<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
----------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number: 1-9988
REXENE CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2104131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5005 LBJ FREEWAY
DALLAS, TEXAS 75244
(Address of principal executive offices) (Zip code)
(214) 450-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
At April 26, 1996, 18,769,951 shares of common stock, par value $0.01 per
share, of Rexene Corporation were outstanding.
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<PAGE>
REXENE CORPORATION AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Condensed Consolidated Statements of Income for the Three Months
Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1996 and 1995. . . . . . . . . . . . . . 3
Notes to Condensed Consolidated Financial Statements. . . . . . 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 5
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 8
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 8
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
REXENE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . $139,687 $169,528
-------- --------
Operating expenses:
Cost of sales. . . . . . . . . . . . . . . . . . 113,205 113,531
Marketing, general and administrative . . . . . 10,414 10,732
Research and development . . . . . . . . . . . . 2,040 1,972
-------- --------
125,659 126,235
-------- --------
Operating income . . . . . . . . . . . . . . . . . 14,028 43,293
-------- --------
Interest expense . . . . . . . . . . . . . . . . . (4,367) (7,286)
Interest income. . . . . . . . . . . . . . . . . . 769 757
Other, net . . . . . . . . . . . . . . . . . . . . (26) (18)
-------- --------
Income before income taxes . . . . . . . . . . . . 10,404 36,746
Income tax expense . . . . . . . . . . . . . . . . 3,934 13,897
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . $ 6,470 $ 22,849
-------- --------
-------- --------
Weighted average shares outstanding. . . . . . . . 19,126 19,104
-------- --------
-------- --------
Net income per share . . . . . . . . . . . . . . . $ 0.34 $ 1.20
-------- --------
-------- --------
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
REXENE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ---------
ASSETS
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . $ 11,733 $ 47,258
Deposit held in trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,616 3,547
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . 75,441 73,520
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,882 62,257
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,163 5,663
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . 313 531
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 161,148 192,776
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . 303,513 291,675
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . 12,051 11,811
Other noncurrent assets. . . . . . . . . . . . . . . . . . . . . . . . . . 23,859 24,329
--------- ---------
$500,571 $520,591
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,443 $ 29,768
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,824 14,319
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,854 1,714
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,590 30,778
Employee benefits payable. . . . . . . . . . . . . . . . . . . . . . . . . 3,941 7,781
--------- ---------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . 59,652 84,360
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,000 175,000
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . 66,808 67,107
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 53,458 53,973
Stockholders' equity:
Preferred stock, par value $.01 per share; 1 million
shares authorized; none issued and outstanding . . . . . . . . . . . . -- --
Common stock, par value $.01 per share; 100 million shares authorized;
18.8 and 18.7 million shares issued and outstanding,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 187
Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,319 111,247
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,315 28,595
Foreign currency translation adjustment. . . . . . . . . . . . . . . . . (169) 122
--------- ---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 145,653 140,151
--------- ---------
$500,571 $520,591
--------- ---------
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
REXENE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,470 $22,849
-------- -------
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . 5,682 4,888
Deferred income taxes. . . . . . . . . . . . . . . . . . . (7) 2,008
Amortization of debt issuance costs. . . . . . . . . . . . . . 250 768
Change in:
Accounts receivable. . . . . . . . . . . . . . . . . . . . . (1,922) (2,905)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . (2,641) 4,436
Prepaid expenses and other . . . . . . . . . . . . . . . . . 218 559
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . (26,188) 11,714
Accounts payable . . . . . . . . . . . . . . . . . . . . . (296) (15,707)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 5,140 6,225
Employee benefits payable and accrued liabilities. . . . . . (3,343) (2,015)
Other noncurrent liabilities . . . . . . . . . . . . . . . 601 (285)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 (2,066)
-------- -------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . (22,199) 7,620
-------- -------
Net cash provided by (used for) operating activities . . . . . . (15,729) 30,469
-------- -------
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . (17,386) (9,488)
Purchase of intangible asset . . . . . . . . . . . . . . . . . (833) -
-------- -------
Net cash used for investing activities . . . . . . . . . . . . . (18,219) (9,488)
-------- -------
Cash flows from financing activities:
Repayment of debt. . . . . . . . . . . . . . . . . . . . . . . - (20,000)
Repayment of advance payment from customer . . . . . . . . . . (900) -
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . (750) -
Proceeds from issuance of common stock, net. . . . . . . . . . 73 276
-------- -------
Net cash used for financing activities . . . . . . . . . . . . . (1,577) (19,724)
-------- -------
Net increase (decrease) in cash and cash equivalents . . . . . . (35,525) 1,257
Cash and cash equivalents at beginning of quarter. . . . . . . . 47,258 45,822
-------- -------
Cash and cash equivalents at end of quarter. . . . . . . . . . . $11,733 $47,079
-------- -------
-------- -------
Supplemental cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . $ 75 681
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . $ 30,310 $ 196
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
REXENE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
Rexene Corporation manufactures and markets a wide variety of products
through its two operating divisions, Rexene Products Company division
("Rexene Products") and Consolidated Thermoplastics Company division ("CT
Film"). The products range from value added specialty products, such as
customized plastic films, to commodity petrochemicals, such as styrene.
These products are used in a wide variety of industrial and consumer-related
applications. The Company's principal products are plastic film,
polyethylene, polypropylene, Rextac-Registered Trademark- amorphous
polyalphaolefin ("Rextac") and styrene. Rexene Corporation and its
subsidiaries are hereinafter sometimes collectively or separately referred to
as the "Company."
The accompanying condensed consolidated financial statements are unaudited;
however, in management's opinion, all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of the results of
operations, financial position and cash flows for the periods shown, have
been made. Results for interim periods are not necessarily indicative of
those to be expected for the full year. The interim condensed consolidated
financial statements should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included in the 1995 Annual Report on
Form 10-K.
2. INCOME TAXES
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Current:
Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,420 $10,488
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521 1,401
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) 2,008
------ -------
$3,934 $13,897
------ -------
------ -------
</TABLE>
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December
1996 31, 1995
------- --------
<S> <C> <C>
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . $22,189 $20,144
Work in progress . . . . . . . . . . . . . . . . . . . . . . . . 5,557 5,356
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . 37,136 36,757
------- -------
$64,882 $62,257
------- -------
------- -------
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment are as
follows (in thousands):
<TABLE>
<CAPTION>
March 31, December
1996 31, 1995
------- --------
<S> <C> <C>
Property, plant and equipment. . . . . . . . . . . . . . . . . . $364,611 $347,527
Less accumulated depreciation. . . . . . . . . . . . . . . . . . (61,098) (55,852)
-------- --------
$303,513 $291,675
-------- --------
-------- --------
</TABLE>
4
<PAGE>
5. INTANGIBLE ASSETS
The cost and accumulated amortization of intangible assets are as
follows (in thousands):
<TABLE>
<CAPTION>
March 31, December
1996 31, 1995
------- --------
<S> <C> <C>
Debt issuance costs. . . . . . . . . . . . . . . . . . . . . . . $ 9,735 $ 9,735
Less accumulated amortization. . . . . . . . . . . . . . . . . . (3,241) (2,991)
------- -------
6,494 6,744
------- -------
Reorganization value in excess of amounts allocable to
identifiable assets . . . . . . . . . . . . . . . . . . . . . . 4,298 4,298
Less accumulated amortization. . . . . . . . . . . . . . . . . . (1,237) (1,171)
------- -------
3,061 3,127
------- -------
Other intangible assets. . . . . . . . . . . . . . . . . . . . . . 6,377 5,544
Less accumulated amortization. . . . . . . . . . . . . . . . . . (3,881) (3,604)
------- -------
2,496 1,940
------- -------
$12,051 $11,811
------- -------
------- -------
</TABLE>
6. CONTINGENCIES
The Company is subject to extensive environmental laws and regulations
concerning, for example, emissions to the air, discharges to surface and
subsurface waters and the generation, handling, storage, transportation,
treatment and disposal of waste and other materials. The Company believes
that, in light of its historical expenditures, it will have adequate
resources to conduct its operations in compliance with currently applicable
environmental and health and safety laws and regulations. However, in order
to comply with changing facility permitting and regulatory standards, the
Company may be required to make additional significant site or operational
modifications. Further, the Company has incurred and may in the future incur
liability to investigate and clean up waste or contamination at its current
or former facilities, or which it may have disposed of at facilities operated
by third parties. On the basis of its investigation and analysis, management
believes that the approximately $20 million accrued in the March 31, 1996
balance sheet is adequate for the total potential environmental liability
with respect to contaminated sites. However, no assurance can be given that
all potential liabilities arising out of the Company's present or past
operations have been identified or fully assessed or that the amounts that
might be required to investigate and remediate such sites will not be
significant to the Company. The Company continually reviews its estimates of
potential environmental liabilities.
The Company is a party to various lawsuits arising in the ordinary course of
business and to certain other lawsuits which are set forth in Note 18 to the
Consolidated Financial Statements included in the Company's 1995 Annual
Report on Form 10-K. There have been no material changes to the lawsuits
described in the aforementioned Note 18, except as described in Part II below.
Although there can be no assurance of the final resolution of such lawsuits,
the Company believes that, based upon its current knowledge of the facts of
each case, it has meritorious defenses to the various claims made and
intends to defend each suit vigorously, and the Company does not believe that
the outcome of any of these lawsuits will have a material adverse effect on
the Company's financial position, results of operations or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The polyethylene, polypropylene and styrene markets in which the Company
competes are cyclical markets that are sensitive to relative changes in
supply and demand, which are in turn affected by general economic conditions.
5
<PAGE>
The Company's plastic film and Rextac-Registered Trademark- polymer
businesses are generally less sensitive to the economic cycles.
Historically, the cyclical segments have experienced alternating periods of
tight supply and rising prices and profit margins, followed by periods of
large capacity additions resulting in oversupply and declining prices and
profit margins.
Following a significant improvement in domestic economic growth since the
second half of 1994, these cyclical markets experienced increased levels of
demand through the second quarter of 1995 which resulted in greater capacity
utilization and higher domestic and export prices. This increase in demand
enabled the Company and the industry in general to increase selling prices
significantly beginning in the second quarter of 1994 through the first half
of 1995 even though feedstock costs were relatively stable. During the
second half of 1995 and the first quarter of 1996, the domestic petrochemical
and polymer markets experienced a decrease in demand and selling prices due
to several factors, including inventory reductions by customers, the slowdown
in economic growth in the United States and a decrease in exports,
particularly to the Chinese market. In addition, prices for these products
were influenced by industry capacity additions in 1995. This decrease in
demand and selling prices is anticipated to stabilize in the second quarter
of 1996.
Principal raw materials purchased by the Company consist of ethane and
propane extracted from natural gas liquids, propylene and benzene (all four
of which are referred to as "feedstocks") for the polymer and styrene
businesses and polyethylene resins for the film business. The prices of
feedstocks fluctuate widely based on the prices of natural gas and oil.
During the first quarter of 1996, feedstocks accounted for approximately 28%
of the Company's total cost of sales. As a result, the Company's ability to
pass on increases in raw material costs to customers has a significant impact
on operating results. The feedstock supplies available in Odessa, Texas are
currently adequate for the Company's requirements.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996
COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1995
The Company's overall sales and profitability were lower in the first quarter
of 1996 as compared to the first quarter of 1995. As discussed above, the
petrochemical and polymer markets in which the Company participates were
stronger in the first quarter of 1995 as compared to the first quarter of
1996. Net sales decreased $29.8 million (or 18%) from the first quarter of
1995 to the first quarter of 1996 principally due to lower average sales
prices in all product lines, partially offset by higher polyethylene and
styrene sales volumes. Styrene sales decreased $13.6 million (or 36%)
principally due to a decrease in average sales price of 16 cents per pound.
Plastic film sales decreased $11.3 million (or 24%) principally due to a
decrease in average sales price of 8 cents per pound and a decrease in sales
volumes of 8.5 million pounds. Polyethylene sales decreased $7.5 million (or
16%) principally due to a decrease in average sales price of 14 cents per
pound, partially offset by an increase in sales volumes of 11.1 million
pounds. Polypropylene sales decreased $2.3 million (or 10%) principally due
to a decrease in average sales price of 3 cents per pound and a decrease in
sales volumes of 1.9 million pounds. Other sales increased $5.5 million
principally due to an increase in excess feedstock sales.
The Company's gross profit percentage decreased from 33% for the three months
ended March 31, 1995 to 19% for the three months ended March 31, 1996
principally due to the decrease in sales prices discussed above. Marketing,
general and administrative expenses and research and development expenses
remained relatively stable from the first quarter of 1995 to 1996.
Due primarily to the factors discussed above, operating income decreased
$29.3 million (or 68%) for the three months ended March 31, 1996 as compared
to the corresponding period in 1995. Net interest expense decreased $2.9
million (or 45%) in the first quarter of 1996 as compared to the first
quarter of 1995 principally due to the repayment of bank debt in the first
half of 1995. Income tax expense decreased $10.0 million (or 72%) in the
first quarter of 1996 as compared to the first quarter of 1995 principally
due to the decrease in operating income discussed above.
Due primarily to the factors discussed above, the Company's net income
decreased $16.4 million (or 72%) in the first quarter of 1996 as compared to
the first quarter of 1995.
6
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1996, net cash provided by operating
activities decreased $46.2 million as compared to the comparable period in
1995. This decrease was principally due to the payment in March 1996 of the
Company's 1995 federal income taxes of approximately $30 million and due to
lower operating income discussed above.
On April 24, 1996, the Company executed an amendment to the Credit Agreement
(the "Amended Credit Agreement"). The Amended Credit Agreement provides a
new line of credit in an initial amount of $150 million for a seven year
term. The primary use of proceeds from the new line of credit is to provide
funds to finance portions of the Company's capital expenditure program at its
Odessa, Texas manufacturing facility over the next three years, including the
construction of a flexible polyolefin polymer plant, the modernization and
expansion of its olefins plant and the construction of a new linear low
density polyethylene plant.
The Company believes that, based on current levels of operations and
anticipated growth, its cash flow from operations, together with other
available sources of liquidity, including the proceeds from the Amended
Credit Agreement, will be adequate to make scheduled payments of interest on
the 11 3/4% Senior Notes due 2004 and the Amended Credit Agreement, to
permit anticipated capital expenditures and to fund working capital
requirements. However, the ability of the Company to satisfy these
obligations depends on a number of significant assumptions, including but not
limited to, the demand for the Company's products, raw material costs and
other factors.
A number of potential environmental liabilities exist which relate to certain
contaminated property. In addition, a number of potential environmental
costs relate to pending or proposed environmental regulations. No assurance
can be given that all of the potential liabilities arising out of the
Company's present or past operations have been identified or that the amounts
that might be required to investigate and remediate such sites or comply with
pending or proposed environmental regulations can be accurately estimated.
The Company has approximately $20 million accrued in the March 31, 1996
balance sheet as an estimate of its total potential environmental liability
with respect to investigating and remediating known and assessed contaminated
sites. If, however, additional liabilities with respect to environmental
contamination are identified, there is no assurance that additional amounts
that might be required to investigate and remediate such potential sites
would not have a material adverse effect on the financial position, results
of operations or cash flows of the Company. In addition, future regulatory
developments could restrict or possibly prohibit existing methods of
environmental compliance. At this time, the Company is unable to determine
the potential consequences such possible future regulatory developments would
have on its financial condition. Management continually reviews its
estimates of potential environmental liabilities. The Company does not
currently carry environmental impairment liability insurance to protect it
against such contingencies because the Company has found such coverage is
available only at great cost and with broad exclusions. As part of its
financial assurance requirements under the Resource Conservation and Recovery
Act and equivalent Texas law, the Company has deposited approximately $3.6
million in trust to cover closure and post-closure costs and plugging and
abandonment costs at certain of the Odessa, Texas manufacturing facility's
hazardous waste management units. Based on the Company's improved financial
condition, the Company has met the regulatory requirements to recover the
funds in the trust. These funds are anticipated to be released by the Texas
Natural Resource Conservation Commission in the second quarter of 1996.
The discussions in this report contain both historical information and
forward-looking statements. The forward-looking statements involve risks and
uncertainties that affect the Company's operations, markets, products,
services, prices and the other factors as discussed in the Company's filings
with the Securities and Exchange Commission. These risks and uncertainties
include, but are not limited to, the demand for the Company's products,
economic conditions, customer inventory levels, competitive pricing
pressures, feedstock costs, changes in industry production capacities and
operating rates, competitive technology positions, and the failure of the
Company to improve operational efficiencies or develop and successfully
market new products as anticipated or complete construction projects on
schedule.
7
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
PHILLIPS CRYSTALLINE LICENSE LITIGATION
As previously reported in Item 3 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, in May 1990, Phillips Petroleum Company
("Phillips") filed a lawsuit against the Company in the United States
District Court for the District of Delaware (the "Trial Court") seeking
injunctive relief, compensatory damages, treble damages and attorneys' fees,
costs and expenses. The complaint alleged that the Company was infringing
Phillips' Patent No. 4,376,851 (the "'851 Patent") for crystalline
polypropylene. Pursuant to a License Agreement dated as of May 15, 1983, as
amended, (the "License Agreement"), Phillips granted the Company a
non-exclusive license to make, use and sell crystalline polypropylene covered
by the '851 Patent. The complaint alleged that effective April 21, 1990,
Phillips terminated the License Agreement and that, without an effective
License Agreement, the Company's continuing use of the '851 Patent
constitutes an infringing use. At a trial before the Court in October 1994,
Phillips sought damages of approximately $15.5 million, plus interest and
fees, for alleged infringement for the period between April 21, 1990 and
trial. On June 19, 1995, the Trial Court entered judgment in favor of the
Company on the license termination issue and concluded that Phillips' notice
of default was insufficient to terminate the License Agreement. Phillips
appealed the Trial Court's judgment to the Court of Appeals for the Federal
Circuit. On March 27, 1996, the Court of Appeals entered an order reversing
the Trial Court and holding that the form of notice was sufficient and
remanding the action to the Trial Court. Rexene has filed a motion with the
appeals court to reconsider its decision. If the motion to reconsider is not
successful, the Trial Court will review Phillips' claims and other defenses
asserted by Rexene which were not previously ruled on in order to enter a new
judgment. Although the Company believes that it has meritorious defenses to
this lawsuit, in the event of an unfavorable ruling, the Company will be
required to renegotiate a new license agreement at a substantially higher
rate than paid under the current license.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.15.3 -- Amended and Restated Credit Agreement dated as of
April 24, 1996
(b) Reports Submitted on Form 8-K:
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REXENE CORPORATION
Registrant
Date: April 29, 1996 By: /s/ Geff Perera
-----------------------
Geff Perera
Vice President and Controller
8
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 24, 1996
AMONG
REXENE CORPORATION,
AS BORROWER,
THE BANK OF NOVA SCOTIA,
AS AGENT,
AND
THE LENDERS SIGNATORY HERETO
US $150,000,000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE..................................... 1
Section 1.02 CERTAIN DEFINED TERMS................................... 1
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS..................... 27
ARTICLE II
COMMITMENTS
Section 2.01 LOANS AND LETTERS OF CREDIT............................. 28
Section 2.02 BORROWINGS, CONTINUATIONS, CONVERSIONS AND LETTERS OF
CREDIT.................................................. 29
Section 2.03 CHANGES OF COMMITMENTS.................................. 33
Section 2.04 FEES.................................................... 33
Section 2.05 SEVERAL OBLIGATIONS..................................... 34
Section 2.06 NOTES................................................... 35
Section 2.07 PREPAYMENTS............................................. 35
Section 2.08 ASSUMPTION OF RISKS..................................... 36
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY................... 37
Section 2.10 LENDING OFFICES......................................... 39
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 REPAYMENT OF LOANS...................................... 39
Section 3.02 INTEREST................................................ 39
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS................................................ 41
Section 4.02 PRO RATA TREATMENT...................................... 42
Section 4.03 COMPUTATIONS............................................ 42
Section 4.04 NON-RECEIPT OF FUNDS BY THE AGENT....................... 42
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 4.05 SET-OFF, SHARING OF PAYMENTS, ETC. ..................... 43
Section 4.06 TAXES................................................... 45
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 EURODOLLAR AND EUROSTERLING LOAN REGULATIONS, ETC. ..... 49
Section 5.02 LIMITATION ON EURODOLLAR ADVANCES....................... 52
Section 5.03 ILLEGALITY.............................................. 53
Section 5.04 LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND 5.03.......... 53
Section 5.05 COMPENSATION............................................ 53
Section 5.06 REPLACEMENT LENDERS..................................... 54
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 CLOSING DATE............................................ 56
Section 6.02 INITIAL AND SUBSEQUENT LOANS AND LETTERS OF CREDIT...... 59
Section 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT................ 60
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 CORPORATE EXISTENCE..................................... 61
Section 7.02 FINANCIAL CONDITION..................................... 62
Section 7.03 LITIGATION.............................................. 62
Section 7.04 NO BREACH............................................... 62
Section 7.05 AUTHORITY............................................... 63
Section 7.06 APPROVALS............................................... 63
Section 7.07 USE OF LOANS............................................ 63
Section 7.08 ERISA................................................... 63
Section 7.09 TAXES................................................... 65
Section 7.10 TITLES, ETC............................................. 65
Section 7.11 NO MATERIAL MISSTATEMENTS............................... 65
Section 7.12 INVESTMENT COMPANY ACT.................................. 66
Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT...................... 66
Section 7.14 SUBSIDIARIES AND PARTNERSHIPS........................... 66
Section 7.15 LOCATION OF BUSINESS AND OFFICES........................ 66
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 7.16 DEFAULTS................................................ 66
Section 7.17 ENVIRONMENTAL MATTERS................................... 66
Section 7.18 COMPLIANCE WITH THE LAW................................. 68
Section 7.19 INSURANCE............................................... 68
Section 7.20 RESTRICTION ON LIENS.................................... 69
Section 7.21 MATERIAL AGREEMENTS..................................... 69
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.01 FINANCIAL STATEMENTS.................................... 70
Section 8.02 LITIGATION.............................................. 72
Section 8.03 MAINTENANCE, INSURANCE, ETC. ........................... 73
Section 8.04 ENVIRONMENTAL MATTERS................................... 74
Section 8.05 FURTHER ASSURANCES...................................... 75
Section 8.06 PERFORMANCE OF OBLIGATIONS.............................. 75
Section 8.07 ERISA INFORMATION AND COMPLIANCE........................ 75
Section 8.08 LOCKBOX................................................. 76
Section 8.09 STAY, EXTENSION AND USURY LAWS.......................... 76
Section 8.10 REAL ESTATE APPRAISALS.................................. 77
Section 8.11 FUTURE CONSTRUCTION..................................... 77
Section 8.12 FUTURE ASSETS........................................... 77
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01 DEBT.................................................... 77
Section 9.02 LIENS................................................... 78
Section 9.03 INVESTMENTS............................................. 78
Section 9.04 RESTRICTED PAYMENTS..................................... 80
Section 9.05 SALES AND LEASEBACKS.................................... 81
Section 9.06 NATURE OF BUSINESS...................................... 81
Section 9.07 LIMITATION ON LEASES.................................... 81
Section 9.08 MERGERS, ETC. .......................................... 81
Section 9.09 PROCEEDS OF NOTES....................................... 82
Section 9.10 ERISA COMPLIANCE........................................ 82
Section 9.11 SALE OR DISCOUNT OF RECEIVABLES......................... 83
Section 9.12 LEVERAGE RATIO.......................................... 84
Section 9.13 INTEREST COVERAGE RATIO................................. 84
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 9.14 SALE OF PROPERTY........................................ 84
Section 9.15 TRANSACTIONS WITH AFFILIATES............................ 85
Section 9.16 SUBSIDIARIES AND PARTNERSHIPS........................... 87
Section 9.17 NEGATIVE PLEDGE AGREEMENTS.............................. 87
Section 9.18 SYNTHETIC LEASES........................................ 87
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT....................................... 88
Section 10.02 REMEDIES................................................ 91
ARTICLE XI
THE AGENT
Section 11.01 APPOINTMENT, POWERS AND IMMUNITIES...................... 92
Section 11.02 RELIANCE BY AGENT....................................... 93
Section 11.03 DEFAULTS................................................ 93
Section 11.04 RIGHTS AS A LENDER...................................... 93
Section 11.05 INDEMNIFICATION......................................... 94
Section 11.06 NON-RELIANCE ON AGENT AND OTHER LENDERS................. 94
Section 11.07 ACTION BY AGENT......................................... 95
Section 11.08 RESIGNATION OF AGENT.................................... 95
ARTICLE XII
MISCELLANEOUS
Section 12.01 WAIVER.................................................. 96
Section 12.02 NOTICES................................................. 96
Section 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC. ................. 96
Section 12.04 AMENDMENTS, ETC. ....................................... 100
Section 12.05 SUCCESSORS AND ASSIGNS.................................. 101
Section 12.06 ASSIGNMENTS AND PARTICIPATIONS.......................... 101
Section 12.07 INVALIDITY.............................................. 103
Section 12.08 COUNTERPARTS............................................ 103
Section 12.09 REFERENCES.............................................. 103
Section 12.10 SURVIVAL................................................ 104
Section 12.11 CAPTIONS................................................ 104
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 12.12 NO ORAL AGREEMENTS...................................... 104
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION............... 104
Section 12.14 INTEREST................................................ 106
Section 12.15 LENDER ACKNOWLEDGMENT OF SECURITY INTEREST IN DEPOSITS.. 108
Section 12.16 CONFIDENTIALITY......................................... 108
Section 12.17 EFFECTIVENESS........................................... 109
Exhibit A - 1 - Form of Revolving Credit Note
Exhibit A - 2 - Form of Sterling Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Legal Opinion of Thompson & Knight
Exhibit E - List of Security Instruments
Exhibit F - Form of Assignment Agreement
Exhibit G - List of Commitments
Schedule 6.02 - Subsequent Security Instruments
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.15 - Location of Businesses and Offices
Schedule 7.16 - Defaults
Schedule 7.17 - Environmental Matters
Schedule 7.18 - Compliance with the Law
Schedule 7.19 - Insurance
Schedule 7.21 - Material Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments
</TABLE>
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<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 24, 1996
among: REXENE CORPORATION, a Delaware corporation (the "BORROWER"); each of the
lenders that is a signatory hereto or which becomes a signatory hereto as
provided in Section 12.06 (individually, together with its successors and
assigns, a "LENDER" and, collectively, the "LENDERS"); and THE BANK OF NOVA
SCOTIA (in its individual capacity, "SCOTIABANK"), as agent for the Lenders (in
such capacity, together with its successors in such capacity, the "AGENT").
R E C I T A L S
A. Certain of the parties hereto originally executed that certain Credit
Agreement dated as of November 29, 1994 (as modified by five letter agreements
dated as of January 27, 1995, April 12, 1995, May 22, 1995, May 30, 1995, and
September 21, 1995, and as amended and supplemented by that certain First
Amendment and Supplement to Credit Agreement dated as of July 17, 1995,
collectively the "ORIGINAL AMENDMENT") whereby, pursuant to the terms and
conditions contained therein, the lenders thereunder agreed to make certain
loans to and extensions of credit on behalf of the Borrower.
B. The Borrower and the Lenders have agreed to further amend the Original
Agreement and to restate the Credit Agreement in its entirety in this Amended
and Restated Credit Agreement (which is hereinafter referred to as the
"AGREEMENT").
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE. As used in this Agreement, the terms
"AGENT," "AGREEMENT", "BORROWER," "LENDER," "LENDERS," and "SCOTIABANK" shall
have the meanings indicated above.
Section 1.02 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):
<PAGE>
"ADDITIONAL COSTS" shall have the meaning assigned such term in
Section 5.01(a).
"ADJUSTED CONSOLIDATED NET INCOME" shall mean with respect to the
Borrower and its Consolidated Subsidiaries, for any period, the aggregate of the
net income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; PROVIDED
that there shall be excluded from such net income (to the extent otherwise
included therein) the following:
(a) the net income of any Person in which the Borrower or any
Consolidated Subsidiary has an interest (which interest does not cause the
net income of such other Person to be consolidated with the net income of
the Borrower and its Consolidated Subsidiaries in accordance with GAAP),
except to the extent of the amount of dividends or distributions actually
paid in such period by such other Person to the Borrower or to a
Consolidated Subsidiary, as the case may be;
(b) the net income (but not loss) of any Consolidated Subsidiary
to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not
at the time permitted by operation of the terms of its charter or any
agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary, or is otherwise restricted or prohibited in each
case determined in accordance with GAAP;
(c) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction;
(d) any extraordinary gains or losses, including gains or losses
attributable to Property sales not in the ordinary course of business; and
(e) the cumulative effect of a change in accounting principles
and any gains or losses attributable to writeups or writedowns of assets.
"ADJUSTED EBITDA" shall mean, for any period, the sum of Adjusted
Consolidated Net Income for such period plus the following expenses or charges
to the extent deducted from Adjusted Consolidated Net Income in such period:
interest, taxes, depreciation and amortization.
"AFFECTED EURODOLLAR LOANS" shall have the meaning assigned such
term in Section 5.04(a).
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<PAGE>
"AFFECTED EUROSTERLING LOANS" shall have the meaning assigned
such term in Section 5.04(b).
"AFFILIATE" of any Person shall mean
(a) any Person directly or indirectly controlled by, controlling
or under common control with such first Person,
(b) any director or officer of such first Person or of any
Person referred to in clause (a) above, and
(c) if any Person in clause (a) above is an individual, any
member of the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person
who is controlled by any such member or trust.
As used in this definition, "CONTROL" (including, with its correlative meanings,
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean any Person which
owns directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
10% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control
such corporation or other Person.
"AGGREGATE COMMITMENTS" at any time shall equal the amount
calculated in accordance with Section 2.03 hereof.
"AGGREGATE MAXIMUM CREDIT AMOUNT" at any time shall equal the sum
of the Maximum Credit Amount of the Lenders ($150,000,000 through and including
the date which is five (5) years after the Closing Date; $125,000,000 after the
date which is five (5) years after the date of the Closing Date through and
including the date which is six (6) years after the date of the Closing Date;
and $100,000,000 thereafter until the Final Maturity Date), as the same may be
reduced pursuant to Sections 2.03(b) and 9.11 hereof.
"APAO" shall mean amorphous polyalphaolefins.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for
each Type of Loan, the lending office of such Lender (or an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or such
other offices of such Lender (or of an Affiliate of such Lender) as such Lender
may from time to time specify to the Agent
-3-
<PAGE>
and the Borrower as the office by which its Loans of such Type are to be made
and maintained.
"APPLICABLE MARGIN" shall mean, for the first twelve-month period
following the Closing Date,
(a) three-fourths of one percent (3/4 of 1%) per annum with
respect to Base Rate Loans and
(b) one and three-fourths percent (1-3/4%) per annum with
respect to Eurodollar Advances and Eurosterling Loans. Thereafter, the
Applicable Margin for Base Rate Loans, Eurodollar Advances and Eurosterling
Loans will be determined quarterly based on the ratio at the end of each
quarter of consolidated Debt of the Borrower and its Consolidated
Subsidiaries (plus the amount reflected in the accounting records of the
Borrower and its Consolidated Subsidiaries at the end of each quarter as
the proceeds received from the sale of accounts receivable under the asset
securitization program permitted under Section 9.11 hereof) to Adjusted
EBITDA on a trailing annualized two-quarter basis, as follows (with changes
in Applicable Margin to occur 60 days after the applicable quarter end, so
long as Borrower has supplied the computation required by subsection
8.01(i)(ii) within the 45 days required under such subsection). (In the
event the Borrower does not timely supply the required computations, the
Agent shall have the right, with the consent of the Majority Lenders, to
set the Applicable Margin based upon the most recent applicable information
available to the Agent):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consolidated Debt
to Adjusted Less than 1.5 to 1.0 Not less than 1.5 to 1.0 Not less than 2.0 to 1.0 Not less than 3.0 to 1.0
EBITDA Ratio Less than 2.0 to 1.0 Less than 3.0 to 1.0 Less than 4.0 to 1.0
- -----------------------------------------------------------------------------------------------------------------------------
Eurodollar 1% 1.25% 1.75% 2.0%
Advances
- -----------------------------------------------------------------------------------------------------------------------------
Base Rate 0% .25% .75% 1.0%
Loans
- -----------------------------------------------------------------------------------------------------------------------------
Eurosterling 1% 1.25% 1.75% 2.0%
Loans
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------
- ---------------------------------------------
<S> <C>
Consolidated Debt
to Adjusted
EBITDA Ratio Not less than 4.0 to 1.0
- ---------------------------------------------
Eurodollar 2.5%
Advances
- ---------------------------------------------
Base Rate 1.5%
Loans
- ---------------------------------------------
Eurosterling 2.5%
Loans
- ---------------------------------------------
- ---------------------------------------------
</TABLE>
"ASSET SALE" shall mean the sale or conveyance of any non-current
tangible assets of the Borrower or any Restricted Subsidiary (including, without
limitation, by way of sale and leaseback, but specifically excluding a sale and
leaseback of an asset occurring within 150 days after the completion of
construction or acquisition of such asset) other than in the ordinary course of
business. Asset Sales shall not include Other Transfers.
-4-
<PAGE>
"ASSIGNMENT" shall have the meaning assigned such term in
Section 12.06(b).
"BASE RATE" shall mean, with respect to any Base Rate Loan, for
any day, the higher of
(a) the Federal Funds Rate for any such day plus 1/2 of 1% or
(b) the rate of interest most recently established by Scotiabank
at its New York office as its base rate for Dollar loans in the U.S. Each
change in any interest rate provided for herein based upon the Base Rate
resulting from a change in the Base Rate shall take effect at the time of
such change in the Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates
based upon the Base Rate.
"BUSINESS DAY" shall mean
(i) any day other than a day on which commercial banks are
authorized or required to close in New York, New York and,
(ii) if such term is used in the definition of "Quarterly Date"
in this Section 1.02 or if such day relates to a borrowing or continuation
of, a payment or prepayment of principal of or interest on, or a conversion
of or into, or the Interest Period for, a Eurodollar Advances or a
Eurosterling Loan, as the case may be, or a notice by the Borrower with
respect to any such borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on which
dealings in Dollar and Eurosterling deposits are carried out in the London
interbank market.
"CAPITAL LEASE OBLIGATION" shall mean, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"CAPITAL STOCK" shall mean
(i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and
all shares, interests, participation, rights or other equivalents (however
designated) of corporate stock,
-5-
<PAGE>
(iii) in the case of a partnership, partnership interests
(whether general or limited), and
(iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following
(i) the acquisition by any Person (or group of Persons acting
together) of a direct or indirect interest in more than 50% of the voting
power of the voting stock of the Borrower, by way of merger or
consolidation or otherwise, or
(ii) the first day on which a majority of the members of the
board of directors of the Borrower are not Continuing Directors. For
purposes of this definition, any transfer of an Equity Interest of an
entity that was formed for the purpose of acquiring voting stock of the
Borrower will be deemed to be a transfer of such portion of such voting
stock as corresponds to the portion of the equity of such entity that has
been so transferred, and the acquisition of voting power of the voting
stock of the Borrower by any Subsidiary of the Borrower shall be
disregarded.
"CLOSING DATE" shall mean April 25, 1996.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time and any successor statute.
"COMMITMENT" shall mean, for any Lender, its obligation to make
Loans as provided in Section 2.01(a) and 2.01(c) and to participate in Letters
of Credit as provided in Section 2.01(b) up to the Lender's Maximum Credit
Amount.
"CONSOLIDATED NET INCOME" shall mean the net income of Borrower
and its Consolidated Subsidiaries determined in accordance with GAAP.
"CONSOLIDATED NET WORTH" shall mean, as at any date, the sum of
the Borrower's and its Consolidated Subsidiaries' consolidated net worth
determined (without duplication) in accordance with GAAP, but exclusive of
increases to Consolidated Net Worth attributable to the income of Unrestricted
Subsidiaries.
"CONSOLIDATED SUBSIDIARIES" shall mean each Restricted Subsidiary
of the Borrower (whether now existing or hereafter created or acquired) the
financial statements
-6-
<PAGE>
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.
"CONTINUING DIRECTORS" shall mean, as of any date of
determination, any member of the board of directors of the Borrower who
(i) was a member of such board of directors on the Closing Date
or
(ii) was nominated for election or elected to such board of
directors with the affirmative vote of a majority of the Continuing
Directors who were members of such board at the time of such nomination or
election.
"CONTRACT OBLIGATIONS" shall mean contractual obligations of the
Borrower and any Restricted Subsidiary to repay or credit to a third party
amounts advanced by such third party (or its Affiliates) to the Borrower or any
Restricted Subsidiary. The amount of Contract Obligations outstanding as of any
date shall be equal to the aggregate amount of remaining payments required to be
made by, and credits required to be given by, the Borrower and/or the Restricted
Subsidiary under the agreements related to such Contract Obligations at such
time.
"CURRENCY AGREEMENT" shall mean the obligation of any Person
pursuant to any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency values.
"CURRENT FUNDED DEBT" shall mean the Borrower's Debt under the
Senior Unsecured Notes.
"DATE OF THE ORIGINAL AGREEMENT" shall mean November 29, 1994.
"DEBT" shall mean, for any Person the sum of the following
(without duplication):
(a) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or
otherwise) in respect of bankers' acceptances, letters of credit, surety or
other bonds and similar instruments;
-7-
<PAGE>
(c) all obligations under leases which shall have been, or
should have been, in accordance with GAAP, recorded as Capital Lease
Obligations;
(d) all Debt obligations of others secured by a Lien on any
asset of such Person, whether or not such Debt is assumed by such Person;
(e) all Debt obligations of others guaranteed by such Person;
and
(f) all obligations of such Person under or in connection with
Hedging Agreements once such obligations become "debt" according to GAAP.
"DEFAULT" shall mean an Event of Default or an event which with
notice or lapse of time or both would become an Event of Default.
"DOLLAR EQUIVALENT" shall mean (i) in relation to any amount
denominated in Dollars, the amount thereof and (ii) in relation to an amount
denominated in Eurosterling, the amount of Dollars required to purchase the
relevant stated amount of Eurosterling at the Exchange Rate on the date of
determination.
"DOLLARS" and "$" shall mean lawful money of the U.S.
"DOMESTIC SUBSIDIARY" shall mean any Subsidiary of the Borrower
organized under the laws of a jurisdiction within the U.S.
"ENVIRONMENTAL LAWS" shall mean any and all Governmental
Requirements pertaining to health or the environment in effect in any and all
jurisdictions that may be applicable to the business or Property of the Borrower
or any Restricted Subsidiary, including without limitation, the Oil Pollution
Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or
protection laws. The term "oil" shall have the meaning specified in OPA, the
terms "hazardous substance" and "release" (or "threatened release") have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA; provided, however, that
-8-
<PAGE>
(i) in the event either OPA, CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply prospectively only and only subsequent to the effective date of such
amendment and
(ii) to the extent the laws of the state in which any Property of
the Borrower or any Restricted Subsidiary is located establish a meaning
for "oil," "hazardous substance," "release," "solid waste" or "disposal"
which is broader than that specified in either OPA, CERCLA or RCRA, such
broader meaning shall apply, but only in such state.
"EQUITY INTERESTS" shall mean Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security which is convertible into, or exchangeable for, Capital Stock).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and any successor statute.
"ERISA AFFILIATE" shall mean each trade or business (whether or
not incorporated) which together with the Borrower or any Restricted Subsidiary
would be deemed to be a "single employer" within the meaning of
section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414
of the Code.
"ERISA EVENT" shall mean
(i) a "Reportable Event" described in Section 4043 of ERISA and
the regulations issued thereunder other than one for which the PBGC has
waived in writing the statutory notice requirement,
(ii) the withdrawal of the Borrower, any Subsidiary or any ERISA
Affiliate from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan
or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA,
(iv) the institution of proceedings to terminate a Plan by the
PBGC or
-9-
<PAGE>
(v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"EURODOLLAR ADVANCES" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in the definition of
"Fixed Eurodollar Rate" in this Section 1.02.
"EUROSTERLING" shall mean the lawful money of Great Britain
loaned or repaid in the U.S.
"EUROSTERLING COMMITMENT" shall mean at any time the obligation
of a Lender to make its Percentage Share of Eurosterling Loans in the maximum
aggregate Dollar Equivalent of $20,000,000.
"EUROSTERLING EXPOSURE" shall mean at any time of determination
by the Agent, the aggregate outstanding Dollar Equivalent principal amount of
the Eurosterling Loans made by all Lenders hereunder.
"EUROSTERLING LENDING OFFICE" shall mean the office of each
Lender in the United States as shown in the signature pages hereof for such
Lender from which each Lender shall make Eurosterling Loans (and be repaid
Eurosterling Loans) pursuant to this Agreement.
"EUROSTERLING LOANS" shall mean the Loans in Eurosterling made by
a Lender from its Eurosterling Lending Office at the Eurosterling Rate made
pursuant to Section 2.01(c) hereof.
"EUROSTERLING NOTES" shall mean the promissory note or notes
(whether one or more) of the Borrower described in Section 2.06 hereof and being
in the form of Exhibit A-2 hereto.
"EUROSTERLING RATE" shall mean with respect to any Eurosterling
Loans, the rate per annum (rounded upwards to the nearest 1/16 of 1%) quoted by
the Agent at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) two Business Days prior to the first day of the Interest Period for
such Eurosterling Loans for the offering by the Agent to the leading lenders in
the London interbank market of Eurosterling deposits having a term comparable to
such Interest Period and in an amount comparable to the principal amount of the
Eurosterling Loan to be made by the Lenders for such Interest Period.
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"EVENT OF DEFAULT" shall have the meaning assigned such term in
Section 10.01.
"EXCEPTED LIENS" shall mean:
(i) Liens securing payment of any Indebtedness;
(ii) Liens securing Hedging Agreements with the Agent, a Lender
or an Affiliate of a Lender;
(iii) Liens existing on Property as of the Closing Date and
(if such Liens are Liens for borrowed money or judgments or for taxes due
and payable which are delinquent and as to which the Borrower or a
Restricted Subsidiary (as applicable) has received written notice) listed
on Schedule 9.02;
(iv) Liens in favor of the Borrower or any Restricted Subsidiary,
which are junior, inferior and fully subordinate in right of payment and as
to enforcement of remedies to the Liens in favor of the Agent as security
for the Indebtedness;
(v) Liens existing on the Property of any Person at the time
such Person becomes a Restricted Subsidiary of the Borrower (excluding
Liens which were incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary of the Borrower) that do not extend
to any other Property of the Borrower or its Restricted Subsidiaries;
(vi) Liens on the shares of URC stock now owned or acquired after
the date of the Original Agreement by the Borrower and on non U.S. patents
of the Borrower licensed to URC, in each case, to the extent and only to
the extent required pursuant to the agreements governing the URC Venture
Investment, as amended from time to time;
(vii) Liens on the non U.S. intellectual property rights
licensed to the Resin Joint Ventures required pursuant to the agreements
governing the Resin Venture Investments;
(viii) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor;
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(ix) landlords', carriers', vendors', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising by operation of law
in the ordinary course of business;
(x) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(xi) deposits to secure the performance of bids, trade contracts,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of like nature incurred in the ordinary course of business;
(xii) easements, rights of way, restrictions, licenses,
consignments and other similar encumbrances on any Property of the Borrower
or of any Restricted Subsidiary, including Liens constituting leases or
subleases to third parties granted by the Borrower or any Restricted
Subsidiary, in each case to the extent incurred in the ordinary course of
business;
(xiii) judgment Liens which attach to Property after the Closing
Date and which do not constitute a Default;
(xiv) Liens on unearned premiums of insurance policies that
secure the financing of such premiums for such policies;
(xv) Liens arising pursuant to authority granted under CERCLA or
RCRA or pursuant to analogous state statutes, provided that the aggregate
of all obligations secured by such Liens in respect of which the Borrower
is carrying an asset on its books as a noncurrent asset or is required to
record a reserve in accordance with GAAP which are secured by such Liens
shall not exceed $15,000,000 in the aggregate at any time;
(xvi) Liens on property existing at the time of acquisition
thereof by the Borrower or any Restricted Subsidiary of the Borrower;
provided that such Liens were in existence prior to contemplation of such
acquisition;
(xvii) Liens on assets of any Person (other than Borrower)
which is not a Restricted Subsidiary;
(xviii) Liens incurred to secure:
(A) Purchase Money Financings or
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(B) Capital Lease Obligations
but only, in the case of (A) and (B), if such Liens do not extend to any
assets other than the assets purchased with the proceeds of the
corresponding Purchase Money Financing or which are the subject of such
Capital Lease Obligation, and in each case to the extent the Debt secured
thereby is permitted to be incurred pursuant to Section 9.01;
(xix) Liens securing any extension, renewal or refunding of
any obligations secured by the foregoing Liens that do not increase the
obligations secured thereby and do not extend such Lien to any assets other
than those previously securing such obligations; and
(xx) Liens of public record on or before the date hereof and held
by Mitsubishi Corporation on the styrene unit and related assets located
near the Odessa Complex.
"EXCHANGE RATE" shall mean, in relation to the exchange of
Dollars for Eurosterling and Eurosterling for Dollars, the rate of exchange
quoted by the Agent at 11:00 A.M. (New York time) on the date of the
determination for the spot purchase in the foreign exchange market of the
applicable amount of Dollars for Eurosterling or Eurosterling for Dollars.
"EXISTING DEBT" shall mean all Debt of the Borrower and its
Restricted Subsidiaries outstanding on the Closing Date.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with a
member of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that
(i) if the date for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and
(ii) if such rate is not so published for any day, the Federal
Funds Rate for such day shall be the average rate charged to the Agent on
such day on such transactions as determined by the Agent.
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"FINAL MATURITY DATE" shall mean, unless the Commitments are
sooner terminated pursuant to Sections 2.03(b) or 10.02 hereof, April 24, 2003.
"FINANCIAL STATEMENTS" shall mean the financial statement or
statements of the Borrower described or referred to in Section 7.02.
"FPO" shall mean flexible polyolefin, a resin developed by the
Borrower.
"FIXED EURODOLLAR RATE" shall mean, with respect to any
Eurodollar Advances, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted by the Agent at approximately 11:00 a.m. London time
(or as soon thereafter as practicable) two Business Days prior to the first day
of the Interest Period for such Loan for the offering by the Agent to leading
lenders in the London interbank market of Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the principal
amount of the Eurodollar Advances to be made by the Lenders for such Interest
Period.
"FIXED RATE" shall mean, with respect to any Eurodollar Advances,
a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the quotient of
(i) the Fixed Eurodollar Rate for such Loan for the Interest
Period for such Loan divided by
(ii) one (1) minus the Reserve Requirement for such Loan for such
Interest Period.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary of the Borrower
organized under the laws of a jurisdiction outside of the U.S. and not operating
in the U.S.
"FRACTIONATION ASSETS" shall mean the plant, Property and
equipment ("PPE") located at the Odessa Complex that are used in connection with
the fractionation of Y-grade streams of natural gas liquids into ethane, propane
and other components and up to 15 acres of land.
"FRACTIONATION VENTURE" shall mean a joint venture between the
Borrower and any other Person(s) providing for the fractionation of natural gas
liquids using the Fractionation Assets and other property, plants and equipment
to be constructed thereon.
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"FRACTIONATION VENTURE INVESTMENT" shall mean an Investment by
the Borrower and its Restricted Subsidiaries in the Fractionation Venture.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of the Original
Agreement provided, however, that for purposes of all determinations with
respect to accounting matters and all financial statements, certificates and
other reports as to financial matters required to be made or delivered pursuant
to this Agreement after the Closing Date, GAAP shall mean such generally
accepted accounting principles as are in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall include the country, the state,
county, city and political subdivisions in which any Person or such Person's
Property is located or which exercises valid jurisdiction over any such Person
or such Person's Property, and any court, agency, department, commission, board,
bureau or instrumentality of any of them including monetary authorities which
exercises valid jurisdiction over any such Person or such Person's Property.
Unless otherwise specified, all references to Governmental Authority herein
shall mean a Governmental Authority having jurisdiction over, where applicable,
the Borrower, its Restricted Subsidiaries or any of their Properties or the
Agent or, any Lender or any Applicable Lending Office.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (whether or not having the force of law), including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"GUARANTEE" shall mean, with respect to any Person, a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner (including,
without limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Debt that is owed by any other Person.
"HEDGING AGREEMENTS" shall mean, with respect to any Person, the
obligations of such Person under
(i) Currency Agreements,
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(ii) Interest Rate Agreements and
(iii) agreements to protect against fluctuations in the
price of feedstocks or products.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Notes or
on other Indebtedness under laws applicable to such Lender which are presently
in effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow.
"INDEBTEDNESS" shall mean any and all amounts owing or to be
owing by the Borrower or any Restricted Subsidiary to the Agent and/or Lenders
in connection with the Notes or any other Loan Document and any Hedging
Agreements with the Agent and/or any one or more of the Lenders (to the extent
such Hedging Agreements constitute "debt" according to GAAP) now or hereafter
arising between the Borrower or any Restricted Subsidiary and any Lender or any
Affiliate of any Lender, and all renewals, extensions for any period,
amendments, supplements, reissues, modifications, and/or rearrangements of any
of the above.
"INDEMNIFIED PARTIES" shall have the meaning assigned such term
in Section 12.03(b).
"INDEMNITY MATTERS" shall mean any and all actions, suits,
proceedings (including any investigations, litigation or inquiries), claims,
demands and causes of action made or threatened against a Person and, in
connection therewith, all losses, liabilities, penalties, damages (including,
without limitation, consequential damages) or reasonable costs and expenses of
any kind or nature whatsoever incurred by such Person whether caused by the sole
or concurrent negligence of such Person seeking indemnification.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar
Advances or Eurosterling Loan, the period commencing on the date such Eurodollar
Advance or Eurosterling Loan is made and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as the
Borrower may select as provided in Section 2.02 (or such longer period as may be
requested by the Borrower and agreed to by the Lenders), except that each
Interest Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month.
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Notwithstanding the foregoing:
(i) no Interest Period may commence before and end after the
Final Maturity Date;
(ii) no Interest Period for any Eurodollar Advances or
Eurosterling Loans may end after the due date of any installment, if any,
provided for in Section 3.01 hereof to the extent that such Eurodollar
Advances or Eurosterling Loans would need to be prepaid prior to the end of
such Interest Period in order for such installment to be paid when due;
(iii) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day
(or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and
(iv) no Interest Period shall have a duration of less than one
month and, if the Interest Period for any Eurodollar Advances or
Eurosterling Loans would otherwise be for a shorter period, such Loans
shall not be available hereunder.
"INTEREST RATE AGREEMENT" shall mean the obligations of any
person pursuant to any interest rate swap agreement, interest rate collar
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in interest rates.
"INVESTMENT" shall mean, with respect to the Borrower and its
Restricted Subsidiaries, any investment by the Borrower or any of its Restricted
Subsidiaries in other Persons (including Affiliates) in the forms of loans,
Guarantees of Debt, advances (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of business), capital
contributions, purchases or other acquisitions from such other Persons, for
consideration, of Debt, Equity Interests, or other securities, and all other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP, but excluding investments to the extent made with the
Capital Stock of the Borrower, with the calculation of each such investment to
be as of the date of such investment.
"INVESTMENT SUSPENSION" shall mean the occurrence of
(i) a monetary Default, or
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(ii) a breach of a covenant contained in Sections 9.12 or 9.13
hereof.
"ISSUER" shall mean, with respect to the issuance of Letters of
Credit, the Agent or any Lender which has consented to be an Issuer.
"LC COMMISSION RATE" shall mean the rate per annum equal to the
sum of
(a) one-eighth of one percent (1/8%), plus
(b) the Applicable Margin for Eurodollar Advances in effect at
the time of issuance of a Letter of Credit.
"LC COMMITMENT" at any time (except as otherwise provided in
Section 2.01(b) hereof) shall mean $15,000,000.
"LC EXPOSURE" at any time shall mean the aggregate face amount of
all undrawn and uncancelled Letters of Credit and the aggregate of all amounts
drawn under all Letters of Credit and not yet reimbursed.
"LETTER OF CREDIT AGREEMENTS" shall mean the written agreements
with the Issuer for any Letter of Credit, executed or hereafter executed in
connection with the issuance of the Letters of Credit, such agreements to be on
the Issuer's customary form for letters of credit of comparable amount and
purpose as from time to time in effect or as otherwise agreed to by the Borrower
and the Issuer.
"LETTERS OF CREDIT" shall mean the letters of credit issued
pursuant to Section 2.01(b) and Section 6.03 and all reimbursement obligations
pertaining to any such letters of credit, and "Letter of Credit" shall mean any
one of the Letters of Credit and the reimbursement obligations pertaining
thereto.
"LIEN" shall mean any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "LIEN" shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to be
the owner
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of any Property which it has acquired or holds subject to a conditional sale
agreement, or leases under an agreement constituting a Capital Lease Obligation.
"LLDPE" shall mean the Linear Low Density Polyethylene.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the
Letters of Credit, the Letter of Credit Agreements and the Security Instruments.
"LOANS" shall mean the loans made pursuant to Section 2.01(a) and
(c). "Loans" shall include the Revolving Credit Loans and the Eurosterling
Loans.
"LOCKBOX AGREEMENT" shall mean that certain Lockbox Agreement
dated April 19, 1995, by and between the Borrower, the depository bank for the
lockbox and the Agent, relating to the lockbox maintained by the Borrower
pursuant to Section 8.08.
"MAJORITY LENDERS" shall mean, at any time while no Loans are
outstanding, Lenders having at least fifty-one percent (51%) of the Aggregate
Commitments and, at any time while Loans are outstanding, Lenders holding at
least fifty-one percent (51%) of the outstanding aggregate principal amount of
the Loans (without regard to any sale by a Lender of a participation in any Loan
under Section 12.06(c)).
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse
effect, as determined by the Majority Lenders, on
(i) the assets, liabilities, financial condition, business,
operations or affairs of the Borrower and its Restricted Subsidiaries taken
as a whole different from those reflected in the Financial Statements or
from the facts represented or warranted in this Agreement or any other
Security Instrument, or
(ii) the ability of the Borrower and its Restricted Subsidiaries
taken as a whole to carry out their business or meet their obligations
under the Loan Documents on a timely basis.
"MAXIMUM CREDIT AMOUNT" shall mean, as to each Lender, the amount
set forth opposite such Lender's name on Exhibit G under the caption "Maximum
Credit Amounts" (as the same may be reduced pursuant to Section 2.03(b) hereof
pro rata to each Lender based on it Percentage Share) as modified from time to
time to reflect any assignments permitted by Section 12.06(b).
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"MITSUBISHI AGREEMENT" shall mean the Agreement for Purchase and
Sale of Styrene Monomer between Borrower and Mitsubishi Corporation, dated as of
June 8, 1995, and all exhibits, schedules and amendments thereto.
"MORTGAGED PROPERTY" shall mean the Property owned by the
Borrower and which is subject to the Liens existing and to exist under the terms
of the Security Instruments.
"MULTIEMPLOYER PLAN" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA.
"NOTES" shall mean the Notes provided for by Section 2.06,
together with any and all renewals, extensions for any period, increases,
rearrangements, substitutions or modifications thereof. The "Notes" shall
include the Revolving Credit Notes and the Eurosterling Notes.
"ODESSA COMPLEX" shall mean the Borrower's petrochemical and
polymer plants and related assets located on approximately 875 acres of land in
Odessa, Texas, less and except certain assets related to the styrene plant which
are currently subject to Liens in favor of Mitsubishi Corporation under the
Mitsubishi Agreement.
"OTHER TAXES" shall have the meaning assigned such term in
Section 4.06(b).
"OTHER TRANSFERS" shall mean (a) Transfer of up to 375 acres of
undeveloped land located in Bayport, Texas, and owned by the Borrower on the
date of the Original Agreement; (b) Transfer of the Fractionation Assets to the
Fractionation Venture; (c) Transfer of assets, whether sold in a single
transaction or in a series of related transactions, which have a fair market
value, as determined by the Board of Directors of Borrower, less than
$1,000,000; (d) Transfer of any intellectual property rights of the Borrower
(other than those used in the CT Film division) to manufacture a product in any
country in which neither the Borrower nor any Restricted Subsidiary is
manufacturing the same product at the time of such transfer; (e) Transfer of
assets relating to the greenhouse/agricultural film business; (f) Transfer of
assets by the Borrower to a Restricted Subsidiary or by a Restricted Subsidiary
to the Borrower or to another Restricted Subsidiary; and (g) Transfer of any
machinery, equipment, furniture, apparatus, tools, implements, materials,
supplies or other similar property which have become worn out or obsolete.
"OTHER VENTURES" shall mean a joint venture between the Borrower
and any other Person(s) other than the URC Venture and the Resin Joint Ventures.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"PERCENTAGE SHARE" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as indicated on
Exhibit G hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b).
"PERSON" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.
"PLAN" shall mean any employee pension benefit plan, as defined
in Section 3(2) of ERISA, which
(a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or
(b) was at any time during the preceding six calendar years,
sponsored, maintained or contributed to, by the Borrower, any Subsidiary or
an ERISA Affiliate.
"POST-DEFAULT RATE" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this Agreement or any
Note which is not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period commencing on the due date until
such amount is paid in full or the default is cured or waived equal to 2% per
annum above the Base Rate as in effect from time to time plus the Applicable
Margin (if any), but in no event to exceed the Highest Lawful Rate (provided
that, if such amount in default is principal of a Eurodollar Advance or a
Eurosterling Loan, the "Post-Default Rate" for such principal shall be, for the
period commencing on the due date and ending on the last day of the Interest
Period therefor, 2% per annum above the interest rate for such Loan as provided
in Section 3.02, but in no event to exceed the Highest Lawful Rate).
"PRINCIPAL OFFICE" shall mean the principal office of the Agent
in New York, located at One Liberty Plaza, New York, New York 10006, which shall
serve to collect payments on the Indebtedness and other fees under this
Agreement on behalf of the Lenders including The Bank of Nova Scotia, Atlanta
agency acting on behalf of The Bank of Nova Scotia.
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"PRIOR REVOLVING CREDIT NOTES" shall mean those certain
promissory notes dated November 29, 1994, in the aggregate amount of
$80,000,000, which Prior Revolving Credit Notes were issued by the Lenders under
and pursuant to the Original Agreement.
"PROPERTY" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"PURCHASE MONEY FINANCING" shall mean, with respect to any
Person, Debt incurred to finance the purchase of any assets of such Person
(within 90 days of such purchase) to the extent
(i) the amount of Debt thereunder shall not exceed 95% of the
purchase cost of such assets,
(ii) the purchase cost for such assets is or should be included
in "additions to property plant and equipment" in accordance with GAAP and
(iii) the purchase of such assets is not part of an acquisition
of any Person.
"QUARTERLY DATES" shall mean the last day of each March, June,
September and December, in each year, the first of which shall be December 31,
1994; provided, however, that if any such day is not a Business Day, such
Quarterly Date shall be the next preceding Business Day.
"REGULATION D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any
change after the Closing Date in any Governmental Requirement (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of lenders (including such Lender or
its Applicable Lending Office) of or under any Governmental Requirement
applicable to banks (whether or not having the force of law) by any Governmental
Authority charged with the interpretation or administration thereof.
"REQUIRED PAYMENT" shall have the meaning assigned such term in
Section 4.04.
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"RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Advances, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against
(i) any category of liabilities which includes deposits by
reference to which the Fixed Eurodollar Rate for Eurodollar Advances is to
be determined as provided in the definition of "Fixed Eurodollar Rate" in
this Section 1.02 or
(ii) any category of extensions of credit or other assets which
include a Eurodollar Advances.
"RESIN JOINT VENTURES" shall mean one or more joint ventures
between the Borrower and any other Person, other than the URC Venture, providing
for the manufacture and sale of APAO and/or FPO outside of the U.S. and Canada.
"RESIN VENTURE INVESTMENT" shall mean an Investment by the
Borrower and its Restricted Subsidiaries in a Resin Joint Venture.
"RESPONSIBLE OFFICER" shall mean, as to any Person, the Chief
Executive Officer, the President or any Vice President of such Person and, with
respect to financial matters, the term "Responsible Officer" shall include the
Chief Financial Officer or the Controller of such Person. Unless otherwise
specified, all references to a Responsible Officer herein shall mean a
Responsible Officer of the Borrower.
"RESTRICTED SUBSIDIARY" of a Person shall mean any direct or
indirect Domestic Subsidiary of the Borrower that is not an Unrestricted
Subsidiary, which Person shall not become a Restricted Subsidiary hereunder
until all actions by and with respect to such Person described in Section 9.16
shall have occurred.
"REVOLVING CREDIT LOANS" shall mean Loans made pursuant to
Section 2.01(a).
"REVOLVING CREDIT NOTES" shall mean the promissory note or notes
(whether one or more) of the Borrower described in Section 2.06 hereof and being
in the form of Exhibit A-1 hereto.
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"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"SECURITY INSTRUMENTS" shall mean the Letters of Credit, the
Letter of Credit Agreements, the agreements or instruments described or referred
to in Exhibit E, and any and all other agreements or instruments now or
hereafter executed and delivered by the Borrower or any other Person (other than
participation or similar agreements between any Lender and any other lender or
creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of the Notes,
this Agreement, or reimbursement obligations under the Letters of Credit, as
such agreements may be amended, supplemented or restated from time to time.
"SENIOR UNSECURED NOTES" shall mean those certain unsecured
11 3/4% Senior Notes due 2004 in the aggregate principal amount of $175,000,000,
issued by the Borrower pursuant to the Indenture dated as of November 29, 1994
and governing such notes.
"SIGNIFICANT SUBSIDIARY" shall mean any Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act.
"SUBSIDIARY" shall mean any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Borrower and/or one or more of its Subsidiaries.
"TAXES" shall have the meaning assigned such term in
Section 4.06(a).
"TRANSFER" shall mean sell, assign, convey or otherwise transfer.
"TYPE" shall mean, with respect to any Loan, a Base Rate Loan, a
Eurodollar Advance or a Eurosterling Loan.
"U.K. SUBSIDIARY" shall mean Rexene Corporation Limited.
"UNRESTRICTED SUBSIDIARY" shall mean
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(i) each of the Subsidiaries of the Borrower in existence on
the date of the Original Agreement which meets the tests set forth in
clause (iii) of this definition,
(ii) any Foreign Subsidiary presently existing or formed or
acquired by the Borrower after the date of the Original Agreement,
(iii) any Domestic Subsidiary of the Company which is designated
by the Borrower as an Unrestricted Subsidiary (pursuant to procedures set
forth below in clause (iii)(f)), but only to the extent that such Domestic
Subsidiary complies with the following:
(a) is not party to any agreement, contract, arrangement
or understanding with the Borrower or any Restricted Subsidiary of the
Borrower unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Borrower or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Borrower except that this clause (a) need not
apply with respect to any agreement, contract, arrangement or understanding
between the Borrower and its Restricted Subsidiaries on the one side and
any Unrestricted Subsidiary that is a "foreign sales corporation" (within
the meaning of 26 U.S.C. Sections 921-927 or any successor sections);
(b) is a Person with respect to which neither the
Borrower nor any of its Restricted Subsidiaries has any direct or indirect
obligation to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results;
(c) has not guaranteed or otherwise directly or
indirectly provided credit support for any Debt of the Borrower or any of
its Restricted Subsidiaries;
(d) has at least one director on its board of directors
that is not a director or executive officer of the Borrower or any of its
Restricted Subsidiaries and has a least one executive officer that is not a
director or executive officer of the Borrower or any of its Restricted
Subsidiaries;
(e) is, at the time it becomes an Unrestricted Subsidiary,
adequately capitalized in light of its business activities at such time;
and
(f) (except for the existing Subsidiaries) is designated
as an Unrestricted Subsidiary by the board of directors of the Borrower,
which
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designation shall be evidenced to the Agent by filing with the Agent a
certified copy of the board resolution giving effect to such designation
and an officers' certificate certifying that such designation complied with
the foregoing conditions. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Agreement and any Debt of such Subsidiary shall be deemed
to be incurred by a Restricted Subsidiary of the Borrower as of such date
(and, if such Debt is not permitted to be incurred as of such date under
the provisions of this Agreement, the Borrower shall be in default of such
covenant unless such default shall have been cured within a period of 30
days thereafter). The board of directors of the Borrower may at any time
designate any Domestic Subsidiary which is an Unrestricted Subsidiary to be
a Restricted Subsidiary; PROVIDED that such designation shall be deemed to
be an incurrence of Debt by a Restricted Subsidiary of the Borrower of any
outstanding Debt of such Unrestricted Subsidiary and such designation shall
only be permitted if
(i) such Debt is permitted under the provisions of this
Agreement,
(ii) no Default or Event of Default would be in existence
following such designation, and
(iii) such Domestic Subsidiary shall execute a written instrument
of guaranty, unconditionally guaranteeing payment of and a Lien covering
the assets of such Domestic Subsidiary securing all Indebtedness under
this Agreement, the Notes and any other Loan Document.
"URC VENTURE" shall mean URC.
"URC VENTURE INVESTMENT" shall mean
(i) all Investments by the Borrower in URC outstanding as of the
date of the Original Agreement as reflected on Borrower's financial
statements as of such date, plus
(ii) all Investments made by the Borrower and its Restricted
Subsidiaries in URC after the date of the Original Agreement; provided,
however, that the aggregate amount of all such Investments made after the
date of the Original Agreement (measured by the fair market value of the
Investment as of the date made) shall not exceed the aggregate amount of
the cash received after the date of the Original Agreement by the Borrower
and its Restricted Subsidiaries as fees for the
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licensing of any intellectual property rights or other proprietary
technology to URC and
(iii) the amount of the Guaranty (as defined in the Joint Venture
Modification Agreement dated as of (and as in effect on) February 25, 1992
between the Borrower and UBE Industries Inc.); provided that at no time
shall the Guaranty made by the Borrower and its Restricted Subsidiaries
(A) be with recourse to the Borrower or any of its
Subsidiaries or
(B) be secured by any Liens on the Property of the
Borrower or any of its Subsidiaries (other than Liens permitted pursuant to
clause (vi) of the definition of Excepted Liens); and provided further that
the amount of the obligations guaranteed pursuant to such Guaranty shall be
reduced by the amount of all Investments made to satisfy the Borrower's
obligations under such Guaranty.
"URC" shall mean Ube Rexene Corporation, a Japanese corporation.
"U.S." shall mean the United States of America.
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect the board of directors of such
corporation, other than directors' qualifying shares, are owned or controlled by
the Borrower or one or more of the Wholly-Owned Subsidiaries or by the Borrower
and one or more of the Wholly-Owned Subsidiaries.
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited financial statements of the Borrower referred to in Section 7.02 (except
for changes concurred with by the Borrower's independent public accountants).
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ARTICLE II
COMMITMENTS
Section 2.01 LOANS AND LETTERS OF CREDIT.
(a) REVOLVING CREDIT LOANS. Each Lender severally agrees, on
the terms of this Agreement, to make Revolving Credit Loans to the Borrower
during the period from and including
(i) the Closing Date or
(ii) such later date that such Lender becomes a party to
this Agreement as provided in Section 12.06(b), to and up to, but
excluding, the Final Maturity Date in an aggregate principal amount at any
one time outstanding up to but not exceeding the amount of such Lender's
Commitment as then in effect; PROVIDED, HOWEVER, that the aggregate
principal amount of the Revolving Credit Loans by all Lenders hereunder at
any one time outstanding together with the LC Exposure and the Eurosterling
Exposure shall not exceed the Aggregate Commitments. Subject to the terms
of this Agreement, during the period from the Closing Date to and up to,
but excluding, the Final Maturity Date, the Borrower may borrow, repay and
reborrow the amount described in this Section 2.01(a).
(b) LETTERS OF CREDIT.
(i) During the period from and including the Closing Date
to but excluding the Final Maturity Date, each Issuer, as issuing bank for
the Lenders, agrees to extend credit for the account of the Borrower or any
Restricted Subsidiary and the Borrower at any time and from time to time by
issuing, renewing, extending or reissuing Letters of Credit; provided
however, the LC Exposure at any one time outstanding shall not exceed the
lesser of
(A) the LC Commitment or
(B) the Aggregate Commitments, as then in effect,
minus the aggregate principal amount of all Revolving Credit Loans then
outstanding and the Eurosterling Exposure. The Lenders shall participate
in such Letters of Credit according to their respective Percentage Shares.
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(ii) The Lenders shall have the obligation, notwithstanding
any Event of Default (but subject to each Lender's respective Commitment),
to make advances under their respective Revolving Credit Note to fund their
respective Percentage Shares of any Letter of Credit.
(c) EUROSTERLING LOANS. Each Lender severally agrees, on the
terms of this Agreement, to make Eurosterling Loans to the Borrower during
the period from and including:
(i) the Closing Date or
(ii) such later date that such Lender becomes a party to
this Agreement as provided in Section 12.06 (b), up to, but excluding the
Final Maturity Date in an aggregate Dollar Equivalent principal amount at
any one time outstanding not to exceed the amount of such Lender's
Eurosterling Commitment as then in effect; PROVIDED, HOWEVER, that on the
date of making of any Eurosterling Loan the Eurosterling Exposure shall not
exceed the Eurosterling Commitment, and further provided that at no time
shall the aggregate principal amount of the Revolving Credit Loans by all
Lenders hereunder at any one time outstanding together with the LC Exposure
and the Eurosterling Exposure exceed the Aggregate Commitment. Subject to
the terms of this Agreement, the Borrower may borrow, repay and reborrow
the amount described in this Section 2.01(c).
(d) LIMITATION ON TYPES OF LOANS. Subject to the other terms
and provisions of this Agreement, at the option of the Borrower, the Loans
may be Base Rate Loans, Eurodollar Advances or Eurosterling Loans; provided
that, without the prior written consent of the Majority Lenders, no more
than ten (10) Eurodollar Advances and five (5) Eurosterling Loans may be
outstanding at any time.
Section 2.02 BORROWINGS, CONTINUATIONS, CONVERSIONS AND LETTERS OF
CREDIT.
(a) BORROWINGS. The Borrower shall give the Agent (which shall
promptly notify the Lenders) advance notice as hereinafter provided of each
borrowing hereunder, which shall specify the aggregate amount of such
borrowing, the Type and the date (which shall be a Business Day) of the
Loans to be borrowed and (in the case of Eurodollar Advances and
Eurosterling Loans) the duration of the Interest Period therefor.
(b) MINIMUM AMOUNTS. All Base Rate Loan borrowings shall be in
amounts of at least $1,000,000 or the remaining balance of the Aggregate
Commitments, if less, or any whole multiple of $500,000 in excess thereof,
all
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Eurodollar Advances shall be in amounts of at least $5,000,000 or any
whole multiple of $1,000,000 in excess thereof and all Eurosterling Loans
shall be in amounts of at least the Dollar Equivalent of $5,000,000 or any
whole multiple of the Dollar Equivalent of $1,000,000 in excess thereof.
(c) NOTICES. All borrowings, continuations and conversions
shall require advance written notice (including notice by telecopier as
provided in Section 12.02) to the Agent (which shall promptly notify the
Lenders) in the form of Exhibit B hereto (or telephonic notice promptly
confirmed by such a written notice), which in each case shall be
irrevocable, from the Borrower to be received by the Agent not later than
11:00 a.m. New York, New York time at least one (1) Business Day prior to
the date of each Base Rate Loan borrowing (except for Base Rate Loan
borrowings on the Notes which are requested in order to fund Letters of
Credit, which borrowings may be requested not later than 12:00 noon at
least one (1) Business Day prior to such Base Rate Loan borrowings), three
(3) Business Days prior to the date of each Eurodollar Advances borrowing,
continuation or conversion and three (3) Business Days prior to the date of
each Eurosterling Loan borrowing or continuation. Without in any way
limiting the Borrower's obligation to confirm in writing any telephonic
notice, the Agent may act without liability upon the basis of telephonic
notice believed by the Agent in good faith to be from the Borrower prior to
receipt of written confirmation. In each such case, the Borrower hereby
waives the right to dispute the Agent's record of the terms of such
telephonic notice except in the case of gross negligence or willful
misconduct by the Agent. Agent agrees to give Borrower notice as soon as
practicable of all drawings on Letters of Credit, in order to permit
Borrower to request a Base Rate Loan borrowing as set forth in this Section
2.02(c).
(d) CONTINUATION OPTIONS. Subject to the provisions made in
this Section 2.02(d), the Borrower may elect to continue all or any part of
any Eurodollar Advances or Eurosterling Loans beyond the expiration of the
then current Interest Period relating thereto by giving advance notice as
provided in Section 2.02(c) to the Agent (which shall promptly notify the
Lenders) of such election, specifying the amount of such Loan to be
continued and the Interest Period therefor. In the absence of such a
timely and proper election, (i) the Borrower shall be deemed to have
elected to convert such Eurodollar Advances to a Base Rate Loan pursuant to
Section 2.02(e), and (ii) the Borrower shall be deemed to have elected to
continue the Eurosterling Loan for the same amount and Interest Period as
the present expiring Eurosterling Loan. All or any part of any Eurodollar
Advances may be continued as provided herein, provided that
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(i) any continuation of any such Loan shall be (as to
each Loan as continued for an applicable Interest Period) in amounts of at
least $5,000,000 or any whole multiple of $1,000,000 in excess thereof and
(ii) no Default shall have occurred and be continuing. If
a Default shall have occurred and be continuing, each Eurodollar Advances
shall be converted to a Base Rate Loan on the last day of the Interest
Period applicable thereto.
All or any part of any Eurosterling Loan may be continued as provided
herein, provided that any continuation of any such Eurosterling Loan shall
be (as to each Loan as continued for an applicable Interest Period) in
amounts of at least the Dollar Equivalent of $5,000,000 or any whole
multiple of the Dollar Equivalent of $1,000,000 in excess thereof.
(e) CONVERSION OPTIONS. The Borrower may elect to convert all
or any part of any Eurodollar Advances on the last day of the then current
Interest Period relating thereto to a Base Rate Loan by giving advance
notice to the Agent (which shall promptly notify the Lenders) of such
election. Subject to the provisions made in this Section 2.02(e), the
Borrower may elect to convert all or any part of any Base Rate Loan at any
time and from time to time to a Eurodollar Advance by giving advance notice
as provided in Section 2.02(c) to the Agent (which shall promptly notify
the Lenders) of such election. All or any part of any outstanding Loan may
be converted as provided herein, provided that
(i) any conversion of any Base Rate Loan into a
Eurodollar Advance shall be (as to each such Loan into which there is a
conversion for an applicable Interest Period) in amounts of at least
$5,000,000 or any whole multiple of $1,000,000 in excess thereof and
(ii) no Default shall have occurred and be continuing. If
a Default shall have occurred and be continuing, no Base Rate Loan may be
converted into a Eurodollar Advances.
(f) ADVANCES. Not later than 11:00 a.m. New York, New York time
on the date specified for each borrowing hereunder, each Lender shall make
available the amount of the Loans to be made by it on such date to the
Agent, to an account which the Agent shall specify, in immediately
available funds, for the account of the Borrower. The amounts so received
by the Agent shall, subject to the terms and conditions of this Agreement,
be made available to the Borrower by transferring the same, in immediately
available funds, to an account of the Borrower, designated by the Borrower
and maintained with the Agent at the Principal Office, in the case of
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Base Rate Loans and Eurodollar Advances, or at the Eurosterling Lending
Office in the case of Eurosterling Loans.
(g) LETTERS OF CREDIT. The Borrower shall give the Agent (which
shall promptly notify the Lenders of such request and their Percentage
Share of such Letter of Credit) advance notice to be received by the Agent
not later than 11:00 a.m. New York, New York time not less than three (3)
Business Days prior thereto of each request for the issuance and at least
ten (10) Business Days prior to the date of the renewal or extension of a
Letter of Credit hereunder which request shall specify
(i) the amount of such Letter of Credit,
(ii) the date (which shall be a Business Day) such Letter
of Credit is to be issued, renewed or extended,
(iii) the duration thereof,
(iv) the name and address of the beneficiary thereof,
(v) the form of the Letter of Credit,
(vi) the name of the Issuer thereof, and
(vii) such other information as the Agent may reasonably
request, all of which shall be reasonably satisfactory to the Agent.
Subject to the terms and conditions of this Agreement, on the date
specified for the issuance, renewal or extension of a Letter of Credit, the
Issuer shall issue such Letter of Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the
Borrower and the Restricted Subsidiary, if the account party, shall execute
a Letter of Credit Agreement. In the event of any conflict between any
provision of a Letter of Credit Agreement and this Agreement, the Borrower,
the Agent and the Lenders hereby agree that the provisions of this
Agreement shall govern.
The Issuer will send to the Borrower and each Lender, immediately
upon issuance of any Letter of Credit, or an amendment thereto, a true and
complete copy of such Letter of Credit, or such amendment thereto.
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Section 2.03 CHANGES OF COMMITMENTS.
(a) The Aggregate Commitments shall at all times be equal to the
Aggregate Maximum Credit Amount after adjustments resulting from reductions
pursuant to Section 2.03(b) hereof.
(b) The Borrower shall have the right to terminate or to reduce
the amount of the Aggregate Maximum Credit Amount at any time or from time
to time upon not less than three (3) Business Days' prior notice to the
Agent (which shall promptly notify the Lenders) of each such termination or
reduction, which notice shall specify the effective date thereof and the
amount of any such reduction (which shall not be less than $5,000,000 or
any whole multiple of $1,000,000 in excess thereof) and shall be
irrevocable and effective only upon receipt by the Agent.
(c) The Aggregate Maximum Credit Amount once terminated or
reduced may not be reinstated.
Section 2.04 FEES.
(a) For the first twelve-month period following the Closing
Date, the Borrower shall pay to the Agent for the account of each Lender a
commitment fee on the daily average unadvanced portion of the Aggregate
Commitments (based on the Dollar Equivalent at such Quarterly Date) minus
the LC Exposure at a rate per annum equal to one-half of one percent (1/2
of 1%). Thereafter, for the period up to but excluding the earlier of the
date the Aggregate Commitments are terminated or the Final Maturity Date,
the commitment fee will be determined quarterly based on the ratio at the
end of each quarter of consolidated Debt of the Borrower and its
Consolidated Subsidiaries (plus the amount reflected in the accounting
records of the Borrower and its Consolidated Subsidiaries at the end of
each quarter as the proceeds received from the sale of accounts receivable
under the asset securitization program permitted under Section 9.11 hereof)
to Adjusted EBITDA on a trailing annualized two-quarter basis as follows
(with changes in the commitment fee to occur 60 days after the applicable
quarter end):
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
<S> <C> <C> <C>
CONSOLIDATED
DEBT TO ADJUSTED Not less than 1.5
EBITDA RATIO Less than 1.5 Less than 2.0 Not less than 2.0
- -------------------------------------------------------------------------
.25% .375% .50%
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
Accrued commitment fees shall be payable on each Quarterly Date
and on the date the Aggregate Commitments are terminated.
(b) The Borrower agrees to pay to the Agent for the Issuers and
the Lenders a fee for each Letter of Credit in an amount equal to the LC
Commission Rate on the daily average outstanding amount of the maximum
liability existing from time to time under such Letter of Credit. In each
such case, the Issuer shall receive for its own account a portion of said
fee equal to one eighth of one percent (1/8%) per annum of the maximum
liability and the remaining portion of said fee shall be distributed to the
Lenders (including the Issuer as a Lender) in accordance with their
respective Percentage Share. Each Letter of Credit shall be deemed to be
outstanding up to the full face amount of the Letter of Credit until the
Issuer has received
(i) the cancelled Letter of Credit or a written
cancellation of the Letter of Credit from the beneficiary of such Letter of
Credit in form and substance acceptable to the Issuer or
(ii) for any reductions in the amount of the Letter of
Credit (other than from a drawing), written notification from the Borrower
(and written acceptance of such reduction from the beneficiary, as
applicable). Such fees are payable in advance at issuance of the Letter of
Credit. Any refunds due Borrower on account of any early cancellations or
reductions shall be paid to Borrower by the Lenders through the Agent
within five (5) Business Days of such cancellation or reduction.
(c) Upon each transfer of any Letter of Credit to a successor
beneficiary in accordance with its terms, the Borrower shall pay the sum of
$500 to the Issuer for its own account.
Section 2.05 SEVERAL OBLIGATIONS. The obligations of the Lenders to fund
their respective Percentage Share of the Loans or the Letters of Credit are
several (and not joint or joint and several), and the failure of any Lender to
make any Loan to be made by it or to provide funds for disbursements under
Letters of Credit on the date specified therefor shall
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not relieve any other Lender of its obligation to make its Loan or provide
funds on such date (up to but not exceeding its Commitment).
Section 2.06 NOTES.
(a) The Revolving Credit Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit A-1 hereto, dated
(i) the Closing Date or
(ii) the effective date of an Assignment pursuant to
Section 12.06(b), payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount as originally in effect and otherwise
duly completed.
(b) The Eurosterling Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit A-2 hereof, dated
(i) the Closing Date or
(ii) the effective date of an Assignment pursuant to
Section 12.06(b), payable to the order of such Lender in a principal amount
equal to the Lender's Percentage Share of the Eurosterling Commitment as
originally in effect and otherwise duly completed.
The date, amount, Type, interest rate and Interest Period of each Loan made by
each Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Notes, and, prior to any transfer,
endorsed by such Lender on the schedule attached to such Notes or any
continuation thereof. Such records shall be deemed conclusive absent manifest
error.
Section 2.07 PREPAYMENTS.
(a) The Borrower may prepay the Base Rate Loans upon not less
than one (1) Business Day prior notice to the Agent (which shall promptly
notify the Lenders), which notice shall specify the prepayment date (which
shall be a Business Day) and the amount of the prepayment (which shall be
at least $2,000,000, or the remaining aggregate principal balance
outstanding on the Notes) and shall be irrevocable and effective only upon
receipt by the Agent. Any prepayment of a
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Eurodollar Advances or a Eurosterling Loan shall be made together with
the payment of compensation pursuant to Section 5.05.
(b) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amount pursuant to Section 2.03(b), the
outstanding aggregate principal amount of the Revolving Credit Loans plus
the LC Exposure and the Eurosterling Exposure exceeds the Aggregate Maximum
Credit Amount (in this subsection (b) such excess is referred to as the
"Excess"), the Borrower shall
(i) prepay the Loans on the date of such termination or
reduction in an aggregate principal amount equal to the Excess, together
with interest on the principal amount paid accrued to the date of such
prepayment and
(ii) if any portion of the Excess remains after prepaying
all of the Loans, pay to the Agent on behalf of the Lenders an amount equal
to such remaining portion of the Excess to be held as cash collateral as
provided in Section 2.09(b) hereof.
(c) Prepayments permitted or required under this Section 2.07
shall be without premium or penalty, except as required under Section 5.05
for prepayment of Eurodollar Advances and Eurosterling Loans. Any
prepayments on the Revolving Credit Loans may be reborrowed subject to the
then effective Aggregate Commitments and satisfaction of all applicable
conditions precedent to borrowings thereunder. Any prepayments on the
Eurosterling Loans may be reborrowed subject to the then effective
Eurosterling Commitment and satisfaction of all applicable conditions
precedent to borrowings thereunder.
Section 2.08 ASSUMPTION OF RISKS. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or any transferee
thereof with respect to its use of such Letter of Credit. Neither the Issuer
nor its correspondents (except in the case of willful misconduct or bad faith on
the part of the Issuer or the correspondents or any of their employees) shall be
responsible for the validity, sufficiency or genuineness of certificates or
other documents or any endorsements thereon, even if such certificates or other
documents should in fact prove to be invalid, insufficient, fraudulent or
forged; for errors, omissions, interruptions or delays in transmissions or
delivery of any messages by mail, telex, or otherwise, whether or not they be in
code; for errors in translation or for errors in interpretation of technical
terms; the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason. The Issuer and its correspondents may
accept certificates or other documents that appear on their face to be in order,
without responsibility for further
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investigation of any matter contained therein regardless of any notice or
information to the contrary.
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY.
(a) If a disbursement by an Issuer is made under any Letter of
Credit, the Borrower shall immediately pay to the Issuer upon notice to the
Borrower of any such disbursement, the amount of each such disbursement
made by the Issuer under the Letter of Credit (if such payment is not
sooner effected as may be required under this Section 2.09, permitted under
Section 2.01(b) or under other provisions of the Letter of Credit),
together with interest on the amount disbursed from and including the date
of disbursement until payment in full of such disbursed amount at a varying
rate per annum equal to
(i) the then applicable interest rate for Base Rate Loans
through the second Business Day after notice of such disbursement is
received by the Borrower and
(ii) thereafter, the Post-Default Rate for Base Rate Loans
(but in no event to exceed the Highest Lawful Rate) for the period from and
including the Business Day following the date of such disbursement to and
including the date of repayment in full of such disbursed amount. The
obligations of the Borrower under this Agreement with respect to each
Letter of Credit shall be absolute, unconditional and irrevocable and shall
be paid or performed strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including, without
limitation, but only to the fullest extent permitted by applicable law, the
following circumstances:
(i) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any of the Security Instruments;
(ii) any amendment or waiver of (including any
default), or any consent to departure from this Agreement made or given in
accordance with the terms of the Loan Agreement (except to the extent
permitted by any amendment or waiver), any Letter of Credit or any of the
Security Instruments;
(iii) the existence of any claim, set-off, defense or
other rights which the Borrower may have at any time against the
beneficiary of any Letter of Credit or any transferee of any Letter of
Credit (or any Persons for whom any such beneficiary or any such transferee
may be acting), the Agent, any Lender or any other Person, whether in
connection with this Agreement, any Letter of Credit,
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the Security Instruments, the transactions contemplated hereby or any
unrelated transaction;
(iv) any statement, certificate, draft, notice or
any other document presented under any Letter of Credit proves to have been
forged, fraudulent, insufficient or invalid in any respect or any statement
therein proves to have been untrue or inaccurate in any respect whatsoever;
(v) payment by the Issuer under any Letter of
Credit against presentation of a draft or certificate which appears on its
face to comply, but does not comply, with the terms of such Letter of
Credit; and
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary, the
Borrower will not be liable for payment or performance that results from
the gross negligence or willful misconduct of the Issuer, except
(i) where the Borrower or any Subsidiary actually
recovers the proceeds for itself or the Issuer of any payment made by the
Issuer in connection with such gross negligence or willful misconduct or
(ii) in cases where the Issuer makes payment to the named
beneficiary of a Letter of Credit in accordance with the requirements of
the Letter of Credit.
(b) In the event of the occurrence of any Event of Default, a
payment or prepayment pursuant to Sections 2.07(b) hereof or the maturity
of the Notes, whether by acceleration or otherwise, an amount equal to the
LC Exposure (or the Excess in the case of Sections 2.07(b)) shall be
deemed to be forthwith due and owing by the Borrower to the Agent and the
Lenders as of the date of any such occurrence; and the Borrower's
obligation to pay such amount shall be absolute and unconditional, without
regard to whether any beneficiary of any such Letter of Credit has
attempted to draw down all or a portion of such amount under the terms of a
Letter of Credit, and, to the fullest extent permitted by applicable law,
shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower may now or hereafter have
against any such beneficiary, the Agent, the Lenders or any other Person
for any reason whatsoever. Such payments shall be held by the Agent on
behalf of the Lenders as cash collateral securing the LC Exposure. In the
event of any such payment by the Borrower of amounts contingently
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owing under outstanding Letters of Credit and in the event that
thereafter drafts or other demands for payment complying with the terms
of such Letters of Credit are not made prior to the respective
expiration dates thereof, the Agent agrees, if no Event of Default has
occurred and is continuing or if no other amounts are outstanding under
this Agreement, the Notes or the Security Instruments, to remit to the
Borrower amounts for which the contingent obligations evidenced by the
Letters of Credit have ceased.
(c) Each Lender severally and unconditionally agrees that,
notwithstanding the occurrence of an Event of Default, it shall promptly
reimburse the Issuer an amount equal to such Lender's Percentage Share of
any disbursement made by the Issuer under any Letter of Credit that is not
reimbursed according to this Section 2.09 except in cases of gross
negligence or willful misconduct of Issuer in paying such Letter of Credit.
Section 2.10 LENDING OFFICES. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 REPAYMENT OF LOANS. The Borrower will pay to the Agent at
its Principal Office in the case of Base Rate Loans and Eurodollar Advances, or
at its Eurosterling Lending Office in the case of Eurosterling Loans, for the
account of each Lender, the principal payments required by this Section 3.01.
On the Final Maturity Date, the Borrower shall repay the outstanding aggregate
principal amount of the Notes. The currency for the principal payments shall be
in the currency in which the related Loan was made. Except as otherwise
provided for in this Agreement, the applicable currency for all other payments
hereunder shall be Dollars.
Section 3.02 INTEREST.
(a) The Borrower will pay to the Agent at its Principal Office for
account of each Lender, interest on the unpaid principal amount of each
Loan made by such Lender for the period commencing on the date such Loan is
made to but excluding the date such Loan shall be paid in full, at the
following rates per annum (subject, however, to Section 12.14):
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(i) if such a Loan is a Base Rate Loan, the Base Rate (as in
effect from time to time) plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate; and
(ii) if such a Loan is a Eurodollar Advance, for each Interest
Period relating thereto, the Fixed Rate for such Loan plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate.
(b) The Borrower will pay to the Agent at its Eurosterling Lending
Office for account of each Lender, interest on the unpaid principal amount
of each Eurosterling Loan made by such Lender for the period commencing on
the date such Eurosterling Loan is made to but excluding the date such
Eurosterling Loan shall be paid in full, for each Interest Period relating
thereto, at the Eurosterling Rate per annum for such Eurosterling Loan
(subject, however, to Section 12.14) plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent at its
Principal Office, in the case of Base Rate Loans and Eurodollar Advances, or at
its Eurosterling Lending Office in the case of Eurosterling Loans, for the
account of each Lender, interest at the applicable Post-Default Rate on any
principal of any Loan made by such Lender, and (to the fullest extent permitted
by law) on any other amount payable by the Borrower hereunder or under any Notes
held by such Lender to or for account of such Lender, which shall not be paid in
full when due (whether at stated maturity, by acceleration or otherwise), for
the period commencing on the due date thereof until the same is paid in full.
Accrued interest on Base Rate Loans shall be payable on each
Quarterly Date commencing on June 30, 1996, and accrued interest on each
Eurodollar Advances and Eurosterling Loan shall be payable on the last day of
the Interest Period therefor and, if such Interest Period is longer than three
months at three-month intervals following the first day of such Interest Period,
except that interest payable at the Post-Default Rate shall be payable from time
to time on demand and interest on any Eurodollar Advances that is converted into
a Base Rate Loan (pursuant to Section 5.04) shall be payable on the date of
conversion (but only to the extent so converted). The currency for the interest
payments shall be in the currency in which the related Loan was made.
Promptly after the determination of any interest rate provided
for herein or any change therein, the Agent shall notify the Lenders to which
such interest is payable and the Borrower thereof. Each determination by the
Agent of an interest rate or fee hereunder shall, except in cases of manifest
error, be final, conclusive and binding on the parties.
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If any sum due from the Borrower under this Agreement or any
order or judgment given in relation hereto has to be converted from the currency
(the "first currency") in which the same is payable hereunder or under such
order or judgment into another currency (the "second currency") for the purpose
of (i) making or filing a claim or proof against the Borrower with any
governmental authority or in any court or tribunal or (ii) enforcing any order
or judgment given in relation hereto, the Borrower shall indemnify each of the
Persons to whom such sum is due against any loss actually suffered as a result
of any discrepancy between (a) the rate of exchange used when restating the
amount in question from the first currency into the second currency and (b) the
rate or rates of exchange at which such Person, acting in good faith in a
commercially reasonable manner, purchased the first currency with the second
currency after receipt of a sum paid to it in the second currency in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
The foregoing indemnity shall constitute a separate obligation of the Borrower
distinct from its other obligations hereunder and shall survive the giving or
making of any judgment or order in relation to all or any of such other
obligations.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under this Agreement, the Notes and the Letters of Credit shall be made in
Dollars, in immediately available funds, to the Agent at its Principal Office in
such accounts as the Agent shall specify by notice to the Borrower from time to
time, not later than 11:00 a.m. New York, New York time on the date on which
such payments shall become due (except with respect to payments of principal,
interest and other amounts to be made by the Borrower under the Eurosterling
Note and in connection with the Eurosterling Loans which shall be payable in
Eurosterling at the Agent's Eurosterling Lending Office in such accounts as the
Agent shall specify by notice from time to time, not later than 11:00 a.m. New
York time on the date on which such payments shall become due) (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Such payments shall be made without (to the
fullest extent permitted by applicable law) defense, set-off or counterclaim.
Each payment to be made to the Agent under this Agreement or any Note for
account of a Lender shall be paid promptly to such Lender in immediately
available funds. In the case of Eurosterling Loans, the Agent shall distribute
such payments to each Lender at its Eurosterling Lending Office in like funds as
received. If the due date of any payment under this Agreement or any Note would
otherwise fall on a day which is not a Business Day such date shall be extended
to the next succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension. At the time
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of each payment to the Agent of any principal of or interest on any
borrowing, the Borrower shall notify the Agent of the Loans to which such
payment shall apply. In the absence of such notice the Agent may specify the
Loans to which such payment shall apply, but to the extent possible such
payment or prepayment will be applied first to the Loans comprised of Base
Rate Loans.
Section 4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein each Lender agrees that:
(a) each borrowing from the Lenders under Section 2.01 shall be
made from the Lenders pro rata in accordance with their Percentage Share,
each payment of commitment fee or other fees under Sections 2.04(a) and (b)
shall be made for account of the Lenders pro rata in accordance with their
Percentage Share, and each termination or reduction of the amount of the
Aggregate Maximum Credit Amount under Section 2.03(b) shall be applied to
the Commitment of each Lender, pro rata according to the amounts of its
respective Commitment;
(b) each payment of principal of Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the respective
unpaid principal amount of the Loans held by the Lenders; and
(c) each payment of interest on Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the amounts of
interest due and payable to the respective Lenders; and
(d) each reimbursement by the Borrower of disbursements under
Letters of Credit shall be made for account of the Lenders pro rata in
accordance with the amounts of reimbursement obligations due and payable to
each respective Lender.
Section 4.03 COMPUTATIONS. Interest on Eurodollar Advances, Eurosterling
Loans and fees shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) occurring in
the period for which such interest is payable, unless such calculation would
exceed the Highest Lawful Rate, in which case interest shall be calculated on
the per annum basis of a year of 365 or 366 days, as the case may be. Interest
on Base Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
Section 4.04 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall
have been notified (which notice shall be effective upon receipt) by a Lender or
the Borrower prior to
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the date on which such notifying party is scheduled to make payment to the
Agent (such payment being herein called the "REQUIRED PAYMENT") of
(a) in the case of a Lender, the proceeds of a Loan or a payment
under a Letter of Credit to be made by it hereunder or
(b) in the case of the Borrower, a payment to the Agent for
account of one or more of the Lenders hereunder, that it does not intend to
make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date and, if such Lender or the Borrower (as
the case may be) has not in fact made the Required Payment to the Agent or
fails to make such Required Payment on the date when due,
(i) the recipient(s) of such payment (to the extent
payment is not made pursuant to clause (ii) below) shall, on demand, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount
was so made available by the Agent until but excluding the date the Agent
recovers such amount at a rate per annum which, for any Lender as
recipient, will be equal to the Federal Funds Rate, and for the Borrower as
recipient, will be equal to the Base Rate plus the Applicable Margin and
(ii) the Lender failing to advance proceeds of a Loan or a
payment under a Letter of Credit shall pay to the Agent customary fees plus
interest on such proceeds and payments for each day on which such proceeds
and/or payments are not made equal to the Federal Funds Rate for the first
two (2) such days and at the Base Rate for each such day thereafter until
such advances are made or returned to the Agent.
Section 4.05 SET-OFF, SHARING OF PAYMENTS, ETC.
(a) The Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim a Lender
may otherwise have, each Lender shall have the right and be entitled (after
consultation with the Agent), at its option, to offset balances held by it
or by any of its Affiliates for account of the Borrower or any Restricted
Subsidiary at any of its offices, in Dollars or in any other currency,
against any principal of or interest on any of such Lender's Loans, or any
other amount payable to such Lender hereunder, which is not paid when due
(regardless of whether such balances are then due to the Borrower),
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in which case it shall promptly notify the Borrower and the Agent
thereof, provided that such Lender's failure to give such notice shall
not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of or
interest on any Loan made by it to the Borrower under this Agreement (or
reimbursement as to any Letter of Credit, through the exercise of any right
of set-off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement) then due
hereunder by the Borrower to such Lender than the percentage received by
any other Lenders, it shall promptly
(i) notify the Agent and each other Lender thereof and
(ii) purchase from such other Lenders participations in
(or, if and to the extent specified by such Lender, direct interests in)
the Loans (or participations in Letters of Credit) made by such other
Lenders (or in interest due thereon, as the case may be) in such amounts,
and make such other adjustments from time to time as shall be equitable,
to the end that all the Lenders shall share the benefit of such excess
payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with
the unpaid principal and/or interest on the Loans held by each of the
Lenders (or reimbursements of Letters of Credit). To such end, all the
Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Lender so purchasing a
participation (or direct interest) in the Loans made by other Lenders (or
in interest due thereon or reimbursement for Letters of Credit, as the case
may be) may exercise all rights of set-off, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such
Lender were a direct holder of Loans or Letters of Credit in the amount of
such participation. Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower. If under
any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a set-off to which this Section 4.05
applies, such Lender shall, to the extent practicable, exercise its rights
in respect of such secured claim in a manner consistent with the rights of
the Lenders entitled under this Section 4.05 to share the benefits of any
recovery on such secured claim.
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Section 4.06 TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the
Borrower hereunder shall be made, in accordance with Section 4.01, free and
clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto resulting from a Regulatory Change, EXCLUDING, in the
case of each Lender and the Agent, taxes imposed on its income, and
franchise or similar taxes imposed on it, by
(i) any jurisdiction (or political subdivision thereof)
of which the Agent or such Lender, as the case may be, is a citizen or
resident or in which such Lender has an Applicable Lending Office,
(ii) the jurisdiction (or any political subdivision
thereof) in which the Agent or such Lender is organized, or
(iii) any jurisdiction (or political subdivision thereof)
in which such Lender or the Agent is doing business which taxes are imposed
solely as a result of doing business in such jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES").
If the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to the Lenders or the Agent
(i) the sum payable shall be increased by the
amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 4.06)
such Lender or the Agent (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) OTHER TAXES. In addition, to the fullest extent permitted
by applicable law, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the
execution, delivery or
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registration of, or otherwise with respect to, this Agreement, any
Assignment or any other Security Instrument (hereinafter referred to as
"OTHER TAXES").
(C) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER WILL INDEMNIFY EACH LENDER AND THE AGENT FOR
THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, BUT NOT LIMITED TO,
ANY TAXES OR OTHER TAXES IMPOSED BY ANY GOVERNMENTAL AUTHORITY ON AMOUNTS
PAYABLE UNDER THIS SECTION 4.06) PAID BY SUCH LENDER OR THE AGENT (ON THEIR
BEHALF OR ON BEHALF OF ANY LENDER), AS THE CASE MAY BE, AND ANY LIABILITY
(INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH
RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR
LEGALLY ASSERTED UNLESS THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR
LEGALLY ASSERTED AND SUCH LENDER'S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS
THE RESULT OF ITS GROSS NEGLIGENCE OR WILFUL MISCONDUCT. ANY PAYMENT
PURSUANT TO SUCH INDEMNIFICATION SHALL BE MADE WITHIN THIRTY (30) DAYS
AFTER THE DATE ANY LENDER OR THE AGENT, AS THE CASE MAY BE, MAKES WRITTEN
DEMAND THEREFOR. IF ANY LENDER OR THE AGENT RECEIVES A REFUND OR CREDIT IN
RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER OR THE AGENT HAS
RECEIVED PAYMENT FROM THE BORROWER HEREUNDER IT SHALL PROMPTLY NOTIFY THE
BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO DEFAULT HAS OCCURRED AND
IS CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A REQUEST BY THE
BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED
APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT EQUAL
TO SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY
INTEREST SO REFUNDED OR CREDITED), PROVIDED THAT THE BORROWER, UPON THE
REQUEST OF SUCH LENDER OR THE AGENT, AGREES TO RETURN SUCH REFUND OR CREDIT
(PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO SUCH LENDER OR THE AGENT IN
THE EVENT SUCH LENDER OR THE AGENT IS REQUIRED TO REPAY SUCH REFUND OR
CREDIT.
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(d) LENDER REPRESENTATIONS.
(i) Each Lender represents that it is either
(i) a corporation organized under the laws of the
United States of America or any state thereof or
(ii) entitled to complete exemption from United
States withholding tax imposed on or with respect to any payments,
including fees, to be made to it pursuant to this Agreement
(A) under an applicable provision of a tax
convention to which the United States of America is a party or
(B) because it is acting through a branch,
agency or office in the United States of America
and any payment to be received by it hereunder is effectively connected
with a trade or business in the United States of America. Each Lender that
is not a corporation organized under the laws of the United States of
America or any state thereof agrees to provide to the Borrower and the
Agent on the Closing Date, or on the date of its delivery of the Assignment
pursuant to which it becomes a Lender, and at such other times as required
by United States law or as the Borrower or the Agent shall reasonably
request, two accurate and complete original signed copies of either
(A) Internal Revenue Service Form 4224 (or
successor form) certifying that all payments to be made to it hereunder
will be effectively connected to a United States trade or business (the
"FORM 4224 CERTIFICATION") or
(B) Internal Revenue Service Form 1001 (or
successor form) certifying that it is entitled to the benefit of a
provision of a tax convention to which the United States of America is a
party which completely exempts from United States withholding tax all
payments to be made to it hereunder (the "FORM 1001 CERTIFICATION").
In addition, each Lender agrees that if it previously filed a Form 4224
Certification, it will deliver to the Borrower and the Agent a new Form
4224 Certification prior to the first payment date occurring in each of its
subsequent taxable years; and if it previously filed a Form 1001
Certification, it will deliver to the Borrower and the Agent a new
certification prior to the first payment date falling in the third year
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following the previous filing of such certification. Each Lender also
agrees to deliver to the Borrower and the Agent such other or supplemental
forms as may at any time be required as a result of changes in applicable
law or regulation in order to confirm or maintain in effect its entitlement
to exemption from United States withholding tax on any payments hereunder,
PROVIDED that the circumstances of such Lender at the relevant time and
applicable laws permit it to do so. If a Lender determines, as a result of
any change in either
(i) a Governmental Requirement or
(ii) its circumstances,
that it is unable to submit any form or certificate that it is obligated to
submit pursuant to this Section 4.06, or that it is required to withdraw or
cancel any such form or certificate previously submitted, it shall promptly
notify the Borrower and the Agent of such fact. If a Lender is organized
under the laws of a jurisdiction outside the United States of America,
unless the Borrower and the Agent have received a Form 1001 Certification
or Form 4224 Certification satisfactory to them indicating that all
payments to be made to such Lender hereunder are not subject to United
States withholding tax, the Borrower shall withhold taxes from such
payments at the applicable statutory rate. Each Lender agrees to indemnify
and hold harmless the Borrower or Agent, as applicable, from any United
States taxes, penalties, interest and other expenses, costs and losses
incurred or payable by
(i) the Agent as a result of such Lender's failure
to submit any form or certificate that it is required to provide pursuant
to this Section 4.06 or
(ii) the Borrower or the Agent as a result of their
reliance on any such form or certificate which such Lender has provided to
them pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has
failed to provide the Borrower with the form required pursuant to this
Section 4.06, if any, (other than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the date on which a form
originally was required to be provided), such Lender shall not be entitled
to indemnification under Section 4.06 with respect to taxes imposed by the
United States which taxes would not have been imposed but for such failure
to provide such forms; PROVIDED, HOWEVER, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax
becomes subject to taxes because of its failure to deliver a form required
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hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such taxes.
(iii) Any Lender claiming any additional amounts payable
pursuant to this Section 4.06 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Agent or to change the jurisdiction of its
Applicable Lending Office or to contest any tax imposed if the making of
such a filing or change or contesting such tax would avoid the need for or
reduce the amount of any such additional amounts that may thereafter accrue
and would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.
(iv) Each Lender hereby represents that it will acquire
its Note for its own account in the ordinary course of its commercial
lending business; however, the disposition of such Lender's property shall
at all times be and remain within its control and, in particular and
without limitation, such Lender may, subject to the provisions of Section
12.06 and any other applicable provisions of this Agreement, sell or
otherwise transfer its Note, any participation interest or any interest in
its Note, or any of its other rights and obligations under the Loan
Documents.
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 EURODOLLAR AND EUROSTERLING LOAN REGULATIONS, ETC..
(a) EURODOLLAR AND EUROSTERLING LOAN REGULATIONS, ETC. The
Borrower shall pay directly to each Lender from time to time such amounts
as such Lender may determine to be necessary to compensate such Lender for
any costs which it determines are attributable to its making or maintaining
of any Eurosterling Loans, Eurodollar Advances or issuing or participating
in Letters of Credit hereunder or its obligation to make any Eurosterling
Loans, Eurodollar Advances or issue or participate in any Letters of Credit
hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any of such Eurosterling Loans, Eurodollar
Advances, Letters of Credit or such obligation (such increases in costs and
reductions in amounts receivable being herein called "ADDITIONAL COSTS"),
resulting from any Regulatory Change which:
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(i) changes the basis of taxation of any amounts payable
to such Lender under this Agreement or any Note in respect of any of such
Eurosterling Loans, Eurodollar Advances or Letters of Credit (other than
taxes imposed on the overall net income of such Lender or of its Applicable
Lending Office for any of such Eurosterling Loans, Eurodollar Advances by
the jurisdiction in which such Lender has its principal office or
Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio or similar requirements (other than the
Reserve Requirement utilized in the determination of the Fixed Rate for
such Loan) relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of such Lender (including any of
such Eurodollar Advances or any deposits referred to in the definition
of "Fixed Eurodollar Rate" in Section 1.02 hereof and any of such
Eurosterling Loans), or the Commitment of such Lender, the Eurodollar
interbank market or the London interbank market; or
(iii) imposes any other condition affecting this Agreement
or any Note (or any of such extensions of credit or liabilities) or such
Lender's Commitment.
Each Lender will notify the Agent and the Borrower of any event occurring
after the Closing Date which will entitle such Lender to compensation
pursuant to this Section 5.01(a) as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, and
will designate a different Applicable Lending Office for the Loans of such
Lender affected by such event if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the sole
opinion of such Lender, be disadvantageous to such Lender, provided that
such Lender shall have no obligation to so designate an Applicable Lending
Office located in the United States. If any Lender requests compensation
from the Borrower under this Section 5.01(a), the Borrower may, by notice
to such Lender, suspend the obligation of such Lender to make additional
Loans of the Type with respect to which such compensation is requested
until the Regulatory Change giving rise to such request ceases to be in
effect (in which case the provisions of Section 5.04 shall be applicable).
(b) REGULATORY CHANGE. Without limiting the effect of the
provisions of Section 5.01(a), in the event that, by reason of any
Regulatory Change or any other circumstances arising after the Closing Date
affecting such Lender, the Eurodollar interbank market, the London
interbank market or such Lender's position in such market, any Lender
either
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(i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or
other liabilities of such Lender which includes deposits by reference to
which the interest rate on Eurodollar Advances or Eurosterling Loans is
determined as provided in this Agreement or a category of extensions of
credit or other assets of such Lender which includes Eurodollar Advances or
Eurosterling Loans or
(ii) becomes subject to restrictions on the amount of such
a category of liabilities or assets which it may hold, then, if such Lender
so elects by notice to the Borrower, the obligation of such Lender to make
additional Eurodollar Advances or Eurosterling Loans shall be suspended
until such Regulatory Change or other circumstances ceases to be in effect
(in which case the provisions of Section 5.04 shall be applicable).
(c) CAPITAL ADEQUACY. Without limiting the effect of the
foregoing provisions of this Section 5.01 (but without duplication), the
Borrower shall pay directly to any Lender from time to time on request such
amounts as such Lender may reasonably determine to be necessary to
compensate such Lender or its parent or holding company for any costs which
it determines are attributable to the maintenance by such Lender or its
parent or holding company (or any Applicable Lending Office), pursuant to
any Governmental Requirement following any Regulatory Change, of capital in
respect of its Commitment, its Note, its Loans or any interest held by it
in any Letter of Credit, such compensation to include, without limitation,
an amount equal to any reduction of the rate of return on assets or equity
of such Lender or its parent or holding company (or any Applicable Lending
Office) to a level below that which such Lender or its parent or holding
company (or any Applicable Lending Office) could have achieved but for such
Governmental Requirement. Such Lender will notify the Borrower that it is
entitled to compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such compensation.
(d) COMPENSATION PROCEDURE. Any Lender notifying the Borrower
of the incurrence of additional costs under this Section 5.01 shall in such
notice to the Borrower and the Agent set forth in reasonable detail the
basis and amount of its request for compensation. Determinations and
allocations by each Lender for purposes of this Section 5.01 of the effect
of any Regulatory Change pursuant to Section 5.01(a) or (b), or of the
effect of capital maintained pursuant to Section 5.01(c), on its costs or
rate of return of maintaining Loans or its obligation to make Loans or
issue Letters of Credit, or on amounts receivable by it in respect of Loans
or Letters of Credit, and of the amounts required to compensate such Lender
under this Section 5.01, shall be conclusive and binding for all purposes,
provided that
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such determinations and allocations are made on a reasonable basis. Any
request for additional compensation under this Section 5.01 shall be
paid by the Borrower within thirty (30) Business Days of the receipt by
the Borrower of the notice described in this Section 5.01(d).
Section 5.02 LIMITATION ON EURODOLLAR ADVANCES. (a) Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any Fixed
Eurodollar Rate for any Interest Period:
(i) the Agent determines (which determination shall be
conclusive, absent manifest error) that quotations of interest rates for
the relevant deposits referred to in the definition of "Fixed Eurodollar
Rate" in Section 1.02 are not being provided in the relevant amounts or for
the relevant maturities for purposes of determining rates of interest for
Eurodollar Advances as provided herein; or
(ii) the Agent determines (which determination shall be
conclusive, absent manifest error) that the relevant rates of interest
referred to in the definition of "Fixed Eurodollar Rate" in Section 1.02
upon the basis of which the rate of interest for Eurodollar Advances for
such Interest Period is to be determined are not sufficient to adequately
cover the cost to the Lenders of making or maintaining Eurodollar Advances;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Advances.
(b) Anything herein to the contrary notwithstanding, if, on or prior
to the determination of any Eurosterling Rate for any Interest Period:
(i) the Agent determines (which determination shall be
conclusive, absent manifest error) that quotations of interest rates for
the relevant deposits referred to in the definition of "Eurosterling Rate"
in Section 1.02 are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest for
Eurosterling Loans as provided herein; or
(ii) the Agent determines (which determination shall be
conclusive, absent manifest error) that the relevant rates of interest
referred to in the definition of "Eurosterling Rate" in Section 1.02 upon
the basis of which the rate of interest for Eurosterling Loans for such
Interest Period is to be determined are not sufficient to adequately cover
the cost to the Lenders of making or maintaining Eurosterling Loans;
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then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurosterling Loans.
Section 5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, (a) in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Advances hereunder, then such Lender shall promptly notify the Borrower thereof
and such Lender's obligation to make Eurodollar Advances shall be suspended
until such time as such Lender may again make and maintain Eurodollar Advances
(in which case the provisions of Section 5.04 shall be applicable); and (b) in
the event that it becomes unlawful for any Lender or its Eurosterling Lending
Office to honor its obligation to make or maintain Eurosterling Loans hereunder,
then such Lender shall promptly notify the Borrower thereof and (i) such
Lender's obligation to make Eurosterling Loans shall be suspended until such
time as such Lender may again make and maintain Eurosterling Loans and (ii) such
Lender's Eurosterling Loans outstanding, if any, shall be prepaid by the
Borrower no later than the earlier of the latest date permitted by the relative
law and the Final Maturity Date.
Section 5.04 LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND 5.03. (a) If the
obligation of any Lender to make Eurodollar Advances shall be suspended pursuant
to Sections 5.01, 5.02 or 5.03 ("AFFECTED EURODOLLAR LOANS"), all Affected
Eurodollar Loans which would otherwise be made by such Lender shall be made
instead as Base Rate Loans (and, if an event referred to in Section 5.01(b) or
Section 5.03 has occurred and such Lender so requests by notice to the Borrower,
all Affected Eurodollar Loans of such Lender then outstanding shall be
automatically converted into Base Rate Loans on the date specified by such
Lender in such notice) and, to the extent that Affected Eurodollar Loans are so
made as (or converted into) Base Rate Loans, all payments of principal which
would otherwise be applied to such Lender's Affected Eurodollar Loans shall be
applied instead to its Base Rate Loans; and
(b) if the obligation of any Lender to make Eurosterling Loans shall
be suspended pursuant to Sections 5.01, 5.02 or 5.03 ("AFFECTED EUROSTERLING
LOANS"), all Affected Eurosterling Loans outstanding, if any, shall be prepaid
by the Borrower, except as permitted by Section 5.03(b), within thirty (30)
Business Days of the receipt by Borrower of the notice described in Section
5.01.
Section 5.05 COMPENSATION. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
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(a) (i) any payment, prepayment or conversion of a Eurodollar
Advances properly made by such Lender or the Borrower for any reason
(including, without limitation, the acceleration of the Loans pursuant to
Section 10.01) on a date other than the last day of the Interest Period for
such Loan; or (ii) any payment or prepayment of a Eurosterling Loan made
by the Borrower for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 10.01) on a date other than
the last day of the Interest Period for such Eurosterling Loan; or
(b) (i) any failure by the Borrower for any reason (including
but not limited to, the failure of any of the conditions precedent
specified in Article VI to be satisfied) to borrow, continue or convert
Eurodollar Advances from such Lender on the date for such borrowing,
continuation or conversion specified in the relevant notice given pursuant
to Section 2.02(c); or (ii) any failure by the Borrower for any reason
(including but not limited to, the failure of any of the conditions
precedent specified in Article VI to be satisfied) to borrow or continue
Eurosterling Loans from such Lender on the date for such borrowing or
continuation specified in the relevant notice given pursuant to Section
2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on
the principal amount so paid, prepaid or converted or not borrowed for the
period from the date of such payment, prepayment or conversion or failure
to borrow to the last day of the Interest Period for such Loan (or, in the
case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date specified for such borrowing) at the applicable
rate of interest for such Loan provided for herein over
(ii) the interest component of the amount such Lender
would have bid in the London interbank market for Dollar or Eurosterling
deposits, as applicable, of leading banks in amounts comparable to such
principal amount and with maturities comparable to such period (as
reasonably determined by such Lender).
Section 5.06 REPLACEMENT LENDERS.
(a) If only one (1) Lender has notified the Borrower and the
Agent of its incurring additional costs under Section 5.01 hereof or has
required the Borrower to make payments for Taxes under Section 4.06 hereof
or obtain appraisals pursuant to Section 8.10, then the Borrower may
(subject to paragraph (b) of this Section 5.06), unless such Lender has
notified the Borrower and the Agent that the
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circumstances giving rise to such notice no longer apply, terminate, in
whole but not in part, the Commitment of such Lender (other than the
Agent) (the "TERMINATED LENDER") at any time upon five (5) Business
Days' prior written notice to the Terminated Lender and the Agent (such
notice referred to herein as a "NOTICE OF TERMINATION"). The rights of
the Borrower provided for in this Section 5.06(a) shall not apply if two
(2) or more Lenders notify the Borrower and the Agent that each such
Lender has incurred such additional costs or required the Borrower to
pay such Taxes.
(b) In order to effect the termination of the Commitment of the
Terminated Lender, the Borrower shall:
(i) obtain an agreement with one or more Lenders to be
the Issuer on any replacement Letter of Credit or increase their Commitment
or Commitments and/or
(ii) request any one or more other banking institutions
(satisfactory to the Agent and all Issuers) to become parties to this
Agreement in place and instead of such Terminated Lender and agree to
accept a Commitment or Commitments; PROVIDED, HOWEVER, that such one or
more other banking institutions are reasonably acceptable to the Agent (and
to the Issuers of the Letters of Credit) and become parties by executing an
Assignment (the Lenders or other banking institutions that agree to accept
in whole or in part the Commitment of the Terminated Lender being referred
to herein as the "REPLACEMENT LENDERS"), such that the aggregate increased
and/or accepted Commitments of the Replacement Lenders under clauses (i)
and (ii) above equal the Commitment of the Terminated Lender.
(c) The Notice of Termination shall include the name of the
Terminated Lender, the date the termination will occur (the "TERMINATION
DATE"), and the Replacement Lender or Replacement Lenders (or replacement
Issuer) to which the Terminated Lender will assign its Commitment and, if
there will be more than one Replacement Lender, the portion of the
Terminated Lender's Commitment to be assigned to each Replacement Lender.
(d) On the Termination Date,
(i) the Terminated Lender shall by execution and delivery
of an Assignment assign its Commitment to the Replacement Lender or
Replacement Lenders (pro rata, if there is more than one Replacement
Lender, in proportion to the portion of the Terminated Lender's Commitment
to be assigned to each Replacement Lender) indicated in the Notice of
Termination and shall assign to the Replacement
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Lender(s) each of its Loans (if any) then outstanding and participation
interests in Letters of Credit (if any) then outstanding pro rata as
aforesaid),
(ii) the Terminated Lender shall endorse its Note, payable
without recourse, representation or warranty to the order of the
Replacement Lender(s) (pro rata as aforesaid),
(iii) the Replacement Lender(s) shall purchase the Note
held by the Terminated Lender (pro rata as aforesaid) at a price equal to
the unpaid principal amount thereof plus interest and facility and other
fees accrued and unpaid to the Termination Date,
(iv) the Replacement Lender(s) shall become the Issuer on
any replacement Letters of Credit, as applicable, and
(v) the Replacement Lender or Replacement Lenders will
thereupon (pro rata as aforesaid) succeed to and be substituted in all
respects for the Terminated Lender with like effect as if becoming a Lender
pursuant to the terms of Section 12.06(b), and the Terminated Lender will
have the rights and benefits of an assignor under Section 12.06(b). To the
extent not in conflict, the terms of Section 12.06(b) shall supplement the
provisions of this Section 5.06(d). For each assignment made under this
Section 5.06, the Replacement Lender shall pay to the Agent the processing
fee provided for in Section 12.06(b). The Borrower will be responsible for
the payment of any breakage costs associated with termination and
Replacement Lenders, as set forth in Section 5.05.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 CLOSING DATE.
The effectiveness of this Agreement is subject to the receipt by the Agent
and the Lenders of all fees (if any) payable pursuant to Section 2.04 or
otherwise under this Agreement on or before the Closing Date, receipt by the
Agent and the Lenders of each of the documents referred to below, and the
satisfaction of the following conditions provided in this Section 6.01, each of
which shall be satisfactory to the Agent and the Lenders as to form and
substance:
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(a) a certificate of the Secretary or an Assistant Secretary of
the Borrower setting forth
(i) resolutions of its board of directors with respect to
the authorization of the Borrower to execute and deliver the Loan Documents
to which it is a party and to enter into the transactions contemplated in
those documents,
(ii) the officers of the Borrower
(y) who are authorized to sign the Loan Documents
to which Borrower is a party and
(z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for
the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the transactions
contemplated hereby,
(iii) specimen signatures of the authorized officers, and
(iv) that the articles or certificate of incorporation and
bylaws of the Borrower delivered to the Agent at the time of the Original
Agreement are still true and complete. The Agent and the Lenders may
conclusively rely on such certificate until the Agent receives notice in
writing from the Borrower to the contrary;
(b) a compliance certificate which shall be substantially in the
form of Exhibit C, duly and properly executed by a Responsible Officer and
dated as of the date of the Closing Date;
(c) the Revolving Credit Notes, duly completed and executed;
(d) the Eurosterling Notes duly completed and executed;
(e) the Security Instruments, including those described on
Exhibit E, duly completed and executed in sufficient number of counterparts
for recording, if necessary, granting to the Agent for the benefit of the
Lenders first priority Liens (subject only to the Excepted Liens) upon
certain Property of the Borrower and its Restricted Subsidiaries more
particularly described therein including, without limitation,
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(i) certain real property and all improvements thereon now or
hereafter acquired, located in the Odessa Complex, Chippewa County,
Wisconsin, Kent County, Delaware, Whitfield County, Georgia and Davis
County, Utah;
(ii) all existing and future accounts, inventory, equipment, and
general intangibles of the Borrower (but excluding (a) non-U.S.
patents, trademarks and copyrights and (b) other intellectual property
rights to the extent same are used outside of the U.S. but not
excluded otherwise);
(iii) all of Borrower's U.S. patents and other U.S.
intellectual property;
(iv) the deposit accounts of the Borrower;
(v) 100% of the Capital Stock of each Subsidiary other than a
Foreign Subsidiary;
(vi) 65% of the Capital Stock of each Foreign Subsidiary, except
URC; and
(f) the following legal opinions:
(i) an opinion of Thompson & Knight, counsel to the Borrower,
substantially in the form of Exhibit D hereto;
(ii) an opinion of Thompson & Knight, counsel to the Borrower,
dated November 29, 1994, and previously delivered to the Agent;
(iii) an opinion of Patterson, Belknap, Webb & Tyler,
special New York counsel to the Borrower, dated November 29, 1994, and
previously delivered to the Agent;
(iv) an opinion of Bayard, Handelman & Murdoch, P.A., special
Delaware counsel to the Borrower, dated November 29, 1994, as
supplemented on February 15, 1995, and previously delivered to the
Agent;
(v) an opinion of Cohne, Rappaport & Segal, special Utah counsel
to the Borrower, dated January 31, 1996, and previously delivered to
the Agent;
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(vi) an opinion of Foley & Lardner, special Wisconsin counsel to
the Borrower, dated March 6, 1995, and previously delivered to the
Agent;
(vii) an opinion of Arnall, Golden & Gregory, special
Georgia counsel to the Borrower, dated November 29, 1994, as
supplemented on February 28, 1995, and previously delivered to the
Agent;
(g) evidence satisfactory to the Agent that the Borrower is
carrying insurance in accordance with Section 7.19 hereof;
(h) the Agent shall have been furnished with appropriate UCC
search certificates reflecting the filing of all financing statements
required to perfect the security interests granted by the Security
Instruments and reflecting no prior liens or security interests, except
with respect to Excepted Liens;
(i) the Agent shall have received commitments for title
insurance on real property assets upon which a Lien has been granted in
favor of the Agent to secure the Indebtedness;
(j) no Material Adverse Effect as to the assets, liabilities,
financial condition, business operations or affairs of the Borrower shall
have occurred since December 31, 1995;
(k) receipt by the Agent and Lenders of an update of the report
of Pace Consultants (regarding profitability of the Borrower and its
Restricted Subsidiaries as a group);
(l) receipt by the Agent and Lenders of a report from Vinson &
Elkins L.L.P., counsel to the Agent, with respect to certain litigation
with respect to which Borrower is a defendant;
(m) letter from Borrower to Agent and Lenders regarding
environmental matters of Borrower and its Restricted Subsidiaries; and
(n) such other documents as the Agent or special counsel to the
Agent may reasonably request.
Section 6.02 INITIAL AND SUBSEQUENT LOANS AND LETTERS OF CREDIT. In
addition to all other applicable conditions precedent contained in this
Agreement, the obligation of the Lenders to make Loans to the Borrower upon the
occasion of each borrowing hereunder and, in addition to the conditions in
Section 6.03, the obligation of the Issuer to issue, renew or
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extend any Letters of Credit is subject to the further conditions precedent
that as of the date of such Loans and/or the issuance of any Letter of Credit
and after giving effect thereto:
(i) no Default shall have occurred and be continuing or result
therefrom;
(ii) no Material Adverse Effect shall have occurred;
(iii) the aggregate principal amount of the Revolving
Credit Loans plus the LC Exposure and the Eurosterling Exposure does not
exceed the Aggregate Commitment;
(iv) the Eurosterling Exposure does not exceed the Eurosterling
Commitment;
(v) the representations and warranties made by the Borrower in
Article VII and in the Security Instruments shall be true on and as of the
date of the making of such Loans with the same force and effect as if made
on and as of such date and following such new borrowing, except as such
representations and warranties are modified in writing:
(x) by new disclosures made to the Agent and the Lenders
from time to time in the course of fulfilling Borrower's obligations under
this Agreement; and
(y) to give effect to transactions expressly permitted
hereby.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in the preceding
sentence (both as of the date of such notice and, unless the Borrower
otherwise notifies the Agent prior to the date of and immediately following
such borrowing as of the date thereof).
Section 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT. In addition to
the satisfaction of all other conditions precedent set forth in this Article VI,
the issuance, renewal, extension or reissuance of the Letters of Credit referred
to in Section 2.01(b) hereof is subject to the following conditions precedent:
(a) At least three (3) Business Days prior to the date of the
issuance and at least ten (10) Business Days prior to the date of the
renewal, extension
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or reissuance of each Letter of Credit, the Agent shall have received a
written request for a Letter of Credit.
(b) Each of the Letters of Credit shall
(i) be issued by an Issuer,
(ii) contain such terms and provisions as are reasonably
required by the Agent and the Issuer,
(iii) be for the account of the Borrower or a Restricted
Subsidiary and the Borrower,
(iv) expire not later than twelve (12) months after the
date of issuance, renewal, extension or reissuance, and in no event later
than two (2) Business Days before the Final Maturity Date, and
(v) not be issued to directly or indirectly support the
Borrower's obligations under the Senior Unsecured Note.
(c) The Borrower shall have duly and validly executed and
delivered to the Issuer a Letter of Credit Agreement pertaining to the
Letter of Credit.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Lenders that
(each representation and warranty herein is given as of the Closing Date and
shall be deemed repeated and reaffirmed on the dates of each borrowing as
provided in Section 6.02):
Section 7.01 CORPORATE EXISTENCE. Each of the Borrower and each
Restricted Subsidiary:
(a) is a corporation duly organized, legally existing and in
good standing under the laws of the jurisdiction of its incorporation;
(b) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals necessary to
own its assets and carry on its business as now being conducted; and
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(c) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would have a Material Adverse
Effect.
Section 7.02 FINANCIAL CONDITION. The audited consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at December 31, 1995 and
the related consolidated statement of income, stockholders' equity and cash flow
of the Borrower and its consolidated Subsidiaries for the fiscal year ended on
said date, with the opinion thereon of Price Waterhouse L.L.P. heretofore
furnished to each of the Lenders fairly present the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at said dates and
the results of its operations for the 1995 fiscal year, all in accordance with
GAAP, as applied on a consistent basis. Neither the Borrower nor any Subsidiary
has on the Closing Date any material Debt, material contingent liabilities,
material liabilities for taxes, unusual material forward or long-term
commitments or unrealized or anticipated material losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements, or in Schedule 7.02. Since December 31, 1995, there has been no
change or event having a Material Adverse Effect. Since the date of the
Financial Statements, neither the business nor the Properties of the Borrower or
any Restricted Subsidiary have been materially and adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any Governmental Authority,
riot, activities of armed forces or acts of God or of any public enemy.
Section 7.03 LITIGATION. Except as disclosed in the notes to the
Financial Statements provided pursuant to Section 7.02 or to the Lenders in
Schedule 7.03 hereto, at the Closing Date there is no litigation, legal,
administrative or arbitral proceeding, to the knowledge of the Borrower
governmental investigation, or to the knowledge of the Borrower other similar
action of any nature pending or, to the knowledge of the Borrower threatened
against the Borrower or any Subsidiary which involves the reasonable possibility
of any judgment or liability against the Borrower or any Subsidiary not fully
covered by insurance (except for normal deductibles), and which may reasonably
have a Material Adverse Effect.
Section 7.04 NO BREACH. Except as otherwise disclosed to the Agent and
the Lenders in writing, neither the execution and delivery of the Loan Documents
nor compliance with the terms and provisions hereof will conflict with or result
in a breach of, or require any consent which has not been obtained as of the
Closing Date under, the respective charter or by-laws of the Borrower or any
Restricted Subsidiary, or any Governmental Requirement or any agreement or
instrument to which the Borrower or any Restricted Subsidiary is a party or by
which it is bound or to which it or its Properties are subject, or constitute a
default under any such agreement or instrument, or result in the
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creation or imposition of any Lien upon any of the revenues or assets of the
Borrower or any Restricted Subsidiary pursuant to the terms of any such
agreement or instrument other than the Liens created by the Loan Documents.
Section 7.05 AUTHORITY. The Borrower has all necessary corporate power
and authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and performance by
the Borrower and each Restricted Subsidiary of the Loan Documents to which it is
a party, have been duly authorized by all necessary corporate action on its
part; and the Loan Documents constitute the legal, valid and binding obligations
of the Borrower and each Restricted Subsidiary, enforceable in accordance with
their terms, except as such terms are limited by (a) bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 7.06 APPROVALS. No authorizations, approvals or consents of, and
no filings or registrations with, any Governmental Authority are necessary for
the execution, delivery or performance by the Borrower or any Restricted
Subsidiary of the Loan Documents or for the validity or enforceability thereof,
except for the recording and filing of the Security Instruments as required by
this Agreement.
Section 7.07 USE OF LOANS. Proceeds of the Loans may be used for general
corporate purposes including but not limited to the payment of reimbursement
obligations under Section 2.09. The Borrower is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation U or X of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Loan hereunder will
be used to buy or carry any margin stock. Neither the Borrower nor any Person
acting on behalf of the Borrower has taken or will take any action which might
cause the Notes or any of the Security Instruments, including this Agreement, to
violate Regulation U or X or any other regulation of the Board of Governors of
the Federal Reserve System or to violate Section 7 of the Securities Exchange
Act of 1934 or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect.
Section 7.08 ERISA.
(a) The Borrower, each Domestic Subsidiary and each ERISA
Affiliate have since September 18, 1992, and have to the best knowledge of
the executive officers of the Borrower prior to such date, complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan.
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(b) Each Plan is, has been since September 18, 1992, and has
been to the best knowledge of the executive officers of the Borrower prior
to such date, maintained in substantial compliance with ERISA and, where
applicable, the Code.
(c) No act, omission or transaction has occurred which is
reasonably likely to result in imposition on the Borrower or any Domestic
Subsidiary of
(i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code which would likely have a Material Adverse Effect
or
(ii) breach of fiduciary duty liability damages under
section 409 of ERISA which would have a Material Adverse Effect.
(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2,
1974. Neither Borrower nor any Domestic Subsidiary has any liability to
the PBGC with respect to any Plan (other than for the payment of current
premiums which are not past due) which would have a Material Adverse
Effect. No ERISA Event with respect to any Plan which would have a
Material Adverse Effect has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any Domestic Subsidiary or any ERISA Affiliate (while an ERISA
Affiliate) is required under the terms of each Plan or applicable law to
have paid as contributions to such Plan and which, if not paid, would have
a Material Adverse Effect, and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether or
not waived, exists with respect to any Plan.
(f) Except as to which proper notice was given pursuant to
Section 9.10(g), the current value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed in the aggregate by more
than $10,000,000 the current value of the assets of all such Plans
allocable to such benefit liabilities based upon the assumptions applied by
the actuary for such Plans in the most recent actuarial reports for such
Plans.
(g) Except as to which proper notice was given pursuant to
Section 9.10(f), none of the Borrower, any Domestic Subsidiary or any ERISA
Affiliate currently sponsors, maintains, or contributes to an employee
welfare benefit
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plan, as defined in section 3(1) of ERISA, including, without limitation,
any such plan maintained to provide benefits to former employees of such
entities, that may not be terminated by the Borrower, a Domestic
Subsidiary or any ERISA Affiliate in its sole discretion at any time
without any material liability.
(h) Except as to which proper notice was given pursuant to
Section 9.10(f), none of the Borrower, any Domestic Subsidiary or any ERISA
Affiliate currently sponsors, maintains or contributes to, or has at any
time in the preceding six calendar years sponsored, maintained or
contributed to, any Multiemployer Plan.
(i) None of the Borrower, any Domestic Subsidiary or any ERISA
Affiliate is currently required to provide security under
section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the Plan.
Section 7.09 TAXES. Except as set out in Schedule 7.09, each of the
Borrower and its Restricted Subsidiaries has filed all United States Federal
income tax returns and all other tax returns which are required to be filed by
them and have paid (to the extent payment is required by the Closing Date) all
material taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any Restricted Subsidiary, except for such
assessments which are being contested in good faith. The charges, accruals and
reserves on the books of the Borrower and its Restricted Subsidiaries in respect
of taxes and other governmental charges are, in the opinion of the Borrower,
adequate. Except as disclosed on Schedule 7.09, no material tax lien has been
filed and, to the knowledge of the Borrower, no claim is being asserted with
respect to any such tax, fee or other charge.
Section 7.10 TITLES, ETC. Except as set out in Schedule 7.10, each of
the Borrower and its Restricted Subsidiaries has good and defensible title to
its material (individually or in the aggregate) Properties, free and clear of
all Liens except Liens permitted by Section 9.02.
Section 7.11 NO MATERIAL MISSTATEMENTS. No written information,
statement, exhibit, certificate, document or report furnished to the Agent by
the Borrower or any Subsidiary in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement contained therein not
materially misleading in the light of the circumstances in which made and with
respect to the Borrower and its Subsidiaries taken as a whole (except to the
extent corrected or updated by later information furnished to the Agent prior to
the Closing Date). There is no fact peculiar to the Borrower or any Subsidiary
which has or in the opinion of Borrower would have a Material Adverse Effect and
which has not been set
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forth in this Agreement or the other written information, statements, exhibits,
certificates, documents, or reports furnished to the Agent by or on behalf of
the Borrower or any Restricted Subsidiary prior to, or on, the Closing Date in
connection with the transactions contemplated hereby.
Section 7.12 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 7.14 SUBSIDIARIES AND PARTNERSHIPS. Except as set forth on
Schedule 7.14, the Borrower has no Subsidiaries and has no interest in any
partnerships. Schedule 7.14 indicates which Subsidiaries are Restricted
Subsidiaries and which are Unrestricted Subsidiaries.
Section 7.15 LOCATION OF BUSINESS AND OFFICES. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Restricted Subsidiary are located at the
addresses stated on Schedule 7.15.
Section 7.16 DEFAULTS. Except as shown on Schedule 7.16, neither the
Borrower nor any Restricted Subsidiary is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default under any
material agreement or instrument to which the Borrower or any Restricted
Subsidiary is a party or by which the Borrower or any Restricted Subsidiary is
bound which default would have a Material Adverse Effect. No Default hereunder
has occurred and is continuing.
Section 7.17 ENVIRONMENTAL MATTERS. Except
(i) as provided in Schedule 7.17 or
(ii) as would not have a Material Adverse Effect (or with respect
to (c), (d) and (e) below, where the failure to take such actions would not
have a Material Adverse Effect):
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(a) Neither any Property of the Borrower or any Domestic
Subsidiary nor the operations conducted thereon violate any order or
requirement of any court or Governmental Authority or any Environmental
Laws;
(b) Without limitation of clause (a) above, no Property
of the Borrower or any Domestic Subsidiary nor the operations currently
conducted thereon or, to the knowledge of the Borrower, by any prior owner
or operator of such Property or operation, are subject to any existing,
pending or, to the knowledge of Borrower, threatened action, suit,
investigation or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws;
(c) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in connection with
the operation or use of any and all Property of the Borrower and each
Domestic Subsidiary, including without limitation those required for
treatment, storage, disposal or release of a hazardous substance or solid
waste into the environment, have been duly applied for, obtained or filed,
and the Borrower and each Domestic Subsidiary are in compliance in all
material respects with the terms and conditions of all such notices,
permits, licenses and similar authorizations;
(d) To the knowledge of the Borrower, all hazardous
substances and solid waste generated at any and all Property of the
Borrower or any Domestic Subsidiary have in the past been transported,
treated and disposed of in accordance with Environmental Laws and so as not
to pose an imminent and substantial endangerment to public health or
welfare or the environment, and all such transport carriers and treatment
and disposal facilities have been and are operating in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and are not
the subject of any existing, pending or threatened action, suit,
investigation or proceeding by or before any Governmental Authority in
connection with any Environmental Laws;
(e) The Borrower, after reasonably appropriate inquiry,
has determined that no hazardous substances or solid waste has been
disposed of or otherwise released on or to any Property of the Borrower or
any Domestic Subsidiary except in compliance with Environmental Laws and so
as not to pose an imminent and substantial endangerment to public health or
welfare or the environment;
(f) To the extent applicable, all Property of the
Borrower and each Domestic Subsidiary currently satisfies all design,
operation, and equipment requirements imposed by the OPA as of the Closing
Date or scheduled to be imposed
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by OPA during the term of this Agreement, and the Borrower does not have
any reason to believe that such Properties, to the extent subject to OPA,
will not be able to maintain compliance with the OPA requirements during
the term of this Agreement; and
(g) Neither the Borrower nor any Domestic Subsidiary has
any known contingent liability in connection with any release or threatened
release of any oil, hazardous substance or solid waste into the
environment;
provided, however, neither the Borrower nor any Domestic Subsidiary shall be in
breach of any representation concerning compliance with Environmental Laws in
any situation in which the Borrower or Domestic Subsidiary was in compliance
with an Environmental Law and such law was amended or supplemented such that the
Borrower or Domestic Subsidiary is no longer in compliance, so long as the
Borrower or Domestic Subsidiary is making diligent efforts to comply as soon as
practicable, the matter is reported to the Agent and compliance is achieved
within six months after the date of effectiveness of the change or supplement to
such law.
Section 7.18 COMPLIANCE WITH THE LAW. Except as disclosed on Schedule
7.18 or otherwise disclosed to the Agent and the Lenders in writing, neither the
Borrower nor any Restricted Subsidiary is at the Closing Date in violation in
any material respect of any Governmental Requirement or does not have or has not
applied for any license, permit, franchise or other governmental authorization
necessary for the ownership of any of its Properties or the conduct of its
business, which violation or failure would have a Material Adverse Effect.
Section 7.19 INSURANCE. Schedule 7.19 attached hereto contains an
accurate and complete list of all material policies of fire, liability,
workmen's compensation, business interruption and other forms of insurance owned
or held by the Borrower and each Restricted Subsidiary as of the Closing Date.
All such policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date of the Closing Date
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance in
all material respects with all requirements of law and of all agreements to
which the Borrower or any Restricted Subsidiary is a party (including, without
limitation, the provisions of Section 8.03(b) hereof); are valid, outstanding
and enforceable policies; provide insurance coverage in at least such amounts
and against at least such risks (but including in any event public liability) as
are usually insured against in the same general area by companies engaged in the
same or a similar business for the assets and operations of the Borrower and
each Restricted Subsidiary; will remain in full force and effect through the
respective dates set forth in Schedule 7.19 without the payment of additional
premiums; and will not in any way be
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affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement; and will otherwise be satisfactory to the Agent in all
respects, including, without limitation, the insurer, amount, form and
substance.
Section 7.20 RESTRICTION ON LIENS. Except
(i) with respect to the Mitsubishi Agreement (but not with
respect to any amendments thereto not approved by Agent),
(ii) with respect to the Senior Unsecured Notes, or
(iii) as otherwise disclosed to the Agent and the Lenders in
writing and delivered to the Agent prior to the Closing Date,
neither the Borrower nor any of its Restricted Subsidiaries is a party to any
agreement or arrangement (other than this Agreement and the Security
Instruments), or subject to any order, judgment, writ or decree, which either
restricts or purports to restrict its ability to grant Liens to other Persons on
or in respect of their respective assets or Properties.
Section 7.21 MATERIAL AGREEMENTS. Set forth on Schedule 7.21 hereto is a
complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
and joint venture agreements of the Borrower and its Restricted Subsidiaries
with a remaining obligation in excess of $10,000,000 and a remaining term of
twelve (12) months, and such list correctly sets forth the names of the debtor
or lessee and creditor or lessor with respect to the Debt or lease obligations
outstanding or to be outstanding and the property subject to any Lien securing
such Debt or lease obligation. Upon request by Agent, Borrower will deliver to
the Agent a complete and correct copy of all such agreements, indentures,
purchase agreements, letters of credit, guarantees, or joint venture agreements,
including any modifications or supplements thereto, as in effect on the Closing
Date.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Loans hereunder, all interest
thereon and all other amounts payable by the Borrower hereunder:
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Section 8.01 FINANCIAL STATEMENTS. The Borrower shall deliver, or shall
cause to be delivered, to the Agent and to each of the Lenders:
(a) As soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, the audited consolidated and
unaudited consolidating statements of income, stockholders' equity, and
cash flow of the Borrower and its Consolidated Subsidiaries for such fiscal
year, and the related consolidated and consolidating balance sheets of the
Borrower and its Consolidated Subsidiaries as at the end of such fiscal
year, and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related
opinion of independent public accountants of recognized national standing
acceptable to the Agent which opinion shall state that said financial
statements fairly present the consolidated financial condition and results
of operations of the Borrower and its Consolidated Subsidiaries as at the
end of, and for, such fiscal year and that such financial statements have
been prepared in accordance with GAAP except for such changes in such
principles with which the independent public accountants shall have
concurred and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge, except
as specifically stated, of any Default; provided, however, notwithstanding
the foregoing, all audited statements shall be for the Borrower and its
consolidated Subsidiaries and statements and reports for the Borrower and
its Consolidated Subsidiaries shall be unaudited. Simultaneously with the
delivery of the statements referred to in the first sentence of this
Section 8.01(a), the Borrower shall deliver to the Agent and to each of the
Lenders an income budget for the fiscal year of the Borrower following the
date of such financial statements.
(b) As soon as available and in any event within 45 days after
the end of each of the first three fiscal quarterly periods of each fiscal
year of the Borrower, a consolidated and consolidating statements of
income, stockholders' equity, and cash flow of the Borrower and its
Consolidated Subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated and consolidating balance sheets as at the end of such
period, and setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal
year, accompanied by the certificate of a Responsible Officer, which
certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries in accordance
with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments).
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(c) As soon as available and in any event within 30 days after
the end of each calendar month of each fiscal year (except for the final
calendar month in each fiscal quarter) of the Borrower, consolidated and
consolidating statements of income, stockholders' equity, and cash flow of
the Borrower and its Consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated and consolidating balance sheets as at
the end of such period, and setting forth in each case in comparative form
the corresponding figures for the corresponding period in the preceding
fiscal year, accompanied by the certificate of a Responsible Officer, which
certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries in accordance
with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments); and within 30 days after the end of each
fiscal year, a preliminary balance sheet of the Borrower and its
Consolidated Subsidiaries.
(d) Promptly after the Borrower knows that any Default or any
Material Adverse Effect has occurred, a notice of such Default or Material
Adverse Effect, describing the same in reasonable detail and the action the
Borrower proposes to take with respect thereto.
(e) Promptly upon receipt thereof, a copy of each other report
or letter submitted to the Borrower or any Restricted Subsidiary by
independent accountants in connection with any annual, interim or special
audit made by them of the books of the Borrower and its Restricted
Subsidiaries, and a copy of any response by the Borrower or any Restricted
Subsidiary of the Borrower, or the Board of Directors of the Borrower or
any Restricted Subsidiary of the Borrower, to such letter or report.
(f) Promptly upon its becoming available, each financial
statement, report, proxy statement or substantive notice sent by the
Borrower to stockholders generally and each regular or periodic report and
any registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Borrower with or
received by the Borrower in connection therewith from any securities
exchange or the SEC or any successor agency.
(g) Promptly after the furnishing thereof, copies of any
statement, report or notice furnished to any Person pursuant to the terms
of any indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.
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(h) From time to time such other information regarding the
business, affairs or financial condition of the Borrower or any Restricted
Subsidiary (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as
any Lender or the Agent may reasonably request.
(i) The Borrower will furnish to the Agent, at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate substantially in the form of Exhibit C hereto executed
by a Responsible Officer
(i) certifying as to the matters set forth therein and
stating that no Default has occurred and is continuing (or, if any Default
has occurred and is continuing, describing the same in reasonable detail),
and
(ii) setting forth in reasonable detail the computations
necessary to determine whether the Borrower is in compliance with
Sections 9.01, 9.03, 9.04, 9.12, 9.13 and 9.14 as of the end of the
respective fiscal quarter or fiscal year and whether or not a change in
Applicable Margin or the fees required under Section 2.04(a) should occur;
provided, however, with respect to the fourth quarter, Borrower shall set
forth the above computations within 60 days after the end of such quarter.
Section 8.02 LITIGATION. The Borrower shall promptly give to the Agent
notice of:
(a) all legal or arbitral proceedings, and of all proceedings
before any Governmental Authority affecting the Borrower or any Restricted
Subsidiary, except proceedings which, if adversely determined, would not
likely have a Material Adverse Effect, and
(b) of any litigation or proceeding affecting the Borrower or
any Restricted Subsidiary in which the amount claimed is in excess of
$5,000,000 and is not covered by insurance.
The Borrower will, and will cause each of its Restricted Subsidiaries to,
promptly notify the Agent and each of the Lenders of any claim, judgment, Lien
or other encumbrance affecting any Property of the Borrower or any Restricted
Subsidiary if the value of the judgment, Lien, or other encumbrance affecting
such Property shall exceed $1,000,000.
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Section 8.03 MAINTENANCE, INSURANCE, ETC.
(a) The Borrower shall and shall cause each Restricted
Subsidiary to: preserve and maintain its corporate existence and all of its
material rights, privileges, licenses and franchises; keep books of record
and account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and activities; comply
with all Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect; pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained in
accordance with GAAP; and upon reasonable notice, permit representatives of
the Agent or any Lender, during normal business hours, to examine, copy and
make extracts from its books and records, to inspect its Properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by such Lender or the Agent (as the case may be).
(b) The Borrower and each Restricted Subsidiary now maintains
and will continue to maintain with financially sound and reputable
insurers, insurance with respect to their respective Properties and
business against such liabilities, casualties, risks and contingencies and
in such types and amounts as is customary in the case of Persons engaged in
the same or similar businesses and similarly situated. The Borrower has
obtained or will promptly obtain endorsements
(i) to the policies pertaining to all physical Properties
in which the Agent or the Banks shall have a Lien under the Security
Instruments naming the Agent as a loss payee,
(ii) to all third party liability policies naming the
Agent an additional insured, and
(iii) containing provisions that all such policies will not
be cancelled or be subject to non-renewal (except for nonpayment of
premium) without 45 days (or 10 days with respect to failure to pay
premiums) prior written notice having been given by the insurance company
to the Agent.
Contemporaneously with the delivery of the financial statements
required by Section 8.01(a) to be delivered for each year, the Borrower
will furnish or cause to be furnished to the Agent and the Lenders
certificates of insurance coverage (with respect to the Borrower's and each
Restricted Subsidiary's Property)
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from the insurers in form and substance satisfactory to the Agent and,
if requested, will furnish the Agent and the Lenders copies of the
applicable policies.
(c) The Borrower will and will cause each Restricted Subsidiary
to operate its Properties or cause such Properties to be operated in a
careful and efficient manner in accordance with the practices of the
industry and in compliance in all material respects with all applicable
contracts and agreements and in compliance in all material respects with
all Governmental Requirements.
Section 8.04 ENVIRONMENTAL MATTERS.
(a) The Borrower and each Domestic Subsidiary will own and
operate its Property so as not to cause or permit any of its Property to be
in violation of any Environmental Laws and will not do anything or permit
anything to be done which will subject any such Property to any remedial
obligations under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect; provided,
however, neither the Borrower or any Domestic Subsidiary shall be in breach
of this covenant for failure to comply with any Environmental Law in any
situation in which the Borrower or Domestic Subsidiary was in compliance
with an Environmental Law and such law was amended or supplemented such
that the Borrower or Domestic Subsidiary is no longer in compliance, so
long as the Borrower or Domestic Subsidiary is making diligent efforts to
comply as soon as practicable, the matter is reported to the Agent and
compliance is achieved within six months after the date of effectiveness of
the change or supplement to such law.
(b) The Borrower will and will cause each Domestic Subsidiary to
establish and implement such procedures as may be reasonably necessary to
continuously determine and assure that any failure of the following does
not have a Material Adverse Effect:
(i) all Property of the Borrower and its Domestic
Subsidiaries and the operations conducted thereon are in compliance with
and do not violate the requirements of any Environmental Laws in any
material respect,
(ii) no oil, hazardous substances or solid wastes are
disposed of or otherwise released on or to any Property owned by any such
party except in substantial compliance with Environmental Laws, and
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(iii) no oil, hazardous substance or solid wastes are
released on or to any such Property so as to pose an imminent and
substantial endangerment to human health or welfare or the environment.
(c) The Borrower will promptly notify the Agent in writing of
any threatened action, suit, investigation or proceeding by or before any
Governmental Authority of which the Borrower receives notice or otherwise
has knowledge that involves allegations of harm to human health or the
environment or potential violations of Environmental Laws, except that
notice to the Agent shall not be required for actions, suits,
investigations, or proceedings where the potential fine, penalty or
remedial obligation is likely to cost the Borrower less than $100,000 or
the injunctive relief sought would not have a Material Adverse Effect.
Section 8.05 FURTHER ASSURANCES. The Borrower will and will cause each
Restricted Subsidiary to cure promptly any defects in the creation and issuance
of the Notes and the execution and delivery of the Security Instruments,
including this Agreement. The Borrower at its expense will and will cause each
Restricted Subsidiary to promptly execute and deliver to the Agent upon its
reasonable request all such other documents, agreements and instruments to
comply with or accomplish the covenants and agreements of the Borrower or any
Restricted Subsidiary in the Security Instruments, including this Agreement, or
to further evidence and more fully describe the collateral intended as security
for the Notes, or to correct any omissions in the Security Instruments, or to
state more fully the security obligations set out herein or in any of the
Security Instruments, or to perfect, protect or preserve any Liens created
pursuant to any of the Security Instruments, or to make any recordings, to file
any notices or obtain any consents, all as may be necessary or appropriate in
connection therewith.
Section 8.06 PERFORMANCE OF OBLIGATIONS. The Borrower will pay the Notes
according to the reading, tenor and effect thereof; and the Borrower will and
will cause each Restricted Subsidiary to do and perform every act and discharge
all of the obligations to be performed and discharged by them under the Security
Instruments, including this Agreement, at the time or times and in the manner
specified.
Section 8.07 ERISA INFORMATION AND COMPLIANCE. The Borrower will
promptly furnish and will cause the Domestic Subsidiaries and any ERISA
Affiliate to promptly furnish to the Agent with sufficient copies to the Lenders
(i) promptly after the filing thereof with the United States
Secretary of Labor, the Internal Revenue Service or the PBGC, upon written
request by the Lenders, copies of each annual and other report with respect
to each Plan or any trust created thereunder,
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(ii) immediately upon becoming aware of the occurrence of any
ERISA Event which would have a Material Adverse Effect or of any
"prohibited transaction," as described in section 406 of ERISA or in
Section 4975 of the Code which would have a Material Adverse Effect, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action
the Borrower, the Domestic Subsidiary or the ERISA Affiliate is taking or
proposes to take with respect thereto, and, when known, any action taken or
proposed by the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto, and
(iii) immediately upon receipt thereof, copies of any notice
of the PBGC's intention to terminate or to have a trustee appointed to
administer any Plan.
With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to,
(i) satisfy in full and in a timely manner, without incurring
any late payment or underpayment charge or penalty and without giving rise
to any lien, all of the contribution and funding requirements of section
412 of the Code (determined without regard to subsections (d), (e), (f) and
(k) thereof) and of section 302 of ERISA (determined without regard to
Sections 303, 304 and 306 of ERISA) where failure to do so would have a
Material Adverse Affect, and
(ii) pay, or cause to be paid, to the PBGC in a timely manner,
without incurring any late payment or underpayment charge or penalty, all
premiums required pursuant to sections 4006 and 4007 of ERISA where failure
to do so would have a Material Adverse Affect.
Section 8.08 LOCKBOX. The Borrower shall establish and maintain one or
more lockboxes for the collection of its accounts receivable, and shall cause
its accounts receivable to be deposited in such lockboxes, with all amounts so
deposited being pledged to secure the Indebtedness (and withheld from Borrower
if an Event of Default occurs), all in accordance with the terms and provisions
of the Lockbox Agreement. The Borrower and the Agent can change the depository
at which the lockboxes are maintained without the consent of the Lenders;
provided, however, Agent and Borrower shall enter new Lockbox Agreements
(substantially similar to the old Lockbox Agreements) with regard to such new
lockbox account(s).
Section 8.09 STAY, EXTENSION AND USURY LAWS. The Borrower covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury
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law wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Agreement; and the Borrower (to the
extent it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the Agent
or any Lender, but will suffer and permit the execution of every such power as
though no such law has been enacted.
Section 8.10. REAL ESTATE APPRAISALS. In the event any Lender is required
by any Governmental Authority to have real estate appraisals and annual updates
(or is criticized in any written report or examination by any Governmental
Authority for not having same), Borrower at its expense shall cooperate with the
need for the Lender to receive same, and same shall be available for the benefit
of all Lenders.
Section 8.11. FUTURE CONSTRUCTION. The Borrower shall construct and
operate the plants for FPO and LLDPE on property upon which the Agent has a
first priority Lien (subject only to the Excepted Liens).
Section 8.12. FUTURE ASSETS. To further secure the Indebtedness, the
Borrower will and will cause each Restricted Subsidiary to grant to the Agent a
Lien upon any asset owned by the Borrower or a Restricted Subsidiary having a
fair market value greater than $1,000,000 which is acquired by the Borrower
after the Closing Date. Further, Borrower will grant the Agent a Lien upon such
assets of Borrower which are currently subject to a Lien in favor of Mitsubishi
Corporation under the Mitsubishi Agreement as soon as practicable after such
assets are free and clear of such Lien in favor of Mitsubishi Corporation.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
(including Letters of Credit) are in effect and until payment in full of Loans
hereunder, all interest thereon and all other amounts payable by the Borrower
hereunder, without the prior written consent of the Majority Lenders:
Section 9.01 DEBT. Neither the Borrower nor any Restricted Subsidiary
will incur, create, assume or suffer to exist any Debt, except:
(a) the Notes, reimbursement obligations under Letters of
Credit, or other Indebtedness or any guaranty of or suretyship arrangement
for the Notes or other Indebtedness;
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(b) Debt of the Borrower existing on the Closing Date which is
reflected in the Financial Statements or disclosed on Schedule 9.01, and
any renewals or extensions (but not increases) thereof;
(c) Debt constituting Capital Lease Obligations (as required to
be reported on the financial statements of the Borrower pursuant to GAAP)
and Purchase Money Financing not to exceed $15,000,000 in the aggregate;
(d) Debt of the Borrower and its Restricted Subsidiaries under
Hedging Agreements to the extent any such Hedging Agreements constitute
Debt;
(e) unsecured intercompany Debt between or among Borrower and
any of its Restricted Subsidiaries;
(f) Debt which also constitutes Investments to the extent
permitted under Section 9.03;
(g) Debt not to exceed $8,000,000 incurred in connection with
transactions for the disposal of wastewater and groundwater to a wastewater
treatment plant in the vicinity of Borrower's Odessa Texas plant; and
(h) other Debt (which shall be unsecured except for Excepted
Liens) not to exceed $25,000,000 in the aggregate at any one time
outstanding.
Section 9.02 LIENS. Neither the Borrower nor any Restricted Subsidiary
will create, incur, assume or permit to exist any Lien on any of its Properties
(now owned or hereafter acquired), except Excepted Liens.
Section 9.03 INVESTMENTS. Neither the Borrower nor any Restricted
Subsidiary will make or permit to remain outstanding any Investments (which
includes acquisitions) in any Person, except that the foregoing restriction
shall not apply to:
(a) Investments, reflected in the Financial Statements or which
are disclosed to the Lenders in Schedule 9.03, including, without
limitation, investments up to the aggregate amount of $20,000,000 in Rexene
Corporation Limited, an English company, which investments in Rexene
Corporation Limited may be paid down and reinvested, but which can not take
the form of a Guarantee; provided, however, no such reinvestment shall be
permitted after an Investment Suspension has occurred and is continuing;
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(b) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of creation
thereof;
(c) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by Standard & Poors Corporation
or Moody's Investors Service, Inc.;
(d) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or
any office located in the United States of any other bank or trust company
which is organized under the laws of the United States or any state
thereof, has capital, surplus and undivided profits aggregating at least
$100,000,000 (as of the date of such Lender's or bank or trust company's
most recent financial reports) and has a short term deposit rating of no
lower than A2 or P2, as such rating is set forth from time to time, by
Standard & Poors Corporation or Moody's Investors Service, Inc.,
respectively;
(e) deposits in money market funds investing exclusively in
investments described in Section 9.03(b), 9.03(c) or 9.03(d);
(f) Investments in the Borrower or a Restricted Subsidiary;
(g) so long as any potential acquisition of any kind (including
the acquisition of a company through the acquisition of its assets) is
approved by the board of directors of the Person to be acquired,
Investments by the Borrower or a Restricted Subsidiary in a Person if as a
result of such Investment
(i) such Person becomes a Restricted Subsidiary, or
(ii) such person is merged, consolidated or amalgamated
into, the Borrower or a Restricted Subsidiary, provided in each case that,
immediately thereafter and giving effect thereto, no event shall occur and
be continuing which constitutes a Default or an Event of Default;
(h) Investments by the Borrower or any Restricted Subsidiary in
the Resin Joint Ventures and the URC Venture not to exceed at any one time
the sum of (i) Investments of cash in an aggregate amount outstanding at
any time (measured by the fair market value of the Investment as of the
date made) not in excess of the aggregate cash received after the date of
the Original Agreement by the Borrower and its Restricted Subsidiaries from
the Resin Joint Ventures as fees for the licensing to the Resin Joint
Ventures of any intellectual property rights or other
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proprietary technology relating to the manufacture of APAO and/or FPO,
plus (ii) $25,000,000, calculated as of the dates of such Investments;
provided, however, the Borrower or a Restricted Subsidiary must be one
of the venture partners;
(i) Investments in the Other Ventures not to exceed at any one
time an aggregate of $25,000,000; provided, however, the Borrower or a
Restricted Subsidiary must be one of the venture partners;
(j) Investments in Unrestricted Subsidiaries in an aggregate
amount at any time outstanding not to exceed $15,000,000 calculated as of
the dates of such Investments (which can take the form of a Guarantee);
provided, however, such Investments shall not be permitted after an
Investment Suspension has occurred and is continuing;
(k) Investments in the form of consideration received from
Asset Sales permitted under this Agreement;
(l) Investments to the extent made with Capital Stock of the
Borrower; and
(m) other Investments not to exceed at any one time outstanding
$15,000,000; provided, however, such Investments shall not be permitted
after an Investment Suspension has occurred and is continuing.
Section 9.04 RESTRICTED PAYMENTS. The Borrower or any Restricted
Subsidiary will not declare or pay any dividend, purchase, redeem or otherwise
acquire for value any of its stock now or hereafter outstanding, return any
capital to its stockholders or make any distribution of its assets to its
stockholders or repay, purchase, repurchase, defease or make any prepayments on
the Senior Unsecured Notes; provided, however, so long as no Default has
occurred and is continuing hereunder or would occur as a consequence thereof,
the Borrower and any Restricted Subsidiary may declare and pay
(i) dividends payable in Capital Stock of the Borrower or
(ii) dividends or distributions payable to the Borrower or any
Restricted Subsidiary;
and provided further that the Borrower may declare and pay cash dividends on the
common stock of Borrower in an amount not exceeding (a) with respect to cash
dividends declared during the 1996 fiscal year, $5,000,000; and (b) with respect
to cash dividends declared during each fiscal year after 1996, the lesser of (1)
$5,000,000 per annum or (2) an amount
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which, together with all other cash dividends declared after December 31,
1996, shall not exceed fifty (50%) percent of aggregate Consolidated Net
Income for the period (computed as a single period) from January 1, 1996
through the last day of fiscal quarter preceding the date on which such cash
dividend was declared.
Section 9.05 SALES AND LEASEBACKS. Neither the Borrower nor any
Restricted Subsidiary will enter into any arrangement, directly or indirectly,
with any Person whereby the Borrower or any Restricted Subsidiary shall sell or
transfer any of its Property, whether now owned or hereafter acquired, and
whereby the Borrower or any Restricted Subsidiary shall then or thereafter rent
or lease as lessee such Property or any part thereof or other Property which the
Borrower or any Restricted Subsidiary intends to use for substantially the same
purpose or purposes as the Property sold or transferred, except, as long as no
Default is occasioned by either of the following:
(i) a sale and leaseback in the ordinary course of business and
(ii) a sale and leaseback of an asset occurring within 150 days
after the acquisition or completion of construction of such asset, subject
in all such cases in clauses (i) and (ii) of this Section 9.05 to the
limitations of Section 9.01(c).
Section 9.06 NATURE OF BUSINESS. Neither the Borrower nor any Restricted
Subsidiary will allow any material change to be made in the character of its
business.
Section 9.07 LIMITATION ON LEASES. Neither the Borrower nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal excluding capital leases), under leases or lease agreements
which would cause the aggregate amount of all payments made by the Borrower and
its Restricted Subsidiaries pursuant to such leases or lease agreements to
exceed $15,000,000 in any period of twelve consecutive calendar months during
the life of such leases.
Section 9.08 MERGERS, ETC. The Borrower will not merge or consolidate
with or sell, transfer, convey, assign, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) by merger or consolidation or
otherwise, all or substantially all of its Properties (whether now owned or
hereafter acquired) to any Person or Group (as that term is used in sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, or
permit any Restricted Subsidiary to do so, except that any Restricted Subsidiary
may merge into or consolidate with or transfer Properties to the Borrower, and
the Borrower or any Restricted Subsidiary may merge or consolidate with any
Person provided in each case that, immediately thereafter and giving effect
thereto, no event shall occur and be continuing which constitutes a Default or
an Event of Default and in the case of any such
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merger or consolidation to which the Borrower or any Restricted Subsidiary is
a party, the Borrower or such Restricted Subsidiary, as the case may be, is
the surviving corporation.
Section 9.09 PROCEEDS OF NOTES. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07.
Section 9.10 ERISA COMPLIANCE. The Borrower will not at any time:
(a) Engage in, or permit any Domestic Subsidiary to engage in,
any transaction in connection with which the Borrower, any Domestic
Subsidiary or any ERISA Affiliate is reasonably likely to be subjected to
either a civil penalty assessed pursuant to section 502(c), (i) or (l) of
ERISA which would have a Material Adverse Effect or a tax imposed by
Chapter 43 of Subtitle D of the Code which would have a Material Adverse
Effect;
(b) Terminate, or permit any Domestic Subsidiary or ERISA
Affiliate to terminate, any Plan in a manner, or take any other action with
respect to any Plan, which could result in any liability to the Borrower,
any Domestic Subsidiary or any ERISA Affiliate to the PBGC which would have
a Material Adverse Effect;
(c) Fail to make, or permit any Domestic Subsidiary or ERISA
Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or applicable
law, the Borrower, a Domestic Subsidiary or any ERISA Affiliate is required
to pay as contributions thereto if such failure would have a Material
Adverse Effect;
(d) Permit to exist, or allow any Domestic Subsidiary or ERISA
Affiliate to permit to exist, any accumulated funding deficiency within the
meaning of section 302 of ERISA or section 412 of the Code, whether or not
waived, with respect to any Plan;
(e) Permit, or allow any Domestic Subsidiary or ERISA Affiliate
to permit, the aggregate current value of the benefit liabilities under all
Plans maintained by the Borrower, any Domestic Subsidiary or any ERISA
Affiliate which is subject to Title IV of ERISA to exceed by more than
$10,000,000 the aggregate current value of the assets of such Plan
allocable to such benefit liabilities (based upon the assumptions applied
by the actuary for such Plans in the most recent actuarial reports for such
Plans).
(f) Without thirty days prior written notice to the Lenders,
contribute to or assume an obligation to contribute to, or permit any
Domestic
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Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan;
(g) Without thirty days prior written notice to the Lenders,
acquire, or permit any Domestic Subsidiary or ERISA Affiliate to acquire,
an interest in any Person that causes such Person to become an ERISA
Affiliate with respect to the Borrower, any Domestic Subsidiary or any
ERISA Affiliate if such Person sponsors, maintains or contributes to, or at
any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to,
(1) any Multiemployer Plan, or
(2) any other Plan
that is subject to Title IV of ERISA under which the current value of the
benefit liabilities under such Plan when added to the current value of the
benefit liabilities under all other Plans (that are subject to Title IV of
ERISA) of the Borrower, each Domestic Subsidiary and ERISA Affiliates
(while an ERISA Affiliate) exceeds by more than $10,000,000 the aggregate
current value of the assets of all such Plans allocable to such benefit
liabilities (based upon the assumptions applied by the actuary for such
Plans in the most recent actuarial report for such Plans);
(h) Incur, or permit any Domestic Subsidiary or ERISA Affiliate
to incur, a liability to or on account of a Plan under section 515, 4041,
4062, 4063, 4064, 4201 or 4204 of ERISA which would have a Material Adverse
Effect;
(i) Contribute to or assume an obligation to contribute to, or
permit any Domestic Subsidiary or ERISA Affiliate to contribute to or
assume an obligation to contribute to, any employee welfare benefit plan,
as defined in section 3(1) of ERISA, including, without limitation, any
such plan maintained to provide benefits to former employees of such
entities, that may not be terminated by such entities in their sole
discretion at any time without any material liability; or
(j) Amend or permit any Domestic Subsidiary or ERISA Affiliate
to amend, a Plan resulting in an increase in current liability that has a
Material Adverse Affect such that the Borrower, any Domestic Subsidiary or
any ERISA Affiliate is required to provide security to such Plan under
section 401(a)(29) of the Code.
Section 9.11 SALE OR DISCOUNT OF RECEIVABLES. Neither the Borrower nor
any Restricted Subsidiary will discount or sell (with or without recourse) any
of its notes
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receivable or accounts receivable other than in the ordinary course of
business; provided, however, Borrower may sell accounts receivable pursuant
to an asset securitization program with the prior written consent of the
Majority Lenders. Upon such consent, the Lien on such accounts receivable in
favor of the Agent shall be released and the Aggregate Commitment shall be
reduced by an amount equal to the funding commitment in the asset
securitization program.
Section 9.12 LEVERAGE RATIO. The Borrower will not permit its Leverage
Ratio to be greater than .7 to 1.0. For the purposes of this Section 9.12,
"LEVERAGE RATIO" shall mean the ratio of
(i) Debt of the Borrower and its Consolidated Subsidiaries to
(ii) Debt of the Borrower and its Consolidated Subsidiaries plus
Consolidated Net Worth.
Section 9.13 INTEREST COVERAGE RATIO. The Borrower will not permit its
Interest Coverage Ratio as of the end of any fiscal quarter of the Borrower
(calculated quarterly at the end of each fiscal quarter beginning with the
second fiscal quarter of 1996) to be less than 2.25; provided, that on no more
than two separate occasions, the Borrower's Interest Coverage Ratio may be less
than 2.25 so long as it is equal to or greater than 1.5 for up to two
consecutive fiscal quarters. In no event, however, may Borrower's Interest
Coverage Ratio be less than 2.25 for more than two fiscal quarters in any three
fiscal quarter period. For the purposes of this Section 9.13, "INTEREST COVERAGE
RATIO" shall mean the ratio of
(i) Adjusted EBITDA for the four fiscal quarters immediately
preceding the date of determination to
(ii) interest expense incurred for such four fiscal quarters of
the Borrower and its Consolidated Subsidiaries.
Section 9.14 SALE OF PROPERTY.
(a) Except in the ordinary course of its business, the
Borrower and its Restricted Subsidiaries will not Transfer any Property or any
undivided interest in any Property (to persons other than the Borrower or any
Restricted Subsidiary) except for Asset Sales and Other Transfers as permitted
under this Agreement.
(b) Unless otherwise permitted under this Agreement, Borrower
and its Restricted Subsidiaries shall not engage in any Asset Sale unless:
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(i) Borrower has given the Agent at least thirty (30)
days prior written notice of the proposed Asset Sale;
(ii) the Borrower is in compliance with all of the terms
and conditions of this Agreement;
(iii) no Default has occurred and is continuing hereunder
or would be caused by such Asset Sale;
(iv) the Borrower shall receive consideration at the time
of such Asset Sale at least equal to the fair market value (upon
evidence of such fair market value which is either a resolution of the
Board of Directors of the Borrower or acceptable to the Agent) of the
Property sold or otherwise disposed of in such Asset Sale; and
(v) 80% of the consideration is in the form of cash or
cash equivalent.
In no event shall the aggregate market value of all Asset Sales exceed
$25,000,000 without the prior written consent of the Majority Lenders.
(c) Borrower and it Restricted Subsidiaries shall not conduct
any of the Other Transfers if an Event of Default has occurred and is continuing
hereunder or would be caused by such Other Transfer; PROVIDED, HOWEVER, the
following Other Transfers are permitted even if an Event of Default has
occurred:
(i) Transfer of assets by the Borrower to a Restricted
Subsidiary or by a Restricted Subsidiary to the Borrower or to another
Restricted Subsidiary; or
(ii) Transfer of any machinery, equipment, furniture,
apparatus, tools, implements, materials, supplies or other similar
property which have become worn out or obsolete.
(d) The Agent will release any Lien held by the Agent for the
benefit of the Lenders upon Property, the Transfer of which is permitted under
this Agreement.
Section 9.15 TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make
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any contract, agreement, understanding, loan, advance or guarantee with, or
for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less
favorable to the Borrower or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Borrower
or such Restricted Subsidiary with an unrelated Person and
(ii) the Borrower delivers to the Agent
(a) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $1.0 million, a resolution of the
appropriate board of directors' set forth in an officers' certificate
certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the board of directors and
(b) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $10.0 million, an opinion as to
the fairness to the Borrower or such Restricted Subsidiary of such
Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing;
PROVIDED, HOWEVER, that
(x) any contract, agreement, understanding,
payment, loan, advance or guarantee (each a "Compensation Benefit")
with, for the benefit of, or to an executive officer of the Borrower
as compensation for employment by the Borrower, whether pursuant to an
employment agreement, an employee benefit plan or other compensation
arrangement if either
(1) such Compensation benefit is less
than $1 million or
(2) is approved by the compensation
committee or the board of directors of the Borrower,
(y) transactions between or among the Borrower
and/or its Restricted Subsidiaries and/or any Unrestricted Subsidiary
which is a foreign sales corporation within the scope of 26 U.S.C.
Section 922 and
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(z) transactions permitted by Sections 9.03 and
9.04 of this Agreement, in each case, shall not be deemed Affiliate
Transactions.
Section 9.16 SUBSIDIARIES AND PARTNERSHIPS. The Borrower shall not
create any additional Subsidiaries or partnerships or permit any Subsidiary to
do so without prior written notice to the Agent and the Lenders. In every such
case
(i) 100% of the Capital Stock of each new Restricted Subsidiary,
65% of the Capital Stock of each new Foreign Subsidiary, 100% of the Equity
Interest of Borrower or any Restricted Subsidiary in any U.S. partnership
or joint venture, and 65% of the Equity Interest of Borrower or any
Restricted Subsidiary in any non U.S. partnership or joint venture, shall
be forthwith pledged to the Agent for the benefit of the Lenders as
security for the payment of the Indebtedness,
(ii) a Lien covering the assets of each new Restricted Subsidiary
shall be granted in favor of the Agent for the benefit of the Lenders,
(iii) each new Restricted Subsidiary shall forthwith
execute a written instrument of guaranty, unconditionally guaranteeing
payment of all Indebtedness under this Agreement, the Notes and any other
Security Instrument, and
(iv) the Borrower shall deliver to the Agent and the Lenders a
revised Schedule 7.14 with respect to each new Subsidiary partnership and
joint venture, designating such Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary. The Borrower shall not permit any Foreign
Subsidiary to have any activities in the United States which would have a
permanent establishment in the United States.
Section 9.17 NEGATIVE PLEDGE AGREEMENTS. Neither the Borrower nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
contract, agreement or understanding (other than this Agreement, the Security
Instruments and the indenture under the Senior Unsecured Notes) which in any way
prohibits or restricts the granting, conveying, creation or imposition of any
Lien on any of its Property or restricts any Restricted Subsidiary from paying
dividends to the Borrower, or which requires the consent of or notice to other
Persons in connection therewith.
Section 9.18 SYNTHETIC LEASES. Neither the Borrower nor any Restricted
Subsidiary will enter into any synthetic lease transaction or any other
structured finance transaction with any Person in connection with the
construction of the plants for FPO and LLDPE.
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ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT. If one or more of the following events
shall occur and be continuing, it shall constitute an "EVENT OF DEFAULT":
(a) the Borrower shall default in the payment or prepayment when
due of any principal of any Loan or reimbursement obligation for a
disbursement made under any Letter of Credit; or the Borrower shall default
for two (2) Business Days in the payment or prepayment when due of any
interest on any Loan or any fees or other amount payable by it hereunder or
under any Security Instrument; or
(b) the Borrower or any Restricted Subsidiary shall default in
the payment when due of any principal of or interest on any of its other
Debt aggregating $5,000,000 or more, or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such
Debt shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Debt to become due prior to its stated maturity; or
(c) any representation, warranty or certification made or deemed
made herein or in any Security Instrument by the Borrower or any Restricted
Subsidiary, or any certificate or financial statement furnished to any
Lender or the Agent pursuant to the provisions hereof or any Security
Instrument, shall prove to have been false or misleading as of the time
made or furnished in any material respect and the failure of such
representation, warranty or certification to be true shall have caused or
reasonably be expected to cause a Material Adverse Effect; or
(d) (i) the Borrower, any Restricted Subsidiary or (as
applicable) any Domestic Subsidiary shall default in the performance of any
of its obligations under Section 8.03 (with respect to Borrower's agreeing
within the term of an insurance policy to a shorter cancellation period),
Section 8.08, Article IX (other than Sections 9.02 [with respect to
inadvertent Liens] and 9.10) or any other Article of this Agreement other
than Article VIII, or
(ii) the Borrower shall default in the performance of any
of its obligations under Section 9.02 (with respect to inadvertent Liens),
Section 9.10 or Article VIII (except for Section 8.03 [with respect to
Borrower's agreeing within the term of an insurance policy to a shorter
cancellation period] and Section 8.08) of
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this Agreement or any Security Instrument (other than the payment of
amounts due which shall be governed by Section 10.01(a)) and such default
shall continue unremedied for a period of thirty (30) days after the
earlier to occur of
(i) notice thereof to the Borrower by the Agent or any
Lender (through the Agent), or
(ii) the Borrower otherwise becoming aware of such
default; or
(e) the Borrower shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) the Borrower shall
(i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of its
creditors,
(iii) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect),
(iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up,
liquidation, dissolution or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, or
(vi) take any corporate action for the purpose of
effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Borrower, in any court of competent
jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts,
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(ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Borrower of all or any substantial part of
its assets, or
(iii) similar relief in respect of the Borrower under any
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 days; or an order for relief against the Borrower shall
be entered in an involuntary case under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess
of $10,000,000 in the aggregate shall be rendered by a court against the
Borrower or any Restricted Subsidiary not covered by insurance and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof and the Borrower or such
Restricted Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or
(i) a final rule, order, decision, or decree shall be issued by
a Governmental Authority pursuant to Environmental Laws that requires the
Borrower or any Domestic Subsidiary to expend more than $10,000,000 in the
aggregate in any one calendar year to remediate environmental contamination
or to spend more than $20,000,000 in the aggregate in any one calendar year
to install pollution or control equipment or that requires the Borrower to
change its operations in a manner that can reasonably be expected to cause
a Material Adverse Effect; or
(j) the Security Instruments after delivery thereof shall for
any reason, except to the extent permitted by the terms thereof, cease to
be in full force and effect and valid, binding and enforceable in
accordance with their terms, or cease to create a valid and perfected Lien
of the priority required thereby on any of the collateral purported to be
covered thereby, or the Borrower shall so state in writing; or
(k) the Borrower discontinues its usual business or a Change of
Control occurs;
(l) any Restricted Subsidiary takes, suffers or permits to exist
any of the events or conditions referred to in paragraphs (e), (f), (g) or
(h) hereof or
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if any provision of any guaranty agreement by the Restricted Subsidiary of
the obligations of the Borrower under this Agreement shall for any reason
cease to be valid and binding on the Restricted Subsidiary or if the
Restricted Subsidiary shall so state in writing;
(m) The Borrower adopts a plan relating to the liquidation or
dissolution of the Borrower unless such plan is abandoned within 30 days
after the adoption of such plan; and
(n) The sale, lease, transfer, conveyance or other disposition
in one or a series of related transactions, by merger or consolidation or
otherwise, of all or substantially all of the assets of the Borrower and
its Restricted Subsidiaries taken as a whole to any Person or Group (as
such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended).
Section 10.02 REMEDIES.
(a) In the case of an Event of Default other than one referred
to in clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the
extent it relates to clauses (e), (f) or (g), the Agent may with the
consent of the Majority Lenders and, upon request of the Majority Lenders,
shall, by notice to the Borrower, cancel the Commitments and/or declare the
principal amount then outstanding of, and the accrued interest on, the
Loans and all other amounts payable by the Borrower hereunder and under the
Notes (including without limitation the payment of cash collateral to
secure the LC Exposure as provided in Section 2.09(b) hereof) to be
forthwith due and payable, whereupon such amounts shall be immediately due
and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default
referred to in clauses (e), (f) or (g) of Section 10.01 or in clause (l) to
the extent it relates to clauses (e), (f) or (g), the Commitments shall be
automatically cancelled and the principal amount then outstanding of, and
the accrued interest on, the Loans and all other amounts payable by the
Borrower hereunder and under the Notes (including without limitation the
payment of cash collateral to secure the LC Exposure as provided in
Section 2.09(b) hereof) shall become automatically immediately due and
payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
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(c) All proceeds received after maturity of the Notes, whether
by acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement and the Security
Instruments; second to accrued interest on the Notes; third to fees; fourth
pro rata to principal outstanding on the Notes and other Indebtedness;
fifth to serve as cash collateral to be held by the Agent to secure the LC
Exposure; and any excess shall be paid to the Borrower or as otherwise
required by any Governmental Requirement.
ARTICLE XI
THE AGENT
Section 11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder with
such powers as are specifically delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 11.05 and the
first sentence of Section 11.06 shall include reference to its Affiliates and
its and its Affiliates' officers, directors, employees, attorneys, accountants,
experts and agents):
(a) shall have no duties or responsibilities except those
expressly set forth in this Agreement, and shall not by reason of this
Agreement be a trustee or fiduciary for any Lender;
(b) makes no representation or warranty to any Lender and shall
not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received
by any of them under, this Agreement, or for the value, validity,
effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of this Agreement, any Note or any other
document referred to or provided for herein or for any failure by the
Borrower or any other Person (other than the Agent) to perform any of its
obligations hereunder or thereunder or for the existence, value, perfection
or priority of any collateral security or the financial or other condition
of the Borrower, its Subsidiaries or any other obligor or guarantor;
(c) except pursuant to Section 11.07 shall not be required to
initiate or conduct any litigation or collection proceedings hereunder; and
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(d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred
to or provided for herein or in connection herewith including its own
ordinary negligence, except for its own gross negligence or willful
misconduct.
The Agent may employ agents, accountants, attorneys and experts and shall
not be responsible for the negligence or misconduct of any such agents,
accountants, attorneys or experts selected by it in good faith or any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such agents, accountants, attorneys or experts. The Agent
may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or
transfer thereof permitted hereunder shall have been filed with the Agent.
Section 11.02 RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent.
Section 11.03 DEFAULTS. The Agent shall not be deemed to have knowledge
of the occurrence of a Default (other than the non-payment of principal of or
interest on Loans or of fees or failure to reimburse for Letter of Credit
drawings) unless the Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the occurrence of a
Default, the Agent shall give prompt notice thereof to the Lenders. In
addition, the Agent shall give each Lender prompt notice of each such Default.
Section 11.04 RIGHTS AS A LENDER. With respect to its Commitment, the
Loans made by it and its participation in the issuance of Letters of Credit,
Scotiabank (and any successor acting as Agent) in its capacity as a Lender
hereunder shall have the same rights, obligations and powers hereunder as any
other Lender and may exercise the same as though it were not acting as the
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. Scotiabank (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to and generally engage
in any kind of banking, trust or other business with the Borrower (and any of
its Affiliates) as if it were not acting as the Agent, and Scotiabank and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
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Section 11.05 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY THE AGENT
RATABLY IN ACCORDANCE WITH THEIR PERCENTAGE SHARES FOR THE INDEMNITY MATTERS AS
DESCRIBED IN SECTION 12.03 TO THE EXTENT NOT INDEMNIFIED OR REIMBURSED BY THE
BORROWER UNDER SECTION 12.03, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWER UNDER SAID SECTION 12.03 AND FOR ANY AND ALL OTHER LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF:
(A) THIS AGREEMENT, THE SECURITY INSTRUMENTS OR ANY OTHER
DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY, BUT EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS
CONTINUING, NORMAL ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE
PERFORMANCE OF ITS AGENCY DUTIES HEREUNDER; OR
(B) THE ENFORCEMENT OF ANY OF THE TERMS OF THIS AGREEMENT, ANY
SECURITY INSTRUMENT OR OF ANY SUCH OTHER DOCUMENTS; WHETHER OR NOT ANY OF
THE FOREGOING SPECIFIED IN THIS SECTION 11.05 ARISES FROM THE SOLE OR
CONCURRENT NEGLIGENCE OF THE AGENT, PROVIDED THAT NO LENDER SHALL BE LIABLE
FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE
OR WILFUL MISCONDUCT OF THE AGENT.
Section 11.06 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports
and other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning
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the affairs, financial condition or business of the Borrower (or any of its
Affiliates) which may come into the possession of the Agent or any of its
Affiliates.
Section 11.07 ACTION BY AGENT. Except for action or other matters
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall
(i) receive written instructions from the Majority Lenders (or
all of the Lenders in cases expressly requiring consent, vote or approval
by the Lenders under this Agreement) specifying the action to be taken, and
(ii) be indemnified to its satisfaction by the Lenders against
any and all liability and expenses which may be incurred by it by reason of
taking or continuing to take any such action.
The instructions of the Majority Lenders (or the Lenders, as the context
requires) and any action taken or failure to act pursuant thereto by the Agent
shall be binding on all of the Lenders. If a Default has occurred and is
continuing, the Agent shall take such action with respect to such Default as
shall be directed by the Majority Lenders in the written instructions (with
indemnities) described in this Section 11.07, provided that, unless and until
the Agent shall have received such directions, the Agent may with the consent of
the Majority Lenders (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Lenders. In no event, however, shall the
Agent be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement and the Security Instruments or
applicable law.
Section 11.08 RESIGNATION OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Majority Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent with the prior consent
of the Borrower, which consent shall not be unreasonably withheld. Upon the
acceptance of such appointment hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article XI and
Section 12.03 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
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ARTICLE XII
MISCELLANEOUS
Section 12.01 WAIVER. No failure on the part of the Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under the Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
Section 12.02 NOTICES. All notices and other communications provided for
herein and in the other Security Instruments (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other
Security Instruments) shall be given or made by telex, telecopy, telegraph,
cable, courier or U.S. Mail or in writing and telexed, telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or in the other
Security Instruments or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement or in the other Security Instruments, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day (otherwise on the next
succeeding Business Day), by telex or telecopier and evidence or confirmation of
receipt is obtained, delivered to the telegraph or cable office or personally
delivered or, in the case of a mailed notice, seven (7) days after the date
deposited in the mails, postage prepaid, in each case given or addressed as
aforesaid.
Section 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC. The Borrower agrees:
(a) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Agent in the
administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of the Agent and the Lenders
with respect thereto) of, and in connection with the negotiation,
syndication, investigation, preparation, execution and delivery of,
recording or filing of, preservation of rights under, enforcement of, and
refinancing, renegotiation or restructuring of, the Loan Documents and any
amendment, waiver or consent relating thereto (including, without
limitation, travel, photocopy, mailing, courier, telephone and other
similar expenses of the Agent, the cost of environmental audits, surveys
[including industry surveys] and appraisals at reasonable intervals, the
reasonable fees and disbursements of counsel for the Agent and, in the case
of enforcement, for any of the Lenders (including allocations for
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either in house counsel or outside counsel, but not both, for any Lender
choosing same), and for insurance and other consultants retained by the
Agent to review all policies of insurance of the Borrower or other
matters reasonably required by the Agent or the Lenders); and promptly
reimburse the Agent for all amounts expended, advanced or incurred by
the Agent or the Lenders to satisfy any obligation of the Borrower under
this Agreement or any Security Instrument, including without limitation,
all costs and expenses of foreclosure;
(b) TO INDEMNIFY THE AGENT AND EACH LENDER AND EACH OF THEIR
AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED
PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON DEMAND
PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE
INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY
OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR IN
ANY WAY RELATED TO
(i) ANY ACTUAL OR PROPOSED USE BY THE BORROWER OF THE
PROCEEDS OF ANY OF THE LOANS OR LETTERS OF CREDIT,
(ii) THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT, THE NOTES AND THE OTHER SECURITY INSTRUMENTS,
(iii) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND
ITS SUBSIDIARIES,
(iv) THE FAILURE OF THE BORROWER OR ANY RESTRICTED
SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY SECURITY INSTRUMENT, INCLUDING
THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT,
(v) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF
ANY WARRANTY OF THE BORROWER SET FORTH IN THIS AGREEMENT OR THE OTHER
SECURITY INSTRUMENTS,
(vi) THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF
OR PAYMENT OR FAILURE TO PAY UNDER ANY
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LETTER OF CREDIT, IN ACCORDANCE WITH THE TERMS HEREOF, SUCH LETTER OF
CREDIT, OR THE LETTER OF CREDIT AGREEMENT EXECUTED IN CONNECTION THEREWITH,
OR
(vii) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT
IN ACCORDANCE WITH THE TERMS HEREOF, SUCH LETTER OF CREDIT, OR THE LETTER
OF CREDIT AGREEMENT EXECUTED IN CONNECTION THEREWITH, NOTWITHSTANDING THE
NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE MANUALLY
EXECUTED DRAFT(S) AND CERTIFICATION(S),
(viii) ANY ASSERTION THAT THE LENDERS WERE NOT
ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY
INSTRUMENTS, OR
(ix) ANY OTHER ASPECT OF THIS AGREEMENT, THE NOTES AND THE
SECURITY INSTRUMENTS, INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES
AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION
WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY ACTION, SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES) OR CLAIM
AND INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY
NEGLIGENCE OF ANY INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS
ARISING SOLELY BY REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER AND
THE AGENT OR A LENDER'S SHAREHOLDERS AGAINST THE AGENT OR LENDER OR BY
REASON OF THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT ON THE PART OF THE
INDEMNIFIED PARTY; AND
(c) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT
(i) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO THE
BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT
LIMITATION, THE
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TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES,
(ii) AS A RESULT OF THE BREACH OR NON-COMPLIANCE BY THE
BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE
BORROWER OR ANY SUBSIDIARY,
(iii) DUE TO PAST OWNERSHIP BY THE BORROWER OR ANY
SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY THEIR
PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD
RESULT IN PRESENT LIABILITY,
(iv) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR
DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR
OPERATED BY THE BORROWER OR ANY SUBSIDIARY, OR
(v) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION
IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER SECURITY
INSTRUMENT, PROVIDED, HOWEVER, NO INDEMNITY SHALL BE AFFORDED UNDER THIS
SECTION 12.03(c) IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING
FROM THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER DURING THE PERIOD
AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE OBTAINED
POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).
(d) No Indemnified Party may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent
to any settlement that an Indemnified Party proposes, if the indemnitor
does not have the financial ability to pay all its obligations outstanding
and asserted against the indemnitor at that time, including the maximum
potential claims against the Indemnified Party to be indemnified pursuant
to this Section 12.03.
(e) In the case of any indemnification hereunder, the Agent, as
appropriate, shall give notice to the Borrower of any such claim or demand
being made against the Indemnified Party and the Borrower shall have the
non-exclusive
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right to join in the defense against any such claim or demand provided
that if the Borrower provides a defense, the Indemnified Party shall
bear its own cost of defense unless there is a conflict between the
Borrower and such Indemnified Party.
(f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT
OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT
CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF
THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN
INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR
WILFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL
CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED
TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR
WILFUL MISCONDUCT OF THE INDEMNIFIED PARTY.
(g) The Borrower's obligations under this Section 12.03 shall
survive any termination of this Agreement and the payment of the Notes and
shall continue thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this
Section 12.03 within thirty (30) days following a final determination of
the liability of the Agent or Lenders and of the receipt by the Borrower of
notice of the amount due.
Section 12.04 AMENDMENTS, ETC. Any provision of this Agreement or any
other Security Instruments may be amended, modified or waived with the
Borrower's and the Majority Lenders' prior written consent; provided that
(a) no amendment, modification or waiver which forgives all or
any portion of principal on loans under this Agreement, extends the Final
Maturity Date or the time to pay interest or fees hereunder, increases the
Aggregate Maximum Credit Amount, reduces or extends the time for payment of
principal on any loans hereunder, reduces or extends the date of payment
(or amends the formula for determining) of any prepayment required under
this Agreement, extends a Letter of Credit beyond the Final Maturity Date,
releases any guarantor of the Indebtedness or
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all or substantially all of the collateral, reduces the interest rate
applicable to the Loans or the fees payable to the Lenders, generally,
affects Sections 2.03(b), this Section 12.04 or Section 12.06(a) or
modifies the definition of "Majority Lenders" shall be effective without
consent of all Lenders;
(b) no amendment, modification or waiver which increases the
Maximum Credit Amount of any Lender shall be effective without the consent
of such Lender; and
(c) no amendment, modification or waiver which modifies the
rights, duties or obligations of the Agent shall be effective without the
consent of the Agent.
Section 12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Borrower may not assign its rights or obligations
hereunder or under the Notes or any Letters of Credit without the prior
consent of all of the Lenders and the Agent.
(b) Any Lender may, upon the written consent of the Agent and
the Borrower (which consent will not be unreasonably withheld), assign to
one or more assignees all or a portion of its rights and obligations under
this Agreement pursuant to an Assignment Agreement substantially in the
form of Exhibit F (an "ASSIGNMENT") PROVIDED, HOWEVER, that
(i) any such assignment shall be in the amount of (a) at
least $5,000,000 or such lesser amount to which the Borrower has consented,
(b) the total amount of the Commitment of the assigning Lender at the time
of such assignment, or (c) any portion of the Commitment of a Lender being
assigned to another Lender; and
(ii) the assignee or assignor shall pay to the Agent a
processing and recordation fee of $2,500 for each assignment.
Any such assignment will become effective upon the execution and delivery
to the Agent of the Assignment and the consent of the Agent. Promptly
after receipt of an executed Assignment, the Agent shall send to the
Borrower a copy of such executed
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Assignment. Upon receipt of such executed Assignment, the Borrower,
will, at its own expense, execute and deliver new Notes to the assignor
and/or assignee, as appropriate, in accordance with their respective
interests as they appear. Upon the effectiveness of any assignment
pursuant to this Section 12.06(b), the assignee will become a "Lender,"
if not already a "Lender," for all purposes of this Agreement and the
other Security Instruments. The assignor shall be relieved of its
obligations hereunder to the extent of such assignment (and if the
assigning Lender no longer holds any rights or obligations under this
Agreement, such assigning Lender shall cease to be a "Lender" hereunder
except that its rights under Sections 4.06, 5.01, 5.05 and 12.03 shall
not be affected).
(c) Each Lender may transfer, grant or assign participations in
all or any part of such Lender's interests hereunder pursuant to this
Section 12.06(c) to any Person, PROVIDED that:
(i) such Lender shall remain a "Lender" for all purposes
of this Agreement and the transferee of such participation shall not
constitute a "Lender" hereunder;
(ii) the amount thereof shall be at least $1,000,000; and
(iii) no participant under any such participation shall
have rights to approve any amendment to or waiver of the Loan Documents
except to the extent such amendment or waiver would
(x) forgive any principal owing or any loans
hereunder or extend the Final Maturity Date,
(y) reduce the interest rate (other than as a
result of waiving the applicability of any post-default increases in
interest rates) or fees applicable to any of the Commitments or Loans or
Letters of Credit in which such participant is participating, or postpone
the payment of any thereof, or
(z) release any guarantor of the Indebtedness or
all or substantially all of the collateral (except as expressly provided in
this Agreement or the Security Instruments) supporting any of the
Commitments or Loans or Letters of Credit in which such participant is
participating.
In the case of any such participation, the participant shall not have any
rights under this Agreement or any of the Security Instruments (the
participant's rights against the granting Lender in respect of such
participation to be those set forth in the agreement
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with such Lender creating such participation), and all amounts payable
by the Borrower hereunder shall be determined as if such Lender had not
sold such participation, PROVIDED that such participant shall be
entitled to receive additional amounts under Article V on the same basis
as if it were a Lender and be indemnified under Section 12.03 as if it
were a Lender. In addition, each agreement creating any participation
must include an agreement by the participant to be bound by the
provisions of Section 12.16.
(d) The Lenders may furnish any information concerning the
Borrower in the possession of the Lenders from time to time to assignees
and participants (including prospective assignees and participants);
provided that, such Persons agree to be bound by the provisions of
Section 12.16 hereof.
(e) Notwithstanding anything in this Section 12.06 to the
contrary, any Lender may assign and pledge all or any of its Notes to any
Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve System
and/or such Federal Reserve Bank. No such assignment and/or pledge shall
release the assigning and/or pledging Lender from its obligations
hereunder.
(f) Notwithstanding any other provisions of this Section 12.06,
no transfer or assignment of the interests or obligations of any Lender or
any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any state.
Section 12.07 INVALIDITY. In the event that any one or more of the
provisions contained in any of the Loan Documents shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of the Loan Documents.
Section 12.08 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.09 REFERENCES. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated
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herein. Any reference herein to an exhibit or schedule shall be deemed to
refer to the applicable exhibit or schedule attached hereto unless otherwise
stated herein.
Section 12.10 SURVIVAL. The obligations of the parties under Section 4.06,
Article V, and Sections 11.05 and 12.03 shall survive the repayment of the Loans
and the termination of the Commitments. To the extent that any payments on the
Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agent's and the Lenders' Liens, security interests,
rights, powers and remedies under this Agreement and each Security Instrument
shall continue in full force and effect. In such event, each Security
Instrument shall be automatically reinstated and the Borrower shall take such
action as may be reasonably requested by the Agent and the Lenders to effect
such reinstatement.
Section 12.11 CAPTIONS. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO CONFLICTS OF LAW PROVISIONS).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW
YORK AND OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
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<PAGE>
YORK (PROVIDED, HOWEVER, ANY ENFORCEMENT ACTION WITH RESPECT TO COLLATERAL
SECURITY MAY BE BROUGHT IN THE JURISDICTION IN WHICH THE COLLATERAL IS
LOCATED), AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER,
THE AGENT AND EACH LENDER HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER,
THE AGENT AND EACH LENDER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES
NOT PRECLUDE THE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION OVER THE
BORROWER IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) THE BORROWER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION
SYSTEM LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS THE DESIGNEE,
APPOINTEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE
BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD
THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED
BY OVERNIGHT COURIER TO THE BORROWER AT ITS ADDRESS SET FORTH UNDER ITS
SIGNATURE BELOW, BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPY SHALL
NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS
SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH
MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BORROWER, THE
AGENT OR ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION. INCLUDING,
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<PAGE>
WITHOUT LIMITATION, THE COMMENCEMENT OF ENFORCEMENT PROCEEDINGS UNDER
THE SECURITY INSTRUMENTS IN ALL APPLICABLE JURISDICTIONS.
(e) EACH OF THE BORROWER AND EACH LENDER HEREBY
(A) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER SECURITY INSTRUMENT AND FOR ANY
COUNTERCLAIM THEREIN;
(B) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES;
(C) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE
OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(D) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT, THE OTHER SECURITY INSTRUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.13.
Section 12.14 INTEREST. It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to it. Accordingly,
if the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of New York or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in the
Notes, this Agreement or in any other Security Instrument or agreement entered
into in connection with or as security for the Notes, it is agreed as follows:
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<PAGE>
(i) the aggregate of all consideration which constitutes
interest under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the Loan
Documents or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by such applicable law, and
any excess shall be cancelled automatically and if theretofore paid shall
be credited by such Lender on the principal amount of the Indebtedness (or,
to the extent that the principal amount of the Indebtedness shall have been
or would thereby be paid in full, refunded by such Lender to the Borrower);
and
(ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required
or permitted prepayment, then such consideration that constitutes interest
under law applicable to any Lender may never include more than the maximum
amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be cancelled
automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on
the principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would thereby be
paid in full, refunded by such Lender to the Borrower). All sums paid or
agreed to be paid to any Lender for the use, forbearance or detention of
sums due hereunder shall, to the extent permitted by law applicable to such
Lender, be amortized, prorated, allocated and spread throughout the full
term of the Loans evidenced by the Notes until payment in full so that the
rate or amount of interest on account of any Loans hereunder does not
exceed the maximum amount allowed by such applicable law. If at any time
and from time to time
(i) the amount of interest payable to any Lender on any
date shall be computed at the Highest Lawful Rate applicable to such Lender
pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation
period the amount of interest otherwise payable to such Lender would be
less than the amount of interest payable to such Lender computed at the
Highest Lawful Rate applicable to such Lender, then the amount of interest
payable to such Lender in respect of such subsequent interest computation
period shall continue to be computed at the Highest Lawful Rate applicable
to such Lender until the total amount of interest payable to such Lender
shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without
giving effect to this Section 12.14.
-107-
<PAGE>
Section 12.15 LENDER ACKNOWLEDGMENT OF SECURITY INTEREST IN DEPOSITS. By
executing this Agreement, each Lender party hereto (i) acknowledges and consents
that all of Borrower's sums now or at any time hereafter on deposit at such
Lender and all such sums due or to become due on account of such deposits have
been collaterally assigned, and pledged to the Agent, as security for the
Indebtedness, and (ii) subordinates any rights that such Lender may now or
hereafter have to security interests, bank's or other possessory liens, rights
of offset or other claims against the Borrower's account at such Lender (except
to the extent of fees due in connection with such account) in favor of the
Agent's interest in said deposits as hereinabove described.
Section 12.16 CONFIDENTIALITY. In the event that the Borrower provides
to the Agent or the Lenders written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders and any participants (for purposes of
this Section 12.16, the term "Lenders" shall include all participants) shall
thereafter maintain such information in confidence in accordance with the
standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to such
portions of the information which
(i) are in the public domain,
(ii) hereafter become part of the public domain without the Agent
or the Lenders breaching their obligation of confidence to the Borrower,
(iii) are previously known by the Agent or the Lenders from some
source other than the Borrower,
(iv) are hereafter developed by the Agent or the Lenders without
using the Borrower's information,
(v) are hereafter obtained by or available to the Agent or the
Lenders from a third party who owes no obligation of confidence to the
Borrower with respect to such information or through any other means other
than through disclosure by the Borrower,
(vi) are disclosed with the Borrower's prior written consent,
(vii) must be disclosed either pursuant to any Governmental
Requirement or to Persons regulating the activities of the Agent or the
Lenders, or
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<PAGE>
(viii) as may be required by law or regulation or order of any
Governmental Authority in any judicial, arbitration or governmental
proceeding.
Further, the Agent or a Lender may disclose any such information to any other
Lender, any independent petroleum engineers or consultants, any independent
certified public accountants, any outside legal counsel employed by such Person
in connection with this Agreement or any Security Instrument, including without
limitation, the enforcement or exercise of all rights and remedies thereunder,
or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Agent or Lender shall
receive a confidentiality agreement from the Person to whom such information is
disclosed such that said Person shall have the same obligation to maintain the
confidentiality of such information as is imposed upon the Agent or Lender
hereunder. Notwithstanding anything to the contrary provided herein, this
obligation of confidence shall cease five (5) years from the date the
information was furnished (and fifteen (15) years if such information is
technical information) unless the Borrower requests in writing at least thirty
(30) days prior to the expiration of such five year period, to maintain the
confidentiality of such information for an additional period of like duration.
The Borrower waives any and all other rights it may have to confidentiality as
against the Agent and the Lenders arising by contract, agreement, statute or law
except as expressly stated in this Section 12.16.
Section 12.17 EFFECTIVENESS. This Agreement shall be effective on the
Closing Date.
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<PAGE>
The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
BORROWER: REXENE CORPORATION
By:_____________________________
Name: Andrew J. Smith
Title: Chief Executive Officer
Address for Notices:
5005 LBJ Freeway
Occidental Tower
Dallas, Texas 75244
Telecopier No.: 214-450-9017
Telephone No.: 214-450-9000
Attention: General Counsel
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<PAGE>
LENDER AND AGENT: THE BANK OF NOVA SCOTIA
BY: THE BANK OF NOVA SCOTIA, ATLANTA AGENCY
By: ______________________________________
Name: F.C.H. Ashby
Title: Senior Manager Loan
Operations
Lending Office for Base Rate Loans,
Eurodollar Advances and Address for
Notices:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Telecopier No.: 404/877-1560
Telephone No.: 404/888-8998
Attention: F.C.H. Ashby
Eurosterling Lending Office:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Telecopier No.: 404/877-1560
Telephone No.: 404/888-8998
Attention: F.C.H. Ashby
With copy to:
Mr. Michael W. Nepveux
Relationship Manager
Energy Banking
The Bank of Nova Scotia
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telecopier No.: 713/752-2425
Telephone No.: 713/752-0900
<PAGE>
Mr. Andrew Rothstein
The Bank of Nova Scotia
Structured Finance
One Liberty Plaza
New York, New York 10006
<PAGE>
LENDERS: MELLON BANK, N.A.
By:____________________________________
Name: Jack Crossley
Title: Vice President
Lending Office for Base Rate Loans:
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Lending Office for Eurodollar Advances:
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Eurosterling Lending Office:
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Address for Notices:
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Telecopier No.: 412/234-8888
Telephone No.: 412/236-2778
Attention: Mr. Jack Crossley
With copy to:
<PAGE>
LENDERS: DEN NORSKE BANK ASA
By:____________________________________
Name: Morten Kreutz
Title: Vice President
By:____________________________________
Name:__________________________________
Title:_________________________________
Lending Office for Base Rate Loans:
600 5th Avenue
New York, New York 10020
Lending Office for Eurodollar Advances:
600 5th Avenue
New York, New York 10020
Eurosterling Lending Office:
600 5th Avenue
New York, New York 10020
Address for Notices:
600 5th Avenue
New York, New York 10020
Telecopier No.: 212/756-3161
Telephone No.: 212/315-6559
Attention: Ms. Helene Vales
Assistant Treasurer
<PAGE>
With copy to:
Mr. Morten Kreutz
Den Norske Bank AS
Three Allen Center
333 Clay Street
Suite 4890
Houston, Texas 77002
Telecopier No.: 713/757-1167
Telephone No.: 713/757-0008
<PAGE>
LENDERS: ABN AMRO BANK N.V. HOUSTON AGENCY
By: ABN AMRO North America, Inc., as Agent
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
Lending Office for Base Rate Loans and
Eurodollar Advances:
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopier No.: 713/629-7533
Telephone No.: 713/964-3322
Attention: Gordon Chang
Eurosterling Lending Office:
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopier No.: 713/629-7533
Telephone No.: 713/964-3322
Attention: Gordon Chang
Address for Notices:
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopier No.: 713/629-7533
Telephone No.: 713/964-3322
Attention: Gordon Chang
<PAGE>
With copy to:
Mr. Gordon Chang
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopier No.: 713/629-7533
Telephone No.: 713/964-3322
<PAGE>
LENDERS: CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Name:__________________________________
Title:_________________________________
Lending Office for Base Rate Loans:
1301 Avenue of the Americas
New York, NY 10019
Lending Office for Eurodollar Advances:
1301 Avenue of the Americas
New York, NY 10019
Eurosterling Lending Office:
1301 Avenue of the Americas
New York, NY 10019
Address for Notices before May 4, 1996:
501 North Akard, Suite 3210
Dallas, TX 75201
Telecopier No.: 214/954-3312
Telephone No.: 214/954-3500
Address for Notices after May 4, 1996:
2200 Ross Avenue, Suite 4400W
Dallas, TX 75201
Telecopier No.: 214/220-2323
Telephone No.: 214/220-2300
Attn: Judy Gordon
<PAGE>
LENDERS: SOCIETE GENERALE, SOUTHWEST AGENCY
By:__________________________________________
Name: Richard M. Lewis
Title: Vice President
Lending Office for Base Rate Loans:
2001 Ross Avenue
Suite 4800
Dallas, Texas 75201
Lending Office for Eurodollar Advances:
2001 Ross Avenue
Suite 4800
Dallas, Texas 75201
Eurosterling Lending Office:
2001 Ross Avenue
Suite 4800
Dallas, Texas 75201
Address for Notices:
2001 Ross Avenue
Suite 4800
Dallas, Texas 75201
Telecopier No.: 214/754-0171
Telephone No.: 214/979-2743
Attention: Ms. Molly Franklin
<PAGE>
With copy to:
Mr. Richard M. Lewis
Vice President
2001 Ross Avenue
Suite 4800
Dallas, Texas 75201
Telecopier No.: 214/979-1104
Telephone No.: 214/979-2777
<PAGE>
LENDERS: NATIONAL BANK OF CANADA
By:_________________________________________
Name: Larry L. Sears
Title: Group Vice President
By: _________________________________________
Name: David L. Schreiber
Title: Assistant Vice President
Lending Office for Base Rate Loans:
125 West 55th
New York, New York 10019-5366
Eurosterling Lending Office:
125 West 55th
New York, New York 10019-5366
Lending Office for Eurodollar Advances:
125 West 55th
New York, New York 10019-5366
Address for Notices:
125 West 55th
New York, New York 10019-5366
Telecopier No.: 212/632-8736
Telephone No.: 212-632-8566
Attention: Ms. Christina Tang
Assistant Manager
<PAGE>
With copy to:
Mr. David L. Schreiber
Assistant Vice President
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Telecopier No.: 214/871-2015
Telephone No.: 214/871-1260
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,733
<SECURITIES> 0
<RECEIVABLES> 78,635
<ALLOWANCES> 3,194
<INVENTORY> 64,882
<CURRENT-ASSETS> 161,148
<PP&E> 364,611
<DEPRECIATION> 61,098
<TOTAL-ASSETS> 500,571
<CURRENT-LIABILITIES> 59,652
<BONDS> 175,000
0
0
<COMMON> 188
<OTHER-SE> 145,465
<TOTAL-LIABILITY-AND-EQUITY> 500,571
<SALES> 139,687
<TOTAL-REVENUES> 139,687
<CGS> 113,205
<TOTAL-COSTS> 113,205
<OTHER-EXPENSES> 12,454
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,367
<INCOME-PRETAX> 10,404
<INCOME-TAX> 3,934
<INCOME-CONTINUING> 6,470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,470
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
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