section
7.25. No Obligated Party is engaged in the business of buying or selling Margin
Stock or extending credit for the purpose of buying or carrying Margin Stock.
Section 6.21 No Material Adverse Change. No Material Adverse Effect has
occurred since the latest date of the Financial Statements delivered to the
Lenders referenced in Section 6.5.
Section 6.22 Full Disclosure. None of the representations or warranties
made by any Obligated Party in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement, or certificate furnished
by or on behalf of any Obligated Party in connection with the Loan Documents
(including the offering and disclosure materials delivered by or on behalf of
any Obligated Party to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
Section 6.23 Material Agreements. As of the Closing Date, Schedule 6.23
sets forth all material agreements and contracts (other than the Loan Documents)
of the Obligated Parties which are required to be publicly disclosed pursuant to
any Requirement of Law since the date of the Parent's annual report on Form 10-K
for the Fiscal Year ended June 30, 2002.
Section 6.24 Bank Accounts. As of the Closing Date, Schedule 6.24
contains a complete and accurate list of all bank accounts maintained by each
Obligated Party with any bank or other financial institution.
Section 6.25 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery, or performance by, or enforcement against, any
Obligated Party of this Agreement or any other Loan Document except for those
which have been duly
CREDIT AGREEMENT - Page 36
obtained by the Obligated Parties, copies of which have been provided to the
Agent, and for filing of financing statements and the Mortgages (if any).
Section 6.26 Investment Property.
(a) Schedule 6.26 sets forth a correct and complete list of
all Investment Property owned by each Obligated Party as of the Closing
Date. Each Obligated Party is the legal and beneficial owner of such
Investment Property, as so reflected, free and clear of any Lien (other
than Permitted Liens), and has not sold, granted any option with
respect to, assigned or transferred, or otherwise disposed of any of
its rights or interest therein.
(b) To the extent any Obligated Party is the owner of or
becomes the issuer of any Investment Property that is Collateral (each
such Person which issues any such Investment Property being referred to
herein as an "Issuer"): (i) as of the Closing Date, the Issuer's
shareholders that are Obligated Parties and the ownership interest of
each such shareholder are as set forth on Schedule 6.4, and each such
shareholder is the registered owner thereof on the books of the Issuer;
(ii) the Issuer acknowledges the Agent's Liens; (iii) to the extent
required to perfect the Agent's Liens, such security interest,
collateral assignment, lien, and pledge in favor of the Agent has been
registered on the books of the Issuer for such purpose as of the date
hereof; and (iv) the Issuer is not aware of any liens, restrictions, or
adverse claims which exist on any such Investment Property other than
the Agent's Liens.
Section 6.27 Common Enterprise. The successful operation and condition
of each of the Obligated Parties is dependent on the continued successful
performance of the functions of the group of the Obligated Parties as a whole
and the successful operation of each of the Obligated Parties is dependent on
the successful performance and operation of each other Obligated Party. Each
Obligated Party expects to derive benefit (and its board of directors or other
governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from successful operations of each of the
other Obligated Parties. Each Obligated Party expects to derive benefit (and the
boards of directors or other governing body of each Obligated Party has
determined that it may reasonably be expected to derive benefit), directly and
indirectly, from the credit extended by the Lenders to the Borrower hereunder,
both in their separate capacities and as members of the group of companies. Each
Obligated Party has determined that execution, delivery, and performance of this
Agreement and any other Loan Documents to be executed by such Obligated Party is
within its purpose, will be of direct and indirect benefit to such Obligated
Party, and is in its best interest.
Section 6.28 Affiliate Transactions. Except as set forth on Schedule
6.28, there are no existing or proposed agreements, arrangements,
understandings, or transactions between any Obligated Party and any of the
officers, members, managers, directors, stockholders, parents, other interest
holders, employees, or Affiliates (other than Subsidiaries) of any Obligated
Party or any members of their respective immediate families, and none of the
foregoing Persons are directly or indirectly indebted to any Person with which
any Obligated Party has a business relationship or which competes with any
Obligated Party. Except as set forth on Schedule 6.28, none of the officers,
members, managers, directors, stockholders, parents, other
CREDIT AGREEMENT - Page 37
interest holders, employees, or Affiliates (other than Subsidiaries) of any
Obligated Party or any members of their respective immediate families have any
direct or indirect ownership, partnership, or voting interest in any Affiliate
of any Obligated Party or any Person with which any Obligated Party has a
business relationship or which competes with any Obligated Party (except that
any such Persons may own stock in any publicly traded company that may compete
with an Obligated Party. Except as set forth on Schedule 6.28, no Subsidiary of
the Parent has any direct or indirect ownership, partnership, or voting interest
in any Person with which any Obligated Party has a business relationship or
which competes with any Obligated Party.
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Obligated Party covenants to the Agent and each Lender that so
long as any of the Obligations remain outstanding or this Agreement is in effect
each Obligated Party will keep and perform each of the following covenants:
Section 7.1 Taxes and Other Obligations. Except as otherwise permitted
by the terms of this Agreement and permitted statutory exemptions, each
Obligated Party shall (a) file when due all tax returns and other reports which
it is required to file, (b) pay, or provide for the payment, when due, of all
taxes, fees, assessments, and other governmental charges against it or upon its
property, income, and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
provide to the Agent and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing, and (c) pay when due all Debt owed by it
and all claims of materialmen, mechanics, carriers, warehousemen, landlords,
processors, and other like Persons, and all other indebtedness owed by it and
perform and discharge in a timely manner all other obligations undertaken by it;
provided, however, such Obligated Party need not pay any of the foregoing (w)
which it is contesting in good faith by appropriate proceedings diligently
pursued, (x) for which it has established proper reserves as required under
GAAP, (y) for which no Lien (other than a Permitted Lien) results from such
non-payment, and (z) with respect to which any such tax, fee, assessment, or
governmental charge in excess of $2,000,000, such Obligated Party has notified
the Agent in writing of any contest described in clause (w) preceding.
Section 7.2 Legal Existence and Good Standing. Except as allowed by
Section 7.9, each Obligated Party shall maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
Section 7.3 Compliance with Law and Agreements; Maintenance of
Licenses. Each Obligated Party shall comply, and shall cause each of its
Subsidiaries to comply, with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws) except to the extent any
noncompliance would not result in liability in excess of $2,000,000 or would not
otherwise reasonably be expected to result in a Material
CREDIT AGREEMENT - Page 38
Adverse Effect. Each Obligated Party shall obtain and maintain, and shall cause
each of its Subsidiaries to obtain and maintain, all material licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date or as permitted by Section
7.17. No Obligated Party shall modify, amend, or alter its certificate or
articles of incorporation, bylaws, limited liability company operating
agreement, limited partnership agreement, or other similar constituent documents
other than in a manner which does not adversely affect the rights of the Lenders
or the Agent.
Section 7.4 Maintenance of Property; Inspection of Property.
(a) Each Obligated Party shall maintain all of its property
necessary and useful in the conduct of its business, in good operating
condition and repair, ordinary wear and tear excepted.
(b) Each Obligated Party shall permit representatives and
independent contractors of the Agent (accompanied by any Lender which
so elects at its own expense and with the consent of the Agent) to
visit and inspect any of its properties, to examine its corporate,
financial, and operating records, and make copies thereof or abstracts
therefrom and to discuss its affairs, finances, and accounts with its
directors, officers, and independent public accountants, at such
reasonable times during normal business hours and as soon as may be
reasonably desired, upon reasonable advance notice to such Obligated
Party, such right to include quarterly field exams; provided, however,
when an Event of Default exists, the Agent or any Lender may do any of
the foregoing at the expense of the Borrower (to be paid by the
Borrower as provided in Section 13.7) at any time during normal
business hours and without advance notice. The Agent, the Lenders, and
all representatives and contractors of the Agent and the Lenders will
comply with all safety and security rules in effect at the time of any
such entry on any Obligated Party's premises
Section 7.5 Insurance.
(a) Each Obligated Party shall maintain with financially sound
and reputable insurers acceptable to the Agent or otherwise having a
rating of at least A+ or better by Best Rating Guide, insurance
against: (i) loss or damage by fire with extended coverage; (ii) theft,
burglary, pilferage, and loss in transit; (iii) public liability and
third party property damage; (iv) larceny, embezzlement, or other
criminal liability; (v) business interruption; and (vi) such other
hazards or of such other types as is customary for Persons engaged in
the same or similar business as such Obligated Party, all such
insurance as the Agent, in its discretion, or acting at the direction
of the Majority Lenders, shall specify, in amounts, and under policies
acceptable to the Agent and the Majority Lenders. Without limiting the
foregoing, in the event that any improved Real Estate covered by a
Mortgage is determined to be located within an area that has been
identified by the Director of the Federal Emergency Management Agency
as a Special Flood Hazard Area ("SFHA"), the applicable Obligated Party
shall purchase and maintain flood insurance on such Real Estate and any
Equipment and Inventory located on such Real Estate. The amount of such
flood insurance will be reasonably determined by the Agent, and shall,
at a minimum, comply with applicable federal regulations as required by
the Flood Disaster Protection Act of 1973, as amended. Each
CREDIT AGREEMENT - Page 39
Obligated Party shall also maintain flood insurance for its Inventory
and Equipment which is, at any time, located in a SFHA.
(b) For each of the insurance policies issued as required by
this Section 7.5, each Obligated Party shall cause the Agent, for the
benefit of the Agent and the Lenders, to be named as secured party or
mortgagee and sole loss payee or additional insured, in a manner
acceptable to the Agent. Each policy of insurance shall contain a
clause or endorsement requiring the insurer to give not less than
thirty (30) days prior written notice to the Agent in the event of
cancellation of such policy for any reason whatsoever and, with respect
to each policy covering property, a clause or endorsement stating that
the interest of the Agent shall not be impaired or invalidated by any
act or neglect of the insured Person or the owner of any premises for
purposes more hazardous than are permitted by such policy. All premiums
for such insurance shall be paid by the Obligated Parties when due, and
certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies shall be delivered to the Agent, in each
case, in sufficient quantity for distribution by the Agent to each of
the Lenders. If any Obligated Party fails to procure (or cause to be
procured) such insurance or to pay the premiums therefor when due, the
Agent may, and at the direction of the Majority Lenders shall, do so
from the proceeds of Revolving Loans.
Section 7.6 Insurance and Condemnation Proceeds. Each Obligated Party
shall promptly notify the Agent and the Lenders of any loss, damage, or
destruction to the Collateral and Real Estate (whether or not any such Real
Estate is Collateral) in excess of $1,000,000, whether or not covered by
insurance. The Agent is hereby authorized to directly collect all insurance and
condemnation proceeds in respect of Collateral and Real Estate (whether or not
any such Real Estate is Collateral) and to apply such proceeds to the reduction
of the Obligations as follows:
(a) With respect to insurance and condemnation proceeds
relating to Collateral other than Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by the Agent in
the collection or handling thereof, the Agent shall apply such proceeds
to the reduction of the Obligations in the manner provided for in
Section 3.7.
(b) With respect to insurance and condemnation proceeds
relating to Collateral consisting of Fixed Assets and any Real Estate
which is not Collateral, after deducting from such proceeds the amount
of any Debt secured by a Permitted Lien (excluding the Agent's Liens)
and the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall permit or require the
applicable Obligated Party to use such proceeds, or any part thereof,
to replace, repair, restore, or rebuild the relevant Fixed Assets in a
diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage, or
destruction so long as (i) no Event of Default exists, and (ii) the
aggregate proceeds do not exceed $1,000,000. In all other
circumstances, the Agent shall apply such insurance and condemnation
proceeds to the reduction of the Obligations in the order provided for
in Section 3.7.
CREDIT AGREEMENT - Page 40
Section 7.7 Environmental Laws.
(a) Except to the extent as could reasonably be expected to
result in a Material Adverse Effect, each Obligated Party shall
conduct, and shall cause each of its Subsidiaries to conduct, its
business in compliance with all Environmental Laws applicable to it,
including those relating to the generation, handling, use, storage, and
disposal of any Contaminant. Each Obligated Party shall take, and shall
cause each of its Subsidiaries to take, prompt and appropriate action
to respond to any non-compliance with Environmental Laws and shall,
upon request of the Agent, report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the
Obligated Parties shall submit to the Agent and the Lenders annually,
or more frequently if requested by the Agent, commencing on the first
Anniversary Date, and on each Anniversary Date thereafter, an update of
the status of each environmental compliance or liability issue
concerning any Obligated Party or any Subsidiary of an Obligated Party
or any of their respective properties or operations (whether past or
present), if any. The Agent or any Lender may request, in which case
the Borrower will promptly furnish or cause to be promptly furnished to
the Agent, copies of technical reports (if any) prepared by any
Obligated Party or any Subsidiary of an Obligated Party and its written
communications with any Governmental Authority regarding any alleged
non-compliance or environmental liability. During the existence of an
Event of Default, each Obligated Party shall, at the Agent's or the
Majority Lenders' request and at such Obligated Party's expense, (i)
retain an independent environmental engineer acceptable to the Agent to
evaluate any site, including tests if appropriate, where the non-
compliance or alleged non-compliance with Environmental Laws has
occurred and prepare and deliver to the Agent, in sufficient quantity
for distribution by the Agent to the Lenders, a report setting forth
the results of such evaluation, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs
thereof and (ii) provide to the Agent, in sufficient quantity for
distribution by the Agent to the Lenders, a supplemental report of such
engineer whenever the scope of the environmental problems (if any), or
the response thereto or the estimated costs thereof, shall increase in
any material respect.
Section 7.8 Compliance with ERISA and Similar Foreign Laws. Each
Obligated Party shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code, and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) make all required contributions to any Plan subject to
Section 412 of the Code; (d) not engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan or Foreign Plan;
(e) not engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA; (f) maintain each Foreign Plan in compliance in all material respects
with Requirements of Law applicable to such Foreign Plan; (g) satisfy all
contribution obligations in all material respects with respect to each Foreign
Plan; and (h) to the extent possible in accordance with any applicable
Requirement of Law, cause each Foreign Plan and related funding arrangements
that are intended to qualify for tax-favored status to maintain such tax-favored
status.
CREDIT AGREEMENT - Page 41
Section 7.9 Mergers, Consolidations, or Sales. No Obligated Party shall
enter into any transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, lease, or otherwise dispose of all or any part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for (a) transfers of any of its property or assets to the
Borrower, (b) sales of Inventory in the ordinary course of its business, (c)
sales or other dispositions of Real Estate and Equipment in the ordinary course
of its business that is obsolete or no longer useable by such Obligated Party in
its business, (d) sale or other disposition of the Borrower's property located
in Baytown, Texas and its property located in Lake Charles, Louisiana, (e) sale
or other disposition of the Borrower's interest in Hollywood/Texas
Petrochemicals, Ltd., (f) transactions between or among Obligated Parties (i) in
the ordinary course of each Obligated Party's business consistent with past
practices and upon terms no less favorable to any Obligated Party than would be
obtained in a comparable arm's length transaction with a third party who is not
an Obligated Party, or (ii) to which the Agent has consented in writing, (g)
sales or other dispositions of approximately seventy-five (75) miles of
pipelines in the Texas Gulf Coast area, and (h) as long as no Event of Default
exists or no Default or Event of Default would result therefrom and provided the
Borrower gives the Agent and the Lenders prior written notice, sales of non-core
assets not to exceed $15,000,000 during any Fiscal Year, provided that the
proceeds of all such sales are applied in accordance with Section 3.7. The
inclusion of proceeds in the definition of Collateral shall not be deemed to
constitute the Agent's or any Lender's consent to any sale or other disposition
of the Collateral or any Real Estate except as expressly permitted herein.
Section 7.10 Distributions; Capital Change; Restricted Investments. No
Obligated Party shall:
(a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except Distributions
(i) (A) by TBC or TOD to the Borrower or to each
other, (B) provided that (except as to clause (3)) there is
not then in existence any Default or Event of Default, (1)
dividends payable solely in shares of Capital Stock or
warrants, rights or options to acquire Capital Stock of the
Borrower or any Subsidiary of the Borrower, (2) payments to
the GP not to exceed $500,000 in any Fiscal Year, (3) payments
by the Borrower to the GP pursuant to the tax sharing
agreement between such parties in existence on the Closing
Date or any similar agreement between such parties, in form
and substance reasonably satisfactory to the Agent, entered
into after the Closing Date, (4) payments by a Subsidiary of
the Borrower to the Borrower or another Subsidiary of the
Borrower, (5) commencing Fiscal Year 2002, dividends or
payments by the Borrower to the Parent to be used by the
Parent solely for scheduled payments of interest in respect of
the Parent's Senior Discount Notes due 2007, (6) regularly
scheduled payments of cash interest in respect of the Senior
Subordinated Notes in accordance with the terms thereof, and
only to the extent required by, and subject to, the
subordination provisions contained in the Senior Subordinated
Note Indenture, or (7) other Distributions, constituting
redemptions, retirements, purchases, and other acquisitions,
direct or indirect, of any shares of any class of Capital
Stock of the Borrower, the GP, or the Parent and/or any
warrants, rights, or options to acquire any such shares, now
or hereafter outstanding to the
CREDIT AGREEMENT - Page 42
extent that the consideration therefor consists solely of
Capital Stock (including warrants, rights, or options relating
thereto) of the Borrower, and (C) payments by the Borrower to
the Parent or the GP or payments made directly by the Borrower
to be used to distribute cash equal in value to the Capital
Stock under the ESOP, repurchase, redeem, acquire, or retire
for value any Capital Stock of the Parent or the GP pursuant
to any stockholders' agreement, management equity subscription
plan or agreement, stock option plan or agreement, or the ESOP
or other employee benefit plan or agreement; provided that the
aggregate amount distributed under the ESOP and the price
paid, and not reimbursed, for all such repurchased, redeemed,
acquired, or retired Capital Stock shall not during any Fiscal
Year of the Borrower exceed (1) $1,000,000 plus (2) the
mandatory redemption or contribution payments under the ESOP;
(b) make any change in its capital structure which could have
a Material Adverse Effect; or
(c) make any Restricted Investment.
Section 7.11 Reserved.
Section 7.12 Guaranties. No Obligated Party shall make, issue, or
become liable on any Guaranty, except (a) Guaranties of the Obligations and the
Debt allowed under Section 7.13 and (b) endorsements of instruments for deposit
or collection in the ordinary course of business.
Section 7.13 Debt. No Obligated Party shall incur or maintain any Debt,
other than: (a) the Obligations; (b) the Debt described on Schedule 6.7; (c)
Capital Leases of Equipment and purchase money secured Debt incurred to purchase
Equipment; provided that the Liens securing such Capital Leases and purchase
money secured Debt shall attach only to the Equipment acquired by the incurrence
of such Capital Leases and purchase money secured Debt and provided that such
Capital Leases and purchase money Debt shall not exceed $20,000,000 in the
aggregate at any time outstanding; (d) Debt evidencing a refunding, renewal, or
extension of the Debt described in clause (b) and clause (c) preceding; provided
that (i) the principal amount thereof is not increased, (ii) the Liens, if any,
securing such refunded, renewed, or extended Debt do not attach to any assets in
addition to those assets, if any, securing the Debt to be refunded, renewed, or
extended, (iii) no Person that is not an obligor or guarantor of such Debt as of
the Closing Date shall become an obligor or guarantor thereof, and (iv) the
terms of such refunding, renewal, or extension are, in the Agent's reasonable
discretion, no less favorable to such Obligated Party, the Agent, or the Lenders
than the original Debt; (e) Debt owing by an Obligated Party other than the
Parent to another Obligated Party for intercompany loans and advances made for
working capital in the ordinary course of business; (f) Guaranties of Debt which
are permitted under Section 7.12; (g) Debt that constitutes "mark to market"
exposure resulting from any Hedge Agreements for the purpose of hedging in the
ordinary course of business against fluctuations in interest rates, commodity
prices, and foreign exchange rates; (h) Subordinated Debt; (i) Debt under the
Term Loan Facility; (j) obligations under "take or pay" contracts or similar
arrangements entered into in the ordinary course of business; provided that
neither the Borrower nor any of its Subsidiaries have made payments under any
such contracts or arrangements other than
CREDIT AGREEMENT - Page 43
payments for product received or product such Person reasonably expects it will
be able to receive within one year from the date the payment was made and the
amount of all such payments in the aggregate could not reasonably be expected to
have a Material Adverse Effect; (k) other unsecured Debt in an aggregate amount
outstanding at any time not in excess of $10,000,000; and (l) liabilities and
obligations in existence on the Closing Date that are reclassified as Debt due
to a change in GAAP.
Section 7.14 Prepayment. No Obligated Party shall voluntarily prepay or
redeem any Debt except (a) the Obligations and (b) the Senior Subordinated Notes
if after any such prepayment or redemption and for the sixty (60) day period
immediately preceding any such prepayment or redemption the Obligated Parties
are current with respect to payment of their other indebtedness, liabilities,
and obligations and, after giving effect to any such prepayment or redemption,
Net Excess Availability is greater than $30,000,000.
Section 7.15 Transactions with Affiliates. Except as otherwise provided
in this Section 7.15, no Obligated Party shall, sell, transfer, distribute, or
pay any money or property, including, but not limited to, any fees or expenses
of any nature (including, but not limited to, any fees or expenses for
management services), to any Affiliate that is not the Borrower, or lend or
advance money or property to any Affiliate that is not the Borrower, or invest
in (by capital contribution or otherwise) or purchase or repurchase any Capital
Stock or indebtedness, or any property, of any Affiliate that is not the
Borrower, or become liable on any Guaranty of the indebtedness, dividends, or
other obligations of any Affiliate that is not the Borrower. Notwithstanding the
foregoing, if no Event of Default exists or would result therefrom, an Obligated
Party may engage in transactions with an Affiliate in the ordinary course of
such Obligated Party's business consistent with past practices and upon terms no
less favorable to such Obligated Party than would be obtained in a comparable
arm's-length transaction with a third party who is not an Affiliate.
Section 7.16 Investment Banking and Finder's Fees. No Obligated Party
shall pay or agree to pay, or reimburse any other party with respect to, any
investment banking or similar or related fee, underwriter's fee, finder's fee,
or broker's fee to any Person in connection with this Agreement other than
pursuant to the Agent's Letter. The Obligated Parties shall defend and indemnify
the Agent and the Lenders against and hold them harmless from (a) all claims of
any Person that any Obligated Party is obligated to pay any such fees and (b)
all costs and expenses (including reasonable attorneys' fees) incurred by the
Agent and/or any Lender in connection therewith.
Section 7.17 Business Conducted. The Obligated Parties shall not
engage, directly or indirectly, in any line of business other than the
businesses in which the Obligated Parties are engaged on the Closing Date and
those reasonably related or incidental thereto.
Section 7.18 Liens. No Obligated Party shall create, incur, assume, or
permit to exist any Lien on any property now owned or hereafter acquired by it,
except Permitted Liens. Other than as set forth in this Agreement or in
connection with the creation or incurrence of any Debt under Section 7.13(c), no
Obligated Party will enter into or become subject to any Negative Pledge;
provided that any Negative Pledge entered into in connection with the creation
of Debt under Section 7.13(c) shall be limited to the purchase money Lien
securing such Debt.
CREDIT AGREEMENT - Page 44
Section 7.19 Sale and Leaseback Transactions. No Obligated Party shall,
directly or indirectly, enter into any arrangement with any Person (other than
the Borrower) providing for such Obligated Party to lease or rent property that
such Obligated Party has sold or will sell or otherwise transfer to such Person,
other than (a) property having an aggregate value of $1,000,000 or less and (b)
Equipment purchased by an Obligated Party and sold to such other Person in
connection with such a transaction within six (6) months of the original
purchase date.
Section 7.20 New Subsidiaries; Addition of Subsidiaries as Guarantors.
(a) No Obligated Party shall without the written consent of
the Agent and the Majority Lenders, directly or indirectly, organize,
create, acquire, or permit to exist any Subsidiary other than Newco and
those Subsidiaries listed on Schedule 6.4. Without limiting the
foregoing, promptly upon creation or acquisition of any Subsidiary,
excluding Newco, by an Obligated Party, other than any Subsidiary which
is organized under Requirements of Law of a jurisdiction other than the
U.S. or a state of the U.S. to the extent required by clause (b)
following, the Obligated Parties shall propose to the Agent that such
new Subsidiary become, and with the Agent's and the Majority Lenders'
consent pursuant to Section 13.20 cause such Subsidiary to become a
Guarantor under the Loan Documents.
(b) In the event that any Obligated Party has any Subsidiary,
excluding Newco, organized under the laws of the U.S. or any state of
the U.S. which is not an Obligated Party and owns property with an
aggregate book or fair market value in excess of $10,000 or that has
revenue in any Fiscal Year in excess of $10,000, such Obligated Party
shall notify the Agent in writing thereof and propose to the Agent that
such Subsidiary become, and with the Agent's and the Majority Lenders'
consent pursuant to Section 13.20 cause such Subsidiary to become, a
Guarantor subject to the terms of this Agreement. In the event that the
Obligated Parties have Subsidiaries, excluding Newco, organized under
the laws of the U.S. or any state of the U.S. which are not Obligated
Parties and which collectively for all such Subsidiaries own property
with an aggregate book or fair market value in excess of $10,000 or
which collectively for all such Subsidiaries have revenue in any Fiscal
Year in excess of $10,000 , the Obligated Parties shall propose to the
Agent that one or more of such Subsidiaries become, and with the
Agent's and the Majority Lenders' consent pursuant to Section 13.20
cause each such Subsidiary to become a Guarantor subject to the terms
of this Agreement to the extent required to cause the aggregate book or
fair market value of all property owned by such Subsidiaries which are
not Obligated Parties to be equal to or less than $10,000 and to cause
the revenue of all such Subsidiaries which are not Obligated Parties,
collectively, to be equal to or less than $10,000.
Any Subsidiary which must be added as a Guarantor as provided in this Section
7.20, shall execute and deliver a joinder agreement and other Loan Documents as
the Agent may reasonably require within thirty (30) days of the occurrence of
the event which results in such Subsidiary being required to become a Guarantor
hereunder.
CREDIT AGREEMENT - Page 45
Section 7.21 Fiscal Year. Each Obligated Party (other than the Parent)
shall cause the last day of its Fiscal Year to be the same as the Parent's.
Section 7.22 Borrower's Fixed Charge Coverage Ratio. The Obligated
Parties will not permit the Fixed Charge Coverage Ratio, determined for the
Borrower and its Subsidiaries on a consolidated basis as of the end of each
Fiscal Quarter, commencing with the Fiscal Quarter ending September 30, 2002 and
continuing for each Fiscal Quarter ending thereafter, to be less than the ratio
specified corresponding to the applicable Fiscal Quarter End in the table below,
respectively, as follows:
<Table>
<Caption>
Fiscal Quarter End Fixed Charge Coverage Ratio
- ------------------ ---------------------------
December 31, 2002 and March 31, 2003 0.95 to 1.00
June 30, 2003 and each Fiscal Quarter ending
thereafter 1.00 to 1.00
</Table>
Section 7.23 Adjusted Tangible Net Worth. The Obligated Parties shall
not permit the Adjusted Tangible Net Worth, determined for the Borrower and its
Subsidiaries on a consolidated basis as of the last day of each calender month
ending after the Closing Date, to be less than the Adjusted Tangible Net Worth
Requirement.
Section 7.24 Net Excess Availability; Minimum Average Net Excess
Availability. The Obligated Parties shall not permit the Net Excess Availability
to be less than $5,000,000 at any time. The Obligated Parties shall not permit
the Average Net Excess Availability to be less than $25,000,000 for the period
beginning on June 1 and ending on June 30 and beginning on December 1 and ending
on December 31 of each calendar year.
Section 7.25 Use of Proceeds. The Borrower shall use the proceeds of
the Revolving Loans (a) to repay the outstanding indebtedness, liabilities, and
obligations under that certain Amended and Restated Credit Agreement, dated as
of June 30, 2000, among the Parent, the Borrower, the lenders party thereto, and
JPMorgan Chase Bank (formerly Chase Bank of Texas, National Association), as
agent, and (b) for general working capital purposes (not otherwise prohibited by
this Agreement) of the Borrower in the ordinary course of business (including,
without limitation, Capital Expenditures) and shall not use any portion of the
Revolving Loan proceeds, directly or indirectly, (w) to buy or carry any Margin
Stock, (x) to repay or otherwise refinance indebtedness of the Borrower or
others incurred to buy or carry any Margin Stock, (y) to extend credit for the
purpose of buying or carrying any Margin Stock, or (z) to acquire any security
in any transaction that is subject to Section 13 or 14 of the Exchange Act.
Section 7.26 Solvency. Each Obligated Party shall at all times during
the term of this Agreement remain Solvent.
CREDIT AGREEMENT - Page 46
Section 7.27 Guaranties of the Obligations. Each Obligated Party,
including any Person which becomes a Guarantor after the Closing Date pursuant
to the terms of this Agreement, shall guarantee payment and performance of the
Obligations pursuant to a Guaranty Agreement in form and substance satisfactory
to the Agent, duly executed by each such Obligated Party.
Section 7.28 Landlord and Mortgagee Agreements. The Obligated Parties
will use their best efforts to provide to the Agent upon the Agent's request, a
landlord's or mortgagee's waiver and consent agreement or subordination and
consent agreement, in form and substance reasonably acceptable to the Agent,
duly executed on behalf of each landlord or mortgagee, as the case may be, of
Real Estate on which any Collateral is located, excluding the Borrower's
headquarters located at Three Riverway, Suite 1500, Houston, Texas 77056. In the
event that the Obligated Parties are unable to obtain any such landlord's or
mortgagee's waiver and consent agreement, the Agent may, in its discretion,
defer delivery of any such waiver and consent agreement or subordination and
consent agreement and establish a Reserve with respect to any Collateral located
on any Real Estate for which the Agent has not received such acceptable waiver
and consent agreement or subordination and consent agreement.
Section 7.29 Additional Collateral; Further Assurances.
(a) Subject to Requirements of Law, the Obligated Parties
shall cause any Subsidiary of the Parent which is required to become an
Obligated Party pursuant to the terms of this Agreement to, upon the
request of the Agent, (i) grant Liens to the Agent, for the benefit of
the Agent and the Lenders, pursuant to such documents as the Agent may
reasonably deem necessary and deliver such property, documents, and
instruments as the Agent may request to perfect the Liens of the Agent
in the Collateral of such Subsidiary (ii) execute a Guaranty of the
Obligations pursuant to Section 7.27, in form and substance
satisfactory to the Agent, and (iii) in connection with the foregoing
requirements, or either of them, deliver to the Agent all items of the
type required by Section 8.1(a) (as applicable). Upon execution and
delivery of such Loan Documents and other instruments, certificates,
and agreements, such Subsidiary shall automatically become a Guarantor
hereunder and thereupon shall have all of the rights, benefits, duties,
and obligations in such capacity under the Loan Documents.
(b) Without limiting the foregoing, the Obligated Parties
shall, and shall cause each of the Parent's Subsidiaries which is
required to become an Obligated Party pursuant to the terms of this
Agreement to, execute and deliver, or cause to be executed and
delivered, to the Agent such documents and agreements, and shall take
or cause to be taken such actions as the Agent may, from time to time,
reasonably request to carry out the terms and conditions of this
Agreement and the other Loan Documents.
(c) The Obligated Parties will deliver to the Agent the
following with respect to each parcel of Real Estate owned by any
Obligated Party which is required to be Collateral:
(i) a Mortgage in proper form for recording in the
jurisdiction in which such Real Estate covered thereby is
located; and
CREDIT AGREEMENT - Page 47
(ii) such other information, documentation, and
certifications, in form and substance satisfactory to the
Agent, as may be reasonably required by the Agent.
Section 7.30 Indentures. Neither of the Indentures will be amended,
supplement, restated, or modified without the prior written consent of the
Required Lenders.
Section 7.31 Capital Expenditures. The Obligated Parties will not
permit the Capital Expenditures of the Borrower and its Subsidiaries during any
Fiscal Year of the Borrower to exceed the amount specified corresponding to the
applicable Fiscal Year end in the table below, respectively, as follows:
<Table>
<Caption>
Fiscal Year End Maximum Capital Expenditures
--------------- ----------------------------
June 30, 2003 $15,500,000
June 30, 2004 $25,000,000
June 30, 2005 and each Fiscal Year $29,000,000
ending thereafter
</Table>
provided that amounts allowed during any Fiscal Year which are not utilized
during such Fiscal Year may be carried forward and utilized during any
succeeding Fiscal Year in addition to amounts otherwise allowed during any such
succeeding Fiscal year as set forth in the preceding table.
Section 7.32 Modification to Other Agreements. No Obligated Party shall
(a) amend, restate, or otherwise modify or change (or permit any amendment,
restatement, or other modification or change in any manner of) (i) any
agreement, document, or instrument executed or delivered by any Obligated Party
in connection with the Term Loan Facility or any Subordinated Debt or (ii) any
of the provisions of any of its Debt or of any agreement, document, or
instrument relating to any such Debt if such amendment, restatement, or other
modification or change would shorten the final maturity or average life to
maturity of, or require any payment to be made earlier than the date originally
scheduled on, such Debt, would increase the interest rate applicable to such
Debt, would change the subordination provision, if any, of such Debt, or would
otherwise be adverse to the Lenders or the issuer of such Debt in any respect or
(b) except for the Obligations and except as expressly permitted pursuant to
Section 7.10 and Section 7.14, make any voluntary or optional payment,
prepayment, redemption, defeasance, sinking fund payment, or other acquisition
for value of any of its Indebtedness (including, without limitation, by way of
depositing money or securities with the trustee therefor before the date
required for the purpose of paying any portion of such Debt when due), or
refund, refinance, replace, or exchange any other Debt for any such Debt, or
except as expressly required pursuant to the Term Loan Facility, make any
payment, prepayment, redemption, defeasance, sinking fund payment, or repurchase
of any outstanding Debt as a result of any asset sale, change of control,
issuance and sale of debt or equity securities, or similar event, or give any
notice with respect to any of the foregoing except prepayments of Capital Leases
or purchase money financing upon
CREDIT AGREEMENT - Page 48
the sale or exchange of the equipment subject thereto in an aggregate amount not
to exceed $1,000,000 since the Closing Date.
ARTICLE 8
CONDITIONS OF LENDING
Section 8.1 Conditions Precedent to Making of Revolving Loans on the
Closing Date. The obligation of the Lenders to make the initial Revolving Loans
on the Closing Date, and the obligation of the Agent to cause the Letter of
Credit Issuer to issue any Letter of Credit or Credit Support on the Closing
Date, are subject to the following conditions precedent having been satisfied in
a manner satisfactory to the Agent and each Lender:
(a) The Agent shall have received each of the following
documents, all of which shall be satisfactory in form and substance to
the Agent and the Lenders:
(i) certified copies of the certificate of
incorporation, certificate of limited partnership, or
comparable organizational document of each Obligated Party,
with all amendments, if any, certified by the appropriate
Governmental Authority of the jurisdiction of each Obligated
Party's organization or formation, and the bylaws,
regulations, operating agreement, limited partnership
agreement, or similar governing agreement or document of each
Obligated Party, in each case certified by the corporate
secretary, general partner, or comparable authorized
representative of such Obligated Party, as applicable as being
true and correct and in effect on the Closing Date;
(ii) certificates of incumbency and specimen
signatures with respect to each individual authorized to
execute and deliver this Agreement and the other Loan
Documents on behalf of each Obligated Party, and any other
individual executing any document, certificate, or instrument
to be delivered in connection with this Agreement and the
other Loan Documents and, in the case of the Borrower, to
request Borrowings and the issuance of Letters of Credit or
Credit Support;
(iii) a certificate evidencing the existence of each
Obligated Party, and certificates evidencing the good standing
of each Obligated Party in the jurisdiction of its
organization and in each other jurisdiction in which it is
required to be qualified as a foreign business entity to
transact its business as presently conducted;
(iv) certified copies of all action taken by each
Obligated Party and each other Person executing any document,
certificate, or instrument to be delivered in connection with
this Agreement and the other Loan Documents to authorize the
execution, delivery, and performance of this Agreement, the
other Loan Documents, and, with respect to the Borrower, the
Borrowings and the issuance of Letters of Credit and/or Credit
Support;
CREDIT AGREEMENT - Page 49
(v) a certificate of each Obligated Party signed by a
Responsible Officer:
(A) stating that all of the representations
and warranties made or deemed to be made under this
Agreement are true and correct as of the Closing
Date, after giving effect to the Revolving Loans to
be made at such time and the application of the
proceeds thereof and the issuance of any Letter(s) of
Credit and/or Credit Support at such time,
(B) stating that no Default or Event of
Default exists,
(C) specifying the account of the Borrower
which is the Designated Account, and
(D) certifying as to such other factual
matters as may be reasonably requested by the Agent;
(vi) with respect to any Letter of Credit or Credit
Support to be issued, all documentation required by Section
1.3, duly executed;
(vii) a Revolving Loan Note, payable to the order of
each Lender in the amount of its Commitment with respect
thereto, duly executed and delivered by the Borrower,
complying with the requirements of Section 1.2(b);
(viii) UCC financing statements and/or amendments to
existing UCC financing statements with respect to the
Collateral as may be requested by the Agent, duly authorized
by the respective Obligated Parties, in all jurisdictions that
the Agent may deem necessary or desirable in order to perfect
the Agent's Liens therein and acknowledgment copies of proper
financing statements, duly filed on or before the Closing Date
under the UCC in each jurisdiction the Agent deems necessary
or desirable in order to perfect the Agent's Liens;
(ix) duly executed UCC termination statements or
assignments and such other instruments, in form and substance
satisfactory to the Agent, as shall be necessary to terminate
and satisfy all Liens on the property of the Obligated Parties
except Permitted Liens;
(x) a Copyright Security Agreement, a Patent Security
Agreement, and a Trademark Security Agreement, as applicable,
with respect to all Proprietary Rights, if any, owned by any
Obligated Party which must be registered with any Governmental
Authority to perfect the Agent's Liens in such Proprietary
Rights, duly executed by each Obligated Party, as applicable;
CREDIT AGREEMENT - Page 50
(xi) the Parent Guaranty Agreement, duly executed and
delivered by the Parent, the GP, and the LP, in each case as
required pursuant to Section 7.27;
(xii) (A) the Parent Security Agreement, duly
executed and delivered by the Parent and (B) the Borrower
Security Agreement, duly executed and delivered by the
Borrower;
(xiii) the Intercreditor Agreement;
(xiv) (A) stock certificates and stock powers (duly
executed in blank) for one hundred percent (100%) of the
Capital Stock (to the extent certificated) of each Subsidiary
of the Parent which is organized under the laws of the U.S. or
any state thereof, together with acknowledgments executed by
the respective issuers thereof, in form and substance
satisfactory to the Agent and (B) "control" agreements
(pursuant to the UCC), each duly executed, as the Agent may
request with respect to any other Investment Property listed
in Schedule 6.26;
(xv) a Mortgage covering each Obligated Party's owned
Real Estate, duly executed and delivered by such Obligated
Party;
(xvi) a Borrowing Base Certificate determined as of
the Business Day preceding the Closing Date;
(xvii) to the extent requested by the Agent, each
landlord's or mortgagee's waiver and consent agreement or
subordination and consent agreement required to be provided
pursuant to Section 7.28;
(xviii) each Blocked Account Agreement duly executed
as requested by the Agent;
(xix) signed opinions of counsel for the Obligated
Parties, opining as to such matters in connection with the
transactions contemplated by this Agreement as the Agent may
reasonably request, each such opinion to be in a form, scope,
and substance satisfactory to the Agent, the Lenders, and
their respective counsel;
(xx) evidence, in form, scope, and substance,
reasonably satisfactory to the Agent, of all insurance
coverage as required by this Agreement together with loss
payable endorsements in form acceptable to the Agent;
(xxi) satisfactory evidence that all filings,
consents, or approvals with or of the shareholders of any
Obligated Party, any Governmental Authority, or any other
third party have been made or obtained, as applicable;
CREDIT AGREEMENT - Page 51
(xxii) (A) a pro forma balance sheet of the Borrower
dated as of the Closing Date which reflects no material
changes from the most recent pro forma balance sheet of the
Borrower previously delivered to the Agent, (B) financial
projections of the Borrower evidencing the Borrower's ability
to comply with the financial covenants set forth in this
Agreement, and (C) interim financial statements for the
Borrower for the period ending August 31, 2002.
(xxiii) such other documents and instruments as the
Agent or any Lender may reasonably request.
(b) On the Closing Date, after giving effect to the making of
all Revolving Loans (including any Revolving Loans made to finance the
fees and expenses set forth in the Agent's Letter or otherwise as
reimbursement for fees, costs, and expenses then payable under this
Agreement) and issuance of all Letters of Credit and Credit Support and
with all of its obligations current, the Borrower shall have remaining
Net Excess Availability in an amount not less than $20,000,000.
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct.
(d) No Default or Event of Default shall exist or would exist
after giving effect to the Revolving Loans to be made and the Letters
of Credit and Credit Support to be issued.
(e) The Borrower shall have paid all fees and expenses of the
Agent and the Attorney Costs incurred in connection with any of the
Loan Documents and the transactions contemplated thereby to the extent
invoiced.
(f) The Agent and the Lenders shall have had an opportunity to
examine the books of account and other records and files of the
Obligated Parties and to make copies thereof, and to conduct a
pre-closing audit which shall include, without limitation, verification
of Inventory, Accounts, and the Borrowing Base, and the results of such
examination and audit shall have been satisfactory to the Agent and the
Lenders in all respects.
(g) All proceedings taken by the Obligated Parties in
connection with the execution of this Agreement, the other Loan
Documents, and all documents and papers relating thereto shall be
satisfactory in form, scope, and substance to the Agent and the
Lenders.
(h) The Agent shall have received any warehouse receipts,
consents, control agreements, subordination agreements or other
documentation the Agent determines in its sole discretion are necessary
to perfect the Agent's Liens in any Inventory or other Collateral in
the possession of any Person other than Borrower.
CREDIT AGREEMENT - Page 52
(i) No Material Adverse Effect shall have occurred with
respect to the Borrower's assets, liabilities, business, financial
condition, business prospects, or results of operations from and after
September 17, 2002.
(j) There shall exist no action, suit, investigation,
litigation, or proceeding pending or, to the knowledge of any Obligated
Party, threatened in any court or before any arbitrator or governmental
instrumentality that in the Agent's reasonable judgment (a) could
impair any Obligated Party's ability to perform satisfactorily under
the Loan Documents, or (b) could reasonably be expected to result in a
Material Adverse Effect.
(k) The Agent shall be satisfied that the Borrower is
adequately capitalized, that the fair saleable value of the Borrower's
assets will exceed its liabilities at closing, and that the Borrower
will have sufficient working capital to pay its debts as they become
due.
(l) The Agent shall be satisfied with all environmental
aspects relating to the Borrower and its business, including all
environmental reports as may be required by the Agent.
(m) There shall not exist or have occurred any material
disruption of or material adverse change in conditions in the
financial, banking, or capital markets that the Agent, in its
discretion, deems material in connection with the syndication of the
Revolving Loans.
(n) The Agent shall have completed to its sole satisfaction, a
review of the Borrower's material supply and sale contracts and
confirmed the no-offset provisions therein.
(o) Not less than $25,000,000 shall have been funded under the
Term Loan Facility prior to or contemporaneous with funding of the
initial Revolving Loans to be made on the Closing Date.
(p) The Agent shall have completed to its sole satisfaction, a
review of the Indentures and documentation with respect to the ESOP and
the Term Loan Facility, and confirmed in each case that the terms and
provisions thereof are satisfactory to the Agent in its sole
discretion.
(q) Without limiting the generality of the items described
above, each of the Obligated Parties shall have delivered to the Agent
(in form and substance reasonably satisfactory to the Agent), the
financial statements, instruments, resolutions, documents, agreements,
certificates, opinions, and other items required by the Agent and the
Lenders.
The acceptance by the Borrower of any Revolving Loans made or Letters of Credit
or Credit Support issued on the Closing Date shall be deemed to be a
representation and warranty made by the Obligated Parties to the effect that all
of the conditions precedent to the making of such Loans or issuance of such
Letters of Credit or Credit Support have been satisfied, with the same effect as
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer of the Obligated Parties, dated the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement
CREDIT AGREEMENT - Page 53
shall be deemed confirmation by such Lender that (1) all conditions precedent in
this Section 8.1 have been fulfilled to the satisfaction of such Lender, (2) the
decision of such Lender to execute and deliver to the Agent an executed
counterpart of this Agreement was made by such Lender independently and without
reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 8.1, and (3) all documents sent to
such Lender for approval, consent, or satisfaction were acceptable to such
Lender.
Section 8.2 Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Revolving Loan, including the initial Revolving Loans on
the Closing Date, and the obligation of the Agent to cause the Letter of Credit
Issuer to issue any Letter of Credit or Credit Support shall be subject to the
further conditions precedent that on and as of the date of any such extension of
credit the following statements shall be true in all material respects or other
conditions precedent shall be complied with, and the acceptance by the Borrower
of any extension of credit shall be deemed to be a statement by each of the
Obligated Parties to the effect set forth in clause (a) through clause (d)
following with the same effect as the delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of each of the Obligated Parties,
dated the date of such extension of credit, stating that:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though
made on and as of such date, other than any such representation or
warranty which relates to a specified prior date and except to the
extent the Agent and the Lenders have been notified in writing by the
Obligated Parties that any representation or warranty is not correct
and the Majority Lenders have explicitly waived in writing compliance
with such representation or warranty;
(b) no event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event
of Default;
(c) no event has occurred and is continuing, or would result
from such extension of credit, which has had or would have a Material
Adverse Effect;
(d) in the case of an extension of credit the proceeds of
which are to be used to make a Distribution, the Borrower has delivered
to the Agent a certificate of a Responsible Officer of the Borrower
certifying that such Distribution complies with Requirements of Law and
that after making such Distribution, the Borrower is and continues to
be Solvent.
The obligation of the Lenders to make each Revolving Loan, including the initial
Revolving Loans on the Closing Date, and the obligation of the Agent to cause
the Letter of Credit Issuer to issue any Letter of Credit or Credit Support
shall be subject to the further condition precedent that on and as of the date
of any such extension of credit the Agent shall be satisfied that, except for
Permitted Liens, the Agent has a valid, exclusive, and perfected first priority
security interest, lien, collateral assignment, and pledge as of such date in
all Collateral as security for the Obligations, to the extent any such Liens may
be perfected under the UCC (but excluding any Liens on vehicles for which a
certificate of title has been issued and Liens perfected solely by possession,
but only to the extent the Agent has not requested perfection of its
CREDIT AGREEMENT - Page 54
Liens in such vehicles or possession of such Collateral), in each case in form
and substance satisfactory to the Agent; provided that upon the Agent's request,
the Obligated Parties shall provide any additional agreement, document,
instrument, certificate, or other item relating to any other Collateral as may
be required for perfection under any Requirement of Law. Except as provided by
Section 11.1, no Borrowing (other than Agent Advances) or issuance of any Letter
of Credit or Credit Support shall exceed the Availability, provided, however,
that the foregoing conditions precedent are not conditions to the requirement
for each Lender participating in or reimbursing the Bank or the Agent for such
Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made in
accordance with the provisions of Section 1.2(i) or Section 1.2(j).
ARTICLE 9
DEFAULT; REMEDIES
Section 9.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure by the Borrower to pay the principal of or
interest or premium on any of the Obligations or any fee or other
amount owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any
Obligated Party in this Agreement or in any other Loan Document, any
Financial Statement, or any certificate furnished by any Obligated
Party at any time to the Agent or any Lender shall prove to be untrue
in any material respect as of the date on which made, deemed made, or
furnished;
(c) any default shall occur in
(i) observance or performance of any of the covenants
and agreements contained in Section 7.2 (insofar as it
requires the preservation of the existence of the Obligated
Parties), clauses (a), (c), (d), (e), (f), (g), (k), (l), (m),
(n), (o), (p), or (r) of Section 5.3, Section 7.9 through
Section 7.30, or Section 2.10 of the Borrower Security
Agreement,
(ii) observance or performance of any of the
covenants and agreements contained in Section 5.2 or clauses
(b), (h), (i), (j), or (q) of Section 5.3 and such default
shall continue for five (5) Business Days or more, or
(iii) except as otherwise provided in Section 9.1(a)
and Section 9.1(b) and in clause (i) and clause (ii)
preceding, observance or performance of any of the other
covenants or agreements contained in this Agreement or in any
other Loan Document or other agreement entered into at any
time to which any Obligated Party and the Agent or any Lender
are party (including in respect of any Bank Products) and such
default shall
CREDIT AGREEMENT - Page 55
continue for more than fifteen (15) days, or if any such
agreement or document shall terminate (other than in
accordance with its terms or the terms hereof or with the
written consent of the Agent and the Majority Lenders) or
become void or unenforceable without the written consent of
the Agent and the Majority Lenders;
(d) any default shall occur with respect to either Indenture,
or under any other Debt (other than the Debt evidenced by the
Indentures or the Obligations) of any Obligated Party in an outstanding
principal amount which exceeds $2,000,000, or under any agreement or
instrument under or pursuant to which any such Debt may have been
issued, created, assumed, or guaranteed by any Obligated Party, and
such default shall continue for more than the period of grace, if any,
therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate or to permit
the holders of any such Debt to accelerate, the maturity of any such
Debt, or any such Debt shall be declared due and payable or be required
to be prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof.
(e) any Obligated Party shall (i) file a voluntary petition in
bankruptcy or otherwise commence any action or proceeding seeking
reorganization, arrangement, or readjustment of its debts or for any
other relief under the Bankruptcy Code or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, or
consent to, approve of, or acquiesce in, any such petition, action, or
proceeding, (ii) apply for or acquiesce in the appointment of a
receiver, assignee, liquidator, sequestrator, custodian, monitor,
trustee, or similar officer for it or for all or any part of its
property, (iii) make an assignment for the benefit of its creditors, or
(iv) be unable generally to pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization,
arrangement, consolidation, or readjustment of the debts of any
Obligated Party or for any other relief under the Bankruptcy Code or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing and such petition or proceeding shall not be
dismissed within sixty (60) days after the filing or commencement
thereof or an order of relief (or comparable order under any other
Requirement of Law) against any Obligated Party shall be entered with
respect thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee, or similar officer for any Obligated Party or for all
or any part of its property shall be appointed or a warrant of
attachment, execution, or similar process shall be issued against any
part of the property of any Obligated Party;
(h) any Obligated Party shall file a certificate of
dissolution under any Requirement of Law or shall be liquidated,
dissolved, or wound-up (except in a transaction allowed under Section
7.9) or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up, or liquidation, or shall take
any corporate action in furtherance thereof;
CREDIT AGREEMENT - Page 56
(i) all or any material part of the property of any Obligated
Party shall be nationalized, expropriated, condemned, seized, or
otherwise appropriated, or custody or control of such property or of
any Obligated Party shall be assumed by any Governmental Authority or
any court of competent jurisdiction at the instance of any Governmental
Authority, except where contested in good faith by proper proceedings
diligently pursued where a stay of enforcement is in effect;
(j) any Loan Document, including any Guaranty of the
Obligations, shall be terminated, revoked, or declared void or invalid
or unenforceable or challenged by any Obligated Party or any other
party thereto;
(k) one or more judgments, orders, decrees, or arbitration
awards is entered against any Obligated Party involving liability in
the aggregate for any or all of the Obligated Parties (to the extent
not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related or
unrelated series of transactions, incidents, or conditions, of
$2,000,000 or more, and the same shall remain unsatisfied, unvacated,
and unstayed pending appeal for a period of thirty (30) days after the
entry thereof;
(l) any loss, theft, damage, or destruction of any item or
items of Collateral or other property of any Obligated Party occurs
which could reasonably be expected to cause a Material Adverse Effect
and is not adequately covered by insurance;
(m) there is filed against any Obligated Party any action,
suit, or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of
1970), which action, suit, or proceeding (i) is not dismissed within
one hundred twenty (120) days and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(n) for any reason any Loan Document ceases to be in full
force and effect or any Lien with respect to any material portion of
the Collateral intended to be secured thereby ceases to be, or is not,
valid, perfected, and prior to all other Liens (other than Permitted
Liens which are expressly permitted to have priority over the Agent's
Liens) or is terminated, revoked, or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension
Plan or Multi- employer Plan which has resulted in, or could reasonably
be expected to result in, liability of any Obligated Party under Title
IV of ERISA to the Pension Plan, Multi-employer Plan, or the PBGC in an
aggregate amount in excess of $1,000,000; (ii) the aggregate amount of
Unfunded Pension Liability among all Pension Plans at any time exceeds
$1,000,000; (iii) any Obligated Party or any ERISA Affiliate shall fail
to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multi-employer Plan in an aggregate
amount in excess of $1,000,000; or (iv) the Foreign Plans in the
aggregate have liabilities in excess of assets (determined in
accordance with the assumptions under each such Foreign Plan and under
Requirements of Law used for funding each
CREDIT AGREEMENT - Page 57
Foreign Plan pursuant to reasonable accounting standards in accordance
with Requirements of Law) in an amount in excess of $1,000,000;
(p) there occurs a Change of Control; or
(q) there occurs an event having a Material Adverse Effect.
Section 9.2 Remedies.
(a) If a Default or an Event of Default exists, the Agent may,
in its discretion, and shall, at the direction of the Majority Lenders,
do one or more of the following at any time or times and in any order,
without notice to or demand on any Obligated Party: (i) reduce the
Maximum Revolver Amount, or the advance rates against Eligible Accounts
and/or Eligible Inventory used in computing the Borrowing Base, or
reduce or increase one or more of the other elements used in computing
the Borrowing Base; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of
Credit or Credit Support. If an Event of Default exists, the Agent
shall, at the direction of the Majority Lenders, do one or more of the
following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to or
demand on any Obligated Party: (A) terminate the Commitments and this
Agreement; (B) declare any or all Obligations to be immediately due and
payable; provided, however, that upon the occurrence of any Event of
Default described in Section 9.1(e), Section 9.1(f), Section 9.1(g), or
Section 9.1(h), the Commitments shall automatically and immediately
expire and all Obligations shall automatically become immediately due
and payable without notice or demand of any kind; (C) require the
Obligated Parties to cash collateralize all Obligations outstanding
with respect to Letters of Credit and Credit Support; and (D) pursue
its other rights and remedies under the Loan Documents and applicable
law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have, for the benefit of the Agent and the Lenders, in
addition to all other rights of the Agent and the Lenders, the rights
and remedies of a secured party under the Loan Documents and the UCC;
(ii) the Agent may, at any time, take possession of the Collateral and
keep it on any Obligated Party's premises, at no cost to the Agent or
any Lender, or remove any part of the Collateral to such other place or
places as the Agent may desire, or any Obligated Party shall, upon the
Agent's demand, at such Obligated Party's cost, assemble the Collateral
and make it available to the Agent at a place reasonably convenient to
the Agent; and (iii) the Agent may sell and deliver any Collateral at
public or private sales, for cash, upon credit, or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and
place of sale or of such postponed or adjourned sale without giving a
new notice of sale. Without in any way requiring notice to be given in
the following manner, each Obligated Party agrees that any notice by
the Agent of sale, disposition, or other intended action hereunder or
in connection herewith, whether required by the UCC or otherwise, shall
constitute reasonable notice to the Obligated Parties if such notice is
mailed by registered or certified mail, return receipt requested,
CREDIT AGREEMENT - Page 58
postage prepaid, or is delivered personally against receipt, at least
ten (10) days prior to such action to the Obligated Parties' address
specified in or pursuant to Section 13.8. If any Collateral is sold on
terms other than payment in full at the time of sale, no credit shall
be given against the Obligations until the Agent or the Lenders receive
payment, and if the buyer defaults in payment, the Agent may resell the
Collateral without further notice to any Obligated Party. In the event
the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, each Obligated Party irrevocably
waives: (A) the posting of any bond, surety, or security with respect
thereto which might otherwise be required; (B) any demand for
possession prior to the commencement of any suit or action to recover
the Collateral; and (C) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or final
judgment. Each Obligated Party agrees that the Agent has no obligation
to preserve rights to the Collateral or marshal any Collateral for the
benefit of any Person. The Agent is hereby granted a license or other
right to use, without charge, each Obligated Party's labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production
of, advertising, or selling any Collateral, and each Obligated Party's
rights under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall be
applied first to all expenses of sale, including Attorney Costs, and
then to the Obligations. The Agent will return any excess to the
Obligated Parties and the Obligated Parties shall remain liable for any
deficiency.
(c) If an Event of Default occurs and is continuing, each
Obligated Party hereby waives all rights to notice and hearing prior to
the exercise by the Agent of the Agent's rights to repossess the
Collateral without judicial process or to replevy, attach, or levy upon
the Collateral without notice or hearing.
ARTICLE 10
TERM AND TERMINATION
Section 10.1 Term and Termination. The term of this Agreement shall end
on the Stated Termination Date unless sooner terminated in accordance with the
terms hereof. The Agent upon direction from the Majority Lenders may terminate
this Agreement, without notice to the Obligated Parties, during the existence of
an Event of Default. Upon the effective date of termination of this Agreement
for any reason whatsoever, all Obligations (including all unpaid principal,
accrued and unpaid interest, and any early termination or prepayment fees or
penalties but excluding indemnification obligations to the extent no claim with
respect thereto has been asserted and remains unsatisfied) shall become
immediately due and payable and the Borrower shall immediately arrange for the
cancellation and return of all Letters of Credit and Credit Support then
outstanding or, if permitted by the Agent in its discretion, presentation to the
Agent of a Supporting Letter of Credit or cash collateral as specified in
Section 1.3(g). Notwithstanding the termination of this Agreement, until all
Obligations are indefeasibly paid and performed in full, the Obligated Parties
shall remain bound by the terms of this Agreement and the other Loan Documents
and shall not be relieved of any of their Obligations hereunder or under any
other Loan Document, and the Agent and the Lenders shall retain all their rights
and remedies hereunder and under the other Loan Documents (including,
CREDIT AGREEMENT - Page 59
without limitation, the Agent's Liens in and all rights and remedies with
respect to all then existing and after-arising Collateral).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
Section 11.1 Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent with respect to any
departure by any Obligated Party therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by
the Agent at the written request of the Majority Lenders) and the
Obligated Parties (which may be evidenced by the signature of the
Borrower pursuant to Section 13.19) and then any such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No waiver, amendment, or consent shall, unless in writing
and signed by all of the Lenders and the Obligated Parties (which may
be evidenced by the signature of the Borrower pursuant to Section
13.19) and acknowledged by the Agent, do any of the following:
(i) increase (other than pursuant to an assignment
under Section 11.2) or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of
principal, interest, fees (other than fees payable to the
Agent solely for the Agent's benefit), or other amounts due to
the Lenders (or any of them) hereunder or under any other Loan
Document;
(iii) reduce the principal of, or the rate of
interest specified herein on any Revolving Loan, or any fees
or other amounts payable hereunder or under any other Loan
Document;
(iv) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Revolving Loans
which is required for the Lenders or any of them to take any
action hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base;
(vi) amend this Section 11.1 or any provision of this
Agreement providing for consent or other action by all of the
Lenders;
(vii) release Collateral other than as permitted by
Section 12.11;
CREDIT AGREEMENT - Page 60
(viii) change the definition of "Eligible Accounts",
"Eligible Inventory", "Majority Lenders", "Net Amount of
Eligible Accounts" and "Required Lenders"; or
(ix) increase the Maximum Revolver Amount or the
Letter of Credit Subfacility.
(c) No waiver, amendment, or consent shall, unless in writing
and signed by the Required Lenders and the Obligated Parties (which may
be evidenced by the signature of the Borrower pursuant to Section
13.19) and acknowledged by the Agent, amend any provision of Section
1.2(j), other than an amendment to the percentage of Lenders required
to revoke the Agent's authorization to make Agent Advances which
revocation shall not require the signature of any of the Obligated
Parties.
(d) Notwithstanding the foregoing, (i) the Agent may, in its
sole discretion and notwithstanding the limitations contained in
Section 11.1(b)(v) and Section 11.1(b)(ix) and any other terms of this
Agreement, make Non-Ratable Loans in accordance with Section 1.2(i) and
make Agent Advances in accordance with Section 1.2(j) and no amendment,
waiver, or consent shall, unless in writing and signed by the Agent,
affect the rights or duties of the Agent under this Agreement or any
other Loan Document and (ii) Schedule A-1 may be amended from time to
time by the Agent alone to reflect assignments of Commitments in
accordance herewith.
(e) If any fees are paid to the Lenders as consideration for
amendments, waivers, or consents with respect to this Agreement, at the
Agent's election, such fees may be paid only to those Lenders that
agree to such amendments, waivers, or consents within the time
specified for submission thereof.
(f) If, in connection with any proposed amendment, waiver, or
consent (a "Proposed Change"):
(i) requiring the consent of all of the Lenders, the
consent of the Required Lenders is obtained but the consent of
the other Lenders is not obtained (any such Lender whose
consent is not obtained as described in this clause (f) being
referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of the Required Lenders,
the consent of the Majority Lenders is obtained but the
consent of the other Lenders is not obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the
Obligated Parties' request the Agent (in its individual capacity as a
Lender) or an Eligible Assignee (with the Agent's approval) shall have
the right (but not the obligation) to purchase from each Non-Consenting
Lender, and each Non-Consenting Lender agrees that it shall sell, such
Non-Consenting Lender's Commitments for an amount equal to the
principal balances thereof and all accrued interest and fees with
respect
CREDIT AGREEMENT - Page 61
thereto through the date of sale pursuant to an Assignment and
Acceptance, without premium or discount.
Section 11.2 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably withheld) and if no Default or
Event of Default exists with the written consent of the Borrower (which
consent shall not be unreasonably withheld), assign and delegate to one
or more Eligible Assignees (provided that no consent of the Agent or
the Borrower shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of such Lender or to another
Lender) (each an "Assignee") all, or any ratable part of all, of the
Revolving Loans, the Commitments, and the other rights and obligations
of such Lender hereunder, in a minimum amount of $10,000,000 and
integral amounts of $5,000,000 in excess thereof or all of such
assigning Lender's Revolving Loans and Commitment (provided that,
unless an assignor Lender has assigned and delegated all of its
Revolving Loans and Commitment, no such assignment and/or delegation
shall be permitted unless, after giving effect thereto, such assignor
Lender retains a Commitment in a minimum amount of $10,000,000);
provided, however, that the Obligated Parties and the Agent may
continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and
related information with respect to the Assignee, shall have been given
to the Obligated Parties and the Agent by such Lender and the Assignee;
(ii) such Lender and its Assignee shall have delivered to the Obligated
Parties and the Agent an Assignment and Acceptance in the form of
Exhibit F (an "Assignment and Acceptance") together with any Revolving
Loan Note subject to such assignment, and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $5,000
(provided that the Agent may, in its discretion, waive such fee in
connection with the initial syndication of the Commitments). The
Borrower agrees to promptly execute and deliver new or replacement
Revolving Loan Notes in exchange for existing Revolving Loan Notes as
reasonably requested by the Agent to evidence assignments of the
Revolving Loans and Commitments in accordance herewith.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations, including, but not limited to, the obligation
to participate in Letters of Credit and Credit Support have been
assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).
CREDIT AGREEMENT - Page 62
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i)
other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Loan Document
furnished pursuant hereto or the attachment, perfection, or priority of
any Lien granted by the Obligated Parties to the Agent or any Lender in
the Collateral; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Obligated Parties or the performance or observance by
the Obligated Parties of any of their respective obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii)
such Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such Assignee will, independently
and without reliance upon the Agent, such assigning Lender, or any
other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) such Assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers,
including the discretionary rights and incidental power, as are
reasonably incidental thereto; and (vi) such Assignee agrees that it
will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it
as a Lender.
(d) Immediately upon satisfaction of the requirements of
Section 11.2(a), this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more
Participants participating interests in any Revolving Loans, the
Commitment of that Lender, and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender's obligations under
this Agreement shall remain unchanged, (ii) the originating Lender
shall remain solely responsible for the performance of such
obligations, (iii) the Obligated Parties and the Agent shall continue
to deal solely and directly with the originating Lender in connection
with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall
transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document
except the matters set forth in Section 11.1(b)(i), Section
11.1(b)(ii), and Section 11.1(b)(iii), and (v) all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not
sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared
CREDIT AGREEMENT - Page 63
or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this
Agreement to the same extent and subject to the same limitation as if
the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor
of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Board or U.S. Treasury Regulation 31 CFR ss.203.14, and
such Federal Reserve Bank may enforce such pledge or security interest
in any manner permitted under applicable law.
ARTICLE 12
THE AGENT
Section 12.1 Appointment and Authorization. Each Lender hereby
designates and appoints the Bank (acting in its capacity as the Agent) as its
agent under this Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this Article 12. The provisions of this Article 12 are
solely for the benefit of the Agent and the Lenders, and the Obligated Parties
shall have no rights of a third party beneficiary of any of the provisions
contained herein. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall the Agent have or be deemed to have any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 1.2(j), and (c) the exercise of remedies pursuant to Section 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
Section 12.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees, or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
CREDIT AGREEMENT - Page 64
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.
Section 12.3 Liability of the Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation, or warranty made by any Obligated Party or
Affiliate of any Obligated Party, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement, or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability, or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Obligated Party
or any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books, or records of any Obligated Party
or any Obligated Party's Affiliates.
Section 12.4 Reliance by the Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, statement, or other document or conversation believed by the
Agent to be genuine and correct and to have been signed, sent, or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including, without limitation, counsel to any Obligated Party), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Majority
Lenders (or such other percentage of Lenders if so required by Section 11.1) and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
Section 12.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from an Obligated Party referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will promptly notify the Lenders
of its receipt of any such notice. The Agent shall take such action with respect
to such Default or Event of Default as may be requested by the Majority Lenders
in accordance with Article 9; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
CREDIT AGREEMENT - Page 65
Section 12.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Obligated Parties and their Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of the Obligated Parties and their Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals, and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition, and
creditworthiness of the Obligated Parties. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition, or creditworthiness of the
Borrower which may come into the possession of any of the Agent-Related Persons.
Section 12.7 Indemnification. WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL UPON DEMAND INDEMNIFY THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
OBLIGATED PARTIES AND WITHOUT LIMITING THE OBLIGATION OF THE OBLIGATED PARTIES
TO DO SO), IN ACCORDANCE WITH THEIR PRO RATA SHARES, FROM AND AGAINST ANY AND
ALL INDEMNIFIED LIABILITIES; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE
FOR THE PAYMENT TO THE AGENT-RELATED PERSONS OF ANY PORTION OF SUCH INDEMNIFIED
LIABILITIES (AS DEFINED HEREIN) TO THE EXTENT IT ARISES FROM SUCH PERSON'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for its Pro Rata Share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings, or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
Section 12.8 The Agent in Individual Capacity. The Bank and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with any
Obligated Party and its Affiliates as though the Bank were not the Agent
hereunder and without notice to or consent of the Lenders. The Bank or its
Affiliates may receive information regarding any Obligated Party or its
CREDIT AGREEMENT - Page 66
Affiliates and Account Debtors (including information that may be subject to
confidentiality obligations in favor of any such Obligated Party or Affiliate),
and the Lenders acknowledge that the Agent and the Bank shall be under no
obligation to provide such information to the Lenders. With respect to its
Revolving Loans, the Bank as a Lender shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" include the Bank in its
individual capacity.
Section 12.9 Successor Agent. The Agent may resign as Agent upon at
least thirty (30) days prior notice to the Lenders and the Obligated Parties,
such resignation to be effective upon the acceptance of a successor agent to its
appointment as the Agent. In the event the Bank sells all of its Commitments and
Revolving Loans as part of a sale, transfer, or other disposition by the Bank of
substantially all of its loan portfolio, the Bank shall resign as the Agent and
such purchaser or transferee shall become the successor Agent hereunder. Subject
to the foregoing, if the Agent resigns (the "resigning Agent") under this
Agreement, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders (the "successor Agent"). If no successor Agent is
appointed prior to the effective date of the resignation of the resigning Agent,
the resigning Agent may appoint, after consulting with the Lenders and the
Obligated Parties, a successor Agent from among the Lenders. Upon the acceptance
of its appointment as the successor Agent, the successor Agent shall succeed to
all the rights, powers, and duties of the resigning Agent and the term "Agent"
shall mean the successor Agent and the resigning Agent's appointment, powers,
and duties as the Agent shall be terminated. After any resigning Agent's
resignation hereunder as the Agent, the provisions of this Article 12 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Agent under this Agreement.
Section 12.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership, or
trust" within the meaning of the Code and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to
deliver to the Agent and the Parent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a U.S. tax treaty, two (2)
properly completed and executed IRS Forms W-8BEN and W-8ECI
before the payment of any interest in the first calendar year
and before the payment of any interest in each third
succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from U.S. withholding tax because it
is effectively connected with a U.S. trade or business of such
Lender, two (2) properly completed and executed copies of IRS
Form W-8ECI before the payment of any interest is due in the
first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
CREDIT AGREEMENT - Page 67
(iii) such other form or forms as may be required
under the Code or other laws of the U.S. as a condition to
exemption from, or reduction of, U.S. withholding tax.
Such Lender agrees to promptly notify the Agent and the Parent of any
change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a U.S. tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify the Agent and the Parent of the percentage
amount in which it is no longer the beneficial owner of Obligations
owing to such Lender. To the extent of such percentage amount, the
Agent and the Parent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender claiming exemption from U.S. withholding tax
by filing IRS Form W-8ECI with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements
imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent or the Borrower may withhold from any
interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms
or other documentation required by clause (a) preceding are not
delivered to the Agent and the Parent, then the Agent or the Borrower
may withhold from any interest payment to such Lender not providing
such forms or other documentation an amount equivalent to the
applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the U.S.
or other jurisdiction asserts a claim that the Agent or the Borrower
did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Agent or
the Borrower of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify each of the Agent and the Borrower
fully for all amounts paid, directly or indirectly, by either of them
as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to either
the Agent or the Borrower under this Section 12.10, together with all
costs and expenses (including Attorney Costs). The obligation of the
Lenders under this clause (e) shall survive the payment of all
Obligations and the resignation or replacement of the Agent.
CREDIT AGREEMENT - Page 68
Section 12.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Liens upon
any Collateral (i) upon the termination of the Commitments and payment
and satisfaction in full of all Revolving Loans and reimbursement
obligations in respect of Letters of Credit and Credit Support, and the
termination or collateralization as provided in Section 1.3(g) of all
outstanding Letters of Credit and Credit Support (whether or not any of
such obligations are due) and all other Obligations; (ii) constituting
property being sold or disposed of if the Obligated Party disposing of
such property certifies to the Agent that the sale or disposition is
made in compliance with Section 7.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which no Obligated Party owned any interest at
the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to an Obligated Party under a lease which
has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of
the Agent's Liens without the prior written authorization of the
Lenders; provided that the Agent may, (A) in its reasonable discretion,
release the Agent's Liens on Collateral valued in the aggregate not in
excess of $1,000,000 during each Fiscal Year without the prior written
authorization of the Lenders and the Agent may release the Agent's
Liens on Collateral valued in the aggregate not in excess of $1,000,000
during each Fiscal Year with the prior written authorization of the
Majority Lenders and (B) execute on behalf of all of the Lenders the
Intercreditor Agreement and any amendment, restatement or other
modification thereto. Upon request by the Agent or the Obligated
Parties at any time, the Lenders will confirm in writing the Agent's
authority to release any Agent's Liens upon particular types or items
of Collateral pursuant to this Section 12.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 12.11(a) from the Lenders or the Majority Lenders,
as applicable, of the Agent's authority to release any Agent's Liens
upon particular types or items of Collateral, and upon at least five
(5) Business Days prior written request by the Obligated Parties, the
Agent shall (and is hereby irrevocably authorized by the Lenders to)
execute such documents as may be necessary to evidence the release of
the Agent's Liens upon such Collateral; provided, however, that (i) the
Agent shall not be required to execute any such document on terms
which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release
of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations
of the Obligated Parties in respect of) any Collateral retained by the
Obligated Parties, including the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by the
Obligated Parties or is cared for, protected, or insured or has been
encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or
are entitled to any particular priority, or to exercise
CREDIT AGREEMENT - Page 69
at all or in any particular manner or under any duty of care,
disclosure, or fidelity, or to continue exercising, any of the rights,
authorities, and powers granted or available to the Agent pursuant to
any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission, or event related
thereto, the Agent may act in any manner it may deem appropriate, in
its sole discretion given the Agent's own interest in the Collateral in
its capacity as one of the Lenders and that the Agent shall have no
other duty or liability whatsoever to any Lender as to any of the
foregoing.
Section 12.12 Restrictions on Actions by the Lenders; Sharing of
Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, setoff
against the Obligations, any amounts owing by such Lender to any
Obligated Party or any accounts of any Obligated Party now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it
shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement
or any other Loan Document or against any Obligated Party, including
the commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral
or any payments with respect to the Obligations owing to such Lender
arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (ii)
payments from the Agent in excess of such Lender's ratable portion of
all such distributions by the Agent, such Lender shall promptly (1)
turn the same over to the Agent, in kind, and with such endorsements as
may be required to negotiate the same to the Agent, or in same day
funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations
owed to the other Lenders so that such excess payment received shall be
applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without
interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
Section 12.13 Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting Liens, for the benefit of
the Agent and the Lenders, in assets which, in accordance with Article 9 of the
UCC or any other Requirement of Law can be perfected only by possession. Should
any Lender (other than the Agent) obtain possession of any such Collateral, such
CREDIT AGREEMENT - Page 70
Lender shall notify the Agent thereof, and, promptly upon the Agent's request
therefor shall deliver such Collateral to the Agent or otherwise deal with such
Collateral in accordance with the Agent's instructions.
Section 12.14 Payments by the Agent to the Lenders. All payments to be
made by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, delivered with or in the applicable
Assignment and Acceptance), or pursuant to such other wire transfer instructions
as each party may designate for itself by written notice to the Agent.
Concurrently with each such payment, the Agent shall identify whether such
payment (or any portion thereof) represents principal, premium, or interest on
the Revolving Loans or otherwise. Unless the Agent receives notice from the
Borrower prior to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full as and when required, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid if repaid within
three (3) days, and thereafter at the Interest Rate then applicable to Base Rate
Revolving Loans.
Section 12.15 Settlement.
(a) Each Lender's funded portion of the Revolving Loans is
intended by the Lenders to be equal at all times to such Lender's Pro
Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, the Bank, and the Lenders agree (which agreement
shall not be for the benefit of or enforceable by the Obligated
Parties) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the
Revolving Loans, including the Non-Ratable Loans and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:
(i) The Agent shall request settlement (a
"Settlement") with the Lenders on at least a weekly basis, or
on a more frequent basis at the Agent's election, (A) on
behalf of the Bank, with respect to each outstanding
Non-Ratable Loan, (B) for itself, with respect to each Agent
Advance, and (C) with respect to collections received, in each
case, by notifying the Lenders of such requested Settlement by
telecopy, telephone, e-mail, or other similar form of
transmission, of such requested Settlement, no later than
10:00 a.m. (Pacific time) on the date of such requested
Settlement (the "Settlement Date"). Each Lender (other than
the Bank, in the case of the Non- Ratable Loans, and the Agent
in the case of the Agent Advances) shall transfer the amount
of such Lender's Pro Rata Share of the outstanding principal
amount of the Non-Ratable Loans and the Agent Advances with
respect to which Settlement is requested to the Agent, to such
account of the Agent as the Agent may designate, not later
than 12:00 noon (Pacific time), on the Settlement Date
applicable thereto. Settlements may occur during the
continuation of a Default or an
CREDIT AGREEMENT - Page 71
Event of Default and whether or not the applicable conditions
precedent set forth in Article 8 have then been satisfied.
Such amounts transferred to the Agent shall be applied against
the amounts of the applicable Non-Ratable Loan or Agent
Advance and, together with the portion of such Non-Ratable
Loan or Agent Advance representing the Bank's Pro Rata Share
thereof, shall constitute Revolving Loans of such Lenders,
respectively. If any such amount is not transferred to the
Agent by any Lender on the Settlement Date applicable thereto,
the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after the
Settlement Date and thereafter at the Interest Rate then
applicable to the Base Rate Revolving Loans (Y) on behalf of
the Bank, with respect to each outstanding Non-Ratable Loan
and (Z) for itself, with respect to each Agent Advance.
(ii) Notwithstanding the foregoing, not more than one
(1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a
Settlement with respect to a Non-Ratable Loan or Agent
Advance), each other Lender (A) shall irrevocably and
unconditionally purchase and receive from the Bank or the
Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan
or Agent Advance equal to such Lender's Pro Rata Share of such
Non-Ratable Loan or Agent Advance, and (B) if Settlement has
not previously occurred with respect to such Non-Ratable Loans
or Agent Advances, upon demand by the Bank or the Agent, as
applicable, shall pay to the Bank or the Agent, as applicable,
as the purchase price of such participation an amount equal to
one-hundred percent (100%) of such Lender's Pro Rata Share of
such Non-Ratable Loans or Agent Advances. If such amount is
not in fact transferred to the Agent by any Lender, the Agent
shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds
Rate for the first three (3) days from and after such demand
and thereafter at the Interest Rate then applicable to Base
Rate Revolving Loans.
(iii) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in
any Non-Ratable Loan or Agent Advance pursuant to clause (ii)
preceding, the Agent shall promptly distribute to such Lender,
such Lender's Pro Rata Share of all payments of principal and
interest and all proceeds of Collateral received by the Agent
in respect of such Non-Ratable Loan or Agent Advance.
(iv) Between Settlement Dates, to the extent no Agent
Advances are outstanding, the Agent may pay over to the Bank
any payments received by the Agent, which in accordance with
the terms of this Agreement would be applied to the reduction
of the Revolving Loans, for application to the Bank's
Revolving Loans including Non-Ratable Loans. If, as of any
Settlement Date, collections received since the then
immediately preceding Settlement Date have been applied to the
Bank's Revolving Loans (other than to Non-Ratable Loans or
Agent Advances in which a Lender has not yet funded its
purchase of a participation pursuant to clause (ii)
preceding), as provided for in
CREDIT AGREEMENT - Page 72
the previous sentence, the Bank shall pay to the Agent for the
accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans.
During the period between Settlement Dates, the Bank with
respect to Non-Ratable Loans, the Agent with respect to Agent
Advances, and each Lender with respect to the Revolving Loans
other than Non-Ratable Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable
under this Agreement on the actual average daily amount of
funds employed by the Bank, the Agent, and the other Lenders.
(v) Unless the Agent has received written notice from
the Obligated Parties or a Lender to the contrary, the Agent
may assume that the applicable conditions precedent set forth
in Article 8 have been satisfied and the requested Borrowing
will not exceed the Availability on any Funding Date for a
Revolving Loan or Non-Ratable Loan.
(b) The Lenders' Failure to Perform. All Revolving Loans
(other than Non- Ratable Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata Shares. It
is understood that (i) no Lender shall be responsible for any failure
by any other Lender to perform its obligation to make any Revolving
Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, (ii) no failure by
any Lender to perform its obligation to make any Revolving Loans
hereunder shall excuse any other Lender from its obligation to make any
Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.
(c) Defaulting Lenders. Unless the Agent receives notice from
a Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one (1) Business Day prior
to the date of such Borrowing, that such Lender will not make available
as and when required hereunder to the Agent such Lender's Pro Rata
Share of such Borrowing, the Agent may assume that each Lender has made
such amount available to the Agent in immediately available funds on
the Funding Date. Furthermore, the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If any Lender has not transferred its full Pro Rata Share to
the Agent in immediately available funds and if the Agent has
transferred a corresponding amount to the Borrower on the Business Day
following such Funding Date the applicable Lender shall make such
amount available to the Agent, together with interest at the Federal
Funds Rate for that day. A notice by the Agent submitted to any Lender
with respect to amounts owing shall be conclusive, absent manifest
error. If each Lender's full Pro Rata Share is transferred to the Agent
as required, the amount transferred to the Agent shall constitute such
Lender's Revolving Loan for all purposes of this Agreement. If any such
amount is not transferred to the Agent on the Business Day following
the Funding Date, the Agent will notify the Borrower of such failure to
fund and, upon demand by the Agent, the Borrower shall pay such amount
to the Agent for the Agent's account, together with interest thereon
for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the Interest Rate applicable
CREDIT AGREEMENT - Page 73
at the time to the Revolving Loans comprising that particular
Borrowing. The failure of any Lender to make any Revolving Loan on any
Funding Date (any such Lender, prior to the cure of such failure, being
hereinafter referred to as a "Defaulting Lender") shall not relieve any
other Lender of its obligation hereunder to make a Revolving Loan on
such Funding Date. No Lender shall be responsible for any other
Lender's failure to advance such other Lenders' Pro Rata Share of any
Borrowing.
(d) Retention of Defaulting Lender's Payments. The Agent shall
not be obligated to transfer to a Defaulting Lender any payments made
by the Borrower to the Agent for the Defaulting Lender's benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead be paid
to or retained by the Agent. In its discretion, the Agent may loan the
Borrower the amount of all such payments received or retained by it for
the account of such Defaulting Lender. Any amounts so loaned to the
Borrower shall bear interest at the rate applicable to Base Rate
Revolving Loans and for all other purposes of this Agreement shall be
treated as if they were Revolving Loans, provided, however, that for
purposes of voting or consenting to matters with respect to the Loan
Documents and determining Pro Rata Shares, such Defaulting Lender shall
be deemed not to be a "Lender." Until a Defaulting Lender cures its
failure to fund its Pro Rata Share of any Borrowing (i) such Defaulting
Lender shall not be entitled to any portion of the Unused Line Fee and
(ii) the Unused Line Fee shall accrue in favor of the Lenders which
have funded their respective Pro Rata Shares of such requested
Borrowing and shall be allocated among such performing Lenders ratably
based upon their relative Commitments. This Section shall remain
effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under
this Agreement. The terms of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve
or excuse the performance by the Borrower of its duties and obligations
hereunder.
(e) Removal of Defaulting Lender. At the Borrower's request,
the Agent or an Eligible Assignee reasonably acceptable to the Agent
and the Borrower shall have the right (but not the obligation) to
purchase from any Defaulting Lender, and each Defaulting Lender shall,
upon such request, sell and assign to the Agent or such Eligible
Assignee, all of the Defaulting Lender's outstanding Commitments
hereunder. Such sale shall be consummated promptly after the Agent has
arranged for a purchase by the Agent or an Eligible Assignee pursuant
to an Assignment and Acceptance, and at a price equal to the
outstanding principal balance of the Defaulting Lender's Revolving
Loans, plus accrued interest and fees, without premium or discount.
Section 12.16 Letters of Credit; Intra-Lender Issues.
(a) Notice of Letter of Credit Balance. On each Settlement
Date, the Agent shall notify each Lender of the issuance of all Letters
of Credit and Credit Support since the prior Settlement Date.
CREDIT AGREEMENT - Page 74
(b) Participations in Letters of Credit.
(i) Purchase of Participations. Immediately upon
issuance of any Letter of Credit or Credit Support in
accordance with Section 1.3(d), each Lender shall be deemed to
have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and
participation equal to such Lender's Pro Rata Share of the
face amount of such Letter of Credit or Credit Support in
connection with the issuance of such Letter of Credit or
Credit Support (including all obligations of the Borrower and
any security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from the Borrower on
account of reimbursement obligations in respect of a Letter of
Credit or Credit Support as to which the Agent has previously
received for the account of the Agent or the Letter of Credit
Issuer payment from a Lender, the Agent shall promptly pay to
such Lender such Lender's Pro Rata Share of such payment from
the Borrower. Each such payment shall be made by the Agent on
the next Settlement Date.
(iii) Documentation. Upon the request of any Lender,
the Agent shall furnish to such Lender copies of any Letter of
Credit, Credit Support, reimbursement agreements executed in
connection therewith, applications for any Letter of Credit or
Credit Support, and such other documentation as may reasonably
be requested by such Lender.
(iv) Obligations Irrevocable. The obligation of each
Lender to make payments to the Agent with respect to any
Letter of Credit or Credit Support or with respect to their
participation therein or with respect to the Revolving Loans
made as a result of a drawing under a Letter of Credit or
Credit Support and the obligation of the Borrower to make
payments to the Agent, for the account of the Lenders, with
respect to any Letter of Credit or Credit Support shall be
irrevocable and shall not be subject to any qualification or
exception whatsoever, including any of the following
circumstances:
(A) any lack of validity or enforceability
of this Agreement or any of the other Loan Documents;
(B) the existence of any claim, setoff,
defense, or other right which the Borrower may have
at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be
acting), any Lender, the Agent, the Letter of Credit
Issuer, or any other Person, whether in connection
with this Agreement, any Letter of Credit or Credit
Support, the transactions contemplated herein or any
unrelated transactions (including any underlying
transactions between the Borrower or any other Person
and the beneficiary named in any Letter of Credit);
CREDIT AGREEMENT - Page 75
(C) any draft, certificate, or any other
document presented under any Letter of Credit proving
to be forged, fraudulent, invalid, or insufficient in
any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any
security for the performance or observance of any of
the terms of any of the Loan Documents;
(E) the occurrence of any Default or Event
of Default; or
(F) the failure of the Borrower to satisfy
the applicable conditions precedent set forth in
Article 8.
(c) Recovery or Avoidance of Payments; Refund of Payments in
Error. In the event any payment by or on behalf of the Borrower
received by the Agent with respect to any Letter of Credit or Credit
Support and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided, or
recovered from the Agent in connection with any receivership,
liquidation, or bankruptcy proceeding, the Lenders shall, upon demand
by the Agent, pay to the Agent their respective Pro Rata Shares of such
amount set aside, avoided, or recovered, together with interest at the
rate required to be paid by the Agent upon the amount required to be
repaid by it. Unless the Agent receives notice from the Borrower prior
to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full as and when required, the
Agent may assume that the Borrower has made such payment in full to the
Agent on such date in immediately available funds and the Agent may
(but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not
made such payment in full to the Agent, each Lender shall repay to the
Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date
such amount is distributed to such Lender until the date repaid.
(d) Indemnification by the Lenders. To the extent not
reimbursed by the Borrower and without limiting the obligations of the
Borrower hereunder, the Lenders agree to indemnify the Letter of Credit
Issuer ratably in accordance with their respective Pro Rata Shares, for
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees)
or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Letter of Credit Issuer in any
way relating to or arising out of any Letter of Credit or Credit
Support or the transactions contemplated thereby or any action taken or
omitted by the Letter of Credit Issuer under any Letter of Credit or
Credit Support or any Loan Document in connection therewith; provided
that no Lender shall be liable for any of the foregoing to the extent
it arises from the gross negligence or willful misconduct of the Person
to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand
for its Pro Rata Share of any costs or expenses payable by the Borrower
to the Letter of Credit Issuer, to the extent that the Letter of Credit
Issuer
CREDIT AGREEMENT - Page 76
is not promptly reimbursed for such costs and expenses by the Borrower.
The agreement contained in this Section shall survive payment in full
of all other Obligations.
Section 12.17 Concerning the Collateral and the Related Loan Documents.
Each Lender authorizes and directs the Agent to enter into the other Loan
Documents, for the ratable benefit and obligation of the Agent and the Lenders.
Each Lender agrees that any action taken by the Agent or the Majority Lenders in
accordance with the terms of this Agreement or the other Loan Documents, and the
exercise by the Agent or the Majority Lenders of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders. The Lenders
acknowledge that the Revolving Loans (including the Agent Advances and the
Non-Ratable Loans), Bank Products (including Hedge Agreements), and all
interest, fees, and expenses hereunder constitute one Debt, secured pari passu
by all of the Collateral.
Section 12.18 Field Audit and Examination Reports; Disclaimer by the
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit
or examination report (each a "Report" and collectively, the "Reports")
prepared by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the
accuracy of any Report, or (ii) shall be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, the Bank, or any
other party performing any audit or examination will inspect only
specific information regarding the Obligated Parties and will rely
significantly upon the Obligated Parties' books and records, as well as
on representations of the Obligated Parties' personnel;
(d) as provided in Section 13.17, agrees to keep all Reports
confidential and strictly for its internal use, and not to distribute
except to its Participants, or use any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to
hold the Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Report in connection
with any loans or other credit accommodations that the indemnifying
Lender has made or may make to the Obligated Parties, or the
indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of the Obligated Parties; and (ii) to pay
and protect, and indemnify, defend, and hold the Agent and any such
other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts
(including Attorney Costs) incurred by the Agent and any such
CREDIT AGREEMENT - Page 77
other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
Section 12.19 Relation Among the Lenders. The Lenders are not partners
or co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 13
MISCELLANEOUS
Section 13.1 No Waivers; Cumulative Remedies. No failure by the Agent
or any Lender to exercise any right, remedy, or option under this Agreement or
any present or future supplement hereto, or in any other agreement between or
among the Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. Subject to
Section 11.1, no waiver by the Agent or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No waiver by the
Agent or the Lenders on any occasion shall affect or diminish the Agent's and
each Lender's rights thereafter to require strict performance by the Obligated
Parties of any provision of this Agreement. The Agent and the Lenders may
proceed directly to collect the Obligations without any prior recourse to the
Collateral. The Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or any
Lender may have.
Section 13.2 Severability. The illegality or unenforceability of any
provision of this Agreement, any other Loan Document, or any instrument or
agreement required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement, any other Loan
Document, or any instrument or agreement required hereunder.
Section 13.3 Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS, PROVIDED
THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE
EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
ARTICLE 9 OF THE UCC) OF THE STATE OF TEXAS; PROVIDED THAT THE PARTIES
HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATE OF TEXAS OR OF THE U.S. LOCATED IN DALLAS COUNTY, TEXAS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE OBLIGATED
PARTIES, THE AGENT, AND THE LENDERS CONSENTS,
CREDIT AGREEMENT - Page 78
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON- EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE OBLIGATED PARTIES, THE AGENT,
AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING 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
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR
INSTRUMENT RELATED HERETO OR THERETO. NOTWITHSTANDING THE FOREGOING (i)
THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY OBLIGATED PARTY OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR
THE OBLIGATIONS AND (ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT
ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) EACH OBLIGATED PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
SUCH OBLIGATED PARTY AT ITS ADDRESS SET FORTH IN SECTION 13.8 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE
SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID.
NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE
LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
Section 13.4 Waiver of Jury Trial. EACH OF THE OBLIGATED PARTIES, THE
LENDERS, AND THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH OF THE OBLIGATED PARTIES, THE LENDERS, AND THE AGENT
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES FURTHER
AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR ANY
CREDIT AGREEMENT - Page 79
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
Section 13.5 Survival of Representations and Warranties. All
representations and warranties of the Obligated Parties contained in this
Agreement shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
Section 13.6 Other Security and Guaranties. The Agent may, without
notice or demand and without affecting the Obligated Parties' obligations
hereunder, from time to time: (a) take from any Person and hold collateral
(other than the Collateral) for the payment of all or any part of the
Obligations and exchange, enforce, or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
Section 13.7 Fees and Expenses. The Borrower agrees to pay to the
Agent, for its benefit, on demand, all costs and expenses that the Agent pays or
incurs in connection with the negotiation, preparation, syndication,
consummation, administration, enforcement, and termination of this Agreement or
any of the other Loan Documents, including: (a) Attorney Costs; (b) reasonable
costs and expenses (including Attorney Costs) for any amendment, supplement,
waiver, consent, or subsequent closing in connection with the Loan Documents and
the transactions contemplated thereby; (c) reasonable costs and expenses of lien
and title searches, and environmental audits; (d) taxes, fees, and other charges
for recording the Mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of this Agreement); (e) sums paid or incurred to pay any amount or
take any action required of any Obligated Party under the Loan Documents that
such Obligated Party fails to pay or take; (f) costs of appraisals, inspections,
and verifications of the Collateral, including travel, lodging, and meals for
field examinations and inspections of the Collateral and the Obligated Parties'
operations by the Agent, plus the Agent's then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $750 per day (or portion thereof) for each Person retained or employed
by the Agent with respect to each field examination or audit) to the extent
incurred (i) during the existence of any Default or Event of Default or (ii) at
any other time up to four (4) times during any calendar year; and (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Payment Accounts and lockboxes, and
costs and expenses of preserving and protecting the Collateral. In addition, the
Borrower agrees to pay costs and expenses incurred by the Agent (including
Attorney Costs) to the Agent, for its benefit, on demand, and to the other
Lenders for their benefit, on demand, and all reasonable fees, expenses, and
disbursements incurred by such other Lenders for one law firm retained by such
other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or
CREDIT AGREEMENT - Page 80
any Lender arising out of the transactions contemplated hereby (including
preparations for and consultations concerning any such matters, but excluding
any fees, expenses, and disbursements that result from claims or disputes
between the Agent and any Lender or between any of the Lenders). The foregoing
shall not be construed to limit any other provisions of the Loan Documents
regarding costs and expenses to be paid by the Borrower. All of the foregoing
costs and expenses shall be charged to the Loan Account as Revolving Loans as
described in Section 3.6.
Section 13.8 Notices. Except as otherwise provided herein, all notices,
demands, and requests that any party is required or elects to give to any other
party shall be in writing, or by a telecommunications device capable of creating
a written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail or
courier service, (b) four (4) days after it shall have been mailed by U.S. mail,
first class, certified or registered, with postage prepaid, or (c) in the case
of notice by such a telecommunications device, when properly transmitted, in
each case addressed to the party to be notified as follows:
If to the Agent or to the Bank:
Bank of America, N.A.
55 South Lake Avenue, Suite 900
Pasadena, California 91101
Attention: Business Credit: URGENT
Telecopy No.: (626) 578-6143
If to any Obligated Party:
c/o Texas Petrochemicals LP
8600 Park Place Boulevard
Houston, Texas 77017
Attention: Brian Bourque
Telecopy No.: (713) 475-7706
or to such other address as each party may designate for itself by like notice.
For purposes of providing any notice to a Lender, such notice shall be delivered
to such Lender at the address for notice of such Lender set forth on the
signature pages of this Agreement or on the most recent Assignment and
Acceptance to which such Lender is a party. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration, or other
communication to the persons designated above to receive copies shall not
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.
Section 13.9 Waiver of Notices. Unless otherwise expressly provided
herein, each Obligated Party waives presentment, notice of demand or dishonor,
protest as to any instrument, notice of intent to accelerate the Obligations,
and notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on any
Obligated Party which the Agent
CREDIT AGREEMENT - Page 81
or any Lender may elect to give shall entitle any Obligated Party to any or
further notice or demand in the same, similar, or other circumstances.
Section 13.10 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by any Obligated Party without the prior written
consent of the Agent and each Lender. The rights and benefits of the Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
Section 13.11 Indemnity of the Agent and the Lenders by the Borrower.
(a) EACH OBLIGATED PARTY AGREES TO DEFEND, INDEMNIFY, AND HOLD
THE AGENT-RELATED PERSONS, AND EACH LENDER AND EACH OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, AND
ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED PERSON") HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES, AND
DISBURSEMENTS (INCLUDING ATTORNEY FEES AND EXPENSES) OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT ANY TIME
FOLLOWING REPAYMENT OF THE REVOLVING LOANS AND THE TERMINATION,
RESIGNATION, OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF ANY LENDER)
BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH PERSON IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT CONTEMPLATED
BY OR REFERRED TO HEREIN OR THEREIN, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH PERSON
UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH
RESPECT TO ANY INVESTIGATION, LITIGATION, OR PROCEEDING (INCLUDING ANY
INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING
OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE REVOLVING LOANS
OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED
PERSON IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE
"INDEMNIFIED LIABILITIES"); PROVIDED THAT THE OBLIGATED PARTIES SHALL
HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON AND THE OBLIGATED PARTIES
SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH
RESPECT TO LIABILITIES RESULTING SOLELY FROM DISPUTES OR CLAIMS BETWEEN
THE AGENT AND ANY LENDER OR BETWEEN ANY OF THE LENDERS. THE AGREEMENTS
IN THIS SECTION 13.11 SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS.
CREDIT AGREEMENT - Page 82
(b) EACH OBLIGATED PARTY AGREES TO INDEMNIFY, DEFEND, AND HOLD
HARMLESS THE AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY
OR INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE,
PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL,
OR PRESENCE OF A HAZARDOUS SUBSTANCE RELATING TO ANY OBLIGATED PARTY'S
OPERATIONS, BUSINESS, OR PROPERTY. THIS INDEMNITY WILL APPLY WHETHER
THE HAZARDOUS SUBSTANCE IS ON, UNDER, OR ABOUT ANY OBLIGATED PARTY'S
PROPERTY OR OPERATIONS OR PROPERTY LEASED TO ANY OBLIGATED PARTY. THE
INDEMNITY INCLUDES BUT IS NOT LIMITED TO ATTORNEY FEES AND EXPENSES.
THE INDEMNITY EXTENDS TO THE AGENT AND THE LENDERS, THEIR AFFILIATES,
SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
SUCCESSORS, ATTORNEYS, AND ASSIGNS. AS USED IN THIS CLAUSE (b),
"HAZARDOUS SUBSTANCES" MEANS ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS
OR BECOMES DESIGNATED OR REGULATED AS "TOXIC," "HAZARDOUS,"
"POLLUTANT," OR "CONTAMINANT" OR A SIMILAR DESIGNATION OR REGULATION
UNDER ANY FEDERAL, STATE, OR LOCAL LAW (WHETHER UNDER COMMON LAW,
STATUTE, REGULATION, OR OTHERWISE) OR JUDICIAL OR ADMINISTRATIVE
INTERPRETATION OF SUCH, INCLUDING PETROLEUM OR NATURAL GAS. THIS
INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER OBLIGATIONS.
Section 13.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY
OBLIGATED PARTY, THE AGENT, ANY LENDER, OR OTHER PERSON AGAINST ANY OBLIGATED
PARTY, THE AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
COUNSEL, REPRESENTATIVES, AGENTS, OR ATTORNEYS-IN- FACT OF ANY OF THEM FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH OBLIGATED PARTY, THE AGENT, AND EACH LENDER HEREBY WAIVES, RELEASES, AND
AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
Section 13.13 Final Agreement. This Agreement and the other Loan
Documents are intended by the Obligated Parties, the Agent, and the Lenders to
be the final, complete, and exclusive expression of the agreement between them.
This Agreement and the other Loan Documents supersede any and all prior oral or
written agreements relating to the subject matter hereof and thereof. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Obligated Parties and a duly authorized officer of each
of the Agent and the Majority Lenders, the Required Lenders, or all of the
Lenders, as applicable.
CREDIT AGREEMENT - Page 83
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 13.14 Counterparts. This Agreement and the other Loan Documents
may be executed in any number of counterparts, and by the Agent, each Lender,
and the Obligated Parties in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same agreement.
Signature pages to this Agreement and the other Loan Documents may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document and a telecopy
of any such executed signature page shall be valid as an original.
Section 13.15 Captions. The captions contained in this Agreement and
the other Loan Documents are for convenience of reference only, are without
substantive meaning and should not be construed to modify, enlarge, or restrict
any provision.
Section 13.16 Right of Setoff. In addition to any rights and remedies
of the Lenders provided by law, if an Event of Default exists or the Revolving
Loans have been accelerated, each Lender is authorized at any time and from time
to time, without prior notice to the Obligated Parties, any such notice being
waived by the Obligated Parties to the fullest extent permitted by law, to
setoff and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender or any Affiliate of such Lender to or for the credit or
the account of the Obligated Parties against any and all Obligations owing to
such Lender, now or hereafter existing, irrespective of whether or not the Agent
or such Lender shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Obligated Parties and the Agent after any
such setoff and application made by such Lender; provided, however, the failure
to give such notice shall not affect the validity of such setoff and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SETOFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF
ANY OBLIGATED PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS.
Section 13.17 Confidentiality.
(a) Each Obligated Party hereby consents that the Agent and
each Lender may issue and disseminate to the public general information
describing the credit accommodation entered into pursuant to this
Agreement, including the name and address of the Obligated Parties and
a general description of the Obligated Parties' business and may use
each Obligated Party's name in advertising and other promotional
material.
CREDIT AGREEMENT - Page 84
(b) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" or "secret" by any
Obligated Party and provided to the Agent or such Lender by or on
behalf of any Obligated Party, under this Agreement or any other Loan
Document, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure
by the Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than an Obligated Party,
provided that such source is not bound by a confidentiality agreement
with an Obligated Party known to the Agent or such Lender; provided,
however, that the Agent and any Lender may disclose such information
(A) at the request or pursuant to any requirement of any Governmental
Authority to which the Agent or such Lender is subject or in connection
with an examination of the Agent or such Lender by any such
Governmental Authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the provisions
of any applicable Requirement of Law; (d) to the extent reasonably
required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Agent, any
Lender or their respective Affiliates may be party; (e) to the extent
reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (f) to the Agent's or such
Lender's independent auditors, accountants, attorneys, and other
professional advisors, provided that such advisors agree to keep such
information confidential to the extent required of the Agent and the
Lenders; (g) to any prospective Participant or Assignee, actual or
potential, provided that such prospective Participant or Assignee
agrees to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (h) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which any Obligated Party is party or is deemed
party with the Agent or such Lender; and (i) to its Affiliates.
Section 13.18 Conflicts with other Loan Documents. Unless otherwise
expressly provided in this Agreement (or in another Loan Document by specific
reference to the applicable provision contained in this Agreement), if any
provision contained in this Agreement conflicts with any provision of any other
Loan Document, the provision contained in this Agreement shall govern and
control.
Section 13.19 Agency of the Borrower for Each Other Obligated Party.
Each of the other Obligated Parties irrevocably appoints the Borrower as its
agent for all purposes relevant to this Agreement, including the giving and
receipt of notices and execution and delivery of all documents, instruments, and
certificates contemplated herein. Any acknowledgment, consent, direction,
certification, or other action which might otherwise be valid or effective only
if given or taken by all or any of the Obligated Parties or acting singly, shall
be valid and effective if given or taken only by the Borrower, whether or not
any of the other Obligated Parties joins therein, and the Agent and the Lenders
shall have no duty or obligation to make further inquiry with respect to the
authority of the Borrower under this Section 13.19, provided that nothing in
this Section 13.19 shall limit the effectiveness of, or the right of the Agent
and the Lenders to rely upon, any notice, document, instrument, certificate,
acknowledgment, consent, direction, certification, or other action delivered by
any Obligated Party pursuant to this Agreement.
CREDIT AGREEMENT - Page 85
Section 13.20 Additional Guarantors. Addition of any Person as a
Guarantor to this Agreement is subject to approval of the Agent and the Majority
Lenders, and may be conditioned upon such requirements as they may determine in
their discretion, including, without limitation, (a) the furnishing of such
financial and other information as the Agent or any such Lender may request, (b)
approval by all appropriate approval authorities of the Agent and each such
Lender, (c) execution and delivery by the Obligated Parties, such Person, the
Agent, and the Majority Lenders of such agreements and other documentation
(including, without limitation, an amendment to this Agreement or any other Loan
Document), and the furnishing by such Person or any of the Obligated Parties of
such certificates, opinions, and other documentation, as the Agent and any such
Lender may request. Neither the Agent nor any Lender shall have any obligation
to approve any such Person for addition as a Guarantor.
Section 13.21 Express Waivers By the Obligated Parties. Each Obligated
Party agrees as follows:
(a) Each Obligated Party hereby waives: (i) notice of
acceptance of this Agreement; (ii) notice of the making of any
Revolving Loans, the issuance of any Letter of Credit or Credit
Support, or any other financial accommodations made or extended under
the Loan Documents or the creation or existence of any Obligations;
(iii) notice of the amount of the Obligations, subject, however, to
such Obligated Party's right to make inquiry of the Agent to ascertain
the amount of the Obligations at any reasonable time; (iv) notice of
any adverse change in the financial condition of any other Obligated
Party or of any other fact that might increase such Obligated Party's
risk with respect to such other Obligated Party under the Loan
Documents; (v) notice of presentment for payment, demand, protest, and
notice thereof as to any promissory notes or other instruments among
the Loan Documents; and (vii) all other notices (except if such notice
is specifically required to be given to such Obligated Party hereunder
or under any of the other Loan Documents to which such Obligated Party
is a party) and demands to which such Obligated Party might otherwise
be entitled;
(b) Each Obligated Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against
any other Obligated Party or to exhaust any rights and remedies which
the Agent or any Lender has or may have against any other Obligated
Party. Each Obligated Party further waives any defense arising by
reason of any disability or other defense of any other Obligated Party
(other than the defense that the Obligations shall have been fully and
finally performed and indefeasibly paid) or by reason of the cessation
from any cause whatsoever of the liability of any such Obligated Party
in respect thereof.
(c) Each Obligated Party hereby waives and agrees not to
assert against the Agent, any Lender, or the Letter of Credit Issuer:
(i) any defense (legal or equitable), setoff, counterclaim, or claim
which such Obligated Party may now or at any time hereafter have
against any other Obligated Party or any other party liable under the
Loan Documents; (ii) any defense, setoff, counterclaim, or claim of any
kind or nature available to any other Obligated Party against the
Agent, any Lender, the Bank, or the Letter of Credit Issuer, arising
directly or indirectly from the
CREDIT AGREEMENT - Page 86
present or future lack of perfection, sufficiency, validity, or
enforceability of the Obligations or any security therefor; (iii) any
right or defense arising by reason of any claim or defense based upon
an election of remedies by the Agent, any Lender, the Bank, or the
Letter of Credit Issuer under any applicable law; (iv) the benefit of
any statute of limitations affecting any other Obligated Party's
liability hereunder;
(d) Each Obligated Party consents and agrees that, without
notice to or by such Obligated Party and without affecting or impairing
the obligations of such Obligated Party hereunder, the Agent may
(subject to any requirement for consent of any of the Lenders to the
extent required by this Agreement), by action or inaction: (i)
compromise, settle, extend the duration or the time for the payment of,
or discharge the performance of, or may refuse to or otherwise not
enforce the Loan Documents; (ii) release all or any one or more parties
to any one or more of the Loan Documents or grant other indulgences to
any other Obligated Party in respect thereof; or (iii) release or
substitute any Person liable for payment of the Obligations, or
enforce, exchange, release, or waive any security for the Obligations
or any Guaranty of the Obligations;
Each Obligated Party represents and warrants to the Agent and the Lenders that
such Obligated Party is currently informed of the financial condition of all
other Obligated Parties and all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. Each
Obligated Party further represents and warrants that such Obligated Party has
read and understands the terms and conditions of the Loan Documents. Each
Obligated Party agrees that neither the Agent, any Lender, the Bank, nor the
Letter of Credit Issuer has any responsibility to inform any Obligated Party of
the financial condition of any other Obligated Party or of any other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
Section 13.22 Designated Senior Indebtedness. The Borrower hereby
confirms that the Obligations constitute "Bank Indebtedness" and "Designated
Senior Indebtedness" and the Agent is the "Representative" for such Bank
Indebtedness and Designated Senior Indebtedness for all purposes of the Senior
Subordinated Note Indenture.
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CREDIT AGREEMENT - Page 87
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
BORROWER:
TEXAS PETROCHEMICALS LP
By: TPC Holding Corp., its general partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
OTHER OBLIGATED PARTIES:
TEXAS PETROCHEMICAL HOLDINGS,
INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
TPC HOLDING CORP.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
PETROCHEMICAL PARTNERSHIP
HOLDINGS, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
CREDIT AGREEMENT - Page 88
AGENT:
BANK OF AMERICA, N.A.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
CREDIT AGREEMENT - Page 89
LENDERS:
BANK OF AMERICA, N.A.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Address for Notices:
Bank of America, N.A.
55 South Lake Avenue, Suite 900
Pasadena, California 91101
Attn: Business Credit: URGENT
Telecopy: (626) 578-6143
CREDIT AGREEMENT - Page 90
THE CIT GROUP/BUSINESS CREDIT,
INC.
By:
---------------------------------------------
Alan R. Schnacke
Vice President
Address for Notices:
5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attn. Regional Credit Manager
Telecopy: 972-455-1690
CREDIT AGREEMENT - Page 91
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Address for Notices:
Credit Notices:
PNC Bank, National Association
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Attn: Doug Clark
Telecopy: (214) 871-2015
Operations Notices:
PNC Bank, National Association
2 Tower Center Boulevard, 8th Floor
East Brunswick, New Jersey 08816
Attn: Gurdatt Jaganan, Operations
Supervisor
Telecopy: (732) 220-4399
CREDIT AGREEMENT - Page 92
ANNEX A
to
Credit Agreement
Definitions, Accounting Terms, and Interpretive Provisions
DEFINITIONS:
Capitalized terms wherever used in the Loan Documents shall have the
following respective meanings (unless otherwise defined therein):
"Account" and "Accounts" have the meaning specified in the Security
Agreements.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper, or General Intangibles (including a
payment intangible).
"ACH Transactions" means any cash management or related services
including, without limitation, the automated clearinghouse transfer of funds by
the Bank for the account of any Obligated Party pursuant to agreement or
overdrafts.
"Adjusted Tangible Net Worth" means, as applied to any Person, at any
date and determined in accordance with GAAP, (a) total assets, minus (b) total
liabilities, plus (c) Subordinated Debt, minus (d) intangible assets.
"Adjusted Tangible Net Worth Requirement" means, as of the end of each
calendar month ending after the Closing Date, an amount equal to the amount
specified corresponding to the applicable calendar month end in the table below,
respectively:
<Table>
<Caption>
Adjusted Tangible Net Worth
Calendar Month End Requirement
- ------------------ ---------------------------
Each calendar month ending after the
Closing Date through and including $95,000,000
December 31, 2002
Calendar month ending January 31, 2003 and $95,000,000 plus cumulative
the each calendar month ending thereafter amount of all Adjusted Tangible
Net Worth Requirement Increases
</Table>
ANNEX A TO CREDIT AGREEMENT- Page 1
"Adjusted Tangible Net Worth Requirement Increase" means an amount,
determined for the Borrower and its Subsidiaries on a consolidated basis equal
to the sum of (a) fifty percent (50%) of the amount (not less than zero) of Net
Income for each Fiscal Year ending after the Closing Date, excluding the effect
of (i) any non-recurring non-cash loss attributable to the sale of assets
outside the ordinary course of business, including any sale of an operating
division or a Subsidiary, (ii) any other non-recurring, non-cash loss, including
any loss attributable to the write-down of long-lived assets or the impairment
of intangible assets (excluding any write-down of Inventory), stock based
compensation, and amortization of financing costs, (iii) any non-cash loss or
non-cash gain or any reduction or increase in shareholders' equity during such
Fiscal Year related to foreign exchange fluctuations or the valuation of
derivatives in accordance with SFAS 133 (as amended by SFAS 137 and SFAS 138),
plus (b) one hundred percent (100%) of the net amount of all equity proceeds
received by the Borrower after the Closing Date. As used in this definition, a
"non-cash loss" is a loss which involves no cash expenditure by the subject
Person in the current Fiscal Year, and a "non-cash gain" is any gain which
involves no cash receipt by the subject Person in the current Fiscal Year.
"Affiliate" means, as to any Person (the "subject Person"), any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, the subject Person or which owns, directly or
indirectly, five percent (5.0%) or more of the outstanding Capital Stock of the
subject Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as administrative agent
for the Lenders, and any successor administrative agent.
"Agent Advances" has the meaning specified in Section 1.2(j).
"Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents, and
attorneys-in-fact of the Agent and its Affiliates.
"Agent's Letter" means that certain letter agreement, dated as of the
Closing Date, among the Borrower and the Agent, as such letter agreement may be
amended, restated, or otherwise modified from time to time.
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders, the Bank, and the Agent pursuant, to this
Agreement and the other Loan Documents.
"Aggregate Revolver Outstandings" means, at any time, the sum of (a)
the unpaid balance of the Revolving Loans, (b) the aggregate undrawn face amount
of all outstanding Letters of Credit and Credit Support, and (c) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit
and Credit Support.
ANNEX A TO CREDIT AGREEMENT- Page 2
"Agreement" means the Credit Agreement to which this Annex A is
attached, as amended, restated, or otherwise modified from time to time.
"Anniversary Date" means an anniversary of the Closing Date.
"Applicable Margin" means, as of the Closing Date,
(a) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Revolving Loans and the Unused Line
Fee), 0.00%;
(b) with respect to LIBOR Rate Revolving Loans, 2.50%; and
(c) with respect to the Unused Line Fee, 0.50%;
in each case subject to adjustment as of the first day of each Fiscal Quarter
beginning April 1, 2003 and continuing on the first day of each Fiscal Quarter
ending thereafter, to the applicable percentage specified corresponding to the
Average Net Excess Availability for the preceding Fiscal Quarter, as set forth
below, respectively:
<Table>
<Caption>
Base Rate LIBOR Rate
Average Net Excess Availability Revolving Revolving Unused
for prior Fiscal Quarter Loans Loans Line Fee
- ------------------------------- --------- ---------- --------
$15,000,000 or less 0.25% 2.75% 0.50%
Greater than $15,000,000 but 0.00% 2.50% 0.50%
less than $35,000,000
Greater than or equal to 0.00% 2.25% 0.375%
$35,000,000 but less than
$50,000,000
Greater than or equal to 0.00% 2.00% 0.25%
$50,000,000
</Table>
For the purpose of determining any such adjustments to the Applicable Margin,
Average Net Excess Availability shall be determined by the Agent on the first
Business Day as of each Fiscal Quarter (the "applicable Fiscal Quarter") for the
immediately preceding Fiscal Quarter, beginning April 1, 2003 for the Fiscal
Quarter ending March 31, 2003, and any such adjustment, if any, shall become
effective prospectively on and after the first day of such applicable Fiscal
Quarter. If a Default or Event of Default exists at the time any reduction in
the Applicable Margin is to be implemented, such reduction shall not occur until
the first day of the first calendar month following the date on which such
Default or Event of Default is waived or cured.
ANNEX A TO CREDIT AGREEMENT- Page 3
"Assignee" has the meaning specified in Section 11.2(a).
"Assignment and Acceptance" has the meaning specified in Section
11.2(a).
"Attorney Costs" means all reasonable fees, expenses, and disbursements
of any law firm or other counsel engaged by the Agent.
"Availability" means, at any time, (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the Borrowing Base, minus (b) the Aggregate Revolver
Outstandings.
"Average Net Excess Availability" means, for any period, the daily
average calculation of Net Excess Availability.
"Bank" means Bank of America, N.A., a national banking association, or
any successor entity thereto.
"Bank Products" means any one or more of the following types of
services or facilities extended to the Borrower by the Bank or any Affiliate of
the Bank in reliance on the Bank's agreement to indemnify such Affiliate: (a)
credit cards; (b) ACH Transactions; (c) cash management, including, without
limitation, controlled disbursement services; and (d) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its sole discretion for the Bank Products then provided or
outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C.ss. 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions, and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"Blocked Account Agreement" means an agreement among the Borrower, the
Agent, and a Clearing Bank, in form and substance reasonably satisfactory to the
Agent, concerning the collection of payments which represent the proceeds of
Accounts or of any other Collateral.
"Borrower" means Texas Petrochemicals LP, a Texas limited partnership.
ANNEX A TO CREDIT AGREEMENT- Page 4
"Borrower Security Agreement" means the Security Agreement, dated
concurrently herewith, between the Borrower and the Agent, for the benefit of
the Agent and the Lenders, as such agreement may be amended, restated, or
otherwise modified from time to time.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrower or by the Bank (in the case
of a Borrowing funded by Non- Ratable Loans) or by the Agent (in the case of a
Borrowing consisting of an Agent Advance), or the issuance of a Letter of Credit
or Credit Support hereunder.
"Borrowing Base" means, at any time, an amount equal to the lesser of
(a) the Maximum Revolver Amount, (b) the sum of, without duplication, (i)
eighty-five percent (85.0%) of the Net Amount of Eligible Accounts, plus (ii)
the lesser of (A) the Inventory Advance Rate multiplied by Eligible Inventory
valued at the lesser of cost or current market value or (B) the Maximum
Inventory Loan Amount, minus (iii) Reserves, or (c) the sum of (i) fifty percent
(50.0%) of the book value of the Inventory of the Borrower and its Subsidiaries
and (ii) eighty-five percent (85.0%) of the book value of the accounts
receivables of the Borrower and its Subsidiaries.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of the Borrower, substantially in the form of Exhibit B (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof (including to the extent the
Borrower has received notice of any Reserve from the Agent, any of the Reserves
included in such calculation pursuant to clause (b)(iii) of the definition of
Borrowing Base), all in such detail as shall be reasonably satisfactory to the
Agent. All calculations of the Borrowing Base in connection with the preparation
of any Borrowing Base Certificate shall originally be made by the Borrower and
certified to the Agent; provided that the Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment, any such
calculation (a) to reflect its reasonable estimate of declines in value of any
of the Collateral described therein and (b) to the extent that such calculation
is not in accordance with this Agreement.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in Pasadena, California, or Charlotte, North Carolina are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings, and payments in connection with the LIBOR Rate or
LIBOR Rate Revolving Loans, any day that is a Business Day pursuant to clause
(a) preceding and that is also a day on which trading in Dollars is carried on
by and between banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request, or
directive of any central bank or other Governmental Authority, or any other law,
rule, or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period of determination, the sum
(without duplication) of capital expenditures and payments under Capital Leases
and other expenditures that are or should be treated as capital expenditures
under GAAP.
ANNEX A TO CREDIT AGREEMENT- Page 5
"Capital Lease" means, with respect to any Person, any lease of
property by such Person which, in accordance with GAAP, should be reflected as a
capital lease on the balance sheet of such Person.
"Capital Stock" means any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (howsoever designated)
issued by any Person.
"Change of Control" means the occurrence of any of the following: (a)
except as allowed by Section 7.9, the adoption of a plan relating to the
liquidation or dissolution of the Borrower or the Parent; (b) the acquisition by
any "person" or "group" (as each such term is used in Section 13(d)(3) and
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended) of a direct
or indirect majority in interest (more than fifty percent (50.0%)) of the voting
power of the voting stock of the Parent by way of merger or consolidation or
otherwise; (c) during any period of twelve (12) consecutive calendar months,
individuals (i) who were members of the Management Group of the Parent on the
first day of such period, or (ii) whose election or nomination for election to
the Management Group of the Parent was recommended or approved by at least a
majority of the Management Group then still in office who were members of the
Management Group of the Parent on the first day of such period, or whose
election or nomination for election was so approved, shall cease to constitute a
majority of the Management Group of the Parent; or (d) except as allowed by
Section 7.9, the Borrower shall cease to be a Wholly-Owned Subsidiary of the
Parent.
"Chattel Paper" has the meaning specified in the Security Agreements.
"Clearing Bank" means the Bank or any other banking institution with
whom a Payment Account has been established pursuant to a Blocked Account
Agreement.
"Closing Date" means the date of this Agreement as specified in the
introductory paragraph.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time and any successor statute and the regulations promulgated thereunder.
"Collateral" means (a) all of the "Collateral", as such term is defined
in the Security Agreements, (b) all owned Real Estate of any Obligated Party,
(c) all other personal property at any time subject to the Agent's Liens, and
(d) all accessions to, substitutions for and replacements, products, and
proceeds of any of the foregoing, including, but not limited to, proceeds of any
insurance policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing.
"Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on
Schedule A-1 or in the most recent Assignment and Acceptance to which such
Lender is a party, as such Commitment may be adjusted from time to time in
accordance with the provisions of Section 11.1 and Section 11.2, and
"Commitments" means, collectively, the aggregate amount of the Commitments of
all of the Lenders.
ANNEX A TO CREDIT AGREEMENT- Page 6
"Compliance Certificate" has the meaning specified in Section 5.2(d).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Continuation/Conversion Date" means the effective date of (a) any
conversion of LIBOR Rate Revolving Loans to Base Rate Revolving Loans or of Base
Rate Revolving Loans to LIBOR Rate Revolving Loans or (b) any continuation of
LIBOR Rate Revolving Loans as LIBOR Rate Revolving Loans.
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by an Obligated Party to the Agent, for the benefit of
the Agent and the Lenders, to evidence and perfect the Agent's Liens in such
Obligated Party's present and future copyrights and related licenses and rights,
as such agreement may be amended, restated, or otherwise modified from time to
time.
"Credit Support" has the meaning specified in Section 1.3(a).
"Debt" means, without duplication, with respect to any Person (the
"subject Person") all liabilities, obligations, and indebtedness of the subject
Person to any other Person, of any kind or nature, now or hereafter owing,
arising, due, or payable, howsoever evidenced, created, incurred, acquired, or
owing, whether primary, secondary, direct, contingent, fixed, or otherwise,
consisting of indebtedness for borrowed money or the deferred purchase price of
property, excluding trade payables, but including, without in any way limiting
the generality of the foregoing: (a) in the case of the Obligated Parties, the
Obligations; (b) all indebtedness, liabilities, and obligations of any Person
secured by any Lien on the subject Person's property, even if the subject Person
shall not have assumed or become liable for the payment thereof; provided,
however, that all such indebtedness, liabilities, and obligations which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of the subject Person prepared in accordance with GAAP; (c) all indebtedness,
liabilities, and obligations created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by the subject Person, even if the rights and remedies of the
lessor, seller, or lender thereunder are limited to repossession of such
property; provided, however, that all such indebtedness, liabilities, and
obligations which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the subject Person prepared in accordance with GAAP; (d) all
indebtedness, liabilities, and obligations under Guaranties of Debt; (e) the
present value (discounted at the Base Rate) of lease payments due under
synthetic leases; and (f) net obligations in respect of Hedge Agreements.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate, plus (b) two
percent (2.00%) per annum. Each Default Rate shall be
ANNEX A TO CREDIT AGREEMENT- Page 7
adjusted simultaneously with any change in the applicable Interest Rate. In
addition, with respect to Letters of Credit and Credit Support, the Default Rate
shall mean the Letter of Credit Fee Percentage, plus two percent (2.00%) per
annum.
"Defaulting Lender" has the meaning specified in Section 12.15(c).
"Designated Account" has the meaning specified in Section 1.2(d).
"Distribution" means, with respect to any Person (other than a natural
person): (a) the payment or making of any dividend or other distribution of
property in respect of such Person's Capital Stock (or any options or warrants
for, or other rights with respect to, such Capital Stock) of such Person, other
than distributions solely in such Person's Capital Stock (or any options or
warrants for, or other rights with respect to, such Capital Stock) of the same
class; (b) the redemption or other acquisition by such Person of any Capital
Stock (or any options or warrants for, or other rights with respect to, such
Capital Stock) of such Person; or (c) the repurchase of any Subordinated Debt of
such Person prior to the maturity thereof as originally issued.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the U.S.
Unless otherwise specified, all payments under this Agreement shall be made in
Dollars.
"EBITDA" means, with respect to any fiscal period, Net Income, plus (a)
without duplication and to the extent deducted in the determination of Net
Income, (i) Interest Expense, (ii) the provision for (or minus any benefit from)
income taxes, (iii) depreciation and amortization expense (excluding
amortization of turnaround costs), (iv) any non-recurring, non-cash losses
attributable to the sale of operating divisions or Subsidiaries, (v) any
extraordinary items or other non-recurring, non-cash losses, including any
losses attributable to the write-down of long-lived assets or impairment of
intangibles (excluding any write-down of Inventory), stock based compensation,
and amortization of financing costs, (vi) any non-cash loss attributable to
foreign exchange fluctuations, and (vii) any non-cash loss related to the
valuation of derivatives in accordance with SFAS 133 (as amended by SFAS 137 and
SFAS 138), minus (b) without duplication and to the extent included in the
determination of Net Income (i) any gains attributable to the sale of assets
outside the ordinary course of business or any operating divisions or
Subsidiaries, (ii) any non-cash gain attributable to foreign exchange
fluctuations, (iii) any non-cash gain related to the valuation of derivatives in
accordance with SFAS 133 (as amended by SFAS 137 and SFAS 138), and (iv) any
other non-cash gains. For the purpose of this definition, a "non-cash loss" is a
loss which involves no cash expenditure by the subject Person in the current
Fiscal Year and a "non-cash gain" is a gain which involves no cash receipt by
the subject Person in the current Fiscal Year.
"Eligible Accounts" means the Accounts of the Borrower which the Agent
in the exercise of its reasonable commercial discretion determines to be
Eligible Accounts. Without limiting the discretion of the Agent to establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account:
ANNEX A TO CREDIT AGREEMENT- Page 8
(a) with respect to which more than ninety (90) days have
elapsed since the date of the original invoice therefor;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in the Borrower
Security Agreement are incorrect or have been breached;
(c) with respect to which Account (or any other Account due
from the applicable Account Debtor), in whole or in part, a check,
promissory note, draft, trade acceptance, or other instrument for the
payment of money has been received, presented for payment, and returned
uncollected for any reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which the applicable Borrower has extended the time
for payment without the consent of the Agent (for the purposes hereof,
"progress billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the
Account Debtor's obligation to pay such invoice is conditioned upon the
Borrower's completion of any further performance under such contract or
agreement);
(e) with respect to which any one or more of the following
events has occurred or exists with respect to the Account Debtor on
such Account: (i) death or judicial declaration of incompetency of such
Account Debtor who is a natural person; (ii) the filing, or the
expectation of filing, by or against such Account Debtor of a request
or petition for an order for relief, liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the Bankruptcy Code or any other
bankruptcy, insolvency, or similar laws of the U.S., any state or
territory thereof, or any foreign jurisdiction, now or hereafter in
effect; (iii) the making of any general assignment by such Account
Debtor for the benefit of creditors; (iv) the appointment of a receiver
or trustee for such Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or
taking possession by a "custodian," as defined in the Bankruptcy Code;
(v) the institution by or against such Account Debtor of any other type
of insolvency proceeding (under the Bankruptcy Code or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation
of, settlement of claims against, or winding up of affairs of, such
Account Debtor; (vi) the sale, assignment, or transfer of all or any
material part of the assets of such Account Debtor; (vii) the
nonpayment generally by such Account Debtor of its debts as they become
due; or (viii) the cessation of the business of such Account Debtor as
a going concern;
(f) if fifty percent (50.0%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible pursuant to the other provisions of
this definition;
(g) owed by an Account Debtor which (i) does not maintain its
chief executive office in the U.S. or Canada, (ii) is not organized
under the laws of the U.S. or Canada or any political subdivision or
state thereof, or (iii) is the government of any foreign country or
sovereign state, or
ANNEX A TO CREDIT AGREEMENT- Page 9
of any state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or other
instrumentality thereof, except to the extent that such Account is
secured or payable by a letter of credit reasonably satisfactory to the
Agent with respect to which all letter-of-credit rights and the right
to make presentment have been collaterally assigned to the Agent, in a
manner, and in form and substance, satisfactory to the Agent; provided
that to the extent the following accounts meet the other eligibility
requirements contained herein, Eligible Accounts shall include (i)
PEMEX Accounts in an amount up to $10,000,000 with respect to which not
more than thirty (30) days have elapsed since the date of the original
invoice therefor and (ii) Tradax Accounts which are supported by
letters of credit reasonably satisfactory to the Agent with respect to
which all letter-of-credit rights and the right to make presentment
have been collaterally assigned to the Agent, in a manner, and in form
and substance, satisfactory to the Agent;
(h) owed by an Account Debtor which is an Affiliate or
employee of the Borrower;
(i) except as provided in clause (k) following, with respect
to which either the perfection, enforceability, or validity of the
Agent's Liens in such Account, or the Agent's right or ability to
obtain direct payment to the Agent of the proceeds of such Account, is
governed by any federal, state, or local statutory requirements other
than those of the UCC;
(j) owed by an Account Debtor with respect to which such
Account Debtor or an Affiliate of such Account Debtor is indebted in
any way to an Obligated Party or any of its Affiliates, or which is
subject to any unapplied cash or credit or any right of setoff or
recoupment by the Account Debtor, unless the Account Debtor has entered
into an agreement acceptable to the Agent to waive setoff rights, or if
the Account Debtor thereon has disputed liability or made any claim
with respect to any other Account due from such Account Debtor, but in
each such case only to the extent of such indebtedness, setoff,
recoupment, dispute, or claim;
(k) owed by the government of the U.S., or any department,
agency, public corporation, or other instrumentality thereof, unless
the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C.ss.
3727 et seq.), and any other steps necessary to perfect the Agent's
Liens therein, have been complied with to the Agent's satisfaction with
respect to such Account;
(l) owed by any state, municipality, or other political
subdivision of the U.S., or any department, agency, public corporation,
or other instrumentality thereof and as to which the Agent determines
that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a bill-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other
Instrument or by Chattel Paper;
ANNEX A TO CREDIT AGREEMENT- Page 10
(o) with respect to which the Agent believes, in the exercise
of its reasonable credit judgment, that the prospect of collection of
such Account is impaired or that such Account may not be paid by reason
of the Account Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit the Borrower to seek judicial
enforcement in such state of payment of such Account, unless the
Borrower has qualified to do business in such state or has filed a
Notice of Business Activities Report or equivalent report for the then
current year;
(q) which arises out of a sale not made in the ordinary course
of the Borrower's business or which represents a rebate due from a
vendor;
(r) with respect to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by, or have
been rejected or objected to by, the Account Debtor or the services
giving rise to such Account have not been performed by the Borrower,
and, if applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;
(s) owed by an Account Debtor, or group of affiliated Account
Debtors, which is obligated to the Obligated Parties respecting
Accounts the aggregate unpaid balance of which exceeds twenty-five
percent (25.0%) of the aggregate unpaid balance of all Accounts owed to
the Borrower at such time by all of the Borrower's Account Debtors, but
only to the extent of such excess;
(t) which is not subject to a first priority and perfected
security interest in favor of the Agent, for the benefit of the Agent
and the Lenders;
(u) with respect to which the Borrower or the Agent has deemed
such Account as uncollectible or has any reason to believe that such
Account is uncollectible;
(v) which is acquired in connection with any acquisition to
the extent the Agent has not completed an audit of the Accounts
acquired in connection with such acquisition with results satisfactory
to the Agent; and
(w) which the Agent determines in its reasonable credit
judgment is ineligible for any other reason.
If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of the Borrowing Base.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company, or other asset based lender having total assets in excess of
$1,000,000,000, (b) any Lender listed on the signature pages
ANNEX A TO CREDIT AGREEMENT- Page 11
of this Agreement, (c) any Affiliate of any Lender, and (d) if an Event of
Default has occurred and is continuing, any Person reasonably acceptable to the
Agent.
"Eligible Inventory" means Inventory, valued at the lower of the
weighted average cost or market value, which the Agent, in its reasonable
discretion, determines to be Eligible Inventory. Without limiting the discretion
of the Agent to establish other criteria of ineligibility, Eligible Inventory
shall not, unless the Agent in its sole discretion elects, include any
Inventory:
(a) that is not owned by the Borrower, including Inventory
held by the Borrower on consignment;
(b) that is not subject to the Agent's Liens, which are
perfected as to such Inventory, or that is subject to any other Lien
whatsoever (other than the Liens described in clause (e) of the
definition of Permitted Liens; provided that such Permitted Liens (i)
are junior in priority to the Agent's Liens or subject to Reserves and
(ii) do not impair directly or indirectly the ability of the Agent to
realize on or obtain the full benefit of the Collateral);
(c) that is not finished goods;
(d) that is work-in-process, process chemicals, catalyst
inventory, samples, prototypes, supplies, or packing and shipping
materials;
(e) that is not in good condition, is unmerchantable, or does
not meet all standards imposed by any Governmental Authority having
regulatory authority over such goods or their use or sale;
(f) that is obsolete, defective, or not currently salable at
prices approximating at least cost in the normal course of the
Borrower's business, or that is slow moving or stale;
(g) that is located outside the U.S. or that is in transit
from vendors or suppliers and not in the exclusive possession and
control of the Borrower (provided that the Agent may include such
Inventory as eligible and establish a Reserve with regard to costs and
expenses owing to third parties with respect to such Inventory);
(h) that is located in a public warehouse or in possession of
a bailee or in a facility leased by the Borrower or that is in rail
cars not owned by the Borrower, if the applicable warehouseman, bailee,
lessor, railroad or rail car owner has not delivered to the Agent, if
requested by the Agent, a subordination agreement in form and substance
satisfactory to the Agent or if a Reserve under clause (c) of the
definition of Reserves has not been established for such Inventory;
(i) that contains or bears any Proprietary Rights licensed to
the Borrower by any Person, if the Agent is not satisfied that it may
sell or otherwise dispose of such Inventory in accordance with the
terms of the Borrower Security Agreement and Section 9.2 without
infringing
ANNEX A TO CREDIT AGREEMENT- Page 12
the rights of the licensor of such Proprietary Rights or violating any
contract with such licensor (and without payment of any royalties other
than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement), and, if the
Agent deems it necessary, as to which the Borrower has not delivered to
the Agent a consent or sublicense agreement from such licensor in form
and substance acceptable to the Agent;
(j) that is acquired in connection with any acquisition to the
extent the Agent has not completed an audit of such Inventory with
results satisfactory to the Agent;
(k) that is MTBE Inventory to the extent it exceeds fifty
percent (50.0%) of all Eligible Inventory;
(l) that is not reflected in the details of a current
perpetual inventory report; and
(m) which the Agent determines in its reasonable credit
judgment is ineligible for any other reason.
If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of the Borrowing Base.
"Environmental Compliance Reserve" means any reserve which the Agent
establishes from time to time in its reasonable discretion after prior written
notice to the Borrower for amounts that are reasonably likely to be expended by
an Obligated Party in order for such Obligated Party and its operations and
property (a) to comply with any notice from a Governmental Authority asserting
material non-compliance with Environmental Laws or (b) to correct any such
material non- compliance identified in a report delivered to the Agent and the
Lenders pursuant to Section 7.7.
"Environmental Laws" means all federal, state, or local laws, statutes,
common law duties, rules, regulations, ordinances, and codes, together with all
administrative orders, directed duties, licenses, authorizations, and permits
of, and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety, and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority or any other Person for (a) any liability under Environmental Laws or
(b) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
"Equipment" has the meaning specified in the Security Agreements.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder, as amended from time to time and any
successor statute.
ANNEX A TO CREDIT AGREEMENT- Page 13
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with an Obligated Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan, (b) a withdrawal by an Obligated Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by an Obligated Party or
any ERISA Affiliate from a Multi-employer Plan or notification that a
Multi-employer Plan is in reorganization or insolvent, (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or the termination,
insolvency, or reorganization of a Multi-employer Plan, (e) the occurrence of an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multi-employer Plan, or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon an Obligated
Party or any ERISA Affiliate.
"ESOP" means the TPC Holding Corp. Employee Stock Ownership Plan.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and the
regulations promulgated thereunder.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1.00%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Bank on such day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" means, according to the context in which used,
the financial statements referred to in Section 5.2 and Section 6.5 or any other
financial statements required to be given to the Agent or the Lenders pursuant
to this Agreement.
ANNEX A TO CREDIT AGREEMENT- Page 14
"Fiscal Quarter" means one of the four three (3) calendar month
measurement periods in a Fiscal Year, with the first of such measurement periods
beginning on July 1 of each Fiscal Year and the last of such measurement periods
ending on June 30 of such Fiscal Year.
"Fiscal Year" means, with respect to any Obligated Party, such
Obligated Party's fiscal year for financial accounting purposes. The current
Fiscal Year of the Parent will end on June 30, 2003.
"Fixed Assets" means, with respect to each Obligated Party, the
Equipment and Real Estate of such Obligated Party.
"Fixed Charge Coverage Ratio" means, as of the end of any Fiscal
Quarter, determined for the preceding four Fiscal Quarters then ended, the ratio
of EBITDA to Fixed Charges.
"Fixed Charges" means, with respect to any fiscal period, without
duplication, the sum of (a) interest on Debt actually paid in cash during such
period, (b) federal, state, local, and foreign income taxes paid in cash net of
refunds and reimbursements, (c) Capital Expenditures made in cash, excluding any
Capital Expenditures financed with any Debt (other than the Revolving Loans)
permitted under this Agreement, net of up to $15,000,000 of cash received during
the term of this Agreement upon the disposal of any non-core assets (where such
disposal is for the specific purpose of replacing old capital assets with new
capital assets or purchasing new capital assets) which is not applied to the
repayment of any Debt other than the Revolving Loans, (d) scheduled principal
payments of Debt, and (e) any Distributions other than (i) Distributions made in
Capital Stock of the Person making such Distribution, and (ii) Distributions
made by the Borrower to the ESOP to the extent that net income for such period
was reduced for such ESOP Distributions.
"Foreign Plan" means any benefit plan established or maintained outside
of the U.S. which an Obligated Party maintains, sponsors, or to which such
Person has any obligation or liability and which provides or otherwise makes
available retirement or deferred benefits of any kind whatsoever to employees.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.
"General Intangibles" has the meaning specified in the Security
Agreements.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government, and
ANNEX A TO CREDIT AGREEMENT- Page 15
any corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing, and any department, agency,
board, commission, tribunal, committee, or instrumentality of any of the
foregoing.
"GP" means TPC Holding Corp., a Delaware corporation, and its
successors and assigns.
"Guarantor" means each Obligated Party and each other Person who
becomes a party to any Guaranty Agreement pursuant to the terms of this
Agreement, and "Guarantors" means two (2) or more of such Persons, collectively.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend, or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Guaranty Agreement" means, collectively and individually (as
applicable), the Parent Guaranty and the Subsidiary Guaranty.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into, which provide for an interest
rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging a Person's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security, or currency valuations, or
commodity prices.
"Indemnified Liabilities" has the meaning specified in Section
13.11(a).
"Indemnified Person" has the meaning specified in Section 13.11(a).
"Indentures" means (a) the Indenture dated July 1, 1996 among the
Parent, the GP, and Fleet National Bank relating to the Parent's Senior Discount
Notes due 2007, as such Indenture may be amended, restated, or otherwise
modified from time to time and (b) the Senior Subordinated Note Indenture.
"Instruments" has the meaning specified in the Security Agreements.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to the Parent or a Subsidiary of the Parent from, which
are due from the Parent or a Subsidiary of the Parent to,
ANNEX A TO CREDIT AGREEMENT- Page 16
or which otherwise arise from any transaction by the Parent or a Subsidiary of
the Parent with, any Affiliate of the Parent or a Subsidiary of the Parent.
"Intercreditor Agreement" means the certain Intercreditor Agreement,
dated as of the Closing Date, among the Obligated Parties, the Agent, and Credit
Suisse First Boston, as such agreement may be amended, restated, or otherwise
modified from time to time.
"Interest Expense" means, with respect to any Person for any period,
the interest expense of such Person for such period, determined in accordance
with GAAP.
"Interest Period" means, with respect to any LIBOR Rate Revolving Loan,
the period commencing on the Funding Date of such Revolving Loan or on the
Continuation/Conversion Date on which such Revolving Loan is continued as or
converted into a LIBOR Rate Revolving Loan, and ending on the date one, two, or
three months thereafter as selected by the Borrower in its Notice of Borrowing
or Notice of Continuation/Conversion, provided that:
(a) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Revolving
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
and
(c) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.
"Inventory" has the meaning specified in the Security Agreements.
"Inventory Advance Rate" means, with respect to Eligible Inventory,
fifty percent (50.0%).
"Inventory Report" means a schedule, in form satisfactory to Agent,
detailing the Borrower's Inventory as of a specified date, (a) presented, with
respect to each location, by product type, volume on hand, cost, and current
market price and (b) reconciled to the most recent Borrowing Base Certificate
delivered by the Borrower as of such date.
"Investment Property" has the meaning specified in the Security
Agreements.
ANNEX A TO CREDIT AGREEMENT- Page 17
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Issuer" has the meaning specified in Section 6.26(b).
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 5.2(e), the
projections of the Obligated Parties' financial condition, results of
operations, and cash flows, in each case for the period commencing on July 1,
2002 and ending on June 30, 2005, and delivered to the Agent prior to the
Closing Date; and (b) thereafter, the projections most recently received by the
Agent pursuant to Section 5.2(e).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding;
provided that no such Agent Advance or Non-Ratable Loan shall be taken into
account in determining any Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in Section 1.3(a).
"Letter of Credit Fee" has the meaning specified in Section 2.5.
"Letter of Credit Fee Percentage" means with respect to any Letter of
Credit or any Credit Support issued hereunder, on any date of determination, a
per annum percentage equal to the Applicable Margin for LIBOR Rate Revolving
Loans as of such date of determination.
"Letter of Credit Issuer" means the Bank, any Affiliate of the Bank, or
any other financial institution that issues any Letter of Credit or Credit
Support pursuant to this Agreement.
"Letter of Credit Subfacility" means $20,000,000.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Revolving Loans, the rate of interest per annum determined pursuant to the
following formula:
LIBOR Rate = Offshore Base Rate
-----------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1.00%) in
effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement
(including any emergency, supplemental, or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"). The
LIBOR Rate for each outstanding LIBOR Rate Revolving Loan
shall be
ANNEX A TO CREDIT AGREEMENT- Page 18
adjusted automatically as of the effective date of any change
in the Eurodollar Reserve Percentage.
"Offshore Base Rate" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by the Agent as the rate
of interest at which Dollar deposits in the approximate amount
of the LIBOR Rate Revolving Loan comprising part of such
Borrowing would be offered by the Bank's London Branch to
major banks in the offshore Dollar market at their request at
or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period.
"LIBOR Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means (a) 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 including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment, or bailment for security purposes, (b) to the extent not included
under clause (a) preceding, any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease, or other title exception
or encumbrance affecting property, and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan Documents" means, collectively, this Agreement, the Revolving
Loan Notes, the Parent Security Agreement, the Borrower Security Agreement, the
Subsidiary Security Agreement (if any), the Mortgages, the Copyright Security
Agreement (if any), the Patent Security Agreement (if any), the Trademark
Security Agreement (if any), the Parent Guaranty, the Subsidiary Guaranty (if
any), the Intercreditor Agreement, agreements providing for Bank Products, and
any other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing, or otherwise relating to the Obligations,
the Collateral, or any other aspect of the transactions contemplated by this
Agreement.
ANNEX A TO CREDIT AGREEMENT- Page 19
"LP" means Petrochemical Partnership Holdings, Inc., a Delaware
corporation, and its successors and assigns.
"Majority Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than fifty percent (50.0%) of the Commitments.
"Management Group" means, as of any date of determination, the board of
directors, board of managers, or similar constituency having management
authority in respect of an entity under any Requirement of Law.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U, or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon the value, condition, use, or availability of the
Collateral or upon the operations, business, properties, or condition (financial
or otherwise) of the Borrower, individually, or the Obligated Parties, taken as
a whole, (b) a material impairment of the ability of the Borrower, individually,
or the Obligated Parties, taken as a whole, to perform under any Loan Document
to which any Obligated Party is a party, as applicable, or (c) a material
adverse effect upon the legality, validity, binding effect, or enforceability
against the Borrower, individually, or the Obligated Parties, taken as a whole,
of any Loan Document.
"Maximum Inventory Loan Amount" means $30,000,000.
"Maximum Rate" means, at any time, the maximum rate of interest the
Lenders may lawfully contract for, charge, or receive in respect of the
Obligations as allowed by any Requirement of Law. For purposes of determining
the Maximum Rate under the Requirements of Law of the State of Texas, the
applicable rate ceiling shall be (a) the "weekly ceiling" described in and
computed in accordance with the provisions of Section 303.003 of the Texas
Finance Code, as amended or (b) if the parties subsequently contract as allowed
by any Requirement of Law, the "quarterly ceiling" or the "annualized ceiling"
computed pursuant to Section 303.008 of the Texas Finance Code, as amended;
provided, however, that at any time the "weekly ceiling", the "quarterly
ceiling", or the "annualized ceiling" shall be less than eighteen percent
(18.0%) per annum or more than twenty-four percent (24.0%) per annum, the
provisions of Section 303.009(a) and Section 303.009(b) of the Texas Finance
Code, as amended, shall control for purposes of such determination, as
applicable.
"Maximum Revolver Amount" means $60,000,000.
"Mortgage" means any mortgage, deed of trust, deed to secure debt,
assignment, or other instrument executed and delivered by any Obligated Party to
or for the benefit of the Agent by which the Agent, for the benefit of the Agent
and the Lenders, acquires a Lien on any Real Estate or a collateral assignment
of such Obligated Party's interest under a lease of Real Estate, and any
amendment, modification, or supplement thereto.
ANNEX A TO CREDIT AGREEMENT- Page 20
"MTBE" means methyl tertiary-butyl ether or similar chemical compound.
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current
calendar year or the immediately preceding six (6) calendar years contributed to
by an Obligated Party or any ERISA Affiliate.
"Negative Pledge" means any agreement, contract, or other arrangement
whereby any Obligated Party is prohibited from, or would otherwise be in default
as a result of, creating, assuming, incurring, or suffering to exist, directly
or indirectly, any Lien on any of its assets in favor of the Agent under the
Loan Documents.
"Net Amount of Eligible Accounts" means, at any time, the gross amount
of Eligible Accounts less sales, excise, or similar taxes, and less returns,
discounts, claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes, and other defenses of any nature at any time issued,
owed, or granted, plus, as of any date of calculation of the Borrowing Base
other than a date for which such calculation is based on a Borrowing Base
Certificate for the last reporting period of any calendar month, the amount of
Accounts with respect to which the goods giving rise to such Accounts have been
shipped but invoices therefor have not been issued and which otherwise would
constitute Eligible Accounts, provided that all such Accounts shall be included
subject to a full review (including with respect to pricing and quantity of
goods shipped which give rise to such unbilled Accounts) by the Agent.
"Net Excess Availability" means, on any day, (a) the amount calculated
under clause (b)(i) and clause (b)(ii) of the definition of Borrowing Base,
minus (b) Reserves other than Reserves calculated under clause (k) of the
definition of Reserves, minus (c) the Aggregate Revolver Outstandings, in each
case determined as of such day.
"Net Income" means, as applied to any Person (the "subject Person"),
the net income (or net loss) of the subject Person for the period in question
after giving effect to deduction of or provision for all operating expenses, all
taxes and reserves (including, without limitation, reserves for deferred taxes),
and all other proper deductions, all determined in accordance with GAAP.
"Newco" means a direct, Wholly-Owned Subsidiary of the Parent organized
by the Parent after the Closing Date for the purpose of conducting or investing
in or acquiring a business in the chemical industry which is reasonably related
to, but not competitive with, the business of the Borrower.
"Non-Ratable Loan" and "Non-Ratable Loans" have the respective meanings
specified in Section 1.2(i).
"Notice of Borrowing" has the meaning specified in Section 1.2(c).
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(b).
ANNEX A TO CREDIT AGREEMENT- Page 21
"Obligated Party" means each of the Borrower, the Parent, the GP, and
the LP, and any other Guarantor now or hereafter existing, individually, and
"Obligated Parties" means two (2) or more of such Persons, collectively.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Obligated
Parties, or any of them, to the Agent and/or any Lender, arising under or
pursuant to this Agreement or any of the other Loan Documents, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification, or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees, and any other sums chargeable to any Obligated
Party hereunder or under any of the other Loan Documents. "Obligations"
includes, without limitation, (a) all debts, liabilities, and obligations now or
hereafter arising from or in connection with the Letters of Credit and Credit
Support and (b) all debts, liabilities, and obligations now or hereafter arising
from or in connection with Bank Products.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges, or similar levies (excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Lender's or the Agent's
gross or net income) which arise from any payment made hereunder or from the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Parent" means Texas Petrochemical Holdings, Inc., a Delaware
corporation, and its successors and assigns.
"Parent Guaranty" means an agreement of Guaranty executed by the Parent
pursuant to which the Parent guarantees the Obligations, as such agreement may
be amended, restated, or otherwise modified from time to time.
"Parent Security Agreement" means the Security Agreement, dated
concurrently herewith, between the Parent and the Agent, for the benefit of the
Agent and the Lenders, as such agreement may be amended, restated, or otherwise
modified from time to time.
"Participant" means any commercial bank, financial institution, or
other Person not an Affiliate of the Obligated Parties who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under this Agreement, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.
ANNEX A TO CREDIT AGREEMENT- Page 22
"Patent Security Agreement" means any Patent Security Agreement
executed and delivered by an Obligated Party to the Agent, for the benefit of
the Agent and the Lenders, to evidence and perfect the Agent's Liens in such
Obligated Party's present and future patents and related licenses and rights, as
such agreement may be amended, restated, or otherwise modified from time to
time.
"Payment Account" means each bank account established pursuant to the
Parent Security Agreement, the Borrower Security Agreement, and the Subsidiary
Security Agreement (if any), to which the funds of an Obligated Party, as
applicable, (including proceeds of Accounts and other Collateral) are deposited
or credited, and which is maintained in the name of the Agent, an Obligated
Party, or any of them, as the Agent may determine, on terms acceptable to the
Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PEMEX Accounts" means Accounts owing to the Borrower on which the
obligor is Petroleos Mexicanos or any of its Subsidiaries.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Obligated Party or any ERISA
Affiliate sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a Multi-employer Plan has made
contributions at any time during the immediately preceding six (6) plan years.
"Permitted Liens" means:
(a) the Agent's Liens;
(b) Liens (i) which are described on Schedule A-2 on the
Closing Date, and Liens resulting from the refinancing of the related
Debt, provided that such refinancing is on the same or substantially
similar terms, the Debt secured thereby shall not be increased, and the
Liens shall not cover any additional property and (ii) other Liens
consented to in writing by the Required Lenders;
(c) Liens for taxes, fees, assessments, or other charges of a
Governmental Authority which are not delinquent or statutory Liens for
taxes, fees, assessments, or other charges of a Governmental Authority;
provided that the payment of such taxes which are due and payable is
being contested in good faith and by appropriate proceedings diligently
pursued and as to which adequate financial reserves have been
established in accordance with GAAP on the applicable Obligated Party's
books and records and a stay of enforcement of any such Lien is in
effect;
(d) Liens consisting of deposits made in the ordinary course
of business in connection with, or to secure payment of, obligations
under worker's compensation, unemployment insurance, social security,
and other similar laws, or to secure the performance of bids, tenders,
or contracts (other than for the repayment of Debt) or to secure
indemnity, performance, or other similar bonds for the performance of
bids, tenders, or contracts (other than for the repayment of Debt) or
to secure statutory obligations (other than liens arising under ERISA
or Environmental Liens) or surety or appeal bonds, or to secure
indemnity, performance, or other similar bonds;
(e) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords, and other similar
Persons, provided that if any such Lien arises from the
ANNEX A TO CREDIT AGREEMENT- Page 23
nonpayment of such claims or demands when due, such claims or demands
do not exceed $1,000,000 in the aggregate;
(f) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way,
covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate, including items that would be
disclosed by a current and accurate survey of the Real Estate, provided
that any of the foregoing Liens in this clause (f) do not in the
aggregate materially detract from the value of such Real Estate or
materially interfere with its use in the ordinary conduct of an
Obligated Party's business;
(g) Liens which constitute purchase money Liens and secure
Debt permitted under clause (c) of Section 7.13;
(h) Liens securing the Term Loan Facility and subject to the
Intercreditor Agreement;
(i) Liens arising from judgments and attachments in connection
with court proceedings, provided that the attachment or enforcement of
such Liens would not result in an Event of Default hereunder and such
Liens are being contested in good faith by appropriate proceedings
diligently pursued, adequate financial reserves have been established
on the applicable Obligated Party's books and records in accordance
with GAAP, no material property is subject to a material risk of loss
or forfeiture, to the extent the claims in respect of such Liens exceed
$2,000,000 such claims are fully covered by insurance (subject to
ordinary and customary deductibles), and a stay of execution pending
appeal or proceeding for review is in effect;
(j) the rights of lessors and lessees under leases and the
rights of licensors and licensees under licenses executed in the
ordinary course of business; and
(k) statutory right of setoff arising in the ordinary course
of business;
provided that (i) none of such Liens listed in clause (b) through clause (h)
preceding may attach to any Accounts, (ii) none of such Liens listed in clause
(b) through clause (h) preceding, other than such Liens of a type and to the
extent provided by clause (e) preceding, may attach to any Inventory owned by
the Borrower, and (iii) none of such Liens listed in clause (e) preceding shall
be a "Permitted Lien" to the extent that any such Lien attaches to any Inventory
owned by an Obligated Party and the aggregate amount of claims or demands under
clause (e) against all Obligated Parties exceeds $1,000,000.
"Permitted Other Investments" means (a) investments by the Obligated
Parties in Subsidiaries which are not Obligated Parties (the "subject Persons"),
not in excess of $10,000,000 in the aggregate during the term of this Agreement,
consisting of (i) payments by an Obligated Party under Letters of Credit issued
under this Agreement in support of obligations of the subject Persons, (ii)
loans, advances, and equity contributions, and (iii) amounts paid under
Guaranties of Debt and other obligations of the subject Persons and (b)
investments by the Parent in Newco not in excess of $20,000,000; provided that
all proceeds invested by the Parent in Newco shall arise from the sale of
Capital Stock of the Parent.
ANNEX A TO CREDIT AGREEMENT- Page 24
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Obligated Party sponsors or maintains or to which any Obligated
Party makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Proprietary Rights" has the meaning specified in the Security
Agreements.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed
as a percentage), the numerator of which is the amount of such Lender's
Commitment and the denominator of which is the sum of the amounts of all of the
Lenders' Commitments, or if no Commitments are outstanding, a fraction
(expressed as a percentage), the numerator of which is the amount of Obligations
owed to such Lender and the denominator of which is the aggregate amount of the
Obligations owed to the Lenders, in each case giving effect to a Lender's
participation in Non-Ratable Loans and Agent Advances.
"Real Estate" means, with respect to any Person, all of such Person's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds, and future interests, together with all of
such Person's now or hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto, and the easements appurtenant thereto.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater, or Real Estate or other property.
"Report" has the meaning specified in Section 12.18(a).
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than sixty-five percent (65.0%) of the Commitments.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserves" means reserves that limit the availability of credit
hereunder, consisting of reserves against Availability, Eligible Accounts, or
Eligible Inventory, established by the Agent from time to time in the Agent's
reasonable credit judgment. Without limiting the generality of the foregoing,
the following
ANNEX A TO CREDIT AGREEMENT- Page 25
reserves shall be deemed to be a reasonable exercise of the Agent's credit
judgment: (a) Bank Product Reserves; (b) reserves for accrued, unpaid interest
on the Obligations; (c) reserves for rent, charges or other amounts due or to
become due with respect to locations where Inventory is in a public warehouse or
is in possession of a bailee or in a facility leased by the Borrower or in
railcars not owned by the Borrower or is subject to statutory or contractual
landlord liens (limited to the equivalent of three months' rent or other charges
with respect to each such location); (d) reserves for Inventory shrinkage; (e)
Environmental Compliance Reserves; (f) reserves for customs charges; (g)
reserves for dilution of Accounts; (h) reserves of up to three (3) months of
charges for warehousemen's or bailees' charges; (i) reserves for taxes, fees,
assessments, and other governmental charges which are due and unpaid; (j) mark
to market reserves for Inventory; and (k) $5,000,000.
"Responsible Officer" means, with respect to any Obligated Party, the
chief executive officer or the president, or any other officer having
substantially the same authority and responsibility, or, with respect to
compliance with financial covenants, the preparation of Borrowing Base
Certificates, and certificates with respect to determination of the Applicable
Margin the chief financial officer or the treasurer of such Obligated Party, or
any other officer having substantially the same authority and responsibility.
"Restricted Investment" means, with respect to any Obligated Party, any
acquisition of property by such Obligated Party in exchange for cash or other
property, whether in the form of an acquisition of Capital Stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other assets
or property, or a loan, advance, capital contribution, or subscription (each of
the foregoing an "Investment"), except (a) (i) Investments in the Borrower, (ii)
Investments owned by the Obligated Parties on the Closing Date as set forth on
Schedule A-3, (iii) loans by the Borrower to the ESOP to purchase Capital Stock
of the Parent in the aggregate at any time outstanding not in excess of
$10,000,000, and (iv) other Investments in an amount not to exceed $500,000
outstanding at any time, and (b) the following if made at a time when no Default
or Event of Default exists or would result therefrom: (i) acquisitions of
equipment to be used in the business of such Obligated Party; (ii) acquisitions
of Inventory in the ordinary course of business of such Obligated Party; (iii)
acquisitions of other current assets acquired in the ordinary course of business
of such Obligated Party; (iv) Investments in direct obligations of the U.S., or
any agency thereof, or obligations guaranteed by the U.S., provided that such
obligations mature within one year from the date of acquisition thereof; (v)
Investments in certificates of deposit maturing within one year from the date of
investment, bankers' acceptances, Eurodollar bank deposits, or overnight bank
deposits, in each case issued by, created by, or with a bank or trust company
organized under the laws of the U.S. or any state thereof having capital and
surplus aggregating at least $100,000,000; (vi) Investments in commercial paper
given a rating of "A2" or better by Standard & Poor's Corporation or "P2" or
better by Moody's Investors Service, Inc. and maturing not more than ninety (90)
days from the date of creation thereof; (vii) Investments in Hedge Agreements
entered into for the purpose of limiting the amount of interest payable under
this Agreement; (viii) Investments in mutual funds substantially all of the
assets of which are comprised of securities of the types described in clauses
(iv), (v), and (vi) preceding; (ix) loans to executive officers, non-employee
directors, and employees of the Obligated Parties; provided that (A) at the time
of such loan no Default or Event of Default shall exist or result therefrom and
(B) the aggregate amount of such loans made by the Obligated Parties and
outstanding at any one time shall not exceed $300,000,
ANNEX A TO CREDIT AGREEMENT- Page 26
calculated net of any bad debt reserves; (x) existing Investments listed on
Schedule A-3); and (xi) Permitted Other Investments.
"Revolving Loan Note" and "Revolving Loan Notes" have the meanings
specified in Section 1.2(b).
"Revolving Loans" has the meaning specified in Section 1.2 and includes
each Agent Advance and Non-Ratable Loan.
"Security Agreements" means the Parent Security Agreement, the Borrower
Security Agreement, and the Subsidiary Security Agreement (if any), collectively
and individually.
"Senior Subordinated Notes" means the notes issued pursuant to the
Senior Subordinated Note Indenture.
"Senior Subordinated Note Indenture" means the Indenture dated as of
March 1, 1997, between the Borrower (as successor to Texas Petrochemicals
Corporation) and Fleet National Bank, Trustee, as the same may have been
supplemented, amended, modified, or otherwise altered on or prior to the Closing
Date and as such agreement may hereafter be supplemented, amended, modified, or
otherwise altered from time to time.
"Settlement" and "Settlement Date" have the meanings specified in
Section 12.15(a)(ii).
"Solvent" means, when used with respect to any Person, that at the time
of determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent
liabilities);
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured;
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means November 25, 2005.
ANNEX A TO CREDIT AGREEMENT- Page 27
"Subordinated Debt" means Debt of an Obligated Party which has
maturities and terms, and which is subordinated to payment of the Obligations
pursuant to an agreement in form and substance acceptable to the Agent, and any
renewals, modifications, or amendments thereto which are approved by the Agent
in writing, and includes, without limitation, the Senior Subordinated Notes.
"Subsidiary" means, with respect to any Person (the "subject Person"),
any corporation, association, partnership, limited liability company, joint
venture, or other business entity of which more than fifty percent (50.0%) of
the voting Capital Stock or other Capital Stock, is owned or controlled directly
or indirectly by the subject Person, or one or more of the Subsidiaries of the
subject Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of an
Obligated Party.
"Subsidiary Guaranty" means any agreement of Guaranty, executed by any
Subsidiary of the Borrower pursuant to which such Subsidiary guarantees the
Obligations, or any portion thereof, as such agreement may be amended, restated,
or otherwise modified from time to time.
"Subsidiary Security Agreement" means any Security Agreement between
one or more Subsidiaries of the Borrower and the Agent, for the benefit of the
Agent and the Lenders, as such agreement may be amended, restated, or otherwise
modified from time to time.
"Supporting Letter of Credit" has the meaning specified in Section
1.3(g).
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Agent and each Lender, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
such Lender's gross or net income in the jurisdiction (whether federal, state,
or local and including any political subdivision thereof) under the laws of
which the Agent or such Lender, as the case may be, is organized or maintains a
lending office.
"Term Lender Priority Collateral" has the meaning specified in the
Intercreditor Agreement.
"Term Loan Facility" means the certain Credit Agreement, dated
concurrently herewith, among the Obligated Parties, the financial institutions
party thereto, Regiment Capital LLC, as documentation agent for such financial
institutions, and Credit Suisse First Boston, as administrative agent for such
financial institutions, as such agreement may be amended, restated, or otherwise
modified from time to time.
"Term Loan Obligations" means Debt of the Borrower owing under the Term
Loan Facility.
"Termination Date" means the earliest to occur of (a) the Stated
Termination Date, (b) the date the Total Facility is terminated (i) by the
Borrower pursuant to Section 3.2 or (ii) pursuant to Section 9.2, and (c) the
date this Agreement is otherwise terminated for any reason whatsoever pursuant
to the terms of this Agreement.
ANNEX A TO CREDIT AGREEMENT- Page 28
"TBC" means Texas Butylene Chemicals Corp., a Texas corporation.
"TOD" means Texas Olefins Domestic International Sales Corporation, a
Texas corporation.
"Total Facility" has the meaning specified in Section 1.1.
"Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by an Obligated Party to the Agent, for the benefit of
the Agent and the Lenders, to evidence and perfect the Agent's Liens in such
Obligated Party's present and future trademarks and related licenses and rights,
as such agreement may be amended, restated, or otherwise modified from time to
time.
"Tradax Account" means an Account on which the Account Debtor is Tradax
Energy, Inc.
"UCC" means the Uniform Commercial Code (or any successor statute), as
in effect from time to time, of the State of Texas or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection of security interests; provided that to the extent that
the UCC is used to define any term herein or in any other documents and such
term is defined differently in different Articles or Divisions of the UCC, the
definition of such term as contained in Article or Division 9 shall govern.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Unused Letter of Credit Subfacility" means an amount equal to the
Letter of Credit Subfacility minus the sum of (a) the aggregate undrawn amount
of all outstanding Letters of Credit and Credit Support, plus, without
duplication, (b) the aggregate unpaid reimbursement obligations with respect to
all Letters of Credit and Credit Support.
"Unused Line Fee" has the meaning specified in Section 2.4.
"U.S." means the United States of America.
"Wholly-Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
ANNEX A TO CREDIT AGREEMENT- Page 29
ACCOUNTING TERMS:
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given to such term in
accordance with GAAP, and all financial computations in this Agreement shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
INTERPRETIVE PROVISIONS:
Wherever used in this Agreement,
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms. Terms used herein
that are defined in the UCC and are not otherwise defined herein shall
have the meanings specified therefor in the UCC.
(b) The words "hereof," "herein," "hereunder," and similar
words refer to this Agreement as a whole and not to any particular
provision of this Agreement. Section, Schedule, and Exhibit references
are to this Agreement unless otherwise specified. The term "documents"
includes any and all instruments, documents, agreements, certificates,
indentures, notices, and other writings, however evidenced. The term
"including" is not limiting and means "including, without limitation."
In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including," the words
"to" and "until" each mean "to but excluding" and the word "through"
means "to and including." The word "or" is not exclusive. The words
"hereof," "herein," "hereunder" and similar words refer to the
Agreement as a whole and not to any particular provision of the
Agreement, and Subsection, Section, Schedule, and Exhibit references
are to this Agreement unless otherwise specified.
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments,
restatements, and other modifications thereto, but only to the extent
such amendments, restatements, and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to
any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing, or interpreting the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
(e) This Agreement and the other Loan Documents may use
several different limitations, tests, or measurements to regulate the
same or similar matters. All such limitations,
ANNEX A TO CREDIT AGREEMENT- Page 30
tests, and measurements are cumulative and shall each be performed in
accordance with their terms.
(f) For purposes of Section 9.1, a breach of a financial
covenant contained in Section 7.22, Section 7.23, and Section 7.31
shall be deemed to have occurred as of any date of determination
thereof by the Agent or as of the last day of any specified measuring
period, regardless of when the Financial Statements reflecting such
breach are delivered to the Agent and the Lenders.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent,
each Lender, and the Obligated Parties and are the products of all
parties. Accordingly, this Agreement and the other Loan Documents shall
not be construed against the Agent, the Lender, or the Obligated
Parties merely because of their respective involvement in their
preparation.
ANNEX A TO CREDIT AGREEMENT- Page 31