SIGNATURES -- (CONTINUED)
/s/ROBERT R. COOK Director
ROBERT R. COOK
/s/ALFRED J. GIARDENELLI Director
ALFRED J. GIARDENELLI
/s/CHARLES W. KLAPPERICH Director
CHARLES W. KLAPPERICH
__________________________ Director
SAMUEL M. LAWRENCE III
/s/JOHN C. PHILLIPS Director
JOHN C. PHILLIPS
/s/ROBERT J. POWERS Director
ROBERT J. POWERS
__________________________ Director
LARRY MARTIN
/s/JOHN MERCADANTE, JR. Director
JOHN MERCADANTE, JR.
II-8
October 15, 1997
Comfort Systems USA, Inc.
Three Riverway, Suite 200
Houston, Texas 77056
Gentlemen:
We have acted as counsel to Comfort Systems USA, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of its Registration
Statement on Form S-1 (the "Registration Statement"), filed by the Company under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the offering and sale by the Company of up to 583,878 shares of its common
stock, par value $.01 per share (the "Common Stock").
We have examined originals or copies of (i) the Second Amended and Restated
Certificate of Incorporation of the Company; (ii) the Bylaws of the Company, as
amended; (iii) certain resolutions of the Board of Directors of the Company; and
(iv) such other documents and records as we have deemed necessary and relevant
for purposes hereof. We have relied upon certificates of public officials and of
officers of the Company as to certain matters of fact relating to this opinion
and have made such investigations of law as we have deemed necessary and
relevant as a basis hereof. We have not independently verified any factual
matter relating to this opinion.
We have assumed the genuineness of all signatures, the authenticity of all
documents, certificates and records submitted to us as copies, and the
conformity to original documents, certificates and records of all documents,
certificates and records submitted to us as copies.
Comfort Systems USA, Inc.
October 15, 1997
Page 2
Based upon the foregoing, and subject to the limitations and assumptions set
forth herein, and having due regard for such legal considerations as we deem
relevant, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
2. The issuance of the Common Stock has been duly authorized, and when
issued and delivered by the Company against payment therefor as described in the
Registration Statement, such shares will be validly issued, fully paid and
nonassessable.
The foregoing opinion is based on and is limited to the laws of the State of
Delaware and the relevant law of the United States of America, and we render no
opinion with respect to the law of any other jurisdiction.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as Exhibit 5.1 to the Registration Statement and to the reference to
this firm as having passed on the validity of the issuance of the Common Stock
under the caption "Legal Matters" in the prospectus contained in the
Registration Statement. By giving such consent, we do not admit that we are
included within the category of persons whose consent is required under Section
7 of the Securities Act or the rules and regulations issued thereunder.
Very truly yours,
Bracewell & Patterson, L.L.P.
EXHIBIT 10.25
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
$75,000,000.00 REVOLVING CREDIT LOAN
AMONG
COMFORT SYSTEMS USA, INC.
AS THE COMPANY,
THE SUBSIDIARIES OF THE COMPANY
LISTED AS GUARANTORS HEREIN
AND
BANK ONE, TEXAS, N.A.,
AS THE AGENT
AND
THE BANKS NAMED HEREIN
DATED AS OF SEPTEMBER 22, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION..................1
SECTION 1.01. DEFINITIONS..........................................1
SECTION 1.02. TYPES OF ADVANCES...................................14
SECTION 1.03. ACCOUNTING TERMS....................................14
SECTION 1.04. SCHEDULES...........................................14
ARTICLE II THE LOANS.....................................................14
SECTION 2.01. THE LOANS...........................................14
SECTION 2.02. THE NOTES...........................................14
SECTION 2.03. NOTICE OF ADVANCE...................................14
SECTION 2.04. DISBURSEMENT OF FUNDS FOR LOANS.....................15
SECTION 2.05. CONVERSIONS AND CONTINUANCES........................15
SECTION 2.06. VOLUNTARY PREPAYMENTS...............................16
SECTION 2.07. MANDATORY REPAYMENTS................................16
SECTION 2.08. METHOD AND PLACE OF PAYMENT.........................16
SECTION 2.09. PRO RATA ADVANCES...................................16
SECTION 2.10. INTEREST............................................17
SECTION 2.11. INTEREST PERIODS....................................18
SECTION 2.12. INTEREST RATE NOT ASCERTAINABLE.....................19
SECTION 2.13. CHANGE IN LEGALITY..................................19
SECTION 2.14. INCREASED COSTS, TAXES OR CAPITAL ADEQUACY
REQUIREMENTS........................................20
SECTION 2.15. EURODOLLAR ADVANCE PREPAYMENT AND DEFAULT PENALTIES.21
SECTION 2.16. VOLUNTARY REDUCTION OF COMMITMENT...................22
SECTION 2.17. TAX FORMS...........................................22
ARTICLE III LETTERS OF CREDIT.............................................22
SECTION 3.01. LETTERS OF CREDIT...................................22
SECTION 3.02. LETTER OF CREDIT REQUESTS...........................23
SECTION 3.03. LETTER OF CREDIT PARTICIPATIONS.....................23
SECTION 3.04. INCREASED COSTS.....................................25
SECTION 3.05. CONFLICT BETWEEN APPLICATIONS AND AGREEMENT.........26
ARTICLE IV FEES...........................................................26
SECTION 4.01. FEES................................................26
ARTICLE V CONDITIONS PRECEDENT............................................27
SECTION 5.01. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE.........27
SECTION 5.02. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS...........28
SECTION 5.03. DELIVERY OF DOCUMENTS...............................28
-i-
ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................29
SECTION 6.01. ORGANIZATION AND QUALIFICATION......................29
SECTION 6.02. AUTHORIZATION AND VALIDITY..........................29
SECTION 6.03. GOVERNMENTAL CONSENTS...............................29
SECTION 6.04. CONFLICTING OR ADVERSE AGREEMENTS OR RESTRICTIONS...29
SECTION 6.05. TITLE TO ASSETS.....................................30
SECTION 6.06. LITIGATION..........................................30
SECTION 6.07. FINANCIAL STATEMENTS................................30
SECTION 6.08. DEFAULT.............................................30
SECTION 6.09. INVESTMENT COMPANY ACT..............................30
SECTION 6.10. PUBLIC UTILITY HOLDING COMPANY ACT..................31
SECTION 6.11. ERISA...............................................31
SECTION 6.12. TAX RETURNS AND PAYMENTS............................31
SECTION 6.13. ENVIRONMENTAL MATTERS...............................31
SECTION 6.14. PURPOSE OF LOANS....................................32
SECTION 6.15. FRANCHISES AND OTHER RIGHTS.........................32
SECTION 6.16. SUBSIDIARIES AND ASSETS.............................32
SECTION 6.17. SOLVENCY............................................32
SECTION 6.18. PAYMENT OF CERTAIN INDEBTEDNESS.....................32
ARTICLE VII AFFIRMATIVE COVENANTS........................................33
SECTION 7.01. INFORMATION COVENANTS...............................33
SECTION 7.02. BOOKS, RECORDS AND INSPECTIONS......................34
SECTION 7.03. INSURANCE AND MAINTENANCE OF PROPERTIES.............35
SECTION 7.04. PAYMENT OF TAXES....................................35
SECTION 7.05. CORPORATE EXISTENCE.................................35
SECTION 7.06. COMPLIANCE WITH STATUTES............................35
SECTION 7.07. ERISA...............................................36
SECTION 7.08. ADDITIONAL SUBSIDIARIES.............................36
ARTICLE VIII NEGATIVE COVENANTS...........................................36
SECTION 8.01. CHANGE IN BUSINESS..................................36
SECTION 8.02. CONSOLIDATION, MERGER OR SALE OF ASSETS.............36
SECTION 8.03. INDEBTEDNESS........................................37
SECTION 8.04. LIENS...............................................38
SECTION 8.05. INVESTMENTS.........................................38
SECTION 8.06. RESTRICTED PAYMENTS.................................39
SECTION 8.07. CHANGE IN ACCOUNTING................................39
SECTION 8.08. CHANGE OF CERTAIN INDEBTEDNESS......................39
SECTION 8.09. TRANSACTIONS WITH AFFILIATES........................39
SECTION 8.10. CURRENT RATIO.......................................40
SECTION 8.11. FUNDED DEBT TO EBITDA RATIO.........................40
SECTION 8.12. FUNDED DEBT TO CONSOLIDATED TANGIBLE NET WORTH RATIO40
SECTION 8.13. CAPITAL EXPENDITURES................................40
SECTION 8.14. INTEREST COVERAGE RATIO.............................40
-ii-
ARTICLE IX GUARANTY.......................................................40
SECTION 9.01. GUARANTY............................................40
SECTION 9.02. CONTINUING GUARANTY.................................41
SECTION 9.03. EFFECT OF DEBTOR RELIEF LAWS........................42
SECTION 9.04. WAIVER OF SUBROGATION...............................42
SECTION 9.05. SUBORDINATION.......................................43
SECTION 9.06. WAIVER..............................................43
SECTION 9.07. FULL FORCE AND EFFECT...............................44
ARTICLE X EVENTS OF DEFAULT AND REMEDIES.................................44
SECTION 10.01. EVENTS OF DEFAULT...................................44
SECTION 10.02. PRIMARY REMEDIES....................................45
SECTION 10.03. OTHER REMEDIES......................................46
ARTICLE XI THE AGENT.....................................................46
SECTION 11.01. AUTHORIZATION AND ACTION............................46
SECTION 11.02. AGENT'S RELIANCE....................................47
SECTION 11.03. AGENT AND AFFILIATES; BOT AND AFFILIATES............47
SECTION 11.04. BANK CREDIT DECISION................................48
SECTION 11.05. AGENT'S INDEMNITY...................................48
SECTION 11.06. SUCCESSOR AGENT.....................................49
SECTION 11.07. NOTICE OF DEFAULT...................................49
ARTICLE XII MISCELLANEOUS................................................49
SECTION 12.01. AMENDMENTS..........................................49
SECTION 12.02. NOTICES.............................................50
SECTION 12.03. NO WAIVER; REMEDIES.................................51
SECTION 12.04. COSTS, EXPENSES AND TAXES...........................51
SECTION 12.05. INDEMNITY...........................................52
SECTION 12.06. RIGHT OF SETOFF.....................................52
SECTION 12.07. GOVERNING LAW.......................................52
SECTION 12.08. INTEREST............................................53
SECTION 12.09. SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........54
SECTION 12.10. SUCCESSORS AND ASSIGNS; PARTICIPATIONS..............54
SECTION 12.11. CONFIDENTIALITY.....................................55
SECTION 12.12. PRO RATA TREATMENT..................................55
SECTION 12.13. SEPARABILITY........................................56
SECTION 12.14. EXECUTION IN COUNTERPARTS...........................56
SECTION 12.15. INTERPRETATION......................................56
SECTION 12.16. SUBMISSION TO JURISDICTION..........................57
SECTION 12.17. WAIVER OF JURY TRIAL................................58
SECTION 12.18. FINAL AGREEMENT OF THE PARTIES......................58
-iii-
Exhibits and Schedules:
Exhibit 1.01A Administrative Questionnaire
Exhibit 1.01B Subordination Terms
Exhibit 2.02(a) Form of Note
Exhibit 2.03 Form of Notice of Advance
Exhibit 2.05 Form of Notice of Conversion
Exhibit 3.02 Form of Letter of Credit Request
Exhibit 7.01(d) Form of Compliance Certificate
Exhibit 12.10(c) Form of Assignment and Acceptance
Schedule 6.04 Agreements
Schedule 6.06 Litigation
Schedule 6.13 Exceptions to Environmental Matters
Schedule 6.16 Subsidiaries
Schedule 8.03(b)(i) Existing Indebtedness
Schedule 8.03(b)(ii) Existing Indebtedness to be Retired
Schedule 8.04(a) Existing Liens
Schedule 8.05(b) Investments
-iv-
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of
September 22, 1997 (this "AGREEMENT") is among COMFORT SYSTEMS USA, INC., a
Delaware corporation (the "COMPANY"), the Subsidiaries of the Company listed on
the signature pages hereto as Guarantors (together with each other person who
subsequently becomes a Guarantor, collectively the "GUARANTORS"), the banks and
other financial institutions listed on the signature pages hereto under the
caption "Banks" (together with each other person who becomes a Bank,
collectively the "BANKS") and BANK ONE, TEXAS, N.A., individually as a Bank
("BOT") and as agent for the other Banks (in such capacity together with any
other Person who becomes the agent, the "AGENT").
The Company, Guarantors, BOT and the Agent are parties to that
certain Credit Agreement dated as of July 2, 1997 (the "Credit Agreement"),
which Credit Agreement provides for a revolving credit facility pursuant to
which BOT will commit to make loans of up to $75,000,000.00 including a letter
of credit facility not to exceed $5,000,000.00 to the Company for general
corporate purposes, including working capital, financing permitted acquisitions
and the issuance of letters of credit.
The Company has requested to further amend the Credit Agreement to
modify certain terms and conditions thereof, all as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the Company, the Agent, the Guarantors, and the
Banks agree as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"ADMINISTRATIVE QUESTIONNAIRE" means the questionnaire attached
hereto as EXHIBIT 1.01(A) to be completed by each Bank and returned to the
Agent.
"ADVANCE" means an advance, pursuant to a Notice of Advance,
comprised of a single Type of Loans from all the Banks (or resulting from
a conversion or conversions on the same date having, in the case of
Eurodollar Rate Advances, the same Interest Period (except as otherwise
provided in this Agreement)), made by all of the Banks concurrently to the
Company.
"ADVANCE DATE" means, with respect to each Advance, the Business Day
upon which the proceeds of such Advance are to be made available to the
Company.
"AFFILIATE" means any other Person directly or indirectly
controlling (including all directors and officers of such Person),
controlled by, or under direct or indirect common control with such
Person.
"AGENT" has the meaning specified in the introduction to this
Agreement.
"AGREEMENT" has the meaning specified in the introduction to this
Agreement.
"ALTERNATE BASE RATE" means, for any date, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and
(b) the Prime Rate in effect on such day. For purposes hereof, the term
"PRIME RATE" means, as of a particular date, the prime rate of BOT most
recently announced by BOT and in effect on such date, automatically
fluctuating upward or downward, as the case may be, with and at the time
of each change therein without notice to the Company or any other Person,
which prime rate may not necessarily represent the lowest or best rate
actually charged to a customer. "FEDERAL FUNDS EFFECTIVE RATE" means, for
any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If, for any reason, the Agent shall
have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate,
including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate
shall be determined without regard to clause (a) of the first sentence of
this definition until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"ALTERNATE BASE RATE ADVANCE" means any Advance bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance
with the provisions of ARTICLE II.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of an Alternate Base Rate
Advance and such Bank's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance.
"APPLICATION FOR LETTER OF CREDIT" means a letter of credit
application in a form satisfactory to the Issuing Bank.
-2-
"ASSETS" (whether or not capitalized) means any interest in any kind
of property or asset, whether real, personal or mixed, or tangible or
intangible.
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION
12.10 (C).
"BANK" has the meaning provided in the introduction to this
Agreement.
"BANKRUPTCY CODE" has the meaning specified in SECTION 10.01(E).
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"BOT" means Bank One, Texas, N.A., 910 Travis, 7th Floor, Houston,
Texas 77002.
"BUSINESS DAY" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of Texas) on which most banks are
open for business in Houston, Texas.
"CAPITALIZED LEASE OBLIGATIONS" means all lease or rental
obligations which, pursuant to GAAP, are capitalized for balance sheet
purposes.
"CERCLA" means the comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, state and local
analogs, and all rules and regulations and requirements thereunder in each
case as now or hereafter in effect.
"CHANGE OF CONTROL" means any of (i) the acquisition by any Person
(other than the shareholders on the Credit Agreement Effective Date), or
two or more Persons acting in concert, after the Credit Agreement
Effective Date of beneficial ownership of 50% or more of the outstanding
shares of voting stock of the Company, (ii) during any period of 24
consecutive months, beginning on the Credit Agreement Effective Date, the
ceasing of those individuals (the "CONTINUING DIRECTORS") who (a) were
directors of the Company on the first day of each such period or (b)
subsequently became directors of the Company and whose initial nomination
for election subsequent to that date was approved by a majority of the
Continuing Directors then on the board of directors of the Company, to
constitute a majority of the board of directors of the Company at any time
during such period, (iii) all or substantially all of the assets of the
Company and its Subsidiaries are sold in a single transaction or series of
related transactions to any Persons or (iv) the Company merges or
consolidates with or into any other Person except as permitted hereunder.
-3-
"CODE" means the Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
"COMMITMENT" and "COMMITMENTS" means the obligation of each of the
Banks to enter into and perform this Agreement, to make available the
Loans and to issue or participate in the Letters of Credit to the Company
in the amounts shown on the signature page of each Bank hereto and all
other duties and obligations of the Banks hereunder.
"COMMITMENT FEE" has the meaning specified in SECTION 4.01(A).
"COMPANY" has the meaning specified in the introduction to this
Agreement.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, an amount
equal to the consolidated stockholders' equity of the Company and its
subsidiaries LESS intangibles of such Persons determined in accordance
with GAAP as of such date.
"CONVERSION" or "CONVERT" (in each case whether or not capitalized)
means the changing of a Eurodollar Rate Advance to an Alternate Base Rate
Advance or vice versa in accordance with the provisions hereof.
"CREDIT AGREEMENT EFFECTIVE DATE" means July 2, 1997.
"CREDIT EVENT" means the making of any Advance or the issuance or
extension of any Letter of Credit.
"CURRENT ASSETS" and "CURRENT LIABILITIES" means, as to the Company
and its Subsidiaries determined on a consolidated basis, at any time the
aggregate current assets or current liabilities (other than the repayment
of the Loans) of the Company, each as determined in accordance with GAAP.
"DEFAULT" means the occurrence of any event which with or without
the giving of notice or the passage of time or both could become an Event
of Default.
"DEFAULT RATE" means the lesser of (i) the Highest Lawful Rate and
(ii) with respect to (a) Alternate Base Rate Advances, the rate per annum
which would otherwise be applicable plus two percent (2%), and (b)
Eurodollar Rate Advances, the rate per annum which would otherwise be
applicable plus three percent (3%).
"DESIGNATED PAYMENT DATE" means March 31, June 30, September 30 and
December 31 of each year; PROVIDED, HOWEVER, if a Designated Payment Date
shall be a day which is not a Business Day, such Designated Payment Date
shall be the next succeeding Business Day, and such extension of time
shall be included in determining the amount to be paid on such date.
-4-
"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the
office of such Bank designated from time to time as its "Domestic Lending
Office" hereunder.
"EBITDA" means, for any period, the consolidated pre-tax income for
such period, plus the aggregate amount which was deducted for such period
in determining such consolidated, pre-tax income in respect of interest
expense (including amortization of debt discount, imputed interest and
capitalized interest), plus depreciation and amortization, provided, the
calculations of EBITDA after the acquisition of assets or entities
permitted under Section 8.05(d) shall include pro forma adjustments
consistent with the regulations and practices of the United States
Securities and Exchange Commission (whether or not applicable) to account
for such acquired entity's historical EBITDA for the relevant period or
similar adjustments in the case of an asset acquisition.
"EFFECTIVE DATE" means the date on which all conditions to make an
Advance set forth in SECTION 5.01 are first met or waived in accordance
with SECTION 12.01 hereof.
"ELIGIBLE ASSIGNEE" means (a) any Bank; (b) a commercial bank
organized under the laws of the United States, or any state thereof, and
having total assets in excess of $250,000,000.00; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or any successor
organization, or a political subdivision of any such country, and having
total assets in excess of $1,000,000,000.00; PROVIDED that such bank is
acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the Organization
for Economic Cooperation and Development or any successor organization;
(d) the central bank of any country which is a member of the Organization
for Economic Cooperation and Development or any successor organization;
and (e) any other bank or similar financial institution approved by the
Agent, the Majority Banks and the Company, which consent of the Company
shall not be unreasonably withheld.
"ENVIRONMENTAL LAWS" means federal, state or local laws, rules or
regulations, and any judicial or administrative interpretations thereof,
including any judicial or administrative order, judgment, permit,
approval, decision or determination pertaining to conservation or
protection of the environment in effect at the time in question, including
the Clean Air Act, CERCLA, the Federal Water Pollution Control Act, the
Occupational Safety and Health Act, the Resource Conservation and Recovery
Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the
Superfund Amendment and Reauthorization Act of 1986, the Hazardous
Materials Transportation Act, and comparable state and local laws, and
other environmental conservation and protection laws.
"ERISA" means the Employee Retirement Income Security Act of 1974
and the regulations promulgated thereunder.
-5-
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which is either a member of the same "controlled group" or
under "common control," within the meaning of Section 414 of the Code and
the regulations thereunder, with the Company and (b) any Subsidiary of the
Company.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
as in effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to each Bank, the
branches or affiliates of such Bank designated as its "Eurodollar Lending
Office" from time to time hereunder.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate
Advance, the rate (rounded to 1/16 of 1%) at which dollar deposits
approximately equal in principal amount to the entire portion of such
Advance and for a maturity equal to the applicable Interest Period are
offered in immediately available funds to the Agent by prime banks in
whatever Eurodollar interbank market may be selected by the Agent in its
sole and absolute discretion at the time of determination and in
accordance with the then usual practice in such market at approximately
10:00 a.m. (Houston, Texas time) two Business Days prior to the
commencement of such Interest Period.
"EURODOLLAR RATE ADVANCE" means any Advance bearing interest at a
rate determined by reference to the Eurodollar Rate in accordance with the
provisions of ARTICLE II.
"EVENTS OF DEFAULT" has the meaning specified in SECTION 10.01.
"EXECUTION DATE" means the date upon which this Agreement shall have
been executed by the Company, the Guarantors, the Banks, and the Agent.
"FEDERAL FUNDS EFFECTIVE RATE" has the meaning specified in the
definition of the term "ALTERNATE BASE RATE."
"FEES" has the meaning specified in SECTION 4.01.
"FINANCIALS" has the meaning specified in SECTION 6.07.
"FUNDED DEBT" means all indebtedness for borrowed money evidenced by
a written document and subject to required payments of interest and/or
principal exclusive of Subordinated Debt.
"GAAP" means generally accepted accounting principles as in effect
from time to time as set forth in the opinions, statements and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting
Standards Board and such other Persons who shall be approved by a
significant segment of the accounting profession and concurred in by the
independent certified public accountants certifying any audited financial
statements of the Company.
-6-
"GUARANTEED OBLIGATIONS" has the meaning specified in SECTION 9.01.
"GUARANTORS" has the meaning provided in the introduction to this
Agreement.
"GUARANTY" means the obligations contained in ARTICLE IX hereof and
in any document containing similar obligations executed by subsequent
Guarantors.
"HAZARDOUS MATERIALS" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable
federal, state or local law or regulation, (b) hazardous substances, as
defined in CERCLA, or in any applicable state or local law or regulation,
(c) gasoline, or any other petroleum product or by-product, (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or in
any applicable federal, state or local law or regulation or (e)
insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable
federal, state or local law or regulation, as each such act, statute or
regulation may be amended from time to time.
"HIGHEST LAWFUL RATE" means, as to any Bank, the maximum nonusurious
rate of interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by such Bank on the Loans or under the Loan
Documents at any time or from time to time. If the maximum rate of
interest which, under applicable law, any of the Banks are permitted to
charge the Company on the Loans shall change after the date hereof, to the
extent permitted by applicable law, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, as of the
effective time of such change without notice to the Company or any other
Person.
"INDEBTEDNESS" means, without duplication, (a) all indebtedness for
borrowed money (whether by loan or the issuance and sale of debt
securities) or for the deferred purchase price of property or services,
(b) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property, (c) all
Capitalized Lease Obligations, (d) hedge or swap agreements; and (e)
obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of another Person of the kinds referred to in clauses (a)
through (d) above.
"INTEREST EXPENSE" means, with respect to the Company and its
Subsidiaries determined on a consolidated basis, for any period the total
interest expense for such period determined in conformity with GAAP
including any interest expense attributable to Capitalized Lease
Obligations.
-7-
"INTEREST PERIOD" has the meaning specified in SECTION 2.11.
"INVESTMENT" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of the assets, stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other
item which would be classified as an "investment" on a balance sheet of
such Person in accordance with GAAP, including any direct or indirect
contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an
interest.
"ISSUING BANK" means, for each Letter of Credit, BOT.
"LETTER OF CREDIT" has the meaning specified in SECTION 3.01(A).
" LETTER OF CREDIT FEE" means the following computed on the undrawn
face amount of each Letter of Credit (i) a 1/8% per annum fronting fee
payable to the Issuing Bank and (ii) a fee payable to the Issuing Bank for
the ratable benefit of the Banks equal to the greater of (a) $500.00 or
(b) a rate per annum determined in accordance with the grid set forth
below as a function of the Funded Debt to EBITDA ratio:
FUNDED DEBT/EBITDA RATIO LETTER OF CREDIT FEE
- --------------------------------------------------------------------------------
less than 1.00 .875%
greater than or equal to 1 but less than 1.50 1.125%
greater than or equal to 1.50 but less than 2.00 1.375%
greater than or equal to 2.00 but less than 2.50 1.875%
Any Letter of Credit Fees expressed as a rate per annum shall be
calculated on the basis of a 365 day year.
"LETTER OF CREDIT OBLIGATIONS" means at any time the sum of (a) the
aggregate then undrawn and unexpired amount of outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit
not reimbursed pursuant to SECTION 3.03(C).
"LETTER OF CREDIT REQUEST" has the meaning specified in SECTION
3.02(A).
"LIEN" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary and whether imposed or created by
operation of law or otherwise) upon, or pledge of, any of its property or
assets, whether now owned or hereafter acquired, or any lease intended as
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security, any capital lease in the nature of the foregoing, any
conditional sale agreement or other title retention agreement, in each
case, for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.
"LOAN" and "LOANS" has the meaning assigned thereto in SECTION 2.01.
"LOAN DOCUMENTS" means this Agreement and the other documents
described in ARTICLE V hereof, the Notes, the Notice of Advance, and the
corporate resolutions authorizing the Loan Documents.
"MAJORITY BANKS" means Banks holding at least 662/3% of the Advances
outstanding under the Loans, or, if no Advances are outstanding, Banks
holding such percentage of the Total Commitment (notwithstanding any
reduction or termination of the Total Commitment) or if there are no
Advances or Commitments outstanding, Banks holding such percentage of
outstanding Letters of Credit.
"MARGIN" means with respect to any Advance, the percentage
determined in accordance with the following table as a function of the
Funded Debt to EBITDA ratio:
FUNDED DEBT/ EURODOLLAR RATE ALTERNATE BASE
EBITDA RATIO ADVANCE RATE ADVANCE
- --------------------------------------------------------------------------------
less than 1.00 1.00% 0.00%
greater than or equal to 1 but less than 1.50 1.25% 0.00%
greater than or equal to 1.50 but less than 2.00 1.50% 0.00%
greater than or equal to 2.00 but less than 2.50 2.00% 0.25%
If sufficient information does not exist to calculate the Margin,
Eurodollar Rate Advances shall not be available to the Company and the
Margin for Alternate Base Rate Advances shall be deemed to be 0%.
"MARGIN PERIOD" means (a) the period from the Credit Agreement
Effective Date through the date that the first quarterly financial
statements are delivered pursuant to Section 7.01(a) and (b) thereafter, a
period commencing on the date on which the quarterly or annual financial
statements of the Company are required to be delivered pursuant to SECTION
7.01(A) or SECTION 7.01(B), as the case may be, and ending on the next
date a financial statement is required to be so delivered.
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"MATERIAL ADVERSE EFFECT" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), (a) a material
adverse effect on the financial condition, business or operations of the
Company individually or the Company and its Subsidiaries taken as a whole
or (b) a material impairment of the collective ability of the Company and
its Subsidiaries to make payment hereunder or under any Note or the right
of any Bank to enforce any of its remedies to collect any amounts owing
under the Loan Documents.
"MATURITY DATE" means a date which is three years after the Credit
Agreement Effective Date.
"MAXIMUM GUARANTEED AMOUNT" means for each Guarantor the maximum
amount which any Guarantor could pay under the Guaranty without having
such payment set aside as a fraudulent transfer or conveyance or similar
action under the Bankruptcy Code or any applicable state or foreign law.
"MULTIEMPLOYER PLAN" means any plan which is a "multiemployer plan"
(as such term is defined in Section 4001(a)(3) of ERISA).
"NOTE" has the meaning specified in SECTION 2.02.
"NOTE" and "NOTES" have the meaning specified in SECTION 2.02.
"NOTICE OF ADVANCE" has the meaning provided in SECTION 2.03(A).
"NOTICE OF CONVERSION" has the meaning provided in SECTION 2.05.
"NOTICE OF DEFAULT" has the meaning specified in SECTION 10.02.
"OBLIGATIONS" means all the obligations of the Company now or
hereafter existing under the Loan Documents, whether for principal,
interest, Fees, expenses, indemnification or otherwise.
"OTHER ACTIVITIES" has the meaning specified in SECTION 11.03.
"OTHER FINANCINGS" has the meaning specified in SECTION 11.03.
"PAYMENT OFFICE" means the office of the Agent located at 1111
Fannin Street, Houston, Texas 77002, or such other office as the Agent may
hereafter designate in writing as such to the other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
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"PERMITTED INVESTMENTS" means, as to any Person:
(a) securities issued or directly and fully guaranteed or
insured by the United States or any agency or instrumentality
thereof (PROVIDED that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition thereof,
(b) time deposits and certificates of deposit with maturities
of not more than twelve months from the date of acquisition by such
Person which deposits or certificates are either: (a) fully insured
by the Federal Deposit Insurance Corporation or (b) in any Bank or
other commercial bank incorporated in the United States or any U.S.
branch of any other commercial bank, in each case having capital,
surplus and undivided profits aggregating $100,000,000.00 or more
with a long-term unsecured debt rating of at least A- from Standard
& Poor's Ratings Group or A3 from Moody's Investors Service,
(c) commercial paper issued by any Person incorporated in the
United States rated at least A2 or the equivalent thereof by
Standard & Poor's Ratings Group or at least P2 or the equivalent
thereof by Moody's Investors Service and, in each case, maturing not
more than 270 days after the date of issuance,
(d) investments in money market mutual funds having assets in
excess of $2,000,000,000.00 substantially all of whose assets are
comprised of securities of the types described in clauses (a)
through (c) above, and
(e) repurchase or reverse purchase agreements respecting
obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into
with any bank listed in or meeting the qualifications specified in
clause (b) above.
"PERMITTED LIENS" shall mean: (a) Liens for taxes, assessments,
levies or other governmental charges not yet due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves are maintained in accordance with GAAP; (b) Liens in connection
with worker's compensation, unemployment insurance or other social
security, old age pension or public liability obligations not yet due or
which are being contested in good faith by appropriate proceedings and for
which adequate reserves are maintained in accordance with GAAP; (c)
operator's, vendors', carriers', warehousemen's, repairmen's, mechanics',
workers', materialmen's or other like Liens arising by operation of law in
the ordinary course of business (or deposits to obtain the release of any
such Lien) and securing amounts not yet due or which are being contested
in good faith by appropriate proceedings and for which adequate reserves
are maintained in accordance with GAAP; (d) deposits to secure insurance
in the ordinary course of business; (e) deposits to secure the performance
of bids, tenders, contracts (other than contracts for the payment of money
or the
-11-
deferred purchase price of goods or services), leases, licenses,
franchises, trade contracts, statutory obligations, surety and appeal
bonds and performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (f) easements, rights of way,
covenants, restrictions, reservations, exceptions, encroachments, zoning
and similar restrictions and other similar encumbrances (other than to
secure the payment of borrowed money or the deferred purchase price of
goods or services) or title defects, in each case incurred in the ordinary
course of business which, in the aggregate, are not substantial in
amount, and which do not in any case singly or in the aggregate materially
detract from the value or usefulness of the Property subject thereto for
the business conducted by the Company and its Subsidiaries or materially
interfere with the ordinary conduct of the business of the Company and its
Subsidiaries; (g) bankers' liens arising by operation of law; (h) inchoate
Liens arising under ERISA to secure contingent liabilities of the Company
and its Subsidiaries; and (i) Liens on assets of Subsidiaries to secure
indebtedness to the Company provided same are collaterally assigned to the
Agent, provided further, such Liens may be incurred only to the extent the
underlying Indebtedness is otherwise permitted under the terms of this
Agreement.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a foreign or
domestic state or political subdivision thereof or any agency of such
state or subdivision.
"PLAN" means any employee pension benefit plan (as defined in
Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the
Code, other than a Multiemployer Plan, with respect to which the Company
or an ERISA Affiliate contributes or has an obligation or liability to
contribute, including any such plan that may have been terminated.
"PRESCRIBED FORMS" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time,
be prescribed by law and which, pursuant to applicable provisions of the
Code or an income tax treaty between the United States and the country of
residence of the Bank providing the form(s) or statement(s), permit each
of the Company and the Agent to make payments hereunder for the account of
such Bank free of deduction or withholding of income and other taxes.
"PRIME RATE" has the meaning set forth in the definition of
Alternate Base Rate.
"PROPERTY" (whether or not capitalized) means any interest in any
kind of property or asset, whether real, personal or mixed, or tangible or
intangible.
"REGULATIONS A, D, G, T, U AND X" means Regulations A, D, G, T, U
and X of the Board as the same are from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
-12-
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment (including the abandonment or discarding of barrels,
containers and other closed receptacles).
"REPORTABLE EVENT" means an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"REQUIREMENTS OF ENVIRONMENTAL LAWS" means, as to any Person, the
requirements of any applicable Environmental Law relating to or affecting
such Person or the condition or operation of such Person's business or its
properties, both real and personal.
"RESERVE PERCENTAGE" means, for any Interest Period and for any
Bank, the reserve percentage applicable during such Interest Period under
regulations issued from time to time by the Board (or if more than one
such percentage is so applicable, the daily average for such percentages
for those days in such Interest Period during which any such percentage
shall be so applicable) for determining the actual reserve requirement
(including any marginal, supplemental or emergency reserves) for such Bank
in respect of liabilities or assets consisting of or including
Eurocurrency Liabilities.
"RESPONSIBLE OFFICER" means, with respect to the Company, the
chairman of the board of directors, president, any vice president, chief
executive officer, chief operating officer, treasurer or chief financial
officer of the Company.
"SUBSIDIARY" means and includes, with respect to any Person, (a) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person, directly or indirectly and (b) any partnership,
association, joint venture or other entity in which such Person, directly
or indirectly, has greater than 50% of the equity interest. Unless
otherwise provided or the context otherwise requires, the term
"Subsidiary" or "Subsidiaries" shall mean a Subsidiary or Subsidiaries of
the Company.
"SUBORDINATED DEBT" means any Indebtedness of the Company or any
subsidiary of the Company which is expressly and validly subordinated to
the obligations of the Company hereunder and under the Notes and other
Loan Documents pursuant to terms and conditions substantially in the form
of the attached EXHIBIT 1.01(B);
"TOTAL COMMITMENT" means the sum of the Commitments for each Bank
totaling a maximum of $75,000,000.00 for all Banks.
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"UNUTILIZED COMMITMENT" means the Total Commitment less Letter of
Credit Obligations less the outstanding Advances under the Loan, as same
may be reduced pursuant to SECTION 2.16.
SECTION 1.02. TYPES OF ADVANCES. Advances hereunder are
distinguished by "Type". The Type of an Advance refers to the determination
whether such Advance is a Eurodollar Rate Advance or an Alternate Base Rate
Advance.
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not defined
herein shall be construed in accordance with GAAP, as applicable, and all
calculations required to be made hereunder and all financial information
required to be provided hereunder shall be done or prepared in accordance with
GAAP.
SECTION 1.04. SCHEDULES. Schedules hereto may be updated by the
Company from time to time to reflect transactions and other matters not
prohibited by the Loan Documents.
ARTICLE II
THE LOANS
SECTION 2.01. THE LOANS. Subject to the terms and conditions hereof,
each Bank severally agrees at any time and from time to time on and after the
Effective Date and prior to the Maturity Date, to make and maintain a loan or
loans (together with any Advances under a Letter of Credit described in Article
III, a "LOAN" and collectively, the "LOANS") to the Company not to exceed at any
time outstanding the maximum amount of its Commitment, which Loans (i) shall, at
the option of the Company, be made and maintained pursuant to one or more
Advances comprised of Alternate Base Rate Advances or Eurodollar Rate Advances;
PROVIDED that, except as otherwise specifically provided herein, all Advances
made simultaneously under the Loan shall be of the same Type, (ii) in the case
of Eurodollar Rate Advances, shall be made in the minimum amount of
$1,000,000.00 and integral multiples of $100,000.00 and, in the case of
Alternate Base Rate Advances, in the minimum amount of $100,000.00 and integral
multiples thereof, or, in either case, in the remaining balance of the Total
Commitment, (iii) may be repaid and, so long as no Default or Event of Default
exists hereunder, reborrowed, at the option of the Company in accordance with
the provisions hereof, and (iv) shall, in the aggregate at any time outstanding
and together with all Letter of Credit Obligations, not exceed the Total
Commitment. There shall be no further Advances after the Maturity Date.
SECTION 2.02. THE NOTES. The Loans shall be evidenced by a Note in
favor of each Bank (individually a "NOTE" and collectively, the "NOTES"),
substantially in the form of EXHIBIT 2.02(A).
SECTION 2.03. NOTICE OF ADVANCE. (a) Whenever the Company desires an
Advance, it shall give written notice thereof (a "NOTICE OF ADVANCE") (or
telephonic notice promptly
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confirmed in writing) to the Agent (i) in the case of an Alternate Base Rate
Advance, not later than 10:00 a.m. (Houston, Texas time) on the date of such
Advance and (ii) in the case of a Eurodollar Rate Advance, not later than noon
(Houston, Texas time) three Business Days prior to the date of such Advance.
Each Notice of Advance shall be irrevocable and shall be in the form of EXHIBIT
2.03 hereto, specifying (i) the aggregate principal amount of the Advance to be
made, (ii) the date of such Advance (which shall be a Business Day), (iii)
whether it is to be an Alternate Base Rate Advance or a Eurodollar Rate Advance
and (iv) if the proposed Advance is to be a Eurodollar Rate Advance, the initial
Interest Period to be applicable thereto.
(b) The Agent shall promptly give the Banks written notice or
telephonic notice (promptly confirmed in writing) of each proposed Advance, of
each Bank's proportionate share thereof and of the other matters covered by each
Notice of Advance.
SECTION 2.04. DISBURSEMENT OF FUNDS FOR LOANS. (a) No later than
1:00 p.m. (Houston, Texas time) on any Advance Date for Loans, each Bank shall
make available its pro rata portion of the amount of such Advance in U.S.
dollars and in immediately available funds at the Payment Office. At such time,
the Agent shall credit the amounts so received to the general deposit account of
the Company maintained with the Agent in immediately available funds or as
otherwise directed by the Company.
(b) Unless the Agent shall have been notified by any Bank prior to
disbursement of the Advance by the Agent that such Bank does not intend to make
available to the Agent such Bank's portion of the Advance to be made on such
date, the Agent may assume that such Bank has made such amount available to the
Agent on such Advance Date and the Agent may, in reliance upon such assumption,
make available to the Company a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Bank and the Agent has
made available same to the Company, the Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Company, and the Company shall pay such corresponding amount
to the Agent within two (2) Business Days after demand therefor. The Agent shall
also be entitled to recover from such Bank or the Company, as the case may be,
interest on such corresponding amount from the date such corresponding amount
was made available by the Agent to the Company to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to (i) as to the
Company, the Alternate Base Rate or the Eurodollar Rate PLUS the applicable
Margin, as appropriate or (ii) as to any Bank, the Federal Funds Effective Rate
on the date of such Advance for a period of three (3) days and thereafter at the
Alternate Base Rate or the Eurodollar Rate PLUS the applicable Margin, as
appropriate. Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitments hereunder or to prejudice any rights which
the Company may have against any Bank as a result of any default by such Bank
hereunder.
SECTION 2.05. CONVERSIONS AND CONTINUANCES. The Company shall have
the option to convert or continue on any Business Day all or a portion of the
outstanding principal
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amount of one Type of Advance for any Loan into another Type of Advance,
PROVIDED, no Advances may be converted into or continued as Eurodollar Rate
Advances if a Default or Event of Default is in existence on the date of the
conversion. Any continuation of an Advance as the same Type of Advance in the
same amount shall be effected by the Company giving notice to the Agent, in
writing, or by telephone promptly confirmed in writing, of its intention to
continue such Advance as an Advance of the same Type. Each such conversion shall
be effected by the Company giving the Agent written notice (each a "NOTICE OF
CONVERSION"), substantially in the form of EXHIBIT 2.05 hereto, prior to noon
(Houston, Texas time) at least (a) three (3) Business Days prior to the date of
such conversion in the case of conversion into or continuance as Eurodollar Rate
Advances and (b) prior to 10:00 a.m. (Houston, Texas time) one Business Day
prior to the date of conversion in the case of a conversion into Alternate Base
Rate Advances, specifying each Advance (or portions thereof) to be so converted
and, if to be converted into or continued as Eurodollar Rate Advances, the
Interest Period to be initially applicable thereto. The Agent shall thereafter
promptly notify each Bank of such Notice of Conversion.
SECTION 2.06. VOLUNTARY PREPAYMENTS. The Company shall have the
right to voluntarily prepay any Loan in whole or in part at any time on the
following terms and conditions: (a) no Eurodollar Rate Advance may be prepaid
prior to the last day of its Interest Period unless, simultaneously therewith,
the Company pays to the Agent for the benefit of the Banks, all sums necessary
to compensate the Banks for all costs and expenses resulting from such
prepayment, as reasonably determined by the Banks, including but not limited to
those costs described in SECTIONS 2.10(F), 2.14, and SECTION 2.15 hereof; and
(b) each prepayment pursuant to this section shall be applied first, to the
payment of accrued and unpaid interest, and then, to the outstanding principal
of such Advances.
SECTION 2.07. MANDATORY REPAYMENTS.
The Company shall repay Loans on any day on which the aggregate
outstanding principal amount of the Loans together with the outstanding Letter
of Credit Obligations exceeds the Total Commitment, in the amount of such
excess. The aggregate amount under the Notes (and all accrued, unpaid interest)
shall be due and payable, and the Commitments shall terminate, on the Maturity
Date.
SECTION 2.08. METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement due from the
Company shall be made to the Agent for the benefit of the Banks not later than
11:00 a.m. (Houston, Texas time) on the date when due and shall be made in
lawful money of the United States in immediately available funds at the Payment
Office.
SECTION 2.09. PRO RATA ADVANCES. All Advances under this Agreement
shall be incurred from the Banks pro rata, on the basis of their respective
Commitments. It is understood that no Bank shall be responsible for any default
by any other Bank in its obligation to make Loans
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hereunder and that each Bank shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
SECTION 2.10. INTEREST. (a) Subject to SECTION 12.08, the
Company agrees to pay interest on the total outstanding principal balance of all
Alternate Base Rate Advances from the date of each respective Advance to
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
Alternate Base Rate in effect from time to time plus the Margin for Alternate
Base Rate Advances, which Margin shall be adjusted on the first day of each
Margin Period. If the Alternate Base Rate is based on the Prime Rate, interest
shall be computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be. If the Alternate Base Rate is based on
the Federal Funds Effective Rate, interest shall be computed on the basis of the
actual number of days elapsed over a year of 360 days.
(b) Subject to SECTION 12.08, the Company agrees to pay interest on
the total outstanding principal balance of all Eurodollar Rate Advances from the
date of each respective Advance to maturity (whether by acceleration or
otherwise) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) which shall, during each Interest Period
applicable thereto, be equal to the lesser of (i) the Highest Lawful Rate and
(ii) the applicable Eurodollar Rate for such Interest Period plus the Margin for
Eurodollar Rate Advances. The applicable Eurodollar Rate shall be fixed for each
Interest Period and shall not change during said Interest Period, but the
applicable Margin, which is added to said Eurodollar Rate to determine the total
interest payable to the Banks, shall be adjusted, if applicable under the
definition of "Margin", effective on the first day of each Margin Period,
whether or not said adjustment occurs at a time other than the beginning of an
Interest Period.
(c) Subject to SECTION 12.08, overdue principal and, to the extent
permitted by law, overdue interest in respect of any Advance and all other
overdue amounts owing hereunder shall bear interest for each day that such
amounts are overdue at a rate per annum equal to the Default Rate.
(d) Interest on each Advance shall accrue from and including the
date of such Advance to but excluding the date of any repayment thereof and
shall be payable (i) in respect of Eurodollar Rate Advances (A) on the last day
of the Interest Period (as defined below) applicable thereto and on each
Designated Payment Date during any Interest Period in excess of three (3) months
and (B) on the date of any voluntary or mandatory repayment or any conversion or
continuance, (ii) in respect of Alternate Base Rate Advances (A) on each
Designated Payment Date, and (B) on the date of any voluntary or mandatory
repayment of such Advances on the principal amount repaid and (iii) in respect
of each Advance, at maturity (whether by acceleration or otherwise) and, after
maturity, on demand.
(e) The Agent, upon determining the Eurodollar Rate for any Interest
Period, shall notify the Company thereof. Each such determination shall, absent
manifest error, be final and
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conclusive and binding on all parties hereto. In addition, prior to the due date
for the payment of interest on any Advances set forth in the immediately
preceding paragraph, the Agent shall notify the Company of the amount of
interest due by the Company on all outstanding Advances on the applicable due
date, but any failure of the Agent to so notify the Company shall not reduce the
Company's liability for the amount owed.
(f) The Company shall pay to the Agent for the account of each Bank,
so long as such Bank shall be required under regulations of the Board to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of such Bank's share of each Eurodollar Rate Advance, from the date of
such Advance until such principal amount is paid in full, at an interest rate
per annum equal at all times during the Interest Period for such Advance to the
lesser of (i) the Highest Lawful Rate and (ii) the remainder obtained by
subtracting (A) the Eurodollar Rate for such Interest Period from (B) the rate
obtained by dividing such Eurodollar Rate referred to in clause (A) above by
that percentage equal to 100% minus the Reserve Percentage of such Bank for such
Interest Period. Such additional interest shall be determined by such Bank as
incurred and shall be payable upon demand therefor by the Bank to the Company.
Each determination by such Bank of additional interest due under this Section
shall be conclusive and binding for all purposes in the absence of manifest
error.
SECTION 2.11. INTEREST PERIODS. (a) At the time the Company gives
any Notice of Advance or Notice of Conversion or provides notice of its intent
to continue a loan as the same Type in respect of the making of, or conversion
into, a Eurodollar Rate Advance, the Company shall have the right to elect, by
giving the Agent on the dates and at the times specified in SECTION 2.03 or
SECTION 2.05, as the case may be, notice of the interest period (each an
"INTEREST PERIOD") applicable to such Eurodollar Rate Advance, which Interest
Period shall be either a one, two, three or six month period; PROVIDED, that:
(i) the initial Interest Period for any Eurodollar Rate
Advance shall commence on the date of such Eurodollar Rate Advance
(including the date of any conversion thereto or continuance thereof
pursuant to SECTION 2.05); each Interest Period occurring thereafter in
respect of such Eurodollar Rate Advance shall commence on the expiration
date of the immediately preceding Interest Period;
(ii) if any Interest Period relating to a Eurodollar Rate
Advance begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, PROVIDED, that if there are no more Business Days
in that month, the Interest Period shall expire on the preceding Business
Day;
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(iv) no Interest Period for Advances shall extend beyond the
applicable Maturity Date; and
(v) the Company shall be entitled to have a maximum of ten
(10) separate Eurodollar Rate Advances hereunder for all Loans outstanding
at any one time.
(b) If, upon the expiration of any Interest Period applicable to a
Eurodollar Rate Advance, the Company has failed to elect a new Interest Period
to be applicable to such Advance as provided above, the Company shall be deemed
to have elected to convert such Advance into an Alternate Base Rate Advance
effective as of the expiration date of such current Interest Period.
SECTION 2.12. INTEREST RATE NOT ASCERTAINABLE. In the event that the
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) that on any date for determining
the Eurodollar Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the Eurodollar interbank market or
the Agent's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate, then, and in any such event, the Agent shall
forthwith give notice to the Company and to the Banks of such determination.
Until the circumstances giving rise to the suspension described herein no longer
exist, the obligations of the Banks to make Eurodollar Rate Advances shall be
suspended.
SECTION 2.13. CHANGE IN LEGALITY. (a) Notwithstanding anything to
the contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank or
its Eurodollar Lending Office to make or maintain any Eurodollar Rate Advance or
to give effect to its obligations as contemplated hereby, then, by prompt
written notice to the Company, such Bank may:
(i) declare that Eurodollar Rate Advances will not thereafter
be made by such Bank hereunder, whereupon the Company shall be prohibited
from requesting Eurodollar Rate Advances from such Bank hereunder unless
such declaration is subsequently withdrawn, PROVIDED, such request for a
Eurodollar Rate Advance shall, if the Company so indicates, be
automatically converted (as to such Bank) into a request for an Alternate
Base Rate Advance and the affected Bank or Banks shall respond thereto as
provided herein; and
(ii) require that all outstanding Eurodollar Rate Advances
made by such Bank be converted to Alternate Base Rate Advances, in which
event (A) all such Eurodollar Rate Advances shall be automatically
converted to Alternate Base Rate Advances as of the effective date of such
notice as provided in paragraph (b) below if required by applicable law or
regulation, or if not so required, at the end of the current Interest
Period and (B) all payments and prepayments of principal which would
otherwise have been applied to repay the converted Eurodollar Rate
Advances shall instead be applied to repay the Alternate Base Rate
Advances resulting from the conversion of such Eurodollar Rate Advances.
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(b) For purposes of this Section, a notice to the Company by the
Agent pursuant to paragraph (a) above shall be effective on the date of receipt
thereof by the Company.
SECTION 2.14. INCREASED COSTS, TAXES OR CAPITAL ADEQUACY
REQUIREMENTS. (a) If any change in the application or effectiveness of any
applicable law or regulation or compliance by any Bank with any applicable
guideline or request issued after the date hereof from any central bank or
governmental authority having jurisdiction over such Bank (whether or not having
the force of law) (i) shall change the basis of taxation of payments to such
Bank of the principal of or interest on any Eurodollar Rate Advance made by such
Bank or any other fees or amounts payable hereunder with respect to Eurodollar
Rate Advances (other than taxes imposed on the overall net income of such Bank
or its Applicable Lending Office or franchise taxes imposed upon it by the
jurisdiction in which such Bank or its Applicable Lending Office has an office),
(ii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement with respect to Eurodollar Rate Advances against assets of,
deposits with or for the account of, or credit extended by, such Bank (without
duplication of any amounts paid pursuant to SECTION 2.10(F)) or (iii) shall
impose on such Bank any other condition affecting this Agreement with respect to
Eurodollar Rate Advances or any Eurodollar Rate Advance made by such Bank, and
the result of any of the foregoing shall be to increase the cost to such Bank of
maintaining its Commitment or of making or maintaining any Eurodollar Rate
Advance or to reduce the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in respect thereof by an
amount deemed in good faith by such Bank to be material, then the Company shall
pay to such Bank such additional amount as will compensate it for such increase
or reduction within ten (10) days after notice thereof pursuant to SECTION
2.14(C).
(b) If any Bank shall have determined in good faith that any change
in any law, rule, regulation or guideline regarding capital adequacy, or any
change therein or any change in the interpretation or administration thereof or
compliance with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency has or would have the effect of reducing the rate of return on the
capital of such Bank as a consequence of, or with reference to, such Bank's
obligations hereunder to a level below that which it could have achieved but for
such adoption, change or compliance by an amount deemed by such Bank to be
material, then, from time to time, the Company shall pay to the Agent for the
benefit of such Bank such additional amount as will reasonably compensate it for
such reduction within ten (10) days after notice thereof pursuant to SECTION
2.14(C).
(c) Each Bank will notify the Company through the Agent of any event
occurring after the date of this Agreement which will entitle it to compensation
pursuant to this Section, as promptly as practicable after it becomes aware
thereof and determines to request compensation and in any case, within 120 days
after becoming aware thereof. A certificate setting forth in reasonable detail
the amount necessary to compensate the Bank in question as specified in
paragraph (a) or (b) above, as the case may be, and the calculation of such
amount shall be delivered to the Company and shall be conclusive absent manifest
error. The failure on the part of any Bank to demand increased compensation with
respect to any Interest Period shall not constitute a waiver of the right to
demand
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compensation thereafter within the 120 day time limit set forth above. Each Bank
agrees, to the extent it may lawfully do so without incurring additional costs,
to use its best efforts to minimize costs arising under this section by
designating another lending office for the Loans affected, PROVIDED no Bank
shall be required to do so.
(d) In the event any Bank gives a notice to the Company pursuant to
SECTION 2.13 or 2.14 that it cannot fund certain Loans or that such funding will
be at an increased cost, or is unable to deliver the Prescribed Forms as
required by SECTION 2.17 below, the Company may give notice in response, with
copies to the Agent, that it wishes to seek one or more banks to replace such
Bank in accordance with the provisions set forth in SECTION 12.10. Each Bank
giving such a notice agrees that, at the request of the Company, it will assign
all of its interests hereunder and under the Notes and the Commitment to a
designated, Eligible Assignee for the full amount then owing to it, all in
accordance with SECTION 12.10. Thereafter, said assignee shall have all of the
rights hereunder and obligations of the Assigning Bank (except as otherwise
expressly set forth herein) and such Bank shall have no further obligations to
the Company hereunder.
(e) Any notice given pursuant to this SECTION 2.14 shall be deemed
to contain a representation by the Bank issuing such notice that the increased
costs and charges are common to substantially all of the loan customers of such
Bank and are not unique to the Company.
SECTION 2.15. EURODOLLAR ADVANCE PREPAYMENT AND DEFAULT PENALTIES.
Subject to SECTION 12.08, the Company shall indemnify each Bank against any loss
or expense (excluding loss of anticipated profits) which it may sustain or incur
as a consequence of (a) an Advance of, or a conversion from or into, Eurodollar
Rate Advances that does not occur on the date specified therefor in a Notice of
Advance or Notice of Conversion or (b) any payment, prepayment or conversion of
a Eurodollar Rate Advance required by any other provision of this Agreement or
otherwise made on a date other than the last day of the applicable Interest
Period. Such loss or expense shall include an amount equal to the excess
determined by each Bank of (i) its cost of obtaining the funds for the Advance
being paid, prepaid or converted or not borrowed (based on the Eurodollar Rate)
for the period from the date of such payment, prepayment or conversion or
failure to borrow to the last day of the Interest Period for such Advance (or,
in the case of a failure to borrow, the Interest Period for the Advance which
would have commenced on the date of such failure to borrow) OVER (ii) the amount
of interest (as determined by each Bank) that would be realized in reemploying
the funds so paid, prepaid or converted or not borrowed for such period or
Interest Period, as the case may be. The Agent, on behalf of the Banks, will
notify the Company of any loss or expense which will entitle the Banks to
compensation pursuant to this Section, as promptly as possible after it becomes
aware thereof, but failure to so notify shall not affect the Company's liability
therefor. A certificate of any Bank setting forth any amount which it is
entitled to receive pursuant to this Section shall be delivered to the Company
and shall be conclusive absent manifest error if such determination is made on a
reasonable basis. The Company shall pay to the Agent for the account of the
Banks the amount shown as due on any certificate within ten (10) days after its
receipt of the same. Without prejudice to the survival of any other obligations
of the Company hereunder, the obligations of the Company under this Section
shall survive the termination
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of this Agreement and, with respect to the assigning Bank, the assignment of any
of the Notes, in each case for one hundred and twenty (120) days.
SECTION 2.16. VOLUNTARY REDUCTION OF COMMITMENT. Upon at least three
(3) Business Days' prior written notice, the Company shall have the right,
without premium or penalty, to reduce or terminate the Commitments, in whole or
in part, in the amount of $5,000,000.00 or integral multiples thereof.
SECTION 2.17. TAX FORMS. With respect to any Bank which is organized
under the laws of a jurisdiction outside the United States, on the date of the
initial Advance hereunder or on the date it becomes a party hereto, and from
time to time thereafter if requested by the Company or the Agent, each such Bank
shall provide the Agent and the Company with the Prescribed Forms. Unless the
Company and the Agent have received such Prescribed Forms, the Agent and the
Company if required by applicable law or regulation, may withhold taxes from
payments under the Loan Documents at the applicable rate in the case of payments
to or for any Bank organized under the laws of a jurisdiction outside the United
States, PROVIDED the Company shall, unless otherwise directed in writing by the
Agent or unless otherwise required by law, make all payments in full to the
Agent without deducting any withholding or similar taxes.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. LETTERS OF CREDIT. (a) Subject to and upon the terms
and conditions herein set forth, the Issuing Bank agrees that it will, at any
time and from time to time on or after the Credit Agreement Effective Date and
prior to the Maturity Date, following its receipt of a Letter of Credit Request
and Application for Letter of Credit, issue for the account of the Company and
in support of the obligations of the Company or any of its Subsidiaries, one or
more letters of credit (the "LETTERS OF CREDIT"), up to a maximum amount
outstanding at any one time for all Letters of Credit of $5,000,000.00, PROVIDED
that the Issuing Bank shall not issue any Letter of Credit if at the time of
such issuance: (i) Letter of Credit Obligations shall be greater than an amount
which, when added to the sum of all Advances then outstanding plus Letter of
Credit Obligations, would exceed the Total Commitment or (ii) the expiry date
or, in the case of any Letter of Credit containing an expiry date that is
extendible at the option of the Issuing Bank, the initial expiry date, of such
Letter of Credit is a date that is later than the Maturity Date.
(b) The Issuing Bank shall neither renew or extend nor permit the
renewal or extension of any Letter of Credit (which renewal or extension will
not be for any period ending after the Revolving Credit Maturity Date) if any of
the conditions precedent to such renewal set forth in SECTION 5.02 are not
satisfied or waived or, after giving effect to such renewal, the expiry date of
such Letter of Credit would be a date that is later than the Maturity Date.
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SECTION 3.02. LETTER OF CREDIT REQUESTS. (a) Whenever the Company
desires that a Letter of Credit be issued for its account or that the existing
expiry date shall be extended, it shall give the Issuing Bank (with copies to be
sent to the Agent and each Bank) (i) in the case of a Letter of Credit to be
issued, at least five (5) Business Days' prior written request therefor and (ii)
in the case of the extension of the existing expiry date of any Letter of
Credit, at least five (5) Business Days prior to the date on which the Issuing
Bank must notify the beneficiary thereof that the Issuing Bank does not intend
to extend such existing expiry date. Each such request shall be executed by the
Company and shall be in the form of EXHIBIT 3.02 attached hereto (each a "LETTER
OF CREDIT REQUEST") and shall be accompanied by an Application for Letter of
Credit therefor, completed to the reasonable satisfaction of the Issuing Bank,
and such other certificates, documents and other papers and information as the
Issuing Bank or the Agent may reasonably request. Each Letter of Credit shall be
denominated in U.S. dollars, shall expire no later than the date specified in
SECTION 3.01, shall not be in an amount greater than is permitted under clause
(i) of SECTION 3.01(A) and shall be in such form as may be reasonably approved
from time to time by the Issuing Bank and the Company.
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Company that such Letter of Credit may
be issued in accordance with, and will not violate the requirements of this
Agreement. Unless the Issuing Bank has received notice from any Bank before it
issues the respective Letter of Credit or extends the existing expiry date of a
Letter of Credit that one or more of the conditions specified in ARTICLE V are
not then satisfied, or that the issuance of such Letter of Credit would violate
this Agreement, then the Issuing Bank shall issue the requested Letter of Credit
for the account of the Company in accordance with the Issuing Bank's usual and
customary practices. Upon its issuance of any Letter of Credit or the extension
of the existing expiry date of any Letter of Credit, as the case may be, the
Issuing Bank shall promptly notify the Company and the Agent and the Agent shall
notify each Bank of such issuance or extension, which notices shall be
accompanied by a copy of the Letter of Credit actually issued or a copy of any
amendment extending the existing expiry date of any Letter of Credit, as the
case may be.
SECTION 3.03. LETTER OF CREDIT PARTICIPATIONS. (a) All Letters of
Credit issued subsequent hereto shall be deemed to have been sold and
transferred by the Issuing Bank to each Bank, and each Bank shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, (to
the extent of such Bank's percentage participation in the Commitment) in each
such Letter of Credit (including extensions of the expiry date thereof), each
substitute Letter of Credit, each drawing made thereunder and the obligations of
the Company under this Agreement and the other Loan Documents with respect
thereto, and any security therefor or guaranty pertaining thereto.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit.
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(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit, the same shall be considered an Alternate Base Rate Advance
without further action by any Person. The Issuing Bank shall promptly notify the
Agent, which shall promptly notify each Bank thereof. Each Bank shall
immediately pay to the Agent for the account of the Issuing Bank the amount of
such Lender's percentage participation of such Advance. If any Bank shall not
have so made its percentage participation available to the Agent, such Lender
agrees to pay interest thereon, for each day from such date until the date such
amount is paid at the lesser of (i) the Federal Funds Effective Rate and (ii)
the Highest Lawful Rate.
(d) The Issuing Bank shall not be liable for, and the obligations of
the Company and the Banks to make payments to the Agent for the account of the
Issuing Bank with respect to Letters of Credit shall not be subject to, any
qualification or exception whatsoever, including any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Company may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit, the Agent, any
Issuing Bank, any Bank, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction
between the Company and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or any other document presented under
the 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;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
(e) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by such Issuing Bank's gross negligence or willful
misconduct. IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT SUCH ISSUING
BANK, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (OTHER THAN WITH RESPECT TO
ANY CLAIMS BY THE ISSUING BANK AGAINST ANY SUCH OFFICER, DIRECTOR, EMPLOYEE OR
AGENT THEREOF) SHALL BE INDEMNIFIED AND HELD HARMLESS FROM, SUBJECT TO THE SAME
TYPE OF PROTECTIONS SET FORTH IN SECTION 11.05(B), ANY ACTION TAKEN OR OMITTED
BY SUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY RELATED
DRAFT OR DOCUMENT ARISING OUT OF OR RESULTING FROM SUCH PERSON'S SOLE OR
CONTRIBUTORY NEGLIGENCE, BUT NOT FROM THE GROSS NEGLIGENCE OR WILLFUL
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MISCONDUCT OF SUCH PERSON. The Company agrees that any action taken or omitted
by the Issuing Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in accordance with the standards of care
specified in the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce, Publication No. 500 (and any
subsequent revisions thereof approved by a Congress of the International Chamber
of Commerce and adhered to by the Issuing Bank) and, to the extent not
inconsistent therewith, the Uniform Commercial Code of the State of Texas, shall
not result in any liability of the Issuing Bank to the Company.
SECTION 3.04. INCREASED COSTS. (a) Notwithstanding any other
provision herein, but subject to SECTION 12.08, if any Bank shall have
determined in good faith that any change after the Credit Agreement Effective
Date of any law, rule, regulation or guideline or the application or
effectiveness of any applicable law or regulation or any change after the Credit
Agreement Effective Date in the interpretation or administration thereof, or
compliance by any Bank (or any lending office of such Bank) with any applicable
guideline or request from any central bank or governmental authority (whether or
not having the force of law) issued after the Credit Agreement Effective Date
either (i) shall impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued, or
participated in, by any Bank or (ii) shall impose on any Bank any other
conditions affecting this Agreement or any Letter of Credit; and the result of
any of the foregoing is to increase the cost to any Bank of issuing, maintaining
or participating in any Letter of Credit, or reduce the amount received or
receivable by any Bank hereunder with respect to Letters of Credit, by an amount
deemed by such Lender to be material, then, from time to time, the Company shall
pay to the Agent for the account of such Lender such additional amount or
amounts as will reasonably compensate such Lender for such increased cost or
reduction by such Lender.
(b) Each Bank will notify the Company through the Agent of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to subsection (a) above, as promptly as practicable. A
certificate of such Lender (i) stating that the compensation sought to be
recovered pursuant to this SECTION 3.04 is generally being charged to other
similarly situated customers and (ii) setting forth in reasonable detail such
amount or amounts as shall be necessary to compensate such Bank as specified in
subsection (a) above may be delivered to the Company (with a copy to the Agent)
and shall be conclusive absent manifest error. The Company shall pay to the
Agent for the account of such Bank the amount shown as due on any such
certificate upon demand; PROVIDED that with respect to events occurring prior to
any notice given under this SECTION 3.04(B), such Bank shall only be entitled to
recover compensation for such events occurring over a period of 120 days.
(c) Except as expressly provided in SECTION 3.04(B), failure on the
part of any Bank to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital with respect to
any Letter of Credit shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts received or
receivables or reduction in return on capital with respect to such Letter of
Credit.
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SECTION 3.05. CONFLICT BETWEEN APPLICATIONS AND AGREEMENT. To the
extent that any provision of any application related to any Letter of Credit is
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
ARTICLE IV
FEES
SECTION 4.01. FEES. Subject to SECTION 12.08 hereof, the Company
agrees to pay the following fees (the "FEES"):
(a) The Company agrees to pay to the Agent for the ratable account
of the Banks a Commitment fee (the "COMMITMENT FEE") for the period from and
including the Credit Agreement Effective Date to the Maturity Date,
respectively, computed at a rate per annum determined by the grid set forth
below and calculated on the basis of a 360 day-year on the daily average of the
Unutilized Commitment of each Bank. The rate for the Commitment Fee shall be
adjusted on the first day of each Margin Period. Commitment Fees shall be due
and payable in arrears on each Designated Payment Date commencing on the first
such date following the Credit Agreement Effective Date and on the Maturity
Date.
FUNDED DEBT/ EBITDA RATIO COMMITMENT FEE
- --------------------------------------------------------------------------------
less than 1.00 12.5 basis points
greater than or equal to 1 but less than 1.50 25.0 basis points
greater than or equal to 1.50 but less than 2.00 25.0 basis points
greater than or equal to 2.00 but less than 2.50 37.5 basis points
(b) The Letter of Credit Fees shall be due and payable at the time
the Issuing Bank is to issue or renew any Letter of Credit. The Letter of Credit
Fee shall be adjusted, if applicable under the definition of "Letter of Credit
Fee", on the first day of each Margin Period.
(c) The fees described in that one certain Fee Letter among the
Company, the Agent, BOT and Bank One Capital Markets dated May 13, 1997 and
executed by the Company on May 16, 1997.
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ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The
obligation of each Bank to make its initial Advance to the Company is subject to
the occurrence of or receipt by the Agent of the following, all in form and
substance satisfactory to the Agent, and, where relevant, executed by all
appropriate parties:
(a) this Agreement (which includes the Guaranty);
(b) one Note for each Bank;
(c) a Notice of Advance with respect to the initial Advance meeting
the requirements of SECTION 2.03(A);
(d) a certificate of an officer and of the secretary or an assistant
secretary of the Company dated as of the Credit Agreement Effective Date
certifying, (i) true and complete copies of each of the articles or certificate
of incorporation, as amended and in effect of the Company and each of the
Guarantors, the bylaws, as amended and in effect, of the Company and each of the
Guarantors and the resolutions adopted by the board of directors of the Company
and each of the Guarantors (A) authorizing the execution, delivery and
performance by the Company and each of its Subsidiaries of this Agreement and
the other Loan Documents to which it is or will be a party and, in the case of
the Company, the Advances to be made hereunder, (B) approving the forms of the
Loan Documents to which it is or will be a party and which will be delivered at
or prior to the date of the initial Advance and (C) authorizing officers of the
Company and each of its Subsidiaries to execute and deliver the Loan Documents
to which it is or will be a party and any related documents, including, any
agreement contemplated by this Agreement, (ii) the incumbency and specimen
signatures of the officers of the Company and each of its Subsidiaries executing
any documents on its behalf and (iii) that there has been no change in the
businesses or financial condition of the Company which could reasonably be
expected to have a Material Adverse Effect since December 31, 1996.
(e) a favorable, signed opinion addressed to the Agent and the Banks
from Bracewell & Patterson, L.L.P., counsel to the Company and the Guarantors
dated as of the Credit Agreement Effective Date;
(f) the payment to the Agent and the Banks of all Fees owing on the
Execution Date and all reasonable fees and expenses (including the reasonable
fees and disbursements of Andrews & Kurth L.L.P.) agreed upon by such parties to
be paid on the Execution Date;
(g) certificates of appropriate public officials as to the
existence, good standing and qualification to do business as a foreign
corporation, as applicable, of the Company and its Subsidiaries in each
jurisdiction in which the ownership of its properties or the conduct of its
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business requires such qualifications and where the failure to so qualify would
have a Material Adverse Effect; and
(h) The consummation of the initial public offering of the stock of
the Company pursuant to the S-1 Registration Statement filed with the Securities
and Exchange Commission on March 26, 1997, as amended, at a minimum share price
of $8.00 per share with gross proceeds of at least $48,800,000.
The acceptance of the benefits of the initial Credit Event shall
constitute a representation and warranty by the Company to the Agent and each of
the Banks that, all of the conditions specified in this Section above shall have
been satisfied or waived as of that time.
SECTION 5.02. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The
obligation of the Banks to make any Advance is, including, without limitation,
the initial Advance, subject to the further conditions precedent that on the
date of such Credit Event:
(a) The representations and warranties set forth in ARTICLE VI shall
be true and correct in all material respects as of, and as if such
representations and warranties were made on, the date of the proposed Advance
(unless such representation and warranty expressly relates to an earlier date or
is no longer true and correct solely as a result of transactions permitted by
the Loan Documents), and the Company shall be deemed to have certified to the
Agent and the Banks that such representations and warranties are true and
correct in all material respects by submitting a Notice of Advance.
(b) The Company shall have complied with the provisions of SECTION
2.03 hereof.
(c) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event.
(d) No Material Adverse Effect shall have occurred since the
delivery of the most recent financial statements delivered pursuant to SECTION
7.01.
(e) The Agent shall have received such other approvals or documents
as the Agent or the Banks may reasonably request.
The acceptance of the benefits of each such Credit Event shall
constitute a representation and warranty by the Company to the Agent and each of
the Banks that all of the conditions specified in this Section above exist as of
that time.
SECTION 5.03. DELIVERY OF DOCUMENTS. All of the Notes, certificates,
legal opinions and other documents and papers referred to in this ARTICLE V,
unless otherwise specified,
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shall be delivered to the Agent for the account of each of the Banks and, except
for the Notes, in sufficient counterparts for each of the Banks and shall be
reasonably satisfactory in form and substance to the Banks.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company, as to itself and each of its Subsidiaries, makes, on or
as of the occurrence of each Credit Event (except to the extent such
representations or warranties relate to an earlier date or are no longer true
and correct in all material respects solely as a result of transactions not
prohibited by the Loan Documents), the following representations and warranties
to the Agent and the Banks:
SECTION 6.01. ORGANIZATION AND QUALIFICATION. Each of the Company
and its Subsidiaries (a) is duly formed or organized, validly existing and is in
good standing under the laws of the state of its organization, (b) has the power
to own its property and to carry on its business as now conducted, except where
the failure to do so would not have a Material Adverse Effect and (c) is duly
qualified to do business and is in good standing in every jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect.
SECTION 6.02. AUTHORIZATION AND VALIDITY. Each of the Company and
its Subsidiaries has the corporate power and authority to execute, deliver and
perform its obligations hereunder and under the other Loan Documents to which it
is a party and all such action has been duly authorized by all necessary
corporate proceedings on its part. The Loan Documents to which each of the
Company and its Subsidiaries is a party have been duly and validly executed and
delivered by such Person and constitute a valid and legally binding agreement of
such Person enforceable in accordance with the respective terms thereof, except,
in each case, as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally, and by general
principles of equity regardless of whether such enforceability is a proceeding
in equity or at law.
SECTION 6.03. GOVERNMENTAL CONSENTS. No authorization, consent,
approval, license or exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is necessary for the valid execution, delivery or
performance by the Company or any Subsidiary of any Loan Document.
SECTION 6.04. CONFLICTING OR ADVERSE AGREEMENTS OR RESTRICTIONS.
Neither the Company nor any Subsidiary is a party to any contract or agreement
or subject to any restriction which would reasonably be expected to have a
Material Adverse Effect. All agreements of the Company relating to the lending
of money or the issuance of letters of credit by any party in existence on the
Credit Agreement Effective Date are described hereto on SCHEDULE 6.04. Neither
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the execution nor delivery of the Loan Documents nor compliance with the terms
and provisions hereof or thereof will be contrary to the provisions of, or
constitute a default under (a) the charter or bylaws of the Company or any of
its Subsidiaries or (b) any law, regulation, order, writ, injunction or decree
of any court or governmental instrumentality that is applicable to the Company
or any of its Subsidiaries or (c) any material agreement to which the Company or
any of its Subsidiaries is a party or by which it is bound or to which it is
subject.
SECTION 6.05. TITLE TO ASSETS. Each of the Company and its
Subsidiaries has good title to all material personalty and good and indefeasible
title to all material realty as reflected on the Company's and the Subsidiaries'
books and records as being owned by them, except for properties disposed of in
the ordinary course of business, subject to no Liens, except those permitted
hereunder, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. All of such assets have been and are being
maintained by the appropriate Person in good working condition in accordance
with industry standards, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
SECTION 6.06. LITIGATION. No proceedings against or affecting the
Company or any Subsidiary are pending or, to the knowledge of the Company,
threatened before any court or governmental agency or department which involve a
reasonable material risk of having a Material Adverse Effect except those listed
on SCHEDULE 6.06 hereof.
SECTION 6.07. FINANCIAL STATEMENTS. Prior to the Credit Agreement
Effective Date, the Company has furnished to the Banks its audited consolidated
balance sheet, audited consolidated income statement and statement of cash flows
for the twelve (12) months ended December 31, 1996 (such financials, the
"FINANCIALS"). The Financials have been prepared in conformity with GAAP
consistently applied (except as otherwise disclosed in such financial
statements) throughout the periods involved and present fairly, in all material
respects, the consolidated financial condition of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations for the periods then ended. As of the Credit Agreement
Effective Date, no Material Adverse Effect has occurred since December 31, 1996.
SECTION 6.08. DEFAULT. Neither the Company nor any Subsidiary is in
default under any material provisions of any instrument evidencing any
Indebtedness or of any agreement relating thereto, or in default in any respect
under any order, writ, injunction or decree of any court, or in default in any
respect under or in violation of any order, injunction or decree of any
governmental instrumentality, in each case in such manner as to cause a Material
Adverse Effect.
SECTION 6.09. INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary is, or is directly or indirectly controlled by or acting on behalf of
any Person which is, an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
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SECTION 6.10. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Company nor any Subsidiary is a non-exempt "holding company," or subject to
regulation as such, or, to the knowledge of the Company's or such Subsidiary's
officers, an "affiliate" of a "holding company" or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
SECTION 6.11. ERISA. No accumulated funding deficiency (as defined
in Section 412 of the Code or Section 302 of ERISA), that would cause a Material
Adverse Effect whether or not waived, exists or is expected to be incurred with
respect to any Plan. No liability to the PBGC (other than required premium
payments) has been or is expected by the Company to be incurred with respect to
any Plan by the Company or any ERISA Affiliate that would cause a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any
withdrawal liability under Title IV of ERISA with respect to any Multi-Employer
Plans.
SECTION 6.12. TAX RETURNS AND PAYMENTS. Each of the Company and
its Subsidiaries has filed all federal income tax returns and other tax returns,
statements and reports (or obtained extensions with respect thereto) which are
required to be filed and has paid or deposited or made adequate provision, in
accordance with GAAP for the payment of all taxes (including estimated taxes
shown on such returns, statements and reports) which are shown to be due
pursuant to such returns, except for such taxes as are being contested in good
faith and by appropriate proceedings.
SECTION 6.13. ENVIRONMENTAL MATTERS. Each of the Company and its
Subsidiaries (a) possesses all environmental, health and safety licenses,
permits, authorizations, registrations, approvals and similar rights necessary
under law or otherwise for the Company or such Subsidiary to conduct its
operations as now being conducted (other than those with respect to which the
failure to possess or maintain would not, individually or in the aggregate for
the Company and such Subsidiaries, reasonably be expected to have a Material
Adverse Effect) and (b) each of such licenses, permits, authorizations,
registrations, approvals and similar rights is valid and subsisting, in full
force and effect and enforceable by the Company or such Subsidiary, and each of
the Company and its Subsidiaries is in compliance with all effective terms,
conditions or other provisions of such permits, authorizations, registrations,
approvals and similar rights except for such failure or noncompliance that,
individually or in the aggregate for the Company and such Subsidiaries, would
not reasonably be expected to have a Material Adverse Effect. Except as
disclosed on SCHEDULE 6.13 on the Credit Agreement Effective Date, neither the
Company nor any of its Subsidiaries has received any notices of any violation
of, noncompliance with, or remedial obligation under, Requirements of
Environmental Laws (which violation or non-compliance has not been cured), and
there are no writs, injunctions, decrees, orders or judgments outstanding, or
lawsuits, claims, proceedings, investigations or inquiries pending or, to the
knowledge of the Company or any Subsidiary, threatened, relating to the
ownership, use, condition, maintenance or operation of, or conduct of business
related to, any property owned, leased or operated by the Company or such
Subsidiary or other assets of the Company or such Subsidiary, other than those
violations, instances of noncompliance, obligations, writs, injunctions,
decrees, orders, judgments,
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lawsuits, claims, proceedings, investigations or inquiries that, individually or
in the aggregate for the Company and such Subsidiaries, would not have a
Material Adverse Effect. Except as disclosed on SCHEDULE 6.13, there are no
material obligations, undertakings or liabilities arising out of or relating to
Environmental Laws to which the Company or any of its Subsidiaries has agreed,
assumed or retained, or by which the Company or any of its Subsidiaries is
adversely affected, by contract or otherwise and, further, except as disclosed
on SCHEDULE 6.13, neither the Company nor any of its Subsidiaries has received a
written notice or claim to the effect that the Company or any of its
Subsidiaries is or may be liable to any other Person as the result of a Release
or threatened Release of a Hazardous Material which, in either case, could
reasonably be expected to have a Material Adverse Effect.
SECTION 6.14. PURPOSE OF LOANS. (a) The proceeds of the Loan will be
used solely for general corporate purposes, including working capital and to
finance acquisitions permitted hereunder.
(b) None of the proceeds of any Advance will be used directly or
indirectly for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation U or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
stock.
SECTION 6.15. FRANCHISES AND OTHER RIGHTS. The Company and each of
its Subsidiaries has all franchises, permits, licenses and other authority as
are necessary to enable them to carry on their respective businesses as now
being conducted and is not in default in respect thereof where the absence of
such or any such default could reasonably be expected to have a Material Adverse
Effect.
SECTION 6.16. SUBSIDIARIES AND ASSETS. The Subsidiaries listed on
SCHEDULE 6.16 are all of the Subsidiaries of the Company as of the Credit
Agreement Effective Date and the address given for such Guarantors is the
correct mailing address as of the Credit Agreement Effective Date.
SECTION 6.17. SOLVENCY. After giving effect to the initial Advance
hereunder and all other Indebtedness of the Company existing at the time of such
Advance, the Company and its Subsidiaries, viewed as a consolidated entity have
at such time (a) capital sufficient to carry on their businesses and
transactions and (b) assets, the fair market value of which exceeds their
consolidated liabilities (as reflected on the Financials or on the financial
statements most recently delivered to the Banks).
SECTION 6.18. PAYMENT OF CERTAIN INDEBTEDNESS. The Company has (a)
repaid in full all of the Indebtedness described on Schedule 8.03(b)(ii) and (b)
obtained, and where applicable recorded in all appropriate locations, releases
of liens for all real and personal property securing same.
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ARTICLE VII
AFFIRMATIVE COVENANTS
The Company, as to itself and each of its Subsidiaries, covenants
and agrees that on and after the date hereof and for so long as this Agreement
is in effect and until the Notes have been paid in full and the Commitments have
terminated:
SECTION 7.01. INFORMATION COVENANTS. The Company will furnish to
each Bank:
(a) As soon as available, and in any event within forty-five (45)
days after the close of each fiscal quarter, the consolidated and consolidating
balance sheet of the Company and its Subsidiaries as of the end of such period
and the related consolidated and consolidating statements of income and cash
flow for such period, setting forth, in each case, comparative consolidated
figures for the related periods in the prior fiscal year, all of which shall be
certified by the chief financial officer or chief executive officer of the
Company as fairly presenting in all material respects, the financial position of
the Company and its Subsidiaries as of the end of such period and the results of
their operations for the period then ended in accordance with GAAP, subject to
changes resulting from normal year-end audit adjustments.
(b) As soon as available, and in any event within one hundred twenty
(120) days after the close of each fiscal year of the Company, the audited
consolidated and the unaudited consolidating balance sheets of the Company and
its Subsidiaries as at the end of such fiscal year and the related consolidated
and consolidating statements of income, stockholders equity and cash flows for
such fiscal year, setting forth, in each case, comparative figures for the
preceding fiscal year and certified by Arthur Andersen or other independent
certified public accountants of recognized national standing, whose report shall
be without limitation as to the scope of the audit and reasonably satisfactory
in substance to the Banks.
(c) Promptly after any Responsible Officer of the Company obtains
knowledge thereof, notice of:
(i) any material violation of, noncompliance with, or remedial
obligations under, Requirements of Environmental Laws that could cause a
Material Adverse Effect;
(ii) any Release or threatened material Release of Hazardous
Materials affecting any property owned, leased or operated by the Company
or any of its Subsidiaries that could cause a Material Adverse Effect;
(iii) any event or condition which constitutes a Default or an
Event of Default;
(iv) any condition or event which, in the opinion of
management of the Company, would reasonably be expected to have a Material
Adverse Effect;
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(v) any Person having given any written notice to the Company
or taken any other action with respect to a claimed material default or
event under any material instrument or material agreement;
(vi) the institution of any litigation which might reasonably
be expected in the good faith judgment of the Company either to have a
Material Adverse Effect or result in a final, non-appealable judgment or
award in excess of $1,000,000.00 with respect to any single cause of
action; and
(vii) all ERISA notices required by SECTION 7.07;
such notice shall specify the nature and period of existence thereof and
specifying the notice given or action taken by such Person and the nature of any
such claimed default, event or condition and, in the case of an Event of Default
or Default, what action has been taken, is being taken or is proposed to be
taken with respect thereto.
(d) At the time of the delivery of the financial statements provided
for in SECTIONS 7.01(A) and 7.01(B), a compliance certificate of a Responsible
Officer in the form attached hereto as EXHIBIT 7.01(D) to the effect that, no
Default or Event of Default exists or, if any Default or Event of Default does
exist, specifying the nature and extent thereof and the action that is being
taken or that is proposed to be taken with respect thereto, which certificate
shall set forth the calculations required to establish whether the Company was
in compliance with the provisions of SECTIONS 8.10 through 8.14 as at the end of
such fiscal period or year, as the case may be.
(e) Promptly following request by the Agent such environmental
reports, studies and audits of the Company's procedures and policies, assets and
operations in respect of Environmental Laws as the Agent may reasonably request.
(f) Promptly upon receipt thereof, a copy of any report or letter
submitted to the Company by its independent accountants in connection with any
regular or special audit of the Company's records.
(g) From time to time and with reasonable promptness, such other
information or documents as the Agent or any Bank through the Agent may
reasonably request.
SECTION 7.02. BOOKS, RECORDS AND INSPECTIONS. The Company and its
Subsidiaries will maintain, and will permit, or cause to be permitted, any
Person designated by any Bank or the Banks to visit and inspect any of the
properties of the Company and its Subsidiaries, to examine the corporate books
and financial records of the Company and its Subsidiaries and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any such corporations with the officers of the Company and its Subsidiaries
and with their independent public accountants, all at such reasonable times and
as often as the Agent or such Bank may reasonably request. Such inspections
shall be at the expense of the Bank or Banks requesting same unless there
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is in existence a Default at the time of such request in which event such
expense shall be at the expense of the Company.
SECTION 7.03. INSURANCE AND MAINTENANCE OF PROPERTIES. (a) Each of
the Company and its Subsidiaries will keep reasonably adequately insured by
financially sound and reputable insurers all of its material property, which is
of a character, and in amounts and against such risks, usually and reasonably
insured by similar Persons engaged in the same or similar businesses, including,
without limitation, insurance against fire, casualty and any other hazards
normally insured against. Each of the Company and its Subsidiaries will at all
times maintain insurance against its liability for injury to Persons or
property, which insurance shall be by financially sound and reputable insurers
and in such amounts and form as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties. The Company shall provide the Agent a listing of all such
insurance and such other certificates and other evidence thereof, on or prior to
the Credit Agreement Effective Date hereof and annually thereafter.
(b) Each of the Company and its Subsidiaries will cause all of its
material properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all reasonably necessary
repairs, renewals and replacements thereof, all as in the reasonable judgment of
such Person may be reasonably necessary so that the business carried on in
connection therewith may be properly conducted at all times, except where such
failure could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.04. PAYMENT OF TAXES. Each of the Company and its
Subsidiaries will pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
except for such amounts that are being contested in good faith and by
appropriate proceedings, except where such failure could not reasonably be
expected to have a Material Adverse Effect.
SECTION 7.05. CORPORATE EXISTENCE. Each of the Company and its
Subsidiaries will do all things necessary to preserve and keep in full force and
effect (a) the existence of the Company, and (b) unless the failure to do so
would not reasonably be expected to have a Material Adverse Effect, the rights
and franchises of each of the Company and its Subsidiaries.
SECTION 7.06. COMPLIANCE WITH STATUTES. Each of the Company and its
Subsidiaries will comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except to the extent the failure to do so would not reasonably
be expected to have a Material Adverse Effect.
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SECTION 7.07. ERISA. Promptly after any Responsible Officer of the
Company or any of its Subsidiaries knows or has reason to know any of the
following items are true the Company will deliver or cause to be delivered to
the Banks a certificate of the chief financial officer of the Company setting
forth details as to such occurrence and such action, if any, the Company or its
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Company or its ERISA
Affiliate with respect thereto: that a Reportable Event has occurred or that an
application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard; that a Multiemployer
Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that any required contribution to a Plan or
Multiemployer Plan has not been or may not be timely made; that proceedings may
be or have been instituted under Section 4069(a) of ERISA to impose liability on
the Company or an ERISA Affiliate or under Section 4042 of ERISA to terminate a
Plan or appoint a trustee to administer a Plan; that the Company or any ERISA
Affiliate has incurred or may incur any liability (including any contingent or
secondary liability) on account of the termination of or withdrawal from a Plan
or a Multiemployer Plan; and that the Company or an ERISA Affiliate may be
required to provide security to a Plan under Section 401(a)(29) of the Code.
SECTION 7.08. ADDITIONAL SUBSIDIARIES. The Company will cause any
Person that becomes a Subsidiary subsequent to the Credit Agreement Effective
Date, within ten (10) Business Days after becoming a Subsidiary, to execute a
Guaranty or a counterpart of this Agreement and deliver same to the Agent,
PROVIDED if said Subsidiary is not incorporated under the laws of the United
States or one of its states or territories, no such guaranty will be required if
the Company makes arrangements, satisfactory to the Agent, in its sole
discretion, regarding restrictions on transfer of funds or other assets by the
Company or any Subsidiary to said new foreign Subsidiary.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees, as to itself and, except as
otherwise provided herein, each of its Subsidiaries, that on and after the date
hereof and for so long as this Agreement is in effect and until the Commitments
have terminated:
SECTION 8.01. CHANGE IN BUSINESS. The Company will not, and will not
permit any of its Subsidiaries to, engage in any businesses not of the same
general type or reasonably related thereto as those conducted by the Company on
the Credit Agreement Effective Date.
SECTION 8.02. CONSOLIDATION, MERGER OR SALE OF ASSETS. Except as
previously disclosed to the Agent, the Company will not, and will not permit any
of its Subsidiaries to, wind up, liquidate or dissolve their affairs, or enter
into any transaction of merger or consolidation, or sell or otherwise dispose of
all or any substantial part of their property or assets (other than sales of
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inventory and surplus or obsolete assets in the ordinary course of business
provided that any disposal does not prejudice the Banks in any way), including
the capital stock of any Subsidiary, except for (a) mergers permitted under
SECTION 8.05(D), (b) mergers by the Company with any of its wholly-owned
Subsidiaries and mergers by the Company's wholly-owned Subsidiaries with another
of the Company's wholly-owned Subsidiaries and (c) mergers by a wholly-owned
Subsidiary of the Company with another Person in connection with an investment
permitted under SECTION 8.05(D).
SECTION 8.03. INDEBTEDNESS. Neither the Company nor any Subsidiary
of the Company will create, incur, assume or permit to exist any Indebtedness of
the Company or any Subsidiary except:
(a) Indebtedness existing hereunder;
(b) Indebtedness existing on the Credit Agreement Effective Date and
described in the Financials or, if not shown, listed on SCHEDULE 8.03(B)(I) and
(II) (but subject to SECTION 7.09);
(c) Indebtedness arising as a result of the endorsement in the
ordinary course of business of negotiable instruments in the course of
collection;
(d) accounts payable and unsecured, current and long-term,
liabilities (including accrued insurance related liabilities), not the result of
indebtedness for borrowed money, to vendors, suppliers and other Persons for
goods and services in the ordinary course of business;
(e) agreements to acquire any Person or assets issued by the Company
or any of its Subsidiaries in anticipation of acquiring such Person or assets if
such acquisition is not prohibited by this Agreement;
(f) intercompany Indebtedness of any Subsidiary of the Company to
the Company or any other Subsidiary and Indebtedness of the Company to any
Subsidiary of the Company provided that same is subordinate to the Obligations
in the manner provided in SECTION 8.05 hereof;
(g) current and deferred taxes;
(h) Other Indebtedness not in excess of $2,000,000.00 in the
aggregate at any time outstanding;
(i) Subordinated Debt incurred by Borrower solely in connection with
investments permitted by SECTION 8.05(D);
(j) Indebtedness assumed or acquired in connection with Investments
permitted under SECTION 8.05(D); provided that all of such Indebtedness in
excess of three percent (3%) of the
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net book value of the assets acquired in any such Investment shall be retired
within 60 days after the date of such Investment; and
(k) renewals and extensions with the same lenders (in the same or
lesser principal amount on similar terms and conditions) of any Indebtedness
listed in subparagraphs (a) through (i) above.
SECTION 8.04. LIENS. Neither the Company nor any Subsidiary of the
Company will create, incur, assume or suffer to exist any Lien upon or with
respect to any of its property or assets of any kind whether now owned or
hereafter acquired (nor will they covenant with any other Person not to grant
such a Lien to the Agent, except:
(a) Liens existing on the Credit Agreement Effective Date and listed
on SCHEDULE 8.04(A);
(b) Liens securing currently secured Indebtedness permitted under
SECTION 8.03(B) or (h) above;
(c) Permitted Liens;
(d) Liens securing Indebtedness permitted under SECTION 8.03(H) AND
8.03(J); and
(e) any renewal, extension or replacement of any Lien referred to
above with the same lenders; PROVIDED, that no Lien arising or existing as a
result of such extension, renewal or replacement shall be extended to cover any
property not theretofore subject to the Lien being extended, renewed or replaced
and PROVIDED FURTHER that the principal amount of the Indebtedness secured
thereby shall not exceed the principal amount of the Indebtedness so secured at
the time of such extension, renewal or replacement.
SECTION 8.05. INVESTMENTS. Neither the Company nor any Subsidiary
will, directly or indirectly, make or own any Investment in any Person, except:
(a) Permitted Investments;
(b) Investments owned on the Credit Agreement Effective Date as set
forth on SCHEDULE 8.05(B), including Investments in the Subsidiaries, direct and
indirect;
(c) Investments arising out of loans and advances for expenses,
travel per diem and similar items in the ordinary course of business to
officers, directors and employees and intercompany Indebtedness permitted by
SECTION 8.03(F);
(d) Investments in the stock, warrants, stock appreciation rights,
other securities and/or other assets of domestic entities engaged in the same
general type of business as the Company
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on the Credit Agreement Effective Date, (i) in which the Company or one of its
wholly owned Subsidiaries is the surviving entity, (ii) at a time when no
Default or Event of Default exists hereunder and (iii) the cash portion of the
purchase price for any one such Investment does not exceed $10,000,000.00;
(e) other Investments not exceeding $500,000.00 in the aggregate at
any one time outstanding;
(f) Investments in the form of stock buybacks allowed under SECTION
8.06; and
(g) Investments in capital stock of wholly-owned Subsidiaries of the
Company.
SECTION 8.06. RESTRICTED PAYMENTS. The Company will not pay any
dividends or redeem, retire, purchase or guaranty the value of or make any other
acquisition, direct or indirect, of any shares of any class of stock of the
Company, or of any warrants, rights or options to acquire any such shares, now
or hereafter outstanding, except to the extent that the consideration therefor
consists solely of shares of stock (including warrants, rights or options
relating thereto) of the Company or is approved by the Majority Banks; PROVIDED,
the Company may purchase the stock of departing officers and employees upon
their departure in a maximum, aggregate amount not to exceed $500,000.00 in the
aggregate or such larger amount at the Agent's written consent.
SECTION 8.07. CHANGE IN ACCOUNTING. The Company will not and will
not permit any Subsidiary to, change its method of accounting except for (a)
changes permitted by GAAP in which the Company's auditors concur, (b) changes
with respect to any Person or assets acquired by the Company to conform with the
Company's policies and procedures and which are permitted by GAAP or (c) changes
required by GAAP. The Company shall advise the Agent in writing promptly upon
making any material change to the extent same is not disclosed in the financial
statements required under SECTION 7.01 hereof. In the event of any such change,
the Company, the Banks and the Agent agree to negotiate amendments to SECTIONS
8.10 through 8.14 hereof (and related definitions, if relevant) so as to
equitably reflect such changes thereon with the intended result that the
criteria for evaluating the financial condition of the Company and its
Subsidiaries shall be substantially the same after such changes as before.
SECTION 8.08. CHANGE OF CERTAIN INDEBTEDNESS. The Company will not,
and will not permit any of its Subsidiaries after the occurrence and during the
continuance of any Event of Default to make any voluntary prepayments of
principal or interest on any other of the Company's Indebtedness.
SECTION 8.09. TRANSACTIONS WITH AFFILIATES. The Company will not,
directly or indirectly, engage in any transaction with any Affiliate, including
the purchase, sale or exchange of assets or the rendering of any service, except
in the ordinary course of business or pursuant to the reasonable requirements of
its business and, in each case, upon terms that are no less favorable than those
which might be obtained in an arm's-length transaction at the time from
non-Affiliates.
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SECTION 8.10. CURRENT RATIO. The Company will not permit the ratio
of Current Assets to Current Liabilities to be less than 1.25 to 1.0.
SECTION 8.11. FUNDED DEBT TO EBITDA RATIO. The Company will not as
of the last day of any fiscal quarter permit the ratio of its total Funded Debt
on such day to EBITDA for the four (4) quarters then ended to be greater than
2.5 to 1.0 at any time during the term hereof.
SECTION 8.12. FUNDED DEBT TO CONSOLIDATED TANGIBLE NET WORTH RATIO.
The Company will not permit as of the last day of any fiscal quarter the ratio
of (a) its total Funded Debt minus investable cash and Permitted Investments on
such day to (b) Consolidated Tangible Net Worth plus Subordinated Debt on such
day, to be greater than 1.25 to 1.0 at any time during the term hereof.
SECTION 8.13. CAPITAL EXPENDITURES. The Company will not permit
total consolidated capital expenditures (including Capitalized Lease Obligations
but exclusive of Investments permitted under SECTION 8.05(D) to be greater than
two percent (2%) of gross revenues for any fiscal year during the term hereof.
SECTION 8.14. INTEREST COVERAGE RATIO. The Company will not permit
as of the last day of any fiscal quarter the ratio EBITDA less depreciation for
the four (4) quarters ended on such day to required cash Interest Expense for
such period to be less than 4.0 to 1. This interest coverage ratio shall be
calculated on a year to date basis during the initial four quarter period during
the term hereof and on a rolling four (4) quarter basis thereafter.
ARTICLE IX
GUARANTY
SECTION 9.01. GUARANTY. In consideration of, and in order to induce
the Banks to make the Loans and the Issuing Bank to issue Letters of Credit
hereunder, the Guarantors hereby absolutely, unconditionally and irrevocably,
jointly and severally, guarantee the punctual payment and performance when due,
whether at stated maturity, by acceleration or otherwise, of the Obligations,
and all other obligations and covenants of the Company now or hereafter existing
under this Agreement, the Notes and the other Loan Documents whether for
principal, interest (including interest accruing or becoming owing both prior to
and subsequent to the commencement of any proceeding against or with respect to
the Company under any chapter of the Bankruptcy Code), Fees, commissions,
expenses (including reasonable attorneys' fees and expenses) or otherwise, and
all reasonable costs and expenses, if any, incurred by the Agent or any Bank in
connection with enforcing any rights under this Guaranty (all such obligations
being the "GUARANTEED OBLIGATIONS"), and agree to pay any and all reasonable
expenses incurred by each Bank and the Agent in enforcing this Guaranty;
PROVIDED that notwithstanding anything contained herein or in any of the Loan
Documents to the contrary, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed such Guarantor's Maximum
Guaranteed Amount,
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PROVIDED FURTHER, each Guarantor shall be unconditionally required to pay all
amounts demanded of it hereunder prior to any determination of such Maximum
Guaranteed Amount and the recipient of such payment, if so required by a final
non-appealable order of a court of competent jurisdiction, shall then be liable
for the refund of any excess amounts. If any such rebate or refund is ever
required, all other Guarantors (and the Company) shall be fully liable for the
repayment thereof to the maximum extent allowed by applicable law. This Guaranty
is an absolute, unconditional, present and continuing guaranty of payment and
not of collectibility and is in no way conditioned upon any attempt to collect
from the Company or any other action, occurrence or circumstance whatsoever.
Each Guarantor agrees that the Guaranteed Obligations may at any time and from
time to time exceed the Maximum Guaranteed Amount of such Guarantor without
impairing this Guaranty or affecting the rights and remedies of the Banks
hereunder.
SECTION 9.02. CONTINUING GUARANTY. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement, the Notes and the other Loan Documents. Each Guarantor agrees
that the Guaranteed Obligations and Loan Documents may be extended or renewed,
and Loans repaid and reborrowed in whole or in part, without notice to or assent
by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Obligations or Loan Documents, or any repayment and reborrowing of Loans. To the
maximum extent permitted by applicable law, the obligations of each Guarantor
under this Guaranty shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms hereof under any
circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Obligations;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights or remedies with respect to, any
direct or indirect security for any Guaranteed Obligations, including the
release of any Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or ownership of
the Company, any Guarantor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Company, such Guarantor, any other
Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other rights or
remedies which such Guarantor at any time may have against the Company, or the
Company or such Guarantor may have at any time against the Agent, any Bank, any
other Guarantor or any other Person, whether in connection with this Guaranty,
the Loan Documents, the transactions contemplated thereby or any
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other transaction other than by the payment in full by the Company of the
Guaranteed Obligations after the termination of the Commitments of the Banks;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the Company, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the Agent or any Bank; or
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
SECTION 9.03. EFFECT OF DEBTOR RELIEF LAWS. If after receipt of any
payment of, or proceeds of any security applied (or intended to be applied) to
the payment of all or any part of the Guaranteed Obligations, the Agent or any
Bank is for any reason compelled to surrender or voluntarily surrenders such
payment or proceeds to any Person (a) because such payment or application of
proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or (b)
for any other similar reason, including (i) any judgment, decree or order of any
court or administrative body having jurisdiction over the Agent, any Bank or any
of their respective properties or (ii) any settlement or compromise of any such
claim effected by the Agent or any Bank with any such claimant (including the
Company), then the Guaranteed Obligations or part thereof intended to be
satisfied shall be reinstated and continue, and this Guaranty shall continue in
full force as if such payment or proceeds have not been received,
notwithstanding any revocation thereof or the cancellation of any Note or any
other instrument evidencing any Guaranteed Obligations or otherwise; and the
Guarantors, jointly and severally, shall be liable to pay the Agent and the
Banks, and hereby do indemnify the Agent and the Banks and hold them harmless
for the amount of such payment or proceeds so surrendered and all expenses
(including reasonable attorneys' fees, court costs and expenses attributable
thereto) incurred by the Agent or any Bank in the defense of any claim made
against it that any payment or proceeds received by the Agent or any Bank in
respect of all or part of the Guaranteed Obligations must be surrendered. The
provisions of this paragraph shall survive the termination of this Guaranty, and
any satisfaction and discharge of the Company by virtue of any payment, court
order or any federal or state law.
SECTION 9.04. WAIVER OF SUBROGATION. Notwithstanding any payment or
payments made by any Guarantor hereunder, or any set-off or application by the
Agent or any Bank of any security or of any credits or claims, no Guarantor will
assert or exercise any rights of the Agent or any Bank or of such Guarantor
against the Company to recover the amount of any payment made by such Guarantor
to the Agent or any Bank hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and such
Guarantor shall not have any right of recourse to or any claim against assets or
property of the Company, in each case unless and until the Obligations of the
Company guaranteed hereby have been fully and finally satisfied. Until such
time, each Guarantor hereby expressly waives any right to exercise any claim,
right or remedy which
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such Guarantor may now have or hereafter acquire against the Company that arises
under this Agreement or any other Loan Document or from the performance by any
Guarantor of the Guaranty hereunder including any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification or
participation in any claim, right or remedy of the Agent or any Bank against the
Company, or any security that the Agent or any Bank now has or hereafter
acquires, whether or not such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise. If any amount shall be paid
to a Guarantor by the Company or another Guarantor after payment in full of the
Obligations, and the Obligations shall thereafter be reinstated in whole or in
part and the Agent or any Bank forced to repay and sums received by any of them
in payment of the Obligations, this Guaranty shall be automatically reinstated
and such amount shall be held in trust for the benefit of the Agent and the
Banks and shall forthwith be paid to the Agent to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured. The provisions of this
paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of the Company by virtue of any payment, court order or any
federal or state law.
SECTION 9.05. SUBORDINATION. If any Guarantor becomes the holder of
any indebtedness payable by the Company or another Guarantor, each Guarantor
hereby subordinates all indebtedness owing to it from the Company to all
indebtedness of the Company to the Agent and the Banks, and agrees that during
the continuance of any Event of Default it shall not accept any payment on the
same until payment in full of the Obligations of the Company under this
Agreement and the other Loan Documents after the termination of the Commitments
of the Banks and shall in no circumstance whatsoever attempt to set-off or
reduce any obligations hereunder because of such indebtedness. If any amount
shall nevertheless be paid in violation of the foregoing to a Guarantor by the
Company or another Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Agent and
the Banks and shall forthwith be paid to the Agent to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
SECTION 9.06. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand of
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the Agent or any Bank institute suit, collection
proceedings or take any other action to collect the Guaranteed Obligations,
including any requirement that the Agent or any Bank protect, secure, perfect or
insure any Lien against any property subject thereto or exhaust any right or
take any action against the Company or any other Person or any collateral (it
being the intention of the Agent, the Banks and each Guarantor that this
Guaranty is to be a guaranty of payment and not of collection). It shall not be
necessary for the Agent or any Bank, in order to enforce any payment by any
Guarantor hereunder, to institute suit or exhaust its rights and remedies
against the Company, any other Guarantor or any other Person, including others
liable to pay any Guaranteed Obligations, or to enforce its rights against any
security ever given to secure payment thereof. Each Guarantor hereby expressly
waives to the maximum extent permitted by applicable law each and every right to
which it may be entitled by virtue of the suretyship laws of the State of Texas,
including any and all rights it may have pursuant
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to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil
Practice and Remedies Code and Chapter 34 of the Texas Business and Commerce
Code. Each Guarantor hereby waives marshaling of assets and liabilities, notice
by the Agent or any Bank of any indebtedness or liability to which such Bank
applies or may apply any amounts received by such Bank, and of the creation,
advancement, increase, existence, extension, renewal, rearrangement or
modification of the Guaranteed Obligations. Each Guarantor expressly waives, to
the extent permitted by applicable law, the benefit of any and all laws
providing for exemption of property from execution or for valuation and
appraisal upon foreclosure.
SECTION 9.07. FULL FORCE AND EFFECT. This Guaranty is a continuing
guaranty and shall remain in full force and effect until all of the Obligations
of the Company under this Agreement and the other Loan Documents and all other
amounts payable under this Guaranty have been paid in full (after the
termination of the Commitments of the Banks). All rights, remedies and powers
provided in this Guaranty may be exercised, and all waivers contained in this
Guaranty may be enforced, only to the extent that the exercise or enforcement
thereof does not violate any provisions of applicable law which may not be
waived.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. EVENTS OF DEFAULT. The following events shall
constitute Events of Default ("EVENTS OF DEFAULT") hereunder:
(a) any installment of principal is not paid when due or any payment
of interest or Fees is not paid on the date on which such payment is due and
such failure continues for a period of five (5) days; or
(b) any representation or warranty made or deemed made by the
Company or any Subsidiary herein or in any of the Loan Documents or other
document, certificate or financial statement delivered in connection with this
Agreement or any other Loan Document shall prove to have been incorrect in any
material respect when made or deemed made or reaffirmed, as the case may be; or
(c) the Company shall fail to perform or observe or cause any
Subsidiary to fail to perform or observe (i) any duty or covenant contained in
ARTICLE VIII of this Agreement or (ii) any other duty or covenant contained
elsewhere in this Agreement or in any of the Loan Documents and such failure
continues for a period of thirty (30) days; or
(d) the Company or any Subsidiary shall (i) fail to make (whether as
primary obligor or as guarantor or other surety) any principal payment of or
interest or premium, if any, on any instrument of Indebtedness in excess of
$2,500,000 allowed hereunder outstanding beyond any period of grace provided
with respect thereto or (ii) shall fail to duly observe, perform or comply
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with any agreement with any Person or any term or condition of any instrument of
Indebtedness in excess of $2,500,000, if the effect of such failure is to cause,
or to permit the holder or holders to cause, such obligations to become due
prior to any stated maturity; or
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Subsidiary, or of a substantial part of the
property or assets of the Company or any Subsidiary, under Title 11 of the
United States Code, as now or hereafter in effect, or any successor thereto (the
"BANKRUPTCY CODE"), or any other federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of the property or assets of the Company or
any Subsidiary or (iii) the winding-up or liquidation of the Company or any
Subsidiary; and such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered; or
(f) the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under the Bankruptcy Code or any
other federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in clause (e)
above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of the property or assets of the Company or
any Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, or admit in writing its
inability or fail generally to pay its debts as they become due or (vii) take
any action for the purpose of effecting any of the foregoing; or
(g) a judgment or order, which with other outstanding judgments and
orders against the Company and its Subsidiaries equal or exceed $500,000.00 in
the aggregate (to the extent not covered by insurance as to which the respective
insurer has acknowledged coverage), shall be entered against the Company or any
Subsidiary and (i) within 30 days after entry thereof such judgment shall not
have been paid or discharged or execution thereof stayed pending appeal or,
within 30 days after the expiration of any such stay, such judgment shall not
have been paid or discharged or (ii) any enforcement proceeding shall have been
commenced (and not stayed) by any creditor or upon such judgment; or
(h) a Change of Control shall occur.
SECTION 10.02. PRIMARY REMEDIES. In any such event, and at any time
after the occurrence of any of the above described events, the Agent, if
directed by the Majority Banks, shall by written notice to the Company (a
"NOTICE OF DEFAULT") take any or all of the following actions, PROVIDED that, if
an Event of Default specified in SECTION 10.01(E) or SECTION 10.01(F) shall
occur, the following shall occur automatically without the giving of any Notice
of Default: (a) declare
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the Commitments terminated, whereupon the Commitments shall forthwith terminate
immediately and any Commitment Fee and any other owing and unpaid Fee shall
forthwith become due and payable without any other notice of any kind; (b)
declare the principal of and any accrued and unpaid interest in respect of all
Advances, and all obligations owing hereunder, to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, notice of demand
or of dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate, declaration or notice of acceleration or any other notice of any
kind (except as herein expressly provided), all of which are hereby waived by
the Company; (c) set off any assets or money of the Company or any Guarantor
in its or any Bank's possession against the Obligations; and (d) exercise any
rights or remedies under any document securing any of the Loan Documents or
under any applicable state or federal law.
SECTION 10.03. OTHER REMEDIES. Upon the occurrence and during the
continuance of any Event of Default, the Agent may proceed to protect and
enforce its and the Banks' rights, either by suit in equity or by action at law
or both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in any other Loan Document or in aid of the
exercise of any power granted in this Agreement or in any other Loan Document;
or may proceed to enforce the payment of all amounts owing to the Banks under
the Loan Documents and any accrued and unpaid interest thereon in the manner set
forth herein or therein; it being intended that no remedy conferred herein or in
any of the other Loan Documents is to be exclusive of any other remedy, and each
and every remedy contained herein or in any other Loan Document shall be
cumulative and shall be in addition to every other remedy given hereunder and
under the other Loan Documents or now or hereafter existing at law or in equity
or by statute or otherwise.
ARTICLE XI
THE AGENT
SECTION 11.01. AUTHORIZATION AND ACTION. Each Bank hereby
irrevocably appoints and authorizes the Agent to act on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to or required of the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. The Agent may perform any
of its duties hereunder by or through its agents and employees. The duties of
the Agent shall be mechanical and administrative in nature; the Agent shall not
have by reason of this Agreement or any other Loan Documents a fiduciary
relationship in respect of any Bank; and nothing in this Agreement or any other
Loan Document, expressed or implied, is intended to, or shall be so construed as
to, impose upon the Agent any obligations in respect of this Agreement or any
other Loan Document except as expressly set forth herein or therein. As to any
matters not expressly provided for by this Agreement, the Notes or the other
Loan Documents (including enforcement or collection of the Notes), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Banks,
and such instructions shall be binding upon the Banks and all holders of Notes
and the Obligations; PROVIDED, that the Agent shall
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not be required to take any action which exposes the Agent to personal liability
and shall not be required or entitled to take any action which is contrary to
any of the Loan Documents or applicable law.
SECTION 11.02. AGENT'S RELIANCE. (a) Neither the Agent nor any of
its directors, officers, agents or employees shall be liable to the Banks for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement, the Notes or any of the other Loan Documents (i) with the
consent or at the request of the Majority Banks or (ii) in the absence of its
or their own gross negligence or willful misconduct, IT BEING THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT THE AGENT AND ITS DIRECTORS, OFFICERS,
AGENTS AND EMPLOYEES SHALL HAVE NO LIABILITY TO THE BANKS FOR ACTIONS AND
OMISSIONS UNDER THIS SECTION RESULTING FROM THEIR SOLE ORDINARY OR CONTRIBUTORY
NEGLIGENCE.
(b) Without limitation of the generality of the foregoing, the
Agent: (i) may treat the payee of each Note and the Obligations as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel (including counsel for the Company), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with this
Agreement, any Note or any other Loan Document; (iv) except as otherwise
expressly provided herein, shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement, any Note or any other Loan Document or to inspect the property
(including the books and records) of the Company; (v) shall not be responsible
to any Bank for the due execution, legality, validity, enforceability,
collectibility, genuineness, sufficiency or value of this Agreement, any Note,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (vi) shall not be responsible to any Bank for the perfection
or priority of any Lien securing the Obligations; and (vii) shall incur no
liability under or in respect of this Agreement, any Note or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopier or cable) reasonably believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 11.03. AGENT AND AFFILIATES; BOT AND AFFILIATES. Without
limiting the right of any other Bank to engage in any business transactions with
the Company or any of its Affiliates, with respect to their Commitments, the
Loans made by them and the Notes issued to them, BOT and each other Bank who may
become the Agent shall have the same rights and powers under this Agreement and
its Notes as any other Bank and may exercise the same as though it was not the
Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include BOT and any such other Bank, in their individual capacities.
BOT, each other Person who becomes the Agent and their respective Affiliates may
be engaged in, or may hereafter engage in, one or more loan, letter of credit,
leasing or other financing activity not the subject of this Agreement
(collectively, the "OTHER FINANCINGS") with the Company, any Subsidiary or any
of its Affiliates, or
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may act as trustee on behalf of, or depositary for, or
otherwise engage in other business transactions with the Company, any Subsidiary
or any of its Affiliates (all Other Financings and other such business
transactions being collectively, the "OTHER ACTIVITIES") with no responsibility
to account therefor to the Banks. Without limiting the rights and remedies of
the Banks specifically set forth herein, no other Bank by virtue of being a Bank
hereunder shall have any interest in (a) any Other Activities, (b) any present
or future guaranty by or for the account of the Company not contemplated or
included herein, (c) any present or future offset exercised by the Agent in
respect of any such Other Activities, (d) any present or future property taken
as security for any such Other Activities or (e) any property now or hereafter
in the possession or control of the Agent which may be or become security for
the Obligations of the Company hereunder and under the Notes by reason of the
general description of indebtedness secured, or of property contained in any
other agreements, documents or instruments related to such Other Activities;
PROVIDED, HOWEVER, that if any payment in respect of such guaranties or such
property or the proceeds thereof shall be applied to reduction of the
Obligations evidenced hereunder and by the Notes, then each Bank shall be
entitled to share in such application according to its pro rata portion of such
Obligations.
SECTION 11.04. BANK CREDIT DECISION. Each Bank acknowledges and
agrees that it has, independently and without reliance upon the Agent or any
other Bank and based on the financial statements referred to in SECTION 7.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
SECTION 11.05. AGENT'S INDEMNITY. (a) The Agent shall not be
required to take any action hereunder or to prosecute or defend any suit in
respect of this Agreement, the Notes or any other Loan Document unless
indemnified to the Agent's satisfaction by the Banks against loss, cost,
liability and expense. If any indemnity furnished to the Agent shall become
impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given. In addition, the
Banks agree to indemnify the Agent (to the extent not reimbursed by the
Company), ratably according to the respective aggregate principal amounts of the
Notes then held by each of them (or if no Notes are at the time outstanding,
ratably according to the respective amounts of the Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement, the Notes and the other Loan
Documents. Without limitation of the foregoing, each Bank agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by the Agent in connection
with the preparation, execution, administration, or enforcement of, or legal
advice in respect of rights or responsibilities under, this Agreement, the Notes
and the other Loan Documents to the extent that the Agent is not reimbursed for
such expenses by the Company. The provisions of this Section shall
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survive the termination of this Agreement, the payment of the Obligations and/or
the assignment of any of the Notes.
(b) Notwithstanding the foregoing, no Bank shall be liable under
this Section to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements due to the Agent resulting from the Agent's gross negligence or
willful misconduct. EACH BANK AGREES, HOWEVER, THAT IT EXPRESSLY INTENDS, UNDER
THIS SECTION, TO INDEMNIFY THE AGENT RATABLY AS AFORESAID FOR ALL SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR RESULTING FROM THE AGENT'S
SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE.
SECTION 11.06. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company and may be removed as
Agent under this Agreement, the Notes and the other Loan Documents at any time
with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Majority Banks, and
shall have accepted such appointment, within 30 calendar days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be an Eligible Assignee. Upon the acceptance of any
appointment as Agent hereunder and under the Notes and the other Loan Documents
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement, the Notes and the other Loan Documents. After any retiring
Agent's resignation or removal as Agent hereunder and under the Notes and the
other Loan Documents, the provisions of this ARTICLE XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement, the Notes and the other Loan Documents.
SECTION 11.07. NOTICE OF DEFAULT. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a Bank or the Company
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." If the Agent receives such
notice, the Agent shall give notice thereof to the Banks; PROVIDED, HOWEVER, if
such notice is received from a Bank, the Agent also shall give notice thereof to
the Company. The Agent shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default as provided in SECTION
10.01 and SECTION 10.02.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. AMENDMENTS. No amendment or waiver of any provision
of this Agreement, any Note or any other Loan Document, nor consent to any
departure by the Company
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herefrom or therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Company, as to amendments, and by the Majority
Banks in all cases, and then, in any case, such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given PROVIDED, no such waiver or amendment shall be effective unless signed by
all of the Banks if it attempts to: (a) change the definition of "COMMITMENT",
"DESIGNATED PAYMENT DATE", "MAJORITY BANKS", "MARGIN" or "MATURITY DATE"; (b)
modify or waive the requirements of this Section, SECTIONS 4.01(A), SECTION
4.01(B), or SECTION 10.01(A); (c) modify so as to increase the ratio set forth
in SECTION 8.12 or waive the requirements of SECTION 8.12, in either case, for a
second consecutive fiscal quarter of the Company; (d) release any Guarantor or
(e) in any other manner change the repayment terms of the Loans, including
required principal payments, the rate, amount or time of interest payments or
the reimbursement obligations under any Letter of Credit.
SECTION 12.02. NOTICES. Except with respect to telephone
notifications specifically permitted pursuant to ARTICLE II, all notices,
consents, requests, approvals, demands and other communications provided for
herein shall be in writing (including telecopy communications) and mailed,
telecopied, sent by overnight courier or delivered:
(a) If to the Company and the Guarantors:
Comfort Systems USA, Inc.
Three Riverway, Suite 200
Houston, Texas 77056
Telephone No.: (713) 830-9600
Telecopy No: (713) 627-7176
Attention: J. Gordon Beittenmiller
(b) If to the Agent:
Bank One, Texas, N.A.
910 Travis, 7th Floor
Houston, Texas 77002
Telephone No.: (713) 751-3828
Telecopy No: (713) 751-6199
Attention: Mr. H. Gale Smith, Jr.
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and to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Telephone No.:(713) 220-4274
Telecopy No.: (713) 220-4285
Attention: Mr. Douglas J. Dillon
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other
parties.
(c) If to any Bank, to the address shown on the signature page
hereof or specified by such Bank (or the Agent on behalf of any Bank) to the
Company.
All communications shall, when mailed, telecopied or delivered, be
effective when mailed by certified mail, return receipt requested to any party
at its address specified above, or telecopied to any party to the telecopy
number set forth above, or delivered personally to any party at its address
specified above; PROVIDED, that communications to the Agent pursuant to ARTICLE
II shall not be effective until actually received by the Agent, and PROVIDED
FURTHER that communications sent by telecopy after 5:00 p.m., Houston, Texas
time, shall be effective on the next succeeding business day.
SECTION 12.03. NO WAIVER; REMEDIES. No failure on the part of any
Bank or the Agent to exercise, and no delay in exercising, any right hereunder,
under any Note or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, or any
abandonment or discontinuance of any steps to enforce such right, preclude any
other or further exercise thereof or the exercise of any other right. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances. The remedies
herein are cumulative and not exclusive of any other remedies provided by law,
at equity or in any other agreement.
SECTION 12.04. COSTS, EXPENSES AND TAXES. The Company agrees to pay
on demand: (a) all reasonable out-of-pocket costs and expenses of the Agent in
connection with the preparation, execution and delivery of this Agreement, the
Notes, the other Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities under this Agreement, the Notes and the other
Loan Documents, and any modification, supplement or waiver of any of the terms
of this Agreement or any other Loan Document, (b) all reasonable costs and
expenses of any Bank and any other holder of an interest in the Notes, and the
Obligations of the Company hereunder and under the Loan Documents, including
reasonable legal fees and expenses, in connection with the enforcement of this
Agreement, the Notes and the other Loan Documents and (c) reasonable costs and
expenses incurred in connection with
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third party professional services required by the Agent such as appraisers,
environmental consultants, accountants or similar Persons, PROVIDED THAT, prior
to any Event of Default hereunder, the Agent will first obtain the consent of
the Company to such expense, which consent shall not be unreasonably withheld.
Without prejudice to the survival of any other obligations of the Company
hereunder and under the Notes, the obligations of the Company under this Section
shall survive the termination of this Agreement or the replacement of the Agent
and each assignment of the Notes.
SECTION 12.05. INDEMNITY. (a) The Company shall and hereby does
indemnify the Agent and each Bank and each Affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages (including
reasonable legal fees and expenses) to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by the Company of the proceeds of any extension
of credit hereunder or any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the foregoing
or any of the other Loan Documents, and the Company shall reimburse each Bank
and each Affiliate thereof and their respective directors, officers, employees
and agents, upon demand for any expenses (including legal fees) reasonably
incurred in connection with any such investigation or proceeding; but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the Person to be indemnified (the
"INDEMNIFIED OBLIGATIONS").
(B) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL INDEMNIFIED
OBLIGATIONS: (I) ARISING OUT OF OR RESULTING FROM THE ORDINARY SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON OR (II) IMPOSED UPON SAID PARTY UNDER ANY
THEORY OF STRICT LIABILITY. Without prejudice to the survival of any other
obligations of the Company hereunder and under the other Loan Documents, the
obligations of the Company under this Section shall survive the termination of
this Agreement and the other Loan Documents and the payment of the Obligations
or the assignment of the Notes.
SECTION 12.06. RIGHT OF SETOFF. Without limiting the remedies
provided for in ARTICLE X, each Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits held and other indebtedness owing by such Bank, or any branch,
subsidiary or Affiliate, to or for the credit or the account of the Company
against any and all the Obligations of the Company now or hereafter existing
under this Agreement and the other Loan Documents and other obligations of the
Company held by such Bank, irrespective of whether or not such Bank shall have
made any demand under this Agreement, its Note or the Obligations and although
the Obligations may be unmatured. The rights of each Bank under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Bank may have.
SECTION 12.07. GOVERNING LAW. This Agreement, all Notes, the other
Loan Documents and all other documents executed in connection herewith shall be
deemed to be contracts
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and agreements executed by the Company and each Bank under the laws of the State
of Texas and of the United States of America and for all purposes shall be
construed in accordance with, and governed by, the laws of said state and of the
United States of America. Without limitation of the foregoing, nothing in this
Agreement, or in the Notes or in any other Loan Document shall be deemed to
constitute a waiver of any rights which any Bank may have under applicable
federal legislation relating to the amount of interest which such Bank may
contract for, take, receive or charge in respect of the Loan and the Loan
Documents, including any right to take, receive, reserve and charge interest at
the rate allowed by the law of the state where any Bank is located. The Agent,
each Bank and the Company further agree that insofar as the provisions of
Article 5069-1.04, of the Revised Civil Statutes of Texas, as amended, are
applicable to the determination of the Highest Lawful Rate with respect to the
Notes and the Obligations hereunder and under the other Loan Documents, the
indicated rate ceiling of such Article shall be applicable; PROVIDED, HOWEVER,
that to the extent permitted by such Article, the Agent may from time to time by
notice to the Company revise the election of such interest rate ceiling as such
ceiling affects the then current or future balances of the Loans. The provisions
of Article 5069-15.01 ET SEQ. do not apply to this Agreement, any Note issued
hereunder or the other Loan Documents.
SECTION 12.08. INTEREST. Each provision in this Agreement and each
other Loan Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, to the Agent or any Bank, or
charged, contracted for, reserved, taken or received by the Agent or any Bank,
for the use, forbearance or detention of the money to be loaned under this
Agreement or any Loan Document or otherwise (including any sums paid as required
by any covenant or obligation contained herein or in any other Loan Document
which is for the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate, and all amounts owed under this Agreement and each other
Loan Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in any Note or any other Loan Document to the contrary
notwithstanding, the Company shall not be required to pay unearned interest on
any Note and the Company shall not be required to pay interest on the
Obligations at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest which would otherwise be payable under such Note and such Loan
Documents would exceed the Highest Lawful Rate, or if the holder of such Note
shall receive any unearned interest or shall receive monies that are deemed to
constitute interest which would increase the effective rate of interest payable
by the Company under such Note and the other Loan Documents to a rate in excess
of the Highest Lawful Rate, then (a) the amount of interest which would
otherwise be payable by the Company shall be reduced to the amount allowed under
applicable law and (b) any unearned interest paid by the Company or any interest
paid by the Company in excess of the Highest Lawful Rate shall in the first
instance be credited on the principal of the Obligations of the Company (or if
all such Obligations shall have been paid in full, refunded to the Company). It
is further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, reserved, taken, charged or received by any
Bank under the Notes and
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the Obligations and under the other Loan Documents are made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate, and shall be
made, to the extent permitted by usury laws applicable to such Bank, by
amortizing, prorating and spreading in equal parts during the period of the full
stated term of the Notes and this Agreement all interest at any time contracted
for, charged or received by such Bank in connection therewith. Furthermore, in
the event that the maturity of any Note or other obligation is accelerated or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest under applicable law may never include more than the
maximum amount allowed by applicable law and excess interest, if any, provided
for in this Agreement, any Note or otherwise shall be canceled automatically as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be refunded to the Company.
SECTION 12.09. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants contained herein or made in writing by
the Company in connection herewith and the other Loan Documents shall survive
the execution and delivery of this Agreement, the Notes and the other Loan
Documents, the termination of the Commitments of the Banks and will bind and
inure to the benefit of the respective successors and assigns of the parties
hereto, whether so expressed or not, PROVIDED, that the Commitments of the Banks
shall not inure to the benefit of any successor or assign of the Company.
SECTION 12.10. SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) All
covenants, promises and agreements by or on behalf of the Company or the Banks
that are contained in this Agreement shall bind and inure to the benefit of
their respective permitted successors and assigns. The Company may not assign or
transfer any of its rights or obligations hereunder.
(b) Any of the Banks may assign to or sell participations to one or
more banks of all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including all or a portion of its
Commitment, the Advances and the Obligations of the Company owing to it and the
Notes); PROVIDED, that the participating banks or other entities shall be
entitled to the cost protection provisions contained in Article II and SECTION
12.04 and the Company shall continue to deal solely and directly with the Agent
in connection with its rights and obligations under this Agreement and the other
Loan Documents. Except with respect to cost protections provided to a
participant pursuant to this paragraph and the items listed in SECTION 12.01
hereof, no participant shall be a third party beneficiary of this Agreement nor
shall it be entitled to enforce any rights provided to the Banks against the
Company under this Agreement.
(c) A Bank may assign to any other Bank or Banks or to any Affiliate
of a Bank and, with the prior written consent of the Company and the Agent
(which consent shall not be unreasonably withheld), a Bank may assign to one or
more other Eligible Assignees all or a portion of its interests, rights, and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment and the same portion of the Loans and other
Obligations of the Company at the time owing to it and the Note held by it);
PROVIDED, HOWEVER, that (i) each such assignment shall be in a minimum principal
amount of not less than $5,000,000.00 all Types of Loans and shall be of a
constant, and not a varying, percentage of all the assigning Bank's
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Commitment, rights and obligations under this Agreement, (ii) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance,
an Assignment and Acceptance, substantially in the form of EXHIBIT 12.10(C)
hereto, in form and substance satisfactory to the Agent (an "ASSIGNMENT AND
ACCEPTANCE") and any Note subject to such assignment and (iii) no assignment
shall be effective until receipt by the Agent of a reasonable service fee from
the assignee in respect of said assignment equal to $2,000.00. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date (unless
otherwise agreed to by the assigning Bank, the Eligible Assignee thereunder and
the Agent) shall be at least five Business Days after the execution thereof, (x)
the Eligible Assignee thereunder shall be a party hereto and to the other Loan
Documents and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Bank hereunder and under the other Loan
Documents and (y) the assignor Bank thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement and the other Loan Documents (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Bank's rights
and obligations under this Agreement and the other Loan Documents, such Bank
shall cease to be a party hereto).
(d) Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this section, disclose to the assignee or participant
or proposed assignee or participant, any information relating to the Company
furnished to such Bank by or on behalf of the Company.
SECTION 12.11. CONFIDENTIALITY. Each Bank agrees to exercise its
best efforts to keep any information delivered or made available by the Company
to it which is clearly indicated to be confidential information, confidential
from anyone other than Persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; PROVIDED that nothing herein shall prevent any Bank
from disclosing such information (a) to any other Bank, (b) pursuant to subpoena
or upon the order of any court or administrative agency, (c) upon the request or
demand of any regulatory agency or authority having jurisdiction over such Bank,
(d) which has been publicly disclosed, (e) to the extent reasonably required in
connection with any litigation to which the Agent, any Bank, the Company or its
respective Affiliates may be a party, (f) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (g) to such Bank's legal
counsel and independent auditors and (h) to any actual or proposed participant
or assignee of all or part of its rights hereunder which has agreed in writing
to be bound by the provisions of this Section. Each Bank will promptly notify
the Company of any information that it is required or requested to deliver
pursuant to clause (b) or (c) of this Section and, if the Company is a party to
any such litigation, clause (e) of this Section .
SECTION 12.12. PRO RATA TREATMENT. (a) Except as otherwise
specifically permitted hereunder, each payment or prepayment of principal, if
permitted under this Agreement, and each payment of interest with respect to an
Advance shall be made pro rata among the Banks.
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(b) Each Bank agrees that if, through the exercise of a right of
banker's Lien, setoff or claim of any kind against the Company as a result of
which the unpaid principal portion of the Notes and the Obligations held by it
shall be proportionately less than the unpaid principal portion of the Notes and
Obligations held by any other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Notes and Obligations held
by such other Bank, in the amount required to render such amounts proportional;
PROVIDED, HOWEVER, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustments restored without interest.
SECTION 12.13. SEPARABILITY. Should any clause, sentence, paragraph
or Section of this Agreement be judicially declared to be invalid, unenforceable
or void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
SECTION 12.14. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Any Subsidiary of the Company that executes this Agreement after the
date of this Agreement shall, upon such execution, become a party hereto as a
Guarantor.
SECTION 12.15. INTERPRETATION. (a) In this Agreement, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and VICE
VERSA;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
PROVIDED that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary herein,
reference to any agreement, document or instrument (including this
Agreement) means such agreement,
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document or instrument as amended, supplemented or modified and in effect
from time to time in accordance with the terms thereof and, if applicable,
the terms hereof, and reference to any Note or other note includes any
Note issued pursuant hereto in extension or renewal thereof and in
substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof
or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, except as expressly provided to the contrary, the word "from" means
"from and including" and the word "to" means "to but excluding"; and
(ix) reference to any law, rule or regulation means such as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
(b) The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
(d) In the event of any conflict between the specific provisions of
this Agreement and the provisions of any application pertaining to any Letter of
Credit, the terms of this Agreement shall control.
SECTION 12.16. SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF TEXAS, IN HARRIS COUNTY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE COMPANY AND
EACH GUARANTOR FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS
ADDRESS PROVIDED IN SECTION 12.02 AND WITH RESPECT TO ANY GUARANTOR, AT THE
ADDRESS PROVIDED ON SCHEDULE 6.16 HERETO, SUCH SERVICE TO BECOME
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