FORM 8-B
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Registration of Securities of Certain Successor Issuers
Filed Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
PROLER INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 76-0494529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4265 San Felipe, Suite 900
Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b)of the Act:
Title of each class Name of each exchange on which
To Be So Registered Each Class Is To Be Registered
- ------------------- ------------------------------
Common New York Stock Exchange
Stock Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g)of the Act:
None
(Title of Class)
Page 1 of 17 Pages
Index Exhibit on Page 13
ITEM 1. GENERAL INFORMATION.
(a) The Registrant is a Delaware corporation incorporated on
February 27, 1996 and organized on February 28, 1996.
(b) The Registrant's fiscal year ends on January 31 of each year.
ITEM 2. TRANSACTION OF SUCCESSION.
(a) Joint Venture Operations, Inc., a Delaware corporation formerly
known as Proler International Corp., is the predecessor to the Registrant and is
referred to herein as the "Predecessor". The Common Stock and Stock Rights of
the Predecessor were registered pursuant to Section 12(b) of the Act.
(b) Effective February 28, 1996, the Predecessor reorganized its
corporate structure into a "holding company" structure, consisting of a holding
company (the Registrant) owning all of the assets previously owned by the
Predecessor and conducting all of the business previously conducted by the
Predecessor through newly-formed, wholly-owned direct and indirect operating
subsidiaries of the Registrant. As described below, in connection with the
restructuring, holders of Common Stock of the Predecessor became holders of an
identical number of shares of Common Stock of the Registrant, and the
Predecessor became a wholly-owned indirect subsidiary of the Registrant.
The restructuring was effected by a merger conducted pursuant to
ss.251(g) of the Delaware General Corporation Law, which provides for the
formation of a holding company structure without a vote of the stockholders of
the Predecessor. In the merger, the Predecessor merged with Proler Merger, Inc.,
a newly-formed, wholly-owned indirect subsidiary of the Registrant (the
"Merger"), with the Predecessor as the surviving corporation of the merger. In
the Merger, each outstanding share of Common Stock of the Predecessor and each
share of Common Stock of the Predecessor held in treasury was automatically
converted into one share of Common Stock of the Registrant. Additionally, each
outstanding option to purchase shares of the Predecessor's Common Stock was
automatically converted into an option to purchase, upon the same terms and
conditions, an identical number of shares of the Registrant's Common Stock, and
the stock options were assumed by and continued as stock options of the
Registrant. In the Merger, the Predecessor changed its name to "Joint Venture
Operations, Inc.", and the Registrant changed its name to "Proler International
Corp."
Also in connection with the Merger, the Predecessor redeemed
outstanding rights to purchase shares of the Predecessor's Series A Junior
Participating Preferred Stock (the "Existing Rights"), and the Registrant
distributed rights (the "Stock Rights") to purchase, on identical terms, shares
of the Registrant's Series A Junior Participating Preferred Stock carrying
identical terms, rights, and preferences as the Series A Junior Participating
Preferred Stock of the Predecessor. The Existing Rights were outstanding
pursuant to the Predecessor's Rights Agreement dated September 26, 1988.
Effective February 28, 1996, the Predecessor redeemed
Page 2 of 17 Pages
all of the Existing Rights at a price of $0.01 per Existing Right (equivalent to
one-third (1/3) of $0.01 per share of the Company's Common Stock), and the
Registrant distributed Stock Rights to stockholders of record on the basis of
one Stock Right for each Existing Right redeemed. As with the Existing Rights,
until the occurrence of certain events specified in the Registrant's Rights
Plan, the Stock Rights are represented by the outstanding shares of Common Stock
of the Registrant in respect of which the Stock Rights are issued, are not
transferable separately from the associated share of the Registrant's Common
Stock, and are automatically transferred upon transfer of the associated Common
Stock.
Immediately prior to the Merger, the Predecessor contributed the
assets, liabilities, and business constituting its domestic recycling and
industrial energy business and certain other assets to the Registrant, and the
Registrant in turn contributed those assets, liabilities and business to Proler
Industries, Inc., a newly-formed, wholly-owned direct subsidiary of the
Registrant.
As a result of the restructuring, all the business and operations
previously conducted by the Predecessor and its subsidiaries are now conducted
by the Registrant and its subsidiaries, and the assets and liabilities of the
Registrant and its subsidiaries on a consolidated basis are the same as the
assets and liabilities of the Predecessor and its subsidiaries immediately
before the Merger. The Certificate of Incorporation and the Bylaws of the
Registrant immediately after the Merger were identical to the Certificate of
Incorporation and Bylaws of the Predecessor as in effect immediately prior to
the restructuring, and the capital stock of the Registrant has the same
designations, rights, and preferences as the capital stock of the Predecessor
prior to the restructuring. In addition, the persons who held offices as
directors and officers of the Company prior to the restructuring hold the same
offices in the holding company after the Merger. The Common Stock and Stock
Rights of the Registrant are listed for trading on the New York Stock Exchange
under the symbol "PS", as were the Common Stock and Existing Rights of the
Predecessor. Stockholders of the Predecessor do not recognize gain or loss for
U.S. Federal Income tax purposes as a result of the restructuring.
The conversion of shares in the Merger occurred without an exchange of
certificates. Accordingly, certificates formerly representing shares of Common
Stock of the Predecessor are deemed to represent shares of Common Stock of the
Registrant.
ITEM 3. SECURITIES TO BE REGISTERED.
The securities to be registered include:
(i) COMMON STOCK OF THE REGISTRANT. As of the date of this filing and
as a result of the transaction of succession described above, the Registrant has
authorized 15,000,000 shares of Common Stock, $1.00 par value per share. As of
the date hereof, 5,351,460 shares of Common Stock have been issued, 634,104 of
which are held by or for the account of the Registrant.
Page 3 of 17 Pages
(ii) STOCK RIGHTS. As of the date of this filing, the Registrant has a
total of 1,783,820 Stock Rights outstanding. As of the date hereof, the Stock
Rights are attached to, represented by, and trade with the Common Stock in
respect of which they were issued. The Stock Rights will detach and trade
separately from the Common Stock, and certificates representing the Stock Rights
will be distributed, in the event of and upon the occurrence of a "Distribution
Date" as defined in Item 4 below.
ITEM 4. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The following description of the capital stock of the Registrant is a
summary of certain terms and provisions of the Registrant's Certificate of
Incorporation, Bylaws and Rights Agreement, each as in effect on the date
hereof.
AUTHORIZED CAPITAL STOCK. The authorized capital stock of the
Registrant consists of (i) 15,000,000 shares of Common Stock, $1.00 par value
per share, of which 5,351,460 shares are issued and 634,104 of the issued shares
are held by or for the account of the Registrant, and (ii) 500,000 shares of
Preferred Stock, $1.00 par value per share, 50,000 shares of which have been
designated as Series "A" Junior Participating Preferred Stock and none of which
shares of Series "A" Junior Participating Preferred Stock have been issued or
are outstanding as of the date hereof.
TERMS OF COMMON STOCK. Holders of Common Stock are entitled to receive
dividends at such time and in such amounts as may be determined by the Board of
Directors, subject to provisions of law and the preferences of the Preferred
Stock and of any other stock ranking prior to the Common Stock as to dividends.
Holders of Common Stock do not have preemptive rights to subscribe for, purchase
or receive any new or additional issues of capital stock, bonds, debentures, or
securities of the Registrant that are convertible into capital stock. In the
event of any liquidation, dissolution or winding up of the Registrant (whether
voluntary or involuntary), holders of Common Stock and any capital stock on a
parity with the Common Stock are entitled to their pro rata share of the assets
of the Registrant remaining after payment or provision for payment of all other
debts and liabilities of the Registrant and of all amounts payable to holders of
stock ranking prior to Common Stock as to distributions upon liquidation.
Holders of Common Stock have one vote for each share of Common Stock
held by them on each matter submitted to a vote of stockholders. The Certificate
of Incorporation does not provide for cumulative voting in elections of
directors.
The Registrant's Certificate of Incorporation provides for the
classification of the Board of Directors of the Registrant into three classes,
designated as Classes A, B, and C. Initially, Class A directors will serve until
the 1996 Annual Meeting of Stockholders, Class B directors will serve until the
1997 Annual Meeting of Stockholders, and Class C directors will serve until the
1998 Annual Meeting of Stockholders. At each annual meeting of stockholders,
elections will be held to replace those directors whose terms have expired.
Directors elected to an office
Page 4 of 17 Pages
upon the expiration of the initial terms of office set forth above will be
elected for three-year terms.
The Registrant's Certificate of Incorporation provides that the
affirmative vote of holders of not less than 75% of the voting securities of the
Registrant, and not less than a majority of voting securities of the Registrant
exclusive of voting securities held beneficially by the Registrant or any person
or entity with whom the Registrant proposes to enter into a transaction, shall
be required to approve (i) any merger or consolidation of the Registrant into,
(ii) any sale, lease or other disposition of assets of the Registrant to, or
(iii) any purchase, lease or other acquisition of assets by the Registrant from,
any corporation, person or entity which beneficially owns more than 5% of the
voting securities of the Registrant either (a) on the record date for
determination of stockholders entitled to vote on the transaction or (b) if no
such vote would be required but for this provision, the date the Registrant
enters into the transaction). The foregoing does not apply to a sale, lease or
other acquisition or disposition of assets with a fair market value less than or
equal to 10% of the fair market value of all assets of the Registrant prior to
the transaction, or to any transaction entered into pursuant to a letter of
intent or similar instrument approved by the Registrant's Board of Directors and
executed by the Registrant prior to the date that the other party acquired
beneficial ownership of in excess of 5% of voting securities of the Registrant.
Any amendment or repeal of the foregoing requirement requires the affirmative
vote of holders of at least 75% of voting securities of the Registrant voting
together as a class. For purposes of this provision, a corporation, person or
entity's "beneficial ownership" of capital stock in the Registrant includes
securities owned directly (whether or not of record), which it has the right to
acquire pursuant to any agreement or arrangement, which are beneficially owned
by an "affiliate" or "associate" (as defined by Rule 12b-2 under the Securities
Exchange Act of 1934) of such corporation, person or entity, or which are
beneficially owned directly or indirectly by any other corporation, person or
entity with which it or any affiliate or associate has any agreement or
arrangement regarding the acquisition, holding and voting of securities of the
Registrant, and "voting securities" include the Registrant's Common Stock and
any other securities of the Registrant entitled to vote as a class with holders
of Common Stock in an election of directors.
STOCK RIGHTS. On February 28, 1996, the Board of Directors of the
Registrant declared a distribution to its stockholders of record as of the
Effective Time of one-third of one Stock Right for each outstanding share of
Common Stock of the Registrant held by them as of the Effective Time. Each Stock
Right entitles the holder to purchase from the Registrant one one-hundredth of
one share of Series A Junior Participating Preferred Stock, $1.00 par value (the
"Preferred Stock"), at an exercise price of $200.00 per one one-hundredth of a
share (the "Purchase Price"). The description and terms of the Stock Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Registrant
and KeyCorp Shareholder Services, Inc. as Rights Agent.
As of the date hereof, there were 1,783,820 Stock Rights issued and
outstanding, which if exercisable, would be entitled to purchase a total of
17,838 shares of Series A Junior Participating Preferred Stock of the
Registrant.
Page 5 of 17 Pages
Initially, the Stock Rights are attached to the Common Stock
certificates representing shares of Common Stock in respect of which the Stock
Rights are issued, and no separate certificates representing the Stock Rights
will be distributed. The Stock Rights will separate from the Common Stock upon
the earlier of (i) ten days following a public announcement by the Registrant,
or by a person or group of affiliated or associated persons (other than the
Registrant, its subsidiaries, or certain affiliates of the Registrant) that has
acquired or obtained the right to acquire beneficial ownership of 20% or more of
the outstanding shares of Common Stock (an "Acquiring Person"), that a person or
group of affiliated or associated persons has become an Acquiring Person (the
"Stock Acquisition Date"), or (ii) ten business days following the commencement
of a tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of such outstanding shares of Common Stock (the
earlier of the date in (i) or (ii) being the "Distribution Date"). Until the
Distribution Date, (i) the Stock Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after February 28, 1996
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Stock Rights associated
with the Common Stock represented by such certificate.
The Stock Rights are not exercisable until the Distribution Date, and
will expire at the close of business on October 10, 1998, unless earlier
redeemed by the Registrant as described below.
As soon as practicable after the Distribution Date, certificates
representing the Stock Rights ("Rights Certificates") will be mailed to holders
of record of the Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Stock Rights Certificates alone will
represent the Stock Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Stock Rights.
In the event that, at any time following the Distribution Date, (i) the
Registrant is the surviving corporation in a merger with an Acquiring Person and
its Common Stock is not changed or exchanged, (ii) a Person becomes the
beneficial owner of more than 30% of the then-outstanding shares of Common Stock
(unless such Person first acquires 30% or more of the outstanding Common Stock
pursuant to a cash tender offer for all of the Common Stock (a) which offer
increases such Person's beneficial ownership to 80% or more and is followed
within 90 days by completion of a business combination in which all remaining
stockholders of the Registrant receive cash consideration per share at least
equal to the highest price paid in connection with such offer, or (b) which is
found by the Board of Directors to be at a price and on terms that are fair and
otherwise to be in the best interests of the Registrant and it stockholders),
(iii) an Acquiring Person engages in one or more "self-dealing" transactions as
set forth in the Rights Agreement, or (iv) during such time as there is an
Acquiring Person, certain events occur which result in such Acquiring Person's
ownership interest being increased by more than 1% (e.g., a reverse stock
split), each holder of a Right will thereafter have the right to receive, upon
exercise of the Right, Common Stock (or, in certain circumstances, cash,
Page 6 of 17 Pages
property or other securities of the Registrant) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in clauses (i), (ii),
(iii) and (iv) of this paragraph, all Stock Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Stock Rights are not
exercisable following the occurrence of any of the events set forth above until
such time as the Stock Rights are no longer redeemable by the Registrant as set
forth below.
In the event that, at any time following the Stock Acquisition Date,
(i) the Registrant is acquired in a merger or other business combination
transaction in which the Registrant is not the surviving corporation (other than
a merger following a tender offer of the type described in the parenthetical in
clause (ii) of the first sentence of the preceding paragraph), (ii) any person
shall consolidate with or merge into the Company, the Company is the surviving
corporation of the merger, and all or part of the shares of the Registrant's
Common Stock are exchanged for stock or other securities of any other person or
cash or any other property, or (iii) 50% or more of the Registrant's assets or
earning power is sold or transferred, each holder of a Right (except Stock
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the "Triggering Events."
The Purchase Price payable, and the number of one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon exercise
of the Stock Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase Price. No
fractional shares of Preferred Stock will be issued upon the exercise of any
Stock Rights (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, the
Registrant may redeem the Stock Rights in whole, but not in part, at a price of
$.01 per Stock Right. After the redemption period has expired, the Registrant's
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 10% or less of the outstanding shares of Common Stock in
a transaction or series of transactions not involving the Registrant.
Immediately upon the action of the Board of Directors ordering redemption of the
Stock Rights, the Stock Rights will terminate and the only right of the holders
of Stock Rights will be to receive the $.01 redemption price per Stock Right.
Page 7 of 17 Pages
In addition, the Stock Rights may be redeemed by stockholder action at
$.01 per Right when certain procedures are complied with in connection with an
acquisition proposal. If a bidder who does not own more than 1% of the
Registrant's stock (and who has not within one year prior to making an
acquisition proposal owned in excess of 1% of the Common Stock and disclosed a
plan or intention to acquire or influence control of the Registrant) proposes to
buy all of the Registrant's stock for cash at a price which a nationally
recognized investment banker selected by the bidder states in writing is fair,
and the bidder has obtained full financing commitments (or otherwise has full
financing) to complete the transaction and complies with certain procedural
requirements, then the Registrant, upon the request of the bidder, will hold a
special meeting of stockholders to consider a resolution requesting the Board of
Directors to accept the bidder's proposal (the special meeting procedure would
also be available to a bidder who owns more than 1% of the Registrant's stock on
February 28, 1996, if such holder does not increase his ownership interest by
more than 1% prior to making a proposal.) If a majority of the outstanding
shares entitled to vote on the proposal vote in favor of the resolution, then,
so long as no person or group acquires 20% or more of the Registrant's Common
Stock, the Stock Rights will be automatically redeemed immediately prior to the
consummation of any tender offer (whether made by the bidder or by anyone else,
provided the tender offer is consummated within 60 days of the special
stockholders meeting) for all of the Registrant's stock at a price per share in
cash no less than the price offered by the bidder and approved by the
stockholders.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Registrant, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Stock
Rights will not be taxable to stockholders or to the Registrant, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Stock Rights become exercisable for Common Stock (or other
consideration) of the Registrant or for common stock of the acquiring company as
set forth above.
Other than those provisions relating to the principal economic terms of
the Stock Rights, any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Registrant prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which do
not adversely affect the interests of holders of Stock Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as the Stock Rights
are not redeemable.
TERMS OF PREFERRED STOCK THAT MATERIALLY LIMIT OR QUALIFY RIGHTS OF
HOLDERS OF COMMON STOCK. The Registrant has authorized 500,000 shares of
Preferred Stock, $1.00 par value per share, which may be issued from time to
time in one or more series. The terms of each series of Preferred Stock,
including the number of shares in such series, voting powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, may be fixed by resolution
of the Board of Directors to the extent permitted by law and by the Certificate
of Incorporation.
Page 8 of 17 Pages
As of the date hereof, the Board of Directors has authorized 50,000
shares of Series "A" Junior Participating Preferred Stock (the "Series A
Preferred Stock"), none of which shares have been issued or are outstanding as
of the date hereof. The Series A Preferred Stock are issuable to holders of
Common Stock of the Registrant pursuant to the Rights Agreement at any time that
a person or group acquires 20% or more of the Registrant's Common Stock or
announces an offer to acquire 30% or more of the Registrant's Common Stock, and
contain voting rights and dividend and liquidation preferences that could deter
any such offer for the Registrant's Common Stock.
Dividends in respect of Series A Preferred Stock are payable quarterly
on the fifteenth day of each of February, May, August, and November, beginning
on the first such date immediately after the issuance of any shares of Series A
Preferred Stock, in the amount of the greater of (i) $12.50 per share or (ii)
100 times the amount of any dividend per share of Common Stock declared since
the immediately preceding quarterly dividend payment date or, if pertaining to
the first quarterly dividend payment date, since the first issuance of Series A
Preferred Stock, subject to adjustment in the event the Company declares any
dividend payable in Common Stock, subdivides the outstanding shares of Common
Stock, or combines the outstanding Common Stock into a smaller number of shares.
Following the issuance of any shares of Series "A" Preferred, dividends accrue
on outstanding shares and are cumulative. Dividends are paid PRO RATA to holders
of Series A Preferred Stock to the extent that funds are not available to pay
the entire amount of dividends due in respect thereof.
Each share of Series A Preferred Stock is entitled to 100 votes
(subject to adjustment in the event the Company declares any dividend payable in
Common Stock, subdivides the outstanding shares of Common Stock, or combines the
outstanding Common Stock into a smaller number of shares) on all matters
submitted to stockholders of the Registrant for approval, with holders of Series
A Preferred Stock and Common Stock voting together as a class. In the event
payments of dividends on Series A Preferred Stock are in arrears for six (6)
quarters, the Registrant is deemed to be in a "Default Period" that extends
until dividends for all previous quarterly periods and the current quarter are
declared and paid or set apart for payment. During the Default Period, holders
of Series A Preferred Stock are entitled to elect two (2) directors, which right
may be exercised at a special meeting called for such purpose or at an annual
meeting at which holders of at least 10% of the Series A Preferred Stock are
represented. In the event that there are no vacancies on the Board of Directors
at the time the holders of Series A Preferred Stock become entitled to elect
directors, or in the event that the election takes place at other than an annual
meeting of stockholders at which at least two directors are to be elected, the
holders of Series A Preferred Stock have the right to expand the Board of
Directors by that number required to allow the holders of Series A Preferred
Stock to elect two directors. Also during the Default Period, vacancies on the
Board of Directors are filled by directors elected by the stockholders that
elected the director formerly occupying such office, such that a director
elected by holders of Series A Preferred Stock during a Default Period may be
replaced by another director elected by holders of Series A Preferred Stock. The
right of holders of Series A Preferred Stock to elect directors expires, and the
terms of directors elected by such holders of Series A Preferred Stock
terminates, upon termination of the Default Period.
Page 9 of 17 Pages
In the event that payments of any dividends on the Series A Preferred
Stock are in arrears, until such dividends are paid in full neither the
Registrant nor its subsidiaries may (i) declare or pay dividends or make
distributions in respect of, redeem, or purchase shares of capital stock ranking
junior (as to dividends or liquidation preference) to the Series A Preferred
Stock; (ii) pay dividends or make distributions in respect of capital stock on a
parity (as to dividends or liquidation preference) with the Series A Preferred
Stock; (iii) acquire or redeem stock on a parity (as to dividends or liquidation
preference) with the Series A Preferred Stock (unless the payment in
consideration of such acquisition or redemption is shares of capital stock
junior to the Series A Preferred Stock); or (iv) acquire Series A Preferred
Stock unless pursuant to an offer made to all holders of Series A Preferred
Stock on terms determined by the Board of Directors to be fair and equitable to
all stockholders.
In the event of its voluntary liquidation, the Registrant may not make
any distributions or payments in respect of stock ranking junior (as to
dividends or liquidation preference) to the Series A Preferred Stock until it
shall have first paid holders of Series A Preferred Stock $5,000 per share, plus
all accrued and unpaid dividends to the date of payment (the "Series A
Liquidation Preference"). When the Series A Liquidation Preferences is paid in
full, holders of Common Stock are entitled to receive an amount per share equal
to the Series A Liquidation Preference divided by 100 (subject to adjustment in
the event the Company declares any dividend payable in Common Stock, subdivides
the outstanding shares of Common Stock, or combines the outstanding Common Stock
into a smaller number of shares) and thereafter holders of Series A Preferred
Stock and holders of Common Stock receive distributions of remaining funds in a
ratio, on a per share basis, of 100 to 1 with respect to the Series A Preferred
Stock and Common Stock, on a per share basis, respectively. In the event funds
are insufficient to permit payment in full of the liquidation preferences of the
Series A Preferred Stock and all other classes of Preferred Stock on a parity
with the Series A Preferred Stock, funds are distributed PRO RATA among such
shares.
In the event of a consolidation, merger, combination or other
transaction in which outstanding shares of Common Stock are exchanged for or
converted into other stock or securities, shares of Series A Preferred Stock
shall be similarly exchanged in an amount per share equal to 100 times the
amount of consideration for which each share of Common Stock is exchanged
(adjusted for stock dividends, subdivisions or combinations).
Shares of Series A Preferred Stock may be called for redemption by the
Registrant in whole but not in part at any time by paying holders cash in the
amount of $5,000 per share, plus accrued and unpaid dividends up to the date
fixed for redemption.
TERMS OF THE REGISTRANT'S CERTIFICATE OF INCORPORATION THAT MAY OPERATE
TO DELAY, DEFER OR PREVENT A CHANGE IN CONTROL OF THE REGISTRANT. Because the
Board of Directors of the Registrant is classified and a maximum of two (2) of
the five (5) directors are elected at any particular annual meeting of
stockholders, it would not be possible for a party to replace a majority of the
Board of Directors at a single annual meeting. Those provisions of the
Certificate of Incorporation requiring approval of holders of 75% of the voting
common stock
Page 10 of 17 Pages
with respect to certain transactions would apply to extraordinary corporate
transactions such as mergers, reorganizations, tender offers, and sales or
transfers of substantially all of the assets of the Registrant and could have
the effect of delaying, deferring or preventing a change in control of the
Registrant. The Series A Preferred Stock is issuable to holders of Stock Rights
pursuant to the Rights Agreement (described above) at any time that a person or
group acquires 20% or more of the Registrant's Common Stock or announces an
offer to acquire 30% or more of the Registrant's Common Stock, contains voting
rights and dividend and liquidation preferences that could deter any such offer
for the Registrant's Common Stock. The Board of Directors, under its authority
to designate the terms of additional series of preferred stock, may authorize
and cause the Registrant to issue additional shares of preferred stock
containing terms and conditions that could operate to delay, defer or prevent a
change in control of the Registrant.
Page 11 of 17 Pages
ITEM 5. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. The capital structure and the balance
sheet of the Registrant immediately after the transaction of
succession, on a consolidated basis, are substantially the
same as those of the Predecessor and therefore are not
required to be filed with this Form 8-B.
(b) Exhibits.
1. Plan or Agreement of Succession:
Agreement of Merger among Proler International Corp.,
Proler Merger, Inc. and Proler Successor, Inc. dated
February 28, 1996 (filed as Exhibit 2.1 to this
Registration Statement).
2. Copies of Proxy Statement.
Not Applicable.
3. Other Exhibits.
See attached Index to Exhibits.
Page 12 of 17 Pages
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
2.1 Agreement of Merger among Proler International Corp., Proler
Merger, Inc., and Proler Successor, Inc. dated February 28,
1996.
3.1 Certificate of Incorporation of Registrant, as amended to
date.
3.2 By-laws of Registrant, as amended to date.
4.1 Rights Agreement dated as of February 28, 1996 between the
Registrant and KeyCorp Shareholder Services, Inc.
10.1 Joint Venture Agreement dated January 5, 1962, between Hugo
Neu Corporation and Proler Steel Corporation, related to Hugo
Neu-Proler Company. (Filed as Exhibit 13.1 to the
Predecessor's Registration Statement No. 2-24928 and
incorporated herein by reference.)
10.2 Amendments to Joint Venture Agreement dated January 5, 1962.
(Filed as Exhibit 13.1(a) to the Predecessor's Registration
Statement No. 2-40782 and incorporated herein by reference.)
10.3 Joint Venture Agreement dated October 13, 1965, between Hugo
Neu-Steel Products, Inc. and Proleride Transport Systems,
Inc., related to Prolerized New England Company. (Filed as
Exhibit 13.15 to the Predecessor's Registration Statement No.
2-24928 and incorporated herein by reference.)
10.4 Amendments to Joint Venture Agreement dated October 13, 1965.
(Filed as Exhibit 13.2(a) to the Predecessor's Registration
Statement No. 2-40782 and incorporated herein by reference.)
10.5 Guaranty Agreement dated October 13, 1965, relating to
Prolerized New England Company. (Filed as Exhibit 13.2(b) to
the Predecessor's Registration Statement No. 2-40782 and
incorporated herein by reference.)
10.6 Joint Venture Agreement dated June 27, 1966, between Proler
Steel Corporation, Hugo Neu Corporation and Schiavone-Bonomo
Corporation related to Prolerized Schiabo-Neu Company. (Filed
as Exhibit 13.22 to the Predecessor's Registration Statement
No. 2- 24928 and incorporated herein by reference.)
10.7 Amendments to Joint Venture Agreement dated June 27, 1966.
(Filed as Exhibit 13.4(a) to the Predecessor's Registration
Statement No. 2- 40782 and incorporated herein by reference.)
Page 13 of 17 Pages
10.8 Lease Agreement dated August 1, 1974 between the City of Los
Angeles and Hugo Neu & Sons, Inc. and Proler Steel
Corporation. (Filed as Exhibit X.12 to Predecessor's Form 10-K
for the fiscal year ended January 31, 1981 and incorporated
herein by reference.)
10.9 Split Dollar Agreement between Proler International Corp. and
Elaine Proler, effective as of September 12, 1980. (Filed as
Exhibit X.15 to Predecessor's Form 10-K for the year ended
January 31, 1982 and incorporated herein by reference.)
10.10 Proler International Corp. Medical Reimbursement Plan as
amended and restated effective February 1, 1991. (Filed as
Exhibit X.12 to Predecessor's Form 10-K for the fiscal year
ended January 31, 1992 and incorporated herein by reference.)*
10.11 Order No. 5472 dated November 6, 1985, approved the first
amendment to permit No. 266 to Hugo Neu-Proler Company and
resets compensation to be paid under the lease agreement dated
August 1, 1974 for the period commencing August 31, 1984
through August 30, 1989. (Filed as Exhibit X.15 to
Predecessor's Form 10-K for the year ended January 31, 1986
and incorporated herein by reference.)
10.12 Amendment to Joint Venture Agreement dated August 2, 1962.
(Filed as Exhibit 13.5 to the Predecessor's Registration No.
2-24928 and incorporated herein by reference.)
10.13 Proler International Corp. Deferred Compensation Agreement for
Herman Proler dated December 22, 1987, as amended December 21,
1989. (Filed as Exhibit X.19 to the Predecessor's Form 10-K
for the fiscal year ended January 31, 1990 and incorporated
herein by reference.)
10.14 Proler International Corp. Executive Deferred Compensation
Plan dated December 31, 1989. (Filed as Exhibit X.20 to the
Predecessor's Form 10-K for the fiscal year ended January 31,
1990 and incorporated herein by reference.)
10.15 Proler International Corp. 1988 Stock Option Agreement. (Filed
as Exhibit X.23 to the Predecessor's Form 10-K for the fiscal
year ended January 31, 1991 and incorporated herein by
reference.)
10.16 Amendment to the Proler International Corp. 1988 Stock Option
Plan dated June 17, 1994. (Filed as Exhibit 10.25 to the
Predecessor's Form 10Q for the Quarter ended July 31, 1994 and
incorporated herein by reference.)
Page 14 of 17 Pages
10.17 Fourth Amended and Restated Credit Agreement among Joint
Venture Operations, Inc. (formerly known as Proler
International Corp.) and Proler International Corp., as
Borrowers, and Joint Venture Operations, Inc., Proleride
Transport Systems, Inc., Proler Environmental Services, Inc.,
Proler International Corp., Proler Industries, Inc., Proler
Steel, Inc., Proler Power Marketing, Inc., Proler Properties,
Inc., and Proler Recycling, Inc., as Guarantors, and Texas
Commerce Bank National Association, dated effective as of
February 28, 1996.
10.18 Amended and Restated Credit Agreement, $6,500,000 Letter of
Credit Facility, among Joint Venture Operations, Inc.
(formerly known as Proler International Corp.) and Proler
International Corp., as Borrowers, and Joint Venture
Operations, Inc., Proler Industries, Inc., Proler Steel, Inc.,
Proler Power Marketing, Inc., Proleride Transport Systems,
Inc., Proler Environmental Services, Inc., Proler
International Corp., Proler Properties, Inc., and Proler
Recycling, Inc., as Guarantors, and Texas Commerce Bank
National Association, dated effective as of February 28, 1996.
10.19 Proler International Corp. Deferred Compensation Agreement for
Norman Bishop dated effective April 16, 1993. (Filed as
Exhibit X to the Predecessor's Form 10Q for the Quarter ended
April 30, 1993 and incorporated herein by reference.)*
10.20 Proler International Corp. 1993 Incentive Compensation Plan.
(Filed as Exhibit 10.24 to the Predecessor's Form 10-K for the
fiscal year ended January 31, 1994 and incorporated herein by
reference.)
10.21 Proler International Corp. Deferred Compensation Agreement for
Steven Gilliland dated effective February 6, 1995. (Filed as
Exhibit No. 10.23 to the Predecessor's Form 10-K for the
fiscal year ended January 31, 1995 and incorporated herein by
reference).*
10.22 Proler International Corp. 1994 Non-Employee Director Stock
Option Plan. (Filed as Exhibit No. 10.1 to the Predecessor's
Form 10-Q for the Quarter ended July 31, 1994 and incorporated
herein by reference).
10.23 Contribution Agreement dated February 28, 1996 by and between
Proler International Corp. and Proler Successor, Inc.
10.24 Contribution Agreement dated February 28, 1996 by and between
Proler Successor, Inc. and Proler Industries, Inc.
Page 15 of 17 Pages
10.25 Contribution Agreement dated February 28, 1996 by and between
Proler Industries, Inc. and Proler Properties, Inc.
21 Subsidiaries of Registrant.
99.1 Joint Venture Interest Purchase Agreement dated September 27,
1995 by and among Hugo Neu Corporation and Proler
International Corp. (Filed as Exhibit 99.1 to the
Predecessor's Form 8-K dated October 2, 1995 and incorporated
herein by reference)
____________
* Indicates an agreement with management.
Page 16 of 17 Pages
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
PROLER INTERNATIONAL CORP.
By:/s/ MICHAEL F. LOY
Title: Vice President-Finance and
Chief Financial Officer
Dated: March 11, 1996
Page 17 of 17 Pages
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (hereinafter, this "AGREEMENT") dated February
28, 1996 by and among Proler Merger, Inc., a Delaware corporation ("PROLER
MERGER"), Proler International Corp., a Delaware corporation ("PROLER
INTERNATIONAL"), and Proler Successor, Inc., a Delaware corporation ("PROLER
SUCCESSOR");
W I T N E S S E T H:
WHEREAS, Proler International wishes to reorganize its corporate
structure into a "holding company" structure consisting of a publicly-traded
holding company and wholly-owned direct and indirect subsidiaries of such
holding company; and
WHEREAS, in connection with this reorganization: (i) Proler
International has formed Proler Successor, a Delaware corporation, as a direct
wholly-owned subsidiary of Proler International; (ii) Proler Successor has
formed Proler Steel, Inc., a Delaware corporation and a direct wholly-owned
subsidiary of Proler Successor ("PROLER STEEL"); and (iii) Proler Steel has
formed Proler Merger, a Delaware corporation and a direct wholly-owned
subsidiary of Proler Steel; and
WHEREAS, Proler International intends to merge with Proler Merger
pursuant to ss.251(g) of the Delaware General Corporation Law (the "DGCL"), with
Proler International as the survivor of such merger, and with stockholders of
Proler International receiving shares of Proler Successor in exchange for their
shares in Proler International; and
WHEREAS, as a result of such merger (hereinafter, the "MERGER"), Proler
Successor would become a publicly traded "holding company", and Proler
International would become a wholly-owned indirect subsidiary of Proler
Successor;
NOW, THEREFORE, in consideration and furtherance of the foregoing, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.1 MERGER OF PROLER MERGER WITH PROLER INTERNATIONAL. Pursuant to
ss.251(g) of the DGCL, and in accordance with and subject to the terms and
conditions of this Agreement, at the Effective Time (as hereinafter defined) the
following shall be deemed to occur simultaneously:
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(a) Proler International shall merge with Proler Merger, with
Proler International to be the surviving corporation of the
Merger (the "SURVIVING CORPORATION"), such that as a result of
the Merger, Proler International shall become an indirect
wholly-owned subsidiary of Proler Successor;
(b) In connection with the Merger, the name of the Surviving
Corporation shall become "JOINT VENTURE OPERATIONS, INC.";
(c) The stockholders of Proler International shall receive, in the
manner set forth in ARTICLE IV, shares of capital stock of
Proler Successor in exchange for their shares of capital stock
of Proler International, and as a result of such exchange
shall become stockholders of Proler Successor (hereinafter
referred to as the "HOLDING COMPANY");
(d) In connection with the Merger, the Certificate of
Incorporation of Holding Company shall be amended to change
the name of the Holding Company to "PROLER INTERNATIONAL
CORP.";
(e) The separate existence of Proler Merger as a Delaware
corporation shall terminate, and at that time and to the
fullest extent provided under the laws of the State of
Delaware: (i) the Surviving Corporation shall, without further
act or deed, possess all of the rights, privileges, powers,
and franchises of public and private nature, and be subject to
all of the restrictions, disabilities and duties of Proler
Merger; (ii) the Surviving Corporation shall, without further
act or deed, possess all property, real, personal and mixed,
and all debts of Proler Merger on whatever account; (iii) all
property, rights, privileges, powers and franchises, and all
and every other interest of Proler Merger shall be the
property of the Surviving Corporation; (iv) all rights of
creditors and all liens upon any property of Proler Merger
shall be preserved unimpaired, and all debts, liabilities, and
duties of Proler Merger shall attach to the Surviving
Corporation and may be enforced against it to the same extent
as if such debts, liabilities and duties had been incurred or
contracted by it; and (v) the Merger shall have all such other
effects as set forth by the DGCL.
(f) Proler Steel, the sole stockholder of Proler Merger
immediately prior to the Merger, will receive, in the manner
set forth in SECTION 4.4, capital stock of the Surviving
Corporation in exchange for the capital stock of Proler Merger
held by it; and
(g) The shares of Holding Company held by the Surviving
Corporation shall be canceled without payment of any
consideration for such cancellation.
1.2 EFFECTIVE TIME. The Merger shall be effective for all
purposes at the time (the "EFFECTIVE TIME") (i) when all conditions precedent
to the Merger set forth in SECTIONS 3.1 and
-2-
3.2 have been satisfied and (ii) when the Secretary of Proler International
shall have filed this Agreement certified in the manner required by ss.103 of
the DGCL, or a Certificate of Merger with respect thereto, with the Secretary of
State of the State of Delaware.
ARTICLE II.
THE CONSTITUENT CORPORATIONS AND THE HOLDING COMPANY
2.1 PROLER INTERNATIONAL.
(a) ORGANIZATION. Proler International is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) CAPITALIZATION OF PROLER INTERNATIONAL. Proler International
has authorized capital consisting of:
(i) 15,000,000 shares of Common Stock, $1.00 per share
par value; and
(ii) 500,000 shares of preferred stock, $1.00 per share
par value, 50,000 shares of which have been
designated as Series A Junior Participating Preferred
Stock.
(c) STOCK OPTIONS AND PLANS. Proler International has entered
into, adopted, or is otherwise subject to certain agreements
and arrangements, including stock grants, options, and rights,
and compensation plans and agreements, pursuant to which it is
or may be obligated to issue additional shares of its capital
stock, including but not limited to the following: (i) the
1988 Stock Option Plan; (ii) the 1994 Non-Employee Director
Stock Option Plan; and (iii) the 1993 Incentive Compensation
Plan; each of which permits the merger and the transactions
contemplated by SECTION 4.3. Copies of all of such agreements
and arrangements have been provided to Holding Company.
(d) RIGHTS AGREEMENT. Pursuant to a Rights Agreement dated as of
September 26, 1988, Proler International has issued and
outstanding rights to purchase shares of Proler
International's Series A Junior Participating Preferred Stock.
Each issued and outstanding share of Common Stock of Proler
International is entitled to one- third of one right to
purchase one-one hundredth of one share of Series A Junior
Participating Preferred Stock of Proler International (each
one-third of one right referred to herein as an "EXISTING
STOCK RIGHT"). As of the date hereof, each Existing Stock
Right is represented by the outstanding share of Common Stock
in respect of which the Existing Stock Right was issued,
cannot be transferred separately from the associated share of
Proler International Common Stock, and is automatically
transferred upon transfer of the associated share of Proler
-3-
International Common Stock. A copy of the Rights Agreement has
been provided to Holding Company.
2.2 PROLER MERGER.
(a) ORGANIZATION. Proler Merger is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware.
(b) CAPITALIZATION OF PROLER MERGER. Proler Merger has authorized
capital consisting of 1,000 shares of Common Stock, $.01 per
share par value, 1,000 shares of which have been issued and
are outstanding. Proler Merger has no options, warrants, or
other rights to purchase or convert any shares of its Common
Stock pursuant to which it is obligated to issue or sell
additional shares of its Common Stock.
(c) OWNERSHIP OF CAPITAL STOCK OF PROLER MERGER. All of the issued
and outstanding shares of Common Stock of Proler Merger are
owned by Proler Steel, a Delaware corporation and wholly-owned
direct subsidiary of Holding Company.
2.3 HOLDING COMPANY
(a) ORGANIZATION. Holding Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. The Certificate of Incorporation and Bylaws
of Holding Company are, and immediately prior to the Merger
will be, identical to the Restated Certificate of
Incorporation and Restated Bylaws of Proler International as
in effect immediately prior to the Merger, except for such
variations as are specifically permitted pursuant to ss.251(g)
of the DGCL.
(b) CAPITALIZATION OF HOLDING COMPANY. Holding Company has
authorized capital consisting of:
(i) 15,000,000 shares of Common Stock, $1.00 per share
par value, 1,000 of which shares are issued and
outstanding; and
(ii) 500,000 shares of preferred stock, $1.00 per share
par value, of which 50,000 shares have been
designated as Series A Junior Participating Preferred
Stock, and none of which shares of Series A Junior
Participating Preferred Stock are issued and
outstanding.
The Common Stock and the Preferred Stock of Holding Company
have the same designations, rights, powers, preferences, and
the same qualifications, limitations and restrictions, as the
Common Stock and the Preferred Stock of Proler International.
Holding Company has no options, warrants, or other rights to
-4-
purchase or convert any shares of its Common Stock pursuant to
which it is obligated to issue or sell additional shares of
its Common Stock.
(c) RIGHTS AGREEMENT. Prior to the Effective Time, Holding Company
will adopt a Rights Agreement pursuant to which rights to
purchase shares of Holding Company's Series A Junior
Participating Preferred Stock may be issued to holders of
Holding Company's Common Stock. The substantive terms and
provisions of Holding Company's Rights Agreement will be
identical to the terms and provisions of Proler
International's Rights Agreement.
(d) OWNERSHIP OF CAPITAL STOCK OF HOLDING COMPANY. All of the
issued and outstanding shares of Common Stock of Holding
Company are owned by Proler International. No rights to have
been issued pursuant to Holding Company's Rights Agreement as
of the date hereof.
ARTICLE III.
CONDITIONS PRECEDENT TO MERGER; TERMINATION OF AGREEMENT
3.1 ACTION BY DIRECTORS. This Agreement shall be submitted for approval
by the respective Boards of Directors of each of Proler Merger and Proler
International as required by ss.251(b) of the DGCL, and by the Board of
Directors of the Holding Company. As required by ss.251(g) of the DGCL, any
approval of the Merger by the Board of Directors of Proler International shall
include a determination by the Board of Directors of Proler International that
the stockholders of Proler International shall not recognize a gain or loss for
United States federal income tax purposes as a result of the Merger.
3.2 ACTION BY STOCKHOLDERS. This Agreement shall be submitted for
approval to the sole stockholder of Proler Merger as required by ss.251(c) of
the DGCL. Pursuant to ss.251(g) of the DGCL, this Agreement is not required to
be approved by, and shall not be submitted for approval to, the stockholders of
Proler International or of Holding Company.
3.3 FILING OF CERTIFICATE. Upon satisfaction of all conditions
precedent set forth in SECTIONS 3.2 and 3.3, the Secretary of Proler
International Corp. shall certify this Agreement in the manner required by
ss.103 of the DGCL and shall file this Agreement as so certified, or shall file
a Certificate of Merger with respect thereto, with the Secretary of State of the
State of Delaware.
3.4 EXPENSES. Proler International shall bear all expenses associated
with the consummation of this Merger.
3.5 TERMINATION. At any time prior to the Effective Time, this
Agreement may be terminated and the Merger abandoned by Proler International by
appropriate resolution of Proler International's Board of Directors.
-5-
ARTICLE IV.
CONVERSION OF SHARES OF CONSTITUENT CORPORATIONS
4.1 CONVERSION OF OUTSTANDING SHARES OF COMMON STOCK OF PROLER
INTERNATIONAL. At the Effective Time, each share or fraction of a share of
Common Stock of Proler International that is outstanding immediately prior to
the Effective Time shall, without further act or deed by Proler International or
its stockholders, be converted into and exchanged for a share or equal fraction
of a share of Common Stock of Holding Company. Shares of Common Stock of Holding
Company into which shares of Common Stock of Proler International are so
converted shall be represented by stock certificates previously representing
shares of Common Stock of Proler International.
4.2 REDEMPTION OF STOCK RIGHTS OF PROLER INTERNATIONAL; DISTRIBUTION OF
STOCK RIGHTS OF HOLDING COMPANY. At the Effective Time, each Existing Stock
Right shall be redeemed pursuant to the redemption provisions of Proler
International's Rights Agreement. Immediately after the Effective Time, Holding
Company shall distribute to holders of record of Holding Company Common Stock
immediately after the Effective Time one-third of one right to purchase 1/100th
of one share of Series A Junior Participating Preferred Stock of Holding Company
(a "SUCCESSOR STOCK RIGHT") for each issued and outstanding share of Holding
Company Common Stock. As provided by the Holding Company's Rights Agreement,
each Successor Stock Right shall be represented by the outstanding share of
Holding Company Common Stock in respect of which the Successor Stock Right was
issued, will not be transferrable separately from the associated share of
Holding Company Common Stock, and will be automatically transferred upon
transfer of the associated share of Holding Company Common Stock.
4.3 ASSUMPTION OF PROLER INTERNATIONAL OBLIGATIONS TO ISSUE CAPITAL
STOCK. Immediately prior to the Effective Time, Proler International was a party
to or subject to certain agreements and arrangements, including stock grants,
options, and rights, and compensation plans and agreements, pursuant to which
parties thereto or beneficiaries thereof acquired, or acquired certain rights to
acquire, shares of capital stock of Proler International, including but not
limited to: (i) the Proler International Corp. Tax Deferred Savings and
Retirement Plan and Trust; (ii) the 1988 Stock Option Plan; and (iii) the 1994
Non-Employee Director Stock Option Plan (all such stock grants, options, rights,
and compensation plans and agreements being referred to herein as the "PLANS").
As of the Effective Time, Holding Company shall adopt, assume, and agree to be
bound by each and every Plan, and any right to acquire a share or fraction of a
share of capital stock of Proler International under any such Plan shall,
without further act or deed by Proler International or its stockholders, be
converted into a right to acquire a share or equal fraction of a share of
capital stock of Holding Company pursuant to such Plan.
4.4 SURRENDER AND CANCELLATION OF SHARES OF PROLER MERGER. At the
Effective Time, each share of Common Stock of Proler Merger that is outstanding
immediately prior to
-6-
the Merger shall be converted into a share of Common Stock of the Surviving
Corporation and the certificate(s) evidencing ownership of all outstanding
shares of Common Stock of Proler Merger shall be surrendered to the Secretary of
the Surviving Corporation in exchange for shares of Common Stock of the
Surviving Corporation into which they are converted pursuant to this
SECTION 4.4.
4.5 SURRENDER AND CANCELLATION OF PROLER INTERNATIONAL'S SHARES IN
HOLDING COMPANY. At the Effective Time, Proler International's 1,000 shares of
Common Stock of Holding Company owned immediately prior to the Merger shall be
canceled without payment of any consideration for such cancellation.
ARTICLE V.
OFFICERS AND DIRECTORS OF
HOLDING COMPANY AND SURVIVING CORPORATION
5.1 HOLDING COMPANY. The officers and directors of Proler International
holding office immediately prior to the effectiveness of the Merger shall serve
in the same capacities as the officers and directors of the Holding Company
until the next annual meeting of stockholders of the Holding Company or until
their successors shall have been elected and qualified.
5.2 SURVIVING CORPORATION. The officers and directors of Proler
International holding office immediately prior to the effectiveness of the
Merger shall serve in the same capacities as officers and directors of the
Surviving Corporation until the next annual meeting of stockholders or until
their successors have been elected and qualified.
ARTICLE VI.
ARTICLES OF INCORPORATION AND BYLAWS OF
HOLDING COMPANY AND SURVIVING CORPORATION
6.1 HOLDING COMPANY. The Certificate of Incorporation and Bylaws of
Holding Company as in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation and Bylaws of Holding Company following the
Merger, provided that the Certificate of Incorporation shall be amended
effective as of the Effective Time to change the name of Holding Company to
"Proler International Corp."
6.2 SURVIVING CORPORATION The Restated Certificate of Incorporation and
Restated Bylaws of Proler International as in effect immediately prior to the
Effective Time shall pursuant to subsection (g) of ss.251 of the DGCL, be the
Certificate of Incorporation and Bylaws of the Surviving Corporation following
the Merger; PROVIDED, HOWEVER, that (i) Article FOURTH of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows:
-7-
"FOURTH. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 1,000 shares of Common
Stock, $1.00 par value per share (the "Common Stock").
(a) DIVIDEND RIGHTS. Subject to the provisions of law, the
holders of the Common Stock shall be entitled to receive dividends at
such time and in such amounts as may be determined by the board of
directors.
(b) VOTING RIGHTS. Except as provided by law and in this
Certificate of Incorporation, the holders of the Common Stock shall
have one vote for each share on each matter submitted to a vote of the
stockholders of the Corporation. Except as otherwise provided by law or
by this Certificate of Incorporation, the holders of the Common Stock
shall have sole voting power.
(c) LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and
other liabilities of the Corporation and the preferential amounts to
which the holders of any stock ranking prior to the Common Stock in the
distribution of assets shall be entitled upon liquidation, the holders
of the Common Stock and the holders of any other stock ranking on a
parity with the Common Stock in the distribution of assets upon
liquidation shall be entitled to share in the remaining assets of the
Corporation according to their respective interests."
AND FURTHER PROVIDED, required by subsection (g) of ss.251 of the DGCL, there
shall be added a new Article SEVENTEENTH to the Certificate of Incorporation of
the Joint Venture Operations, Inc. as follows:
"SEVENTEENTH. Any act or transaction by or involving the Corporation
that requires for its adoption the approval of its stockholders
pursuant to the Delaware General Corporation Law or the provisions of
this Certificate of Incorporation, shall pursuant to subsection (g) of
ss.251 of the Delaware General Corporation Law also require the
approval of the stockholders of Proler International Corp. (and any
successor by merger) by the same vote as is required pursuant to the
Delaware General Corporation Law or the provisions of this Certificate
of Incorporation, as the case may be."
-8-
IN WITNESS WHEREOF, each of Proler Merger, Proler International and
Proler Successor, pursuant to the authority granted by their respective Boards
of Directors, have caused this Agreement to be executed and attested by their
duly appointed officers and their respective corporate seal to be hereunto
affixed.
PROLER INTERNATIONAL CORP.
By:/s/ STEVEN F. GILLILAND
Name: Steven F. Gilliland
Title: President
PROLER MERGER, INC.
By:/s/ STEVEN F. GILLILAND
Name: Steven F. Gilliland
Title: President
PROLER SUCCESSOR, INC.
By:/s/ STEVEN F. GILLILAND
Name: Steven F. Gilliland
Title: President
-9-
CERTIFICATE OF INCORPORATION
OF
PROLER SUCCESSOR, INC.
FIRST. The name of the Corporation is Proler Successor, Inc.
SECOND. The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of Newcastle. The name and address of its resident agent
therein is The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 15,500,000, of which 15,000,000
shall be shares of Common Stock of the par value of $1.00 per share (the "Common
Stock") and 500,000 shall be shares of preferred stock of the par value of $1.00
per share (the "Preferred Stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions, of the Common Stock and the
Preferred Stock are as follows:
PART 1. COMMON STOCK PROVISIONS
(a) DIVIDEND RIGHTS. Subject to provisions of law and the preferences
of the Preferred Stock and of any other stock ranking prior to the Common Stock
as to dividends, the holders of the Common Stock shall be entitled to receive
dividends at such time and in such amounts as may be determined by the board of
directors.
(b) VOTING RIGHTS. Except as provided by law and in this Certificate of
Incorporation, the holders of the Common Stock shall have one vote for each
share on each matter submitted to a vote of the stockholders of the Corporation.
Except as otherwise provided by law, by this Certificate of Incorporation or by
resolutions of the board of directors providing for the issue of any series of
Preferred Stock, the holders of the Common Stock shall have sole voting power.
(c) LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, after payment
or provision for payment of the debts and other liabilities of the Corporation
and the preferential amounts to which the holders of any stock ranking prior to
the Common Stock in the distribution of assets shall be entitled upon
liquidation, the holders of the Common Stock and the holders of any other stock
ranking on a parity with the Common Stock in the distribution of assets upon
liquidation shall
1
be entitled to share in the remaining assets of the Corporation according to
their respective interests.
PART 2. PREFERRED STOCK PROVISIONS
(a) AUTHORITY OF THE BOARD OF DIRECTORS TO ISSUE IN SERIES. The
Preferred Stock may be issued from time to time in one or more series. All
shares of any one series of Preferred Stock shall be identical except as to the
dates of issue and the dates from which dividends on shares of the series issued
on different dates shall cumulate, if cumulative. Authority is hereby expressly
granted to the board of directors to authorize the issue of one or more series
of Preferred Stock, and to fix by resolution or resolutions providing for the
issue of each such series the number of shares in such series and the voting
powers, designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, of such
series, to the full extent now or hereafter permitted by law, subject to any
other provision of this Certificate of Incorporation.
(b) SERIES A JUNIOR PARTICIPATING PREFERRED STOCK.
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock"
and the number of shares constituting such series shall be 50,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the 15th day of February, May, August and November
in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share
of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $12.50
or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common
Stock, par value $1.00 per share, of the Corporation (the "Common
Stock") since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series
A Junior Participating Preferred Stock. In the event the Corporation
shall at any time following February 27, 1996 (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
2
outstanding Common Stock or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying each such
amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in
paragraph (A) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $12.50 per
share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to 100 votes on all matters submitted
to a vote of the stockholders of the Corporation. In the event
3
the Corporation shall at any time following February 27, 1996 (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C)(i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to
six (6) quarterly dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, the
holders of Preferred Stock, voting as a class, irrespective of series,
shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by
the holders of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right,
voting as a class, to elect Directors to fill vacancies, if any, in the
Board of Directors as may then exist up to (2) Directors or, if such
right is exercised at any annual meeting, to elect two (2) Directors.
If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have exercised
their right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be
4
increased or decreased except by vote of the holders of Preferred Stock
as herein provided or pursuant to the rights of any equity securities
ranking senior to or PARI PASSU with the Series A Junior Participating
Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding, irrespective
of series, may request, the calling of a special meeting of the holders
of Preferred Stock, which meeting shall thereupon be called by the
Chairman, a Vice-Chairman or the Secretary of the Corporation. Notice
of such meeting and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier
than 10 days and not later than 30 days after such order or request or
in default of the calling of such meeting within 45 days after such
order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period 30 days immediately
preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole number of Directors until the holders
of Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall continue
in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any
vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become vacant.
References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in the
restated certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this
Section 3 (such number being subject, however, to change thereafter in
any manner provided by law or in the restated certificate of
incorporation or bylaws). Any vacancies in the Board of Directors
effected by the
5
provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled.
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior
Participating Preferred Stock); or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine
6
in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. REQUIRED SHARES. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to
be created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth
herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any voluntary liquidation, dissolution or winding up
of the Corporation, no distributions shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock shall have
received $5,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the
date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of
Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph C below to reflect
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Junior Participating Preferred Stock
and Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio, on a per share basis, of the
Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the
7
Series A Junior Participating Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.
(C) In the event the Corporation shall at any time following
February 27, 1996 (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case as the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying
such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any property, then
in any such case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time
(i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. REDEMPTION. The shares of Series A Junior
Participating Preferred Stock may be called for redemption by the
Corporation, at its option, by vote of the Board of Directors, in whole
but not in part, at any time, by paying therefor in cash an amount
equal to $5,000 per share, plus accrued and unpaid dividends to the
date fixed for redemption.
Section 9. RANKING. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock as the payment of dividends and the
distribution of assets, unless the terms of any such series shall
provide otherwise.
8
Section 10. AMENDMENT. The Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner
which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so
as to affect them adversely without the affirmative vote of the holders
of two-thirds or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Shares A Junior Participating
Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares,
to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Junior Participating Preferred Stock.
FIFTH. No holder of shares of the Corporation of any class shall be
entitled as of right to subscribe for, purchase, or receive any part of any new
or additional issue of stock of any class, whether now or hereafter authorized,
or of any bonds, debentures, or other securities convertible into stock of any
class, and all such additional shares of stock, bonds, debentures or other
securities convertible into stock may be issued and disposed of by the Board of
Directors to such person or persons and on such terms and for such consideration
(so far as may be permitted by law) as the Board of Directors, in their absolute
discretion, may deem advisable.
SIXTH. The minimum amount of capital with which the Corporation will
commence business is $1,000.
SEVENTH. The Corporation is to have perpetual existence.
EIGHTH. The number of directors which shall constitute the full board
of directors shall be fixed in the bylaws of the Corporation. The board of
directors shall have power to make, amend or repeal the bylaws, and such power
may be exercised by the directors in accordance with law and the provisions of
this Certificate of Incorporation, except that no amendment, repeal or other
action with respect to the bylaws which increases the number of directors of the
Corporation shall be valid unless it is approved by not less than 80% of the
directors holding office immediately prior to such action. No decrease in the
number of directors shall shorten the term of any incumbent director. To the
extent that any provision of this Article Eighth is inconsistent with any
provision of Article Tenth hereof, such provision of this Article Eighth shall
govern and control.
NINTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
TENTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
(1) To make, alter or repeal the bylaws of the corporation.
9
(2) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the corporation.
(3) To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper
purpose and to reduce or abolish any such reserve in the
manner in which it was created.
(4) By resolution passed by a majority of the whole board, to
designate one or more committees, each committee to consist of
two or more of the directors of the corporation, which, to the
extent provided in the resolution or in the bylaws of the
Corporation, shall have and may exercise the powers of the
board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as
may be stated in the bylaws of the Corporation or as may be
determined from time to time by resolution adopted by the
board of directors.
(5) When and as authorized by the affirmative vote of the holders
of a majority of the stock issued and outstanding having
voting power given at a stockholders' meeting duly called for
that purpose, or when authorized by the written consent of the
holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange all of the property
and assets of the Corporation, including its good will and its
corporate franchises, upon such terms and conditions and for
such consideration, which may be in whole or in part shares of
stock in, or other securities of, or both, any other
corporation or corporations, as the board of directors shall
deem expedient and for the best interests of the corporation.
ELEVENTH. No contract or other transaction entered into by the
Corporation with one or more of its directors or with any firm in which any of
its directors are members or are otherwise interested or with any Corporation or
association in which any of its directors are stockholders, directors, officers,
members, employees or otherwise interested shall be void or voidable for the
reason that such director or directors having such interest are present and
counted in determining the existence of a quorum at a meeting of the Board of
Directors of the Corporation which authorizes or approves such contract or
transaction or that the vote of such director or directors having such interest
shall have been necessary to authorize or approve such contract or transaction,
provided that the fact of such interest shall be disclosed or otherwise known to
the Board of Directors.
TWELFTH. Meetings of stockholders may be held outside the State of
Delaware, if the bylaws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Corporation. Elections of directors
need not be by ballot unless the bylaws of the Corporation shall so provide.
10
THIRTEENTH. The Corporation reserves the right to amend, alter, change
or repeal any provision herein contained in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
FOURTEENTH. The directors of the Corporation are hereby divided into
three classes, which are designated the class A directors, class B directors and
class C directors. The term of office of the class A directors shall expire at
the annual meeting of stockholders next ensuing after the effective date of this
Article Fourteenth, the term of office of the class B directors shall expire one
year thereafter and the term of office of the class C directors shall expire two
years thereafter. At each annual election held after the effective date of this
Article Fourteenth, directors shall be chosen for a full term of three years to
succeed the directors whose terms have expired. No power or duty of any director
shall be affected by the class of directors to which such director belongs.
The directors of the Corporation shall have power to fix the number of
directors in each class, but the number of directors in any class shall not
exceed by more than one the number of directors in any other class.
No director of the Corporation may be removed except for cause.
FIFTEENTH. Part 1. Except as otherwise specifically provided herein,
the provisions of this Article Fifteenth shall be applicable to any (i) merger
or consolidation of the Corporation with or into, (ii) sale, lease or other
disposition of assets of the Corporation to, or (iii) purchase, lease or other
acquisition of assets by the Corporation from, any corporation, person or entity
which beneficially owned (as defined below) more than 5% of the voting
securities (as defined below) of the Corporation either (a) at the record date
for determination of stockholders of the Corporation entitled to vote on or
consent to such transaction or (b) in case of any transaction which would not
require any vote of the stockholders absent this Article Fifteenth, at the date
the Corporation entered into any agreement regarding such transaction.
Part 2. a. For purposes of this Article Fifteenth, securities
"beneficially owned" by a corporation, person or entity shall be deemed to
include securities (i) which it owns directly, whether or not of record, (ii)
which it has the right to acquire pursuant to any agreement, undertaking or
other arrangement, (iii) which are beneficially owned directly or indirectly by
any "affiliate" or "associate" of such corporation, person or entity within the
definition of such terms in Regulation Section 240.12b-2 (Rule 12b-2) under the
Securities Exchange Act of 1934 as in effect on February 27, 1996, and (iv)
which are beneficially owned directly or indirectly by any other corporation,
person or entity with which it or any affiliate or associate has any agreement,
understanding or arrangement regarding the acquisition, holding, voting or
disposition of any securities of the Corporation.
b. For purposes of this Article Fifteenth the "voting securities" of
the Corporation shall include the Common Stock of the Corporation together with
any other securities of the Corporation now or hereafter authorized and which at
the time of any
11
determination of "voting securities" for purposes hereof are outstanding and
entitled to vote in elections of directors of the Corporation.
c. For purposes of this Article Fifteenth the term "subject
transaction" shall include any transaction of the nature described in Part 1 of
this Article Fifteenth.
Part 3. Except as otherwise provided in Part 4 of this Article
Fifteenth the Corporation shall not enter into or consummate any subject
transaction without the affirmative vote or consent of (i) the holders of not
less than 75% of the voting securities of the Corporation and (ii) the holders
of not less than a majority of the voting securities of the Corporation
exclusive of any voting securities of the Corporation beneficially owned by the
corporation, person or entity with whom it is proposed that the Corporation
enter into the subject transaction. For purposes of any vote or consent pursuant
to this Article Fifteenth, the Common Stock and any other voting securities of
the Corporation shall vote together as a single class, except as otherwise
provided by law.
Part 4. Anything elsewhere in this Article Fifteenth notwithstanding,
the provisions of this Article Fifteenth shall not be applicable to (i) any
subject transaction (or series of related subject transactions) consisting of
the sale, lease or other acquisition or disposition by the Corporation of assets
whose fair market value did not exceed 10% of the fair market value of all the
assets of the Corporation prior to such subject transaction (or the first of the
series of such related subject transactions) or (ii) any subject transaction
undertaken pursuant to and in accordance with the terms of a letter of intent or
similar written instrument approved by the board of directors and signed by the
Corporation before the corporation, person or entity with which the transaction
is proposed beneficially owned 5% or more of the voting securities of the
Corporation.
Part 5. The board of directors of the Corporation shall make all
determinations pursuant to this Article Fifteenth, including without limitation
(i) the amount of voting securities beneficially owned by any corporation,
person or entity, (ii) the status of any corporation, person or entity as an
affiliate or associate of another, (iii) the fair market value of any and all
assets for purposes hereof and (iv) the date of approval of any letter of intent
and the compliance of any transaction with the terms thereof. Any such
determination reasonably made in good faith by the directors on the basis of
information available to them shall be conclusive, and no director will have any
liability to the Corporation or any other corporation, person or entity because
of any such determination so made.
Part 6. Notwithstanding anything to the contrary contained in Article
Thirteenth of this Certificate of Incorporation, no amendment, alteration,
change or repeal, direct or indirect, of Article Fifteenth shall be effective
unless (in addition to any other vote required by law or otherwise) such
amendment, alteration, change or repeal receives the affirmative vote or consent
of the holders of not less than 75% of all voting securities (as defined in
Article Fifteenth) of the Corporation, voting together for such purpose as a
single class except as otherwise provided by law.
12
SIXTEENTH. No director shall be personally liable to the Corporation or
any of its stockholders for monetary damages for any breach of fiduciary duty by
such director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the liability of
directors, then the liability of a director of the Corporation, in addition to
the limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law. No
amendment to or repeal of this Article Sixteenth shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for or with respect to any acts or omissions of such director occurring prior to
such amendment.
SEVENTEENTH. The incorporator of the Corporation is Travis C.
McCullough, 700 Louisiana Street, Suite 1900, Houston, Texas 77002.
EIGHTEENTH. The names and mailing addresses of the persons who are to
serve as the directors of the Corporation until the first annual meeting of
stockholders or until their successors are elected and qualified are as follows:
NAME MAILING ADDRESS
Herman Proler 4625 San Felipe
Houston, Texas 77027
Steven F. Gilliland 4625 San Felipe
Houston, Texas 77027
Harvey Alter 4625 San Felipe
Houston, Texas 77027
Richard B. Mayor 700 Louisiana, Suite 1900
Houston, Texas 77002
John J. McKenna 909 Fannin, Suite 1600
Houston, Texas 77010
13
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th
day of February, 1996.
/s/ TRAVIS C. MCCULLOUGH
Travis C. McCullough
Incorporator
14
CERTIFICATE OF CORRECTION OF
CERTIFICATE OF INCORPORATION
of
PROLER INTERNATIONAL CORP.
Proler International Corp., a Delaware corporation, pursuant to Section
103(f) of the General Corporation Law of the State of Delaware, certifies:
FIRST: That the Certificate of Incorporation, which was filed with the
Secretary of State of Delaware on February 27, 1996, is an inaccurate record of
the corporate action therein referred to.
SECOND: That said Certificate of Incorporation was inaccurate in that
Article EIGHTEENTH of the Certificate of Incorporation, which set forth the
names of the initial directors of the Corporation, omitted the designation of
the classes to which such directors were appointed as contemplated by Article
FOURTEENTH of the Certificate of Incorporation, which classifies the directors
of the Corporation into three classes.
THIRD: Article EIGHTEENTH in its corrected form is as follows:
EIGHTEENTH. The names and mailing addresses of the persons who are to
serve as the directors of the Corporation until the annual meeting of
stockholders set forth below or until their successors are elected and qualified
are as follows:
<TABLE>
<CAPTION>
INITIAL TERM EXPIRES
AT ANNUAL MEETING
NAME MAILING ADDRESS CLASS HELD IN THE YEAR:
---- --------------- ----- --------------------
<S> <C> <C> <C>
Herman Proler 4625 San Felipe #900
Houston, Texas 77027 A 1996
Steven F. Gilliland 4625 San Felipe #900
Houston, Texas 77027 C 1998
Harvey Alter 1615 "H" Street, N.W.
Washington, D.C. 20062 A 1996
Richard B. Mayor 700 Louisiana #1900
Houston, Texas 77002 C 1998
John J. McKenna 909 Fannin #1600
Houston, Texas 77010 B 1997
</TABLE>
IN WITNESS WHEREOF, Proler International Corp. has caused this
Certificate of Correction to be executed by its duly authorized officer this 6th
day of March, 1996.
PROLER INTERNATIONAL CORP.
By:/s/ MICHAEL F. LOY
Name: Michael F. Loy
Title: Vice President-Finance
and Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PROLER SUCCESSOR, INC.
Proler Successor, Inc., a Delaware corporation (the "Corporation") does
hereby certify:
FIRST: That Article FIRST of the Certificate of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
"FIRST: The name of the Corporation is Proler International
Corp."
SECOND: That said amendment to the Certificate of Incorporation was
duly adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its President, this 28th day of February, 1996.
PROLER SUCCESSOR, INC.
By:/s/ STEVEN F. GILLILAND
Steven F. Gilliland, President
BY-LAWS
OF
PROLER SUCCESSOR, INC.
(THE "CORPORATION")
ARTICLE I
OFFICES
Section 1.1. The principal office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 1.2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. All meetings of the stockholders for the election of
directors shall be held in the City of Houston, State of Texas, at such place as
may be fixed from time to time by the board of directors. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed wavier of notice thereof.
Section 2.2. Annual meetings of stockholders, commencing with the year
1996, shall be held on such day and at such time during the months of May or
June as may be fixed from time to time by the Board of Directors. At the annual
meetings of stockholders, they shall elect, by a plurality vote, a Board of
Directors, and transact such other business as may properly be brought before
the meeting. In the event that no date is fixed by the Board of Directors,
annual meetings of stockholders shall be held on the second Tuesday in June, if
not a legal holiday,and if a legal holiday, then on the next secular day
following, at 11:00 A.M.
Section 2.3. Written notice of the annual meeting shall be given to
each stockholder entitled to vote thereat at least ten days before the date of
the meeting.
Section 2.4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, during ordinary business hours, for a period
of at least ten days prior to the election, either at a place within the city or
town where the election is to be held and which place shall be specified in the
notice of the meeting, or, if not specified, at the place where said
1
meeting is to be held, and the list shall be produced and kept at the time and
place of election during the whole time thereof, and subject to the inspection
of any stockholder who may be present.
Section 2.5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board of directors or by the
president or the board of directors and shall be called by the president or
secretary at the request in writing of any two members of the board of
directors, or at the request in writing of stockholders owning ten percent or
more in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 2.6. Written notice of a special meeting of stockholders,
stating the time, place and purpose thereof, shall be given to each stockholder
entitled to vote thereat, at least ten days before the date fixed for the
meeting.
Section 2.7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 2.8. The holders of fifty percent of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 2.10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period, and, except where the transfer books of the corporation have been
closed or a date has been fixed as a record date for the determination of its
stockholders entitled to vote, no shares of stock shall be voted on at any
election for directors which has been transferred on the books of the
corporation within twenty days next preceding such election of directors.
2
Section 2.11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provisions of the statutes or of the certificate of incorporation, the meeting
and vote of stockholders may be dispensed with, if all the stockholders who
would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
ARTICLE III
DIRECTORS
Section 3.1. The number of directors which shall constitute the whole
Board shall be five (5), to be made up of one Class A director, two Class B
directors and two Class C directors, in accordance with the Corporation's
Certificate of Incorporation.
Section 3.2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until the next annual election and until their
successors are duly elected and shall qualify, unless sooner displaced.
Section 3.3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 3.4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 3.5. The first meeting of each newly elected board of directors
shall be held immediately following the adjournment of the annual meeting of the
stockholders and at the same place as such meeting of the stockholders, or at
such other time and place as shall be fixed by the vote of the stockholders at
the annual meeting, and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event such meeting is not held at the time and
place herein specified or so fixed by the stockholders, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 3.6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
3
Section 3.7. Special meetings of the board may be called by the
chairman of the board of directors or by the president on three days' notice to
each director, either personally or by mail, or upon twenty-four hours notice by
telegram; special meetings shall be called by the chairman of the board of
directors or the president or secretary in like manner and on like notice on the
written request of any director.
Section 3.8. At all meetings of the board, a majority of the total
number of the board shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 3.9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if prior to such action a written consent thereto is signed
by all members of the board or of such committee as the case may be, and such
written consent is filed with the minutes of proceedings of the board or
committee.
COMMITTEES OF DIRECTORS
Section 3.10. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of two or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the board of
directors.
Section 3.11. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 3.12. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
4
ARTICLE IV
NOTICES
Section 4.1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 4.2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 5.1. The officers of the corporation shall be chosen by the
board of directors and there shall be a chairman of the board of directors, and
a president, one or more vice-presidents, a secretary and a treasurer. The board
of directors may also choose one or more assistant secretaries and assistant
treasurers and one of the Vice Presidents may be designated the Executive Vice
President. Two or more offices may be held by the same person, except that where
the offices of president and secretary are held by the same person, such person
shall not hold any other office.
Section 5.2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 5.3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 5.4. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 5.5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
5
CHAIRMAN OF THE BOARD
Section 5.6. The Chairman of the Board shall preside when present at
all meetings of the stockholders and the Board of Directors, and shall perform
all duties and have all powers which are commonly incident to the office of
Chairman of the Board.
THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Section 5.7. The president shall be the chief executive officer and
chief operating officer of the Corporation and, subject to the direction of the
Board of Directors and the Chairman of the Board, shall in general supervise and
control all business and affairs of the Corporation and shall perform all duties
and have all powers which are commonly incident to the offices of chief
executive officer and chief operating officer or which are delegated to him by
the Chairman of the Board or by the Board of Directors. In the event of the
death or disability of the Chairman of the Board, the President shall perform
the duties of the Chairman of the Board, and, when so acting, shall have all the
powers of and shall be subject to all the restrictions upon the Chairman of the
Board.
Section 5.8. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 5.9. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 5.10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
6
Section 5.11. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 5.12. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 5.13. The treasurer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 5.14. If required by the board of directors the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 5.15. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 6.1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by or in the name of the corporation by the
president or a vice-president and the treasurer or an assistant treasurer, or
the secretary or an assistant secretary of the corporation, certifying the
number of shares owned by him in the corporation.
Section 6.2. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the
7
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
CLOSING OF TRANSFER BOOKS
Section 6.3. The Board of Directors may close the stock transfer books
of the Corporation for a period not exceeding sixty (60) days preceding the date
of any meeting of stockholders or the date for payment of any dividend or the
date for the allotment of rights or the date when any change or conversion or
exchange of capital stock shall go into effect or for a period of not exceeding
sixty (60) days in connection with obtaining the consent of stockholders for any
purpose. In lieu of closing the stock transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of stockholders, or the date for the allotment of rights, or
the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent, as a record
date for the determination of the stockholders entitled to notice of, and to
vote at, any such meeting, and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders and only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
Section 6.4. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
8
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 7.1. Dividends upon the capital stock of the corporation,
subject to any provisions of the certificate of incorporation, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
FISCAL YEAR
Section 7.2. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 7.3. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the word "Delaware". The
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
INDEMNIFICATION OF DIRECTORS, OFFICER AND OTHER PERSONS
Section 7.4. To the extent permitted by law, the corporation shall
indemnify each of its directors in their capacity as directors or officers of
the corporation, and may indemnify any other person, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERS or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to be the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
9
The corporation shall indemnify each of its directors in their capacity
as directors or officers of the corporation, and may indemnify any other person,
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery of the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
Any indemnification under this section (unless ordered by a court)
shall be made by the corporation only upon a determination that indemnification
of the director, officer, employee or agent is proper because he has met the
applicable standard of conduct set forth above. Such determination shall be made
as follows: by the board of directors by a majority vote of directors who are
not parties to such action, suit or proceeding, even though such directors do
not constitute a quorum; or if such a quorum is not obtainable, or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or by the stockholders.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
board of directors upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this section. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
The indemnification and advance of expenses provided by this section
shall be a contract right and shall not be deemed exclusive of any other rights
to which those seeking indemnification or the advancement of expenses may be
entitled under the laws of the State of Delaware, under any agreement, including
any agreement to which the corporation is a party, vote of stockholders or
disinterested directors or otherwise, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. No
amendment to or repeal of this section 7.4 shall apply to or have any effect on
the contract rights of any person under this section 7.4 for or with respect to
acts or omissions of such person occurring prior to such amendment.
10
ARTICLE VIII
AMENDMENTS
Section 8.1. These by-laws may be altered or repealed at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alteration or repeal be contained in the notice of such special meeting. No
change of the time or place of the meeting for the election of directors shall
be made within thirty days next before the day on which such meeting is to be
held, and in case of any change of such time or place, notice thereof shall be
given to each stockholder in person or by letter mailed to his last known post
office address at least twenty days before the meeting is held.
ARTICLE IX
BUSINESS COMBINATIONS
Section 9.1. The Company shall not be governed by the provisions of
Section 203 BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS of the Delaware
General Corporation Law.
11
Resolution adopted by the Board of Directors
March 5, 1996
RESOLVED, that Section 3.1 of Article III of the Bylaws of the Company
be amended to read hereinafter in its entirety as follows:
"Section 3.1 The number of directors which shall constitute
the whole Board shall be five (5), to be made up of two Class A
directors, one Class B director and two Class C directors, in
accordance with the Corporation's Certificate of Incorporation."
12
PROLER INTERNATIONAL CORP.
and
KEYCORP SHAREHOLDER SERVICES, INC.
Rights Agent
Rights Agreement
Dated as of February 28, 1996
TABLE OF CONTENTS
SECTION PAGE
------- ----
1 Certain Definitions ................................................ 1
2 Appointment of Rights Agent ........................................ 4
3 Issue of Rights Certificates ....................................... 4
4 Form of Rights Certificates ........................................ 6
5 Countersignature and Registration .................................. 7
6 Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates ........... 7
7 Exercise of Rights; Purchase Price; Expiration Date of Rights ...... 8
8 Cancellation and Destruction of Rights Certificates ................ 10
9 Reservation and Availability of Capital Stock ...................... 10
10 Record Date ........................................................ 11
11 Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights .......................................................... 12
12 Certificate of Adjusted Purchase Price or Number of Shares ......... 20
13 Consolidation, Merger, or Sale or Transfer of Assets or Earning
Power .............................................................. 20
14 Fractional Rights and Fractional Shares ............................ 23
15 Rights of Action ................................................... 24
16 Agreement of Rights Holder ......................................... 24
17 Rights Certificate Holder Not Deemed a Stockholder ................. 25
18 Concerning the Rights Agent ........................................ 25
19 Merger, Consolidation or Change of Name of Rights Agent ............ 25
20 Duties of Rights Agent ............................................. 26
21 Change of Rights Agent ............................................. 28
22 Issuance of New Rights Certificates ................................ 29
23 Redemption ......................................................... 29
24 Notice of Certain Events ........................................... 31
25 Notices ............................................................ 32
26 Supplements and Amendments ......................................... 32
27 Successors ......................................................... 33
28 Determinations and Actions by the Board of Directors, etc .......... 33
29 Benefits of this Agreement ......................................... 33
30 Severability ....................................................... 34
31 Governing Law ...................................................... 34
32 Counterparts ....................................................... 34
33 Descriptive Headings ............................................... 34
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of February 28, 1996 (the "Agreement"),
between Proler International Corp., a Delaware corporation (the "Company"), and
KeyCorp Shareholder Services, Inc. as Rights Agent (the "Rights Agent");
WITNESSETH:
WHEREAS, the Company (formerly Proler Successor, Inc.) is a "holding
company" formed pursuant to a merger consummated on February 28, 1996 by and
among the former Proler International Corp. (the predecessor to the Company),
the Company, and Proler Merger, Inc., pursuant to which merger Common Stock of
the Company was issued in exchange for outstanding Common Stock of the former
Proler International Corp.; and
WHEREAS, pursuant to the Merger Agreement dated February 28, 1996
pursuant to which the merger was consummated, the Company agreed to enter into
this Agreement upon the effectiveness of the merger and agreed to declare a
distribution to its stockholders of certain rights issued pursuant to this
Agreement; and
WHEREAS, on February 28, 1996 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one-third of one Right for each share of common stock, $1.00 par
value per share, of the Company (the "Common Stock") outstanding at 5:02 p.m. on
February 28, 1996 (the Effective Time of the merger and, for purposes of this
Agreement, the "Record Date"), and authorized the issuance of one-third of one
Right (as such number may hereinafter be adjusted pursuant to the provisions of
SECTION 11(P) hereof) for each share of Common Stock of the Company issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date (as such term is defined in
SECTION 3 hereof), each whole Right initially representing the right to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
$1.00 par value per share, of the Company having the rights, powers and
preferences set forth in the Company's Certificate of Incorporation as in effect
on the date hereof upon the terms and subject to the conditions hereinafter set
forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and intending to be legally bound hereby, the
parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan.
<PAGE>
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange, or (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to SECTION 3(a) or SECTION 22 hereof (the "Original
Rights") or pursuant to SECTION 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not
in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this SUBPARAGRAPH (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to SUBPARAGRAPH (ii) of
this PARAGRAPH (c)) or disposing of any voting securities of the
Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
2
(e) "Close of business" on any given date shall mean 5:00 P.M., Houston
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it shall mean 5:00 P.M. Houston time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock, $1.00 par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(g) An "Offer" shall mean a written proposal delivered to the Company
by any Person who both beneficially owns 1% or less of the outstanding Common
Stock as of the date such proposal is delivered and who has not within one year
prior to the delivery of such written proposal (x) beneficially owned in excess
of 1% of the outstanding Common Stock and (y) (at a time when such Person
beneficially owned a greater than 1% stake) disclosed, or caused the disclosure
of, any intention which relates to or would result in the acquisition, or
influence of control, of the Company (an "Offeror"), and which proposal:
(i) provides for the acquisition of all of the outstanding
shares of Voting Stock held by any Person other than the Offeror and
its Affiliates for cash at the same price;
(ii) is accompanied by a written opinion of a nationally
recognized investment banking firm which is addressed to the holders of
shares of Voting Stock other than the Offeror and its Affiliates and
states that the price to be paid to such holders pursuant to the Offer
is fair to such holders;
(iii) states that the Offeror has obtained written financing
commitments from recognized financing sources, and/or has on hand cash
or cash equivalents, for the full amount of all financing necessary to
consummate the Offer; and
(iv) requests the Company to call a special meeting of the
holders of Voting Stock for the purpose of voting on a resolution
requesting the Board of Directors to accept such Offer and contains a
written agreement of the Offeror to pay (or share with any other
Offeror) at least one-half of the Company's costs of such special
meeting (exclusive of the Company's costs of preparing and mailing
proxy material for its own solicitation).
Notwithstanding anything in the foregoing to the contrary, an "Offer"
shall include a proposal that meets the requirements of all of (i), (ii), (iii),
and (iv) above and that is delivered to the Company by a Person who beneficially
owns in excess of 1% of the outstanding Common Stock if (x) such Person owned in
excess of 1% of the outstanding Common Stock on February 28, 1996, (y) as of the
date such proposal is delivered such Person beneficially owns not more than the
percentage of the Common Stock that is the sum of (A) the percentage of the
outstanding Common Stock beneficially owned by such Person as of February 28,
1996 and (B) 1 (one) (this percentage, as calculated for each such Person, shall
be hereinafter referred to as the "Offeror Percentage"), and (z) such Person has
not within one year prior to the delivery of such written proposal (1)
beneficially owned a percentage of the outstanding Common Stock that exceeds the
Offeror Percentage applicable to such Person and (2) (at a time when such Person
3
beneficially owned a percentage of the outstanding Common Stock that exceeds the
Offeror Percentage applicable to such Person) disclosed, or caused the
disclosure of, any intention which relates to or would result in the
acquisition, or influence of control, of the Company. Any Person who complies
with all the requirements of the preceding sentence shall be an Offeror for
purposes of this Agreement.
(h) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(i) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, $1.00 par value per share, of the Company.
(j) "SECTION 11(a)(ii) Event" shall mean any event described in SECTION
11(a)(ii) (a), (b) or (c) hereof.
(k) "SECTION 13 Event" shall mean any event described in CLAUSES (x),
(y) or (z) of SECTION 13(a) hereof.
(l) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(m) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(n) "Triggering Event" shall mean any SECTION 11(a)(ii) Event or any
SECTION 13 EVENT.
(o) "Voting Stock" shall mean (i) the Common Shares and (ii) any other
shares of capital stock of the Company entitled to vote generally in the
election of directors or entitled to vote together with the Common Shares in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with SECTION 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth
calendar day after the Stock Acquisition Date (or, if the tenth calendar day
after the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the close of business
4
on the tenth business day after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14e-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would be the Beneficial Owner of
30% or more of the shares of Common Stock then outstanding (the earlier of (i)
and (ii) being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of PARAGRAPH (b) of this SECTION 3)
by the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Rights Agent has been notified that the Distribution Date
has occurred, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more right certificates, in substantially the
form of EXHIBIT A hereto (the "Rights Certificates"), evidencing one-third of
one Right for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to SECTION 11(P) hereof, at the
time of distribution of the Right Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with SECTION 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as EXHIBIT B (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock
shall also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as such term is defined in
SECTION 7 hereof), the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock shall also be deemed to be certificates for Rights, and shall
bear the following legend:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement between
Proler International Corp. (the "Company") and KeyCorp Shareholder
Services, Inc. dated as of February 28, 1996 (the "Rights Agreement"),
the terms of which are hereby incorporated
5
herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes, an Acquiring Person or any
Affiliate, or Associates thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void."
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates shall
be evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in EXHIBIT A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of SECTION 11 and SECTION 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one-hundredths of a
share of Preferred Stock as shall be set forth therein at the price set forth
therein the "Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to SECTION 3(a) or SECTION
22 hereof that the Company knows represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of SECTION 7(e) hereof, and any Rights
Certificate issued pursuant to SECTION 6 or
6
SECTION 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in SECTION 7(e) of such Agreement."
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, and President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be countersigned by the Rights Agent (either
manually or by facsimile signature as determined by the Company) and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by and person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTION 4(b), SECTION 7(e) and SECTION
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of shares of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or
7
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder has completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and has provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to SECTION 4(b), SECTION 7(e) and SECTION 14 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to SECTION 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in SECTION 9(c), SECTION 11(a)(iii) and SECTION 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the close of business on October
10, 1998 (the "Final Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in SECTION 23 hereof (the earlier of (i) and (ii) being
herein referred to as the "Expiration Date").
(b) The Purchase Price for one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $200, and shall be
subject to adjustment from time to time as provided in SECTIONS 11 and 13(a)
hereof and shall be payable in accordance with PARAGRAPH (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price for the shares of Preferred Stock (or other
8
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to SECTION 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
total number of shares of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company has elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary
agent, requisition from the depositary agent depositary receipts representing
such number of shares of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with SECTION 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced pursuant to SECTION 11(a)(iii) hereof) may be
made by money order, certified bank check or bank draft payable to the order of
the Company. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
SECTION 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all of the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of SECTION 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a triggering Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this SECTION 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this SECTION 7(e) and
SECTION 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person
9
as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this SECTION 7 unless such registered holder has (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange, if surrendered to the Company or any of its agents,
shall be delivered to the Rights Agent for cancellation or in canceled form, or,
if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) and/or out of any authorized and issued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) held in its treasury, the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement including SECTION 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a SECTION
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with SECTION 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933 (the
"Act"), with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and
10
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in CLAUSE (i) of the first
sentence of this SECTION 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction has been obtained.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax that may be payable in respect
of any transfer or delivery of Rights Certificates to a Person other than, or
the issuance or delivery of a number of shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in respect of a name other
than that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of any Rights
until such tax has been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. RECORD DATE. Each person in whose name any certificate for
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise
11
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this SECTION 11.
(a) (i) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on its Preferred Stock payable
in shares of Preferred Stock (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this SECTION 11(a) and SECTION 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both this
SECTION 11(a)(i) and SECTION 11(a)(ii) hereof, the adjustment provided
for in this SECTION 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to SECTION 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall merge into the
Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such
merger or combination and the Common Stock of the Company
shall remain outstanding and unchanged, (2) shall, in one
transaction or a series of transactions, transfer any assets
to the Company or to any of its Subsidiaries in exchange (in
whole or in part) for shares of Common Stock, for shares of
other equity securities of the Company, or for securities
exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise) or
otherwise obtain from the Company, with or without
consideration, any additional shares of such equity securities
or securities exercisable for or convertible into shares of
such equity securities (other than pursuant to a pro rata
distribution to all holders of Common Stock), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or
12
otherwise acquire or dispose of, in one transaction or a
series of transactions, to, from or with (as the case may be)
the Company or any of its Subsidiaries, assets on terms and
conditions less favorable to the Company than the Company
would be able to obtain in arm's length negotiation with an
unaffiliated third party, other than pursuant to a transaction
set forth in SECTION 13(a) hereof, (4) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of in one transaction or a series of
transactions, to, from or with (as the case may be) the
Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in as of
the date hereof between the Company in as of the date hereof
between the Company and such Acquiring Person or Associate or
Affiliate) assets having an aggregate fair market value of
more than $6,578,300, other than pursuant to a transaction set
forth in SECTION 13(a) hereof, (5) shall receive any
compensation from the Company or any of the Company's
Subsidiaries other than compensation for full-time employment
as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) shall
receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from
a requirement of law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries; or
(B) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary organized, appointed or established by the Company
for or pursuant to the terms of any such plan), along or
together with its Affiliates and Associates, shall, at any
time after the Rights Dividend Declaration Date, become the
Beneficial Owner of 30% or more of the shares of Common Stock
then outstanding, unless the event causing the 30% threshold
to be crossed is a transaction set forth in SECTION 13(a)
hereof, or is an acquisition of shares of Common Stock
pursuant to a tender offer or an exchange offer, made in the
manner prescribed by Section 14(d) of the Exchange Act, for
all outstanding shares of Common Stock (other than shares held
by such Person and its Affiliates) that is, by its terms, held
open for not less than 60 days and either (1) is at a price
and on terms determined by at least a majority of the members
of the Board of Directors who are not officers of the Company,
or who are not nominees, representatives, Affiliates or
Associates of the Person making such offer, after receiving
advice from one or more investment banking firms, to be (a) at
a price that is fair to stockholders (taking into account all
factors which the Directors of the Company deem relevant
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders, or (2) is for cash and (i) causes such Person,
together with all Affiliates and Associates of such Person, to
be the Beneficial Owner of 80% or more of the Common Stock
then outstanding and (ii) is followed, within 90 days, by the
completion of a merger or other business combination in which
all remaining stockholders of the Company (other than the
Person making such offer) receive cash consideration in a per
share amount at least equal to the highest per share amount
paid in connection with such offer; or
13
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or
any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of SECTION 13(a) apply (whether or not with or into
or otherwise involving an Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
which is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person
then, promptly following five (5) days after the date of the occurrence
of an event described in SECTION 11(a)(ii)(b) hereof and promptly
following the occurrence of any event described in SECTION 11(a)(ii)(a)
or hereof, proper provision shall be made so that each holder of a
Right (except as provided below and in SECTION 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement
and subject to the terms of the Company's certificate of incorporation,
in lieu of shares of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a SECTION
11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of
the current market price (determined pursuant to SECTION 11(d)(i)
hereof) per share of Common Stock on the date of such first occurrence
(such number of shares being referred to herein as the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's certificate of incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing SUBPARAGRAPH (ii)
of this SECTION 11(a), the Company shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such excess
being hereinafter referred to as the "Spread"), and (B) with respect to
each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board of Directors of the
Company has deemed to have the same value as shares of Common Stock
(such shares of preferred stock being referred to as "common stock
equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by
the Board of Directors of the Company; PROVIDED, HOWEVER, if the
Company
14
shall not have made adequate provision to deliver value pursuant to
CLAUSE (b) above within thirty (30) days following the later of (x) the
first occurrence of a SECTION 11(a) (ii) Event and (y) the date on
which the Company's right of redemption pursuant to SECTION 23(a)
expires (the later of (x) and (y) being referred to herein as the
"SECTION 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company determines in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized
for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the SECTION 11(a)(ii) Trigger Date, in
order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be
extended being hereinafter referred to as, the "Substitution Period").
To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this SECTION
11(a)(iii), the Company (x) shall provide, subject to SECTION 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this SECTION 11(a)(iii), the value of the
Common Stock shall be the current market price (as determined pursuant
to SECTION 11(d)(i) hereof) per share of the Common Stock on the
SECTION 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock
on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options, or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to SECTION 11(d)(ii)
hereof) per share of Preferred Stock on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock
which the aggregate offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or equivalent preferred stock
to be offered for subscription or purchase (or into which the convertible
15
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in SECTION 11(b), hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
SECTION 11(d)(ii) hereof) per share of Preferred Stock on such record date, less
the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such current market price (as determined pursuant to SECTION 11(d)(ii) hereof
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to SECTION 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to SECTION
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
Common Stock for the ten (10) consecutive Trading Days immediately following
such date; PROVIDED, HOWEVER, that in the event that the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock or securities convertible into shares of such
Common Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or in case no
16
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares of such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of the
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in CLAUSE (i) of this SECTION 11(d) (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in CLAUSE (i) of this SECTION 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the current market price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this SECTION 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this SECTION 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this SECTION 11(e), any adjustment
required by this SECTION 11 shall be made no later
17
than the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to SECTION 11(a)(ii)
or SECTION 13(a) hereof, the holder of any Right thereafter exercised becomes
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to provisions
with respect to the Preferred Stock contained in SECTIONS 11(a), (b), (c), (e),
(g), (h), (i), (j), (k) and (m), and the provisions of SECTIONS 7, 9, 10, 13,
and 14 hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) All rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
SECTION 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in SECTIONS 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share of Preferred
Stock covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of shares of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of shares or fractions of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this SECTION 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
SECTION 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender
18
thereof, if required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares or fractions of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share of Preferred Stock
and the number of shares which were expressed in the initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value, if any, of the shares of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this SECTION 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any share
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
SECTION 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with SECTION 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with SECTION 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to
19
any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with SECTION
11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of SECTION 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by SECTION 23 or SECTION 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTION 11 and SECTION 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with SECTION 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and the Rights Agent shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merger with and into,
any other Person (other than a Subsidiary of the Company in a transaction which
complies with SECTION 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with
20
SECTION 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with SECTION 11(o) hereof), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in SECTION 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a SECTION 13 Event (or,
if a SECTION 11(a)(ii) Event has occurred prior to the first occurrence of a
SECTION 13 Event, multiplying the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a SECTION 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a SECTION 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the current market price (determined pursuant to SECTION 11(d)(i)
hereof) per share of the common stock of such Principal Party on the date of
consummation of such SECTION 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such SECTION 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of SECTION 11 hereof shall
apply only to such Principal Party following the first occurrence of a SECTION
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its common
stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of common stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of SECTION 11(a)(ii) hereof shall be of no effect following the first occurrence
of any SECTION 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in CLAUSE (x) or (y) of
the first sentence of SECTION 13(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
21
(ii) in the case of any transaction described in CLAUSE (z) of the
first sentence of SECTION 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; PROVIDED, HOWEVER, that
in any such case, (1) if the common stock of such Person is not at such
time and has not been continuously over the preceding twelve (12) month
period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the common stock
of which is and has been so registered, "Principal Party" shall refer
to such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the common stocks of
two or more of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the common
stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its common stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
SECTION 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
Providing for the terms set forth in PARAGRAPHS (a) and (b) of this SECTION 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
SECTION 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of it Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this SECTION 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a SECTION 13 Event
shall occur at any time after the occurrence of a SECTION 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in SECTION 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, SECTION
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of SECTION 13(a) if:
(i) such transaction is consummated with a person or Persons who
acquired shares of Common Stock pursuant to a tender offer or exchange
offer for all outstanding shares of Common Stock that complies with the
provisions of SECTION 11(a)(ii)(b) hereof (or a wholly owned subsidiary
of any such Person or Persons), (ii) the price per share of Common
Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose
shares where purchased pursuant to such tender offer or exchange offer,
and (iii) the form of
22
consideration being offered to the remaining holders of shares of
Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this SECTION
13(d), all Rights hereunder shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in SECTION 11(P) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this SECTION 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this SECTION 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
SECTION 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of
23
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one share of
Common Stock. For purposes of this SECTION 14(c), the current market value of
one share of Common Stock (as determined pursuant to SECTION 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this SECTION 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement other than rights of action vested in the Rights Agent pursuant to
SECTION 18 are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
SECTION 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
24
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in SECTION 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim or liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or
25
any corporation succeeding to the corporate trust business of the Rights Agent
or any Successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; PROVIDED, HOWEVER, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of SECTION 21 hereof. In case, at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights either in the name of the predecessor
or in the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases the Rights Certificates shall have
the full force provided in the Rights Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, but all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chief Executive Officer, the Chief Operating Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
fully authorization by the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the
26
same (except as to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of SECTION 11 or
SECTION 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock
or Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the Chief Operating Officer, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any such officer of the Company actually receives such application, unless any
such officer has consented in writing to an effective date in the case of an
omission), unless the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
27
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; PROVIDED, HOWEVER, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to CLAUSE 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be. If the Company fails to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation by the resigning Rights Agent, the such
resigning Rights Agent or any registered holder of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws of the
United States or of the State of Texas (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of Texas), in good standing, having an office in any
one or more of such States, which is authorized under such laws to exercise
corporate trust or shareholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties, and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this SECTION 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
28
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; PROVIDED, HOWEVER that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to SUBSECTION (b) of this SECTION 23 or by stockholder action pursuant
to SUBSECTION (c) of this SECTION 23 and shall not be redeemed in any other
manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), or (ii) the Final Expiration Date, redeem all but
not less than all the outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
PROVIDED, HOWEVER that if, following the occurrence of a Stock Acquisition Date
and following the expiration of the right of redemption hereunder but prior to
any Triggering Event, (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of a
Triggering Event such that such Person is thereafter a Beneficial Owner of 10%
or less of the outstanding shares of Common Stock, and (ii) there are no other
Persons, immediately following the occurrence of the event described in CLAUSE
(i), who are Acquiring Persons, then the right of redemption shall be reinstated
and thereafter be subject to the provisions of this SECTION 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a SECTION 11(a)(ii) Event until such
time as the Company's right of redemption hereunder has expired.
(c) (i) In the event the Company receives an Offer from any Offeror,
the Board of Directors of the Company shall call a special meeting of holders of
Voting Stock (the "Special
29
Meeting") for the purpose of voting on a resolution requesting the Board of
Directors to accept such offer, as such Offer may be amended or revised by the
Offeror from time to time to increase the price per share in cash to be paid to
holders of shares of Voting Stock (the "Resolution"). The Special Meeting shall
be held on a date selected by the Board of Directors, which date shall not be
less than sixty (60) and not more than one hundred twenty (120) days after the
later of (A) the date such Offer is received by the Company (the "Offer Date")
and (B) the date of any meeting of holders of Voting Stock already scheduled as
of the Offer Date; PROVIDED, HOWEVER, that if (x) such other meeting shall have
been called for the purpose of voting on a resolution with respect to another
Offer and (y) the Offer Date shall be not later than fifteen (15) days after the
date such other Offer was received by the Company, then both the Resolution and
such other resolution shall be voted on at such meeting and such meeting shall
be deemed to be the Special Meeting. The Board of Directors shall set a date for
determining the recordholders of Voting Stock entitled to notice of and to vote
at the Special Meeting in accordance with the Company's certificate of
incorporation and bylaws and with applicable law. At the Offeror's request, the
Company shall include in any proxy soliciting material prepared by it in
connection with the Special Meeting proxy soliciting material submitted by the
Offeror; PROVIDED, HOWEVER, that the Offeror shall by written agreement with the
Company contained in or delivered with such request indemnify the Company
against any and all liabilities resulting from any misstatements, misleading
statements and omissions contained in the Offeror's proxy soliciting material
and agrees to pay the Company's incremental costs incurred as a result of
including such material in the Company's proxy soliciting material.
Notwithstanding the foregoing, no Special Meeting shall be held from and after
such time as any Person becomes an Acquiring Person, and any Special Meeting
scheduled prior to such time and not theretofore held shall be canceled.
(ii) If at the Special Meeting the Resolution receives the affirmative
vote of a majority of the shares of Voting Stock outstanding as of the record
date of the Special Meeting, then all of the Rights shall be redeemed by such
action of holders of Voting Stock at the Redemption Price, effective immediately
prior to the consummation of any tender offer (provided that such tender offer
is consummated prior to sixty (60) days after the date of the Special Meeting)
pursuant to which any Person offers to purchase all of the shares of Voting
Stock held by Persons other than such Person and its Affiliates and Associates
at a price per share in cash equal to or greater than the price contained in the
Resolution approved at the Special Meeting; PROVIDED, HOWEVER, that the Rights
shall not be redeemed at any time from and after such time as any Person becomes
and Acquiring person.
(iii) Nothing contained in this SUBSECTION (c) shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any Offer, or to recommend that holders of shares of
Voting Stock reject any tender offer, or to take any other action (including,
with-out limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative Offers or other
proposals to the Special Meeting) with respect to any Offer or any tender offer
that the Board of Directors believes is necessary or appropriate in the exercise
of such fiduciary duty.
30
(iv) Nothing in this SUBSECTION (c) shall be construed as limiting or
prohibiting the Company or any Offeror from proposing or engaging, at any time,
in any acquisition, disposition or other transfer of any securities of the
Company, any merger or consolidation involving the Company, any sale or other
transfer of assets of the Company, any liquidation, dissolution or winding-up of
the Company, or any other business combination or other transaction, or any
other action by the Company or such Offeror; PROVIDED, HOWEVER, that the holders
of Rights shall have the rights set forth in this Agreement with respect to any
such acquisition, disposition, transfer, merger, consolidation, sale,
liquidation, dissolution, winding-up, business combination, transaction or
action.
(d) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to SUBSECTION (b) of this
SECTION 23, or upon the effectiveness of the redemption of the Rights pursuant
to SUBSECTION (c) of this SECTION 23, and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly give public notice of any such
redemption; PROVIDED, HOWEVER, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. Within ten (10)
days after such action of the Board of Directors ordering the redemption of the
Rights pursuant to SUBSECTION (b) or the effectiveness of the redemption of the
Rights pursuant to SUBSECTION (c), as the case may be, the Company shall mail a
notice of redemption to all holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with SECTION 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related transactions,
of more than 50%, of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with SECTION 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with SECTION 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the
31
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by CLAUSE (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.
(b) In case any of the events set forth in SECTION 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with SECTION 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under SECTION 11(a)(ii) hereof, and (ii) all
reference in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 25. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Proler International Corp.
4265 San Felipe, Suite 900
P. O. Box 286
Houston, Texas 77027
Attention: Steven F. Gilliland
Subject to the provisions of SECTION 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
KeyCorp Shareholder Services, Inc.
700 Louisiana Street
Suite 2620
Houston, Texas 77002
Attention: Ray Rosenbaum
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this SECTION 26, the Company and the
Rights Agent shall, if the
32
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the penultimate sentence of
this SECTION 26, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); PROVIDED,
this Agreement may not be supplemented or amended to lengthen, pursuant to
CLAUSE (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this SECTION 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of shares of Preferred
Stock for which a Right is exercisable prior to a Triggering Event. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of CLAUSE (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board to any liability to the holders of the Rights.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common
33
Stock) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Stock).
Section 30. SEVERABILITY. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgement that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in SECTION 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
SECTION 31. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT AND EACH RIGHTS
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAW
OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: PROLER INTERNATIONAL CORP.
By:/s/ M.F. LOY By:/s/ STEVEN F. GILLILAND
Name: MICHAEL F. LOY Name: STEVEN F. GILLILAND
Title: SECRETARY Title: PRESIDENT
ATTEST: KEYCORP SHAREHOLDER SERVICES,
INC.
By:/s/ BARBARA A. SHEPHERD By:/s/ RAY G. ROSENBAUM
Name: BARBARA A. SHEPHERD Name: RAY G. ROSENBAUM
Title: VICE PRESIDENT Title: VICE PRESIDENT
35
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- _________Rights
NOT EXERCISABLE AFTER OCTOBER 10, 1998 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1
Rights Certificate
Proler International Corp.
This certifies that Proler International Corp. , or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of ______________, 19__ (the "Rights Agreement"),
between Proler International Corp., Delaware corporation (the "Company"), and
KeyCorp Shareholder Services, Inc. (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 p.m. (Houston time) on October 10, 1998, at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, non-assessable
share of Series A Junior Participating Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of $200.00 per one one-hundredth of a share
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The Purchase Price shall be paid in cash. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per one
one-hundredth of a share set forth above, are the number and Purchase Price as
of _____________, 19__, based on the Preferred Stock as constituted at such
date.
- ------------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
Upon the occurrence of a Triggering Event (as such term is defined in
the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder thereof shall have any right with respect to such Rights from and after
the occurrence of such SECTION 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
Purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable upon the exercise hereof, nor shall anything
A-2
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ___________, 19__
ATTEST: PROLER INTERNATIONAL CORP.
By:__________________ By:_______________________
Name:________________ Name:_____________________
Title:_______________ Title:____________________
Countersigned:
KEYCORP SHAREHOLDER SERVICES, INC.
By:____________________
Authorized Signature
A-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED hereby sells, assigns, and
transfers unto ______________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________________, 19__
_______________________
Signature
Signature Guaranteed:
1
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________, 19__
________________________
Signature
Signature Guaranteed:
2
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
3
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate)
TO: Proler International Corp.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to Purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security
or other identifying number
_______________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________
(Please print name and address)
Dated: ____________, 19__
_____________________
Signature
Signature Guaranteed:
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined Pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________________, 19__
____________________
Signature
Signature Guaranteed:
2
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
3
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On February 28, 1996, the Board of Directors of Proler International
Corp. (the "Company") declared a dividend distribution of one-third of one Right
for each outstanding share of Common Stock, $1.00 par value per share ("Common
Stock") of the Company to stockholders of record at ____ on February 28, 1996
(the "Record Date"). Each Whole Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, $1.00 par value (the "Preferred Stock") at a Price of $200.00
per one one-hundredth of a share (the "Purchase Price"), subject to adjustment.
The Purchase Price shall be paid in cash. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and KeyCorp Shareholder Services, Inc. as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) ten business days following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock Certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after February 28, 1996
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and Bill
expire at the close of business on 10 years after the Record Date, unless
earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
its Common Stock is not changed or exchanged, (ii) a Person becomes the
beneficial owner of more than 30% of the then outstanding shares of Common Stock
(unless such Person first acquires 30% or more of the outstanding Common Stock
pursuant to a cash tender offer for all of the Common Stock (a)
B-1
which offer increases such Person's beneficial ownership to 80% or more and is
followed within 90 days by completion of a business combination in which all
remaining stockholders of the Company receive cash consideration per share at
least equal to the highest price paid in connection with such offer, or (b)
which is found by the Board of Directors to be at a price and on terms that are
fair and otherwise to be in the best interests of the Company and its
stockholders), (iii) an Acquiring Person engages in one or more "self-dealing"
transactions as set forth in the Rights Agreement, or (iv) during such time as
there is an Acquiring Person, certain events occur which result in such
Acquiring Person's ownership interest being increased by more than 1% (e.g., a
reverse stock split), each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. Notwithstanding any of the foregoing, following
the occurrence of any of the events set forth in CLAUSES (i), (ii), (iii) and
(IV) of this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void. However, Rights are not exercisable following the
occurrence of any of the events set forth above until such time as the Rights
are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger following a tender offer of the type described in the parenthetical in
CLAUSE (ii) of the first sentence of the second preceding paragraph), or (ii)
50% or more of the Company's assets or earning power is sold or transferred,
each holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the Right. The events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock will be issued upon the exercise
of any Rights (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Pate, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right. After the redemption
B-2
period has expired, the Company's right of redemption may be reinstated if any
Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.01 redemption price.
In addition, the Rights may be redeemed by stockholder action at $.01
per Right when certain procedures are complied with in connection with an
acquisition proposal. If a bidder who does not own more than 1% of the Company's
stock (and who has not within one year prior to making an acquisition proposal
owned in excess of 1% of the Common Stock and disclosed a plan or intention to
acquire or influence control of the Company) proposes to buy all of the
Company's stock for cash at a price which a nationally recognized investment
banker selected by the bidder states in writing is fair, and the bidder has
obtained full financing commitments (or otherwise has full financing) to
complete the transaction and complies with certain procedural requirements, then
the Company, upon the request of the bidder, will hold a special meeting of
stockholders to consider a resolution requesting the Board of Directors to
accept the bidder's proposal. (The special meeting procedure would also be
available to a bidder who owns more than 1% of the Company's stock on February
28, 1996, if such holder does not increase his ownership interest by more than
1% prior to making a proposal. If a majority of the outstanding shares entitled
to vote on the proposal vote in favor of the resolution, then, so long as no
person or group acquires 20% or more of the Company's Common Stock, the Rights
will be automatically redeemed immediately prior to the consummation of any
tender offer (whether made by the bidder or by anyone else, provided the tender
offer is consummated within 60 days of the special stockholders meeting) for all
of the Company's stock at a price per share in cash no less than the price
offered by the bidder and approved by the stockholders.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; PROVIDED, HOWEVER, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-B dated
February 29, 1996. A copy of the Rights Agreement is available free of charge
from the Rights Agent. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
B-3
$23,000,000.00
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
JOINT VENTURE OPERATIONS, INC.
(FORMERLY KNOWN AS PROLER INTERNATIONAL CORP.)
AND
PROLER INTERNATIONAL CORP.,
AS BORROWERS
AND
JOINT VENTURE OPERATIONS, INC.,
PROLERIDE TRANSPORT SYSTEMS, INC.,
PROLER ENVIRONMENTAL SERVICES, INC.,
PROLER INTERNATIONAL CORP.,
PROLER INDUSTRIES, INC.,
PROLER STEEL, INC.,
PROLER POWER MARKETING, INC.,
PROLER PROPERTIES, INC.
PROLER RECYCLING, INC.,
AS GUARANTORS
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
DATED EFFECTIVE AS OF FEBRUARY 28, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PRELIMINARY STATEMENT.............................................................................................1
ARTICLE I - DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS.....................................................2
Section 1.01. Certain Defined Terms....................................................................2
Section 1.02. Accounting Terms........................................................................16
Section 1.03. Types of Advances.......................................................................16
ARTICLE II - COMMITMENT AND TERMS OF CREDIT....................................................................16
Section 2.01. The Commitment..........................................................................16
Section 2.02. The Notes...............................................................................17
Section 2.03. Making the Advances.....................................................................18
Section 2.04. Conversions and Continuances............................................................18
Section 2.05. Interest Rate and Interest Payment Dates................................................18
Section 2.06. Interest Periods........................................................................20
Section 2.07. Interest Rate Not Ascertainable.........................................................21
Section 2.08. Principal Payments of Advances..........................................................21
Section 2.09. Computations; Payments on Non-Business Days.............................................21
Section 2.10. Set-Off, Counterclaims and Taxes........................................................21
Section 2.11. Borrowers Unconditionally Liable........................................................22
Section 2.12. Change in Legality......................................................................22
Section 2.13. Reserve Requirements; Change in Circumstances...........................................23
Section 2.14. Eurodollar Advance Prepayment and Default Penalties....................................24
Section 2.15. Use of Proceeds of Advances.............................................................25
Section 2.16. Voluntary Prepayments. ................................................................25
Section 2.17. Mandatory Prepayments...................................................................25
Section 2.18. Reduction of the Commitment.............................................................26
Section 2.19. Fees....................................................................................26
Section 2.20. Ratification............................................................................26
ARTICLE III - GUARANTY.........................................................................................26
Section 3.01. Guaranty................................................................................26
Section 3.02. Continuing Guaranty.....................................................................27
Section 3.03. Effect of Debtor Relief Laws............................................................28
Section 3.04. Waiver of Subrogation...................................................................29
Section 3.05. Subordination...........................................................................29
Section 3.06. Waiver..................................................................................29
Section 3.07. Full Force and Effect...................................................................30
-i-
ARTICLE IV - CONDITIONS PRECEDENT..............................................................................30
Section 4.01. Conditions Precedent to the Initial Advance.............................................30
Section 4.02. Conditions Precedent to All Advances....................................................32
ARTICLE V - REPRESENTATIONS AND WARRANTIES.....................................................................33
Section 5.01. Organization............................................................................33
Section 5.02. Authority...............................................................................33
Section 5.03. No Conflict.............................................................................34
Section 5.04. Consents................................................................................34
Section 5.05. Financial Condition; No Material Adverse Change.........................................34
Section 5.06. Litigation; Material Adverse Effect.....................................................35
Section 5.07. Indebtedness............................................................................35
Section 5.08. No Margin Stock.........................................................................35
Section 5.09. Accuracy and Completeness of Information................................................35
Section 5.10. ERISA...................................................................................36
Section 5.11. Government Regulation...................................................................36
Section 5.12. Property................................................................................36
Section 5.13. Payment of Taxes........................................................................36
Section 5.14. Insurance...............................................................................37
Section 5.15. Subsidiaries; Joint Ventures............................................................37
Section 5.16. Patents.................................................................................37
Section 5.17. Compliance with Statutes................................................................37
Section 5.18. Labor Relations; Collective Bargaining Agreements.......................................38
Section 5.19. Liabilities.............................................................................39
Section 5.20. Solvency................................................................................39
ARTICLE VI - AFFIRMATIVE COVENANTS.............................................................................39
Section 6.01. Reporting Requirements..................................................................39
Section 6.02. Existence...............................................................................42
Section 6.03. Maintenance of Properties; Insurance....................................................42
Section 6.04. Notice of Litigation....................................................................42
Section 6.05. Taxes; Claims...........................................................................43
Section 6.06. Notice of Default.......................................................................43
Section 6.07. Inspections.............................................................................43
Section 6.08. Compliance with Laws; Notices...........................................................44
Section 6.09. Books and Records; Accounting Systems and Principles....................................44
Section 6.10. Ownership of Credit Parties.............................................................45
Section 6.11. Further Assurances......................................................................45
Section 6.12. Performance of Loan Documents...........................................................45
Section 6.13. Activities of Joint Venture.............................................................45
Section 6.14. Dividends...............................................................................45
-ii-
ARTICLE VII - NEGATIVE COVENANTS...............................................................................45
Section 7.01. Liens...................................................................................45
Section 7.02. Indebtedness............................................................................47
Section 7.03. Financial Covenants.....................................................................48
Section 7.04. Consolidation, Mergers and Acquisitions; Fundamental Changes............................48
Section 7.05. Transactions with Affiliates............................................................49
Section 7.06. Use of Proceeds.........................................................................49
Section 7.07. Compliance with ERISA...................................................................50
Section 7.08. Limitation on Negative Pledge Clauses...................................................50
Section 7.09. Investments.............................................................................50
Section 7.10. Sale and Leaseback......................................................................51
Section 7.11. Capital Expenditures....................................................................51
Section 7.12. Limitation on Restrictions Affecting Subsidiaries.......................................51
Section 7.13. Restricted Payments.....................................................................52
Section 7.14. Other Business..........................................................................52
Section 7.15. Joint Venture Agreements................................................................52
Section 7.16. No Transfers to Affiliates..............................................................52
ARTICLE VIII - DEFAULT AND REMEDIES............................................................................52
Section 8.01. Events of Default.......................................................................52
Section 8.02. Set-Off in Event of Default.............................................................55
ARTICLE IX - MISCELLANEOUS.....................................................................................55
Section 9.01. Amendments..............................................................................55
Section 9.02. Notices.................................................................................55
Section 9.03. Costs, Expenses and Taxes...............................................................57
Section 9.04. Binding Effect; Successors and Assigns..................................................57
Section 9.05. Independence of Covenants...............................................................57
Section 9.06. Survival of Representations and Warranties..............................................57
Section 9.07. Separability............................................................................57
Section 9.08. No Waiver; Remedies.....................................................................58
Section 9.09. Counterparts............................................................................58
Section 9.10. Governing Law...........................................................................58
Section 9.11. Limitation on Interest..................................................................58
Section 9.12. Indemnification.........................................................................59
Section 9.13. Notice and Defense of Claims............................................................61
Section 9.14. Limitation by Law.......................................................................63
Section 9.15. Interpretation..........................................................................63
Section 9.16. Waiver of Texas Deceptive Trade Practices Act...........................................64
Section 9.17. Releases................................................................................64
Section 9.18. Final Agreement of the Parties..........................................................65
</TABLE>
-iii-
EXHIBITS AND SCHEDULES:
Exhibit 1.01-A Borrowing Base Certificate
Exhibit 1.01-C Form of Consent of Joint Venture
Exhibit 2.02-A Promissory Note - Operations
Exhibit 2.02-B Promissory Note - International
Exhibit 2.03 Borrowing Request
Exhibit 5.06 Litigation
Exhibit 5.07 Indebtedness
Exhibit 5.15 Corporations and Joint Ventures
Exhibit 5.18 Collective Bargaining Agreements
Exhibit 7.01(b) Liens
Exhibit 7.09 Investments
-iv-
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
This FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this
"AGREEMENT") dated effective as of February 28, 1996, is entered into by and
among JOINT VENTURE OPERATIONS, INC., a Delaware corporation (formerly known as
Proler International Corp.) ("OPERATIONS") and PROLER INTERNATIONAL CORP., a
Delaware corporation ("INTERNATIONAL", each individually, a "BORROWER" and
collectively, the "BORROWERS"), PROLERIDE TRANSPORT SYSTEMS, INC., PROLER
ENVIRONMENTAL SERVICES, INC., PROLER INDUSTRIES, INC., PROLER STEEL, INC.,
PROLER POWER MARKETING, INC., and PROLER RECYCLING, INC., each a Delaware
corporation, and PROLER PROPERTIES, INC., a Texas corporation (collectively,
together with each of Operations and International acting in its capacity as a
guarantor hereunder, the "GUARANTORS" and together with the Borrowers
collectively, the "CREDIT PARTIES"), and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association (the "BANK").
PRELIMINARY STATEMENT
Joint Venture Operations, Inc., then known as Proler
International Corp., as the borrower, and certain of its subsidiaries, as
guarantors, entered into that certain Third Amended and Restated Credit
Agreement dated effective as of December 11, 1995 (as same may have been amended
or modified from time to time, the "1995 AGREEMENT") whereby the Bank agreed to
make available to the borrower a line of credit for general working capital
purposes up to $23,000,000.00.
Subsequent to the execution of the 1995 Agreement, the entity
that executed said document as Proler International Corp., effective as of this
date, has been the surviving party to a merger and has changed its name to Joint
Venture Operations, Inc., a Delaware corporation. In addition, a new entity,
Proler International Corp., a Delaware corporation, has been formed. The new
entity, Proler International Corp., owns all of the issued and outstanding
shares of two newly formed corporations, Proler Steel, Inc., a Delaware
corporation, and Proler Industries, Inc., a Delaware corporation. Proler Steel,
Inc. owns all of the issued and outstanding shares of Joint Venture Operations,
Inc., a Borrower under this Agreement. Joint Venture Operations, Inc. owns all
of the issued and outstanding shares of Proleride Transport Systems, Inc., a
Delaware corporation and a Guarantor hereunder. Proler Industries, Inc. owns all
of the issued and outstanding shares of all of the remaining Guarantors (except
Proler International Corp. and Joint Venture Operations, Inc.).
-1-
Requirements of the borrower under the 1995 Agreement were,
among others: (i) the pledge of all of the shares of certain subsidiaries owned
by the borrower thereunder as collateral for the obligations thereunder and (ii)
that various of the substantial subsidiaries of the borrower thereunder execute
said agreement as guarantors. Because of the reorganization of the borrower
under said agreement, such obligations will no longer be fulfilled.
Therefore, the parties wish to amend and restate the 1995
Agreement in its entirety to carry out the intent of said document following the
corporate restructuring of the borrower thereunder. Proler International Corp.
and Joint Venture Operations, Inc. have both indicated that each wishes to be a
Borrower hereunder on the terms set forth herein. In consideration of the
foregoing and the mutual covenants and premises herein contained, Proler
International Corp. and Joint Venture Operations, Inc. (each individually as a
Borrower and also as a Guarantor), the Guarantors and the Bank do hereby agree
as follows:
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants set forth herein, the Borrowers, the Guarantors and the Bank
hereby agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS
Section 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings:
"ADVANCES" is defined in SECTION 2.01(a).
"AFFILIATE" means, when used with respect to any Person, any
other Person which controls or is controlled by or is under common
control with such Person. As used in this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person (whether
through ownership of securities or partnership or ownership interests
or otherwise).
"AGREEMENT" is defined in the introduction to this Agreement
as same may from time to time be amended, supplemented, modified or
restated.
"AMENDED AND RESTATED PLEDGE AGREEMENT" means that certain
Amended and Restated Pledge Agreement (Fourth Amended and Restated
Credit Agreement) of even date herewith executed by the Credit Parties
therein named, pledging and granting to the Bank a lien and security
interest in and to the shares in certain subsidiaries of said Credit
Parties as therein described.
-2-
"AMENDED AND RESTATED SECURITY AGREEMENT" means that certain
Amended and Restated Security Agreement (Fourth Amended and Restated
Credit Agreement) of even date herewith executed by each of the Credit
Parties in favor of the Bank granting to the Bank a lien and security
interest in and to substantially all of the assets of each of the
Credit Parties as therein described.
"APPRAISAL" means, collectively, an appraisal of each of the
Mortgaged Properties in form and substance satisfactory to the Bank.
"ASSURANCE" means, as to any Person, all obligations,
contingent or otherwise, of such Person guaranteeing or in effect
guaranteeing in any manner, whether directly or indirectly, any
Indebtedness of any other Person (the "primary obligor") including,
without limitation, obligations of such Person, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or supply
funds for the purchase of) any direct or indirect security therefor,
(b) to purchase property, securities or services for the purpose of
assuring the owner of such Indebtedness of the payment of such
Indebtedness, (c) to maintain working capital, equity capital or other
financial statement condition of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or otherwise to protect
the owner thereof against loss in respect thereof; PROVIDED that such
obligations are entered into by such Person directly with the primary
obligee or (d) entered into for the purpose of assuring in any manner
the owner of such Indebtedness of the payment of such Indebtedness or
to protect such owner against loss in respect thereof; PROVIDED that
the term Assurance shall not include endorsements for collection or
deposit, in either case in the ordinary course of business.
"AUTHORIZED OFFICER" means the Chief Executive Officer, Chief
Financial Officer, Controller, Chief Operating Officer or Treasurer of
the respective Credit Party or such other officer approved by the Bank
for the task indicated.
"BANK" is defined in the introduction to this Agreement.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States.
"BOARD OF DIRECTORS" means, as to any Credit Party, the Board
of Directors of such Credit Party.
"BORROWER" is defined in the introduction to this Agreement.
-3-
"BORROWING BASE" means, at any date of determination for
Advances, an amount equal to the sum of (a) 50% of the Market Value of
all Eligible Proler Inventory or Eligible Joint Venture Inventory
consisting of Processed Scrap, PLUS (b) $25.00 per Gross Ton of all
other Eligible Proler Inventory or Eligible Joint Venture Inventory,
PLUS (c) 50% of the Eligible Joint Venture Receivables, PLUS (d) 80% of
the Eligible Proler Receivables; PROVIDED, that the Borrowing Base
calculation shall be reduced by an additional 33% in respect of any
assets of any Joint Venture which becomes a Joint Venture in accordance
with the definition thereof after the Effective Date and the Joint
Venture Agreement with respect to which requires the consent of the
venture partner for the collateral assignment of the right to receive
distributions from the Joint Venture, unless and until a fully executed
original of a consent by the venture partner of the relevant Joint
Venture substantially in the form of EXHIBIT 1.01(c) hereto is
delivered to the Bank (the "CONSENT") and an appropriate amendment to
this Agreement, the Security Agreement, the UCC-1 financing statements
and such other documents as the Bank may reasonably request, granting
to the Bank a lien and security interest, consistent with the relevant
Consent, in the right to distributions of cash and profits by said
Joint Venture of the appropriate Credit Party is delivered to the Bank.
"BORROWING BASE CERTIFICATE" means a certificate in the form
of EXHIBIT 1.01-A hereto, duly completed and executed by an Authorized
Officer and accompanied by an accounts receivable aging schedule and a
description by type and amount of the inventory included in the
Borrowing Base, in each case in form and substance satisfactory to the
Bank.
"BORROWING BASE DEFICIENCY" means, at any time, with respect
to Advances, the amount, if any, by which (a) the aggregate principal
amount of all Advances then outstanding exceeds (b) the Borrowing Base
for Advances.
"BORROWING DATE" means, when used with respect to any Advance,
the date upon which the proceeds of such Advance are made available to
International.
"BORROWING REQUEST" is defined in SECTION 2.03.
"BUSINESS DAY" means a day of the year on which national
banking associations are not authorized or required to close in
Houston, Texas.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) in respect of which such
Person's obligations as lessee under such lease or rental agreement
constitute obligations which shall have been or should be, in
accordance with GAAP, capitalized on the balance sheet of such Person.
"CLAIM" is defined in SECTION 9.17.
-4-
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"COMMITMENT" means (a) $23,000,000 from and including the
Effective Date to and including February 28, 1996, (b) $20,000,000 from
and including March 1, 1996 to and including March 31, 1996, (c)
$17,500,000.00 from and including April 1, 1996 to and including April
30, 1996 and (d) $15,000,000 from and including May 1, 1996 to the
Termination Date.
"COMMITMENT FEE" is defined in SECTION 2.19.
"COMMONLY CONTROLLED ENTITY" means, with respect to any
Person, any Person which is a member of a controlled group of
corporations and trades or businesses (whether or not incorporated) (as
such term is used in ss. 414(b) or ss. 414(c) of the Code) of which
such Person is also a member.
"COMMUNICATIONS" is defined in SECTION 9.02.
"CONSENT" is defined in the definition of Borrowing Base.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or
capitalized under Capital Leases but excluding any amount representing
capitalized interest) by International and its Subsidiaries during such
period that are required to be included in property, plant or equipment
reflected in the consolidated balance sheet of International and its
Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, at any time, the current
assets of International and its Subsidiaries determined on a
consolidated basis.
"CONSOLIDATED CURRENT LIABILITIES" means, at any time, the
current liabilities of International and its Subsidiaries determined on
a consolidated basis.
"CONSOLIDATED NET INCOME" means, for any period, the
consolidated net income (or loss) of International and its Subsidiaries
for such period taken as a single accounting period computed in
accordance with GAAP.
"CONSOLIDATED NET WORTH" means, at any date of determination
thereof, the consolidated net worth of International and its
Subsidiaries on the Effective Date computed
-5-
in accordance with GAAP plus cumulative Consolidated Net Income for the
period (taken as one accounting period) from the Effective Date to such
date.
"CREDIT PARTIES" is defined in the introduction to this
Agreement.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States and all other applicable state or federal dissolution,
liquidation, conservatorship, bankruptcy, moratorium, readjustment of
debt, compromise, rearrangement, receivership, insolvency,
reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally.
"DEEDS OF TRUST" means those certain Deeds of Trust covering
the Mortgaged Properties executed by the appropriate Credit Parties
dated as of August 31, 1992 as amended and modified from time to time.
"DEED OF TRUST MODIFICATION AGREEMENT" means that certain Deed
of Trust Modification and Extension Agreement (Fourth Amended and
Restated Credit Agreement) dated of even date herewith, executed in
connection herewith by the appropriate Credit Parties and in form and
substance satisfactory to the Bank.
"DEFAULT" means an event which with the giving of notice or
the lapse of time or both could, unless cured or waived, become an
Event of Default.
"DEFAULT RATE" is defined in SECTION 2.05(e).
"EBITDA" means, for any period, the Consolidated Net Income
for such period, before any non-cash asset writedowns or impairment
losses not to exceed $10,000,000 in the aggregate during the term
hereof, interest income, interest expense, depreciation, amortization
and provision for taxes and without giving effect to any extraordinary
gains or gains from sales of assets (other than sales of inventory in
the ordinary course of business).
"EFFECTIVE DATE" means the time and Business Day on which the
conditions set forth in ARTICLE IV are satisfied or waived pursuant to
SECTION 9.01.
"ELIGIBLE INVENTORY" means, with respect to any Person at the
time any determination thereof is to be made, Inventory of such Person
consisting of Processed Scrap or Unprocessed Scrap which meets each of
the following criteria at such time:
(a) such Person shall have good title to such Inventory;
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(b) the Bank shall have been granted a perfected first
priority security interest in such Inventory except for Eligible Joint
Venture Inventory, it being agreed that the Bank shall not have a
security interest therein; and
(c) such Inventory shall be within the United States or the
Virgin Islands.
"ELIGIBLE JOINT VENTURE INVENTORY" means, as to each Joint
Venture, the Eligible Inventory of such Joint Venture MULTIPLIED BY the
aggregate percentage that all Credit Parties own in the equity or, if
different, the right to the profits of such Joint Venture pursuant to
the applicable Joint Venture Agreement; PROVIDED, that the total of all
items making up a part of the Borrowing Base that consist either of
Eligible Joint Venture Inventory or Eligible Joint Venture Receivables
shall not exceed, for any Joint Venture, the maximum amount allowed to
be distributed to the Bank in any Consent executed in respect of such
Joint Venture.
"ELIGIBLE JOINT VENTURE RECEIVABLES" means, as to each Joint
Venture, the Eligible Receivables of such Joint Venture MULTIPLIED BY
the aggregate percentage that all Credit Parties own in the equity or,
if different, the right to the profits of such Joint Venture pursuant
to the applicable Joint Venture Agreement; PROVIDED, that the total of
all items making up a part of the Borrowing Base that consist either of
Eligible Joint Venture Inventory or Eligible Joint Venture Receivables
shall not exceed, for any Joint Venture, the maximum amount allowed to
be distributed to the Bank in any Consent executed in respect of such
Joint Venture.
"ELIGIBLE PROLER INVENTORY" means all of the Eligible
Inventory of International and its Subsidiaries, excluding any Joint
Venture.
"ELIGIBLE PROLER RECEIVABLES" means all of the Eligible
Receivables of International and its Subsidiaries, excluding any Joint
Venture.
"ELIGIBLE RECEIVABLE" means, with respect to any Person at the
time any determination thereof is to be made, a Receivable of such
Person which complies with each of the following criteria at such time:
(a) which remains unpaid less than 60 days from the date of
invoice thereof, it being agreed that funds due from account debtors
and collected by Hugo Neu Corporation are not deemed paid until funds
are received from Hugo Neu Corporation;
(b) which is due from an account debtor whose principal place
of business is located within the United States or the Virgin Islands
unless (i) such Receivable is backed 100% by a letter of credit issued
or confirmed by a bank having a long term debt rating of
-7-
at least BBB or better by Standard & Poor's Ratings Group or Baa or
better by Moody's Investors Services or (ii) such account debtor has
previously been approved in a writing (which approval has not been
withdrawn) by the Bank as an eligible foreign account debtor for
purposes of this Agreement;
(c) which is not due from a Subsidiary or an Affiliate of such
Person;
(d) which is payable in U. S. Dollars;
(e) which is not due from an account debtor who is insolvent
or is the subject of any proceeding under any Debtor Relief Laws;
(f) as to which the Bank has a perfected first priority
security interest except for Eligible Joint Venture Receivables, it
being agreed that the Bank shall not have a security interest therein;
and
(g) as to which Receivable the account debtor shall have not
asserted a default on the part of such Person or otherwise indicated a
dispute or refusal to make payments on such Receivable.
"ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations (other
than internal reports prepared by International or any of its
Subsidiaries solely in the ordinary course of such Person's business
and not in response to any third party action or request of any kind)
or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "applicable claims"), including (a) any and all applicable
claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (b) any and all
applicable claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials arising from alleged injury or
threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAWS" means any and all laws, statutes, rules,
ordinances, codes, licenses, permits, regulations, orders, approvals
authorizations, judgments, decisions or determinations of any
governmental authority pertaining to health or the environment in
effect in any and all jurisdictions in which the property of
International or any of its Subsidiaries is located, including, the
Clean Air Act, 42 U.S.C. ss.ss. 7401-7626, the Comprehensive
Environmental, Response, Compensation, and Liability Act, 42 U.S.C.
ss.ss. 9601-9675, the Hazardous Materials Transportation Act, 49 U.S.C.
ss.ss. 1801-1813 the
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Occupational Safety and Health Act, 29 U.S.C. ss.ss. 651-678, the
Resource Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901-6992, the
Safe Drinking Water Act, 42 U.S.C. ss.ss. 300f-300j, the Toxic
Substances Control Act, 15 U.S.C. ss.ss. 2601-2671, the Superfund
Amendment and Reauthorization Act of 1986 and other environmental
conservation and environmental protection laws, as any of the same may
be amended from time to time.
"ENVIRONMENTAL REPORTS" means, collectively, a Phase I
environmental audit and report of each of the Mortgaged Properties in
form and substance satisfactory to the Bank.
"ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended from time to time.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D in effect from time to time.
"EURODOLLAR LENDING OFFICE" means the office designated by the
Bank from time to time as its Eurodollar Lending Office.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate
Advance, the rate (rounded to the nearest 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 Bank by prime
banks in whatever Eurodollar interbank market may be selected by the
Bank 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.
"EVENTS OF DEFAULT" is defined in SECTION 8.01
"GAAP" means Generally Accepted Accounting Principles,
consistently applied.
"GOVERNMENT SECURITIES" means readily marketable direct full
faith and credit obligations of the United States or obligations
unconditionally guaranteed by the full faith and credit of the United
States.
"GROSS TON" means a unit of weight equal to 2,240 pounds.
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"GUARANTEED OBLIGATIONS" is defined in SECTION 3.01.
"GUARANTORS" is defined in the introduction to this Agreement.
"GUARANTY" means the guaranty contained in ARTICLE III.
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain or contained electric fluid containing
polychlorinated biphenyls, and radon gas, (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law and (c) any
other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
"HIGHEST LAWFUL RATE" means, at any date, the maximum
nonusurious interest rate that may under applicable law then be
contracted for, charged, received, taken or reserved by the Bank in
connection with the Obligations.
"INDEBTEDNESS" of any Person means, without duplication: (a)
any obligation of such Person for borrowed money, including: (i) any
obligation of such Person evidenced by bonds, debentures, notes or
other similar debt instruments, (ii) any obligation of such Person in
respect of letters of credit and (iii) any obligation for borrowed
money which is non-recourse to the credit of such Person to the extent
that it is secured by any asset of such Person, (b) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (c) any obligation of
such Person for the deferred purchase price of any property or
services, except accounts payable arising in the ordinary course of
such Person's business that have been outstanding less than ninety (90)
days since the date of the related invoice or, if longer, which are, in
good faith, being disputed by the obligor, and for which appropriate
reserves have been set aside, (d) the present value at ten percent
(10%) per annum of all Capital Leases of such Person, (e) Assurances of
such Person, (f) any Indebtedness of another Person to the extent
secured by a Lien on any asset of such first Person, whether or not
such Indebtedness is assumed by such first Person and (g) any Indirect
Indebtedness of such Person.
"INDEMNIFIED PERSONS" is defined in SECTION 9.12.
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"INDIRECT INDEBTEDNESS" of a Person means (a) the Indebtedness
of a partnership in which such Person is a general partner and (b) the
amount of any liability of such Person created by the Indebtedness of a
joint venture in which such Person is a joint venturer.
"INTEREST PERIOD" has the meaning specified in SECTION 2.06.
"INTERNATIONAL NOTE" is defined in SECTION 2.02.
"INVENTORY" means, with respect to any Person as of the date
of any determination thereof, all "inventory" (as defined in the
Uniform Commercial Code in effect in any jurisdiction) in which such
Person may now or hereafter have an interest wherever located, and
shall also mean and include all goods, merchandise, raw materials and
other materials and supplies, work in process, finished goods and any
products made or processed therefrom and all substances, if any,
commingled therewith or added thereto, and other tangible personal
property presently existing or hereafter acquired by such Person and
held for sale or lease or furnished or to be furnished under contracts
for services or used or consumed in the business of such Person.
"INVESTMENT" means any investment so classified under GAAP
made by stock purchase, capital contribution, loan or advance or by
purchase of property or otherwise.
"JOINT VENTURE AGREEMENTS" is defined in SECTION 5.15(b).
"JOINT VENTURES" means the joint ventures and corporations in
existence on the date hereof and set forth on EXHIBIT 5.15 hereof and
each other joint venture or other similar business entity in which the
Borrower or any of its wholly-owned Subsidiaries becomes a participant
from and after the Effective Date, in each case, for so long as any
such joint venture, corporation or other business entity shall remain
in existence and International or any of its Subsidiaries has an
interest therein.
"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, affirmative or negative, 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 conditional sale agreement, Capital Lease or
other title retention agreement.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents and all other agreements, instruments and documents,
including security agreements, notes, warrants, guaranties, mortgages,
deeds of trust, subordination agreements, pledges, powers
-11-
of attorney, consents, assignments, collateral assignments, letter
agreements, contracts, notices, leases, amendments, financing
statements, letter of credit applications and reimbursement agreements
and all other writings heretofore, now or hereafter executed by or on
behalf of any Credit Party, any of their respective Affiliates or any
other Person in connection with or relating to this Agreement.
"MARGIN" means, in respect of Eurodollar Rate Advances, 2.75%.
"MARKET VALUE" means, at the time of determination, the weekly
shredded scrap price composite and the weekly steel scrap price
composite published in the most recent daily American Metal Market
publication available.
"MASTER RATIFICATION AGREEMENT" means that one certain Master
Ratification, Security and Pledge Agreement-Third Amended and Restated
Credit Agreement executed by the Company and the Guarantors in
connection with the Third Amended and Restated Credit Agreement dated
as of December 11, 1995 granting to, and ratifying certain liens in
favor of the Bank as Collateral for the Obligations of said Third
Amended and Restated Credit Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect
upon the business, operations, properties, assets, business prospects
or financial condition of the Credit Parties, taken as a whole, or (b)
the material impairment of the ability of the Credit Parties, taken as
a whole, to perform timely their Obligations under the Loan Documents
to which they are a party.
"MORTGAGED PROPERTIES" means the real properties described in
the Deeds of Trust which are still owned by any of the Credit Parties.
"MORTGAGEE POLICIES" is defined in SECTION 4.01(h).
"NOTE" and "NOTES" is defined in SECTION 2.02.
"NOTICE OF CONVERSION" is defined in SECTION 2.04.
"OBLIGATIONS" means all present and future obligations of
every kind or nature of any Credit Party at any time and from time to
time owed to the Bank under the Loan Documents, whether due or to
become due, matured or unmatured, liquidated or unliquidated, or
contingent or non-contingent, including obligations of performance as
well as obligations of payment, and including, to the extent permitted
by applicable Debtor Relief Laws, interest
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that accrues after the commencement of any proceeding under any Debtor
Relief Law by or against any Credit Party.
"OPERATIONS NOTE" is defined in SECTION 2.02.
"PATENT SECURITY AGREEMENT" means that certain Patent Security
Agreement dated as of August 31, 1992 by and between Proler
Environmental Services, Inc. and the Bank.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERFECTION CERTIFICATE" is defined in the Security Agreement.
"PERMITTED INVESTMENTS" means, when used in connection with
any Person, the Person's Investments in:
(a) Government Securities due within one year of the making of
the Investment;
(b) readily marketable direct obligations of any state of the
United States or any political subdivision of any such state given on
the date of such investment a credit rating of at least Aa by Moody's
Investors Service or AA by Standard & Poor's Ratings Group, in each
case, due within one year from the making of the Investment;
(c) certificates of deposit issued by or money market deposits
with the Bank or with any other bank or trust company organized under
the laws of the United States or any state thereof or Canada and having
combined capital, surplus and undivided profits of not less than
$500,000,000 (as of the date of its most recent financial statements);
(d) commercial paper rated at least P-1 or A-1 by Moody's
Investors Service or Standard & Poor's Ratings Group, respectively; or
(e) mutual funds regularly traded within the United States
whose investments are limited to those described in (a) through (d),
above.
"PERMITTED LIENS" means (a) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the
Mortgagee Policies in respect thereof and found acceptable by the Bank
in its sole discretion, (b) as to any particular Mortgaged Property at
any time, such easements, encroachments, covenants, rights of way,
minor defects, irregularities or encumbrances on title which are not
unusual with respect to property similar in character to such Mortgaged
Property and which do not, in the reasonable opinion of the
-13-
Bank, materially impair such Mortgaged Property for the purpose for
which it is held by the mortgagor thereof, or the Lien held by the
Bank, (c) municipal and zoning ordinances, which are not violated by
the existing improvements and the present use made by the mortgagor
thereof of the Premises (as defined in the respective Deeds of Trust),
(d) general real estate taxes and assessments not yet delinquent, (e)
Liens permitted under SECTION 7.01 except for subparagraph (f) thereof
and to the extent and only for the period affecting the respective
Mortgaged Property or assets and (f) such other items as the Bank may
consent to.
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
"PLAN" means any employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.
"PRIME RATE" means, as of any particular date, the prime rate
per annum most recently determined by the Bank as its prime rate of
interest per annum and thereafter entered in the minutes of the Bank's
loan and discount committee automatically fluctuating upward or
downward, as the case may be, on the day of each determination without
special notice to the Borrowers or any other Person. The Borrowers
acknowledge that the Prime Rate may not be the Bank's best or lowest
rate, or favored rate, and any statement, representation or warranty in
that regard or to that effect is hereby expressly disclaimed by the
Bank.
"PRIME RATE ADVANCE" means any Advance bearing interest at the
Prime Rate.
"PRIOR ADVANCES" means, as of the date of determination, the
aggregate principal amount, if any, then outstanding of any "Advances"
(as defined in the 1995 Agreement) made to Operations and outstanding
under the Operations Note.
"PROCESSED SCRAP" means scrap metal which has been prepared,
sheared, cleaned and/or separated into its ferrous and non-ferrous
components and is available for sale in its present condition.
"RECEIVABLE" means, as to any Person as at any date of
determination thereof, the unpaid principal portion of the obligation
of any customer of such Person to pay to such Person in respect of any
services performed by such Person or Inventory purchased from and
shipped or caused to be shipped by such Person, net of any credits,
rebates or offsets owed to such customer by such Person. For purposes
hereof, a credit or rebate paid by check or
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draft of such Person shall be deemed to be outstanding until such check
or draft shall have been debited to the respective account of such
Person on which such check or draft was drafted or drawn.
"REGULATION D" means Regulation D of the Board (respecting
reserve requirements), as the same is from time to time in effect, and
all official rulings and interpretations thereunder or thereof.
"REGULATION G" means Regulation G of the Board (respecting
margin credit extended by Persons other than banks, brokers and
dealers), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"REGULATION U" means Regulation U of the Board (respecting
margin credit extended by banks), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" means Regulation X of the Board (respecting the
borrowers who obtain margin credit) as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"RESERVE PERCENTAGE" means, for any Interest Period, 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 maximum
reserve requirement (including any marginal, supplemental or emergency
reserves) for the Bank in respect of liabilities or assets consisting
of or including Eurocurrency Liabilities.
"RESTRICTED PAYMENT" means, with respect to any Person:
(a) the declaration of any dividend on, or the incurrence of
any liability to make any other payment or distribution in respect of,
any shares of such Person (other than one payable solely in its
shares); or
(b) (i) any payment or distribution on account of the
purchase, redemption or other retirement of any shares of such Person,
or of any warrant, option or other right to acquire such shares, or any
other payment or distribution (other than pursuant to a dividend
-15-
theretofore declared or liability theretofore incurred as specified in
subsection (a)), made in respect thereof, either directly or
indirectly, or (ii) the purchase, redemption or other retirement of
shares of such Person in exchange for, or out of the net cash proceeds
received by such Person from a substantially concurrent sale of, other
shares of such Person.
"SECURITY DOCUMENTS" means the Patent Security Agreement, the
Deeds of Trust, the Amended and Restated Security Agreement, the
Amended and Restated Pledge Agreement and the Note and Deed of Trust
Modification Agreement.
"SUBSIDIARY" of any Person means and includes (a) any
corporation or limited liability company more than 50% of whose stock
is at the time owned by such Person directly or indirectly through its
Subsidiaries and (b) any partnership, association or other entity in
which such Person, directly or indirectly through Subsidiaries, has
more than a 50% equity interest at the time, but specifically excluding
any Joint Ventures.
"TERMINATION DATE" means February 28, 1997 or the earlier
termination in whole of the Commitment of the Bank pursuant to SECTION
2.17 or SECTION 8.01.
"UNITED STATES" and "U.S." each means the United States of
America.
"UNPROCESSED SCRAP" means scrap metal which has been purchased
but has not been processed for sale in its present condition.
"UNUTILIZED COMMITMENT" means, at any time, an amount equal to
the Commitment minus the outstanding Advances.
Section 1.02. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in SECTION 5.05. The books and records of International shall be
kept, and all financial data submitted pursuant to this Agreement shall be
prepared, in accordance with GAAP.
Section 1.03. 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 a Prime Rate Advance.
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ARTICLE II
COMMITMENT AND TERMS OF CREDIT
Section 2.01. THE COMMITMENT. (a) The Bank agrees, on the
terms and conditions and relying upon the representations and warranties herein
set forth, to honor the Prior Advances now owing by, or issued for the account
of, Operations, and to make new advances (such new advances, together with all
Prior Advances herein referred to as "ADVANCES") to International under the
International Note from time to time on one or more Business Days during the
period from the Effective Date up to the Termination Date, which Advances shall,
at the option of the relevant Borrower, be made as Prime Rate Advances or
Eurodollar Rate Advances. Each Eurodollar Rate Advance shall be in an original
principal amount of not less than $1,000,000.00 and an integral multiple of
$100,000.00 and each Prime Rate Advance shall be in an original principal amount
of not less than $200,000.00 and integral multiples of $100,000.00. Within the
limits set forth in SECTION 2.01(B) and subject to the terms and conditions of
this Agreement, during the period from the date hereof until the Termination
Date, Operations may prepay at any time and from time to time without premium or
penalty, International may borrow under this Section and prepay at any time and
from time to time without premium or penalty and reborrow under this Section. No
new Advances shall be allowed under the Operations Note.
(b) Notwithstanding any other term or provision hereof no
Advance shall be made if after giving effect to the making of such Advance the
aggregate amount of outstanding Advances would exceed the lesser of (A) the
Borrowing Base with respect to making Advances and (B) the Commitment.
Section 2.02. THE NOTES. All Prior Advances, currently
outstanding under the 1995 Agreement shall be evidenced by a Note dated of even
date herewith executed by Operations, payable to the order of the Bank in the
amount of the outstanding balance of such Prior Advances as of the date hereof,
substantially in the form of EXHIBIT 2.02A (the "OPERATIONS NOTE"). All Advances
subsequent to the date hereof shall be made to International and evidenced by a
Note dated of even date herewith executed by International, payable to the order
of the Bank in the amount of $23,000,000.00, substantially in the form of
EXHIBIT 2.02B (the "INTERNATIONAL NOTE"). (Each of said Notes is herein referred
to as a Note or the Note and together as the Notes.) The Bank is hereby
authorized, but not required, by International to endorse on the schedule (or a
continuation thereof) attached to the International Note, to the extent
applicable, the date, the amount outstanding and the amount of each Advance and
the amount of payment or prepayment of such Advance; PROVIDED, HOWEVER, the
failure by the Bank to make any such endorsement shall not affect the obligation
of International under such Note or hereunder with respect to such Advances.
Notwithstanding anything herein contained, International shall not be liable as
a maker for any amounts outstanding as of the Effective Date advanced under any
note executed prior to the Effective Date or under the Operations Note or for
any other amounts advanced to Operations, including any indebtedness
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evidenced by the Operations Note, or for any amounts that would constitute
interest under applicable law thereon, or any other amounts owing in connection
therewith, but shall be liable for any and all such amounts as a Guarantor, and
Operations shall not be liable as a maker for any Advances subsequent hereto or
under the International Note or for any other amounts advanced to International,
including any indebtedness evidenced by the International Note, or for any
amounts that would constitute interest under applicable law thereon, or any
other amounts owing in connection therewith, but shall be liable for new
Advances and the International Note and any and all other such amounts only as a
Guarantor.
Section 2.03. MAKING THE ADVANCES. Advances subsequent to the
Effective Date shall be made under the International Note only, upon the request
of an Authorized Officer of International and confirmed immediately in writing
by International in substantially the form of EXHIBIT 2.03 hereto (a "BORROWING
REQUEST"). No Advances shall be made under the Operations Note, but said Note
shall evidence amounts outstanding under the 1995 Agreement as of the Effective
Date. Each Borrowing Request shall, in the case of Prime Rate Advances, be given
to the Bank not later than 10:00 a.m. (Houston, Texas time), via telecopy or
hand delivery on the Borrowing Date for such Advance, and, in the case of
Eurodollar Rate Advances, not later than 10:00 a.m. (Houston, Texas time) not
later than three (3) days prior to the requested Advance. Each Borrowing Request
shall specify (a) the proposed Borrowing Date (which shall be a Business Day),
(b) the amount of the proposed Advance, (c) the Type of Advance, (d) the
availability of such Advance under the Commitment and (e) if such Advance is to
be a Eurodollar Rate Advance, the initial Interest Period (as defined below in
SECTION 2.06) to be applicable thereto. Each Borrowing Request shall be
irrevocable by International. Upon satisfaction of the applicable conditions set
forth in ARTICLE IV hereof, the Bank will make the proceeds of each Advance
available to International at the office of the Bank (or such other reasonable
place designated by such Borrower in advance) on the date specified in the
Borrowing Request.
Section 2.04. CONVERSIONS AND CONTINUANCES. Each Borrower
shall have the option to convert on any Business Day all or a portion of the
outstanding principal amount of one Type of Advance made to it 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. Each such conversion shall be effected by the relevant
Borrower giving the Bank written notice (each a "NOTICE OF CONVERSION") prior to
10:00 a.m. (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
(1) Business Day prior to the date of conversion in the case of a conversion
into Prime 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 applicable thereto.
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Section 2.05. INTEREST RATE AND INTEREST PAYMENT DATES. Each
Borrower shall pay interest on the unpaid principal amounts owing by it to the
Bank to it from the date said amount was advanced until such principal amount
shall be paid in full, on the dates and at the rates per annum specified below:
(a) Subject to the provisions of SECTIONS 2.05(e) AND 9.11,
each Prime Rate Advance shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to the lesser of (i) the Prime Rate and (ii)
the Highest Lawful Rate. Accrued and unpaid interest on the Prime Rate Advances
shall be due and payable (A) quarterly in arrears on the last day of each
calendar quarter occurring after the Effective Date and on the Termination Date,
(B) with respect to the principal amount of any voluntary or mandatory repayment
on the date of such voluntary or mandatory repayment and (C) at maturity
(whether by acceleration or otherwise) and, after maturity, on demand.
(b) Subject to SECTIONS 2.05(E) and 9.11, each Eurodollar Rate
Advance shall bear interest on the unpaid principal amount thereof from the date
of such Advance 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. The applicable Eurodollar Rate and the Margin shall be fixed for each
Interest Period and shall not change during said Interest Period. Interest on
each Eurodollar Rate Advance shall be payable (A) on the last day of the
Interest Period applicable thereto, (B) with respect to the principal amount of
any voluntary or mandatory repayment on the date of such voluntary or mandatory
repayment, or on the date of any conversion or continuance and (C) at maturity
(whether by acceleration or otherwise) and, after maturity, on demand.
(c) The Bank, upon determining the Eurodollar Rate for any
Interest Period, shall notify the Borrowers thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto. In addition, prior to the due date for the payment of interest on any
Eurodollar Rate Advances set forth in the immediately preceding paragraph, the
Bank shall notify each Borrower to which such Advances were made of the amount
of interest due by such Borrower on all outstanding Eurodollar Rate Advances on
the applicable due date, but any failure of the Bank to so notify a Borrower
shall not reduce such Borrower's liability for the amount owed.
(d) Each Borrower shall pay to the Bank, so long as the 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 each
Eurodollar Rate Advance made to such Borrower, 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 each Interest Period for such Advance to the lesser of (i)
the Highest Lawful Rate and (ii) the remainder obtained by
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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 the Bank for such
Interest Period. Such additional interest shall be determined by the Bank as
incurred and shall be payable upon demand therefor by the Bank to the relevant
Borrower. Each determination by the Bank of additional interest due under this
Section shall be PRIMA FACIE evidence thereof for all purposes in the absence of
manifest error.
(e) Any amount of principal or, to the extent permitted by
applicable law, interest which is not paid when due immediately by the Borrower
owing such principal or interest (whether at stated maturity, by acceleration or
otherwise) shall bear interest from the date on which such amount is due until
such amount is paid in full at a rate per annum equal at all times to the Prime
Rate plus four percent (4%) per annum but in no event to exceed the Highest
Lawful Rate (the "DEFAULT RATE") and shall be payable upon demand.
(f) Each Borrower shall, at the time of making each payment of
principal and/or interest hereunder and under its Note, specify to the Bank the
Advances or other sums payable by such Borrower hereunder or under such Note to
which such payment is to be applied and in the event that such Borrower fails to
so specify, the Bank may apply such payment to such Borrower's Obligations as it
may elect in its sole discretion, subject to the provisions and limitations of
this ARTICLE II. .
Section 2.06. INTEREST PERIODS. (a) At the time a Borrower
gives any Borrowing Request or Notice of Conversion in respect of the making of,
or conversion into, a Eurodollar Rate Advance, such Borrower shall have the
right to elect, by giving the Bank on the dates and at the times specified in
SECTION 2.03 or SECTION 2.04, 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 or three 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 2.04); each Interest Period occurring thereafter in
respect of such Eurodollar Rate Advance shall commence on the day
following 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;
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(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; and
(iv) no Interest Period for Advances shall extend beyond the
Termination Date.
(b) If, upon the expiration of any Interest Period applicable
to a Eurodollar Rate Advance, the relevant Borrower has failed to elect a new
Interest Period to be applicable to such Advance as provided above, such
Borrower shall be deemed to have elected to convert such Advance into a Prime
Rate Advance effective as of the day following the expiration date of such
current Interest Period.
Section 2.07. INTEREST RATE NOT ASCERTAINABLE. In the event
that the Bank 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 Bank'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 Bank
shall forthwith give notice to the Borrowers of such determination. Until the
Bank notifies the Borrowers that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Bank to make Eurodollar
Rate Advances shall be suspended.
Section 2.08. PRINCIPAL PAYMENTS OF ADVANCES. The unpaid
principal balance of the Advances made to a Borrower, together with all accrued
and unpaid interest thereon, shall be due and payable by such Borrower on the
Termination Date, subject to the mandatory prepayments required pursuant to
SECTION 2.17, PROVIDED, that prepayments may not be made under the International
Note until the Operations Note is paid in full, PROVIDED, FURTHER that Advances
under the International Note may not be utilized for the purpose of repaying the
Operations Note.
Section 2.09. COMPUTATIONS; PAYMENTS ON NON-BUSINESS DAYS. (a)
All payments by a Borrower of principal and interest hereunder, under its Note
and the other Loan Documents shall be made in U.S. Dollars to the Bank at its
office at 712 Main Street, Houston, Texas in immediately available funds not
later than 12:00 Noon (Houston, Texas time) on the date when due.
(b) Interest on the Prime Rate Advances shall be computed by the Bank
on the actual number of days elapsed over a year of 365 days, unless such
computation would cause the interest contracted for, charged or received to
exceed the Highest Lawful Rate, in which event, interest shall be computed for
the actual number of days elapsed over a year of 365 or 366 days, as
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the case may be. Determination by the Bank of an interest rate hereunder shall
be PRIMA FACIE evidence of its accuracy.
(c) Whenever any payment hereunder (other than payments of
interest on Eurodollar Rate Advances) shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall in such case be included in the computation
of payment of interest and all other amounts due under the Loan Documents, as
the case may be.
Section 2.10. SET-OFF, COUNTERCLAIMS AND TAXES. All payments
of principal, interest, expenses, reimbursements, compensation and any other
amount from time to time due hereunder, under the Notes or any other Loan
Document shall be made by the Borrowers without set-off or counterclaim and
shall be made free and clear of and without deduction for any present or future
tax, levy, impost or any other charge, if any, of any nature whatsoever now or
hereafter imposed by any taxing authority upon either Borrower. If the making of
such payments by a Borrower is prohibited by law unless such a tax, levy, impost
or other charge is deducted or withheld therefrom, such Borrower shall pay to
the Bank, on the date of each such payment, such additional amounts as may be
necessary in order that the net amounts received by the Bank after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required; PROVIDED, HOWEVER, that all
amounts payable under this Agreement which constitute interest under applicable
law shall not exceed an amount which would result in the payment of interest at
a rate in excess of the Highest Lawful Rate.
Section 2.11. BORROWERS UNCONDITIONALLY LIABLE. Each Borrower
shall (to the extent set forth herein) be unconditionally liable to the Bank for
the principal amount of any and all Advances made to it, interest due thereon,
the Commitment Fee, and all other amounts due to the Bank from such Borrower
hereunder (including any Commitment Fee, in the case of International) or under
any other agreement or security document executed in connection herewith, and
shall make prompt and punctual payment when due of such amounts.
Section 2.12. 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 the Bank or
its Eurodollar Lending Office to make or maintain any Eurodollar Rate Advance or
to give effect to its obligations as contemplated hereby with respect to
Eurodollar Rate Advances, then, by prompt written notice to the Borrowers, the
Bank may:
(i) declare that Eurodollar Rate Advances will not thereafter
be made by the Bank hereunder, whereupon International shall be
prohibited from requesting Eurodollar
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Rate Advances from the Bank hereunder unless such declaration is
subsequently withdrawn; and
(ii) in the event that the maintenance of any Eurodollar Rate
Advance(s) shall have been made unlawful, require that all outstanding
Eurodollar Rate Advance(s) made by the Bank be converted to Prime Rate
Advances, in which event (A) all such Eurodollar Rate Advances shall be
automatically converted to Prime Rate Advances as of the effective date
of such notice as provided in paragraph (b) below 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 Prime Rate Advances resulting from the conversion of such
Eurodollar Rate Advances.
(b) For purposes of this Section, a notice to the Borrowers by
the Bank pursuant to paragraph (a) above shall be effective on the date of
receipt thereof by the Borrowers.
Section 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) It is understood that the cost to the Bank of making or maintaining any
Advance may fluctuate as a result of the applicability of, or changes in,
reserve requirements imposed by the Board. Each Borrower agrees to pay to the
Bank from time to time, as provided in paragraph (d) below, such amounts as
shall be necessary to compensate the Bank, prospectively from the date of
demand, for the portion of the cost of making or maintaining any Advance made to
such Borrower resulting from any such reserve requirements to the extent set
forth in this Section.
(b) Notwithstanding any other provision herein, if the
introduction of any applicable law or regulation or any change in applicable law
or regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any applicable guideline or request from
any central bank or governmental authority (whether or not having the force of
law) (i) shall change the basis of taxation of payments to the Bank of the
principal of or interest on any Advance made by the Bank, or any other fees or
amounts payable hereunder (other than (x) taxes imposed on the overall net
income of the Bank or its applicable lending office by any jurisdiction or by
any political subdivision or taxing authority therein (or any tax which is
enacted or adopted by any such jurisdiction, political subdivision or taxing
authority as a direct substitute for any such taxes) or (y) any tax, assessment
or other governmental charge that would not have been imposed but for the
failure of the Bank to comply with any certification, information, documentation
or other reporting requirement), (ii) shall impose, modify or deem applicable
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, the Bank (without duplication
of any amounts paid pursuant to SECTION 2.05(D)), or (iii) shall impose on the
Bank any other condition affecting this Agreement or any Advance made by the
Bank, and the result of any of the foregoing shall be to increase the cost to
the Bank of maintaining the Commitment or
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of making or maintaining any Advance or to reduce the amount of any sum received
or receivable by the Bank hereunder (whether of principal, interest or
otherwise) in respect thereof by an amount deemed in good faith by the Bank to
be material, then each Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such increase or reduction relating to
any Commitment available to, or any Advance made to such Borrower, upon demand
by the Bank. Notwithstanding the foregoing, in no event shall the Bank be
permitted to receive any compensation hereunder constituting interest in excess
of the Highest Lawful Rate.
(c) If the Bank shall have determined in good faith that any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 Report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards" or that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration thereof by any central bank or other
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such central
bank or governmental authority, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and that the amount of such capital is increased by or based upon the
existence of the Commitment hereunder and other commitments of this type, the
Borrowers shall from time to time pay to the Bank upon demand additional amounts
sufficient to compensate the Bank or such corporation in the light of such
circumstances, to the extent that the Bank reasonably determines such increase
in capital to be allocable to the existence of the Commitment hereunder.
(d) The Bank will notify the Borrowers of any event occurring
after the date of this Agreement which will entitle the Bank to compensation
pursuant to this SECTION 2.13. A certificate of the Bank setting forth in
reasonable detail (i) such amount or amounts as shall be necessary to compensate
the Bank as specified in paragraph (a), (b), or (c) above as the case may be,
and (ii) the calculation of such amount or amounts shall be simultaneously
delivered to the Borrower owing such amount or amounts and shall be PRIMA FACIE
evidence of its accuracy. Such Borrower shall pay to the Bank the amount shown
as due on any such certificate within ten (10) days after such Borrower's
receipt of the same. The failure of the Bank to demand increased compensation
with respect to any Interest Period shall not constitute a waiver of the right
to demand compensation thereafter.
Section 2.14. EURODOLLAR ADVANCE PREPAYMENT AND DEFAULT
PENALTIES. Subject to SECTION 9.11, each Borrower shall indemnify the Bank
against any reasonable loss or expense which it may actually sustain or incur as
a consequence of (a) an Advance of, or a conversion from or into, Eurodollar
Rate Advances made to such Borrower that does not occur on the date specified
therefor in a Borrowing Request or Notice of Conversion delivered by such
Borrower (except by reason of
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SECTION 2.12) or (b) any payment, prepayment or conversion of a Eurodollar Rate
Advance made to such Borrower required by any other provision of this Agreement
or otherwise made on a date other than the last day of the applicable Interest
Period (except for any conversion under SECTION 2.12). Such loss or expense
shall include an amount equal to the excess determined by the Bank of (i) its
actual 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 reasonably
determined by the 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 Bank will notify the relevant Borrower of any loss or expense
which will entitle the Bank to compensation pursuant to this Section, as
promptly as possible after it becomes aware thereof, but failure to so notify
shall not affect such Borrower's liability therefor. A certificate of the Bank
setting forth any amount which it is entitled to receive pursuant to this
Section shall be delivered to such Borrower and shall be PRIMA FACIE evidence of
its accuracy. The Borrower to which such a certificate is delivered shall pay to
the Bank 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 Borrowers hereunder, the obligations of the Borrowers under
this Section shall survive the termination of this Agreement and the assignment
of any of the Notes.
Section 2.15. USE OF PROCEEDS OF ADVANCES. The Borrowers will
use the proceeds of all Advances for working capital and general business
purposes of International and its Subsidiaries.
Section 2.16. VOLUNTARY PREPAYMENTS. Upon at least three (3)
Business Days' prior written notice, each Borrower shall have the right to
voluntarily prepay Advances made to it in whole or in part from time to 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 Borrower making such payment pays to the Bank all sums necessary
to compensate the Bank for all costs and expenses resulting from such
prepayment, as reasonably determined by the Bank, described in SECTIONS 2.05(D),
2.13, and 2.14 hereof, (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 as shall be designated by such Borrower
and (c) prepayments under the International Note shall not be allowed until the
final repayment of the Operations Note.
Section 2.17. MANDATORY PREPAYMENTS. (a) If any Borrowing Base
Certificate shall disclose the existence of a Borrowing Base Deficiency, one or
both of the Borrowers, on the day that the delivery of such Borrowing Base
Certificate is required by SECTION 6.01(F), shall prepay a principal amount of
its respective outstanding Advances such that the aggregate prepaid is equal to
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such Borrowing Base Deficiency in accordance with the terms hereof; PROVIDED,
that prepayments under the International Note shall not be allowed until the
final repayment of the Operations Note.
(b) If, on any day, the market valuation of the Inventory of
International, its Subsidiaries and the Joint Ventures included in the Borrowing
Base, based on the American Metals Market Composite Valuation or such other
source of value acceptable to the Bank, is less than or equal to ninety percent
(90%) of the market valuation of such Inventory as disclosed in the most recent
Borrowing Base Certificate required to be delivered pursuant to SECTION 6.01(F),
the Borrowing Base shall be recalculated by International as of such date using
such market valuations as of such date and, if such recalculation results in a
Borrowing Base Deficiency, International, on the third business day following
the date of such recalculation shall deliver a new Borrowing Base Certificate
and, as required by SECTION 6.01(F) one or both of the Borrowers, shall prepay a
principal amount of its respective outstanding Advances such that the aggregate
prepaid is equal to such Borrowing Base Deficiency; PROVIDED that prepayments
under the International Note shall not be allowed until the final repayment of
the Operations Note.
Section 2.18. REDUCTION OF THE COMMITMENT. International shall
have the right, upon at least three (3) Business Days' notice to the Bank, to
terminate in whole or reduce in part the Unutilized Commitment; PROVIDED, that
each partial reduction shall be in the aggregate amount of $250,000.00 and an
integral multiple of $250,000.00 in excess thereof.
Section 2.19. FEES. International agrees to pay to the Bank a
commitment fee (the "COMMITMENT FEE") for the period from and including the date
hereof to but not including the Termination Date, computed at a rate equal to
one-half of one percent (1/2%) per annum on the daily average of the Unutilized
Commitment. Such Commitment Fee shall be due and payable in arrears on the last
Business Day of each calendar quarter and on the Termination Date.
Section 2.20. RATIFICATION. Each Credit Party hereby confirms
and ratifies the terms of the Security Documents to which it is a party and the
creation of the Liens thereunder to secure the Obligations of the Borrowers to
the Bank as more fully set forth therein and further agrees and acknowledges (a)
that, except as otherwise set forth in the Note and Deed of Trust Modification
Agreement, the Liens of the Security Documents to which it is a party extend to
and expressly secure the Obligations of the Borrowers under this Agreement, the
Notes and the other Loan Documents and (b) that the Security Documents to which
it is a party and the Liens created thereunder are valid and subsisting and
shall remain enforceable against such Credit Party in accordance with their
terms and shall not be reduced or limited or impaired by the execution of this
Agreement and the Notes. The Bank hereby agrees to promptly release the Liens
under the Security Documents on all property and assets of Proler Environmental
Services, Inc., but not any other Credit Parties, to the extent but only to the
extent of any project financed by Indebtedness permitted by SECTION 7.02(D), but
not otherwise.
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ARTICLE III
GUARANTY
Section 3.01. GUARANTY. (a) In consideration of, and in order
to induce the Bank to make Advances, each Guarantor hereby absolutely,
unconditionally and irrevocably, jointly and severally guarantees the punctual
payment and performance when due, whether at stated maturity, by acceleration or
otherwise, of all obligations and covenants of each Borrower now or hereafter
existing under this Agreement, the Notes and/or any of the other Loan Documents
to which such Borrower is a party 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 a Borrower under any
chapter of the Bankruptcy Code of the United States (11 U.S.C. ss. 101 ET SEQ.)
or any other Debtor Relief Law, fees, commissions, expenses (including
reasonable counsel fees and expenses) or otherwise, and all reasonable costs and
expenses, if any, incurred by the Bank in connection with enforcing any rights
under this Guaranty (all such obligations being the "GUARANTEED OBLIGATIONS").
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 Borrowers or any other action, occurrence or circumstance
whatsoever. Nothing herein is intended to provide that a Borrower shall be
liable as a Guarantor for any Obligations for which such Borrower is primarily
liable, but each Borrower shall be liable as a Guarantor for any Obligations for
which such Borrower is not primarily liable.
(b) Each Guarantor hereby, jointly and severally, agrees to
pay and to indemnify the Bank harmless from and against any damage, loss, cost
or expense (including reasonable attorneys' fees) that the Bank may incur or be
subject to as a consequence, direct or indirect, of (i) any breach by such
Guarantor or any other Credit Party of any warranty, covenant, term or condition
in, or the occurrence of any default under, this Guaranty, this Agreement or any
other Loan Document, together with all reasonable expenses resulting from the
compromise or defense of any claims or liabilities arising as a result of any
such breach or default and (ii) any legal action commenced to challenge the
validity of this Guaranty, this Agreement or any other Loan Document.
Section 3.02. 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 Advances 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 Advances. 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:
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(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Obligations, including any
reduction or termination of all or a portion of the Commitment;
(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 a
Borrower, any Guarantor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting a Borrower, 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 a Borrower, or a
Borrower or such Guarantor may have at any time against the Bank, any other
Guarantor or any other Person, whether in connection with this Guaranty, the
Loan Documents, the transactions contemplated thereby or any other transaction;
(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 a Borrower, such Guarantor or any other Guarantor of
the Guaranteed Obligations or Loan Documents, or of any other obligation to the
Bank; or
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
Section 3.03. 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 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
reason, including (i) any judgment, decree or order of any court or
administrative body having jurisdiction over the Bank or any of its properties
or (ii) any settlement or compromise of any such claim effected by the Bank with
any such claimant (including a Borrower), 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
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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 Bank, and
hereby do indemnify the Bank and hold it 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 Bank in the
defense of any claim made against it that any payment or proceeds received by
the 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 a Borrower by virtue of any
payment, court order or any federal or state law.
Section 3.04. WAIVER OF SUBROGATION. Notwithstanding any
payment or payments made by any Guarantor hereunder, or any set-off or
application by the Bank of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the Bank or of such Guarantor
against a Borrower or any other Guarantor to recover the amount of any payment
made by such Guarantor to the Bank hereunder by way of subrogation,
reimbursement, contribution, indemnity, or otherwise arising by contract or
operation of law, until such time as the Obligations have been satisfied and the
Bank shall have no Commitment. If any amount shall nevertheless be paid to a
Guarantor by a Borrower or another Guarantor prior to payment in full of the
Guaranteed Obligations, such amount shall be held in trust for the benefit of
the Bank and shall forthwith be paid to the Bank to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
Section 3.05. SUBORDINATION. Each Guarantor hereby
subordinates all indebtedness owing to it from a Borrower to all indebtedness of
each of the Borrowers to the Bank, and agrees that it shall not accept any
payment on the same until payment in full of the obligations of each Borrower
under this Agreement, the Notes and all other Loan Documents, 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 to a
Guarantor by a Borrower or another Guarantor prior to payment in full of the
Guaranteed Obligations, such amount shall be held in trust for the benefit of
the Bank and shall forthwith be paid to the Bank to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
Section 3.06. 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 Bank institute suit, collection proceedings or take any
other action to collect the Guaranteed Obligations, including any requirement
that the Bank protect, secure, perfect or insure any Lien against any property
subject thereto or exhaust any right or take any action against a Borrower or
any other Person or any collateral (it being the intention of the Bank and each
Guarantor that this Guaranty is to be a guaranty of payment and not of
collection). It shall not be necessary for the Bank, in order to enforce any
payment by any Guarantor hereunder,
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to institute suit or exhaust its rights and remedies against a Borrower, 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 each and every
right to which it may be entitled by virtue of the suretyship laws of the State
of Texas, including, without limitation, any and all rights it may have pursuant
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 Bank of any indebtedness or liability to which the Bank applies or may
apply any amounts received by the Bank, and of the creation, advancement,
increase, existence, extension, renewal, rearrangement and/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 3.07. FULL FORCE AND EFFECT. This Guaranty is a
continuing guaranty and shall remain in full force and effect until payment in
full of the Obligations of the Borrowers under this Agreement, the Notes and all
other Loan Documents and all other amounts payable under this Guaranty.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The
obligation of the Bank to make its initial Advance is subject to the conditions
precedent that the Bank shall have received on or before the date of such
initial Advance, to the extent same has not previously been received all of the
following, in form and substance satisfactory to the Bank and in such number of
counterparts as may be reasonably requested by the Bank:
(a) each Note duly executed and delivered by the relevant Borrower;
(b) this Agreement duly executed and delivered by the Credit Parties;
(c) the Note and Deed of Trust Modification Agreements duly executed
and delivered by the relevant Credit Parties to the Bank;
(d) the Amended and Restated Security Agreement duly executed and
delivered by the Credit Parties;
(e) the Patent Security Agreement duly executed and delivered by Proler
Environmental Services, Inc.;
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(f) the Amended and Restated Pledge Agreement duly executed and
delivered by the appropriate Credit Parties party thereto;
(g) the Deeds of Trust duly executed and delivered by all of the
parties holding title to the Mortgaged Properties;
(h) Mortgagee title insurance policies issued by title insurers
satisfactory to the Bank in amounts satisfactory to the Bank (the "MORTGAGEE
POLICIES") and assuring the Bank that the Deeds of Trust in respect of the
Mortgaged Properties are valid and enforceable first priority mortgages on the
respective Mortgaged Properties, free and clear of all defects and encumbrances
except Permitted Liens. Such Mortgagee Policies shall be in form and substance
reasonably satisfactory to the Bank;
(i) appropriate endorsements to Mortgagee Policies if requested by the
Bank;
(j) the Appraisal, if required by Bank;
(k) the Environmental Reports and, depending upon the content and
conclusion thereof, additional environmental reports, Phase II Audits and such
other related information concerning the Mortgaged Properties as the Bank may
require;
(l) (i) executed financing statements for all jurisdictions as may be
necessary or, in the reasonable opinion of the Bank, desirable to perfect the
security interests created by the Security Documents and (ii) evidence that all
other actions necessary or, in the reasonable opinion of the Bank, desirable to
perfect and protect the Liens created by the Security Documents have been taken;
(m) copies of surveys satisfactory to the Bank covering, all together,
each tract or parcel of land (including all appurtenant easements) subject to
the Deeds of Trust, satisfactory in form and substance to the Bank. In addition,
the Bank shall have received such officer's certificates and other similar
instruments relating to survey matters as the Bank may request;
(n) a Uniform Commercial Code search, tax search and judgment report of
the appropriate records of the States of Texas, Delaware, and all other states
in which a Borrower or any Joint Venture is conducting business satisfactory in
form and substance to the Bank;
(o) all of the issued and outstanding stock of the Guarantors owned by
any Credit Party together with related stock powers executed by the pledgor of
such stock;
(p) a certificate of the president or a vice president and of the
secretary or an assistant secretary of each Credit Party certifying, INTER ALIA,
(i) true and correct copies of resolutions
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adopted by the Board of Directors of each such Credit Party, (A) authorizing the
execution, delivery and performance by each such Credit Party of the Loan
Documents to which it is or will be a party and, in the case of each Borrower,
the borrowings thereunder, (B) approving the forms of the Loan Documents to
which it is a party and which will be delivered at or prior to the date of the
initial Advance and (C) authorizing officers of each such Credit Party to
execute and deliver the Loan Documents to which it is or will be a party and any
related documents, (ii) true and correct copies of the bylaws of each Credit
Party that is a corporation, as amended to the date of such certificate, (iii)
the incumbency and specimen signatures of the officers of each such Credit Party
executing any documents on behalf of it, (iv) the truth of the representations
and warranties made by such Credit Party in any Loan Document to which it is a
party and which will be delivered at or prior to the date of the initial
Advance, (v) the absence of any proceedings for the dissolution or liquidation
of each such Credit Party, (vi) the absence of the occurrence and continuance of
any Default or Event of Default with respect to each such Credit Party and (vii)
that no event or condition has occurred since January 31, 1995 that would
constitute a Material Adverse Effect;
(q) the favorable, signed opinion of Mayor, Day, Caldwell & Keeton,
L.L.P., counsel for the Credit Parties, addressed to the Bank, as to such
matters as the Bank may reasonably request;
(r) a Perfection Certificate executed by an Authorized Officer of each
Credit Party;
(s) [Intentionally Omitted]
(t) payment of all reasonable fees and out-of-pocket expenses of the
Bank and of Andrews & Kurth L.L.P., counsel to the Bank, and any local counsel
retained by it;
(u) a Borrowing Base Certificate;
(v) copies of certificates of good standing and existence for each of
the Credit Parties in the jurisdiction of its incorporation and certificates of
authority to conduct business in each jurisdiction in which the failure to
obtain same would constitute a Material Adverse Effect; and
(w) such other documents as the Bank may reasonably request relating to
the existence and good standing of each Credit Party, the authorization,
execution and delivery of this Agreement and the other Loan Documents, and all
other matters relevant hereto and thereto, all in form and substance reasonably
satisfactory to the Bank.
Section 4.02. CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of
the Bank to make any Advance, including the initial Advance, shall be subject to
the further conditions
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precedent that on the date of such Advance the following statements shall be
true (and each of the giving of the applicable Borrowing Request and the
acceptance by a Borrower of the proceeds of such Advance, shall constitute a
representation and warranty by each Borrower that on the date of such Advance
such statements are true):
(a) with respect to each Advance, the Bank shall have received a
Borrowing Request;
(b) with respect to any Advance, immediately after giving effect to
such Advance, the sum of the aggregate outstanding principal amount of all
Advances does not exceed the lesser of (i) the Commitment or (ii) the Borrowing
Base with respect to making Advances;
(c) the representations and warranties contained in ARTICLE V and those
contained in the other Loan Documents are true and correct in all material
respects as though made on and as of such date (except for those expressly made
as of the date thereof and except for changes in International and its
Subsidiaries arising from transactions contemplated by the terms hereof);
(d) no Default or Event of Default has occurred and is continuing or
would result from such Advance;
(e) to the extent not previously delivered, the Bank shall have
received the Commitment Fee, and all other fees, if any, theretofore or then due
and payable to it; and
(f) since the date of International's last audited financials, no event
shall have occurred and be continuing which has had or is likely to have a
Material Adverse Effect except for any matters disclosed in writing to the Bank
prior to the Effective Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and
to make the Advances, each Credit Party represents and warrants to the Bank as
to itself, and, to the extent specifically stated, as to its Subsidiaries and
each Joint Venture in which it has an interest as follows.
Section 5.01. ORGANIZATION. Each Credit Party (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (b) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which such qualification and good standing are necessary in
order for such Credit Party to conduct its business and own its properties as
conducted and owned and except where the
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failure to be so qualified or in good standing would not constitute a Material
Adverse Effect and (c) has all requisite power and authority (corporate or
otherwise) to conduct its business as now conducted, to own or lease its
property and assets and to execute, deliver and perform each of the Loan
Documents to which it is or may be a party.
Section 5.02. AUTHORITY. The execution, delivery and performance by
each Credit Party of this Agreement and the other Loan Documents to which it is
or may be a party and the consummation of the Advances contemplated hereby, have
been duly approved by the board of directors of such Credit Party and no other
corporate proceedings on the part of such Credit Party are necessary to
consummate such Advances. Each of the Loan Documents to which such Credit Party
is a party has been duly executed and delivered by such Credit Party and
constitutes the legal, valid and binding obligation of such Credit Party,
enforceable against such Credit Party in accordance with its terms.
Section 5.03. NO CONFLICT. The execution, delivery and performance by
such Credit Party of each of the Loan Documents to which it is or may be a
party, do not and shall not, by the lapse of time, the giving of notice or
otherwise, (a) constitute a violation of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to such Credit Party or a breach of any provision contained in
such Credit Party's articles or certificate of incorporation or bylaws, or
contained in any material agreement, instrument or document to which it is a
party or by which it is bound, other than violations or breaches which would
not, individually or in the aggregate, result in a Material Adverse Effect or
(b) result in or require the creation or imposition of any Lien whatsoever upon
any of the properties or assets of such Credit Party (other than Liens permitted
by this Agreement and Liens in favor of the Bank arising pursuant to the Loan
Documents).
Section 5.04. CONSENTS. No authorization, consent, approval, permit,
license, or exemption of or filing or registration with, any governmental agency
or any other Person which has not been obtained, was, is or will be necessary
for the valid execution, delivery or performance by any Credit Party of any of
the Loan Documents to which it is or may be a party.
Section 5.05. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
Operations delivered to the Bank the consolidated balance sheet of Operations
and its Subsidiaries as of January 31, 1995 and the related consolidated
statements of operations, cash flow and stockholders' equity for the year then
ended, including the related schedules and notes, reported on by Coopers &
Lybrand.
(b) The unaudited consolidated balance sheet and statement of
operations and cash flow of Operations and its Subsidiaries as at October 31,
1995, copies of which has heretofore
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been furnished to the Bank, are correct in all material respects, and present
fairly the consolidated financial condition of Operations as at such date
(subject to normal year-end audit adjustments).
(c) The financial statements referred to in paragraphs (a) and (b)
above, including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved.
(d) The Borrowers have disclosed to the Bank in writing any and all
facts which would result in, or which Borrowers believe may result in, a
Material Adverse Effect and since January 31, 1995, there has been no material
adverse change in the business, operations, properties, assets, business
prospects or financial condition of International and its Subsidiaries taken as
a whole except as to those matters previously disclosed to the Bank as of the
date hereof.
Section 5.06. LITIGATION; MATERIAL ADVERSE EFFECT. (a) Except as set
forth in EXHIBIT 5.06 hereto, there are no actions, suits or proceedings pending
or, to the best of International's knowledge, threatened or probable of
assertion, against or affecting any Credit Party or any of its Subsidiaries or
any property or rights of any Credit Party or any of its Subsidiaries before any
court or any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, if determined adversely to the
Borrowers or any such Subsidiary would constitute a Material Adverse Effect.
(b) Except as otherwise disclosed to the Bank in writing,
neither the business, properties nor operations of any Credit Party nor any of
its Subsidiaries is materially and adversely affected by any fire, explosion,
accident, strike, lockout or other labor dispute, embargo, act of God or act of
a public enemy or other event, condition or casualty, provided the determination
of such effect shall include a consideration of available insurance proceeds.
Section 5.07. INDEBTEDNESS. Except as set forth in EXHIBIT
5.07 or as set forth in the financial statements referred to in SECTION 5.05,
and except for the Indebtedness represented by this Agreement, the Notes and the
other Loan Documents and any other Indebtedness owing to the Bank, no Credit
Party, nor any of its Subsidiaries has any secured or unsecured Indebtedness.
Section 5.08. NO MARGIN STOCK. No Credit Party nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U), and no
part of the proceeds of any Advance will be used, directly or indirectly, (a) to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or (b) for the purpose of purchasing,
carrying or trading in any securities under such circumstances as to involve any
Credit Party in a violation of Regulation X.
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Section 5.09. ACCURACY AND COMPLETENESS OF INFORMATION. All
written estimates, projections and forecasts furnished by or on behalf of the
Borrowers and the other Credit Parties to the Bank for purposes of or in
connection with this Agreement, or in connection with any Advance, were and will
be prepared on the basis of assumptions, data, tests or conditions believed to
be reasonable, valid or to represent industry conditions existing at the time
such estimates or forecasts were furnished. Neither this Agreement, the Notes,
the other Loan Documents, the statements and documents referred to in SECTION
5.05 nor any other document delivered by the Borrowers or any of their
respective Subsidiaries to the Bank contains any material misstatement of fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading as of the respective date thereof.
The Borrowers have not intentionally withheld any fact known to them which has
or is reasonably likely to constitute a Material Adverse Effect which has not
been set forth or referred to in this Agreement, the Notes, the other Loan
Documents or such other document heretofore furnished to the Bank.
Section 5.10. ERISA. (a) No Reportable Event or withdrawal
from or termination, reorganization or insolvency has occurred and is continuing
with respect to any Plan that would likely constitute a Material Adverse Effect
and (b) neither the PBGC nor a Borrower nor any Commonly Controlled Entity has
instituted any proceedings or taken any other actions with respect to the
withdrawal from, or the termination, reorganization or insolvency of any Plan
that would reasonably be expected to have a Material Adverse Effect.
Section 5.11. GOVERNMENT REGULATION. No Credit Party nor any
of its Subsidiaries is (a) an "investment company" or a company 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, (b) a "holding company" or a "subsidiary company" of a "holding company"
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, or (c) a "public utility," as such term is defined in the
Federal Power Act.
Section 5.12. PROPERTY. Each Credit Party and each of its
Subsidiaries, as the case may be, has good record and defensible title in fee
simple to or valid leasehold interests in all its real properties and marketable
title to all its other property and assets except where the failure to so have
such title or interest would not reasonably be expected to have a Material
Adverse Effect.
Section 5.13. PAYMENT OF TAXES. The federal income tax returns
of each Borrower and other tax returns and reports of each Credit Party and its
Subsidiaries required to be filed with the appropriate governmental agencies in
all jurisdictions in which such returns and reports are required to be filed
have been filed and all of the foregoing are true, correct and complete, and
each Borrower paid all taxes and other similar charges, or made adequate
provision therefor, that are due and payable within the time prescribed for
filing and payment or an appropriate extension has been
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requested and obtained for such filing or payment except where such failure
would not reasonably be expected to result in a Material Adverse Effect. Neither
Borrower nor any of its Subsidiaries has taken any reporting positions for which
it does not have a reasonable basis and no such Person anticipates any further
material tax liability with respect to the tax years for which returns have been
filed. International has no knowledge of any proposed tax assessment against
International or any of its Subsidiaries that would reasonably be expected to
have a Material Adverse Effect which is not being actively contested in good
faith.
Section 5.14. INSURANCE. Each Credit Party and each of its
Subsidiaries carries and will continue to carry insurance with reputable
insurers in respect of its properties in such amounts and against such risks as
is customarily maintained by other Persons of similar size engaged in similar
business and reasonably acceptable to the Bank.
Section 5.15. SUBSIDIARIES; JOINT VENTURES. (a) EXHIBIT 5.15
hereto lists each Subsidiary of each Credit Party and each Joint Venture in
which a Credit Party has an interest, the jurisdiction under which each such
Subsidiary and Joint Venture is incorporated or organized and the direct and
indirect ownership interest of such Credit Party therein. Each Subsidiary of a
Credit Party has been duly organized and is validly existing in good standing
under the laws of its jurisdiction of organization.
(b) The Borrowers have heretofore delivered to the Bank a copy
of the Articles or Certificate of Incorporation of each Joint Venture that is a
corporation and each agreement creating or governing the rights of the parties
to each other Joint Venture (collectively, the "JOINT VENTURE AGREEMENTS") in
existence on the date hereof, as amended to the date hereof. Each Joint Venture
Agreement is in full force and effect and as to each Joint Venture Agreement
creating each non-corporate Joint Venture is enforceable against each Credit
Party which is a party thereto in accordance with its terms.
Section 5.16. PATENTS. Each Credit Party and each of its
Subsidiaries owns or holds a valid license to use all material patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
that are necessary for, and no restriction applicable to any such patent,
trademark, service mark, trade name, copyright, license or other right would
interfere in any material respect with, the operation of its business taken as a
whole as presently conducted and as proposed to be conducted.
Section 5.17. COMPLIANCE WITH STATUTES. (a) Each Credit Party
and each of its Subsidiaries is in compliance 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 such non-compliance as is not
likely to, in the aggregate, have a Material Adverse Effect.
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(b) Each Credit Party and each of its Subsidiaries is in
compliance with all applicable Environmental Laws governing its business for
which failure to comply is likely to have a Material Adverse Effect, and no
Credit Party nor any of its Subsidiaries is liable for any material penalties,
fines or forfeitures for failure to comply with any of the foregoing in the
manner set forth above. All licenses, permits, registrations or approvals
required for the business of each Credit Party and each of its Subsidiaries, as
conducted as of the Effective Date, under any Environmental Law have been
secured and each Credit Party and each of its Subsidiaries is in substantial
compliance therewith, except such licenses, permits, registrations or approvals
the failure to secure or to comply therewith is not likely to have a Material
Adverse Effect. No Credit Party nor any of its Subsidiaries is in noncompliance
with, breach of or default under any applicable writ, order, judgment,
injunction, or decree to which such Credit Party or such Subsidiary is a party
or which would affect the ability of such Credit Party or such Subsidiary to
operate any of its properties and no event has occurred and is continuing which,
with the passage of time or the giving of notice or both, would constitute
noncompliance, breach of or default thereunder, except in each such case, such
noncompliances, breaches or defaults as are not likely to, in the aggregate,
have a Material Adverse Effect. There are, as of the Effective Date, no
Environmental Claims pending or, to the best knowledge of any Credit Party,
threatened, which (i) question the validity, term or entitlement of such Credit
Party or any of its Subsidiaries for any permit, license, order or registration
required for the operation of any facility which such Credit Party or any of its
Subsidiaries currently operates and (ii) wherein any unfavorable decision,
ruling or finding would be reasonably likely to have a material adverse effect
on the financial viability of any facility thereof. There are no facts,
circumstances, conditions or occurrences on any real property or, to the
knowledge of the Credit Parties, on any property adjoining or in the vicinity of
any real property that could reasonably be expected (i) to form the basis of an
Environmental Claim against any Credit Party or any of its Subsidiaries or (ii)
to cause such real property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such real property under any Environmental
Law, except in each such case, such Environmental Claims or restrictions that
individually or in the aggregate are not reasonably likely to have a Material
Adverse Effect.
(c) To the best of the Credit Parties' knowledge, Hazardous
Materials have not at any time been (i) generated, used, treated or stored on,
or transported to or from, any real property of any Credit Party or any of its
Subsidiaries or (ii) released on any real property, in each case where such
occurrence or event is reasonably likely to have a Material Adverse Effect.
Section 5.18. LABOR RELATIONS; COLLECTIVE BARGAINING
AGREEMENTS. (a) Set forth on EXHIBIT 5.18 is a list and description (including
dates of termination) of all collective bargaining or similar agreements between
or applicable to any Credit Party or any of its Subsidiaries and any union,
labor organization or other bargaining agent in respect of the employees of any
Credit Party or any of its Subsidiaries on the Effective Date.
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(b) No Credit Party nor any of its Subsidiaries is engaged in
any unfair labor practice that could have a Material Adverse Effect. There is
(i) no significant unfair labor practice complaint pending against any Credit
Party or any of its Subsidiaries or, to the best knowledge of any Credit Party,
threatened against any of them before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is now pending against any Credit
Party or any of its Subsidiaries or, to the best knowledge of such Credit Party,
threatened against any of them, (ii) no significant strike, labor dispute,
slowdown or stoppage is pending against any Credit Party or any of its
Subsidiaries or, to the best knowledge of such Credit Party, threatened against
such Credit Party or any of its Subsidiaries and (iii) no union representation
question exists with respect to the employees of any Credit Party or any of its
Subsidiaries, except such as is not reasonably likely to have a Material Adverse
Effect.
Section 5.19. LIABILITIES. (a) All contingent liabilities and
direct liabilities of the Credit Parties and their respective Subsidiaries, and
all anticipated losses of the Credit Parties and their respective Subsidiaries,
which in the aggregate are material to the Credit Parties and their respective
Subsidiaries taken as a whole, are set forth in the financial statements
referred to in SECTION 5.05 to the extent required by GAAP and modified by the
footnotes to such statements and (b) all contingent liabilities and direct
liabilities of the Credit Parties and all unrealized or anticipated losses of
the Credit Parties and their respective Subsidiaries, which in the aggregate are
material to the Credit Parties and their respective Subsidiaries taken as a
whole, to the extent required by GAAP will be set forth in the financial
statements next delivered pursuant to SECTION 6.01 hereof after any of such are
incurred or anticipated, as applicable.
Section 5.20. SOLVENCY. The Credit Parties, viewing their
businesses and operations as a single consolidated entity, have capital
sufficient to carry on their businesses and transactions and all businesses and
transactions in which they are about to engage and are now solvent and able to
pay their respective debts as they mature, and the Credit Parties now
collectively own property having a value, both at fair valuation and at present
fair salable value, greater than the amount required to pay all existing debts
of the Credit Parties.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or
outstanding or the Bank shall have any Commitment, unless the Bank shall
otherwise consent in writing, each Credit Party covenants and agrees as to
itself, and, to the extent specifically stated, as to its Subsidiaries and each
Joint Venture in which it has an interest that:
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Section 6.01. REPORTING REQUIREMENTS. International shall
deliver or cause to be delivered to the Bank:
(a) ANNUAL REPORTS. Upon the earlier of 120 days after the
close of each fiscal year of International or the day following the date of
filing of International's Annual Report on Securities and Exchange Commission
Form 10-K, either (i) a copy of International's Annual Report on Form 10-K as
filed with respect to such year or (ii) consolidated and consolidating balance
sheets of International and its Subsidiaries, as at the end of such fiscal year
and the related statements of operations, cash flow and stockholders' equity for
such fiscal year, setting forth comparative figures for the preceding fiscal
year, and examined by Coopers & Lybrand (or other independent certified public
accountants of recognized national standing reasonably acceptable to the Bank)
whose opinion shall not be qualified as to the scope of audit and as to the
status of International or any of its Subsidiaries as a going concern, together,
in each case, with a certificate of the accounting firm referred to above
stating that in the course of its regular audit of the business of
International, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default that has occurred and is continuing, or, if such
firm has obtained knowledge of any Default or Event of Default that has occurred
and is continuing, a statement as to the nature thereof.
(b) QUARTERLY REPORTS. Upon the earlier of 60 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of International, or the day following each date of filing of
International's Quarterly Report on Form 10-Q either (i) a copy of
International's Quarterly Report on Form 10-Q as filed with respect to such
quarterly period or (ii) consolidated and consolidating balance sheets of
International and its Subsidiaries, as at the end of such quarterly period and
the related statements of operations and cash flows for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and setting forth comparative figures for the related periods
in the prior fiscal year, in each case, certified by an Authorized Officer,
subject to changes resulting from audit and normal year-end audit adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event
within 30 days (45 days in the case of the last monthly accounting period of
each fiscal quarter), after the end of each monthly accounting period
(commencing with January 1996) of each fiscal year of International and each
Joint Venture, consolidated and consolidating balance sheets of International
and its Subsidiaries, as at the end of such period, and the balance sheet of any
Joint Venture that is accounted for in such month in the statements of
International or its Subsidiaries, and the related statements of operations for
such period setting forth comparative figures for the corresponding period of
the previous year, including listings and agings of all Receivables for
International and each Joint Venture, each of which shall be certified by an
Authorized Officer, subject to changes resulting from audit and normal year-end
audit adjustments.
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(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statements pursuant to clauses (a), (b) and (c) above, a certificate
of an Authorized Officer demonstrating compliance by International and the other
Credit Parties with the provisions of SECTION 7.03 and stating whether any Event
of Default or Default has occurred and is continuing, and if there is any Event
of Default or Default, describing it and the steps, if any, being taken to cure
it.
(e) SEC FILINGS. Promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and reports as
International shall send to its public stockholders and copies of all
registration statements (without exhibits) and reports which it files with the
Securities and Exchange Commission.
(f) BORROWING BASE CERTIFICATE. Together with each delivery of
the monthly reports pursuant to clause (c) above and on each date on which a new
Borrowing Base Certificate is required to be delivered as provided in SECTION
2.17(B), a Borrowing Base Certificate in the form of EXHIBIT 1.01-A attached
hereto, signed by an Authorized Officer of International, including therein
information as at the end of the period covered by said certificate.
(g) ERISA FILINGS. Promptly upon the filing or making thereof,
copies of each filing and report made by International, under ERISA with the
PBGC or with the U.S. Department of Labor or which International may receive
from such Persons that, in each case, relate to a condition or event that would
likely have a Material Adverse Effect.
(h) REPORTABLE EVENTS. Forthwith upon International receiving
actual notice of the occurrence of a Reportable Event under, the termination,
insolvency or reorganization of, or the institution of steps by the PBGC,
International or any Commonly Controlled Entity with respect to the withdrawal,
termination, insolvency or reorganization of any Plan to which International may
have any liability, written notice thereof describing the same and the steps
being taken by International with respect thereto.
(i) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy
of each other report or "management letter" submitted to International by its
independent accountants in connection with any annual, interim or special audit
made by it of the books of International, provided if said report contains
personnel information of a confidential nature, International may delete said
sections before delivery of same to the Bank.
(j) APPRAISALS. Annually, upon written request by the Bank, an
Appraisal for each of the Mortgaged Properties; provided, that the Bank shall
not request any Appraisal prior to the Termination Date.
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(k) ENVIRONMENTAL REPORTS. Upon written request by the Bank,
an Environmental Report for each of the Mortgaged Properties; PROVIDED, HOWEVER,
that the Bank understands and agrees that it may not request or perform any
environmental inspection, audit or assessment of any property owned or leased by
any Credit Party unless (1) all of the obligations of International hereunder
shall have been accelerated in accordance with ARTICLE VIII hereof (and such
acceleration shall not have been rescinded), (2) International receives prior
notice of the inspection, audit or assessment and the proposed scope thereof,
(3) the Bank and the Credit Parties agree that International shall be entitled
to review any report produced from any such inspection, audit or assessment
simultaneously with its delivery to the Bank and (4) any environmental
consultant utilized in connection therewith shall be a party mutually acceptable
to the Bank and International, with the Bank and International hereby
stipulating that E.R.M. - Southwest, Inc. is mutually acceptable.
(l) OTHER REPORTS. In addition to the reports and statements
described in this Section, International shall provide the Bank: (i) such other
financial reports and information as the Bank may from time to time reasonably
request respecting the business, properties, operations or condition (financial
or otherwise) of International or any Joint Venture; and (ii) notice of any
additional Indirect Indebtedness incurred or Liens granted by any Joint Venture
in excess of $500,000.00 in any single transaction.
Section 6.02. EXISTENCE. Each Credit Party shall preserve and
maintain its and its Subsidiaries' existence, rights, franchises and privileges
in the jurisdictions of their incorporation or other organization and their
qualification and good standing in all jurisdictions in which the failure to
preserve or maintain such existence, rights, franchises, privileges,
qualification and good standing would be likely to constitute a Material Adverse
Effect.
Section 6.03. MAINTENANCE OF PROPERTIES; INSURANCE. (a) Each
Credit Party and each of its Subsidiaries shall maintain with financially sound,
responsible and reputable insurance companies insurance against such risks and
in such amounts as are usually insured against by Persons of established
reputation engaged in the same or similar businesses and similarly situated;
PROVIDED, HOWEVER, notwithstanding the foregoing, each Credit Party and its
Subsidiaries will maintain (i) all insurance required by state statutes to be
maintained by employers for the protection of employees against work related
injuries and (ii) to the extent available at commercially reasonable rates,
comprehensive general liability coverage in such amounts as are appropriate for
the operations of such Credit Party and its Subsidiaries and (iii) all insurance
that such Credit Party and its Subsidiaries are required to maintain by law and
(iv) insurance required to be maintained by any of the Credit Parties pursuant
to the Deeds of Trust. Each policy in effect from time to time pursuant to the
terms of this Section, shall include a provision for thirty (30) days' prior
written notice to the Bank of any cancellation or expiration thereof and shall
show the Bank as an additional insured.
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(b) Each Credit Party will maintain and preserve all of its
material properties necessary for the proper conduct of its business in working
order and condition, ordinary wear and tear excepted.
Section 6.04. NOTICE OF LITIGATION. International shall
promptly, upon actual notice or knowledge thereof, deliver or cause to be
delivered to the Bank notice of (a) the institution of or threat of, any action,
suit, proceeding, governmental investigation or arbitration against or affecting
any Credit Party or any of its Subsidiaries not previously disclosed in writing
to the Bank pursuant to SECTION 5.06 which, if determined adversely to such
Credit Party or such Subsidiary, would constitute a Material Adverse Effect or
(b) any material development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed, which is likely to constitute a
Material Adverse Effect.
Section 6.05. TAXES; CLAIMS. Each Credit Party and each of its
Subsidiaries shall (a) timely file all federal, state and local tax returns and
other reports which such Credit Party and such Subsidiaries are required by law
to file or obtain an appropriate extension for filing thereof, (b) maintain
adequate reserves on its books in accordance with GAAP for the payment of all
material taxes, assessments and governmental charges, and pay prior to
delinquency all such taxes, assessments and governmental charges, and (c) pay
all other material claims (including, without limitation, claims for labor,
services, materials and supplies) that have become due and payable and that by
law have or may become a Lien on International's property or assets, prior to
the time when any penalty or fine may be incurred with respect thereto, other
than any such tax, assessment, charge, levy or claim which is being contested in
good faith, by proper proceedings and with respect to which adequate reserves
have been established.
Section 6.06. NOTICE OF DEFAULT. International shall notify
the Bank in writing within three (3) Business Days after International becomes
aware of the occurrence thereof, (a) of any condition or event that constitutes
either an Event of Default or a Default, (b) of any other default by
International or any of its Subsidiaries under any material note, indenture,
advance agreement, mortgage, lease, deed or other similar agreement to which
International or any of its Subsidiaries is a party or by which International or
any of its Subsidiaries is bound, the existence of which might reasonably be
expected to lead to a Material Adverse Effect, or (c) of any event or condition
that might reasonably be expected to constitute a Material Adverse Effect, such
notice to specify the nature and period of existence of any such condition,
event, default or potential default and what action International has taken, is
taking or proposes to take with respect thereto.
Section 6.07. INSPECTIONS. From time to time during regular
business hours and upon reasonable notice, each Credit Party will permit any
agents or representatives of the Bank to examine and make copies of and
abstracts from the records and books of account and files and visit the
properties of such Credit Party and its Subsidiaries to discuss the affairs,
finances and accounts
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of such Credit Party and its Subsidiaries with any of its independent certified
public accountants (with an officer or other representative of such Credit Party
present); PROVIDED, HOWEVER, that the Bank shall keep any information obtained
confidential to the extent that the Bank is not required by law to disclose such
information and such information is not otherwise generally available to the
public.
Section 6.08. COMPLIANCE WITH LAWS; NOTICES. (a) GENERAL.
International shall, and shall cause its Subsidiaries to, comply with all
material laws, rules and regulations, including, without limitation, all
Environmental Laws, and all restrictive covenants applicable to International
and its Subsidiaries, the noncompliance with which might, in any respect,
constitute a Material Adverse Effect; PROVIDED, HOWEVER, that neither
International nor any of its Subsidiaries shall be required to comply with any
such law or restrictive covenant if the applicability or validity thereof is
being contested in good faith, by proper proceedings and for which adequate
reserves have been established.
(b) ENVIRONMENTAL MATTERS. Promptly upon obtaining knowledge
thereof, International shall deliver to the Bank notice of (i) any pending or
threatened Environmental Claim against International or any of its Subsidiaries
or any real property of International or any of its Subsidiaries unless such
Environmental Claim could not, individually or when aggregated with all other
such Environmental Claims, reasonably be expected to have a Material Adverse
Effect; (ii) any condition or occurrence on any real property of International
or any of its Subsidiaries that (A) results in material noncompliance by
International or such Subsidiary with any applicable Environmental Law unless
such noncompliance could not, individually or when aggregated with all other
such non-compliance claims, reasonably be expected to have a Material Adverse
Effect; (iii) any condition or occurrence on any real property of International
that could reasonably be anticipated to cause such real property to be subject
to any restrictions on the ownership, occupancy, use or transferability of such
real property under any Environmental Law unless such restrictions could not,
individually or when aggregated with all other such restrictions, reasonably be
expected to have a Material Adverse Effect; and (iv) the taking of any removal
or remedial action in response to the actual or alleged presence of any
Hazardous Material on any real property of International or any of its
Subsidiaries, unless the presence of such Hazardous Materials and the removal or
remedial action in response thereto could not, individually or when aggregated
with all such other occurrences or events, reasonably be expected to have a
Material Adverse Effect. All such notices shall describe in reasonable detail
the nature, to the extent known, of the claim, investigation, condition,
occurrence or removal or remedial action and the response thereto of
International or of its applicable Subsidiary. In addition, International will
provide the Bank with copies of all material written communications with any
government or governmental agency relating to Environmental Law, all material
communications with any government or governmental agency relating to
Environmental Claims, and such detailed reports of any Environmental Claim, in
each case as they relate to the Mortgaged Properties as may reasonably be
requested in writing from time to time by the Bank.
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Section 6.09. BOOKS AND RECORDS; ACCOUNTING SYSTEMS AND
PRINCIPLES. Each Credit Party will keep adequate records and books of account in
which complete entries will be made in accordance with GAAP, reflecting all
financial transactions of such Credit Party and its Subsidiaries.
Section 6.10. OWNERSHIP OF CREDIT PARTIES. International will
at all times maintain and cause to be maintained the legal and beneficial
ownership of the shares of capital stock of the Credit Parties to be as shown on
EXHIBIT 5.15.
Section 6.11. FURTHER ASSURANCES. Each Credit Party shall at
its expense, promptly execute and deliver, or cause to be executed and
delivered, to the Bank upon reasonable request all such other and further
documents, agreements and instruments reasonably required to comply with or
accomplish the covenants and agreements of such Credit Party in the Loan
Documents to which it is a party.
Section 6.12. PERFORMANCE OF LOAN DOCUMENTS. Each Credit Party
will perform or cause to be performed all of the terms, covenants, agreements
and conditions on its part to be performed under this Agreement and each of the
other Loan Documents.
Section 6.13. ACTIVITIES OF JOINT VENTURE. Except for Liens
and Indebtedness incurred in connection with any project financing as described
in SECTIONS 7.02(d) AND 7.09(g), each of the Credit Parties will use its good
faith efforts, within the bounds of good business judgment and its legal
obligations under or in connection with the Joint Venture Agreements to which it
is a party affecting the Joint Ventures, to limit the Indebtedness that may be
incurred by, and any liens that may be granted by, said Joint Ventures. To the
extent that said Credit Parties are able to do so within the aforesaid bounds,
they will encourage said Joint Ventures to minimize the imposition of any of
said Indebtedness or the granting of any liens.
Section 6.14. DIVIDENDS. To the extent permitted by law,
International agrees to take such actions within its power so that each of the
Credit Parties will pay, to the extent funds are legally available therefor,
dividends of an amount sufficient to allow International to make all required
payments of principal or interest due from International hereunder.
ARTICLE VII
NEGATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or
outstanding or the Bank shall have any Commitment, unless the Bank shall
otherwise consent in writing, each Credit Party covenants and agrees as to
itself, and, to the extent specifically stated, as to its Subsidiaries and each
Joint Venture in which it has an interest that:
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Section 7.01. LIENS. Each Credit Party shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or permit to exist,
whether directly or indirectly, any Lien on or with respect to any of its
properties or assets, whether now held or hereafter acquired, except:
(a) Liens created pursuant to this Agreement or any other Loan
Document or other Liens in favor of the Bank;
(b) Liens existing on the Effective Date and set forth on
EXHIBIT 7.01(b);
(c) Liens imposed by law, carriers', warehousemen's or
mechanics' liens, and Liens to secure claims for labor, material or supplies
arising in the ordinary course of business, but only to the extent that payment
thereof shall not at the time be due or is being contested in good faith by
appropriate proceedings diligently conducted and with respect to which
appropriate reserves have been set aside in accordance with GAAP, and so long as
the enforcement thereof has been stayed and such Liens do not individually or in
the aggregate have a Material Adverse Effect;
(d) Deposits or pledges to enable the Credit Parties and their
Subsidiaries to exercise any privilege or license, deposits or pledges made in
connection with, or to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security, or to secure the
performance of bids, tenders, contracts (other than those relating to borrowed
money) or leases or to secure statutory obligations or surety or appeal bonds,
or to secure indemnity, performance or other similar bonds in the ordinary
course of business, or in connection with contests, so long as such Liens do not
individually or in the aggregate materially impair the value or materially
interfere with the use of any property subject thereto or the operation of the
usual business of the Credit Party(ies) involved and do not, in the aggregate
exceed $1,000,000.00;
(e) Liens for taxes, assessments, levies or other governmental
charges not yet due or which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which appropriate reserves
have been set aside in accordance with GAAP, and so long as the enforcement
thereof has been stayed and such Liens do not individually or in the aggregate
have a Material Adverse Effect;
(f) Liens arising out of judgments or awards against a Credit
Party, or any of its Subsidiaries with respect to which such Person shall be in
good faith prosecuting an appeal or a proceeding for review, or Liens incurred
by a Credit Party, or such Subsidiary for the purpose of obtaining a stay or
discharge of any legal proceeding to which such Person is a party, PROVIDED,
HOWEVER, nothing herein is intended to waive any Event of Default that may
result from any such judgment, award or proceeding under SECTION 8.01(k);
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(g) Liens consisting of encumbrances, easements or
reservations of, or rights of others for, rights-of-way, sewers, electric lines,
telegraph and telephone lines, pipelines and other similar purposes, zoning
restrictions, restrictions on the use of real property and minor defects and
irregularities in the title thereto, landlord's or lessor's Liens under leases
to which a Credit Party, or any of its Subsidiaries is a party and other similar
encumbrances, none of which has a Material Adverse Effect;
(h) Rights of collecting banks having a right of set off,
revocation, refund or chargeback with respect to money or instruments of a
Credit Party or any of its Subsidiaries on deposit with or in the possession of
such bank;
(i) [Intentionally Omitted]
(j) Liens to secure Indebtedness incurred in connection with
the purchase of equipment for use in International's day to day office
operations not to exceed, in the aggregate during the term hereof, $250,000.00;
(k) Other Permitted Liens;
(l) Liens on assets of Proler Environmental Services, Inc.
(but not any other Credit Parties) to secure Indebtedness permitted by SECTION
7.02(d) hereof; and
(m) Extensions, renewals or replacements of any Lien referred
to in the foregoing clauses; PROVIDED, HOWEVER, 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 so as to violate this Agreement; and FURTHER PROVIDED that the
principal amount of Indebtedness secured thereby shall not exceed the principal
amount of Indebtedness so secured at the time of such extension, renewal or
replacement so as to violate this Agreement.
Section 7.02. INDEBTEDNESS. International shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or permit to exist
any Indebtedness as defined herein exclusive of those items described in
subparagraph (g) of such definition except:
(a) Indebtedness of the Credit Parties hereunder and under the
other Loan Documents or any other Indebtedness owing to the Bank;
(b) Indebtedness set forth in EXHIBIT 5.07 or as set forth in
the financial statements referred to in SECTION 5.05;
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(c) Taxes, assessments or other governmental charges which are
not yet delinquent or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, and in respect of which adequate
reserves shall have been made therefor;
(d) Indebtedness, whether in the form of loans, Capital Leases
or other forms of Indebtedness, incurred by Proler Environmental Services, Inc.,
(but not any other Credit Party) in an aggregate original principal amount not
to exceed $20,000,000.00, in connection with project financings, PROVIDED such
Indebtedness shall be without recourse to any Credit Party other than Proler
Environmental Services, Inc.;
(e) Indebtedness of International, not to exceed
$20,000,000.00, PROVIDED such Indebtedness is subordinate and inferior in all
respects (including subsequent to the filing of any petition for relief under
the U.S. Bankruptcy Code) to the Obligations on such terms and conditions and in
such degree as the Bank shall approve in writing prior to the incurrence
thereof, such approval not to be unreasonably withheld; and
(f) Extensions, renewals and replacements (but not increases)
of any Indebtedness referred to in the foregoing clauses.
Section 7.03. FINANCIAL COVENANTS. (a) International shall not
permit the ratio of (i) Consolidated Current Assets to (ii) Consolidated Current
Liabilities to be less than 1.75 to 1.0 at the end of any fiscal quarter of
International, PROVIDED, notwithstanding the definition of Joint Ventures or
anything else herein contained, for purposes of this Section 7.03(a) only (but
not any other sections or subsections of 7.03), Consolidated Current Assets and
Consolidated Current Liabilities shall include that portion of the current
assets and current liabilities of the Joint Ventures equal to that portion of
the Credit Parties' ownership interest therein.
(b) International shall not permit Consolidated Net Worth as
of the end of each fiscal quarter, commencing with the fiscal quarter ending
January 31, 1996, to be less than $55,000,000.00 plus 50% of Consolidated Net
Income (excluding any non-cash writedowns or impairment losses not to exceed
$10,000,000.00 in the aggregate at any such time) earned commencing August 1,
1995 and thereafter.
(c) International shall not permit EBITDA (i) for the period
of the four consecutive fiscal quarters ending April 30, 1996 to be less than
$1,000,000.00, (ii) for the period of the four consecutive fiscal quarters
ending July 31, 1996 to be less than $1,500,000.00 and (iii) for each fiscal
quarter ending thereafter, to be less than $1,500,000.00, based on the results
of such quarter and the prior consecutive three fiscal quarters as of the end of
each fiscal quarter.
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Section 7.04. CONSOLIDATION, MERGERS AND ACQUISITIONS;
FUNDAMENTAL CHANGES. Except as otherwise provided herein, including, without
limitation, as provided in SECTION 7.09(g), International shall not, and shall
not permit any of its Subsidiaries, other than actions by Proler Environmental
Services, Inc., contemplated under SECTIONS 7.02, 7.09 or 7.11 without the prior
written consent of the Bank, to merge or consolidate with or acquire all or any
part of the outstanding capital stock or assets of any other Person (other than
purchases or other acquisitions of inventory and equipment in the ordinary
course of business) or liquidate, wind up or dissolve (or suffer any liquidation
or dissolution), or suffer a change in ownership directly or indirectly, except
that the following shall be permitted:
(a) any Credit Party (other than International) may merge into
or consolidate with any Credit Party or with any other Subsidiary of any Credit
Party, PROVIDED that a Credit Party is the survivor;
(b) any Subsidiary of a Credit Party may merge into or
consolidate with any other Subsidiary of any Credit Party, PROVIDED, that, if a
wholly-owned Subsidiary of a Credit Party is a party to such merger or
consolidation, a wholly-owned Subsidiary of a Credit Party is the survivor, and
PROVIDED, FURTHER, that if the outstanding shares of stock of a Subsidiary that
is a party to such a merger or consolidation are pledged to the Bank under the
Pledge Agreement, then the shares of such surviving Subsidiary which are held by
any Credit Party or any Subsidiary of a Credit Party shall be pledged to the
Bank under the Pledge Agreement; and
(c) the dissolution or liquidation of any of (i) Prolerized
Steel Corporation, or Gulf Coast Metals, Inc. and (ii) any other Subsidiary
which is not a Credit Party if immediately after such dissolution or liquidation
of any such other Subsidiary, International and its consolidated Subsidiaries
are not less creditworthy in the reasonable opinion of the Bank and provided the
Bank has prior written notice thereon.
Section 7.05. TRANSACTIONS WITH AFFILIATES. Subject to SECTION
7.16 hereof and the Investments allowed under SECTION 7.09(g), the Credit
Parties shall not, and shall not permit any of their Subsidiaries to, enter
into, or be a party to, any transaction with any Affiliate (including any Joint
Venture) except on terms and conditions as favorable (or more favorable) to such
Credit Party or such Subsidiary than would be obtained in a comparable arm's
length transaction between unrelated parties, PROVIDED, HOWEVER, that the Credit
Parties may deal with any Joint Venture as contemplated by SECTION 7.09(F) or
the Joint Venture Agreements or any other joint venture agreements to which they
are a party in accordance with past practice or within the bounds of good
business judgment.
Section 7.06. USE OF PROCEEDS. No proceeds of any Advance
shall be used by a Borrower for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any
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"margin stock," within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System. No Borrower shall engage principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of such Regulation U. No
Borrower will permit the proceeds of any Advance to be used for any purpose
other than as set forth herein.
Section 7.07. COMPLIANCE WITH ERISA. International shall not,
and shall not permit any of its Subsidiaries to, (a) terminate any Plan so as to
result in any liability to PBGC which could reasonably be expected to have a
Material Adverse Effect, (b) engage in any "prohibited transaction" (as defined
in Section 4975 of the Code) involving any Plan which would result in a
liability for an excise tax or civil penalty in connection therewith which could
reasonably be expected to have a Material Adverse Effect, (c) incur or suffer to
exist any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived involving any Plan which could reasonably be expected to
have a Material Adverse Effect or (d) allow or suffer to exist any event or
condition, which presents a material risk of incurring a liability to PBGC by
reason of termination of any such Plan which could reasonably be expected to
have a Material Adverse Effect.
Section 7.08. LIMITATION ON NEGATIVE PLEDGE CLAUSES. The
Credit Parties shall not, and shall not permit any of their Subsidiaries to,
enter into any agreement with any Person other than the Bank which prohibits or
limits the ability of the Credit Parties or any of their Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of their property, assets or
revenues, whether now owned or hereafter acquired, other than any such agreement
entered into by Proler Environmental Services, Inc., but not any other Credit
Party, in connection with the Indebtedness permitted by SECTION 7.02(d) hereof.
Section 7.09. INVESTMENTS. The Credit Parties shall not, and
shall not permit any of their Subsidiaries to, directly or indirectly, make any
Investments except:
(a) Investments existing on the Effective Date and listed on
EXHIBIT 7.09;
(b) Investments on terms customary in the industry involved in
the form of accounts receivable incurred, and Investments made in settlement of
such accounts receivable, all in the ordinary course of business of the Credit
Parties and their Subsidiaries;
(c) Permitted Investments;
(d) stock or securities received in the settlement of debts
(created in the ordinary course of business);
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(e) travel advances to officers and employees made in the
ordinary course of business;
(f) Investments in Joint Ventures; and
(g) Investments in the stock or assets of other Persons not to
exceed (i) $2,500,000.00 in any one Person or any single transaction, PROVIDED,
any such Investment up to $6,000,000.00 shall be permitted if made in or to
Proler Environmental Services, Inc. by any other Credit Party for the purpose of
funding the construction by Proler Environmental Services, Inc. or a non-Credit
Party Affiliate thereof of a gasification plant for which no recourse exists to
any other Credit Party or (ii) $6,000,000.00 outstanding with supplemental
Investments to maintain such level allowed so long as no more than $6,000,000.00
is invested during any twelve-month period, computed on a rolling four (4)
quarter basis, without the prior written approval of the Bank, such approval not
to be unreasonably withheld; PROVIDED, that any Investment in or to Proler
Environmental Services, Inc. referred to in clause (i) above shall be considered
an Investment under this subsection (ii) and shall not serve to increase the
total amount allowed in any twelve-month period.
Section 7.10. SALE AND LEASEBACK. International shall not, and
shall not permit any of its Subsidiaries to, enter into any arrangement with any
Person providing for the leasing by International or a Subsidiary of
International of real or personal property which has been or is to be sold or
transferred by International or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security as such property or rental obligations of International or such
Subsidiary, other than leases entered into in connection with any project
financed in whole or in part by Indebtedness permitted by SECTION 7.02(D), which
together with all other Indebtedness incurred in respect of such project, shall
not exceed $20,000,000.00 in the aggregate.
Section 7.11. CAPITAL EXPENDITURES. International shall not
incur Consolidated Capital Expenditures (exclusive of (A) any Consolidated
Capital Expenditures attributable to capital expenditures made by International
or Proler Environmental Services, Inc. in connection with any project financed
in whole or in part by Indebtedness permitted by SECTIONS 7.02(d), 7.02(e),
7.02(F) or 7.10, which expenditures shall be a part of, and may not exceed the
amount permitted by SECTIONS 7.02(d), 7.02(e) or 7.02(f) and (B) exclusive of
Investments permitted by SECTION 7.09) in an aggregate amount in excess of
$6,000,000.00 for any twelve-month period during the term of this Agreement,
computed on a rolling four (4) quarter basis.
Section 7.12. LIMITATION ON RESTRICTIONS AFFECTING
SUBSIDIARIES. International shall not, and shall not permit any of its
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction of any kind, on the ability
of any such
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Subsidiary to (a) pay dividends or make any distributions on its capital stock
or joint venture or partnership interests, (b) pay any indebtedness to
International or any other Subsidiary of International, (c) make loans or
advances to International or any Subsidiary of International or (d) transfer any
of its property or assets to International or any Subsidiary of International,
other than, in the case of each of the foregoing clauses (a) through (d), any
such encumbrance or restriction created by Proler Environmental Services, Inc.
in connection with any Indebtedness permitted by SECTION 7.02(d).
Section 7.13. RESTRICTED PAYMENTS. Except as contemplated or
permitted by the Rights Agreement dated as of February 28, 1996, as amended or
modified, International shall not directly or indirectly declare, order, pay,
make or set apart any Restricted Payment; PROVIDED, that International may make
Restricted Payments in the form of dividends on, and repurchases of, its own
capital stock up to a maximum amount of $2,500,000.00 for each twelve-month
period, computed on a rolling four (4) quarter basis.
Section 7.14. OTHER BUSINESS. The Credit Parties will not
engage, and will not permit any of their Subsidiaries to engage, in any lines of
business other than the business in which they are engaged on the Effective Date
and other activities incidental or related to such business, including, without
limitation, lines of business relating to processing, treatment and disposal of
waste streams and the sale, use or marketing of products produced in connection
therewith or the licensing of technology in connection therewith.
Section 7.15. JOINT VENTURE AGREEMENTS. The Joint Venture
Agreements shall not be modified, amended, terminated or otherwise affected
without the prior written consent of the Bank.
Section 7.16. NO TRANSFERS TO AFFILIATES. Other than as
permitted by SECTIONS 7.05 and 7.09, the Credit Parties shall not transfer to
all of their Affiliates any assets, having a value in excess of $1,000,000 in
the aggregate, during the term hereof, unless said transfer is paid for by said
Affiliate with cash as of the time of the transfer.
ARTICLE VIII
DEFAULT AND REMEDIES
Section 8.01. EVENTS OF DEFAULT. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing, namely:
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(a) a Borrower shall fail to pay when due any installment of
principal of or interest owed by it on any Advance or other amount due
hereunder, under the Notes or any Loan Document to which it is a party; or
(b) any other Credit Party shall fail to pay any amount
payable to the Bank by such Credit Party hereunder or under any other Loan
Document to which it is a party when due thereunder; or
(c) International shall fail to comply with or perform any
covenant, agreement or condition in ARTICLE VII hereof; or
(d) any Credit Party shall fail to perform any other term,
covenant or agreement contained herein or in any other Loan Document to which it
is a party which failure could reasonably be expected to have a Material Adverse
Effect and such failure shall not have been remedied within thirty (30) days
after the earlier of (i) the discovery thereof by the Credit Party or (ii) the
receipt of written notice thereof by International from the Bank; or
(e) any representation or warranty made by any Credit Party in
any Loan Document to which it is a party or in any certificate, agreement,
instrument or statement contemplated by or delivered pursuant to, or in
connection with, any Loan Document shall prove to have been incorrect in any
material respect when made; or
(f) any Credit Party shall (i) fail to pay any Indebtedness
owing to the Bank evidenced by a promissory note, credit agreement or letter of
credit application; (ii) fail to pay any other Indebtedness having a principal
amount in excess of $250,000.00 (other than the amounts referred to in
subsections (a) and (b) of this SECTION 8.01) owing by such Person, or any
interest or premium thereon, when due (or, if permitted by the terms of the
relevant document, within any applicable grace period), whether such
Indebtedness shall become due by scheduled maturity, by required prepayment, by
acceleration, by demand or otherwise; or (iii) fail to perform any term,
covenant or condition on its part to be performed under any agreement or
instrument evidencing, securing or relating to any such Indebtedness, when
required to be performed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such failure is to accelerate, or to permit the holder or holders of such
Indebtedness to accelerate, the maturity of such Indebtedness; or
(g) any Loan Document shall (other than with the consent of
the Bank), at any time after its execution and delivery and for any reason,
cease to be in full force and effect or to provide the Liens contemplated
thereby, except for such provisions or Liens that the Bank determines are not
material either individually or in the aggregate, or shall be declared to be
null and void, or the validity or enforceability thereof or of the Liens
contemplated thereby shall be contested
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by any Credit Party to the Loan Documents or any such Credit Party shall deny
that it has any or further liability or obligation under any Loan Document; or
(h) any Reportable Event that might constitute grounds for the
termination of any Plan, or for the appointment by an appropriate United States
district court of a trustee to administer any Plan, shall have occurred and be
continuing for at least thirty (30) days, or any Plan shall be terminated, or a
trustee shall be appointed by an appropriate United States district court to
administer any Plan, or the PBGC shall institute proceedings to terminate any
Plan or to appoint a trustee to administer any Plan, and, in any such event, the
then-current value of such Plan's benefits guaranteed under Title IV of ERISA at
the time shall exceed by more than $270,000.00 the then-current value of such
Plan's assets, allocable to such benefits at such time; or
(i) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing; or
(j) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an order for
relief shall be entered against such Credit Party under the federal bankruptcy
laws as now or hereafter in effect; or
(k) a final judgment or order for the payment of money in
excess of $270,000.00 (net of acknowledged, uncontested insurance coverage)
shall be rendered against any Credit Party and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) a stay of enforcement of such judgment or order by reason of a
pending appeal or otherwise, shall not be in effect for any period of thirty
(30) consecutive days; or
(l) any single Person shall in a single transaction or a
series of related transactions acquire control of more than 51% of
International's capital stock;
then, (x) upon the occurrence of any Event of Default described in SECTION
8.01(J) or SECTION 8.01(k), (i) the Commitment shall automatically terminate and
(ii) the unpaid principal amount of and
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accrued interest on all Advances together with all other amounts owing by the
Credit Parties under this Agreement, the Notes, the other Loan Documents and any
other agreement or security document contemplated by or delivered in connection
with this Agreement shall automatically become immediately due and payable
without, in any case, presentment for payment, further demand, protest, notice
of intent to accelerate, notice of acceleration or further notice of any kind,
all of which are hereby expressly waived by each Borrower, and (y) upon the
occurrence of any other Event of Default, the Bank may, by notice to
International, (i) declare the Commitment to be terminated, whereupon the same
shall forthwith terminate and (ii) declare the entire unpaid principal amount of
all Advances, all interest accrued and unpaid thereon and all other amounts
payable by any Credit Party under this Agreement, the Notes, the other Loan
Documents and any other agreement or security document contemplated by or
delivered in connection with this Agreement, to be forthwith due and payable,
whereupon all such amounts shall become and be forthwith due and payable,
without presentment for payment, further demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of which
are hereby expressly waived by each Borrower.
Section 8.02. SET-OFF IN EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, the Bank is hereby
authorized, at any time and from time to time, without notice to the Borrowers
or any other Credit Party (any such notice being expressly waived by the Credit
Party) and to the fullest extent permitted by applicable law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any branch, subsidiary or Affiliate of the Bank to or for the credit or the
account of any Credit Party against any and all of the obligations of such
Credit Party, now or hereafter existing under this Agreement, the Notes or the
other Loan Documents to which each such Credit Party is a party, irrespective of
whether or not the Bank shall have made any demand for satisfaction of such
Obligations and although such Obligations may be unmatured. The Bank agrees to
notify International promptly after any such set-off and application made by the
Bank; PROVIDED, HOWEVER, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including other rights of
set-off) which the Bank may have hereunder or under any applicable law.
ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENTS. No modification, amendment or waiver
of any provision of this Agreement (including, without limitation, the
Guaranty), the Notes or any other Loan Document, or consent to any departure by
any Credit Party herefrom or therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank and each Credit Party
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thereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 9.02. NOTICES. All notices, consents, requests,
approvals, demands and other communications (collectively, "COMMUNICATIONS")
provided for herein and in the other Loan Documents shall be in writing
(including telecopied communications) and mailed, telecopied or delivered as
follows:
if to International or any other Credit Party to, or in care of--
Proler International Corp.
4265 San Felipe, Suite 900
Houston, Texas 77027
Attention: Steven F. Gilliland
Telecopy No.: (713) 627-2737
with a copy to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attention: Gail Merel
Telecopy No.: (713) 225-7047
if to the Bank --
Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention: Stephen H. Oglesby or Curtis D. Karges
Telecopy No.: (713) 236-6004
with a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: Thomas J. Perich
Telecopy No.: (713) 220-4285
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or at such other address as the Bank or any Credit Party shall designate in a
Communication to each of the other parties hereto. All Communications shall be
effective, in the case of written or telecopied communications, three days after
being deposited in the mail, or upon the date sent by telecopy or (in the case
of Communications which are not mailed or telecopied) when delivered and (if a
Communication is sent by telecopy or delivered) receipt thereof is confirmed,
respectively, in each case addressed as aforesaid. Notwithstanding the
foregoing, all Borrowing Requests shall not be effective until received by the
Bank.
Section 9.03. COSTS, EXPENSES AND TAXES. The Borrowers agree
to pay on demand all reasonable costs and expenses of the Bank in connection
with (a) the administration of the Loan Documents and the preparation,
execution, delivery, filing, recording and administration of this Agreement, the
Advances, the Notes and the other Loan Documents and any other agreements or
security documents delivered in connection with or pursuant to any of the Loan
Documents, including the reasonable fees and out-of-pocket expenses of Andrews &
Kurth L.L.P., counsel for the Bank and any local counsel who may be retained by
such counsel, and the cost of any and all appraisals, surveys, environmental
audits or studies subject to the limitations of SECTION 6.01(L), title insurance
policies and similar items required hereby, (b) all reasonable costs and
expenses, if any, incurred by the Bank in connection with the enforcement of
this Agreement and the other Loan Documents and any other agreements or security
documents executed in connection with or pursuant to any of the Loan Documents,
including the reasonable fees and out-of-pocket expenses of counsel for the Bank
and any local counsel who may be retained by such counsel, and (c) the
reasonable costs and expenses in connection with the custody, preservation, use
or operation of, or the sale of, or collection from, or other realization upon
the collateral covered by any of the Loan Documents. The agreements of the
Borrowers contained in this Section shall survive the termination of the
Commitment and the payment of all amounts owing by any Credit Party hereunder or
under any of the other Loan Documents.
Section 9.04. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the Credit Parties,
the Bank and their respective successors and assigns, except that no Credit
Party may assign or transfer its respective rights hereunder without the prior
written consent of the Bank.
Section 9.05. INDEPENDENCE OF COVENANTS. All covenants
contained in the Loan Documents shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that such action or condition would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 9.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement and the other Loan
Documents, or made in writing by any
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Credit Party in connection herewith or therewith, shall survive the execution
and delivery of this Agreement, the Notes and the other Loan Documents. Any
investigation by the Bank shall not diminish in any respect whatsoever its right
to rely on such representations and warranties.
Section 9.07. SEPARABILITY. Should any clause, sentence,
paragraph, subsection, Section or Article 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 by
the parties hereto, and the remainder will have the same force and effectiveness
as if such stricken part or parts had never been included herein.
Section 9.08. NO WAIVER; REMEDIES. No failure on the part of
the Bank to exercise, and any delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies provided in this Agreement and the Notes are
cumulative and not exclusive of any remedies provided in any of the other Loan
Documents or by law.
Section 9.09. 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.
Section 9.10. GOVERNING LAW. This Agreement, the Notes and,
unless otherwise specified therein, all other Loan Documents and all other
documents executed in connection herewith or therewith, shall be deemed to be
contracts and agreements executed by Credit Parties and the Bank under the laws
of the State of Texas and of the United States and for all purposes shall be
construed in accordance with, and governed by, the laws of the State of Texas
and of the United States. Without limitation of the foregoing, nothing in this
Agreement, the Notes or any other Loan Documents shall be deemed to constitute a
waiver of any rights which the Bank may have under federal legislation relating
to the rate of interest which the Bank may contract for, take, receive, reserve
or charge in respect of any Advance or any of the other Obligations. The Bank
and the Borrowers further agree that insofar as the provisions of Article 1.04,
Subtitle 1, Title 79, of the Revised Civil Statutes of Texas, 1925, as amended,
are applicable to the determination of the Highest Lawful Rate with respect to
the Obligations, the indicated (weekly) rate ceiling computed from time to time
pursuant to Section (a) of such Article shall apply to the Obligations;
PROVIDED, HOWEVER, that to the extent permitted by such Article, the Bank may
from time to time by notice from the Bank to the Borrowers revise the election
of such interest rate ceiling as such ceiling affects the then current or future
balances outstanding under the Notes. The provisions of Chapter 15 of
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Subtitle 3 of the said Title 79 do not apply to this Agreement, the Notes or any
transactions contemplated by any Loan Document.
Section 9.11. LIMITATION ON INTEREST. Each provision in this
Agreement, the Notes 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 Bank for the use, forbearance or detention of the money to be advanced under
this Agreement, the Notes or any other 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 which are for the
use, forbearance or detention of money under this Agreement or such Loan
Document shall in all events be less than that amount of money which would cause
the effective rate of interest to exceed the Highest Lawful Rate. Anything in
this Agreement, the Notes or any other Loan Document to the contrary
notwithstanding, no Borrower shall ever be required to pay unearned interest on
the Advances or any of the other Obligations or ever be required to pay interest
on the Advances or any of the other Obligations at a rate in excess of the
Highest Lawful Rate, or if the holder of any of the Advances or any of the other
Obligations 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 either or both Borrowers under this Agreement, the Notes 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 Borrowers
under this Agreement, the Notes and other Loan Documents shall be reduced to the
amount allowed under applicable law and (b) any unearned interest paid by a
Borrower or any interest paid by a Borrower in excess of the Highest Lawful Rate
shall be in the first instance credited on the principal of the applicable Note
with the excess thereof, if any, refunded to such Borrower. It is further agreed
that, without limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received by the Bank under the Notes, this
Agreement or 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 the Bank (now or hereafter
enacted), by amortizing, prorating, allocating and spreading in equal parts
during the period of the full stated term of the Obligations evidenced by the
Notes all interest at any time contracted for, charged or received by the Bank
in connection therewith. If at any time and from time to time, (x) the amount of
interest payable to the Bank on any date shall be computed at the Highest Lawful
Rate pursuant to this Section and (y) in respect of any subsequent interest
computation period the amount of interest otherwise payable to the Bank would be
less than the amount of interest payable to the Bank computed at the Highest
Lawful Rate, then to the extent permitted by applicable usury law, the amount of
interest payable to the Bank in respect of such subsequent interest computation
period shall continue to be computed at the Highest Lawful Rate until the total
amount of interest payable to the Bank shall equal the total amount of interest
which
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would have been payable to the Bank if the total amount of interest had been
computed without giving effect to this Section.
Section 9.12. INDEMNIFICATION. (a) Each of the Borrowers and
each other Credit Party agrees to indemnify, defend and hold the Bank, as well
as its officers, employees, agents, directors, shareholders, counsels and
Affiliates (collectively, "INDEMNIFIED PERSONS") harmless from and against any
and all loss, liability, damage, judgment, claim, deficiency, penalty, fine,
response and remediation cost, stabilization cost, encapsulation cost,
treatment, storage or disposal cost, groundwater monitoring or environmental
sampling cost or any other reasonable cost or expense (including interest,
penalties, reasonable attorneys', experts' or consultants' fees, and
disbursements in connection with any investigative, administrative or judicial
proceeding and amounts paid in settlement) (collectively, "INDEMNIFIED
LIABILITIES") incurred by or asserted against any Indemnified Person arising out
of, in any way connected with, or as a result of (i) the execution and delivery
of this Agreement and the other Loan Documents, the performance by the parties
hereto and thereto of their respective obligations hereunder and thereunder
(including the making of the Commitment of the Bank) and consummation of the
transactions contemplated hereby and thereby, (ii) the actual or proposed use of
the Advances, (iii) any past, present or future violation by a Borrower, any of
its respective Subsidiaries, any operator who is not an Indemnified Person of
the Mortgaged Properties, or any other Person (other than any Indemnified
Person) of any requirement of law, including Environmental Laws, with regard to
the ownership, operation, use or occupancy of the Mortgaged Properties occurring
at any time prior to the repayment in full of the Advances and the other
Obligations, (iv) solely insofar as any of the following arises out of any
Mortgaged Property, the past, present or future treatment, storage, disposal,
generation, use, transport, movement, migration, presence, release, spill or
emission of any pollutants, contaminants, Hazardous Materials, or hazardous or
toxic substances or wastes into or onto soil, land, surface water, ground water,
watercourses, publicly-owned treatment works, drains, sewer systems, wetlands or
septic systems occurring at any time prior to the repayment in full of the
Advances and the other Obligations, (v) ownership by the Bank of any real or
personal property following rightful foreclosure under the Security Documents,
to the extent such losses, liabilities, damages, judgments, claims, deficiencies
or expenses arise out of or result from the presence or release of any Hazardous
Materials in, on or under such property during the period owned, leased or
operated by a Borrower or any of its respective Subsidiaries, including, without
limitation, losses, liabilities, damages, judgments, claims, deficiencies or
expenses which are imposed under Environmental Laws upon Persons by virtue of
their ownership, (vi) foreseeable consequential or punitive damages incurred as
a result of any matter or claim described above or (vii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnified Person is a party thereto.
(b) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS BUT IN ALL EVENTS SUBJECT TO
SUBPARAGRAPH (C) OF THIS SECTION 9.12, IT IS THE EXPRESS INTENTION OF
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EACH BORROWER AND THE OTHER CREDIT PARTIES THAT EACH INDEMNIFIED PERSON SHALL BE
INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DEFICIENCIES, JUDGMENTS OR REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM
THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF SUCH INDEMNIFIED
PERSON. THE OBLIGATIONS OF EACH BORROWER AND THE OTHER CREDIT PARTIES UNDER THIS
SECTION 9.12 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE COMMITMENT
AND THE REPAYMENT OF THE OBLIGATIONS.
(c) Notwithstanding any other provision of this Agreement or
any other Loan Document or any other document or instrument, in no event shall
any Credit Party be liable in any manner with respect to any or all Indemnified
Liabilities to the extent arising from any acts or omissions constituting gross
negligence or willful misconduct on the part of any Indemnified Person.
(d) With respect to all Indemnified Liabilities relating to
any Mortgaged Property or any Hazardous Material or any Environmental Law,
notwithstanding any other provision of this Agreement or any other Loan Document
or any other document or instrument, no Credit Party shall be liable (x) for any
acts of any Indemnified Person or of any Person acting on behalf of or at the
direction of any Indemnified Person, or (y) in the event that any Indemnified
Person, or any Person acting on behalf of or at the direction of any Indemnified
Person, is judicially or administratively determined to be a Person having
management participation or otherwise exercising control within the meaning of
the Environmental Laws in effect on the date of this Agreement, for any omission
of any Indemnified Person or any omission of any Person acting on behalf of, or
at the direction of any Indemnified Person, or (z) for any act or omission of
any Person occurring from and after the date on which none of the Credit Parties
holds title to such Mortgaged Property; PROVIDED, HOWEVER, that this clause (z)
shall not release any Credit Party from any liability which it would otherwise
have under this subparagraph (d) for conditions arising prior to said date as to
which any Indemnified Liability is asserted subsequent to said date.
Section 9.13. NOTICE AND DEFENSE OF CLAIMS. (a) The Credit
Parties shall give prompt notice to the Bank of:
(i) their receipt of any correspondence, demand, notice,
order, complaint, notice of violation, assessment, claim or request for
information issued pursuant to or under color of any Environmental Laws
or which refers to any Hazardous Materials from any federal, state or
local governmental authority or from any private party or organization
with respect to the Mortgaged Properties, any operator of the Mortgaged
Properties or any Credit Party, which, in the reasonable good faith
judgment of the Credit Parties, is likely to result in a Material
Adverse Effect;
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(ii) the institution of any claim, suit, action, investigation
or administrative or judicial proceeding or action (formal or informal)
of which the Credit Parties are aware, brought with regard to the
condition, use, ownership, operation, occupancy or maintenance of the
Mortgaged Properties under the Environmental Laws or relating to
Hazardous Materials which claim, suit, action, investigation or
administrative or judicial proceeding or action, in the reasonable good
faith judgment of the Credit Parties, is likely to result in a Material
Adverse Effect; and
(iii) the discovery or detection, of which the Credit Parties
are aware, by any Person, of Hazardous Materials on the Mortgaged
Properties which, in the reasonable good faith judgment of the Credit
Parties, is likely to result in a Material Adverse Effect.
(b) The Credit Parties shall retain the exclusive right, at
their option, to compromise, settle or defend, at their expense and with their
own counsel, any Indemnified Liabilities; PROVIDED, HOWEVER, that the Credit
Parties shall provide the Bank with all such copies of documents and pleadings
relating to such Indemnified Liabilities as the Bank may reasonably request;
PROVIDED, FURTHER, that in the case of any action in which any Indemnified
Person is a named party thereto, such counsel retained by the Credit Parties
shall be reasonably acceptable to such Indemnified Person. In the case of any
such action in which an Indemnified Person is a named party thereto, the Credit
Parties, at the request of such Indemnified Person, shall keep such Indemnified
Person apprised of all matters relevant to such action and such Indemnified
Person shall have the full right, at its own expense, to participate, through
counsel or otherwise, in all meetings and proceedings with adverse parties or
governmental authorities (other than any confidential meetings unrelated to
claims against such Indemnified Person); PROVIDED, HOWEVER, that if any of the
Credit Parties give notice in writing to such Indemnified Person that the Credit
Parties do not intend, for whatever reason, to defend any such action, then such
Indemnified Person may prosecute its own defense or response with its own
counsel and the reasonable fees of such counsel shall be at the expense of the
Credit Parties for that portion of the action relating to any Indemnified
Liabilities if: (x) such Indemnified Person shall prosecute such defense or
response diligently and in an appropriate manner and (y) such Indemnified
Person, at the request of any of the Credit Parties, shall keep the Credit
Parties apprised of all matters relevant to such action; PROVIDED, FURTHER, that
in the event that such Indemnified Person does not consent to any settlement or
compromise proposed by the parties to such action and acceptable to the Credit
Parties, then the liability of the Credit Parties under SECTIONS 9.12 and 9.13
of this Agreement for any Indemnified Liabilities shall not exceed that
liability which the Credit Parties would have had if such Indemnified Person had
consented to such settlement or compromise.
(c) Upon the occurrence of any of the events contemplated by
subsection (a) above relating to any Mortgaged Property, the Bank shall have
(but need not exercise) the right to retain, at its own expense, consultants and
specialists of the Bank's choice to assess the necessity for
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and appropriateness of the investigation, removal, remediation, encapsulation or
other treatment of any Hazardous Materials found on the Mortgaged Properties. If
the Bank reasonably determines that any such activities are necessary and
appropriate to prevent the occurrence of a Material Adverse Effect, it shall
deliver written notice to the Credit Parties of the basis of such determination,
describing such activities with reasonable specificity. Upon receipt of such
notice, and if such activities are required by law, the Credit Parties will
diligently, and in a reasonable manner, undertake and complete such activities
to the Bank's reasonable satisfaction, at the Credit Parties' sole expense.
(d) The Indemnified Persons shall give prompt written notice
to the Credit Parties of any claim against the Indemnified Persons which might
give rise to a claim by the Indemnified Persons against the Credit Parties under
SECTION 9.12.
Section 9.14. LIMITATION BY LAW. All rights, remedies and
powers provided in this Agreement and the other Loan Documents may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Agreement and the other Loan
Documents are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement or any other Loan Document invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
Section 9.15. 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 (iv) is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) reference to any agreement, document or instrument means
such agreement, document or instrument as amended, supplemented or
modified and in effect from time to
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time in accordance with the terms thereof and, if applicable, the terms
hereof, and reference to any 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, the word "from" means "from and including" and the word "to"
means "to but excluding";
(ix) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time; and
(x) whenever any accounting computation is required to be
made, for purposes hereof, such computation shall be made in accordance
with GAAP.
(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.
Section 9.16. WAIVER OF TEXAS DECEPTIVE TRADE PRACTICES ACT.
EACH CREDIT PARTY HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS, DEMANDS AND CAUSES
OF ACTION BASED UPON OR RELATED TO THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT AS DESCRIBED IN SECTION 17.41 ET SEQ. OF THE TEXAS BUSINESS &
COMMERCE CODE, AS THE SAME PERTAINS OR MAY PERTAIN TO ANY OF THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, TO THE MAXIMUM EXTENT THAT SUCH
RIGHTS, ETC. MAY LAWFULLY AND EFFECTIVELY BE WAIVED. IN FURTHERANCE OF THIS
WAIVER, EACH UNDERSIGNED OBLIGOR UNDER THE LOAN DOCUMENTS HEREBY REPRESENTS AND
WARRANTS THAT (A) EACH SUCH CREDIT PARTY HAS ASSETS OF $5,000,000.00 OR GREATER
ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
GAAP AND HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT
ENABLE IT TO EVALUATE THE MERITS AND RISKS OF A TRANSACTION, (B) EACH SUCH
CREDIT PARTY IS REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE NEGOTIATION,
EXECUTION AND DELIVERY OF THE LOAN DOCUMENTS AND (C) NO SUCH CREDIT PARTY
CONSIDERS ITSELF TO BE IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH
RESPECT TO THE LOAN DOCUMENTS.
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Section 9.17. RELEASES. EACH CREDIT PARTY HEREBY RELEASES,
DISCHARGES AND ACQUITS FOREVER THE BANK AND ITS OFFICERS, DIRECTORS, TRUSTEES,
AGENTS, EMPLOYEES AND COUNSEL (IN EACH CASE, PAST, PRESENT OR FUTURE) FROM ANY
AND ALL CLAIMS EXISTING AS OF THE DATE HEREOF (OR THE DATE OF ACTUAL EXECUTION
HEREOF BY THE APPLICABLE PERSON OR ENTITY, IF LATER). AS USED HEREIN, THE TERM
"CLAIM" SHALL MEAN ANY AND ALL LIABILITIES, CLAIMS, DEFENSES, DEMANDS, ACTIONS,
CAUSES OF ACTION, JUDGMENTS, DEFICIENCIES, INTEREST, LIENS, COSTS OR EXPENSES
(INCLUDING COURT COSTS, PENALTIES, ATTORNEYS' FEES AND DISBURSEMENTS AND AMOUNTS
PAID IN SETTLEMENT) OF ANY KIND AND CHARACTER WHATSOEVER, INCLUDING CLAIMS FOR
USURY, BREACH OF CONTRACT, BREACH OF COMMITMENT, NEGLIGENT MISREPRESENTATION OR
FAILURE TO ACT IN GOOD FAITH, IN EACH CASE WHETHER NOW KNOWN OR UNKNOWN,
SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED OR PRIMARY OR CONTINGENT, AND
WHETHER ARISING OUT OF WRITTEN DOCUMENTS, UNWRITTEN UNDERTAKINGS, COURSE OF
CONDUCT, TORT, VIOLATIONS OF LAWS OR REGULATIONS OR OTHERWISE ARISING OUT OF
THIS TRANSACTION, THE TRANSACTION CONTEMPLATED BY ANY PRIOR AGREEMENTS, AND ALL
RELATED DOCUMENTS, TRANSACTIONS AND EVENTS.
Section 9.18. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BORROWERS:
PROLER INTERNATIONAL CORP.
By: /s/ MICHAEL F. LOY
Michael F. Loy
Vice President - Finance
JOINT VENTURE OPERATIONS, INC.
By: /s/ MICHAEL F. LOY
Michael F. Loy
Vice President - Finance
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GUARANTORS:
PROLER INTERNATIONAL CORP.
PROLERIDE TRANSPORT SYSTEMS, INC.
JOINT VENTURE OPERATIONS, INC.
PROLER RECYCLING, INC.
PROLER INDUSTRIES, INC.
PROLER STEEL, INC.
PROLER POWER MARKETING, INC.
PROLER PROPERTIES INC.
PROLER ENVIRONMENTAL
SERVICES, INC.
By: /s/ MICHAEL F. LOY
Michael F. Loy
Vice President - Finance
BANK:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ CURTIS D. KARGES
Curtis D. Karges
Senior Vice President
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AMENDED AND RESTATED CREDIT AGREEMENT
$6,500,000.00 LETTER OF CREDIT FACILITY
AMONG
JOINT VENTURE OPERATIONS, INC.
(FORMERLY KNOWN AS PROLER INTERNATIONAL CORP.)
AND
PROLER INTERNATIONAL CORP.,
AS BORROWERS
AND
JOINT VENTURE OPERATIONS, INC.
PROLER INDUSTRIES, INC.
PROLER STEEL, INC.
PROLER POWER MARKETING, INC.
PROLERIDE TRANSPORT SYSTEMS, INC.,
PROLER ENVIRONMENTAL SERVICES, INC.,
PROLER INTERNATIONAL CORP.
PROLER PROPERTIES, INC.
PROLER RECYCLING, INC.,
AS GUARANTORS
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
DATED EFFECTIVE AS OF FEBRUARY 28, 1996
-1-
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I - DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS.....................................................2
Section 1.01. Certain Defined Terms....................................................................2
Section 1.02. Accounting Terms........................................................................16
ARTICLE II - COMMITMENT AND TERMS OF CREDIT....................................................................16
Section 2.01. The Commitment..........................................................................16
Section 2.02. The Notes...............................................................................17
Section 2.03. Letters of Credit and Existing Letters of Credit.......................................17
Section 2.04. Interest Rate..........................................................................20
Section 2.05. Fees...................................................................................20
Section 2.06. Termination of the Commitment..........................................................20
Section 2.07. Computations; Payments on Non-Business Days............................................21
Section 2.08. Set-Off, Counterclaims and Taxes.......................................................21
Section 2.09. The Borrowers Unconditionally Liable...................................................21
Section 2.10. Reserve Requirements; Change in Circumstances..........................................21
Section 2.11. Use of Letters of Credit...............................................................23
Section 2.12. Ratification...........................................................................23
ARTICLE III - GUARANTY.........................................................................................24
Section 3.01. Guaranty................................................................................24
Section 3.02. Continuing Guaranty.....................................................................25
Section 3.03. Effect of Debtor Relief Laws............................................................26
Section 3.04. Waiver of Subrogation...................................................................26
Section 3.05. Subordination...........................................................................26
Section 3.06. Waiver..................................................................................27
Section 3.07. Full Force and Effect...................................................................27
ARTICLE IV - CONDITIONS PRECEDENT..............................................................................27
Section 4.01. Conditions Precedent to the Initial Letter of Credit....................................27
Section 4.02. Conditions Precedent to All Letters of Credit...........................................30
ARTICLE V - REPRESENTATIONS AND WARRANTIES.....................................................................31
Section 5.01. Organization............................................................................31
Section 5.02. Authority...............................................................................31
Section 5.03. No Conflict.............................................................................31
Section 5.04. Consents................................................................................31
Section 5.05. Financial Condition; No Material Adverse Change.........................................32
Section 5.06. Litigation; Material Adverse Effect.....................................................32
Section 5.07. Indebtedness............................................................................32
Section 5.08. No Margin Stock.........................................................................33
Section 5.09. Accuracy and Completeness of Information................................................33
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Section 5.10. ERISA...................................................................................33
Section 5.11. Government Regulation...................................................................33
Section 5.12. Property................................................................................34
Section 5.13. Payment of Taxes........................................................................34
Section 5.14. Insurance...............................................................................34
Section 5.15. Subsidiaries; Joint Ventures............................................................34
Section 5.16. Patents.................................................................................35
Section 5.17. Compliance with Statutes................................................................35
Section 5.18. Labor Relations; Collective Bargaining Agreements.......................................36
Section 5.19. Liabilities.............................................................................36
Section 5.20. Solvency................................................................................36
ARTICLE VI - AFFIRMATIVE COVENANTS.............................................................................37
Section 6.01. Reporting Requirements..................................................................37
Section 6.02. Existence...............................................................................39
Section 6.03. Maintenance of Properties; Insurance....................................................40
Section 6.04. Notice of Litigation....................................................................40
Section 6.05. Taxes; Claims...........................................................................40
Section 6.06. Notice of Default.......................................................................41
Section 6.07. Inspections.............................................................................41
Section 6.08. Compliance with Laws; Notices...........................................................41
Section 6.09. Books and Records; Accounting Systems and Principles....................................42
Section 6.10. Ownership of Credit Parties.............................................................42
Section 6.11. Further Assurances......................................................................42
Section 6.12. Performance of Loan Documents...........................................................42
Section 6.13. Activities of Joint Venture.............................................................42
Section 6.14. Dividends.............................................................................43
ARTICLE VII - NEGATIVE COVENANTS...............................................................................43
Section 7.01. Liens...................................................................................43
Section 7.02. Indebtedness............................................................................45
Section 7.03. Financial Covenants.....................................................................45
Section 7.04. Consolidation, Mergers and Acquisitions; Fundamental Changes............................46
Section 7.05. Transactions with Affiliates............................................................47
Section 7.06. Use of Proceeds.........................................................................47
Section 7.07. Compliance with ERISA...................................................................47
Section 7.08. Limitation on Negative Pledge Clauses...................................................47
Section 7.09. Investments.............................................................................48
Section 7.10. Sale and Leaseback......................................................................48
Section 7.11. Capital Expenditures....................................................................49
Section 7.12. Limitation on Restrictions Affecting Subsidiaries.......................................49
Section 7.13. Restricted Payments.....................................................................49
Section 7.14. Other Business..........................................................................49
-ii-
Section 7.15. Joint Venture Agreements................................................................49
Section 7.16. No Transfers to Affiliates..............................................................50
ARTICLE VIII - DEFAULT AND REMEDIES............................................................................50
Section 8.01. Events of Default.......................................................................50
Section 8.02. Set-Off in Event of Default.............................................................53
ARTICLE IX - MISCELLANEOUS.....................................................................................53
Section 9.01. Amendments..............................................................................53
Section 9.02. Notices.................................................................................53
Section 9.03. Costs, Expenses and Taxes...............................................................55
Section 9.04. Binding Effect; Successors and Assigns..................................................55
Section 9.05. Independence of Covenants...............................................................55
Section 9.06. Survival of Representations and Warranties..............................................55
Section 9.07. Separability............................................................................55
Section 9.08. No Waiver; Remedies.....................................................................56
Section 9.09. Counterparts............................................................................56
Section 9.10. Governing Law...........................................................................56
Section 9.11. Limitation on Interest..................................................................56
Section 9.12. Indemnification.........................................................................57
Section 9.13. Notice and Defense of Claims............................................................59
Section 9.14. Limitation by Law.......................................................................61
Section 9.15. Interpretation..........................................................................61
Section 9.16. Waiver of Texas Deceptive Trade Practices Act...........................................62
Section 9.17. Releases................................................................................62
Section 9.18. Final Agreement of the Parties..........................................................63
</TABLE>
-iii-
EXHIBITS AND SCHEDULES:
Exhibit 1.01-A Borrowing Base Certificate
Exhibit 1.01-B Outstanding Letters of Credit and Acceptances
Exhibit 1.01-C Consent
Exhibit 2.02-A Note A
Exhibit 2.03 Letter of Credit Request
Exhibit 5.06 Litigation
Exhibit 5.07 Indebtedness
Exhibit 5.15 Corporations and Joint Ventures
Exhibit 5.18 Collective Bargaining Agreements
Exhibit 7.01(b) Liens
Exhibit 7.09 Investments
-iv-
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT")
dated effective as of February 28, 1996, is entered into by and among JOINT
VENTURE OPERATIONS, INC., a Delaware corporation (formerly known as Proler
International Corp.) ("OPERATIONS") and PROLER INTERNATIONAL CORP., a Delaware
corporation ("INTERNATIONAL", each individually, a "BORROWER" and collectively,
the "BORROWERS"), PROLER STEEL, INC., a Delaware corporation, PROLER INDUSTRIES,
INC., Inc., a Delaware corporation, PROLERIDE TRANSPORT SYSTEMS, INC., a
Delaware corporation, PROLER ENVIRONMENTAL SERVICES, INC., a Delaware
corporation, and PROLER RECYCLING, INC., a Delaware corporation, PROLER
PROPERTIES, INC., a Texas corporation (collectively, together with each of
Operations and International acting in its capacity as a guarantor hereunder,
the "GUARANTORS" and together with the Borrowers collectively, the "CREDIT
PARTIES"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association (the "BANK").
PRELIMINARY STATEMENT
Joint Venture Operations, Inc., then known as Proler
International Corp., as the borrower, and certain of its subsidiaries, as
guarantors, entered into that certain Credit Agreement dated effective as of
December 11, 1995 (as same may have been amended or modified from time to time,
the "PRIOR CREDIT AGREEMENT"), which Prior Credit Agreement provided for the
Bank to make available to the borrower a line of credit up to $5,000,000.00 and
to issue letters of credit for the account of Joint Venture Operations, Inc.,
then known as Proler International Corp., up to $6,500,000.00.
Subsequent to the execution of the Prior Credit Agreement, the
entity that executed said document as Proler International Corp., effective as
of this date, has been the surviving party to a merger and has changed its name
to Joint Venture Operations, Inc., a Delaware corporation. In addition, a new
entity, Proler International Corp., a Delaware corporation, has been formed. The
new entity, Proler International Corp., owns all of the issued and outstanding
shares of two newly formed corporations, Proler Steel, Inc., a Delaware
corporation, and Proler Industries, Inc., a Delaware corporation. Proler Steel,
Inc. owns all of the issued and outstanding shares of Joint Venture Operations,
Inc., a Borrower and a Guarantor under this Agreement. Joint Venture Operations,
Inc. owns all of the issued and outstanding shares of Proleride Transport
Systems, Inc., a Delaware corporation and a Guarantor hereunder. Proler
Industries, Inc., owns all of the issued and outstanding shares of all of the
remaining Guarantors (except Proler International Corp. and Joint Venture
Operations, Inc.).
Requirements of the borrower under the Prior Credit Agreement
were, among others: (i) the pledge of all of the shares of certain subsidiaries
owned by the borrower thereunder as collateral for the obligations thereunder
and (ii) that various of the substantial subsidiaries of the
-1-
borrower thereunder execute said agreement as guarantors. Because of the
reorganization of the borrower under said agreement, such obligations will no
longer be fulfilled.
Therefore, the parties wish to amend and restate the Prior
Credit Agreement in its entirety to carry out the intent of said document
following the corporate restructuring of the borrower thereunder. Proler
International Corp. and Joint Venture Operations, Inc. have both indicated that
each wishes to be a Borrower hereunder on the terms set forth herein. In
consideration of the foregoing and the mutual covenants and premises herein
contained, Proler International Corp. and Joint Venture Operations, Inc., each
individually as a Borrower and also as a Guarantor), the Guarantors and the Bank
do hereby agree as follows:
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants set forth herein, the Borrowers, the Guarantors and the Bank
hereby agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND MISCELLANEOUS
Section 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings:
"AFFILIATE" means, when used with respect to any Person, any
other Person which controls or is controlled by or is under common
control with such Person. As used in this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person (whether
through ownership of securities or partnership or ownership interests
or otherwise).
"AGREEMENT" means this Amended and Restated Credit Agreement,
as the same may from time to time be amended, supplemented, modified or
restated.
"APPLICATION" means an application, in such form as the Bank
may specify from time to time, requesting the Bank to open a Letter of
Credit.
"APPRAISAL" means, collectively, an appraisal of each of the
Mortgaged Properties in form and substance satisfactory to the Bank.
"ASSURANCE" means, as to any Person, all obligations,
contingent or otherwise, of such Person guaranteeing or in effect
guaranteeing in any manner, whether directly or indirectly, any
Indebtedness of any other Person (the "primary obligor") including,
without limitation, obligations of such Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or supply
funds for the purchase of) any direct or indirect security therefor,
(b) to purchase property, securities or services for the purpose of
assuring the owner of such
-2-
Indebtedness of the payment of such Indebtedness, (c) to maintain
working capital, equity capital or other financial statement condition
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or otherwise to protect the owner thereof against loss in
respect thereof; PROVIDED that such obligations are entered into by
such Person directly with the primary obligee or (d) entered into for
the purpose of assuring in any manner the owner of such Indebtedness of
the payment of such Indebtedness or to protect such owner against loss
in respect thereof; PROVIDED that the term Assurance shall not include
endorsements for collection or deposit, in either case in the ordinary
course of business.
"AUTHORIZED OFFICER" means the Chief Executive Officer, Chief
Financial Officer, Controller, Chief Operating Officer or Treasurer of
the respective Credit Party or such other officer approved by the Bank
for the task indicated.
"BANK" is defined in the introduction to this Agreement.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States.
"BOARD OF DIRECTORS" means as to any Credit Party the Board of
Directors of such Credit Party.
"BORROWER" is defined in the introduction to this Agreement.
"BORROWING BASE" means, at any date of determination an amount
equal to 60% of the sum of (i) the market value, as set forth in the
Appraisals, of all of the Mortgaged Properties, plus (ii) the
outstanding principal amount of that certain promissory note dated July
26, 1995 made by Harridan Limited Partnership payable to Proler
International Corp. in the original principal amount of $4,200,000;
PLUS (iii) if such Borrowing Base for issuance of Letters of Credit is
fully utilized, an amount equal to the sum of (x) (a) 50% of the Market
Value of all Eligible Proler Inventory or Eligible Joint Venture
Inventory consisting of Processed Scrap, PLUS (b) $25.00 per Gross Ton
of all other Eligible Proler Inventory or Eligible Joint Venture
Inventory, PLUS (c) 50% of the Eligible Joint Venture Receivables, PLUS
80% of the Eligible Proler Receivables; PROVIDED, that the Borrowing
Base calculation shall be reduced by an additional 33% in respect of
any assets of any Joint Venture which becomes a Joint Venture in
accordance with the definition thereof after the Effective Date and the
Joint Venture Agreement with respect to which requires the consent of
the venture partner for the collateral assignment of the right to
receive distributions from the Joint Venture, unless and until a fully
executed original of a consent by the venture partner of the relevant
Joint Venture substantially in the form of EXHIBIT 1.01(C) hereto is
delivered to the Bank (the "CONSENT") and an appropriate amendment to
this Agreement, the Security Agreement, the UCC-1 financing statements
and such other documents as the Bank may reasonably request, granting
to the Bank a lien and security interest, consistent with the relevant
Consent, in the right to distributions of cash and profits by said
Joint Venture of the
-3-
appropriate Credit Party is delivered to the Bank, MINUS (y) the
principal amount of Indebtedness outstanding under the Revolving Credit
Facility.
"BORROWING BASE CERTIFICATE" means a certificate in the form
of EXHIBIT 1.01-A hereto, duly completed and executed by an Authorized
Officer and accompanied by an accounts receivable aging schedule and a
description by type and amount of the inventory included in the
Borrowing Base, in each case in form and substance satisfactory to the
Bank.
"BORROWING BASE DEFICIENCY" means, at any time, the amount, if
any, by which (i) the sum of the undrawn amount of all outstanding
Letters of Credit and Existing Letters of Credit exceeds (ii) the
Borrowing Base.
"BORROWING DATE" means, when used with respect to any Letter
of Credit, the date upon which any Letter of Credit is issued.
"BORROWING REQUEST" is defined in SECTION 2.03.
"BUSINESS DAY" means a day of the year on which national
banking associations are not authorized or required to close in
Houston, Texas.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) in respect of which such
Person's obligations as lessee under such lease or rental agreement
constitute obligations which shall have been or should be, in
accordance with GAAP, capitalized on the balance sheet of such Person.
"CLAIM" is defined in SECTION 9.17.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"COMMERCIAL LETTER OF CREDIT" is defined in SECTION 2.03(a).
"COMMITMENT" means, subject to the limitations of the
Borrowing Base in respect of Letters of Credit, an amount equal to
$6,500,000.
"COMMONLY CONTROLLED ENTITY" means, with respect to any
Person, any Person which is a member of a controlled group of
corporations and trades or businesses (whether or not incorporated) (as
such term is used in ss. 414(b) or ss. 414(c) of the Code) of which
such Person is also a member.
"COMMUNICATIONS" is defined in SECTION 9.02.
-4-
"CONSENT" is defined in the definition of Borrowing Base.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or
capitalized under Capital Leases but excluding any amount representing
capitalized interest) by International and its Subsidiaries during such
period that are required to be included in property, plant or equipment
reflected in the consolidated balance sheet of International and its
Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, at any time, the current
assets of International and its Subsidiaries determined on a
consolidated basis.
"CONSOLIDATED CURRENT LIABILITIES" means, at any time, the
current liabilities of International and its Subsidiaries determined on
a consolidated basis.
"CONSOLIDATED NET INCOME" means, for any period, the
consolidated net income (or loss) of International and its Subsidiaries
for such period taken as a single accounting period computed in
accordance with GAAP.
"CONSOLIDATED NET WORTH" means, at any date of determination
thereof, the consolidated net worth of International and its
Subsidiaries on the Effective Date computed in accordance with GAAP
plus cumulative Consolidated Net Income for the period (taken as one
accounting period) from the Effective Date to such date.
"CREDIT PARTIES" is defined in the introduction to this
Agreement.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States and all other applicable state or federal dissolution,
liquidation, conservatorship, bankruptcy, moratorium, readjustment of
debt, compromise, rearrangement, receivership, insolvency,
reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally.
"DEEDS OF TRUST" means those certain Deeds of Trust covering
the Mortgaged Properties executed by the appropriate Credit Parties
dated as of August 31, 1992 as amended and modified from time to time.
"DEFAULT" means an event which with the giving of notice or
the lapse of time or both could, unless cured or waived, become an
Event of Default.
"DEFAULT RATE" is defined in SECTION 2.04.
-5-
"EBITDA" means, for any period, the Consolidated Net Income
for such period, before non-cash asset writedowns or impairment losses
not to exceed $10,000,000 in the aggregate during the term hereof,
interest income, interest expense, depreciation, amortization and
provision for taxes and without giving effect to any extraordinary
gains or gains from sales of assets (other than sales of inventory in
the ordinary course of business).
"EFFECTIVE DATE" means the time and Business Day on which the
conditions set forth in ARTICLE IV are satisfied or waived pursuant to
SECTION 9.01.
"ELIGIBLE INVENTORY" means, with respect to any Person at the
time any determination thereof is to be made, Inventory of such Person
consisting of Processed Scrap or Unprocessed Scrap which meets each of
the following criteria at such time:
(a) such Person shall have good title to such Inventory;
(b) the Bank shall have been granted a perfected first
priority security interest in such Inventory except for Eligible Joint
Venture Inventory, it being agreed that the Bank shall not have a
security interest therein; and
(c) such Inventory shall be within the United States or the
Virgin Islands.
"ELIGIBLE JOINT VENTURE INVENTORY" means, as to each Joint
Venture, the Eligible Inventory of such Joint Venture MULTIPLIED BY the
aggregate percentage that all Credit Parties own in the equity or, if
different, the right to the profits of such Joint Venture pursuant to
the applicable Joint Venture Agreement; PROVIDED, that the total of all
items making up a part of the Borrowing Base that consist either of
Eligible Joint Venture Inventory or Eligible Joint Venture Receivables
shall not exceed, for any Joint Venture, the maximum amount allowed to
be distributed to the Bank in any Consent executed in respect of such
Joint Venture.
"ELIGIBLE JOINT VENTURE RECEIVABLES" means, as to each Joint
Venture, the Eligible Receivables of such Joint Venture MULTIPLIED BY
the aggregate percentage that all Credit Parties own in the equity or,
if different, the right to the profits of such Joint Venture pursuant
to the applicable Joint Venture Agreement; PROVIDED, that the total of
all items making up a part of the Borrowing Base that consist either of
Eligible Joint Venture Inventory or Eligible Joint Venture Receivables
shall not exceed, for any Joint Venture, the maximum amount allowed to
be distributed to the Bank in any Consent executed in respect of such
Joint Venture.
"ELIGIBLE PROLER INVENTORY" means all of the Eligible
Inventory of International and its Subsidiaries, excluding any Joint
Venture.
-6-
"ELIGIBLE PROLER RECEIVABLES" means all of the Eligible
Receivables of International and its Subsidiaries, excluding any Joint
Venture.
"ELIGIBLE RECEIVABLE" means, with respect to any Person at the
time any determination thereof is to be made, a Receivable of such
Person which complies with each of the following criteria at such time:
(a) which remains unpaid less than 60 days from the date of
invoice thereof, it being agreed that funds due from account debtors
and collected by Hugo Neu Corporation are not deemed paid until funds
are received from Hugo Neu Corporation;
(b) which is due from an account debtor whose principal place
of business is located within the United States or the Virgin Islands
unless (i) such Receivable is backed 100% by a letter of credit issued
or confirmed by a bank having a long term debt rating of at least BBB
or better by Standard & Poor's Ratings Group or Baa or better by
Moody's Investors Services or (ii) such account debtor has previously
been approved in a writing (which approval has not been withdrawn) by
the Bank as an eligible foreign account debtor for purposes of this
Agreement;
(c) which is not due from a Subsidiary or an Affiliate of such
Person;
(d) which is payable in U. S. Dollars;
(e) which is not due from an account debtor who is insolvent
or is the subject of any proceeding under any Debtor Relief Laws;
(f) as to which the Bank has a perfected first priority
security interest except for Eligible Joint Venture Receivables, it
being agreed that the Bank shall not have a security interest therein;
and
(g) as to which Receivable the account debtor shall have not
asserted a default on the part of such Person or otherwise indicated a
dispute or refusal to make payments on such Receivable.
"ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations (other
than internal reports prepared by International or any of its
Subsidiaries solely in the ordinary course of such Person's business
and not in response to any third party action or request of any kind)
or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter,
-7-
"applicable claims"), including (a) any and all applicable claims by
governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all applicable claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"ENVIRONMENTAL LAWS" means any and all laws, statutes, rules,
ordinances, codes, licenses, permits, regulations, orders, approvals
authorizations, judgments, decisions or determinations of any
governmental authority pertaining to health or the environment in
effect in any and all jurisdictions in which the property of
International or any of its Subsidiaries is located, including, the
Clean Air Act, 42 U.S.C. ss.ss. 7401-7626, the Comprehensive
Environmental, Response, Compensation, and Liability Act, 42 U.S.C.
ss.ss. 9601-9675, the Hazardous Materials Transportation Act, 49 U.S.C.
ss.ss. 1801-1813 the Occupational Safety and Health Act, 29 U.S.C.
ss.ss. 651-678, the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss. 6901-6992, the Safe Drinking Water Act, 42 U.S.C. ss.ss. 300f-
300j, the Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601-2671, the
Superfund Amendment and Reauthorization Act of 1986 and other
environmental conservation and environmental protection laws, as any of
the same may be amended from time to time.
"ENVIRONMENTAL REPORTS" means, collectively, a Phase I
environmental audit and report of each of the Mortgaged Properties in
form and substance satisfactory to the Bank.
"ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended from time to time.
"EVENTS OF DEFAULT" is defined in SECTION 8.01.
"EXECUTION DATE" means the date of execution of this Agreement
by all of the parties hereto.
"EXISTING LETTERS OF CREDIT" means the letters of credit in
the total maximum amount of $6,166,635.00 heretofore issued by the Bank
and listed on EXHIBIT 1.01B hereto.
"EXISTING L/C OBLIGATIONS" means, at any time, an amount equal
to the sum at such time of (a) the aggregate undrawn amount of the
Existing Letters of Credit PLUS (b) the aggregate amount of drawings
under Existing Letters of Credit which have not then been reimbursed
pursuant to SECTION 2.03.
"EXTENDED TERMINATION DATE" is defined in the term
"Termination Date."
-8-
"GAAP" means Generally Accepted Accounting Principles,
consistently applied.
"GOVERNMENT SECURITIES" means readily marketable direct full
faith and credit obligations of the United States or obligations
unconditionally guaranteed by the full faith and credit of the United
States.
"GROSS TON" means a unit of weight equal to 2,240 pounds.
"GUARANTEED OBLIGATIONS" is defined in SECTION 3.01.
"GUARANTORS" is defined in the introduction to this Agreement.
"GUARANTY" means the guaranty contained in ARTICLE III.
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain or contained electric fluid containing
polychlorinated biphenyls, and radon gas, (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law and (c) any
other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
"HIGHEST LAWFUL RATE" means, at any date, the maximum
nonusurious interest rate that may under applicable law then be
contracted for, charged, received, taken or reserved by the Bank in
connection with the Obligations.
"INDEBTEDNESS" of any Person means, without duplication: (a)
any obligation of such Person for borrowed money, including: (i) any
obligation of such Person evidenced by bonds, debentures, notes or
other similar debt instruments, (ii) any obligation of such Person in
respect of letters of credit and (iii) any obligation for borrowed
money which is non-recourse to the credit of such Person to the extent
that it is secured by any asset of such Person, (b) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (c) any obligation of
such Person for the deferred purchase price of any property or
services, except accounts payable arising in the ordinary course of
such Person's business that have been outstanding less than ninety (90)
days since the date of the related invoice or, if longer, which are, in
good faith, being disputed by the obligor, and for which appropriate
reserves have been set aside, (d) the
-9-
present value at ten percent (10%) per annum of all Capital Leases of
such Person, (e) Assurances of such Person, (f) any Indebtedness of
another Person to the extent secured by a Lien on any asset of such
first Person, whether or not such Indebtedness is assumed by such first
Person and (g) any Indirect Indebtedness of such Person.
"INDEMNIFIED PERSONS" is defined in SECTION 9.12.
"INDIRECT INDEBTEDNESS" of a Person means (a) the Indebtedness
of a partnership in which such Person is a general partner and (b) the
amount of any liability of such Person created by the Indebtedness of a
joint venture in which such Person is a joint venturer.
"INVENTORY" means, with respect to any Person as of the date
of any determination thereof, all "inventory" (as defined in the
Uniform Commercial Code in effect in any jurisdiction) in which such
Person may now or hereafter have an interest wherever located, and
shall also mean and include all goods, merchandise, raw materials and
other materials and supplies, work in process, finished goods and any
products made or processed therefrom and all substances, if any,
commingled therewith or added thereto, and other tangible personal
property presently existing or hereafter acquired by such Person and
held for sale or lease or furnished or to be furnished under contracts
for services or used or consumed in the business of such Person.
"INVESTMENT" means any investment so classified under GAAP
made by stock purchase, capital contribution, loan or advance or by
purchase of property or otherwise.
"JOINT VENTURE AGREEMENTS" is defined in SECTION 5.15(b).
"JOINT VENTURES" means the joint ventures and corporations in
existence on the date hereof and set forth on EXHIBIT 5.15 hereof and
each other joint venture or other similar business entity in which the
Borrower or any of its wholly-owned Subsidiaries becomes a participant
from and after the Effective Date, in each case, for so long as any
such joint venture, corporation or other business entity shall remain
in existence and International or any of its Subsidiaries has an
interest therein.
"L/C FEES" means the fees described in SECTION 2.05.
"L/C OBLIGATIONS" means, at any time, an amount equal to the
sum at such time of (a) the aggregate undrawn amount of the Existing
Letters of Credit or Letters of Credit then outstanding PLUS (b) the
aggregate amount of drawings under Existing Letters of Credit or
Letters of Credit which have not then been reimbursed pursuant to
SECTION 2.03(c).
-10-
"LETTER OF CREDIT REQUEST" is defined in SECTION 2.03(b).
"LETTERS OF CREDIT" is defined in SECTION 2.01(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, affirmative or negative, 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 conditional sale agreement, Capital Lease or
other title retention agreement.
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Applications, the Security Documents and all other agreements,
instruments and documents, including security agreements, notes,
warrants, guaranties, mortgages, deeds of trust, subordination
agreements, pledges, powers of attorney, consents, assignments,
collateral assignments, letter agreements, contracts, notices, leases,
amendments, financing statements, letter of credit applications and
reimbursement agreements and all other writings heretofore, now or
hereafter executed by or on behalf of any Credit Party, any of their
respective Affiliates or any other Person in connection with or
relating to this Agreement, the Letters of Credit and the Existing
Letters of Credit.
"MARKET VALUE" means, at the time of determination, the weekly
shredded scrap price composite and the weekly steel scrap price
composite published in the most recent daily American Metal Market
publication available.
"MASTER RATIFICATION AGREEMENT" means that one certain Master
Ratification, Security and Pledge Agreement-New Credit Agreement
executed by the Company and the Guarantors in connection with the Prior
Credit Agreement dated as of December 11, 1995 granting to, and
ratifying certain liens in favor of the Bank as collateral for the
Obligations of said Prior Credit Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect
upon the business, operations, properties, assets, business prospects
or financial condition of the Credit Parties, taken as a whole, or (b)
the material impairment of the ability of the Credit Parties, taken as
a whole, to perform timely their Obligations under the Loan Documents
to which they are a party.
"MORTGAGED PROPERTIES" means the real properties described in
the Deeds of Trust which are still owned by any of the Credit Parties.
"MORTGAGEE POLICIES" is defined in SECTION 4.01(h).
-11-
"NEW PLEDGE AGREEMENT" means that certain Pledge Agreement
(Amended and Restated Credit Agreement) of even date herewith executed
by the Credit Parties therein named, pledging and granting to the Bank
a lien and security interest in and to the shares in certain
subsidiaries of said Credit Parties as therein described.
"NEW SECURITY AGREEMENT" means that certain Security Agreement
(Amended and Restated Credit Agreement) of even date herewith executed
by each of the Credit Parties in favor of the Bank granting to the Bank
a lien and security interest in and to substantially all of the assets
of each of the Credit Parties as therein described.
"NOTE A" is defined in SECTION 2.02(a).
"NOTE B" means that certain Revolving Credit Note dated August
31, 1992 in the original principal amount of $10,000,000, executed by
Operations and made payable to the order of the Bank, as amended by the
Note and Deed of Trust Modification Agreement, together with all other
modifications, extensions, renewals and rearrangements thereof.
"NOTE AND DEED OF TRUST MODIFICATION AGREEMENT" means that
certain Promissory Note and Deed of Trust Modification and Extension
Agreement dated of even date herewith, executed in connection herewith
by the appropriate Credit Parties and in form and substance
satisfactory to the Bank extending and modifying Note B.
"NOTES" and "NOTE" mean, collectively, (a) Note A, and (b)
Note B and individually any of the Notes referred to in (a) and (b)
above.
"NOTICE OF CONVERSION" is defined in SECTION 2.04.
"OBLIGATIONS" means all present and future obligations of
every kind or nature of any Credit Party at any time and from time to
time owed to the Bank under the Loan Documents (including the L/C
Obligations and the Existing L/C Obligations), whether due or to become
due, matured or unmatured, liquidated or unliquidated, or contingent or
non-contingent, including obligations of performance as well as
obligations of payment, and including, to the extent permitted by
applicable Debtor Relief Laws, interest that accrues after the
commencement of any proceeding under any Debtor Relief Law by or
against any Credit Party.
"PATENT SECURITY AGREEMENT" means that certain Patent Security
Agreement dated as of August 31, 1992 by and between Proler
Environmental Services, Inc. and the Bank.
-12-
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERFECTION CERTIFICATE" is defined in the Security Agreement.
"PERMITTED INVESTMENTS" means, when used in connection with
any Person, the Person's Investments in:
(a) Government Securities due within one year of the making of
the Investment;
(b) readily marketable direct obligations of any state of the
United States or any political subdivision of any such state given on
the date of such investment a credit rating of at least Aa by Moody's
Investors Service or AA by Standard & Poor's Ratings Group, in each
case, due within one year from the making of the Investment;
(c) certificates of deposit issued by or money market deposits
with the Bank or with any other bank or trust company organized under
the laws of the United States or any state thereof or Canada and having
combined capital, surplus and undivided profits of not less than
$500,000,000 (as of the date of its most recent financial statements);
(d) commercial paper rated at least P-1 or A-1 by Moody's
Investors Service or Standard & Poor's Ratings Group, respectively; or
(e) mutual funds regularly traded within the United States
whose investments are limited to those described in (a) through (d),
above.
"PERMITTED LIENS" means (a) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the
Mortgagee Policies in respect thereof and found acceptable by the Bank
in its sole discretion, (b) as to any particular Mortgaged Property at
any time, such easements, encroachments, covenants, rights of way,
minor defects, irregularities or encumbrances on title which are not
unusual with respect to property similar in character to such Mortgaged
Property and which do not, in the reasonable opinion of the Bank,
materially impair such Mortgaged Property for the purpose for which it
is held by the mortgagor thereof, or the Lien held by the Bank, (c)
municipal and zoning ordinances, which are not violated by the existing
improvements and the present use made by the mortgagor thereof of the
Premises (as defined in the respective Deeds of Trust), (d) general
real estate taxes and assessments not yet delinquent, (e) Liens
permitted under SECTION 7.01 except for subparagraph (f) thereof and to
the extent and only for the period affecting the respective Mortgaged
Property or assets and (f) such other items as the Bank may consent to.
-13-
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
"PLAN" means any employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.
"PRIME RATE" means, as of any particular date, the prime rate
per annum most recently determined by the Bank as its prime rate of
interest per annum and thereafter entered in the minutes of the Bank's
loan and discount committee automatically fluctuating upward or
downward, as the case may be, on the day of each determination without
special notice to the Borrowers or any other Person. The Borrowers
acknowledge that the Prime Rate may not be the Bank's best or lowest
rate, or favored rate, and any statement, representation or warranty in
that regard or to that effect is hereby expressly disclaimed by the
Bank.
"PROCESSED SCRAP" means scrap metal which has been prepared,
sheared, cleaned and/or separated into its ferrous and non-ferrous
components and is available for sale in its present condition.
"RECEIVABLE" means, as to any Person as at any date of
determination thereof, the unpaid principal portion of the obligation
of any customer of such Person to pay to such Person in respect of any
services performed by such Person or Inventory purchased from and
shipped or caused to be shipped by such Person, net of any credits,
rebates or offsets owed to such customer by such Person. For purposes
hereof, a credit or rebate paid by check or draft of such Person shall
be deemed to be outstanding until such check or draft shall have been
debited to the respective account of such Person on which such check or
draft was drafted or drawn.
"REGULATION D" means Regulation D of the Board (respecting
reserve requirements), as the same is from time to time in effect, and
all official rulings and interpretations thereunder or thereof.
"REGULATION G" means Regulation G of the Board (respecting
margin credit extended by Persons other than banks, brokers and
dealers), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
-14-
"REGULATION U" means Regulation U of the Board (respecting
margin credit extended by banks), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" means Regulation X of the Board (respecting the
borrowers who obtain margin credit) as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"RESTRICTED PAYMENT" means, with respect to any Person:
(a) the declaration of any dividend on, or the incurrence of
any liability to make any other payment or distribution in respect of,
any shares of such Person (other than one payable solely in its
shares); or
(b) (i) any payment or distribution on account of the
purchase, redemption or other retirement of any shares of such Person,
or of any warrant, option or other right to acquire such shares, or any
other payment or distribution (other than pursuant to a dividend
theretofore declared or liability theretofore incurred as specified in
subsection (a)), made in respect thereof, either directly or
indirectly, or (ii) the purchase, redemption or other retirement of
shares of such Person in exchange for, or out of the net cash proceeds
received by such Person from a substantially concurrent sale of, other
shares of such Person.
"REVOLVING CREDIT FACILITY" means that certain Fourth Amended
and Restated Credit Agreement dated this date among the Borrowers, the
Guarantors and the Bank.
"SECURITY DOCUMENTS" means the Patent Security Agreement, the
Deeds of Trust, the Master Ratification Agreement, the New Pledge
Agreement, the New Security Agreement and the Note and Deed of Trust
Modification Agreement.
"STANDBY LETTER OF CREDIT" is defined in SECTION 2.03(a).
"SUBSIDIARY" of any Person means and includes (a) any
corporation or limited liability company more than 50% of whose stock
is at the time owned by such Person directly or indirectly through its
Subsidiaries and (b) any partnership, association or other entity in
which such Person, directly or indirectly through Subsidiaries, has
more than a 50% equity interest at the time, but specifically excluding
any Joint Ventures.
-15-
"TERMINATION DATE" means June 30, 1997 or the earlier
termination in whole of the Commitment of the Bank or its obligation to
issue Letters of Credit pursuant to SECTION 2.06 or SECTION 8.01;
PROVIDED, HOWEVER, if on June 30, 1997 any Existing Letter of Credit or
Letter of Credit outstanding on such date contains an expiration date
later than such date, the Termination Date shall be extended to the
latest expiration date of any such Letter of Credit but not later than
December 31, 1997 (such date being the "EXTENDED TERMINATION DATE")
solely for the purpose of funding drawings under SECTION 2.20(c)
hereof, paid by the Banks pursuant to any such Existing Letter of
Credit or Letter of Credit.
"UNIFORM CUSTOMS" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised from time to time.
"UNITED STATES" and "U.S." each means the United States of
America.
"UNPROCESSED SCRAP" means scrap metal which has been purchased
but has not been processed for sale in its present condition.
Section 1.02. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in SECTION 5.05. The books and records of International shall be
kept, and all financial data submitted pursuant to this Agreement shall be
prepared, in accordance with GAAP.
ARTICLE II
COMMITMENT AND TERMS OF CREDIT
Section 2.01. THE COMMITMENT. The Bank agrees, on the terms
and conditions and relying upon the representations herein set forth, to issue
additional standby or commercial letters of credit for the account of
International Operations (the "LETTERS OF CREDIT") from time to time on any one
or more Business Days during the period from the Effective Date up to the
Termination Date; PROVIDED, HOWEVER, no Letter of Credit shall be issued after
the Termination Date and all Letters of Credit shall expire on or prior to the
Extended Termination Date. Notwithstanding any other term or provision hereof,
no Letter of Credit shall be issued if after giving effect to the issuance of
such Letter of Credit the aggregate amount of all L/C Obligations would exceed
the lesser of (1) the Borrowing Base and (2) the Commitment. Pursuant to SECTION
2.03(c), fundings of any Letter of Credit by the Bank shall be reimbursed
immediately by International.
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(b) The Existing Letters of Credit and any renewals or
extensions thereof during the term hereof shall be deemed to be issued under
this Agreement and shall be a part of the Commitment. Pursuant to SECTION
2.03(c), fundings of any Existing Letter of Credit by the Bank shall be
reimbursed immediately by Operations.
(c) The expiration date of an Existing Letter of Credit shall
not be extended beyond the Extended Termination Date.
Section 2.02. THE NOTES. (a) The Obligations of International
with respect to any Letter of Credit issued for its account, if any, shall be
evidenced by a single Note dated of even date herewith (said Note, together with
all modifications, extensions, renewals and rearrangements thereof "NOTE A") of
International payable to the order of the Bank in the principal amount of the
Commitment, substantially in the form of EXHIBIT 2.02-A; PROVIDED that,
notwithstanding anything herein contained, International shall not be liable as
a maker for any amounts drawn under any Existing Letter of Credit or Letter of
Credit issued for the account of Operations or paid in respect of any such
Existing Letter of Credit or Letter of Credit, including any indebtedness
evidenced by Note B, or for any amounts that would constitute interest under
applicable law thereon, or any other amounts owing in connection therewith, but
shall be liable for any and all such amounts as a Guarantor. Any sums
outstanding under Note A shall be payable on demand.
(b) The Obligations of Operations with respect to the Existing
Letters of Credit or any Letter of Credit issued for its account, if any, shall
be evidenced by Note B; PROVIDED, that, notwithstanding anything herein
contained, Operations shall not be liable as a maker for any amounts drawn under
any Letter of Credit issued for the account of International or paid in respect
of any such Letter of Credit, including any indebtedness evidenced by Note A, or
for any amounts that would constitute interest under applicable law thereon, or
any other amounts owing in connection therewith, but shall be liable for any and
all such amounts as a Guarantor. Any sums outstanding under Note B shall be
payable on demand. It is agreed that no sums are outstanding under Note B as of
the date hereof.
Section 2.03. LETTERS OF CREDIT AND EXISTING LETTERS OF
CREDIT. (a)(i) Subject to the terms and conditions hereof, the Bank agrees to
issue Letters of Credit for the account of either Borrower on any Business Day
from the Effective Date to the Termination Date in such form as may be approved
from time to time by the Bank; PROVIDED that the Bank shall have no obligation
to issue any Letter of Credit if, after giving effect to such issuance, the L/C
Obligations would exceed the Commitment. Each Letter of Credit shall (A) be
denominated in U. S. Dollars and shall be either (1) a standby letter of credit
issued to support obligations of the Borrower or one or more of its
Subsidiaries, contingent or otherwise (a "STANDBY LETTER OF CREDIT") or (2) a
documentary letter of credit in respect of the purchase of goods or services by
the Borrower or one or more of its
-17-
Subsidiaries in the ordinary course of business (a "COMMERCIAL LETTER OF
CREDIT") and (B) expire no later than the Extended Termination Date.
(ii) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the
State of Texas.
(iii) The Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or
cause the Bank to exceed any limits imposed by, any applicable law or
regulation.
(b) (i) Either Borrower may from time to time request that the
Bank issue a Letter of Credit by delivering to the Bank at its address for
notices specified herein a request (a "LETTER OF CREDIT REQUEST") in the form
set forth as EXHIBIT 2.03 hereof and an Application therefor, completed to the
satisfaction of the Bank, and such other certificates, documents and other
papers and information as the Bank may reasonably request. The Bank shall not be
required to issue any Letter of Credit earlier than three (3) Business Days
after its receipt of the Letter of Credit Request and related Application
therefor and all such other certificates, documents and other papers and
information relating thereto. Upon receipt of any Letter of Credit Request and
related Application from either Borrower, the Bank will process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and, upon
satisfaction of the applicable terms and conditions set forth in ARTICLE IV,
shall promptly issue the original of the Letter of Credit requested to the
beneficiary thereof or as otherwise may be agreed by the Bank and such Borrower.
The Bank shall furnish a copy of each Letter of Credit issued hereunder to each
Borrower promptly following the issuance thereof.
(ii) In respect of any Letters of Credit or Existing Letters
of Credit, if any, outstanding on the Termination Date, assuming no
Default or Event of Default has occurred, the Borrower for the account
of which any of such Letters of Credit or Existing Letters of Credit
were issued may, at its option, provide to the Bank collateral in the
form of cash or a certificate of deposit issued by the Bank in the
amount of such Letters of Credit or Existing Letters of Credit and any
expenses reasonably anticipated by the Bank in connection therewith,
whereupon, when all such Letters of Credit or Existing Letters of
Credit are so secured, the Bank shall release its Liens on all other
collateral hereunder or under any of the Loan Documents. In no event
shall any Letters of Credit or Existing Letters of Credit be
outstanding beyond the Extended Termination Date. Each Borrower shall
remain liable in respect of the Letters of Credit or Existing Letters
of Credit issued for its account on terms consistent with the terms
hereof, but for all other purposes of this Agreement and the other Loan
Documents the Obligations will be deemed paid in full and not
outstanding and the Commitment shall be deemed terminated.
-18-
(c) Each Borrower agrees to reimburse the Bank on each date on
which the Bank notifies such Borrower of the date and amount of a draft
presented under any Existing Letter of Credit or Letter of Credit issued for its
account and paid by the Bank for the amount of (i) such draft so paid and (ii)
any taxes, fees, charges or other costs or expenses incurred by the Bank in
connection with such payment. Upon the presentment of any draft for honor under
any Existing Letter of Credit or Letter of Credit by the beneficiary thereof
which the Bank determines is in compliance with the condition for payment
thereunder, the Bank shall promptly notify the Borrower for the account of which
such Letter of Credit or Existing Letter of Credit was issued. In the event the
Bank makes any payment pursuant to a draft presented under an Existing Letter of
Credit or a Letter of Credit, the Borrower for the account of which such Letter
of Credit or Existing Letter of Credit was issued shall immediately, upon
demand, pay said amount to the Bank in cash plus any interest due thereon from
the date when due at the Default Rate as provided in SECTION 2.04. Any amounts
owing and unpaid by International shall be obligations of International
evidenced by Note A. Any amounts owing and unpaid by Operations shall be
obligations of Operations evidenced by Note B.
(d) Each Borrower's obligations under this Section shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which either Borrower may have
or have had against the Bank or any beneficiary of an Existing Letter of Credit
or a Letter of Credit. Each Borrower also agrees with the Bank that the Bank
shall not be responsible for, and such Borrower's reimbursement obligations
under SECTION 2.03(C) above shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even
through such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among either Borrower and any beneficiary of any
Existing Letter of Credit or Letter of Credit or any other party to which such
Existing Letter of Credit or Letter of Credit may be transferred or any claims
whatsoever of either Borrower against any beneficiary of such Existing Letter of
Credit or Letter of Credit or any such transferee. The 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
Existing Letter of Credit or Letter of Credit, except for errors or omissions
caused by the Bank's gross negligence or willful misconduct. Each Borrower
agrees that any action taken or omitted by the Bank under or in connection with
any Existing Letter of Credit or Letter of Credit issued for the account of such
Borrower or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Customs and, to the extent not inconsistent therewith,
the Uniform Commercial Code of the State of Texas, shall be binding on such
Borrower and shall not result in any liability of the Bank to such Borrower.
(e) The responsibility of the Bank to a Borrower in connection
with any draft presented for payment under any Existing Letter of Credit or
Letter of Credit shall, in addition to any payment obligation expressly provided
for in such Existing Letter of Credit or Letter of Credit be limited to
determining that the documents (including each draft) delivered under such
Existing Letter
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of Credit or Letter of Credit in connection with such presentment are in
conformity with such Existing Letter of Credit or Letter of Credit.
(f) To the extent that any provision of any Application,
certificate, document or other papers related to any Existing Letter of Credit
or Letter of Credit is inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall control and no such Application, certificate,
document or other paper shall give the Bank or any Borrower any greater rights
than the Bank or such Borrower would otherwise have under this Agreement.
Section 2.04. INTEREST RATE. Any funding of any Letters of
Credit or any Existing Letter of Credit for which the Bank is not reimbursed
immediately by the Borrower owing such principal or interest shall bear interest
from the date on which such amount is due until such amount is paid in full at a
rate per annum equal at all times to the Prime Rate plus four percent (4%) per
annum but in no event to exceed the Highest Lawful Rate (the "DEFAULT RATE") and
shall be payable upon demand.
Section 2.05. FEES. (a) Each Borrower shall pay to the Bank a
letter of credit commission with respect to each Existing Letter of Credit and
Letter of Credit issued for the account of such Borrower payable in advance and
computed for the period from the Effective Date or date of such payment to the
date upon which the next such payment is due hereunder at the rate of one
percent (1%) per annum (which, in the case of Commercial Letters of Credit,
shall be calculated on the basis of one-quarter of one percent (1/4%) for each
90 day period or any part thereof) of the aggregate amount available to be drawn
under such Existing Letter of Credit and Letter of Credit on the date on which
such fee is calculated or the then minimum letter of credit insurance fee
charged by the Bank, whichever is greater; PROVIDED, HOWEVER, with respect to
each Existing Letter of Credit, the amount of such commission payable to the
Bank shall be reduced by the amount of the commissions already paid to the Bank
with respect to such Existing Letter of Credit with respect to any period from
and after the Effective Date. Such commissions shall be payable in advance on
the Effective Date and on the last day of each calendar quarter occurring
thereafter and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, each
Borrower shall pay or reimburse the Bank for such normal and customary costs and
expenses as are incurred or charged by the Bank in issuing, effecting payment
under, amending or otherwise administering any Existing Letter of Credit or any
Letter of Credit issued for the account of such Borrower.
Section 2.06. TERMINATION OF THE COMMITMENT. On the
Termination Date the Commitment shall be zero; PROVIDED, HOWEVER, if any one or
more Existing Letters of Credit or Letters of Credit outstanding on the
Termination Date have a later expiration date, then the Commitment shall reduce
to a level equal to the sum of the undrawn face amount of each of the then
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outstanding Existing Letters of Credit and Letters of Credit (reducing by the
amount of any expiring Existing Letter of Credit or Letter of Credit as it
expires) and shall, in any event, terminate in its entirety on the Extended
Termination Date.
Section 2.07. COMPUTATIONS; PAYMENTS ON NON-BUSINESS DAYS. (a)
All payments by a Borrower of principal and interest hereunder, under its Note
and the other Loan Documents shall be made in U.S. Dollars to the Bank at its
office at 712 Main Street, Houston, Texas in immediately available funds not
later than 12:00 Noon (Houston, Texas time) on the date when due.
(b) Interest on any amount due hereunder or under any Note
shall be computed by the Bank on the actual number of days elapsed over a year
of 365 days. Determination by the Bank of an interest rate hereunder shall be
PRIMA FACIE evidence of its accuracy.
Section 2.08. SET-OFF, COUNTERCLAIMS AND TAXES. All payments
of principal, interest, expenses, reimbursements, compensation and any other
amount from time to time due hereunder, under the Notes or any other Loan
Document shall be made by the Borrowers without set-off or counterclaim and
shall be made free and clear of and without deduction for any present or future
tax, levy, impost or any other charge, if any, of any nature whatsoever now or
hereafter imposed by any taxing authority upon either Borrower. If the making of
such payments by a Borrower is prohibited by law unless such a tax, levy, impost
or other charge is deducted or withheld therefrom, such Borrower shall pay to
the Bank, on the date of each such payment, such additional amounts as may be
necessary in order that the net amounts received by the Bank after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required; PROVIDED, HOWEVER, that all
amounts payable under this Agreement which constitute interest under applicable
law shall not exceed an amount which would result in the payment of interest at
a rate in excess of the Highest Lawful Rate.
Section 2.09. THE BORROWERS UNCONDITIONALLY LIABLE. Subject to
the provisions of SECTIONS 2.02(a) and 9.11, each Borrower shall (to the extent
set forth herein) be unconditionally liable to the Bank for the principal amount
of any and all L/C Obligations with respect to Letters of Credit issued for such
Borrower's account, interest due thereon, the L/C Fees relating thereto and all
other amounts due to the Bank from such Borrower hereunder or under any other
agreement or security document executed in connection herewith, and shall make
prompt and punctual payment when due of such amounts.
Section 2.10. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) It is understood that the cost to the Bank of making or maintaining any
Existing Letter of Credit or Letter of Credit may fluctuate as a result of the
applicability of, or changes in, reserve requirements imposed by the Board. Each
Borrower agrees to pay to the Bank from time to time, as provided in paragraph
(d) below, such amounts as shall be necessary to compensate the Bank,
prospectively from the date of
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demand, for the portion of the cost of making or maintaining any Existing Letter
of Credit or Letter of Credit made to or issued for the account of such Borrower
resulting from any such reserve requirements to the extent set forth in this
Section.
(b) Notwithstanding any other provision herein, if the
introduction of any applicable law or regulation or any change in applicable law
or regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any applicable guideline or request from
any central bank or governmental authority (whether or not having the force of
law) (i) shall change the basis of taxation of payments to the Bank of the
principal of or interest on any Existing L/C Obligations, any L/C Obligations or
any other fees or amounts payable hereunder (other than (x) taxes imposed on the
overall net income of the Bank or its applicable lending office by any
jurisdiction or by any political subdivision or taxing authority therein (or any
tax which is enacted or adopted by any such jurisdiction, political subdivision
or taxing authority as a direct substitute for any such taxes) or (y) any tax,
assessment or other governmental charge that would not have been imposed but for
the failure of the Bank to comply with any certification, information,
documentation or other reporting requirement), (ii) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, the Bank, or
(iii) shall impose on the Bank any other condition affecting this Agreement, and
the result of any of the foregoing shall be to increase the cost to the Bank of
maintaining the Commitment or of issuing or maintaining any Existing Letter of
Credit or Letter of Credit or to reduce the amount of any sum received or
receivable by the Bank hereunder (whether of principal, interest or otherwise)
in respect thereof by an amount deemed in good faith by the Bank to be material,
then each Borrower shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such increase or reduction relating to the
Commitment available to, or any Letter of Credit or Existing Letter of Credit
issued for the account of such Borrower, upon demand by the Bank.
Notwithstanding the foregoing, in no event shall the Bank be permitted to
receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(c) If the Bank shall have determined in good faith that any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 Report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards" or that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration thereof by any central bank or other
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such central
bank or governmental authority, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and that the amount of such capital is increased by or based upon the
existence of the Commitment hereunder and other commitments
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of this type, then the Borrowers shall from time to time pay to the Bank upon
demand additional amounts sufficient to compensate the Bank or such corporation
in the light of such circumstances, to the extent that the Bank reasonably
determines such increase in capital to be allocable to the existence of the
Commitment hereunder.
(d) If while any Existing Letter of Credit or any Letter of
Credit is outstanding, any law, executive order or regulation is enforced,
adopted or interpreted by any central bank or other governmental authority so as
to affect any Borrower's obligations or the compensation to the Bank in respect
of the Existing Letters of Credit or the Letters of Credit or the cost to the
Bank of establishing or maintaining the Existing Letters of Credit or the
Letters of Credit, then the Borrower for the account of which any such Letter of
Credit or Existing Letter of Credit was issued shall from time to time upon
demand, reimburse or indemnify the Bank with respect thereto so that the Bank
shall be in the same position as if there had been no such enforcement, adoption
or interpretation. Notwithstanding the foregoing, in no event shall the Bank be
permitted to receive any compensation hereunder constituting interest in excess
of the Highest Lawful Rate.
(e) The Bank will notify the Borrowers of any event occurring
after the date of this Agreement which will entitle the Bank to compensation
pursuant to this SECTION 2.10. A certificate of the Bank setting forth in
reasonable detail (i) such amount or amounts as shall be necessary to compensate
the Bank as specified in paragraph (a), (b), (c) or (d) above as the case may
be, and (ii) the calculation of such amount or amounts shall be simultaneously
delivered to the Borrower owing such amount or amounts and shall be PRIMA FACIE
evidence of its accuracy. Such Borrower shall pay to the Bank the amount shown
as due on any such certificate within ten (10) days after such Borrower's
receipt of the same. The failure of the Bank to demand increased compensation
with respect to any Interest Period shall not constitute a waiver of the right
to demand compensation thereafter.
Section 2.11. USE OF LETTERS OF CREDIT. International and its
Subsidiaries will use all Letters of Credit issued hereunder for general
business purposes of International and its Subsidiaries PROVIDED, any Letter of
Credit issued in support of any Investment by Proler Environmental Services,
Inc. in any facility shall be considered an Investment subject to the
limitations of SECTION 7.09(g).
Section 2.12. RATIFICATION. Each Credit Party hereby confirms
and ratifies the terms of the Security Documents to which it is a party and the
creation of the Liens thereunder to secure the Obligations of the Borrowers to
the Bank as more fully set forth therein and further agrees and acknowledges (a)
that, except as otherwise set forth in the Note and Deed of Trust Modification
Agreement, the Liens of the Security Documents to which it is a party extend to
and expressly secure the Obligations of the Borrowers under this Agreement, the
Notes and the other Loan Documents and (b) that the Security Documents to which
it is a party and the Liens created thereunder are valid and subsisting and
shall remain enforceable against such Credit Party in accordance with their
terms
-23-
and shall not be reduced or limited or impaired by the execution of this
Agreement and the Notes; PROVIDED, HOWEVER, that nothing herein or in any other
Loan Document has granted, or shall be deemed to grant, any lien or security
interest as collateral security for any of the Obligations in any Joint Venture
interest (as defined in the Security Agreement) of any Credit Party in Hugo Neu
Proler Company or Prolerized New England Company, including, without limitation,
any right, title or interest of any Credit Party in and to distributions under
the Joint Venture Agreement of either such Joint Venture. The Bank hereby agrees
to promptly release the Liens under the Security Documents on all property and
assets of Proler Environmental Services, Inc., but not any other Credit Parties,
to the extent but only to the extent of any project financed by Indebtedness
permitted by SECTION 7.02(D), but not otherwise.
ARTICLE III
GUARANTY
Section 3.01. GUARANTY. (a) In consideration of, and in order
to induce the Bank to issue Letters of Credit hereunder, each Guarantor hereby
absolutely, unconditionally and irrevocably, jointly and severally guarantees
the punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of all obligations and covenants of each Borrower now
or hereafter existing under this Agreement, the Notes and/or any of the other
Loan Documents to which such Borrower is a party 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 a Borrower under
any chapter of the Bankruptcy Code of the United States (11 U.S.C. ss. 101 ET
SEQ.) or any other Debtor Relief Law, fees, commissions, expenses (including
reasonable counsel fees and expenses) or otherwise, and all reasonable costs and
expenses, if any, incurred by the Bank in connection with enforcing any rights
under this Guaranty (all such obligations being the "GUARANTEED OBLIGATIONS").
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 Borrowers or any other action, occurrence or circumstance
whatsoever. Nothing herein is intended to provide that a Borrower shall be
liable as a Guarantor for any Obligations for which such Borrower is primarily
liable, but each Borrower shall be liable as a Guarantor for any Obligations for
which such Borrower is not primarily liable.
(b) Each Guarantor hereby, jointly and severally, agrees to
pay and to indemnify the Bank harmless from and against any damage, loss, cost
or expense (including reasonable attorneys' fees) that the Bank may incur or be
subject to as a consequence, direct or indirect, of (i) any breach by such
Guarantor or any other Credit Party of any warranty, covenant, term or condition
in, or the occurrence of any default under, this Guaranty, this Agreement or any
other Loan Document, together with all reasonable expenses resulting from the
compromise or defense of any
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claims or liabilities arising as a result of any such breach or default and (ii)
any legal action commenced to challenge the validity of this Guaranty, this
Agreement or any other Loan Document.
Section 3.02. 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 that it will remain bound upon this Guaranty notwithstanding any
extension, renewal or other alteration of any Guaranteed Obligations or Loan
Documents. 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,
including any reduction or termination of all or a portion of the Commitment;
(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 a Borrower, any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting a Borrower, 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 a Borrower,
or a Borrower or such Guarantor may have at any time against the Bank, any other
Guarantor or any other Person, whether in connection with this Guaranty, the
Loan Documents, the transactions contemplated thereby or any other transaction;
(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 a Borrower, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the Bank; or
(g) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
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Section 3.03. 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
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 reason, including (i) any judgment, decree or order of any court
or administrative body having jurisdiction over the Bank or any of its
properties or (ii) any settlement or compromise of any such claim effected by
the Bank with any such claimant (including a Borrower), 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 Bank, and hereby do indemnify the Bank and hold it 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 Bank in the defense of any claim made against it that
any payment or proceeds received by the 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 a Borrower by virtue of any payment, court order or any federal or
state law.
Section 3.04. WAIVER OF SUBROGATION. Notwithstanding any
payment or payments made by any Guarantor hereunder, or any set-off or
application by the Bank of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the Bank or of such Guarantor
against a Borrower or any other Guarantor to recover the amount of any payment
made by such Guarantor to the Bank hereunder by way of subrogation,
reimbursement, contribution, indemnity, or otherwise arising by contract or
operation of law, until such time as the Obligations have been satisfied and the
Bank shall have no Commitment. If any amount shall nevertheless be paid to a
Guarantor by a Borrower or another Guarantor prior to payment in full of the
Guaranteed Obligations, such amount shall be held in trust for the benefit of
the Bank and shall forthwith be paid to the Bank to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
Section 3.05. SUBORDINATION. Each Guarantor hereby
subordinates all indebtedness owing to it from a Borrower to all indebtedness of
each of the Borrowers to the Bank, and agrees that it shall not accept any
payment on the same until payment in full of the obligations of each Borrower
under this Agreement, the Notes, the Letters of Credit, the Existing Letters of
Credit and all other Loan Documents, 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 to a Guarantor by a
Borrower or another Guarantor prior to payment in full of the Guaranteed
-26-
Obligations, such amount shall be held in trust for the benefit of the Bank and
shall forthwith be paid to the Bank to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured.
Section 3.06. 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 Bank institute suit, collection proceedings or take any
other action to collect the Guaranteed Obligations, including any requirement
that the Bank protect, secure, perfect or insure any Lien against any property
subject thereto or exhaust any right or take any action against a Borrower or
any other Person or any collateral (it being the intention of the Bank and each
Guarantor that this Guaranty is to be a guaranty of payment and not of
collection). It shall not be necessary for the Bank, in order to enforce any
payment by any Guarantor hereunder, to institute suit or exhaust its rights and
remedies against a Borrower, 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 each and every right to which it may be entitled by virtue of
the suretyship laws of the State of Texas, including, without limitation, any
and all rights it may have pursuant 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 Bank of any indebtedness or liability to
which the Bank applies or may apply any amounts received by the Bank, and of the
creation, advancement, increase, existence, extension, renewal, rearrangement
and/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 3.07. FULL FORCE AND EFFECT. This Guaranty is a
continuing guaranty and shall remain in full force and effect until payment in
full of the Obligations of the Borrowers under this Agreement, the Notes and all
other Loan Documents and all other amounts payable under this Guaranty.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO THE INITIAL LETTER OF
CREDIT. The obligation of the Bank to maintain any Existing Letter of Credit or
to issue the initial Letter of Credit hereunder is subject to the conditions
precedent that the Bank shall have received on or before the Execution Date, to
the extent same have not previously been received all of the following, in form
and substance satisfactory to the Bank and in such number of counterparts as may
be reasonably requested by the Bank:
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(a) the Notes each duly executed and delivered by the relevant
Borrower;
(b) this Agreement duly executed and delivered by the Credit
Parties;
(c) the Note and Deed of Trust Modification Agreements duly
executed and delivered by the relevant Credit Parties to the Bank;
(d) the New Security Agreement duly executed and delivered by
the Credit Parties;
(e) the Patent Security Agreement duly executed and delivered
by Proler Environmental Services, Inc.;
(f) the New Pledge Agreement duly executed and delivered by
the appropriate Credit Parties party thereto;
(g) the Deeds of Trust duly executed and delivered by all of
the parties holding title to the Mortgaged Properties;
(h) Mortgagee title insurance policies issued by title
insurers satisfactory to the Bank in amounts satisfactory to the Bank (the
"MORTGAGEE POLICIES") and assuring the Bank that the Deeds of Trust in respect
of the Mortgaged Properties are valid and enforceable first priority mortgages
on the respective Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Liens. Such Mortgagee Policies shall be in form
and substance reasonably satisfactory to the Bank;
(i) Appropriate endorsements to Mortgagee Policies in form and
substance satisfactory to the Bank to reflect the extended Termination Date of
Note B and the applicability thereto of the Mortgagee Policies;
(j) the Appraisal, if required by Bank;
(k) the Environmental Reports and, depending upon the content
and conclusion thereof, additional environmental reports, Phase II Audits and
such other related information concerning the Mortgaged Properties as the Bank
may require;
(l) (i) executed financing statements for all jurisdictions as
may be necessary or, in the reasonable opinion of the Bank, desirable to perfect
the security interests created by the Security Documents and (ii) evidence that
all other actions necessary or, in the reasonable opinion of the Bank, desirable
to perfect and protect the Liens created by the Security Documents have been
taken;
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(m) copies of surveys satisfactory to the Bank covering, all
together, each tract or parcel of land (including all appurtenant easements)
subject to the Deeds of Trust, satisfactory in form and substance to the Bank.
In addition, the Bank shall have received such officer's certificates and other
similar instruments relating to survey matters as the Bank may request;
(n) a Uniform Commercial Code search, tax search and judgment
report of the appropriate records of the States of Texas, Delaware, and all
other states in which a Borrower or any Joint Venture is conducting business
satisfactory in form and substance to the Bank;
(o) all of the issued and outstanding stock of the Guarantors
owned by any Credit Party together with related stock powers executed by the
pledgor of such stock;
(p) a certificate of the president or a vice president and of
the secretary or an assistant secretary of each Credit Party certifying, INTER
ALIA, (i) true and correct copies of resolutions adopted by the Board of
Directors of each such Credit Party, (A) authorizing the execution, delivery and
performance by each such Credit Party of the Loan Documents to which it is or
will be a party and, in the case of each Borrower, the borrowings thereunder,
(B) approving the forms of the Loan Documents to which it is a party and which
will be delivered at or prior to the Execution Date and (C) authorizing officers
of each such Credit Party to execute and deliver the Loan Documents to which it
is or will be a party and any related documents, (ii) true and correct copies of
the bylaws of each Credit Party that is a corporation, as amended to the date of
such certificate, (iii) the incumbency and specimen signatures of the officers
of each such Credit Party executing any documents on behalf of it, (iv) the
truth of the representations and warranties made by such Credit Party in any
Loan Document to which it is a party and which will be delivered at or prior to
the date of the initial Letter of Credit, (v) the absence of any proceedings for
the dissolution or liquidation of each such Credit Party, (vi) the absence of
the occurrence and continuance of any Default or Event of Default with respect
to each such Credit Party and (vii) that no event or condition has occurred
since January 31, 1995 that would constitute a Material Adverse Effect;
(q) the favorable, signed opinion of Mayor, Day, Caldwell &
Keeton, L.L.P., counsel for the Credit Parties, addressed to the Bank, as to
such matters as the Bank may reasonably request;
(r) a Perfection Certificate executed by an Authorized Officer
of each Credit Party;
(s) [Intentionally Omitted]
(t) payment of all reasonable fees and out-of-pocket expenses
of the Bank and of Andrews & Kurth L.L.P., counsel to the Bank, and any local
counsel retained by it;
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[(U) A BORROWING BASE CERTIFICATE FOR NOTE A AND NOTE B;]
(v) copies of certificates of good standing and existence for
each of the Credit Parties in the jurisdiction of its incorporation and
certificates of authority to conduct business in each jurisdiction in which the
failure to obtain same would constitute a Material Adverse Effect; and
(w) such other documents as the Bank may reasonably request
relating to the existence and good standing of each Credit Party, the
authorization, execution and delivery of this Agreement and the other Loan
Documents, and all other matters relevant hereto and thereto, all in form and
substance reasonably satisfactory to the Bank.
Section 4.02. CONDITIONS PRECEDENT TO ALL LETTERS OF CREDIT.
The obligation of the Bank to issue any Letter of Credit, shall be subject to
the further conditions precedent that on the date of issuance the following
statements shall be true (and each of the giving of the Letter of Credit Request
and the issuance of the Letter of Credit shall constitute a representation and
warranty by each Borrower that on the date of the issuance of any Letter of
Credit such statements are true):
(a) the Bank shall have received a Letter of Credit Request
and Application;
(b) immediately after giving effect to such issuance, the sum
of the aggregate outstanding undrawn amount of all Existing Letters of Credit
and all Letters of Credit does not exceed the lesser of (i) the Commitment or
(ii) the Borrowing Base;
(c) the representations and warranties contained in ARTICLE V
and those contained in the other Loan Documents are true and correct in all
material respects as though made on and as of such date (except for those
expressly made as of the date thereof and except for changes in International
and its Subsidiaries arising from transactions contemplated by the terms
hereof);
(d) no Default or Event of Default has occurred and is
continuing or would result from such Credit Event;
(e) the Bank shall have received the L/C Fees and all other
fees, if any, theretofore or then due and payable to it; and
(f) since the date of International's last audited financials,
no event shall have occurred and be continuing which has had or is likely to
have a Material Adverse Effect except for any matters disclosed in writing to
the Bank prior to the Effective Date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and
to issue the Letters of Credit, each Credit Party represents and warrants to the
Bank as to itself, and, to the extent specifically stated, as to its
Subsidiaries and each Joint Venture in which it has an interest as follows.
Section 5.01. ORGANIZATION. Each Credit Party (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (b) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which such qualification and good standing are necessary in
order for such Credit Party to conduct its business and own its properties as
conducted and owned and except where the failure to be so qualified or in good
standing would not constitute a Material Adverse Effect and (c) has all
requisite power and authority (corporate or otherwise) to conduct its business
as now conducted, to own or lease its property and assets and to execute,
deliver and perform each of the Loan Documents to which it is or may be a party.
Section 5.02. AUTHORITY. The execution, delivery and
performance by each Credit Party of this Agreement and the other Loan Documents
to which it is or may be a party and issuance of the Letters of Credit
contemplated hereby, have been duly approved by the board of directors of such
Credit Party and no other corporate proceedings on the part of such Credit Party
are necessary to issue such Letters of Credit. Each of the Loan Documents to
which such Credit Party is a party has been duly executed and delivered by such
Credit Party and constitutes the legal, valid and binding obligation of such
Credit Party, enforceable against such Credit Party in accordance with its
terms.
Section 5.03. NO CONFLICT. The execution, delivery and
performance by such Credit Party of each of the Loan Documents to which it is or
may be a party, do not and shall not, by the lapse of time, the giving of notice
or otherwise, (a) constitute a violation of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to such Credit Party or a breach of any provision contained
in such Credit Party's articles or certificate of incorporation or bylaws, or
contained in any material agreement, instrument or document to which it is a
party or by which it is bound, other than violations or breaches which would
not, individually or in the aggregate, result in a Material Adverse Effect or
(b) result in or require the creation or imposition of any Lien whatsoever upon
any of the properties or assets of such Credit Party (other than Liens permitted
by this Agreement and Liens in favor of the Bank arising pursuant to the Loan
Documents).
Section 5.04. CONSENTS. No authorization, consent, approval,
permit, license, or exemption of or filing or registration with, any
governmental agency or any other Person which has
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not been obtained, was, is or will be necessary for the valid execution,
delivery or performance by any Credit Party of any of the Loan Documents to
which it is or may be a party.
Section 5.05. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.
(a) Operations delivered to the Bank the consolidated balance sheet of
Operations and its Subsidiaries as of January 31, 1995 and the related
consolidated statements of operations, cash flow and stockholders' equity for
the year then ended, including the related schedules and notes, reported on by
Coopers & Lybrand.
(b) The unaudited consolidated balance sheet and statement of
operations and cash flow of Operations and its Subsidiaries as at October 31,
1995, copies of which has heretofore been furnished to the Bank, are correct in
all material respects, and present fairly the consolidated financial condition
of Operations as at such date (subject to normal year-end audit adjustments).
(c) The financial statements referred to in paragraphs (a) and
(b) above, including the related schedules and notes thereto, have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved.
(d) The Borrowers have disclosed to the Bank in writing any
and all facts which would result in, or which Borrowers believe may result in, a
Material Adverse Effect and since January 31, 1995, there has been no material
adverse change in the business, operations, properties, assets, business
prospects or financial condition of International and its Subsidiaries taken as
a whole except as to those matters previously disclosed to the Bank as of the
date hereof.
Section 5.06. LITIGATION; MATERIAL ADVERSE EFFECT. (a) Except
as set forth in EXHIBIT 5.06 hereto, there are no actions, suits or proceedings
pending or, to the best of International's knowledge, threatened or probable of
assertion, against or affecting any Credit Party or any of its Subsidiaries or
any property or rights of any Credit Party or any of its Subsidiaries before any
court or any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, if determined adversely to the
Borrowers or any such Subsidiary would constitute a Material Adverse Effect.
(b) Except as otherwise disclosed to the Bank in writing,
neither the business, properties nor operations of any Credit Party nor any of
its Subsidiaries is materially and adversely affected by any fire, explosion,
accident, strike, lockout or other labor dispute, embargo, act of God or act of
a public enemy or other event, condition or casualty, provided the determination
of such effect shall include a consideration of available insurance proceeds.
Section 5.07. INDEBTEDNESS. Except as set forth in EXHIBIT
5.07 or as set forth in the financial statements referred to in SECTION 5.05,
and except for the Indebtedness represented by this
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Agreement, the Notes and the other Loan Documents and any other Indebtedness
owing to the Bank, no Credit Party, nor any of its Subsidiaries has any secured
or unsecured Indebtedness.
Section 5.08. NO MARGIN STOCK. No Credit Party nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U), and no
Letter of Credit or Existing Letter of Credit will be used, directly or
indirectly, (a) to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or (b) for the
purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve any Credit Party in a violation of Regulation X.
Section 5.09. ACCURACY AND COMPLETENESS OF INFORMATION. All
written estimates, projections and forecasts furnished by or on behalf of the
Borrowers and the other Credit Parties to the Bank for purposes of or in
connection with this Agreement, or in connection with any Letter of Credit or
Existing Letter of Credit, were and will be prepared on the basis of
assumptions, data, tests or conditions believed to be reasonable, valid or to
represent industry conditions existing at the time such estimates or forecasts
were furnished. Neither this Agreement, the Notes, the other Loan Documents, the
statements and documents referred to in SECTION 5.05 nor any other document
delivered by the Borrowers or any of their respective Subsidiaries to the Bank
contains any material misstatement of fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading as of the respective date thereof. The Borrowers have not
intentionally withheld any fact known to them which has or is reasonably likely
to constitute a Material Adverse Effect which has not been set forth or referred
to in this Agreement, the Notes, the other Loan Documents or such other document
heretofore furnished to the Bank.
Section 5.10. ERISA. (a) No Reportable Event or withdrawal
from or termination, reorganization or insolvency has occurred and is continuing
with respect to any Plan that would likely constitute a Material Adverse Effect
and (b) neither the PBGC nor a Borrower nor any Commonly Controlled Entity has
instituted any proceedings or taken any other actions with respect to the
withdrawal from, or the termination, reorganization or insolvency of any Plan
that would reasonably be expected to have a Material Adverse Effect.
Section 5.11. GOVERNMENT REGULATION. No Credit Party nor any
of its Subsidiaries is (a) an "investment company" or a company 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, (b) a "holding company" or a "subsidiary company" of a "holding company"
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, or (c) a "public utility," as such term is defined in the
Federal Power Act.
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Section 5.12. PROPERTY. Each Credit Party and each of its
Subsidiaries, as the case may be, has good record and defensible title in fee
simple to or valid leasehold interests in all its real properties and marketable
title to all its other property and assets except where the failure to so have
such title or interest would not reasonably be expected to have a Material
Adverse Effect.
Section 5.13. PAYMENT OF TAXES. The federal income tax returns
of each Borrower and other tax returns and reports of each Credit Party and its
Subsidiaries required to be filed with the appropriate governmental agencies in
all jurisdictions in which such returns and reports are required to be filed
have been filed and all of the foregoing are true, correct and complete, and
each Borrower paid all taxes and other similar charges, or made adequate
provision therefor, that are due and payable within the time prescribed for
filing and payment or an appropriate extension has been requested and obtained
for such filing or payment except where such failure would not reasonably be
expected to result in a Material Adverse Effect. Neither Borrower nor any of its
Subsidiaries has taken any reporting positions for which it does not have a
reasonable basis and no such Person anticipates any further material tax
liability with respect to the tax years for which returns have been filed.
International has no knowledge of any proposed tax assessment against
International or any of its Subsidiaries that would reasonably be expected to
have a Material Adverse Effect which is not being actively contested in good
faith.
Section 5.14. INSURANCE. Each Credit Party and each of its
Subsidiaries carries and will continue to carry insurance with reputable
insurers in respect of its properties in such amounts and against such risks as
is customarily maintained by other Persons of similar size engaged in similar
business and reasonably acceptable to the Bank.
Section 5.15. SUBSIDIARIES; JOINT VENTURES. (a) EXHIBIT 5.15
hereto lists each Subsidiary of each Credit Party and each Joint Venture in
which a Credit Party has an interest, the jurisdiction under which each such
Subsidiary and Joint Venture is incorporated or organized and the direct and
indirect ownership interest of such Credit Party therein. Each Subsidiary of a
Credit Party has been duly organized and is validly existing in good standing
under the laws of its jurisdiction of organization.
(b) The Borrowers have heretofore delivered to the Bank a copy
of the Articles or Certificate of Incorporation of each Joint Venture that is a
corporation and each agreement creating or governing the rights of the parties
to each other Joint Venture (collectively, the "JOINT VENTURE AGREEMENTS") in
existence on the date hereof, as amended to the date hereof. Each Joint Venture
Agreement is in full force and effect and as to each Joint Venture Agreement
creating each non-corporate Joint Venture is enforceable against each Credit
Party which is a party thereto in accordance with its terms.
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Section 5.16. PATENTS. Each Credit Party and each of its
Subsidiaries owns or holds a valid license to use all material patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
that are necessary for, and no restriction applicable to any such patent,
trademark, service mark, trade name, copyright, license or other right would
interfere in any material respect with, the operation of its business taken as a
whole as presently conducted and as proposed to be conducted.
Section 5.17. COMPLIANCE WITH STATUTES. (a) Each Credit Party
and each of its Subsidiaries is in compliance 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 such non-compliance as is not
likely to, in the aggregate, have a Material Adverse Effect.
(b) Each Credit Party and each of its Subsidiaries is in
compliance with all applicable Environmental Laws governing its business for
which failure to comply is likely to have a Material Adverse Effect, and no
Credit Party nor any of its Subsidiaries is liable for any material penalties,
fines or forfeitures for failure to comply with any of the foregoing in the
manner set forth above. All licenses, permits, registrations or approvals
required for the business of each Credit Party and each of its Subsidiaries, as
conducted as of the Effective Date, under any Environmental Law have been
secured and each Credit Party and each of its Subsidiaries is in substantial
compliance therewith, except such licenses, permits, registrations or approvals
the failure to secure or to comply therewith is not likely to have a Material
Adverse Effect. No Credit Party nor any of its Subsidiaries is in noncompliance
with, breach of or default under any applicable writ, order, judgment,
injunction, or decree to which such Credit Party or such Subsidiary is a party
or which would affect the ability of such Credit Party or such Subsidiary to
operate any of its properties and no event has occurred and is continuing which,
with the passage of time or the giving of notice or both, would constitute
noncompliance, breach of or default thereunder, except in each such case, such
noncompliances, breaches or defaults as are not likely to, in the aggregate,
have a Material Adverse Effect. There are, as of the Effective Date, no
Environmental Claims pending or, to the best knowledge of any Credit Party,
threatened, which (i) question the validity, term or entitlement of such Credit
Party or any of its Subsidiaries for any permit, license, order or registration
required for the operation of any facility which such Credit Party or any of its
Subsidiaries currently operates and (ii) wherein any unfavorable decision,
ruling or finding would be reasonably likely to have a material adverse effect
on the financial viability of any facility thereof. There are no facts,
circumstances, conditions or occurrences on any real property or, to the
knowledge of the Credit Parties, on any property adjoining or in the vicinity of
any real property that could reasonably be expected (i) to form the basis of an
Environmental Claim against any Credit Party or any of its Subsidiaries or (ii)
to cause such real property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such real property under any Environmental
Law, except in each such case, such
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Environmental Claims or restrictions that individually or in the aggregate are
not reasonably likely to have a Material Adverse Effect.
(c) To the best of the Credit Parties' knowledge, Hazardous
Materials have not at any time been (i) generated, used, treated or stored on,
or transported to or from, any real property of any Credit Party or any of its
Subsidiaries or (ii) released on any real property, in each case where such
occurrence or event is reasonably likely to have a Material Adverse Effect.
Section 5.18. LABOR RELATIONS; COLLECTIVE BARGAINING
AGREEMENTS. (a) Set forth on EXHIBIT 5.18 is a list and description (including
dates of termination) of all collective bargaining or similar agreements between
or applicable to any Credit Party or any of its Subsidiaries and any union,
labor organization or other bargaining agent in respect of the employees of any
Credit Party or any of its Subsidiaries on the Effective Date.
(b) No Credit Party nor any of its Subsidiaries is engaged in
any unfair labor practice that could have a Material Adverse Effect. There is
(i) no significant unfair labor practice complaint pending against any Credit
Party or any of its Subsidiaries or, to the best knowledge of any Credit Party,
threatened against any of them before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is now pending against any Credit
Party or any of its Subsidiaries or, to the best knowledge of such Credit Party,
threatened against any of them, (ii) no significant strike, labor dispute,
slowdown or stoppage is pending against any Credit Party or any of its
Subsidiaries or, to the best knowledge of such Credit Party, threatened against
such Credit Party or any of its Subsidiaries and (iii) no union representation
question exists with respect to the employees of any Credit Party or any of its
Subsidiaries, except such as is not reasonably likely to have a Material Adverse
Effect.
Section 5.19. LIABILITIES. (a) All contingent liabilities and
direct liabilities of the Credit Parties and their respective Subsidiaries, and
all anticipated losses of the Credit Parties and their respective Subsidiaries,
which in the aggregate are material to the Credit Parties and their respective
Subsidiaries taken as a whole, are set forth in the financial statements
referred to in SECTION 5.05 to the extent required by GAAP and modified by the
footnotes to such statements and (b) all contingent liabilities and direct
liabilities of the Credit Parties and all unrealized or anticipated losses of
the Credit Parties and their respective Subsidiaries, which in the aggregate are
material to the Credit Parties and their respective Subsidiaries taken as a
whole, to the extent required by GAAP will be set forth in the financial
statements next delivered pursuant to SECTION 6.01 hereof after any of such are
incurred or anticipated, as applicable.
Section 5.20. SOLVENCY. The Credit Parties, viewing their
businesses and operations as a single consolidated entity, have capital
sufficient to carry on their businesses and transactions
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and all businesses and transactions in which they are about to engage and are
now solvent and able to pay their respective debts as they mature, and the
Credit Parties now collectively own property having a value, both at fair
valuation and at present fair salable value, greater than the amount required to
pay all existing debts of the Credit Parties.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or
outstanding or the Bank shall have any Commitment, unless the Bank shall
otherwise consent in writing, each Credit Party covenants and agrees as to
itself, and, to the extent specifically stated, as to its Subsidiaries and each
Joint Venture in which it has an interest that:
Section 6.01. REPORTING REQUIREMENTS. International shall
deliver or cause to be delivered to the Bank:
(a) ANNUAL REPORTS. Upon the earlier of 120 days after the
close of each fiscal year of International or the day following the date of
filing of International's Annual Report on Securities and Exchange Commission
Form 10-K, either (i) a copy of International's Annual Report on Form 10-K as
filed with respect to such year or (ii) consolidated and consolidating balance
sheets of International and its Subsidiaries, as at the end of such fiscal year
and the related statements of operations, cash flow and stockholders' equity for
such fiscal year, setting forth comparative figures for the preceding fiscal
year, and examined by Coopers & Lybrand (or other independent certified public
accountants of recognized national standing reasonably acceptable to the Bank)
whose opinion shall not be qualified as to the scope of audit and as to the
status of International or any of its Subsidiaries as a going concern, together,
in each case, with a certificate of the accounting firm referred to above
stating that in the course of its regular audit of the business of
International, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default that has occurred and is continuing, or, if such
firm has obtained knowledge of any Default or Event of Default that has occurred
and is continuing, a statement as to the nature thereof.
(b) QUARTERLY REPORTS. Upon the earlier of 60 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of International, or the day following each date of filing of
International's Quarterly Report on Form 10-Q either (i) a copy of
International's Quarterly Report on Form 10-Q as filed with respect to such
quarterly period or (ii) consolidated and consolidating balance sheets of
International and its Subsidiaries, as at the end of such quarterly period and
the related statements of operations and cash flows for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and setting forth
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comparative figures for the related periods in the prior fiscal year, in each
case, certified by an Authorized Officer, subject to changes resulting from
audit and normal year-end audit adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event
within 30 days (45 days in the case of the last monthly accounting period of
each fiscal quarter), after the end of each monthly accounting period
(commencing with January 1996) of each fiscal year of International and each
Joint Venture, consolidated and consolidating balance sheets of International
and its Subsidiaries, as at the end of such period, and the balance sheet of any
Joint Venture that is accounted for in such month in the statements of
International or its Subsidiaries, and the related statements of operations for
such period setting forth comparative figures for the corresponding period of
the previous year, including listings and agings of all Receivables for
International and each Joint Venture, each of which shall be certified by an
Authorized Officer, subject to changes resulting from audit and normal year-end
audit adjustments.
(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statements pursuant to clauses (a), (b) and (c) above, a certificate
of an Authorized Officer demonstrating compliance by International and the other
Credit Parties with the provisions of SECTION 7.03 and stating whether any Event
of Default or Default has occurred and is continuing, and if there is any Event
of Default or Default, describing it and the steps, if any, being taken to cure
it.
(e) SEC FILINGS. Promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and reports as
International shall send to its public stockholders and copies of all
registration statements (without exhibits) and reports which it files with the
Securities and Exchange Commission.
(f) BORROWING BASE CERTIFICATE. Together with each delivery of
the monthly reports pursuant to clause (c) above and on each date on which a new
Borrowing Base Certificate is required to be delivered as provided in SECTION
2.17(B), a Borrowing Base Certificate in the form of EXHIBIT 1.01-A attached
hereto, signed by an Authorized Officer of International, including therein
information as at the end of the period covered by said certificate.
(g) ERISA FILINGS. Promptly upon the filing or making thereof,
copies of each filing and report made by International, under ERISA with the
PBGC or with the U.S. Department of Labor or which International may receive
from such Persons that, in each case, relate to a condition or event that would
likely have a Material Adverse Effect.
(h) REPORTABLE EVENTS. Forthwith upon International receiving
actual notice of the occurrence of a Reportable Event under, the termination,
insolvency or reorganization of, or the institution of steps by the PBGC,
International or any Commonly Controlled Entity with respect to the withdrawal,
termination, insolvency or reorganization of any Plan to which International may
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have any liability, written notice thereof describing the same and the steps
being taken by International with respect thereto.
(i) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy
of each other report or "management letter" submitted to International by its
independent accountants in connection with any annual, interim or special audit
made by it of the books of International, provided if said report contains
personnel information of a confidential nature, International may delete said
sections before delivery of same to the Bank.
(j) APPRAISALS. Annually, upon written request by the Bank, an
Appraisal for each of the Mortgaged Properties; provided, that the Bank shall
not request any Appraisal prior to the Termination Date.
(k) ENVIRONMENTAL REPORTS. Upon written request by the Bank,
an Environmental Report for each of the Mortgaged Properties; PROVIDED, HOWEVER,
that the Bank understands and agrees that it may not request or perform any
environmental inspection, audit or assessment of any property owned or leased by
any Credit Party unless (1) all of the obligations of International hereunder
shall have been accelerated in accordance with ARTICLE VIII hereof (and such
acceleration shall not have been rescinded), (2) International receives prior
notice of the inspection, audit or assessment and the proposed scope thereof,
(3) the Bank and the Credit Parties agree that International shall be entitled
to review any report produced from any such inspection, audit or assessment
simultaneously with its delivery to the Bank and (4) any environmental
consultant utilized in connection therewith shall be a party mutually acceptable
to the Bank and International, with the Bank and International hereby
stipulating that E.R.M. - Southwest, Inc. is mutually acceptable.
(l) OTHER REPORTS. In addition to the reports and statements
described in this Section, International shall provide the Bank: (i) such other
financial reports and information as the Bank may from time to time reasonably
request respecting the business, properties, operations or condition (financial
or otherwise) of International or any Joint Venture; and (ii) notice of any
additional Indirect Indebtedness incurred or Liens granted by any Joint Venture
in excess of $500,000.00 in any single transaction.
Section 6.02. EXISTENCE. Each Credit Party shall preserve and
maintain its and its Subsidiaries' existence, rights, franchises and privileges
in the jurisdictions of their incorporation or other organization and their
qualification and good standing in all jurisdictions in which the failure to
preserve or maintain such existence, rights, franchises, privileges,
qualification and good standing would be likely to constitute a Material Adverse
Effect.
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Section 6.03. MAINTENANCE OF PROPERTIES; INSURANCE. (a) Each
Credit Party and each of its Subsidiaries shall maintain with financially sound,
responsible and reputable insurance companies insurance against such risks and
in such amounts as are usually insured against by Persons of established
reputation engaged in the same or similar businesses and similarly situated;
PROVIDED, HOWEVER, notwithstanding the foregoing, each Credit Party and its
Subsidiaries will maintain (i) all insurance required by state statutes to be
maintained by employers for the protection of employees against work related
injuries and (ii) to the extent available at commercially reasonable rates,
comprehensive general liability coverage in such amounts as are appropriate for
the operations of such Credit Party and its Subsidiaries and (iii) all insurance
that such Credit Party and its Subsidiaries are required to maintain by law and
(iv) insurance required to be maintained by any of the Credit Parties pursuant
to the Deeds of Trust. Each policy in effect from time to time pursuant to the
terms of this Section, shall include a provision for thirty (30) days' prior
written notice to the Bank of any cancellation or expiration thereof and shall
show the Bank as an additional insured.
(b) Each Credit Party will maintain and preserve all of its
material properties necessary for the proper conduct of its business in working
order and condition, ordinary wear and tear excepted .
Section 6.04. NOTICE OF LITIGATION. International shall
promptly, upon actual notice or knowledge thereof, deliver or cause to be
delivered to the Bank notice of (a) the institution of or threat of, any action,
suit, proceeding, governmental investigation or arbitration against or affecting
any Credit Party or any of its Subsidiaries not previously disclosed in writing
to the Bank pursuant to SECTION 5.06 which, if determined adversely to such
Credit Party or such Subsidiary, would constitute a Material Adverse Effect or
(b) any material development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed, which is likely to constitute a
Material Adverse Effect.
Section 6.05. TAXES; CLAIMS. Each Credit Party and each of its
Subsidiaries shall (a) timely file all federal, state and local tax returns and
other reports which such Credit Party and such Subsidiaries are required by law
to file or obtain an appropriate extension for filing thereof, (b) maintain
adequate reserves on its books in accordance with GAAP for the payment of all
material taxes, assessments and governmental charges, and pay prior to
delinquency all such taxes, assessments and governmental charges, and (c) pay
all other material claims (including, without limitation, claims for labor,
services, materials and supplies) that have become due and payable and that by
law have or may become a Lien on International's property or assets, prior to
the time when any penalty or fine may be incurred with respect thereto, other
than any such tax, assessment, charge, levy or claim which is being contested in
good faith, by proper proceedings and with respect to which adequate reserves
have been established.
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Section 6.06. NOTICE OF DEFAULT. International shall notify
the Bank in writing within three (3) Business Days after International becomes
aware of the occurrence thereof, (a) of any condition or event that constitutes
either an Event of Default or a Default, (b) of any other default by
International or any of its Subsidiaries under any material note, indenture,
advance agreement, mortgage, lease, deed or other similar agreement to which
International or any of its Subsidiaries is a party or by which International or
any of its Subsidiaries is bound, the existence of which might reasonably be
expected to lead to a Material Adverse Effect, or (c) of any event or condition
that might reasonably be expected to constitute a Material Adverse Effect, such
notice to specify the nature and period of existence of any such condition,
event, default or potential default and what action International has taken, is
taking or proposes to take with respect thereto.
Section 6.07. INSPECTIONS. From time to time during regular
business hours and upon reasonable notice, each Credit Party will permit any
agents or representatives of the Bank to examine and make copies of and
abstracts from the records and books of account and files and visit the
properties of such Credit Party and its Subsidiaries to discuss the affairs,
finances and accounts of such Credit Party and its Subsidiaries with any of its
independent certified public accountants (with an officer or other
representative of such Credit Party present); PROVIDED, HOWEVER, that the Bank
shall keep any information obtained confidential to the extent that the Bank is
not required by law to disclose such information and such information is not
otherwise generally available to the public.
Section 6.08. COMPLIANCE WITH LAWS; NOTICES. (a) GENERAL.
International shall, and shall cause its Subsidiaries to, comply with all
material laws, rules and regulations, including, without limitation, all
Environmental Laws, and all restrictive covenants applicable to International
and its Subsidiaries, the noncompliance with which might, in any respect,
constitute a Material Adverse Effect; PROVIDED, HOWEVER, that neither
International nor any of its Subsidiaries shall be required to comply with any
such law or restrictive covenant if the applicability or validity thereof is
being contested in good faith, by proper proceedings and for which adequate
reserves have been established.
(b) ENVIRONMENTAL MATTERS. Promptly upon obtaining knowledge
thereof, International shall deliver to the Bank notice of (i) any pending or
threatened Environmental Claim against International or any of its Subsidiaries
or any real property of International or any of its Subsidiaries unless such
Environmental Claim could not, individually or when aggregated with all other
such Environmental Claims, reasonably be expected to have a Material Adverse
Effect; (ii) any condition or occurrence on any real property of International
or any of its Subsidiaries that (A) results in material noncompliance by
International or such Subsidiary with any applicable Environmental Law unless
such noncompliance could not, individually or when aggregated with all other
such non-compliance claims, reasonably be expected to have a Material Adverse
Effect; (iii) any condition or occurrence on any real property of International
that could reasonably be
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anticipated to cause such real property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such real property under any
Environmental Law unless such restrictions could not, individually or when
aggregated with all other such restrictions, reasonably be expected to have a
Material Adverse Effect; and (iv) the taking of any removal or remedial action
in response to the actual or alleged presence of any Hazardous Material on any
real property of International or any of its Subsidiaries, unless the presence
of such Hazardous Materials and the removal or remedial action in response
thereto could not, individually or when aggregated with all such other
occurrences or events, reasonably be expected to have a Material Adverse Effect.
All such notices shall describe in reasonable detail the nature, to the extent
known, of the claim, investigation, condition, occurrence or removal or remedial
action and the response thereto of International or of its applicable
Subsidiary. In addition, International will provide the Bank with copies of all
material written communications with any government or governmental agency
relating to Environmental Law, all material communications with any government
or governmental agency relating to Environmental Claims, and such detailed
reports of any Environmental Claim, in each case as they relate to the Mortgaged
Properties as may reasonably be requested in writing from time to time by the
Bank.
Section 6.09. BOOKS AND RECORDS; ACCOUNTING SYSTEMS AND
PRINCIPLES. Each Credit Party will keep adequate records and books of account in
which complete entries will be made in accordance with GAAP, reflecting all
financial transactions of such Credit Party and its Subsidiaries.
Section 6.10. OWNERSHIP OF CREDIT PARTIES. International will
at all times maintain and cause to be maintained the legal and beneficial
ownership of the shares of capital stock of the Credit Parties to be as shown on
EXHIBIT 5.15.
Section 6.11. FURTHER ASSURANCES. Each Credit Party shall at
its expense, promptly execute and deliver, or cause to be executed and
delivered, to the Bank upon reasonable request all such other and further
documents, agreements and instruments reasonably required to comply with or
accomplish the covenants and agreements of such Credit Party in the Loan
Documents to which it is a party.
Section 6.12. PERFORMANCE OF LOAN DOCUMENTS. Each Credit Party
will perform or cause to be performed all of the terms, covenants, agreements
and conditions on its part to be performed under this Agreement and each of the
other Loan Documents.
Section 6.13. ACTIVITIES OF JOINT VENTURE. Except for Liens
and Indebtedness incurred in connection with any project financing as described
in SECTIONS 7.02(d) AND 7.09(g), each of the Credit Parties will use its good
faith efforts, within the bounds of good business judgment and its legal
obligations under or in connection with the Joint Venture Agreements to which it
is a party affecting the Joint Ventures, to limit the Indebtedness that may be
incurred by, and any liens that may be granted by, said Joint Ventures. To the
extent that said Credit Parties are able to do so within
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the aforesaid bounds, they will encourage said Joint Ventures to minimize the
imposition of any of said Indebtedness or the granting of any liens.
Section 6.14. DIVIDENDS. To the extent permitted by law,
International agrees to take such actions within its power so that each of the
Credit Parties will pay, to the extent funds are legally available therefor,
dividends of an amount sufficient to allow International to make all required
payments of principal or interest due from International hereunder.
ARTICLE VII
NEGATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or
outstanding or the Bank shall have any Commitment, unless the Bank shall
otherwise consent in writing, each Credit Party covenants and agrees as to
itself, and, to the extent specifically stated, as to its Subsidiaries and each
Joint Venture in which it has an interest that:
Section 7.01. LIENS. Each Credit Party shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or permit to exist,
whether directly or indirectly, any Lien on or with respect to any of its
properties or assets, whether now held or hereafter acquired, except:
(a) Liens created pursuant to this Agreement or any other Loan
Document or other Liens in favor of the Bank;
(b) Liens existing on the Effective Date and set forth on
EXHIBIT 7.01(b);
(c) Liens imposed by law, carriers', warehousemen's or
mechanics' liens, and Liens to secure claims for labor, material or supplies
arising in the ordinary course of business, but only to the extent that payment
thereof shall not at the time be due or is being contested in good faith by
appropriate proceedings diligently conducted and with respect to which
appropriate reserves have been set aside in accordance with GAAP, and so long as
the enforcement thereof has been stayed and such Liens do not individually or in
the aggregate have a Material Adverse Effect;
(d) Deposits or pledges to enable the Credit Parties and their
Subsidiaries to exercise any privilege or license, deposits or pledges made in
connection with, or to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security, or to secure the
performance of bids, tenders, contracts (other than those relating to borrowed
money) or leases or to secure statutory obligations or surety or appeal bonds,
or to secure indemnity, performance or other similar bonds in the ordinary
course of business, or in connection with contests, so long as such Liens do not
individually or in the aggregate materially impair the value or
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materially interfere with the use of any property subject thereto or the
operation of the usual business of the Credit Party(ies) involved and do not, in
the aggregate exceed $1,000,000.00;
(e) Liens for taxes, assessments, levies or other governmental
charges not yet due or which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which appropriate reserves
have been set aside in accordance with GAAP, and so long as the enforcement
thereof has been stayed and such Liens do not individually or in the aggregate
have a Material Adverse Effect;
(f) Liens arising out of judgments or awards against a Credit
Party, or any of its Subsidiaries with respect to which such Person shall be in
good faith prosecuting an appeal or a proceeding for review, or Liens incurred
by a Credit Party, or such Subsidiary for the purpose of obtaining a stay or
discharge of any legal proceeding to which such Person is a party, PROVIDED,
HOWEVER, nothing herein is intended to waive any Event of Default that may
result from any such judgment, award or proceeding under SECTION 8.01(k);
(g) Liens consisting of encumbrances, easements or
reservations of, or rights of others for, rights-of-way, sewers, electric lines,
telegraph and telephone lines, pipelines and other similar purposes, zoning
restrictions, restrictions on the use of real property and minor defects and
irregularities in the title thereto, landlord's or lessor's Liens under leases
to which a Credit Party, or any of its Subsidiaries is a party and other similar
encumbrances, none of which has a Material Adverse Effect;
(h) Rights of collecting banks having a right of set off,
revocation, refund or chargeback with respect to money or instruments of a
Credit Party or any of its Subsidiaries on deposit with or in the possession of
such bank;
(i) [Intentionally Omitted]
(j) Liens to secure Indebtedness incurred in connection with
the purchase of equipment for use in International's day to day office
operations not to exceed, in the aggregate during the term hereof, $250,000.00;
(k) Other Permitted Liens;
(l) Liens on assets of Proler Environmental Services, Inc.
(but not any other Credit Parties) to secure Indebtedness permitted by SECTION
7.02(d) hereof; and
(m) Extensions, renewals or replacements of any Lien referred
to in the foregoing clauses; PROVIDED, HOWEVER, that no Lien arising or existing
as a result of such extension, renewal
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or replacement shall be extended to cover any property not theretofore subject
to the Lien being extended, renewed or replaced so as to violate this Agreement;
and FURTHER PROVIDED that the principal amount of Indebtedness secured thereby
shall not exceed the principal amount of Indebtedness so secured at the time of
such extension, renewal or replacement so as to violate this Agreement.
Section 7.02. INDEBTEDNESS. International shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or permit to exist
any Indebtedness as defined herein exclusive of those items described in
subparagraph (g) of such definition except:
(a) Indebtedness of the Credit Parties hereunder and under the
other Loan Documents or any other Indebtedness owing to the Bank;
(b) Indebtedness set forth in EXHIBIT 5.07 or as set forth in
the financial statements referred to in SECTION 5.05;
(c) Taxes, assessments or other governmental charges which are
not yet delinquent or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, and in respect of which adequate
reserves shall have been made therefor;
(d) Indebtedness, whether in the form of loans, Capital Leases
or other forms of Indebtedness, incurred by Proler Environmental Services, Inc.,
(but not any other Credit Party) in an aggregate original principal amount not
to exceed $20,000,000.00, in connection with project financings, PROVIDED such
Indebtedness shall be without recourse to any Credit Party other than Proler
Environmental Services, Inc.;
(e) Indebtedness of International, not to exceed
$20,000,000.00, PROVIDED such Indebtedness is subordinate and inferior in all
respects (including subsequent to the filing of any petition for relief under
the U.S. Bankruptcy Code) to the Obligations on such terms and conditions and in
such degree as the Bank shall approve in writing prior to the incurrence
thereof, such approval not to be unreasonably withheld; and
(f) Extensions, renewals and replacements (but not increases)
of any Indebtedness referred to in the foregoing clauses.
Section 7.03. FINANCIAL COVENANTS. (a) International shall not
permit the ratio of (i) Consolidated Current Assets to (ii) Consolidated Current
Liabilities to be less than 1.75 to 1.0 at the end of any fiscal quarter of
International; PROVIDED, notwithstanding the definition of "Joint Ventures," or
anything else herein contained, for purposes of this SECTION 7.03(a) only (but
not any other sections or subsections of 7.03), Consolidated Current Assets and
Consolidated Current
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Liabilities shall include that portion of the current assets and current
liabilities of the Joint Ventures equal to that portion of the Credit Parties'
ownership interest therein.
(b) International shall not permit Consolidated Net Worth as
of the end of each fiscal quarter, commencing with the fiscal quarter ending
January 31, 1996, to be less than $55,000,000.00 plus 50% of Consolidated Net
Income ( excluding any non-cash asset writedowns or impairment losses not to
exceed $10,000,000 in the aggregate at any such time) earned commencing August
1, 1995 and thereafter.
(c) International shall not permit EBITDA (i) for the period
of the four consecutive fiscal quarters ending April 30, 1996 to be less than
$1,000,000.00, (ii) for the period of the four consecutive fiscal quarters
ending July 31, 1996 to be less than $1,500,000.00, and (iii) for each fiscal
quarter ending thereafter, to be less than $1,500,000.00, based on the results
of such quarter and the prior consecutive three fiscal quarters, all measured as
of the end of each fiscal quarter.
Section 7.04. CONSOLIDATION, MERGERS AND ACQUISITIONS;
FUNDAMENTAL CHANGES. Except as otherwise provided herein, including, without
limitation, as provided in SECTION 7.09(g), International shall not, and shall
not permit any of its Subsidiaries, other than actions by Proler Environmental
Services, Inc., contemplated under SECTIONS 7.02, 7.09 or 7.11 without the prior
written consent of the Bank, to merge or consolidate with or acquire all or any
part of the outstanding capital stock or assets of any other Person (other than
purchases or other acquisitions of inventory and equipment in the ordinary
course of business) or liquidate, wind up or dissolve (or suffer any liquidation
or dissolution), or suffer a change in ownership directly or indirectly, except
that the following shall be permitted:
(a) any Credit Party (other than International) may merge into
or consolidate with any Credit Party or with any other Subsidiary of any Credit
Party, PROVIDED that a Credit Party is the survivor;
(b) any Subsidiary of a Credit Party may merge into or
consolidate with any other Subsidiary of any Credit Party, PROVIDED, that, if a
wholly-owned Subsidiary of a Credit Party is a party to such merger or
consolidation, a wholly-owned Subsidiary of a Credit Party is the survivor, and
PROVIDED, FURTHER, that if the outstanding shares of stock of a Subsidiary that
is a party to such a merger or consolidation are pledged to the Bank under the
Pledge Agreement, then the shares of such surviving Subsidiary which are held by
any Credit Party or any Subsidiary of a Credit Party shall be pledged to the
Bank under the Pledge Agreement; and
(c) the dissolution or liquidation of any of (i) Prolerized
Steel Corporation or Gulf Coast Metals, Inc. and (ii) any other Subsidiary which
is not a Credit Party if immediately after such
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dissolution or liquidation of any such other Subsidiary, International and its
consolidated Subsidiaries are not less creditworthy in the reasonable opinion of
the Bank and provided the Bank has prior written notice thereon.
Section 7.05. TRANSACTIONS WITH AFFILIATES. Subject to SECTION
7.16 hereof and the Investments allowed under SECTION 7.09(g), the Credit
Parties shall not, and shall not permit any of their Subsidiaries to, enter
into, or be a party to, any transaction with any Affiliate (including any Joint
Venture) except on terms and conditions as favorable (or more favorable) to such
Credit Party or such Subsidiary than would be obtained in a comparable arm's
length transaction between unrelated parties, PROVIDED, HOWEVER, that the Credit
Parties may deal with any Joint Venture as contemplated by SECTION 7.09(f) or
the Joint Venture Agreements or any other joint venture agreements to which they
are a party in accordance with past practice or within the bounds of good
business judgment.
Section 7.06. USE OF PROCEEDS. No proceeds of any Letter of
Credit shall be used by a Borrower for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin stock," within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System.
No Borrower shall engage principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock within the meaning of such Regulation U. No Borrower will request
the issuance of a Letter of Credit or Existing Letter of Credit for any purpose
other than as set forth herein.
Section 7.07. COMPLIANCE WITH ERISA. International shall not,
and shall not permit any of its Subsidiaries to, (a) terminate any Plan so as to
result in any liability to PBGC which could reasonably be expected to have a
Material Adverse Effect, (b) engage in any "prohibited transaction" (as defined
in Section 4975 of the Code) involving any Plan which would result in a
liability for an excise tax or civil penalty in connection therewith which could
reasonably be expected to have a Material Adverse Effect, (c) incur or suffer to
exist any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived involving any Plan which could reasonably be expected to
have a Material Adverse Effect or (d) allow or suffer to exist any event or
condition, which presents a material risk of incurring a liability to PBGC by
reason of termination of any such Plan which could reasonably be expected to
have a Material Adverse Effect.
Section 7.08. LIMITATION ON NEGATIVE PLEDGE CLAUSES. The
Credit Parties shall not, and shall not permit any of their Subsidiaries to,
enter into any agreement with any Person other than the Bank which prohibits or
limits the ability of the Credit Parties or any of their Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of their property, assets or
revenues, whether now owned or hereafter acquired, other than any such agreement
entered into by Proler Environmental Services, Inc., but not any other Credit
Party, in connection with the Indebtedness permitted by SECTION 7.02(d) hereof.
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Section 7.09. INVESTMENTS. The Credit Parties shall not, and
shall not permit any of their Subsidiaries to, directly or indirectly, make any
Investments except:
(a) Investments existing on the Effective Date and listed on
EXHIBIT 7.09;
(b) Investments on terms customary in the industry involved in
the form of accounts receivable incurred, and Investments made in settlement of
such accounts receivable, all in the ordinary course of business of the Credit
Parties and their Subsidiaries;
(c) Permitted Investments;
(d) stock or securities received in the settlement of debts
(created in the ordinary course of business);
(e) travel advances to officers and employees made in the
ordinary course of business;
(f) Investments in Joint Ventures; and
(g) Investments in the stock or assets of other Persons not to
exceed (i) $2,500,000.00 in any one Person or any single transaction, PROVIDED,
any such Investment up to $6,000,000.00 shall be permitted if made in or to
Proler Environmental Services, Inc. by any other Credit Party for the purpose of
funding the construction by Proler Environmental Services, Inc. or a non-Credit
Party Affiliate thereof of a gasification plant for which no recourse exists to
any other Credit Party or (ii) $6,000,000.00 outstanding with supplemental
Investments to maintain such level allowed so long as no more than $6,000,000.00
is invested during any twelve-month period, computed on a rolling four (4)
quarter basis, without the prior written approval of the Bank, such approval not
to be unreasonably withheld; PROVIDED, that any Investment in or to Proler
Environmental Services, Inc. referred to in clause (i) above shall be considered
an Investment under this subsection (ii) and shall not serve to increase the
total amount allowed in any twelve-month period.
Section 7.10. SALE AND LEASEBACK. International shall not, and
shall not permit any of its Subsidiaries to, enter into any arrangement with any
Person providing for the leasing by International or a Subsidiary of
International of real or personal property which has been or is to be sold or
transferred by International or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security as such property or rental obligations of International or such
Subsidiary, other than leases entered into in connection with any project
financed in whole or in part by Indebtedness permitted by SECTION 7.02(d), which
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together with all other Indebtedness incurred in respect of such project, shall
not exceed $20,000,000.00 in the aggregate.
Section 7.11. CAPITAL EXPENDITURES. International shall not
incur Consolidated Capital Expenditures (exclusive of (A) any Consolidated
Capital Expenditures attributable to capital expenditures made by International
or Proler Environmental Services, Inc. in connection with any project financed
in whole or in part by Indebtedness permitted by SECTIONS 7.02(d), 7.02(e),
7.02(f) or 7.10, which expenditures shall be a part of, and may not exceed the
amount permitted by SECTIONS 7.02(d), 7.02(e) or 7.02(f) and (B) exclusive of
Investments permitted by SECTION 7.09) in an aggregate amount in excess of
$6,000,000.00 for any twelve-month period during the term of this Agreement,
computed on a rolling four (4) quarter basis.
Section 7.12. LIMITATION ON RESTRICTIONS AFFECTING
SUBSIDIARIES. International shall not, and shall not permit any of its
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction of any kind, on the ability
of any such Subsidiary to (a) pay dividends or make any distributions on its
capital stock or joint venture or partnership interests, (b) pay any
indebtedness to International or any other Subsidiary of International, (c) make
loans or advances to International or any Subsidiary of International or (d)
transfer any of its property or assets to International or any Subsidiary of
International, other than, in the case of each of the foregoing clauses (a)
through (d), any such encumbrance or restriction created by Proler Environmental
Services, Inc. in connection with any Indebtedness permitted by SECTION 7.02(d).
Section 7.13. RESTRICTED PAYMENTS. Except as contemplated or
permitted by the Rights Agreement dated as of February 28, 1996, as amended or
modified, International shall not directly or indirectly declare, order, pay,
make or set apart any Restricted Payment; PROVIDED, that International may make
Restricted Payments in the form of dividends on, and repurchases of, its own
capital stock up to a maximum amount of $2,500,000.00 for each twelve-month
period, computed on a rolling four (4) quarter basis.
Section 7.14. OTHER BUSINESS. The Credit Parties will not
engage, and will not permit any of their Subsidiaries to engage, in any lines of
business other than the business in which they are engaged on the Effective Date
and other activities incidental or related to such business, including, without
limitation, lines of business relating to processing, treatment and disposal of
waste streams and the sale, use or marketing of products produced in connection
therewith or the licensing of technology in connection therewith.
Section 7.15. JOINT VENTURE AGREEMENTS. The Joint Venture
Agreements shall not be modified, amended, terminated or otherwise affected
without the prior written consent of the Bank.
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Section 7.16. NO TRANSFERS TO AFFILIATES. Other than as
permitted by SECTIONS 7.05 and 7.09, the Credit Parties shall not transfer to
all of their Affiliates any assets, having a value in excess of $1,000,000 in
the aggregate, during the term hereof, unless said transfer is paid for by said
Affiliate with cash as of the time of the transfer.
ARTICLE VIII
DEFAULT AND REMEDIES
Section 8.01. EVENTS OF DEFAULT. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing, namely:
(a) a Borrower shall fail to pay when due any installment of
principal of or interest owed by it on any amount due hereunder, under the Notes
or any Loan Document to which it is a party; or
(b) a Borrower shall fail to pay immediately upon demand by
the Bank, the amount paid by the Bank pursuant to a draft presented under an
Existing Letter of Credit or a Letter of Credit issued for the account of such
Borrower; or
(c) any other Credit Party shall fail to pay any amount
payable to the Bank by such Credit Party hereunder or under any other Loan
Document to which it is a party when due thereunder; or
(d) International shall fail to comply with or perform any
covenant, agreement or condition in ARTICLE VII hereof; or
(e) any Credit Party shall fail to perform any other term,
covenant or agreement contained herein or in any other Loan Document to which it
is a party which failure could reasonably be expected to have a Material Adverse
Effect and such failure shall not have been remedied within thirty (30) days
after the earlier of (i) the discovery thereof by the Credit Party or (ii) the
receipt of written notice thereof by International from the Bank; or
(f) any representation or warranty made by any Credit Party in
any Loan Document to which it is a party or in any certificate, agreement,
instrument or statement contemplated by or delivered pursuant to, or in
connection with, any Loan Document shall prove to have been incorrect in any
material respect when made; or
(g) any Credit Party shall (i) fail to pay any Indebtedness
owing to the Bank evidenced by a promissory note, credit agreement or letter of
credit application; (ii) fail to pay any
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other Indebtedness having a principal amount in excess of $250,000.00 (other
than the amounts referred to in subsections (a) and (b) of this SECTION 8.01)
owing by such Person, or any interest or premium thereon, when due (or, if
permitted by the terms of the relevant document, within any applicable grace
period), whether such Indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise; or (iii) fail to
perform any term, covenant or condition on its part to be performed under any
agreement or instrument evidencing, securing or relating to any such
Indebtedness, when required to be performed, and such failure shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such failure is to accelerate, or to permit the
holder or holders of such Indebtedness to accelerate, the maturity of such
Indebtedness; or
(h) any Loan Document shall (other than with the consent of
the Bank), at any time after its execution and delivery and for any reason,
cease to be in full force and effect or to provide the Liens contemplated
thereby, except for such provisions or Liens that the Bank determines are not
material either individually or in the aggregate, or shall be declared to be
null and void, or the validity or enforceability thereof or of the Liens
contemplated thereby shall be contested by any Credit Party to the Loan
Documents or any such Credit Party shall deny that it has any or further
liability or obligation under any Loan Document; or
(i) any Reportable Event that might constitute grounds for the
termination of any Plan, or for the appointment by an appropriate United States
district court of a trustee to administer any Plan, shall have occurred and be
continuing for at least thirty (30) days, or any Plan shall be terminated, or a
trustee shall be appointed by an appropriate United States district court to
administer any Plan, or the PBGC shall institute proceedings to terminate any
Plan or to appoint a trustee to administer any Plan, and, in any such event, the
then-current value of such Plan's benefits guaranteed under Title IV of ERISA at
the time shall exceed by more than $270,000.00 the then-current value of such
Plan's assets, allocable to such benefits at such time; or
(j) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing; or
(k) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
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appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of
90 days; or an order for relief shall be entered against such Credit Party under
the federal bankruptcy laws as now or hereafter in effect; or
(l) a final judgment or order for the payment of money in
excess of $270,000.00 (net of acknowledged, uncontested insurance coverage)
shall be rendered against any Credit Party and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) a stay of enforcement of such judgment or order by reason of a
pending appeal or otherwise, shall not be in effect for any period of thirty
(30) consecutive days; or
(m) any single Person shall in a single transaction or a
series of related transactions acquire control of more than 51% of
International's capital stock; then, (x) upon the occurrence of any Event of
Default described in SECTION 8.01(J) or SECTION 8.01(K), (i) the Commitment
shall automatically terminate and the Bank's obligation to issue Letters of
Credit shall automatically terminate and (ii) all amounts owing by the Credit
Parties under this Agreement, the Notes, the other Loan Documents and any other
agreement or security document contemplated by or delivered in connection with
this Agreement (including all L/C Obligations and Existing L/C Obligations)
shall automatically become immediately due and payable without, in any case,
presentment for payment, further demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of which
are hereby expressly waived by each Borrower, and (y) upon the occurrence of any
other Event of Default, the Bank may, by notice to International, (i) declare
the Commitment to be terminated, whereupon the same shall forthwith terminate
and (ii) declare the entire unpaid principal amount of all amounts payable by
any Credit Party under this Agreement (including all L/C Obligations and
Existing L/C Obligations), the Notes, the other Loan Documents and any other
agreement or security document contemplated by or delivered in connection with
this Agreement, to be forthwith due and payable, whereupon all such amounts
shall become and be forthwith due and payable, without presentment for payment,
further demand, protest, notice of intent to accelerate, notice of acceleration
or further notice of any kind, all of which are hereby expressly waived by each
Borrower. With respect to all Letters of Credit and Existing Letters of Credit
as to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to clause (x) or (y) above, each Borrower for the account
of which any of such Letters of Credit or Existing Letters of Credit were issued
shall at such time deposit in a cash collateral account opened by the Bank an
amount equal to the aggregate undrawn face amount of such Letters of Credit and
Existing Letters of Credit issued for its account. Amounts held in such cash
collateral account shall be applied by the Bank to the payment of drafts drawn
under such Letters of Credit and Existing Letters of Credit, and the unused
portion thereof after all such Letters of Credit and Existing Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to repay
other obligations of such Borrower hereunder and under the Notes and the other
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Loan Documents. After all such Letters of Credit and Existing Letters of Credit
shall have expired or been fully drawn upon, all L/C Obligations and Existing
L/C Obligations shall have been satisfied and all other obligations of each
Borrower hereunder and under the Notes and the other Loan Documents shall have
been paid in full, the balance, if any, in such cash collateral account shall be
returned to each Borrower that deposited such cash collateral to be applied by
the Borrowers as their interests may appear.
Section 8.02. SET-OFF IN EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, the Bank is hereby
authorized, at any time and from time to time, without notice to the Borrowers
or any other Credit Party (any such notice being expressly waived by the Credit
Party) and to the fullest extent permitted by applicable law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any branch, subsidiary or Affiliate of the Bank to or for the credit or the
account of any Credit Party against any and all of the obligations of such
Credit Party, now or hereafter existing under this Agreement (including all L/C
Obligations and Existing L/C Obligations), the Notes or the other Loan Documents
to which each such Credit Party is a party, irrespective of whether or not the
Bank shall have made any demand for satisfaction of such Obligations and
although such Obligations may be unmatured. The Bank agrees to notify
International promptly after any such set-off and application made by the Bank;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including other rights of
set-off) which the Bank may have hereunder or under any applicable law.
ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENTS. No modification, amendment or waiver
of any provision of this Agreement (including, without limitation, the
Guaranty), the Notes or any other Loan Document, or consent to any departure by
any Credit Party herefrom or therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank and each Credit Party
thereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 9.02. NOTICES. All notices, consents, requests,
approvals, demands and other communications (collectively, "COMMUNICATIONS")
provided for herein and in the other Loan Documents shall be in writing
(including telecopied communications) and mailed, telecopied or delivered as
follows:
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if to International or any other Credit Party to, or in care of--
Proler International Corp.
4265 San Felipe, Suite 900
Houston, Texas 77027
Attention: Steven F. Gilliland
Telecopy No.: (713) 627-2737
with a copy to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attention: Gail Merel
Telecopy No.: (713) 225-7047
if to the Bank --
Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention: Stephen H. Oglesby or Curtis D. Karges
Telecopy No.: (713) 236-6004
with a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: Thomas J. Perich
Telecopy No.: (713) 220-4285
or at such other address as the Bank or any Credit Party shall designate in a
Communication to each of the other parties hereto. All Communications shall be
effective, in the case of written or telecopied communications, three days after
being deposited in the mail, or upon the date sent by telecopy or (in the case
of Communications which are not mailed or telecopied) when delivered and (if a
Communication is sent by telecopy or delivered) receipt thereof is confirmed,
respectively, in each case addressed as aforesaid. Notwithstanding the
foregoing, all Borrowing Requests shall not be effective until received by the
Bank.
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Section 9.03. COSTS, EXPENSES AND TAXES. The Borrowers agree
to pay on demand all reasonable costs and expenses of the Bank in connection
with (a) the administration of the Loan Documents, the Letters of Credit and the
preparation, execution, delivery, filing, recording and administration of this
Agreement, the Notes, the Letters of Credit, the Existing Letters of Credit and
the other Loan Documents and any other agreements or security documents
delivered in connection with or pursuant to any of the Loan Documents, including
the reasonable fees and out-of-pocket expenses of Andrews & Kurth L.L.P.,
counsel for the Bank and any local counsel who may be retained by such counsel,
and the cost of any and all appraisals, surveys, environmental audits or studies
subject to the limitations of SECTION 6.01(l), title insurance policies and
similar items required hereby, (b) all reasonable costs and expenses, if any,
incurred by the Bank in connection with the enforcement of this Agreement and
the other Loan Documents and any other agreements or security documents executed
in connection with or pursuant to any of the Loan Documents, including the
reasonable fees and out-of-pocket expenses of counsel for the Bank and any local
counsel who may be retained by such counsel, and (c) the reasonable costs and
expenses in connection with the custody, preservation, use or operation of, or
the sale of, or collection from, or other realization upon the collateral
covered by any of the Loan Documents. The agreements of the Borrowers contained
in this Section shall survive the termination of the Commitment and the payment
of all amounts owing by any Credit Party hereunder or under any of the other
Loan Documents.
Section 9.04. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the Credit Parties,
the Bank and their respective successors and assigns, except that no Credit
Party may assign or transfer its respective rights hereunder without the prior
written consent of the Bank.
Section 9.05. INDEPENDENCE OF COVENANTS. All covenants
contained in the Loan Documents shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that such action or condition would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 9.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement and the other Loan
Documents, or made in writing by any Credit Party in connection herewith or
therewith, shall survive the execution and delivery of this Agreement, the
Notes, any Letters of Credit, the Existing Letters of Credit and the other Loan
Documents. Any investigation by the Bank shall not diminish in any respect
whatsoever its right to rely on such representations and warranties.
Section 9.07. SEPARABILITY. Should any clause, sentence,
paragraph, subsection, Section or Article 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
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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 by
the parties hereto, and the remainder will have the same force and effectiveness
as if such stricken part or parts had never been included herein.
Section 9.08. NO WAIVER; REMEDIES. No failure on the part of
the Bank to exercise, and any delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies provided in this Agreement and the Notes are
cumulative and not exclusive of any remedies provided in any of the other Loan
Documents or by law.
Section 9.09. 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.
Section 9.10. GOVERNING LAW. This Agreement, the Notes, the
Letters of Credit, the Existing Letters of Credit and, unless otherwise
specified therein, all other Loan Documents and all other documents executed in
connection herewith or therewith, shall be deemed to be contracts and agreements
executed by Credit Parties and the Bank under the laws of the State of Texas and
of the United States and for all purposes shall be construed in accordance with,
and governed by, the laws of the State of Texas and of the United States.
Without limitation of the foregoing, nothing in this Agreement, the Notes or any
other Loan Documents shall be deemed to constitute a waiver of any rights which
the Bank may have under federal legislation relating to the rate of interest
which the Bank may contract for, take, receive, reserve or charge in respect of
the Obligations. The Bank and the Borrowers further agree that insofar as the
provisions of Article 1.04, Subtitle 1, Title 79, of the Revised Civil Statutes
of Texas, 1925, as amended, are applicable to the determination of the Highest
Lawful Rate with respect to the Obligations, the indicated (weekly) rate ceiling
computed from time to time pursuant to Section (a) of such Article shall apply
to the Obligations; PROVIDED, HOWEVER, that to the extent permitted by such
Article, the Bank may from time to time by notice from the Bank to the Borrowers
revise the election of such interest rate ceiling as such ceiling affects the
then current or future balances outstanding under the Notes. The provisions of
Chapter 15 of Subtitle 3 of the said Title 79 do not apply to this Agreement,
the Notes or any transactions contemplated by any Loan Document.
Section 9.11. LIMITATION ON INTEREST. Each provision in this
Agreement, the Notes, the Letters of Credit, the Existing Letters of Credit 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 Bank for the use,
forbearance or detention of the money to be advanced under this Agreement, the
Notes or any other Loan Document or otherwise (including any sums paid as
required by any
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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 which are for the use, forbearance or
detention of money under this Agreement or such Loan Document shall in all
events be less than that amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate. Anything in this Agreement, the
Notes, the Letters of Credit, the Existing Letters of Credit or any other Loan
Document to the contrary notwithstanding, no Borrower shall ever be required to
pay unearned interest on the Obligations or ever be required to pay interest on
the Obligations at a rate in excess of the Highest Lawful Rate, or if the holder
of any of the Obligations 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 either or both Borrowers under this Agreement, the
Notes 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
Borrowers under this Agreement, the Notes and other Loan Documents shall be
reduced to the amount allowed under applicable law and (b) any unearned interest
paid by a Borrower or any interest paid by a Borrower in excess of the Highest
Lawful Rate shall be in the first instance credited on the principal of the
applicable Note with the excess thereof, if any, refunded to such Borrower. It
is further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, charged or received by the Bank under the
Notes, this Agreement, the Letters of Credit, the Existing Letters of Credit or
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 the Bank (now or hereafter enacted), by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the Obligations evidenced by the Notes all interest at any time
contracted for, charged or received by the Bank in connection therewith. If at
any time and from time to time, (x) the amount of interest payable to the Bank
on any date shall be computed at the Highest Lawful Rate pursuant to this
Section and (y) in respect of any subsequent interest computation period the
amount of interest otherwise payable to the Bank would be less than the amount
of interest payable to the Bank computed at the Highest Lawful Rate, then to the
extent permitted by applicable usury law, the amount of interest payable to the
Bank in respect of such subsequent interest computation period shall continue to
be computed at the Highest Lawful Rate until the total amount of interest
payable to the Bank shall equal the total amount of interest which would have
been payable to the Bank if the total amount of interest had been computed
without giving effect to this Section.
Section 9.12. INDEMNIFICATION. (a) Each of the Borrowers and
each other Credit Party agrees to indemnify, defend and hold the Bank, as well
as its officers, employees, agents, directors, shareholders, counsels and
Affiliates (collectively, "INDEMNIFIED PERSONS") harmless from and against any
and all loss, liability, damage, judgment, claim, deficiency, penalty, fine,
response
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and remediation cost, stabilization cost, encapsulation cost, treatment, storage
or disposal cost, groundwater monitoring or environmental sampling cost or any
other reasonable cost or expense (including interest, penalties, reasonable
attorneys', experts' or consultants' fees, and disbursements in connection with
any investigative, administrative or judicial proceeding and amounts paid in
settlement) (collectively, "INDEMNIFIED LIABILITIES") incurred by or asserted
against any Indemnified Person arising out of, in any way connected with, or as
a result of (i) the execution and delivery of this Agreement and the other Loan
Documents, the performance by the parties hereto and thereto of their respective
obligations hereunder and thereunder (including the making of the Commitment of
the Bank) and consummation of the transactions contemplated hereby and thereby,
(ii) the actual or proposed use of the Letters of Credit or the Existing Letters
of Credit, (iii) any past, present or future violation by a Borrower, any of its
respective Subsidiaries, any operator who is not an Indemnified Person of the
Mortgaged Properties, or any other Person (other than any Indemnified Person) of
any requirement of law, including Environmental Laws, with regard to the
ownership, operation, use or occupancy of the Mortgaged Properties occurring at
any time prior to the repayment in full of the Obligations, (iv) solely insofar
as any of the following arises out of any Mortgaged Property, the past, present
or future treatment, storage, disposal, generation, use, transport, movement,
migration, presence, release, spill or emission of any pollutants, contaminants,
Hazardous Materials, or hazardous or toxic substances or wastes into or onto
soil, land, surface water, ground water, watercourses, publicly-owned treatment
works, drains, sewer systems, wetlands or septic systems occurring at any time
prior to the repayment in full of the Obligations, (v) ownership by the Bank of
any real or personal property following rightful foreclosure under the Security
Documents, to the extent such losses, liabilities, damages, judgments, claims,
deficiencies or expenses arise out of or result from the presence or release of
any Hazardous Materials in, on or under such property during the period owned,
leased or operated by a Borrower or any of its respective Subsidiaries,
including, without limitation, losses, liabilities, damages, judgments, claims,
deficiencies or expenses which are imposed under Environmental Laws upon Persons
by virtue of their ownership, (vi) foreseeable consequential or punitive damages
incurred as a result of any matter or claim described above or (vii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Person is a party thereto.
(b) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS BUT IN ALL EVENTS SUBJECT TO SUBPARAGRAPH (C) OF THIS
SECTION 9.12, IT IS THE EXPRESS INTENTION OF EACH BORROWER AND THE OTHER CREDIT
PARTIES THAT EACH INDEMNIFIED PERSON SHALL BE INDEMNIFIED AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DEFICIENCIES, JUDGMENTS OR
REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE
(WHETHER SOLE OR CONTRIBUTORY) OF SUCH INDEMNIFIED PERSON. THE OBLIGATIONS OF
EACH BORROWER AND THE OTHER CREDIT PARTIES UNDER
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THIS SECTION 9.12 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE
COMMITMENT AND THE REPAYMENT OF THE OBLIGATIONS.
(c) Notwithstanding any other provision of this Agreement or
any other Loan Document or any other document or instrument, in no event shall
any Credit Party be liable in any manner with respect to any or all Indemnified
Liabilities to the extent arising from any acts or omissions constituting gross
negligence or willful misconduct on the part of any Indemnified Person.
(d) With respect to all Indemnified Liabilities relating to
any Mortgaged Property or any Hazardous Material or any Environmental Law,
notwithstanding any other provision of this Agreement or any other Loan Document
or any other document or instrument, no Credit Party shall be liable (x) for any
acts of any Indemnified Person or of any Person acting on behalf of or at the
direction of any Indemnified Person, or (y) in the event that any Indemnified
Person, or any Person acting on behalf of or at the direction of any Indemnified
Person, is judicially or administratively determined to be a Person having
management participation or otherwise exercising control within the meaning of
the Environmental Laws in effect on the date of this Agreement, for any omission
of any Indemnified Person or any omission of any Person acting on behalf of, or
at the direction of any Indemnified Person, or (z) for any act or omission of
any Person occurring from and after the date on which none of the Credit Parties
holds title to such Mortgaged Property; PROVIDED, HOWEVER, that this clause (z)
shall not release any Credit Party from any liability which it would otherwise
have under this subparagraph (d) for conditions arising prior to said date as to
which any Indemnified Liability is asserted subsequent to said date.
Section 9.13. NOTICE AND DEFENSE OF CLAIMS. (a) The Credit
Parties shall give prompt notice to the Bank of:
(i) their receipt of any correspondence, demand, notice,
order, complaint, notice of violation, assessment, claim or request for
information issued pursuant to or under color of any Environmental Laws
or which refers to any Hazardous Materials from any federal, state or
local governmental authority or from any private party or organization
with respect to the Mortgaged Properties, any operator of the Mortgaged
Properties or any Credit Party, which, in the reasonable good faith
judgment of the Credit Parties, is likely to result in a Material
Adverse Effect;
(ii) the institution of any claim, suit, action, investigation
or administrative or judicial proceeding or action (formal or informal)
of which the Credit Parties are aware, brought with regard to the
condition, use, ownership, operation, occupancy or maintenance of the
Mortgaged Properties under the Environmental Laws or relating to
Hazardous Materials which claim, suit, action, investigation or
administrative or judicial proceeding or
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action, in the reasonable good faith judgment of the Credit Parties, is
likely to result in a Material Adverse Effect; and
(iii) the discovery or detection, of which the Credit Parties
are aware, by any Person, of Hazardous Materials on the Mortgaged
Properties which, in the reasonable good faith judgment of the Credit
Parties, is likely to result in a Material Adverse Effect.
(b) The Credit Parties shall retain the exclusive right, at
their option, to compromise, settle or defend, at their expense and with their
own counsel, any Indemnified Liabilities; PROVIDED, HOWEVER, that the Credit
Parties shall provide the Bank with all such copies of documents and pleadings
relating to such Indemnified Liabilities as the Bank may reasonably request;
PROVIDED, FURTHER, that in the case of any action in which any Indemnified
Person is a named party thereto, such counsel retained by the Credit Parties
shall be reasonably acceptable to such Indemnified Person. In the case of any
such action in which an Indemnified Person is a named party thereto, the Credit
Parties, at the request of such Indemnified Person, shall keep such Indemnified
Person apprised of all matters relevant to such action and such Indemnified
Person shall have the full right, at its own expense, to participate, through
counsel or otherwise, in all meetings and proceedings with adverse parties or
governmental authorities (other than any confidential meetings unrelated to
claims against such Indemnified Person); PROVIDED, HOWEVER, that if any of the
Credit Parties give notice in writing to such Indemnified Person that the Credit
Parties do not intend, for whatever reason, to defend any such action, then such
Indemnified Person may prosecute its own defense or response with its own
counsel and the reasonable fees of such counsel shall be at the expense of the
Credit Parties for that portion of the action relating to any Indemnified
Liabilities if: (x) such Indemnified Person shall prosecute such defense or
response diligently and in an appropriate manner and (y) such Indemnified
Person, at the request of any of the Credit Parties, shall keep the Credit
Parties apprised of all matters relevant to such action; PROVIDED, FURTHER, that
in the event that such Indemnified Person does not consent to any settlement or
compromise proposed by the parties to such action and acceptable to the Credit
Parties, then the liability of the Credit Parties under SECTIONS 9.12 and 9.13
of this Agreement for any Indemnified Liabilities shall not exceed that
liability which the Credit Parties would have had if such Indemnified Person had
consented to such settlement or compromise.
(c) Upon the occurrence of any of the events contemplated by
subsection (a) above relating to any Mortgaged Property, the Bank shall have
(but need not exercise) the right to retain, at its own expense, consultants and
specialists of the Bank's choice to assess the necessity for and appropriateness
of the investigation, removal, remediation, encapsulation or other treatment of
any Hazardous Materials found on the Mortgaged Properties. If the Bank
reasonably determines that any such activities are necessary and appropriate to
prevent the occurrence of a Material Adverse Effect, it shall deliver written
notice to the Credit Parties of the basis of such determination, describing such
activities with reasonable specificity. Upon receipt of such notice, and if such
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activities are required by law, the Credit Parties will diligently, and in a
reasonable manner, undertake and complete such activities to the Bank's
reasonable satisfaction, at the Credit Parties' sole expense.
(d) The Indemnified Persons shall give prompt written notice
to the Credit Parties of any claim against the Indemnified Persons which might
give rise to a claim by the Indemnified Persons against the Credit Parties under
SECTION 9.12.
Section 9.14. LIMITATION BY LAW. All rights, remedies and
powers provided in this Agreement and the other Loan Documents may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Agreement and the other Loan
Documents are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement or any other Loan Document invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
Section 9.15. 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 (iv) is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) reference to any agreement, document or instrument means
such agreement, 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
includes any note issued pursuant hereto in extension or renewal
thereof and in substitution or replacement therefor;
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(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, the word "from" means "from and including" and the word "to"
means "to but excluding";
(ix) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time; and
(x) whenever any accounting computation is required to be
made, for purposes hereof, such computation shall be made in accordance
with GAAP.
(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.
Section 9.16. WAIVER OF TEXAS DECEPTIVE TRADE PRACTICES ACT.
EACH CREDIT PARTY HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS, DEMANDS AND CAUSES
OF ACTION BASED UPON OR RELATED TO THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT AS DESCRIBED IN SECTION 17.41 ET SEQ. OF THE TEXAS BUSINESS &
COMMERCE CODE, AS THE SAME PERTAINS OR MAY PERTAIN TO ANY OF THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, TO THE MAXIMUM EXTENT THAT SUCH
RIGHTS, ETC. MAY LAWFULLY AND EFFECTIVELY BE WAIVED. IN FURTHERANCE OF THIS
WAIVER, EACH UNDERSIGNED OBLIGOR UNDER THE LOAN DOCUMENTS HEREBY REPRESENTS AND
WARRANTS THAT (A) EACH SUCH CREDIT PARTY HAS ASSETS OF $5,000,000.00 OR GREATER
ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
GAAP AND HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT
ENABLE IT TO EVALUATE THE MERITS AND RISKS OF A TRANSACTION, (B) EACH SUCH
CREDIT PARTY IS REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE NEGOTIATION,
EXECUTION AND DELIVERY OF THE LOAN DOCUMENTS AND (C) NO SUCH CREDIT PARTY
CONSIDERS ITSELF TO BE IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH
RESPECT TO THE LOAN DOCUMENTS.
Section 9.17. RELEASES. EACH CREDIT PARTY HEREBY RELEASES,
DISCHARGES AND ACQUITS FOREVER THE BANK AND ITS OFFICERS, DIRECTORS, TRUSTEES,
AGENTS, EMPLOYEES AND COUNSEL (IN EACH CASE, PAST, PRESENT OR FUTURE) FROM ANY
AND ALL CLAIMS EXISTING AS OF THE DATE HEREOF (OR THE DATE OF ACTUAL EXECUTION
HEREOF BY THE APPLICABLE PERSON OR ENTITY, IF LATER). AS USED HEREIN,
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THE TERM "CLAIM" SHALL MEAN ANY AND ALL LIABILITIES, CLAIMS, DEFENSES, DEMANDS,
ACTIONS, CAUSES OF ACTION, JUDGMENTS, DEFICIENCIES, INTEREST, LIENS, COSTS OR
EXPENSES (INCLUDING COURT COSTS, PENALTIES, ATTORNEYS' FEES AND DISBURSEMENTS
AND AMOUNTS PAID IN SETTLEMENT) OF ANY KIND AND CHARACTER WHATSOEVER, INCLUDING
CLAIMS FOR USURY, BREACH OF CONTRACT, BREACH OF COMMITMENT, NEGLIGENT
MISREPRESENTATION OR FAILURE TO ACT IN GOOD FAITH, IN EACH CASE WHETHER NOW
KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED OR PRIMARY OR
CONTINGENT, AND WHETHER ARISING OUT OF WRITTEN DOCUMENTS, UNWRITTEN
UNDERTAKINGS, COURSE OF CONDUCT, TORT, VIOLATIONS OF LAWS OR REGULATIONS OR
OTHERWISE ARISING OUT OF THIS TRANSACTION, THE TRANSACTION CONTEMPLATED BY ANY
PRIOR AGREEMENTS, AND ALL RELATED DOCUMENTS, TRANSACTIONS AND EVENTS.
Section 9.18. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BORROWERS:
PROLER INTERNATIONAL CORP.
By: /s/ MICHAEL F. LOY
Michael F. Loy
Vice President - Finance
JOINT VENTURE OPERATIONS, INC.
By: /s/ MICHAEL F. LOY
Michael F. Loy
Vice President - Finance
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GUARANTORS:
PROLER INTERNATIONAL CORP.
JOINT VENTURE OPERATIONS, INC.
PROLER POWER MARKETING, INC.
PROLER STEEL, INC.
PROLER INDUSTRIES, INC.
PROLERIDE TRANSPORT SYSTEMS, INC.
PROLER RECYCLING, INC.
PROLER ENVIRONMENTAL SERVICES, INC.
PROLER PROPERTIES, INC.
By: /s/ MICHAEL F. LOY
Michael F. Loy
Vice President - Finance
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BANK:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ CURTIS D. KARGES
Curtis D. Karges
Senior Vice President
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") dated as of February 28,
1996 is by and between PROLER INTERNATIONAL CORP., a Delaware corporation
("PROLER INTERNATIONAL"), and PROLER SUCCESSOR, INC. a Delaware corporation
("PROLER SUCCESSOR");
WITNESSETH:
WHEREAS, Proler International owns all of the issued and outstanding
Common Stock of Proler Successor, and in connection with a restructuring of the
business and operations of Proler International and its subsidiaries, Proler
International wishes to contribute certain of its assets and businesses to
Proler Successor, and wishes Proler Successor to assume certain liabilities and
obligations of Proler International;
NOW, THEREFORE, the parties hereto agree as follows:
1. CONTRIBUTION OF ASSETS TO PROLER SUCCESSOR. Proler International
agrees to contribute to Proler Successor those certain assets, contracts,
properties, and other rights and interests listed on SCHEDULE 1 hereto that are
carried on the books and records of or are otherwise owned by Proler
International as of the date hereof (the "CONTRIBUTED ASSETS"). Proler
International agrees to execute and deliver such instruments, agreements,
certificates, and other documents as shall be necessary or appropriate to convey
title in the Contributed Assets to Proler Successor.
2. ASSUMPTION OF CERTAIN LIABILITIES BY PROLER SUCCESSOR. Proler
Successor agrees to assume the debts, liabilities and obligations of Proler
International listed in SCHEDULE 2 hereto that are carried on the books and
records of or are otherwise obligations of Proler International as of the date
hereof (the "ASSUMED LIABILITIES"). Proler Successor agrees to execute and
deliver to Proler International such agreements, instruments, and other
documents necessary or appropriate to effect and evidence its assumption of the
Assumed Liabilities.
3. EFFECTIVE DATE. This Agreement shall become effective at 2:30 p.m.
on February 28, 1996, with the contribution of the Contributed Assets and the
assumption of the Assumed Liabilities to be effective as of such date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
PROLER INTERNATIONAL CORP.
By: /s/ STEVEN F. GILLILAND
Name: STEVEN F. GILLILAND
Title: PRESIDENT
PROLER SUCCESSOR, INC.
By: /s/ STEVEN F. GILLILAND
Name: STEVEN F. GILLILAND
Title: PRESIDENT
2
SCHEDULE 1
ASSETS CONTRIBUTED TO PROLER SUCCESSOR, INC.
Houston Petty Cash
Payroll Account maintained at Texas Commerce Bank
All Accounts Receivable from employees
All Prepaid Insurance
All Prepaid Officers Life Insurance
All Casualty Insurance Receivables
CIGNA Insurance Deposits
San Felipe Office Lease Deposit
Cash Surrender Value Life Insurance
Loans on Insurance Policies
Office Equipment and Improvements - San Felipe office
Deferred Compensation Intangible Asset
Accrued Interest Life Insurance
MRI Corp. Intercompany Receivables
Prolerized Steel Corporation Intercompany Receivables
Proler Environmental Services, Inc. Intercompany Receivables
Proler Recycling, Inc., Intercompany Receivables
Proler Power Marketing, Inc. Intercompany Receivables
Investment in MRI Corp.
Investment in Prolerized Steel Corporation
Investment in Proler Environmental Services, Inc.
Investment in Proler Recycling, Inc.
Investment in Proler Power Marketing, Inc.
Note Receivable from Howard Industries
Houston Maintenance Parts Inventory Work in Progress
Land located on Furay Road
Land located on Coke Street
Land located on Middle Street
Real property - Liberty Road, Building & Equipment
Other Assets Held for Resale - Jacintoport Blvd.
Other Assets Held for Resale - Liberty Road
3
SCHEDULE 2
LIABILITIES ASSUMED BY PROLER SUCCESSOR, INC.
Deferred Compensation Liability
Payroll Tax Liabilities
Deferred Rent Expense
Accrued Bonuses
Stock Option Liability
Accrued Liabilities
- Legal
- Workers Compensation and General Liability Insurance
- Section 401(k) Plan
MRI Corp. Intercompany Payables
Prolerized Steel Corporation Intercompany Payables
Proler Environmental Services, Inc. Intercompany Payables
Proler Recycling, Inc., Intercompany Payables
Proler Power Marketing, Inc. Intercompany Payables
Ad Valorem Tax Liability
4
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") dated as of February 28,
1996 is by and between PROLER SUCCESSOR, INC., a Delaware corporation ("PROLER
SUCCESSOR"), and PROLER INDUSTRIES, INC. a Delaware corporation ("PROLER
INDUSTRIES").
WITNESSETH:
WHEREAS, Proler Successor owns all of the issued and outstanding Common
Stock of Proler Industries; and
WHEREAS, in connection with a restructuring of Proler International
Corp., the sole shareholder of Proler Successor, Proler International Corp.
contributed certain of its assets and businesses to Proler Successor and Proler
Successor assumed certain liabilities and obligations of Proler International
pursuant to a Contribution Agreement of even date herewith (the "PROLER
INTERNATIONAL CONTRIBUTION AGREEMENT", a copy of which is attached hereto as
EXHIBIT "A"); and
WHEREAS, Proler Successor wishes to contribute certain of the assets
and businesses contributed to it by Proler International to Proler Industries,
and wishes Proler Industries to assume certain of the liabilities and
obligations of Proler International assumed by Proler Successor;
NOW, THEREFORE, the parties hereto agree as follows:
1. CONTRIBUTION OF ASSETS TO PROLER INDUSTRIES. Proler Successor agrees
to contribute to Proler Industries those certain assets, contracts, properties,
and other rights and interests listed on SCHEDULE 1 hereto (the "CONTRIBUTED
ASSETS)", all of which were contributed to Proler Successor pursuant to the
Proler International Contribution Agreement. Proler Successor agrees to execute
and deliver such instruments, agreements, certificates, and other documents as
shall be necessary or appropriate to convey title in the Contributed Assets to
Proler Industries.
2. ASSUMPTION OF CERTAIN LIABILITIES BY PROLER INDUSTRIES. Proler
Industries agrees to assume the debts, liabilities and obligations of Proler
Successor listed in SCHEDULE 2 hereto (the "ASSUMED LIABILITIES"), all of which
were assumed by Proler Successor pursuant to the Proler International
Contribution Agreement. Proler Industries agrees to execute and deliver to
Proler Successor such agreements, instruments, and other documents necessary or
appropriate to effect and evidence its assumption of the Assumed Liabilities.
3. EFFECTIVE DATE. This Agreement shall become effective at 2:35 p.m.
on February 28, 1996, with the contribution of the Contributed Assets and the
assumption of the Assumed Liabilities to be effective as of such date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
PROLER SUCCESSOR, INC.
By: /s/ STEVEN F. GILLIAND
Name: STEVEN F. GILLILAND
Title: PRESIDENT
PROLER INDUSTRIES, INC.
By: /s/ STEVEN F. GILLILAND
Name: STEVEN F. GILLILAND
Title: PRESIDENT
2
SCHEDULE 1
ASSETS CONTRIBUTED TO PROLER INDUSTRIES, INC.
MRI Corp. Intercompany Receivables
Prolerized Steel Corporation Intercompany Receivables
Proler Environmental Services, Inc. Intercompany Receivables
Proler Recycling, Inc., Intercompany Receivables
Proler Power Marketing, Inc. Intercompany Receivables
Investment in MRI Corp.
Investment in Prolerized Steel Corporation
Investment in Proler Environmental Services, Inc.
Investment in Proler Recycling, Inc.
Investment in Proler Power Marketing, Inc.
Note Receivable from Howard Industries
Houston Maintenance Parts Inventory
Work in Progress
Land located on Furay Road
Land located on Coke Street
Land located on Middle Street
Real property - Liberty Road, Building & Equipment
Other Assets Held for Resale - Jacintoport Blvd.
Other Assets Held for Resale - Liberty Road
3
SCHEDULE 2
LIABILITIES ASSUMED BY PROLER INDUSTRIES, INC.
MRI Corp. Intercompany Payables
Prolerized Steel Corporation Intercompany Payables
Proler Environmental Services, Inc. Intercompany Payables
Proler Recycling, Inc., Intercompany Payables
Proler Power Marketing, Inc. Intercompany Payables
Ad Valorem Tax Liability
4
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") dated as of February 28,
1996 is by and between PROLER INDUSTRIES, INC., a Delaware corporation ("PROLER
INDUSTRIES"), and PROLER PROPERTIES, INC. a Texas corporation ("PROLER
PROPERTIES").
WITNESSETH:
WHEREAS, in connection with a restructuring of Proler International
Corp., the ultimate parent corporation of Proler Industries and Proler
Properties, (i) Proler International Corp. contributed certain of its assets and
businesses to Proler Successor, Inc. and Proler Successor, Inc. assumed certain
liabilities and obligations of Proler International pursuant to a Contribution
Agreement of even date herewith (the "PROLER INTERNATIONAL CONTRIBUTION
AGREEMENT", a copy of which is attached hereto as EXHIBIT "A"); (ii) Proler
Successor, Inc. contributed certain of such assets and businesses to Proler
Industries and Proler Industries assumed certain of such liabilities and
obligations assumed by Proler Successor pursuant to a Contribution Agreement of
even date herewith (the "PROLER SUCCESSOR CONTRIBUTION AGREEMENT", a copy of
which is attached hereto as EXHIBIT "B"); and
WHEREAS, Proler Industries wishes to contribute certain of the assets
and businesses contributed to it by Proler Successor to Proler Properties, and
wishes Proler Properties to assume certain of the liabilities and obligations of
Proler International Corp. assumed by Proler Industries;
NOW, THEREFORE, the parties hereto agree as follows:
1. CONTRIBUTION OF ASSETS TO PROLER PROPERTIES. Proler Industries
agrees to contribute to Proler Properties those certain assets, contracts,
properties, and other rights and interests listed on SCHEDULE 1 hereto (the
"CONTRIBUTED ASSETS"), all of which were contributed to Proler Industries
pursuant to the Proler Successor Contribution Agreement. Proler Industries
agrees to execute and deliver such instruments, agreements, certificates, and
other documents as shall be necessary or appropriate to convey title in the
Contributed Assets to Proler Properties.
2. ASSUMPTION OF CERTAIN LIABILITIES BY PROLER PROPERTIES. Proler
Properties agrees to assume the debts, liabilities and obligations of Proler
Industries listed in SCHEDULE 2 hereto (the "ASSUMED LIABILITIES"), all of which
were assumed by Proler Industries pursuant to the Proler Successor Contribution
Agreement. Proler Properties agrees to execute and deliver to Proler Industries
such agreements, instruments, and other documents necessary or appropriate to
effect and evidence its assumption of the Assumed Liabilities.
3. EFFECTIVE DATE. This Agreement shall become effective at 2:40 p.m.
on February 28, 1996, with the contribution of the Contributed Assets and the
assumption of the Assumed Liabilities to be effective as of such date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
PROLER INDUSTRIES, INC.
By: /s/ STEVEN F. GILLILAND
Name: STEVEN F. GILLILAND
Title: PRESIDENT
PROLER PROPERTIES, INC.
By: /s/ STEVEN F. GILLILAND
Name: STEVEN F. GILLILAND
Title: PRESIDENT
2
SCHEDULE 1
ASSETS CONTRIBUTED TO PROLER PROPERTIES, INC.
Note Receivable from Howard Industries
Houston Maintenance Parts Inventory
Work in Progress
Land located on Furay Road
Land located on Coke Street
Land located on Middle Street
Real property - Liberty Road, Building & Equipment
Other Assets Held for Resale - Jacintoport Blvd.
Other Assets Held for Resale - Liberty Road
3
SCHEDULE 2
LIABILITIES ASSUMED BY PROLER PROPERTIES, INC.
Ad Valorem Tax Liability
4
EXHIBIT 21
PROLER INTERNATIONAL CORP. (THE "REGISTRANT") AND SUBSIDIARIES
The following table provides certain information as to (i) each direct
and indirect subsidiary of the Registrant and (ii) each of the Registrant's
joint operations, as of February 29, 1996:
<TABLE>
<CAPTION>
RELATIONSHIP
TO COMPANY
OR A
NAME OF ENTERPRISE SUBSIDIARY (1)
The Registrant, Proler International Corp., a Delaware corporation
Subsidiaries of the Company:
<S> <C>
Proler Steel, Inc., a Delaware corporation...................................................100%
Proler Industries, Inc., a Delaware corporation..............................................100%
Joint Venture Operations, Inc., a Delaware corporation
(formerly Proler International Corp.).....................................................100%(2)
Proleride Transport Systems, Inc., a Delaware corporation....................................100%(3)
Prolerized Steel Corporation, a Delaware Corporation.........................................100%(4)
Proler Properties, Inc., a Texas corporation (formerly Buffalo Steel Corp.)..................100%(4)
MRI Corporation, a Delaware corporation......................................................100%(4)
Proler Environmental Services, Inc., a Delaware corporation..................................100%(4)
Proler Recycling, Inc., (formerly Proler Elemental Refining, Inc.)
a Delaware corporation....................................................................100%(4)
Proler Power Marketing, Inc., a Delaware corporation.........................................100%(4)
Gulf Coast Metals, Inc., a Texas corporation ................................................100%(5)
Joint Operations of the Company:
Hugo Neu-Proler Company, a partnership under the laws of California..........................50%(3)(6)
Prolerized New England Company, a partnership under the laws of New York.....................50%(6)(7)
Prolerized Schiabo-Neu Company, a partnership under the laws of New York.....................331/3%(3)(6)
Dover Barge Company, a Delaware corporation..................................................331/3%(3)
Worcester Recycling, Inc., a Massachusetts corporation....................................... 50%(7)
Prolerized New England Foreign Sales Corporation, a Virgin Island corporation................ 50%(8)
Prolerized Schiabo-Neu Foreign Sales Corporation, a Virgin Island corporation................331/3%(9)
Hugo Neu-Proler Foreign Sales Corporation, a Virgin Island corporation.......................50%(10)
Pacific Bulk Loading, Inc., a California corporation......................................... 50%(3)
Bulkloader, Inc., a Massachusetts corporation................................................ 50%(8)
Pacific Industrial Metal Corporation, a California corporation...............................50%(11)
H. Finkelman, Inc., a Maine corporation...................................................... 50%(7)
B. Rovner & Co., Inc. a New Hampshire corporation............................................ 50%(8)
Alameda Street Metal Corp., a California corporation......................................... 50%(3)
</TABLE>
(1) Percentage of voting stock or share in profits owned by the Company
except as otherwise indicated.
(2) Owned by Proler Steel, Inc.
(3) Owned by Joint Venture Operations, Inc.
(4) Owned by Proler Industries, Inc.
(5) Owned by Proler Properties, Inc. (formerly Buffalo Steel Corp.)
(6) Control can be exercised by the Company only by unanimous consent of
the partners.
(7) Owned by Proleride Transport Systems, Inc.
(8) Owned by Prolerized New England Company, a partnership. See footnote
(6).
(9) Owned by Prolerized Schiabo-Neu Company, a partnership. See footnote
(6).
(10) Owned by Hugo Neu-Proler Company, a partnership. See footnote (6).
(11) Owned by Pacific Bulk Loading, Inc.
