1
EXHIBIT 10.39
INTERCREDITOR AGREEMENT
2
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - PAYMENTS OF LIABILITIES . . . . . . . . . . . . . . . . . 8
2.1 Payments Prior to Significant Event . . . . . . . . . 8
2.2 "True Up" Participation Purchase Between Banks
and Noteholders to Maintain Original Principal
Ratio Following Significant Event . . . . . . . . . . 9
2.3 Payment on or After Significant Event . . . . . . . . 9
2.4 Relative Rights . . . . . . . . . . . . . . . . . . . 9
2.5 Avoided Payments . . . . . . . . . . . . . . . . . . . 9
2.6 Obligations Several . . . . . . . . . . . . . . . . . 10
2.7 Participation Terms . . . . . . . . . . . . . . . . . 10
ARTICLE III - AMENDMENT AND ACCELERATION OF LENDING
AGREEMENTS . . . . . . . . . . . . . . . . . . . . 11
3.1 Lending Agreements . . . . . . . . . . . . . . . . . . 11
3.2 Credit Agreement . . . . . . . . . . . . . . . . . . . 11
3.3 Note Agreements . . . . . . . . . . . . . . . . . . . 11
3.4 ABN Amendment and ABN Guaranty . . . . . . . . . . . . 12
3.5 Acceleration . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV - REPRESENTATIONS, COVENANTS AND RIGHTS OF LENDERS . . . . . 13
4.1 Non-Reliance . . . . . . . . . . . . . . . . . . . . . 13
4.2 Representations and Warranties . . . . . . . . . . . . 13
4.3 Covenants of Creditors . . . . . . . . . . . . . . . . 13
4.4 Headings . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Plural Terms . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V - CONDITIONS TO EFFECTIVENESS;
DELIVERY OF DOCUMENTS . . . . . . . . . . . . . . . 15
Table of Contents
Page 1
3
5.1 Conditions to Effectiveness . . . . . . . . . . . . . 15
ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Waivers; Amendments . . . . . . . . . . . . . . . . . 16
6.3 Successors and Assigns . . . . . . . . . . . . . . . . 16
6.4 No Third Party Rights . . . . . . . . . . . . . . . . 17
6.5 Partial Invalidity . . . . . . . . . . . . . . . . . . 18
6.6 Equitable Remedies . . . . . . . . . . . . . . . . . . 18
6.7 Jury Trial . . . . . . . . . . . . . . . . . . . . . . 18
6.8 Counterparts . . . . . . . . . . . . . . . . . . . . . 18
6.9 Governing Law . . . . . . . . . . . . . . . . . . . . 18
6.10 Construction . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII - COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . . 18
7.1 Designation of Agent . . . . . . . . . . . . . . . . . 18
7.2 Duties of Collateral Agent . . . . . . . . . . . . . . 19
7.3 Delegation Duties, Etc . . . . . . . . . . . . . . . . 21
7.4 Indemnification . . . . . . . . . . . . . . . . . . . 22
7.5 Exculpatory Provisions . . . . . . . . . . . . . . . . 22
7.6 Knowledge of Default . . . . . . . . . . . . . . . . . 23
7.7 Collateral Agent in its Individual Capacity . . . . . 23
7.8 Resignation or Removal of Collateral Agent . . . . . . 24
7.9 Creditors as Owners . . . . . . . . . . . . . . . . . 24
7.10 Compensation . . . . . . . . . . . . . . . . . . . . . 24
EXHIBITS/SCHEDULES:
Exhibit A - Security Agreement
Exhibit B - Deeds of Trust/Mortgages
Exhibit C - Participation Certificate
Exhibit D - Notice of Assignment
Schedule 1 - Address for Notices
CONSENTS:
Consent and Agreement of the Company and its Affiliates
Table of Contents
Page 2
4
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this "Agreement") dated as of
November 12, 1996 is entered into by and among:
(1) Principal Mutual Life Insurance Company, TMG Life
Insurance Company, Berkshire Life Insurance Company and The Security
Mutual Life Insurance Company (individually, a "Noteholder" and
collectively, the "Noteholders") ;
(2) Texas Commerce Bank National Association ("TCB") and
Bank One, Texas, N.A. (individually, a "Bank" and collectively, the
"Banks"); and
(3) ABN AMRO Bank, N.V., a Netherlands chartered Bank
acting through its Houston agency ("ABN").
RECITALS
A. Pursuant to a Credit Agreement ($35,000,000 Revolving Credit
Loan) dated as of May 15, 1995, as amended by Amendments to Credit Agreement
effective as of July 19, 1995, and as of August 14, 1996 (as amended, the
"Prior Credit Agreement") the Banks have advanced funds to and issued certain
letters of credit (the "Banks' L/C's") on behalf of Serv-Tech, Inc. (the
"Company"). The face amount of the Banks' L/C's plus principal currently
advanced under the Credit Agreement is $19,454,067. The Company's obligations
under the Credit Agreement are guaranteed by Affiliates of the Company
identified in the Credit Agreement. The Company also is obligated to reimburse
TCB for certain liabilities incurred by the Company from time to time through
its use of cash management services provided by TCB, including overdrafts by
the Company and amounts of automated clearing house funds that may erroneously
be credited to the Company's account with TCB (to the maximum extent of
$2,000,000.00, the "Cash Management Liabilities").
B. Pursuant to a Note Purchase Agreement dated as of June 1, 1993,
as amended by the First through Sixth Amendment to Note Purchase Agreement
effective as of October 1, 1994, April 1, 1995, October 1, 1994, January 1,
1996, April 1, 1996 and July 1, 1996, respectively (as amended, the "Note
Purchase Agreement"), the Noteholders have purchased obligations (evidenced by
notes issued pursuant to the Note Purchase Agreement, "Senior Notes") of the
Company in an aggregate principal amount equal to $15,000,000.
C. ABN has issued four (4) Letters of Credit which are unexpired as
of the date hereof in the aggregate face amount of approximately $15,195,369 as
of September 30, 1996 (such Letters of Credit, as amended from time to time,
"ABN Letters of Credit"). The ABN Letters of Credit are issued for the account
of F. C.
5
Schaffer & Associates, Inc. ("FCS"). FCS is obligated to repay sums that ABN
may advance under the Letters of Credit pursuant to the terms of a Continuing
Reimbursement Agreement dated as of November 1, 1994, as amended by First and
Second Amendments dated July 1, 1995 and April 30, 1996, respectively ("Prior
Reimbursement Agreement"). ABN has also issued a Letter of Credit, as amended
from time to time, for the benefit of FCS for the account of Finchaa Sugar
Factory ("Revolving L/C"). ABN is to be reimbursed for advances made on the
Revolving L/C by The African Development Bank. Pursuant to the terms of the
Prior Reimbursement Agreement, FCS is obligated to pay interest on the advances
made by ABN on the Revolving L/C until ABN is reimbursed by The African
Development Bank. The obligations of FCS under the Prior Reimbursement
Agreement are guaranteed by the Company and its Affiliates under its Guaranty
dated as of November 1, 1994 ("Prior ABN Guaranty").
D. The Company under each of the Prior Credit Agreement, the Note
Purchase Agreement and the Prior ABN Guaranty and FCS under the Prior
Reimbursement Agreement has requested that the respective documents be amended
as set forth in the First Amended and Restated Credit Agreement (the "Credit
Agreement"), the Note Restructuring Amendment, the ABN Amendment, and the ABN
Guaranty (all as defined below) (collectively, the "Amendments").
E. As a condition to execution and delivery of the Amendments, each
of the Banks, Noteholders and ABN are requiring the execution and delivery of
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:
"ABN" shall have the meaning assigned to same in the first
paragraph of this Agreement.
"ABN Amendment" shall mean that certain Amended and Restated
Continuing Reimbursement Agreement of even date herewith, executed by ABN and
FCS, as it may be amended from time to time.
-2-
6
"ABN Guaranty" shall mean the Amended and Restated Guaranty of
the Company and the Affiliates named therein of even date herewith as it may be
amended from time to time.
"ABN Letters of Credit" shall have the meaning assigned to same
in Recital C above.
"ABN Liabilities" shall mean all sums advanced by ABN on the ABN
Letters of Credit and not yet repaid by FCS, the Company or any of their
Affiliates, to ABN under the ABN Amendment or the ABN Guaranty and all accrued
but unpaid interest, fees, charges, and rights to reimbursement for costs due
under the ABN Amendment or the ABN Guaranty.
"Affiliate" shall mean, with respect to any Person, another
Person which controls, is controlled by, or is under common control with, such
Person.
"Agent Bank" shall mean Texas Commerce Bank National Association
as agent under the Credit Agreement and its successors and assigns.
"Amendments" shall have the meaning assigned to same in Recital D
above.
"Assignee Creditor" shall have the meaning assigned to same in
Section 6.3(b).
"Assignment" shall have the meaning assigned to same in Section
6.3(b).
"Assignor Creditor" shall have the meaning assigned to same in
Section 6.3(b).
"Available Proceeds" shall mean all payments received by any
Creditor from and after the date of the occurrence of a Significant Event
including, without limitation, (i) any payment received from or on account of
any Obligor, (ii) any payment received as a result of the exercise of any right
of setoff or rights under any banker's or other lien or counterclaim, or any
exercise of rights under a theory of trust or constructive trust or other
equitable, common law, statutory, or other legal rights, or (iii) any payment
received as a result of the exercise of any right or remedy under any Lending
Agreement or any agreement, document or instrument delivered in connection with
any Lending Agreement, in each case, irrespective of whether such proceeds or
payments are received before or after the commencement of any bankruptcy or
other similar proceeding by or against the Company or any of its Affiliates.
"Avoided Payment" shall mean, any amounts received by any
Creditor in respect of any portion of the Liabilities, which, in each case, are
subsequently avoided or otherwise required to be returned to any Obligor or its
representative, trustee,
-3-
7
receiver, or successor in interest, whether by court order, settlement or
otherwise.
"Bank" or "Banks" shall have the meaning assigned to same in the
first paragraph of this Agreement.
"Banks' L/C's" shall have the meaning assigned to it in Recital A
above.
"Business Day" shall mean any day which is not a Saturday or
Sunday or a day on which commercial banks are authorized not to do business or
required to close in Houston, Texas.
"Cash Collateral Account(s)" shall mean interest-bearing accounts
established by the Collateral Agent for funds held to secure the Letter of
Credit Obligations. Funds in the Cash Collateral Account(s) shall be federally
insured or invested in United States Treasury obligations either directly or by
purchase of an interest in funds which invest in such Treasury obligations.
"Cash Management Liabilities" shall have the meaning assigned to
same in Recital A above.
"Closing Date" shall mean the date on which the last of the Note
Restructuring Amendment, Senior Note Guaranty, the Credit Agreement, the ABN
Amendment and the ABN Guaranty becomes effective.
"Collateral" shall mean all or substantially all of the assets of
the Company and its Affiliates which shall secure all of the Liabilities.
"Collateral Agent" shall mean Texas Commerce Bank, National
Association, as agent for the parties to this Agreement under the terms and
conditions set forth in Article VII below.
"Company" shall have the meaning assigned to same in Recital A
above.
"Credit Agreement" shall mean that certain First Amended and
Restated Credit Agreement of even date herewith executed by the Banks, the
Company and certain Affiliates of the Company as Guarantors as it may be
amended from time to time.
"Credit Agreement Liabilities" shall mean all obligations of the
Company and its Affiliates, as defined in the Credit Agreement or any document
executed in connection therewith, including obligations related to the Banks'
L/C's.
"Creditor" shall mean each Noteholder, each Bank, TCB with
respect to the Cash Management Liabilities and ABN, and "Creditors" shall mean
all Noteholders, TCB with respect to the Cash Management Liabilities, all Banks
and ABN, collectively.
-4-
8
"Creditor Groups" shall mean the Banks considered as a group, the
Noteholders considered as a group, ABN, and TCB only with respect to the Cash
Management Liabilities.
"Deeds of Trust/Mortgages" shall have the meaning assigned to
same in Section 7.2 hereof.
"Event of Default" shall mean an Event of Default under the
Credit Agreement, Note Purchase Agreement, the Senior Note Guaranty, the ABN
Amendment or the ABN Guaranty occurring after the date hereof.
"Guarantors" shall mean the Persons which are guarantors under
the Credit Agreement, the ABN Guaranty and Senior Note Guaranty.
"L/C Reduction Notice" shall have the meaning assigned to it in
Section 4.3(f).
"Lending Agreements" shall mean the Credit Agreement, the Note
Purchase Agreement, the Senior Note Guaranty, the ABN Amendment, the ABN
Guaranty, and all promissory notes, security agreements, guaranties or other
documents executed in connection with any of the above or the Cash Management
Liabilities by any Obligor pursuant to each such agreement.
"Letter of Credit Obligations" shall mean at any specified time
the total contingent exposure of the issuer of the ABN Letters of Credit and
the Banks' L/C's.
"Liabilities" shall mean collectively, the Credit Agreement
Liabilities, the Cash Management Liabilities, the Note Liabilities and the ABN
Liabilities.
"Lien" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capitalized
lease obligation or other title retention agreement.
"Make-Whole Amount" shall refer to the obligation of the Company
to reimburse the Banks and/or Noteholders for losses suffered due to prepayment
of principal as more fully described and defined in Section 2.15 of the Credit
Agreement and Section 4.2 and 9.1 of the Note Purchase Agreement.
"Note Liabilities" shall mean all obligations, of any Obligor to
any Noteholder arising under the Note Purchase Agreement or under any other
document executed in connection therewith and all obligations of all the
Guarantors under the Senior Note Guaranty.
-5-
9
"Note Purchase Agreement" shall have the meaning assigned to same
in Recital B above, as amended by the Note Restructuring Amendment.
"Note Restructuring Amendment" shall mean the Note Restructuring
Amendment to Note Purchase Agreement dated as of the date hereof between the
Company and the Noteholders.
"Noteholder" and "Noteholders" shall have the meaning assigned to
same in the first paragraph of this Agreement.
"Noteholder Basic Make-Whole Amount" shall mean the Make-Whole
Amount calculated as set forth in the Note Purchase Agreement using as a
discount rate the greater of the Make-Whole Discount Rate as set forth in the
Note Purchase Agreement, or 6.469%.
"Noteholder Excess Make-Whole Amount" shall mean the difference
between the Make-Whole Amount calculated as set forth in the Note Purchase
Agreement and the Noteholder Basic Make-Whole Amendment; provided however, the
Noteholder Excess Make-Whole Amount may never be less than $0.
"Notice of Assignment" shall have the meaning assigned to same in
Section 6.3.
"Obligor" shall mean the Company or any Affiliate of the Company.
"Original Principal Ratio" shall mean the ratio for sharing
between the Banks and Noteholders of 49.1525% of the Bank to 50.8475% for the
Noteholders [same being the ratio of the Outstanding Principal under the Credit
Agreement on August 14, 1996, to the Outstanding Principal under the Senior
Notes on August 14, 1996.]
"Outstanding Principal" shall mean, with respect to the
Noteholders, all principal outstanding as of a given date under the Note
Purchase Agreement. With respect to the Banks "Outstanding Principal" shall
mean all principal outstanding as of a given date as loans under the Credit
Agreement, and any sums advanced but not repaid under the Banks' L/C's. With
respect to ABN "Outstanding Principal" shall mean any sums advanced but not
reimbursed under any ABN Letters of Credit. With respect to TCB "Outstanding
Principal" shall mean sums advanced to or on behalf of the Company as part of
the Cash Management Liabilities for which TCB has in writing demanded
reimbursement and which ten (10) days thereafter remains outstanding.
"Payment Default" shall mean the failure of any Obligor to make
any payment when due or within any applicable grace period under any of the
Lending Agreements.
"Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint
-6-
10
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.
"Prior ABN Guaranty" shall have the meaning assigned to same in
Recital C above.
"Prior Credit Agreement" shall have the meaning assigned to same
in Recital A above.
"Prior Reimbursement Agreement" shall have the meaning assigned
to same in Recital C above.
"Proportionate Share" shall mean as of a specified date (i) with
respect to the Banks, a percentage equal to the ratio of the Banks' Total
Exposure to all Creditor Groups' Total Exposure; (ii) with respect to the
Noteholders, a percentage equal to the ratio of the Noteholders' Total Exposure
to all Creditor Groups' Total Exposure; (iii) with respect to ABN, a percentage
equal to the ratio of the ABN Total Exposure to all Creditor Groups' Total
Exposure; and (iv) with respect to TCB, a percentage equal to the ratio of the
TCB Total Exposure to all Creditor Groups' Total Exposure.
"Required Banks" shall mean, as of any date, Banks which have
fifty-one percent (51%) of the Credit Agreement Liabilities.
"Required Creditors" shall mean, as of any date, both (i) any two
of Required Banks, Required Noteholders, or ABN, and (ii) any combination of
Creditor Groups which hold three-quarters of the aggregate Outstanding
Principal for all Creditors.
"Required Noteholders" shall mean, as of any date, Noteholders
holding 51% or more of the principal amount of the Note Liabilities.
"Revolving L/C" shall have the meaning assigned to same in
Recital C above.
"Security Agreement" shall have the meaning assigned to same in
Section 7.2(a) below.
"Senior Note Guaranty" shall mean the Guaranty Agreement executed
by Affiliates of the Company contemporaneously with the execution of, and as a
prerequisite to, the effectiveness of the Note Restructuring Amendment.
"Senior Notes" shall have the meaning assigned to same in Recital
B above.
"Significant Event" shall mean (i) the occurrence of a Payment
Default; (ii) the acceleration of the maturity of or the other exercise of
remedies for a default or an event of default
-7-
11
under the Credit Agreement, ABN Amendment, ABN Guaranty, Note Purchase
Agreement, or Senior Note Guaranty; (iii) any draft or other demand for payment
made under any ABN Letter of Credit; (iv) Banks fail or cease for any reason to
make Advances (as defined in the Credit Agreement including, without
limitation, advances under the Supplemental Commitment prior to January 31,
1997, when Borrowing Base capacity (as defined in the Credit Agreement) exists
therefore; (v) any Creditor shall exercise any setoff or banker's lien right or
any rights under a theory of trust or constructive trust or other equitable,
common law, statutory, or other legal rights, or (vi) Company or any Guarantor
shall file or have filed against it any petition seeking relief against the
Company or any Guarantor as a debtor or bankrupt or seeking other relief under
the bankruptcy, reorganization, debtor's relief, or insolvency or other similar
laws of the United States, any state or any other jurisdiction either domestic
or foreign.
"Supplemental Commitment" shall mean the agreement of the Banks
contained in the Credit Agreement, under which the Banks agree to provide a
supplemental revolving line of credit to the Company in the maximum principal
amount of $4,000,000 subject to the terms set forth therein.
"Supplemental Commitment Liabilities" shall mean all obligations
including all principal, interest and fees due from the Company and its
Affiliates under the Supplemental Commitment.
"TCB" shall have the meaning assigned to same in the first
paragraph of this Agreement.
"Total Exposure" shall mean, for any Creditor, the sum of
Outstanding Principal plus the amount, if any, of such Creditors Letter of
Credit Obligations; provided, however, that Total Exposure for TCB under the
Cash Management Liabilities shall mean sums advanced to or on behalf of the
Company for which TCB has in writing demanded reimbursement and which ten (10)
days thereafter remain outstanding.
ARTICLE II
PAYMENTS OF LIABILITIES
2.1 Payments Prior to Significant Event. Prior to the date on which
a Significant Event shall have occurred, each Bank or Noteholder may receive
and accept from the Company or any of its Affiliates repayments of Cash
Management Liabilities, payments under the Credit Agreement and the Note
Purchase Agreement, and ABN may receive and accept fees due it with respect to
the ABN Letters of Credit and fees and interest with respect to the Revolving
L/C.
-8-
12
2.2 "True Up" Participation Purchase Between Banks and Noteholders to
Maintain Original Principal Ratio Following Significant Event. Promptly
following the occurrence of the first Significant Event to occur after the date
hereof, and prior to application of Available Proceeds in accordance with
Section 2.3 below, either the Banks or the Noteholders shall purchase from the
other, a participation interest in the Note Liabilities or the Credit Agreement
Liabilities held by the other in an amount sufficient to ensure that, as
between the Banks and Noteholders, each holds an amount of Outstanding
Principal as of such date so as to maintain the Original Principal Ratio.
2.3 Payment on or After Significant Event.
(a) Upon or simultaneously with the occurrence of a
Significant Event, all Available Proceeds shall be first used to pay all
Supplemental Commitment Liabilities. Upon payment in full thereof, all
remaining Available Proceeds shall be shared by Creditors in accordance
with their respective Creditor Group's Proportionate Shares determined
as of the date such payment is received; provided, however, that the
portion of sums due any Creditor with respect to Letter of Credit
Obligations shall be paid to the Collateral Agent to be held by the
Collateral Agent in such Creditor's Cash Collateral Account.
(b) If, on or after the date on which a Significant Event
shall have occurred, any Creditor receives and applies any Available
Proceeds to its own debt (other than payments made in accordance with
this Section 2.3), then such Creditor shall purchase from each other
Creditor a participation interest in such other Creditor's Total
Exposure equal to such other Creditor's Proportionate Share of such
Available Proceeds, determined as of the date such payment is received;
provided, however, that the amount payable with respect to the Letter of
Credit Obligations shall be paid to the Collateral Agent for deposit
into the appropriate Cash Collateral Account.
2.4 Relative Rights. This Agreement defines certain rights of
Noteholders, ABN, and Banks as among themselves. Nothing in this Agreement is
intended to affect or impair (i) as between Noteholders and the Company and
Guarantors, the Note Liabilities, Note Purchase Agreement, the Senior Note
Guaranty or any document, instrument or agreement delivered in connection with
the Note Purchase Agreement, (ii) as between Banks and the Company and the
Guarantors of the obligations of the Company and such Guarantors under the
Credit Agreement or any document, instrument or agreement delivered in
connection with the Credit Agreement, or (iii) as between ABN and FCS and the
Guarantors of the obligations of FCS under the ABN Amendment, the ABN Guaranty
or any documents, instruments or agreements delivered in connection therewith.
2.5 Avoided Payments. If at any time any Creditor is determined to
have received a payment which later becomes an
-9-
13
Avoided Payment and the amount of such Avoided Payment is not equal to such
Creditor's Proportionate Share of all Avoided Payments determined to have been
returned by all Creditors (such Proportionate Share to be determined as of the
date each such Avoided Payment was made by the Obligor) then each Creditor
having returned an Avoided Payment which is less than such Creditor's
Proportionate Share of all Avoided Payments shall purchase from each Creditor
having returned an Avoided Payment which is greater than such Creditor's
Proportionate Share of all Avoided Payments a participation interest in the
Liabilities owing to such other Creditors, such that all Creditors share all
Avoided Payments pro rata based on their Proportionate Shares (determined as of
the date each such Avoided Payment was made by the applicable Obligor).
2.6 Obligations Several. The obligations of Creditors under this
Agreement are several and not joint. No Creditor shall be responsible for any
failure by any other Creditor to make any payment or to perform its obligation
to purchase any participation, and no failure by any Creditor to make any
payment or to perform its obligation to purchase any participation shall excuse
any other Creditor from its obligations to make any payment or to purchase any
participation.
2.7 Participation Terms. In the event any participation is purchased
and sold pursuant to Sections 2.2, 2.3, or 2.5: (i) it shall be purchased and
sold based on a price equal to the purchasing Creditor's Proportionate Share of
the undiscounted principal held by the selling Creditor; (ii) it shall include
in such purchase, in addition to the principal purchased all interest and other
entitlements associated therewith; (iii) such participation shall not affect
the selling Creditor's obligations under the applicable Lending Agreement; (iv)
such selling Creditor shall remain solely responsible to the other parties to
such Lending Agreement for the performance of such obligations; and (v) the
Company, Guarantors, and all Obligors, if applicable, and the other Creditor
parties to such Lending Agreement shall continue to deal solely and directly
with such selling Creditor in connection with such selling Creditor's rights
and obligations under such Lending Agreement; provided, however, the purchasing
participant shall be entitled to vote its proportionate interest under the
appropriate Lending Agreement with respect to requiring the relevant Creditor
Group to take or omit to take any action under such Lending Agreement and shall
be bound by all decisions made under or in connection with the applicable
Lending Agreement. The owner of the facility in which a participation is
purchased shall issue a Participation Certificate in the form of Exhibit C
attached hereto to the party purchasing the participation.
-10-
14
ARTICLE III
AMENDMENT AND ACCELERATION OF LENDING AGREEMENTS
3.1 Lending Agreements. Except as set forth in Section 3.2, 3.3 or
3.4, any Creditor may, in accordance with the terms of its Lending Agreement,
amend, restate, supplement or otherwise modify any provisions of its Lending
Agreement or any of the documents, agreements or instruments delivered in
connection with its Lending Agreement. In addition, Creditors may charge the
Obligors incidental service fees charged to the Creditors' customers generally
as they may charge from time to time without regard to the restrictions in
Section 3.2, 3.3, or 3.4 below. Such incidental fees shall include service
charges related to deposit accounts, wire transfer fees, and the like. It
shall not include Letter of Credit Fees, non-usage fees or other fees
specifically identified in any of the Lending Agreement.
3.2 Credit Agreement. Without the consent of Required Noteholders
and ABN, Banks shall not amend, restate, supplement or otherwise modify the
Credit Agreement, the or any of the documents, agreements or instruments
delivered in connection with the Credit Agreement in any manner which (i)
changes the Credit Agreement Aggregate Commitment, (ii) increases the interest
rates, fees or indemnities payable to the Banks thereunder, (iii) changes the
scheduled date for any principal or interest payment due thereunder, (iv)
changes the date as set forth in Section 3.1 of the Credit Agreement by which
any letter of credit issued pursuant to the Credit Agreement must expire, (v)
releases the Company or any Guarantor from any obligations due thereunder, or
(vi) otherwise amends, restates, supplements or modifies any of the payment
terms or provisions or any definition (to the extent such definitions relate
thereto) in the Credit Agreement, or any of the documents, agreements or
instruments delivered in connection with the Credit Agreement. Without the
consent of Required Noteholders and ABN, Banks shall not amend, restate,
supplement or otherwise modify any of the covenants contained in Sections 8.03,
8.04, 8.05, 8.09, 8.11, 8.12, 8.13, 8.14 or 8.15 of the Credit Agreement, or
any definition applicable to such covenants to the extent relating thereto, or
amend, restate, supplement or otherwise modify the Events of Default specified
in the Credit Agreement.
3.3 Note Agreements. Without the consent of Required Banks and ABN,
Noteholders shall not amend, restate, supplement or otherwise modify the Note
Purchase Agreement or any of the documents, agreements or instruments delivered
in connection with the Note Purchase Agreement in any manner which (i) changes
the loans, advances or other financial accommodations to Borrower thereunder,
(ii) increases the interest rates, fees, Make-Whole Amount or indemnities
payable to the Noteholders thereunder, (iii) changes the scheduled date for any
principal or interest payment due thereunder, (iv) releases the Company or any
Guarantor from any obligations due thereunder, or (v) otherwise amends,
restates, supplements or modifies any of the payment terms or
-11-
15
provisions or any definition (to the extent such definitions relate thereto) in
the Note Purchase Agreement or any of the documents, agreements or instruments
delivered in connection with the Note Purchase Agreement. Without the consent
of Required Banks and ABN, Noteholders shall not amend, restate, supplement or
otherwise modify any of the covenants contained in Sections 6.4, 6.5, 6.6, 6.7,
6.8, 6.12, 6.19 and 6.20 of the Note Purchase Agreement or Sections 9.2, 9.3,
9.5, 9.6, 9.10, 9.12 and 9.13 of the Note Restructuring Amendment or any
definition applicable to such covenants to the extent relating thereto, or
amend, restate, supplement or otherwise modify the Events of Default specified
in the Note Purchase Agreement.
3.4 ABN Amendment and ABN Guaranty. Without the consent of Required
Banks and Required Noteholders, ABN shall not amend, restate, supplement or
otherwise modify the ABN Amendment, ABN Guaranty or other agreements related to
issuance of the ABN Letters of Credit in any manner which (i) changes the
financial accommodations to FCS or any Obligor thereunder, (ii) increases the
interest rates or fees thereunder, (iii) changes the scheduled date for any
principal or interest payment due thereunder, (iv) releases FCS or any
Guarantor from any obligations due thereunder, or (v) otherwise amends,
restates, supplements or modifies any of the payment terms or provisions or any
definition (to the extent such definitions relate thereto) in the ABN
Amendment, the ABN Guaranty or any of the documents, agreements or instruments
delivered in connection therewith. Without the consent of Required Banks and
the Required Noteholders, ABN shall not amend, restate, supplement or otherwise
modify any of the covenants of the Note Restructuring Amendment and Note
Purchase Agreement identified in Section 3.3 above and of the Credit Agreement
identified in Section 3.2 above which are incorporated by reference into
Section 3.1 of the ABN Guaranty or any definition applicable to such covenants
to the extent relating thereto, or amend, restate, supplement or otherwise
modify the Events of Default specified in the ABN Amendment or ABN Guaranty.
Notwithstanding the provisions of this Section 3.4, ABN shall be permitted to
increase the amount of the ABN Letters of Credit by a total of not more than
Three Million Dollars ($3,000,000.00), which shall include increases of not
more than Two Million Dollars ($2,000,000.00) in the amount of the Advance
Payment Letter of Credit (as defined in the ABN Amendment) and an increase of
not more than One Million Dollars ($1,000,000.00) in the amount of the
Performance Security Letter of Credit (as defined in the ABN Amendment).
3.5 Acceleration. Nothing contained in this Agreement shall prevent
any Creditor from taking any remedial action otherwise permitted under the
terms of its Lending Agreement, including, without limitation, declaring the
acceleration of the maturity of any of the Liabilities or obtaining a money
judgment against any Obligor or demanding payment under the ABN Amendment or
the ABN Guaranty so long as all receivership, repossession, attachment,
foreclosure, setoff, execution, post-judgment collection procedures or any
other action affecting the Collateral
-12-
16
are conducted pursuant to Article VII hereof, in accordance with the terms of
this Agreement.
ARTICLE IV
REPRESENTATIONS, COVENANTS AND RIGHTS OF LENDERS
4.1 Non-Reliance. Each Creditor represents that it has,
independently and without reliance on any other Creditor, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of the financial condition and affairs of Obligors and its own decision to
enter into this Agreement, and agrees that it will, independently and without
reliance upon any other Creditor, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own appraisals
and decisions in taking or not taking action under this Agreement or any
Lending Agreement. Except for notices, reports and other documents and
information expressly required to be furnished to the other Creditors by any
Creditor hereunder, no Creditor shall have any duty or responsibility to
provide any other Creditor with any credit or other information concerning any
Obligor which may come into the possession of Creditor or any of its or their
Affiliates.
4.2 Representations and Warranties. Each Creditor represents and
warrants to each other Creditor that (a) such Creditor is a corporation or
association duly organized, validly, existing and in good standing under the
laws of its jurisdiction of incorporation or organization; (b) the execution,
delivery and performance by such Creditor of this Agreement are within the
power of such Creditor and have been duly authorized by all necessary actions
on the part of such Creditor; and (c) this Agreement has been duly executed and
delivered by such Creditor and constitutes the legal, valid and binding
obligation of such Creditor, enforceable against it in accordance with its
terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally.
4.3 Covenants of Creditors. Each Creditor covenants and agrees with
each other Creditor as follows:
(a) Security. Except as specifically provided for herein with
respect to the Supplemental Commitment Liabilities, unless all Creditors
receive the same benefit on a pari passu basis, (i) no Creditor shall
take or hold as security for the Liabilities any property of any Obligor
or any other Person, and (ii) no Creditor shall accept any guaranty of
the Liabilities other than the Guaranties in effect as of the date
hereof (including the Senior Note Guaranty) or guaranties from entities
which become Subsidiaries of the Company subsequent to the date hereof;
provided, however, that it shall not be a violation of the
-13-
17
terms hereof for ABN or any of the Banks to open and maintain accounts
of any Obligor with respect to which such institution by operation of
law may have a banker's lien or right of setoff.
(b) Notice of Amendment, Default or Set-Off. Promptly after
entering into any amendment or modification of a any agreement with the
Company or its Affiliates, Agent Bank, ABN, Banks or Noteholders, as
applicable, shall provide notice of such amendment or modification to
the other Creditors, provided that failure to give such notice shall not
affect the validity of such amendment or modification. Promptly after
delivering to or receiving from any Obligor notice of the occurrence of
any Event of Default, Agent Bank, ABN, or each Bank or each Noteholder,
as applicable, shall deliver a copy of such notice to the other
Creditors, provided that failure to deliver such notice shall not affect
the validity of any such notice delivered to any Obligor. Promptly
after exercising any set-off or banker's lien right or any exercise of
rights under a theory of constructive trust or other equitable, common
law, statutory or legal rights provided by law or by any agreement with
the Company or any Affiliate, the Creditor exercising such right shall
provide notice to the Collateral Agent and each other Creditor of such
exercise and of the Available Proceeds received as a result of such
exercise.
(c) Bankruptcy. In any bankruptcy proceeding of any Obligor
unless Required Banks, Required Noteholders, ABN, and TCB agree, (i) no
Creditor shall, with respect to its claim regarding the Liabilities,
vote in favor of any plan of reorganization which is inconsistent with
this Agreement, and (ii) each Creditor shall, with respect to its claim
regarding the Liabilities, actively oppose or shall join in opposing any
plan of reorganization proposed in any such bankruptcy which is
inconsistent with this Agreement.
(d) Application of Set-Off Payments to Liabilities. Each
Creditor agrees that it shall apply all amounts received by exercise of
any right of set-off or banker's lien to the Liabilities in accordance
with the provisions of this Agreement prior to the application of any
such amount to any liability or obligation which is not a Liability.
(e) Cooperation; Further Assurances. Each Creditor shall
cooperate fully with each other Creditor to the end that the terms of
this Agreement may be carried out promptly and fully. Without limiting
the generality of the foregoing, each Creditor shall respond promptly to
any request by any other Creditor regarding the amount of any
Liabilities owed to such Creditor. Each Creditor shall execute and
deliver such other agreements, documents and instruments and agrees to
take such other action as shall be reasonably necessary to carry out the
terms of this Agreement.
-14-
18
(f) L/C Reduction Notice. The Banks and ABN covenant and
agree that after the first Significant Event to occur after the date
hereof, they will use their best efforts to promptly give notice to the
Collateral Agent when their respective Letter of Credit Obligations are
reduced for any reason, including by expiration of a Letter of Credit or
the permanent reduction of exposure under an unexpired Letter of Credit.
Such notice shall be in writing, certified as true, correct and complete
by the party serving such notice and stating the date and of the amount
of such reduction. The Company, its Affiliates, the beneficiary of any
Letter of Credit and all other persons not a party to this Agreement
shall have no rights under this subsection 4.3(f), and the failure of
ABN or any of the Banks to give the notice herein required shall have no
effect on any action taken by ABN or the Banks with respect to the
Company or any of its Affiliates or any other party.
4.4 Headings. Headings in this Agreement are for convenience of
reference only and are not part of the substance hereof.
4.5 Plural Terms. All terms defined in this Agreement in the
singular form shall have comparable meanings when used in the plural form and
vice versa.
ARTICLE V
CONDITIONS TO EFFECTIVENESS;
DELIVERY OF DOCUMENTS
5.1 Conditions to Effectiveness. This Agreement shall become a
binding obligation of each Creditor from and after the Closing Date upon the
occurrence of the following events:
(a) The Prior Credit Agreement shall have been amended and
restated) by the Credit Agreement.
(b) The Note Restructuring Amendment and the Senior Note
Guaranty shall have become effective.
(c) The ABN Amendment and the ABN Guaranty shall have become
effective.
(d) Each Creditor shall have executed and delivered this
Agreement.
(e) The Security Agreements, Deeds of Trust/Mortgages, and
Financing Statements as defined in Section 7.2(a) shall have been executed.
(f) The Consent and Agreement hereto shall have been fully
executed.
-15-
19
ARTICLE VI
MISCELLANEOUS
6.1 Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications under this
Agreement shall be in writing and delivered by hand or mailed, first class
postage prepaid, or sent by overnight courier, or by confirmed telefax
transmission (confirmed by hand-delivery or overnight courier copy sent the
same day such telefax is sent), in each case addressed to the party to which
such notice is requested or permitted to be given or made, at the address or
telecopy number specified beneath the heading "Address for Notices" under the
name of such Creditor in Schedule 1, or at such other address or telecopy
number of which such Person shall have notified in writing the party giving
such notice, provided that any notice given by any Noteholder or ABN to Banks
shall be given to Agent Bank.
6.2 Waivers; Amendments. Any term, covenant, agreement or condition
of this Agreement may be amended or waived if such amendment or waiver is in
writing and is signed by the Required Banks, TCB, ABN, and the Required
Noteholders.
No failure or delay by any Creditor in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise or of any other right preclude any other further
exercise thereof or of any other right. Unless otherwise specified in such
waiver or consent, a waiver or consent given hereunder shall be effective only
in the specific instance and for the specific purpose for which given.
6.3 Successors and Assigns.
(a) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Creditors and their respective successors and
assigns.
(b) Assignments. In connection with any assignment by any
Creditor (an "Assignor Creditor") to any other Person (an "Assignee
Creditor") of all or any portion of the Assignor Creditor's rights under
such Assignor Creditor's Lending Agreements (as permitted thereby), such
Assignor Creditor shall also assign to the Assignee Creditor and
Assignee Creditor shall assume all or an allocable portion of such
Assignor Creditor's rights and obligations under this Agreement (such an
assignment to be referred to herein as an "Assignment") subject to the
following:
(i) Each Assignor Creditor shall notify each other
Creditor of each Assignment by delivering to such other
Creditor a copy of a Notice of Assignment in the form of Exhibit
D, appropriately completed and duly executed by such Assignor
Creditor and Assignee Creditor
-16-
20
(a "Notice of Assignment"), which specifies (x) the name,
notice address and wire instructions of such Assignee Creditor;
(y) the respective principal portion of the Liabilities of
Assignor Creditor and Assignee Creditor after the Assignment; and
(z) the date as of which Assignee Creditor is assuming
obligations under Section 2.5 (Avoided Payments) with respect to
payments made by any Obligor.
(ii) From and after the date of delivery of the Notice of
Assignment, (x) the new Assignee Creditor reflected therein shall
be a Creditor hereunder and shall have the rights, duties and
obligations of such a Creditor (with respect to the principal
portion of the Liabilities so assigned and assumed) under this
Agreement, and (y) Schedule 1 shall be deemed to be amended on
such date to reflect the information set forth in the Notice of
Assignment.
(iii) Any Assignment shall not release Assignor Creditor
from its obligations hereunder to any other Creditor unless (x)
Required Creditors agree, or (y) (A) such Assignee Creditor (in
its capacity as a principal and not as nominee or trustee for any
other Person) assumes in writing all of the obligations hereunder
and under the assigned Lending Agreement; and (B) Assignee
Creditor (in its capacity as a principal) shall be a Qualified
Institutional Buyer under Rule 144A of the Securities and
Exchange Commission. Upon delivery of a Notice of Assignment
with respect to an Assignment complying with this Section
6.3(b)(iii), Assignor Creditor shall be released from all further
obligations under this Agreement with respect to the Liabilities
thereby assigned.
(c) Participations and Other Transfers. Nothing contained in
this Agreement is intended to limit the right of any Creditor to sell
participations in or otherwise transfer its rights in its Liabilities
and its Lending Agreements; provided, however, that no participant or
other transferee who is not also an Assignee Creditor shall be entitled
to exercise any of the rights and remedies provided to Creditors
hereunder.
(d) Disclosure. Creditors may disclose the terms of this
Agreement and any financial or other information relating to any Obligor
to each other or to any potential Assignee Creditor, participant or
other transferee.
6.4 No Third Party Rights. Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give, any
Person, other than Creditors and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.
-17-
21
6.5 Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law of any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
6.6 Equitable Remedies. Each party to this Agreement recognizes that
money damages may provide an insufficient remedy for breach of their respective
obligations under this Agreement and therefore agrees that specific performance
of its obligations, and such other equitable remedies as may be appropriate,
may be granted to each party hereunder. Remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
6.7 JURY TRIAL. EACH CREDITOR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING TO THIS AGREEMENT IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OF THE TRANSACTIONS OR
EVENTS REFERENCED HEREIN OR CONTEMPLATED HEREBY.
6.8 Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
6.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Texas without reference
to any choice of law rules.
6.10 Construction. This Agreement is the result of negotiations
among, and has been reviewed by, each Creditor and its respective counsel.
Accordingly, this Agreement shall be deemed to be the product of all parties
hereto and shall not be construed against any party hereto on the ground that
such party drafted this Agreement. To the extent there is any inconsistency
between the terms of this Agreement and the terms of any Lending Agreement, the
terms of this Agreement shall control.
ARTICLE VII
COLLATERAL AGENT
7.1 Designation of Agent. Texas Commerce Bank National
Association is hereby designated the Collateral Agent by each of the other
Creditors to perform such duties on behalf of the other Creditors and itself,
and to have such powers as are set forth herein. In performing its functions
and duties under this Agreement, the Collateral Agent shall act solely as agent
of the Creditors and does not assume and shall not be deemed to have
-18-
22
assumed any obligation toward or relationship of agency or trust hereunder with
or for any Obligor. The Collateral Agent shall not have, by reason of this
Agreement, a fiduciary relationship with any Creditor, and nothing in this
Agreement, expressed or implied, is intended or shall be so construed to impose
upon the Collateral Agent any obligations in respect of this Agreement or the
other instruments and agreements referred to herein except as expressly set
forth herein or therein.
7.2 Duties of Collateral Agent.
(a) The Collateral Agent shall have no duties or
responsibilities, other than those expressly set forth herein. It
shall be responsible for obtaining the signatures of the Company and
appropriate Affiliates on Security Agreements substantially in the
form attached hereto as Exhibit A ("Security Agreements") and Deeds of
Trust or Mortgages substantially in the form attached hereto as
Exhibit B ("Deeds of Trust/Mortgages") pursuant to which the Company
and appropriate Affiliates pledge the Collateral as security for all
of the Company's obligations to the Banks, the Noteholders and ABN.
The Collateral Agent shall also obtain executed financing statements
to be filed to perfect the security interests and liens created by
such Security Agreements and Deeds of Trust/Mortgages ("Financing
Statements").
(b) Collateral Agent shall be responsible for filing the
Deeds of Trust/Mortgages and Financing Statements in such offices as
directed by the Creditor Groups to pay such fees and expenses as are
required in connection therewith and to make such filings and pay such
fees as are required to continue such perfection.
(c) (i) Collateral Agent shall take such actions and
perform such duties as required of the Secured Party under the terms
of the Security Agreement or Mortgagee Beneficiary or Secured Party
under the Deeds of Trust/Mortgages; (ii) upon the written instructions
of the Required Creditors, but not before, Collateral Agent (and no
other party) shall take such acts as directed by the Required
Creditors that are necessary or desirable to exercise any right of the
Creditors or any of them with respect to any of the Collateral or
proceeds thereof, to foreclose upon such Collateral, conduct
foreclosure sales where appropriate, to collect proceeds of Collateral
and to distribute such proceeds to the Creditors as appropriate; (iii)
the Collateral Agent may release Collateral of a value of not more
than $50,000 so long as collateral of a similar nature and of equal or
greater value is simultaneously substituted therefor or the Creditor
Groups agree and consent and vehicles with a market value of less than
$15,000 sold in the ordinary course of business; and (iv) Collateral
Agent may at any time not take or refrain from taking any of the
actions authorized by Section 7.2(c)(i) or (iii), until it receives
instructions from the Required Creditors provided that doing so will
not endanger the Creditors' secured
-19-
23
interest in the Collateral and the Collateral Agent promptly seeks
such instructions.
(d) Each Creditor agrees that no other Creditor shall
have any right individually to realize upon the security interest
granted by any of the Security Agreements or Deeds of Trust or to
otherwise enforce or exercise any remedy in respect of the Collateral,
it being understood and agreed that such remedies may be exercised
only by the Collateral Agent for the ratable benefit of the Creditors
and each Creditor further agrees that it shall not individually
institute any judicial action pertaining to the Collateral or exercise
any other remedy pertaining to the Collateral, except with the consent
of the Required Creditors hereof; provided that nothing contained in
this Agreement shall be deemed or construed to limit in any fashion,
(w) the right of the Creditors to accelerate or demand payment
pursuant to documents evidencing the Company's or any Affiliate's
indebtedness to them, or (x) to limit the rights of TCB, in its
capacity as a Bank, to receive and collect proceeds in the Company's
lockbox account with TCB and hold and distribute same pursuant to the
terms hereof, (y) the right of ABN to receive and disburse funds from
the account it holds in the name of F. C. Schaffer into which
proceeds from the FINCHAA Sugar Refinery Project are paid and
thereafter disbursed, provided, further, following a Significant Event
all such receipts and disbursements of TCB and ABN shall be for the
benefit of all of the Creditors in accordance with Section 2.3 hereof,
or (z) to prohibit the filing of collection actions by individual
Creditors so long as no action is taken against any of the Collateral
except as specifically permitted herein. Notwithstanding the above
provisions of this Section 7.2(d), it shall not be a violation of the
terms of this Agreement if any institution exercises its rights under
Banker's Liens or right of setoff to take proceeds of accounts of any
Obligor held at their respective institutions so long as such taking
is done to preserve or protect the interests of Creditors in such
funds and if such amounts are distributed pursuant to Section 7.2(e)
as proceeds of Collateral.
(e) Distribution of the proceeds of such Collateral shall
be made in the following order: First, to the Collateral Agent to pay
the reasonable costs and expenses of performing its duties hereunder,
including those related to foreclosure, sale, and collection of
proceeds thereof; Second, to the Banks in payment of the Supplemental
Commitment Liabilities; Third, to the Creditors, pro rata, (i) in
payment of principal, interest, and fees (including Make-Whole Amounts
for Banks and the Noteholder Basic Make-Whole Amount) due Creditors
with respect to money loaned under the Credit Agreement or the Note
Purchase Agreement, and in payment of TCB's Outstanding Principal and
under the Cash Management Liability, (ii) in payment of money advanced
but not reimbursed under any ABN Letter of Credit or Bank L/C, and
(iii) to create Cash Collateral Accounts to secure the Letter
-20-
24
of Credit Obligations; Fourth, to Noteholders for the Noteholder
Excess Make-Whole Amount, if any; and Fifth, to all Creditors pro rata
for costs and expenses for which such Creditors are entitled to
reimbursement plus the Noteholder Excess Make-Whole Amount, and Sixth,
to the Obligors as required by law.
(f) Distribution of the contents of the Cash Collateral
Accounts shall be made as follows:
(i) Upon receipt of a written request from TCB or ABN
certifying that a draft(s) has been made and paid on a Letter of
Credit and giving the amount and date of such payment, the Collateral
Agent shall distribute funds to the issuer of such Letter of Credit
from the applicable Cash Collateral Account in an amount determined
by multiplying the amount in the Cash Collateral Account by a
fraction, the numerator of which is the amount of the draft(s) and
the denominator of which is the total amount of the exposure of the
issuer under the Bank L/C's or the ABN Letters of Credit, as the case
may be, which were outstanding and unexpired immediately prior to the
payment of the draft(s);
(ii) Upon receipt of a L/C Reduction Notice certifying
that a Letter of Credit has expired or that the issuers' exposure
under an unexpired Letter of Credit has been permanently reduced and
giving the amount and date of such reduction of the issuer's Letter
of Credit Obligations, the Collateral Agent shall distribute pursuant
to the terms of Section 7.2(e) to the Creditors in their
Proportionate Shares determined immediately after the date of the
reduction of exposure, funds from the applicable Cash Collateral
Account in an amount determined by multiplying the amount in said
Cash Collateral Account by a fraction, the numerator of which is the
amount of the reduction of the issuers' Letter of Credit Obligations
and the denominator of which is the Letter of Credit Obligations of
the issuer immediately prior to the reduction.
(g) Collateral Agent shall promptly send to each Creditor
copies of any notices it receives with respect to the Security
Agreement or Deeds of Trust/Mortgages or the Collateral from any
Obligor or any other source and prior to any distribution shall give
notice to each Creditor Group of the Total Exposure and Letter of
Credit Obligations to be used in calculating the distribution.
7.3 Delegation Duties, Etc. The Collateral Agent may execute any
of its respective duties and perform any of its respective powers hereunder by
or through agents or employees and shall be entitled to consult with legal
counsel and any accountant or other professional selected by it. The
Collateral Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
-21-
25
7.4 Indemnification. Each Creditor does hereby indemnify the
Collateral Agent in its capacity as such, and its directors, officers,
employees or agents, to the extent not reimbursed promptly by the Company or
any other Obligor, pro rata according to their Proportionate Shares from and
against any and all claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in any way relating to or arising out of this Agreement, the Senior
Notes, the Credit Agreement, the ABN Letters of Credit or any of the other
documents or any action taken or omitted to be taken or suffered in good faith
by any of them hereunder or thereunder, provided that no Bank, Noteholder or
ABN shall be liable for any portion of any of the foregoing items resulting
from the gross negligence or willful misconduct of the Collateral Agent or any
of its respective directors, offices, employees or agents. Without limiting
the foregoing, each Bank, each Noteholder, and ABN agrees to reimburse the
Collateral Agent promptly upon demand for its Proportionate Share of any
out-of-pocket expenses (including reasonable counsel fees and disbursements)
incurred by the Collateral Agent in connection with the execution,
administration or enforcement of rights and responsibilities under, or
amendment, modification or waiver of any provision of, this Agreement, to the
extent that the Collateral Agent is not promptly reimbursed for such expenses
by the Company or any other Obligor. If the Collateral Agent is subsequently
reimbursed by the Company or any other Obligor for such expenses, the
Collateral Agent shall remit to the Creditors their pro rata shares of such
reimbursement. As a Creditor, Texas Commerce Bank shall bear its pro rata
share of all expenses and indemnities to be reimbursed to the Collateral Agent.
The obligation of each Creditor hereunder shall be several and not joint and
several.
7.5 Exculpatory Provisions.
(a) Neither the Collateral Agent, nor any of its
officers, directors, employees or agents shall be liable for any
action taken or omitted to be taken or suffered in good faith by it
hereunder or in connection herewith, except that the Collateral Agent
shall be liable for its own gross negligence or willful misconduct.
Neither the Collateral Agent nor any of its directors, officers,
employees or agents, shall be liable in any manner for the
effectiveness, enforceability, collectability, genuineness,
perfection, validity, sufficiency or the due execution of this
Agreement, the Security Agreements, the Deeds of Trust/Mortgages, the
Financing Statements or any of the other documents executed in
connection therewith or for the due authorization, authenticity or
accuracy of the representations and warranties herein or in any other
certificate, report, notice, consent, opinion, statement, or other
document furnished or to be furnished hereunder, and shall be entitled
to rely upon any of the foregoing believed by it to be genuine and
correct and to have been signed and sent or made by the proper party.
The Collateral Agent shall be under no duty or responsibility to
-22-
26
any Creditor to ascertain or to inquire into the performance or
observance by the Company or any Affiliate of any of the provisions
hereof or of any document executed and delivered in connection
herewith. Each Creditor acknowledges that it has taken and will
continue to take such action and to make such investigation as it
deems necessary to inform itself of the affairs of the Company and the
other Obligors and each Creditor acknowledges that it has made and
will continue to make its own independent investigation of the
creditworthiness and the business and operations of the Company and
the other Obligors and that, in entering into this Agreement and in
making its extensions of credit, it has not relied and will not rely
upon any information or representations furnished or given by the
Collateral Agent or any other Creditor.
(b) If the Collateral Agent shall request instruction
from the Banks, TCB, Noteholders and/or ABN with respect to any act or
action (including the failure to take an action) in connection with
any Obligor's obligations under the Lending Agreements, the Collateral
Agent shall be entitled to refrain from such act or taking such action
unless and until it shall have received instructions form the
Creditors whose consent to such action or inaction is required
pursuant to the terms of this Agreement. Without prejudice to the
generality of the foregoing, (i) the Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper party or
parties, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys, accountants, experts
and other professional advisors selected by it and (ii) no Creditor
shall have any right of action whatsoever against the Collateral Agent
as a result of the Collateral Agent acting or (where so instructed)
refraining from acting under this Agreement with respect to any
Obligor's obligations under the Lending Agreements in accordance with
the instructions of all of the Creditors whose consent to such action
or inaction is required pursuant to the terms of this Agreement.
7.6 Knowledge of Default. It is expressly understood and agreed
that the Collateral Agent shall be entitled to assume that no Defaults or Event
of Default has occurred and is continuing, unless the officers of the
Collateral Agent immediately responsible for matters concerning this Agreement
shall have been notified in writing by (a) the Company or any other Obligor, or
(b) any Creditor that such Creditor considers that an Event of Default has
occurred and is continuing and specifying the nature thereof.
7.7 Collateral Agent in its Individual Capacity. The Collateral
Agent shall have the same rights and powers hereunder as any Creditor with
respect to this Agreement, all extensions of credit made by the Collateral
Agent, and any renewals, extensions or deferrals of the payment thereof, and
may exercise the same as
-23-
27
though it were not the Collateral Agent. The Collateral Agent may accept
deposits from, lend money to and generally engage in any kind of banking,
trust, financial advisory or other business with the Company or any Affiliate
of the Company as if it were not performing the duties specified herein, and
may accept reasonable and customary fees and other consideration from the
Company for services in connection with this Agreement and otherwise without
having to account for the same to the Creditors.
7.8 Resignation or Removal of Collateral Agent. If at any time
the Collateral Agent deems it advisable, in its sole discretion, it may submit
to each of the Creditors and the Company a written notification of its
intention to resign as Collateral Agent under this Agreement, such resignation
to be effective only at such time within thirty (30) days after such written
notification that a successor Collateral Agent, satisfactory to the Required
Creditors, has been appointed and accepted such appointment in writing, or at
such time more than thirty (30) days after such written notification that a
successor Collateral Agent has been identified by the original Collateral
Agent, and such successor has accepted such appointment in writing. In the
event that the Collateral Agent shall have breached any of its material
obligations to the Creditors hereunder, the Required Creditors other than the
Collateral Agent may remove the Collateral Agent and appoint a successor
Collateral Agent from among themselves or otherwise, effective on the date
specified by them, by written notice to the Collateral Agent and the Company.
7.9 Creditors as Owners. The Collateral Agent may deem and treat
each Creditor as the owner of such Creditor's indebtedness for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Collateral Agent. Any request, authority or
consent of any person who at the time of making such request or giving such
authority or consent is the owner of such indebtedness shall be conclusive and
binding on any subsequent owner, transferee or assignee of such indebtedness.
7.10 Compensation. The Company shall pay to the Collateral Agent
for its own account the Collateral Agent's fee of $10,000 payable upon
execution of this Agreement.
-24-
28
NOTEHOLDERS:
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By: /s/ JOHN D. CLEAVENGER
--------------------------------------------
Name: John D. Cleavenger, Counsel
-------------------------------------------
Title:
------------------------------------------
By: /s/ STEPHEN G. SKRIVANEK
--------------------------------------------
Name: Stephen G. Skrivanek, Counsel
-------------------------------------------
Title:
------------------------------------------
TMG LIFE INSURANCE COMPANY
By: /s/ ROBERT R. LAPOINTE
--------------------------------------------
Name: Robert R. Lapointe
-------------------------------------------
Title: Vice President
------------------------------------------
By: /s/ MICHAEL J. CAREW
--------------------------------------------
Name: Michael J. Carew
-------------------------------------------
Title: Assistant Vice President
------------------------------------------
BERKSHIRE LIFE INSURANCE COMPANY
By: /s/ ELLEN I. WHITTAKER
--------------------------------------------
Name: Ellen I. Whittaker
-------------------------------------------
Title: Investment Officer
------------------------------------------
THE SECURITY MUTUAL LIFE INSURANCE COMPANY
By: /s/ KEVIN W. HAMMOND
--------------------------------------------
Name: Kevin W. Hammond
-------------------------------------------
Title: Vice President
------------------------------------------
Chief Investment Officer
------------------------------------------
29
BANKS:
TEXAS COMMERCIAL BANK NATIONAL ASSOCIATION
By: /s/ CURTIS D. KARGES
------------------------------------------
Name: Curtis D. Karges
------------------------------------------
Title: Senior Vice President
------------------------------------------
BANK ONE, TEXAS, N.A.
By: /s/ JOHN E. ELAM, JR.
------------------------------------------
Name: John E. Elam, Jr.
------------------------------------------
Title: Vice President
------------------------------------------
ABN:
ABN AMRO BANK, N.V., HOUSTON AGENCY
By: ABN AMRO NORTH AMERICA, INC.
By: /s/ H. GENE SHIELS
------------------------------------------
Name: H. Gene Shiels
------------------------------------------
Title: Vice President and Director
------------------------------------------
By: /s/ CHARLES W. RANDALL
------------------------------------------
Name: Charles W. Randall
------------------------------------------
Title: Senior Vice President and
------------------------------------------
Managing Director
------------------------------------------
30
EXHIBIT A
SECURITY AGREEMENT
DUE TO THE LARGE VOLUME OF MATERIAL,
THIS EXHIBIT HAS BEEN INTENTIONALLY OMITTED.
PARTIES TO THE AGREEMENT HAVE BEEN SUPPLIED COPIES.
31
EXHIBIT B
DEEDS OF TRUST/MORTGAGE
DUE TO THE LARGE VOLUME OF MATERIAL,
THIS EXHIBIT HAS BEEN INTENTIONALLY OMITTED.
PARTIES TO THE AGREEMENT HAVE BEEN SUPPLIED COPIES.
32
EXHIBIT C
PARTICIPATION CERTIFICATE
Reference is made to the Intercreditor Agreement dated November __,
1996, executed by Principal Mutual Life Insurance Company, TMG Life Insurance
Company, Berkshire Life Insurance Company and the Security Mutual Life Insurance
Company (individually, a "Noteholder" and collectively, the "Noteholders");
Texas Commerce Bank National Association ("TCB") and Bank One, Texas, N.A.
(individually, a "Bank" and collectively, the "Banks"); and ABN AMRO Bank, N.V.,
a Netherlands chartered Bank acting through its Houston agency ("ABN"). All
capitalized terms used herein shall have the meaning set forth herein or, if no
definition is contained herein, as set forth in the Intercreditor Agreement.
1. ___________________________________________ ("Assignee"), has
purchased from ________________________________________ ("Assignor") and
Assignor has sold and assigned to Assignee a __________ percent (__%) interest
in and to Assignor's rights, title and interest as of the date hereof in all
Outstanding Principal, together with interest and other entitlements associated
therewith, under the terms of Assignor's Lending Agreement with the Company and
its Affiliates.
2. The participation purchased and evidenced by this Certificate shall
be held pursuant to and governed by all of the terms of the Intercreditor
Agreement and, in particular, Section 2.7 thereof.
Dates this _____ day of _________, 199_.
ASSIGNOR ASSIGNEE
(Name of Assignor) (Name of Assignee)
By: By:
------------------------------ -----------------------------------
Name: Name:
------------------------------ -----------------------------------
Title: Title:
------------------------------ -----------------------------------
33
EXHIBIT D
Notice of Assignment
THIS NOTICE OF ASSIGNMENT is sent pursuant to the requirements of
Section 6.3 of that certain Intercreditor Agreement dated November _____, 1996
("Intercreditor Agreement") by and between ABN AMRO BANK, N.V., a Netherlands
Chartered Bank acting through its Houston agency, PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY, TMG LIFE INSURANCE COMPANY, BERKSHIRE LIFE INSURANCE
COMPANY, SECURITY MUTUAL LIFE INSURANCE COMPANY, TEXAS COMMERCE BANK N.A., and
BANK ONE TEXAS, N.A. (collectively the "Creditors").
By this Notice ___________________________ ("Assignor") notifies the
other Creditors that it has assigned and transferred an interest in its
financial accommodation made to ____________________________ to
___________________________ as "Assignee" together with corresponding rights
and obligations of Assignor under any Guaranties, Security Agreements, Deeds of
Trust, Mortgages or other agreements made or executed in connection therewith
(the "Facility").
Assignor certifies that:
(1) Such Assignment is made in compliance with the terms of the
Intercreditor Agreement;
(2) Assignor has seen and reviewed the Intercreditor Agreement and is
fully aware of and consents to its terms;
(3) Assignor has purchased ___________ percent (__%) of Assignee's
interest in the Facility;
(4) Assignee has retained ____________ percent (__%) interest in the
Facility.
(5) Assignor's address is as follows:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Telecopier No.: (___)
------------------
Wire Transfer Instructions ;
----------------------
and
(6) The Assignment is effective as of ____________ __, 1996.
Exhibit D
Page 1
34
(5) Assignor's address is as follows:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Telecopier No.: (___)
------------------
Wire Transfer Instructions ;
----------------------
and
(6) The Assignment is effective as of ____________ __, 1996.
Exhibit D
Page 1
35
Dated this ______ day of _____________________, 199__.
ASSIGNOR: ASSIGNEE:
- ------------------------------- ----------------------------------
By: By:
---------------------------- ------------------------------
Name: Name:
-------------------------- ----------------------------
Its: Its:
---------------------- ------------------------
Exhibit D
Page 2
36
CONSENT AND AGREEMENT
The Company and its Affiliates executing this Consent and Agreement
hereby certify and agree as follows:
(1) They have read, reviewed and understood the terms and
conditions set forth in the foregoing Intercreditor Agreement;
(2) They understand and agree that sums received by any party to
the Intercreditor Agreement from or on behalf of the Company
or any of its Affiliates after the occurrence of a Significant
Event will be distributed to Creditors and applied to the
obligations of the Company or its Affiliates to the Creditors
in the amounts and in the manner described in the
Intercreditor Agreement even if some other distribution may be
set out in other agreements with certain of the Creditors;
(3) They shall have no claims or right of action against any
Creditor for actions taken or not taken in compliance with the
terms of the Intercreditor Agreement;
(4) They are not third party beneficiaries of the Intercreditor
Agreement and they shall have no legal or equitable right,
remedy, or claim under or by virtue of the Intercreditor
Agreement or by virtue of any provision therein; and
(5) They understand and agree that the parties to the
Intercreditor Agreement may amend or modify its terms from
time to time with or without notice to the Company or its
Affiliates and that such amendment shall be effective without
the knowledge, consent or further agreement of the Company or
any of its Affiliates.
-1-
37
Dated November __, 1996.
SERV-TECH, INC.
By:/s/ DAVID TUSA
-------------------------------------------------
Name: David Tusa
Title: Senior Vice President of
Finance and Administration
ADVANCED REFRACTORY SERVICES, INC.
AMERICAN MECHANICAL SERVICES, INC.
CASTING CONCEPTS, INC.
CON-SEAL, INC.
DM ACQUISITION CORPORATION
ENTERPRISE SERVICE CORPORATION
F.C. SCHAFFER & ASSOCIATES, INC.
HARTNEY CORPORATION
HARTNEY INDUSTRIAL SERVICES
CORPORATION
HILL TECHNICAL SERVICES, INC.
MAC-TECH, INC.
ST PIPING, INC.
TOTAL REFRACTORY SYSTEMS, INC.
TURNAROUND MAINTENANCE, INC.
UNITED INDUSTRIAL MATERIALS, INC.
By:/s/ DAVID TUSA
-------------------------------------------------
Name: David Tusa
Title: Vice President
SECO INDUSTRIES, INC.
SERV-TECH ENGINEERS, INC.
SERV-TECH EPC, INC.
By:/s/ DAVID TUSA
-------------------------------------------------
Name: David Tusa
Title: Senior Vice President of Finance
and Administration
PRS HOLDING, INC.
By:/s/ DAVID TUSA
-------------------------------------------------
Name: David Tusa
Title: Senior Vice President
-2-
38
DELTA MAINTENANCE, INC.
PETRO RECOVERY SYSTEMS, INC.
SERV-TECH CONSTRUCTION AND
MAINTENANCE, INC. (FORMERLY SERV
TECH EPC - HOUSTON, INC.)
SERV-TECH INTERNATIONAL SALES, INC.
SERV-TECH OF NEW MEXICO, INC.
SERV-TECH SERVICES, INC.
TERMINAL TECHNOLOGIES, INC.
TIPCO ACQUISITION CORP.
By:/s/ DAVID TUSA
-------------------------------------------------
Name: David Tusa
Title: President
-3-
39
SCHEDULE 1
Address for Notices
Texas Commerce Bank
713 Main Street
Houston, Texas 77002
Attention: Mr. Curtis D. Karges
Telecopy No: (713) 216-6004
Bank One Texas, N.A.
Bank One Center Building
910 Travis, 7th Floor
Houston, Texas 77002
Attention: John Elam
Telecopy No.: (713) 751-6199
ABN AMRO Bank N.V., Houston Agency
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Charles W. Randall
Senior Vice President and
Managing Director
Telecopy No: (713) 629-7533
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0810
Attention: Investment Department/
Accounting & Treasury
Telecopy No: (515) 248-2490
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0810
Attention: Investment Department/
Securities Division
Telecopy No: (515) 248-2490
TMG Life Insurance Company
The Mutual Group (U.S.)
401 North Executive Drive
Brookfield, Wisconsin 53008-0980
Attention: Ms. Lisa Harris
Telecopy No: (414) 797-3988
Berkshire Life Insurance Company
700 South Street
Pittsburgh, Massachusetts 01201
Attention: Securities Department
Telecopy No: (413) 443-9397
The Security Mutual Life Insurance Company of
Lincoln, Nebraska
200 Centennial Mall North (68508)
Post Office Box 82248
Lincoln, Nebraska 68501
Attention: Kevin Hammond
Telecopy No: (402) 434-9599
Schedule 1
Page 1